The landmark No Surprises Act became effective January 1, 2022 to protect consumers from surprise medical bills from out-of-network providers and facilities. Greedy industry stakeholders are fighting to remove these long overdue protections. Is anyone surprised? Read More about Health Care Industry Fights No Surprises Act. Are You Surprised?
Employers take great care to choose the best possible health plan for their members. But to get value from their plan, employees must understand common health insurance terms to make sound health care decisions. A recent study shows how a lack of literacy is resulting in confusion and higher costs.
The 2022 health insurance literacy survey published by HealthCare.com asked respondents how well they understood specific health insurance language. The results show “bewilderment over a wide range of health insurance terms and how health insurance functions in the United States.”
Despite these varying degrees of confidence, it’s clear that respondents don’t correctly understand how things work.
For example, “copay” ranks as the best understood of all the health insurance terms presented. And yet half of all respondents erroneously “believe that copays count toward deductibles when they generally do not.”
Additionally, “understanding the meaning of “in-network” is crucial to not getting socked by unexpected health insurance bills. But 4 in 10 respondents (41%) were unable to select the correct option” among four choices to describe its meaning: “See only doctors who are contracted with a carrier associated with your policy.”
As a result, “1 in 4 Americans (26%) say lack of health insurance understanding caused them to receive a higher than expected medical bill.”
Employers are ideally positioned to bring clarity to the healthcare conversation and help employees avoid surprise medical bills due to misunderstandings. Here are several strategies that can help members (and employers) in significant ways.
Everyone benefits when employees understand health insurance language and have a simpler, cost-saving, open access plan with better member support.
Is laughter really the best medicine? Sadly, it is mightily needed to offset these tragic “health care” experiences. While it’s easy to shake our heads at the absurdity of the American healthcare system, it’s hard to laugh at its outrageous and often heartbreaking impact on patients.
Can you imagine being charged to hold your newborn after delivery? Or repossessing a veteran’s prosthetic legs because he couldn’t afford the copay?
How about the woman who was charged $40 for crying during her doctor visit? In this and in another case, patients were charged for a “brief emotional/behavorial assessment.” This insidious and much abused billing code is often used to pad the bill. And while the charges are low and easily overlooked, they add up to millions of dollars in profits.
Under our dystopian healthcare system, Americans suffer from staggering medical debt and forego needed medications, mental health care, and life-saving surgeries they cannot afford.
Still laughing? We didn’t think so.
The war for talent has escalated thanks to “The Great Resignation,” a pandemic-driven trend in which employees are quitting their jobs in record numbers. While some change careers, most seek new positions that better align with their priorities, which include higher pay and better health benefits.
This level of churn is exhausting, expensive, and disruptive. Consider that 44% of employees are “job seekers” and of them, 33% are active “job hunters,” according to the 2022 Global Benefits Attitudes Survey conducted by WTW (Willis Towers Watson).
Additionally, Gallup estimates that “The cost of replacing an individual employee can range from one-half to two times the employee’s annual salary. So, a 100-person organization that provides an average salary of $50,000 could have turnover and replacement costs of approximately $660,000 to $2.6 million per year.”
Clearly, this is not sustainable.
Although making more money is often the top reason for changing jobs, a CNBC analysis of the WTW survey identifies health benefits as the #2 reason why “almost 20% said they’d take a new job for the same pay — suggesting factors other than wages are important, too.”
The WTW survey affirms this. “Benefits packages that meet the needs of employees and provide an enhanced experience result in significantly greater retention (78% vs 41% when the benefits package does not meet the needs).”
Employers competing for top talent should consider replacing high-cost, traditional health plans with innovative plans that challenge and transcend the byzantine practices of insurers, PBMS, and health systems. Decisive steps can be taken today to offer enhanced health benefits that deliver better access to care at lower, more realistic costs for employers and employees.
It’s one thing for employees and job seekers to demand better health benefits. It’s another to take responsibility for personal finances by fully understanding everything offered by a health plan.
The Wall Street Journal asserts that the best time to evaluate plan options is during open enrollment. When confronted with thick booklets and lengthy documents, many employees make quick, simple choices instead of exploring the potential value of more complex plan options. This is a missed opportunity to save money and secure the most appropriate coverage for their family.
It also prevents employees from evaluating whether certain benefits are worth the cost. While employers have been ramping up benefits in the war for talent, inflation has made consumers more cost sensitive. Employees can reduce monthly paycheck deductions and increase satisfaction with their health plan by choosing only those benefits that best support them, especially during the continued and evolving pandemic.
In the war for talent, health plans that offer better health benefits at a lower cost have a clear competitive advantage. When companies save 30% on health plan spending without cost shifting, they can redirect those funds to what employees and candidates seek: higher salaries and signing bonuses, increased direct and indirect compensation, and enhanced employment amenities. And there’s an immediate and significant improvement to the balance sheet that can catapult a business ahead of its competition.
Employees are demanding health benefits beyond the status quo as they move from job to job. Employers can make that happen by offering a better health plan experience and helping employees evaluate their options during open enrollment.
Now that’s sustainable!
Twenty years ago, nearly two-thirds of doctors were independent practitioners. Today, only one-quarter remain independent. This mass exodus is being driven by financial pressures, marketplace competition, and the politics of health care. Which begs the question: where have all the doctors gone?
They’re still here… they’ve just switched from being employers to employees. Research by the Physicians Advocacy Institute reveals that by the end of 2021, 52.1% of physicians were employed by hospitals and health systems and another 21.8% were employed by corporate entities such as health insurance and private equity firms.
This is not good news for consumers. Health systems, which are aggregating unchecked across the country, buy and control doctors in order to capture and control more revenue. This is done under the guise of “integration efficiencies.” However, anyone who’s had the misfortune to be a patient can attest to the inefficiency, duplication, miscommunication, and unpleasant billing surprises within these mega systems.
Health systems routinely buy and employ primary care physicians (PCPs) and press these doctors for high volume patient throughput. This leaves mere minutes for most PCP visits and drives more tests and procedures. It also increases costs and maximizes revenue generation for the health system.
It gets worse. To maintain this level of throughput, PCPs employed by health systems are required to refer patients to specialists and outpatient facilities within their vertical system, further generating revenue while limiting choice for patients and doctors.
These PCPs are practicing well below their licensure capability. Family, internal, and general medicine physicians are well trained to care for most acute illnesses and manage the most prevalent chronic conditions when patients don’t have extenuating circumstances. Try getting an IV, stitches, a mole or skin tag removed, or a simple fracture set in a PCP office today.
Twenty years ago, less than five percent of PCP visits resulted in a referral to a specialist. The rate of referrals to specialists has more than tripled today.
Our health care system needs more Direct Primary Care (DPC) physicians who maintain their independence from hospitals, health systems, and corporate employers. DPCs can provide a much wider array of care and when necessary, can refer to lower cost, higher quality independent specialists.
Some DPCs have joined accountable care organizations and adopted patient-centered, medical home models. Nearly 24% are considering ancillary or subscription-based services to benefit their patients.
These doctors generally charge a monthly fixed fee that covers most of the care that the average patient and family will need, including telemedicine, annual checkups, basic blood work, urgent care, chronic condition care, medication management, and more, all without insurance paperwork and extra cost.
This disturbing trend reinforces the industry emphasis on generating profit vs. helping practitioners provide optimal health care. The unfortunate result is that physician and patient choice will continue to erode while costs rise and quality of care declines.
In a unanimous and bipartisan decision, the Federal Trade Commission (FTC) will investigate the secretive practices of six of the largest Pharmacy Benefit Managers (PBMs) in the country. Diverse stakeholders are hopeful this action will unravel years of corruption and reduce prescription drug prices.
The FTC demanded records detailing the business practices of CVS Caremark, Express Scripts, Optum Rx, Humana, Prime Therapeutics, and MedImpact Healthcare Systems. The action has been praised by plan sponsors, pharmacy industry groups, and community pharmacy owners who are subject to clawbacks and additional fees that limit competition and consumer choice.
Of particular concern is the growing trend toward vertical integration… a closed loop in which PBMs are owned by or affiliated with large national health plans. They are also integrated with mail order and specialty pharmacies, significantly expanding their profits and reach in the pharmacy supply chain.
Lina M. Khan, Chair of the Federal Trade Commission, summarizes the situation in this recent quote. “Although many people have never heard of pharmacy benefit managers, these powerful middlemen have enormous influence over the U.S. prescription drug system. This study will shine a light on these companies’ practices and their impact on pharmacies, payers, doctors, and patients.”
While the FTC conducts its long overdue investigation of the self-serving predation of legacy PBMs, employers and plan sponsors can seek out pharmacy benefit plans that take a more equitable and contemporary approach.
Plans should incorporate these key management features:
The FTC confirms that PBM operations have been “difficult or impossible to understand for patients and independent businesses across the prescription drug system.” Employers should be encouraged by the Rx management options currently available and the industry-wide changes that are likely to result from the FTC’s probe.
While there is an imperative for immediate accountability, the immortal words of Reverend Dr. Martin Luther King, Jr. remind us that “the arc of the moral universe is long, but it bends toward justice.”
In the third and fourth quarters, employee health plan brokers and advisors are busy closing new business and managing client renewals. This is a great time to offer next-generation plan designs that can significantly reduce expenses for employers and employees while improving overall benefits.
Watch this on-demand webinar to stay current on the newest and most advantageous reimbursement strategies and self-funding trends. Speakers include Aaron Polkoski, Regional Vice President, Matrix Group Benefits and Neil Quinn, Chief Strategy Officer, Vitori Health, interviewed by David Slepak.
You will gain valuable insights into:
A report by the PBM Accountability Project reveals the details of PBMs’ “evolving business models and revenue.” Despite the available financial data, the authors could not identify “the source of nearly 40% of PBMs’ total gross profit.” Can this “business as usual” become a catalyst for change?
The coalition of pharmacy, labor, healthcare, business, and patient advocacy groups that supports the PBM Accountability Project certainly hopes so.
As described in the report, revenue flows to PBMs from multiple stakeholders in the supply chain, not just payer clients. And gross profit is generated through multiple sources and business activities, including but not limited to retained rebates, retained manufacturer administrative service fees, and their own mail order/specialty pharmacies.
So where is that 40% of unaccounted-for profit hiding? Potential sources may include “spread pricing, pharmacy fees and clawbacks, fees collected from payers, and other non-administrative fees collected from manufacturers.”
Despite stakeholders demanding more transparency, PBMs play shell games by rebalancing revenue streams and identifying new ones to offset those with smaller profits. Their results have been quite successful: a 12% increase in overall gross profit, from $25 billion in 2017 to $28 billion in 2019.
Source: PBM Accountability Project: Understanding the Evolving Business Models and Revenue of Pharmacy Benefit Managers 2021
Efforts to ensure that public and private sector health plans don’t overpay for prescription medicines often focus on government control of drug prices through legislation, including through the Build Back Better Act currently under debate. Given the complexity of the pharmaceutical supply chain, which is the most effective point to apply such legislation?
Source: PBM Accountability Project: Understanding the Evolving Business Models and Revenue of Pharmacy Benefit Managers 2021In an interview by AIS Health, Lindsay Bealor Greenleaf, vice president at ADVI Health, acknowledges that “the legislation does impose some new transparency requirements on PBMs,” but that it is setting “government price controls on manufacturers while letting the PBMs completely off the hook.”
Greenleaf asserts that PBMs “operate in a black box, and they profit most from drugs with the highest list prices, and then they make patients pay coinsurance based off those inflated list prices.” Holding so much power is a dangerous combination that must be addressed to hold PBMs accountable for their role in rising prescription drug costs.
If PBMs don’t innovate and proactively adopt reforms and the government doesn’t force the issue, “the biggest hope for change” is likely to come from employers and other clients of PBMs, Greenleaf says. “The hope is that they keep stepping up and saying, ‘What’s going on here, am I getting the best deal, and even if I am getting a good deal, how good of a deal are you getting?’”
Employers can seek out ethical, member-focused prescription drug plans like VitoriRx to eliminate the predatory practices and half-measures of transparency from legacy PBMs. They can also support groups like the PBM Accountability Project, whose sponsors demand lower drug prices and cost increases and greater accountability and transparency from PBMs.
A study published in JAMA Health Forum reveals that pre- and post-sale rebates from prescription drug manufacturers to commercial health plan sponsors are steadily increasing. Far from reducing out-of-pocket expenses for patients, this convoluted backroom strategy actually makes things worse.
The study succinctly describes how this complex dynamic negatively affects members. (The bold emphasis is ours.)
“Prescription drug manufacturers routinely offer post-sale rebates to pharmacy benefit managers (PBMs) and health insurance plans. While drug rebates can reduce plans’ net costs, rebates do not reduce patients’ cost sharing, which is usually based on pre-rebate list prices set by drug companies. Drug rebates can incentivize drug manufacturers to inflate list prices and PBMs to distort drug formularies to favor high list price and high rebate therapies.”
This can also create equity issues for consumers buying individual plans as well as members covered by an employee health plan.
A related Axios article quotes Ge Bai, accounting professor at Johns Hopkins Carey Business School and one of the authors of the study, as saying, “We have the sick people paying more than their fair share for the drug and the rebate goes back to the plan to reduce premiums for the healthy.”
To build a better formulary, it’s best not to include drugs that are not supported by sound comparative effectiveness research. Follow evidence-based clinical guidelines for prior-authorization of drugs and step-therapy to use less expensive, equally effective medicines first.
Brand name inhaler manufacturers tinker with patents and use gimmicks the Food and Drug Administration (FDA) shouldn’t allow to thwart the availability of low-cost generic inhalers. And profits are so high that a tobacco manufacturer took over an asthma inhaler company to “diversity its portfolio.”
A research article in Health Affairs reveals that manufacturers recycle the same patents on multiple inhalers from different classes and shift old ingredients to new devices. Of the 62 inhalers for asthma and chronic obstructive pulmonary disease (COPD) approved by the FDA during the past 35 years, only one contained an active ingredient with a new mechanism of action. More than half of the patents issued were for the actual inhaler devices.
The researchers conclude that regulatory and patent reform is critical to ensure that patent protection bestowed on brand name inhaler manufacturers better reflects the true clinical benefits of new products. Until then, patients will continue to experience the dual medical and financial burdens of asthma and COPD.
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