Privacy or Cover-up? Hiding Behind HIPAA to Inflate Insurance Premiums

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When the HIPAA Privacy Rule was enacted in 1996, its intent was to protect personal medical records and health information. This goal has since been weaponized by legacy health insurance carriers who withhold data from fully-insured plan sponsors to obscure their justification for higher premiums.

A recent article explains how smaller employers “only receive meager large-claims data at the end of the year. You will not get month-to-month claims versus premium information. The stated reason: carriers are concerned that if they give you too much specific detail about your employees’ health and claim activity, you may be able to discern who has what condition. This, the logic goes, violates HIPAA. The smaller your population, the greater this risk. … This argument is absurd, but it has been the reality in the industry for twenty years.”

There is another, perhaps more insidious, reason for not sharing claims data: to keep employers from escaping the prison of the legacy carriers’ fully-insured health plan. Claims data are the “receipts” for an employer’s plan expenditures with healthcare providers. Without this vital information, fully-insured employers cannot get the stop-loss insurance that enables self-insurance and the cost control and plan design freedom that it brings.

Privacy and transparency are not mutually exclusive. Both can be attained with a modern, self-funded health plan that eliminates the conflicts of interest inherent in fully-insured legacy plans.

By choosing a health plan administrator like Vitori Health, employers can experience freedom of choice, total transparency, and unfettered access to claims data supported by a proven cost and risk suppression platform. Employees will receive better benefits at a lower cost and a remarkable member experience.

Insulin Cap May Drive PBMs to Keep Profits by Hiking Employer Premiums

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Medicare patients cheered when the Inflation Reduction Act capped monthly insulin costs at $35. Then drug manufacturers controlling 90% of the market set this $35 cap for everyone by bypassing the PBM middlemen. To protect their black box of profits, insiders expect PBMs to raise employer premiums.

Consider how much money is at stake. Patients who paid over $1,000 per month for insulin in 2018 are now paying only $35 in 2023. And despite slashing insulin costs by 70%, pharmaceutical companies will still profit handsomely. It’s a win-win for all stakeholders except the PBMs.

This huge gap represents the “60% or 70% of fees” taken by PBMs, who act as intermediaries between drug manufacturers and pharmacies in the supply chain. These fees are a driving force behind the rise in prescription drug costs. Such predatory business practices are all about profits, so a loss here must be offset by a gain somewhere else. Next target, employers.

Employers can fight back and save money by axing their PBM and working with a modern health plan that delivers an ethically-grounded pharmacy program and formulary based on science and clinical value with advanced cost-plus pricing technology for net lowest cost results. Transparent pharmacy services administration ensures that what’s paid at the pharmacy is what the employer plan sponsor pays and 100% of rebates paid monthly.

It’s time to eliminate the dubious fees and questionable practices that raise costs for employers and their members.

How Can Employers Get Fair Hospital Pricing?

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Healthcare costs are spiking to record levels and burdening the nation’s employers. Significant portions of premium dollars pay for inpatient hospital services, with employers paying 200% or more of Medicare prices. “Plan sponsors as plan fiduciaries have to take action. They can’t just stand for it.”

So says Michael Thompson, president and chief executive officer of the National Alliance of Healthcare Purchaser Coalitions (National Alliance), whose playbook supports employers’ claims that hospital prices are unreasonable and unsustainable. It also urges employers to take more responsibility for negotiations.

While very large employers might have the wherewithal to navigate reimbursement discussions with hospitals and health systems, it’s like asking patients to be cost-effective healthcare shoppers in an opaque and foreign healthcare economy: much easier said than done.

The legacy health insurance carriers have done almost nothing to address hospital cost relief for decades. In fact, BUCA contracts with hospitals perpetuate the cost escalation, allowing hospitals to charge whatever they want with little oversight while insurance carrier profits increase along with rising hospital charges.

Reference-based pricing (RBP) is often touted as an alternative because it caps costs at a negotiated percentage above the baseline Medicare price. The downside is that RBP’s overly simplistic reimbursement method and combative stance with providers routinely results in contested claims payments. Employees bear the brunt of this friction with balance bills that increase their medical costs and create financial uncertainty.

Achieving Fair Pricing with Fair Market Payment™

Vitori Health removes the unrealistic expectation of hospital price negotiation from employers and their health plan participants with its exclusive Fair Market Payment™ algorithm that determines appropriate claim payments honored by providers without friction. This unique and sophisticated approach drives significant health plan savings while delivering an exceptional member experience.

A nationwide analysis of plan performance reveals that:

  • 98.8% of Vitori FMP reimbursements are paid by providers without question. Claims with extenuating clinical circumstances may warrant an easily administered reimbursement adjustment. BUCA insurers and RBP plans regularly deny and delay a much larger percentage of claims, frustrating providers.
  • Less than 0.24% of Vitori claims have an unexpected member bill compared to BUCA and RBP plans, which have 10-40 times higher rate of unexpected member billing.

A modern, member-first health plan with advanced technology can effectively counteract today’s skyrocketing hospital and healthcare costs. Employers can realize 30% savings with industry-leading plan advantages and unprecedented 80+ Net Promoter member satisfaction scores.

3x3x3 Interview Captures Vitori’s Outstanding Value Proposition

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We are excited to share that Neil Quinn, Chief Strategy Officer at Vitori Health, was interviewed by Chris Fisher to create a BenefitsAlly 3x3x3 video.

In 3x3x3 interviews, innovative solution providers answer three questions of interest to benefit advisers using three slides in under three minutes. Neil provides quick yet comprehensive answers to these questions:

1. What is Vitori Health?

2. How is Vitori Health different?

3. Who is a good fit for Vitori Health?

>>WATCH THE VIDEO

Benefit consultants can learn more about the advantages of a modern health plan from Vitori Health and Vitori Vantage, the industry’s first 3-year level-premium plan that breaks the cycle of annual renewal cost increases.

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Chris Fisher is the founder of BenefitsAlly. Their mission is to discover programs that are innovative, solve a problem, and have a proven track record of success. They share these great solutions with benefits consultants so they can stay competitive by bringing essential solutions to employers before their competition does.

Patients=$0. Insurers=Millions. How to Boost Profits by Denying Claims.

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Medical directors adjudicating claims are supposed to examine patient records, review coverage policies, and use their expertise to approve or deny claims. But at Cigna, they spend only 1.2 seconds on each case and instantly reject millions of claims without even opening the file.

This unfair review process, known as PXDX, is designed to boost profits by reducing claims processing costs, denying coverage, and avoiding payment of health care claims. The volume is staggering. According to a ProPublica exposé, “Over a period of two months last year, Cigna doctors denied over 300,000 requests for payments using this method.”

One former executive describes PXDX as “…a system built to deny claims.” Another, who helped conceive the program, questioned at the time whether such speedy denials satisfied the law or fell into a gray zone. “We sent the idea to legal, and they sent it back saying it was OK.”

It may be legal, but it’s certainly not ethical. The practice leaves patients with unexpected bills and encourages health care avoidance for services that should be covered by any decent employee health plan.

Ironically, Cigna has stated that its PXDX system does not prevent a patient from receiving care — it only decides when the insurer won’t pay: “Reviews occur after the service has been provided to the patient and does not result in any denials of care.”

Employers can circumvent this insanity by avoiding monopoly insurance carriers that prioritize profits over people. The ideal solution is a self-funded plan from a modern health plan plan administrator. Fair Market Payment™ (FMP), which is offered exclusively by Vitori Health, establishes fair and acceptable claim payments and eliminates provider friction that creates balance billing problems for plan members.

With a less costly, more compassionate health plan, employers can realize significant savings and reduce fiduciary risks while improving employee health and other benefits.

Hospital Mergers Raise Costs, Cut Competition, and Pump Profits

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Hospital and health system mergers have become rampant and are typically announced with glowing press releases promising greater access to better and more affordable health care. However, research into the results of consolidation exposes outcomes that run counter to these promises.

In 2022, healthcare mergers and acquisitions resulted in a record setting $45+ billion in total transacted revenue. Industry insiders expect even more activity in 2023 with Deloitte predicting that “after consolidation in the next decade, only 50 percent of current health systems will likely remain.”

The nonprofit, nonpartisan Kaiser Family Foundation (KFF) has studied the real impact of consolidation on American consumers, 54% of whom receive healthcare through employer-sponsored health plans. Their findings align with other studies showing the unmet promises and benefits promoted by hospital system aggregators.

Unrealized Quality

Results are mixed with the majority of studies concluding that health care quality is essentially unchanged or worsened. Research from The National Institute for Health Care Management (NIHCM) Foundation states that there is “no evidence that clinical processes or patient outcomes improved after an ownership change, but results point to modestly worsening quality from the patient experience perspective.” Findings from the New England Journal of Medicine show “modestly worse patient experiences” resulting from hospital mergers and acquisitions.

A Harvard review found that care quality was only slightly better at consolidated health systems than private practices. According to Nancy Beaulieu, study first author, “One of the key arguments for hospital mergers and practice acquisition was that health systems would deliver better-value care for patients. This study provides the most comprehensive evidence yet that this isn’t happening.”

Competition and Cost

Despite claims by the American Hospital Association (AHA) that consolidation reduces health care costs, mergers have shown to increase prices and reduce affordability even as profits increase.

Studies continue to show that consolidation and health care costs have a detrimental association. Less competition means fewer choices and more opportunities for health systems to monopolize a market and raise prices. This impact is nuanced in large, metropolitan areas and keenly felt in small and mid-sized markets where dominant providers emerge as the result of consolidation.

Trade association AHIP (America’s Health Insurance Plans) describes this connection rather succinctly:

“Everyday Americans bear the brunt of hospital consolidation. Hospitals in highly concentrated markets can charge higher prices for medical services and have greater leverage to negotiate higher prices from health insurance providers, leading to ever-increasing health care costs for individuals and families.”

Neutralizing the Impact of Consolidation

KFF calls for policymakers “to address any potential anti-competitive behavior in markets that are already consolidated.” And NIHCM declares, “In the face of ongoing hospital market consolidation and accompanying price increases, consumers deserve to experience measurable and meaningful quality [and cost] improvements… Merging hospitals must be held more accountable for achieving, not just promising, such benefits.”

Employers that maintain allegiance to legacy insurance carriers whose profits increase when hospital prices rise will feel the negative impact of health system consolidation in higher medical claim costs and insurance premiums. While there are plenty of excuses for sticking with the status quo, employers who choose a modern health plan administrator using advanced claims payment technology can limit the negative impacts of health system consolidation, and meet their fiduciary obligation to manage costs for their health plan participants.

Should Boards Probe Health Care Costs? Deloitte Would Say Yes.

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Corporate boards have historically relegated employee and workforce concerns to management. In 2020, COVID-19’s dramatic impact on operations and employee health began changing that perspective in significant ways, leading to a more expansive approach to how boards fulfill their responsibilities.

In a recent publication, Deloitte’s Center for Board Effectiveness confirms that:

“Events related to the pandemic … have … thrust workforce management to the forefront of board agendas. In many cases an afterthought, a lagging consideration to the business and technology strategy, workforce management is now a leading priority, on an equal footing with other key areas of board focus.”

This much-needed emphasis is both timely and necessary. There is organizational risk for boards that do not press for better performance beyond the status quo. Enterprise risk programs should do more than “check the boxes” and boards must challenge those who insist they’re doing “everything they can” for employees as well as shareholders.

Mitigating Employee Health Plan Risk

ERISA, which ensures that both retirement and health plans are managed in the best interests of plan participants, tightened its regulations around retirement plans after rising numbers of class action suits resulted in billions of dollars in settlements. From imprudent investments and grossly high fees to mismanaging shared plan assets, employers were called to task for reduced earnings for employees.

As for healthcare benefits, boards can (and should) urge organizations to move away from legacy health plans that prioritize insurer and PBM profits over plan participants. This has fueled runaway employer costs, siphoned employee income, and burdened employees with medical debt when they need to use their health insurance.

Most employers and their employees are overspending on healthcare by 30% or more. This drain on corporate profits and employee income can be addressed by a modern health plan administrator with leading technology and a moral imperative to represent the best interests of employers and health plan participants.

Although it is unlikely that ERISA-driven regulatory changes around health plans are imminent, ERISA does expect organizations (and by extension, their boards) to manage health plan expenses. It is not difficult to envision employee health plan participants initiating legal action because employers and benefits consultants maintain plans with legacy insurance carriers that fail to demonstrate any cost control. Boards are encouraged to be more diligent and take proactive steps to mitigate the risk of such a scenario.

Board Responsibilities to Society

Deloitte cites the 2022 Edelman Trust Barometer, whose top ten findings reinforce the role business plays as the society’s most trusted institution. Respondents affirm that “societal leadership is now a core function of business” and that “business needs to step up on societal issues.”

There are few societal issues or obligations more critical than addressing the challenges of today’s healthcare system. As an integral part of this system, employer health plan sponsors have an enormous responsibility and cannot afford to be complacent actors. A greater emphasis on employee health and wellbeing is needed, as supported by Springer, which finds that some boards “view health as a business opportunity or even a moral obligation.”

Although 54% of the population receives health insurance through an employer health plan, 29% of those with employer coverage are functionally uninsured. Legacy health plans subject employees to immense financial distress and instability, often resulting in bankruptcy and crippling debt from which many struggle to recover.

Corporations and their boards have responsibilities to employees as well as shareholders and when it comes to employee health, those priorities are not mutually exclusive. Private sector employers need to embrace the growing workforce stewardship taken by many state and municipal government leaders as they root out unnecessary spending and seek more cost-effective, member-focused health plan alternatives.

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