Most working Americans get their health insurance through their employer. This is a huge part of the cost of running a business. Starbucks spends more on healthcare than they do on coffee. General Motors spends more on healthcare than they do on steel. Our healthcare is dominated by businessmen who stand between patients and clinicians. They have made their contracts and other business arrangements secret so that your employer and your company’s employees cannot possibly understand how the money flows. There are many in the current system who benefit from this secrecy. They get much more money. This reality is a major cause of the poor functioning of our healthcare system. That money gives them the ability to make major political contributions to keep the current broken system in place. They win and everyone else loses—including your employer. The best chance we have to get better health at lower cost is through collaboration of employers. They are the only group with the muscle to push back against the medical business machine that is taking advantage of them and other Americans.
The Consolidated Appropriations Act (CAA) is the law of the land. It is the most powerful tool your employer has to give you better health at lower cost. Jeff Hogan is one of the most knowledgeable authorities in the country on the CAA. He recently pointed to a joint effort by employers to implement the mandates in the law. “I’m really thrilled to see this excellent advocacy on behalf of employers from Purchaser Business Group on Health (PBGH). The bottom line is that most health plans, TPAs (insurance claims administrators) and other employer critical service providers have been VERY unhelpful as it relates to helping their CUSTOMERS manage their new CAA duties…” The winners under the old system are a barrier to progress.
Jeff pointed to an article in Fierce Healthcare that discussed the efforts of the business group. It begins like this: “The Consolidated Appropriations Act that passed this year will next year make self-insured employers the fiduciaries for the healthcare services that they purchase, which means they’ll have more say about quality and cost but also more responsibility.” Your employer becomes a fiduciary for your health plan. The means they have the same responsibilities that they assume in managing your 401k. You must have absolute confidence that your 401k is managed in your best interest. Now your employer is responsible for seeing that you have effective healthcare at a reasonable cost. The CAA means that medical business arrangements can no longer be secret and hidden. Your employer has the right to see all the data. Where is the money going and what are the arrangements between the medical businessmen? “That is a role that they (employers) are prepared to take on effectively, but that means all the partners that they rely on—their PBMs, pharma, health plans, consultants—will have to become transparent and accountable,” You cannot possibly execute your fiduciary responsibility if you don’t know where the money is being spent and how effective the medical treatment is that you are buying.
I asked Jeff to review this piece and he added this: “There is now an assumption (under the CAA) that all employers have all of the health data and analytics information that they need to determine (1) Exactly what they are paying specific providers for specific health services, (2) Where they are paying for high and low quality, (3) What they’re paying in costs to their pbm (pharmacy benefits manager) and the costs of those drugs. Further, with that data, they must determine (fiduciary standard) if their contracts for services and the costs they are paying are what they SHOULD be paying and therefore in the interests of all of their plan fiduciaries.
Health data and intentional analytics (something heretofore missing in the marketplace) must furnish the employers with the information that they need to point out the (1) specific characteristics of their specific population including data points on prevalence and acuity of disease process, (2) non optimized site of care, (3) bad quality. In short, these sources provide the fiduciary with the tools necessary to assess retrospective data and to give insight into the new and required unbiased procurement process. It also provides them with the functionality to (4) provide necessary accountability for health service contracting to substantiate decision making and apportionment of resources. (5) Allows employers to use their own retrospective data and analytics to have at risk providers bid on their population, the contractual terms and pricing associated with servicing the population and the digital point solutions that the at-risk provider would need to have to handle the needs of the specific population” Thanks Jeff for filling in some important details.
Healthcare costs are enormous—the average paid by an employer to insure a family is $23,000 a year. If a company employs 100 people, that is $1.6 million dollars. “Last year, GM spent $5.3 billion on health care — enough to buy a GMC Yukon for each of its U.S. employees.” Here is the curious thing. In most companies that massive expense is handled in the human resources department which has numerous other pressing issues to deal with like recruiting and retaining the best people, compensation and benefits, employee training and development, workplace safety, and compliance with a host of state and federal regulations. It is a huge assortment of responsibilities.
As a practical matter, human resources offices are not prepared to deal with this issue themselves. They hire brokers and consultants to manage it for them. Human resources or HR in your company does not make the decisions about your healthcare benefits. The brokers and consultants tell them what is best for them, and they do that. The most important HR decision is which broker to use. There is this huge layer of middlemen between you, your employer, and the broker. The broker recommends an “insurance company“and the insurance company controls what lab company, drug benefits, hospitals, and doctors you can use. At every level, the arrangements between the consultants, brokers, pharmacy benefits managers, huge hospital systems, and clinicians are secrets held only by the insurance company. The whole system is riddled with conflicts of interest. For example, brokers are often paid by your company AND by the insurance company that they recommend. Of course, they are going to recommend the insurance company that pays them. That is in the broker’s interest. It is certainly not in your interest or in your company's interest. That is why the Consolidated Appropriations Act is so important and that is why the people in the middle are fighting it. The CAA means that every arrangement for the middlemen between your employer and you must be disclosed and that your employer is responsible for making certain that the costs are reasonable, conflicts of interest are eliminated, and that you receive good care at a fair cost. Your employer cannot see your healthcare data, but at a higher level it has a right to see how much money is going to tests, hospitals, emergency rooms, pharmacy costs and specialists. This data is critical to success if we are to have a system that produces better health at lower cost.
Some companies in America have already made the move. We are proving that with one of our clients, Vestra Health, a worksite clinic company. While many insurance companies are still fighting to keep their data secret, Vestra is working with an “insurance company” (third party administrator or TPA) that provides all data to the employer as the Consolidated Appropriations Act requires. This TPA is not fighting the law to preserve their advantage. Vestra has been working for some time to use every possible lever to improve health and reduce costs. I have worked with them on producing optimal medical therapy for about five years. They do other important things like negotiating contracts directly with hospitals and organizations that do MRIs and CAT scans. If you call their office with an urgent serious problem, they work with you early in the process to solve it. They don’t automatically tell you to call 911. Now that we have access to their data, we have been able to prove that they are doing amazing work. Patients seen in their clinic cost half as much, are in the emergency room one third as often, and are hospitalized one fifth as often compared to employees seen in the broader community. Their Native American tribal sponsor, the Coushatta Casino Resort in Louisiana, is in total compliance with the provisions of the CAA. It can be done now in the rural United States. We are helping clients do it. They are saving money, and their employees are healthier.
We are the only developed country in the world that puts up with a crazy system like ours. The Germans have a system that most closely resembles this one, but they have eliminated the middleman. As in this country, most Germans get their healthcare paid for through their employer. They don’t depend on consultants and brokers to make their healthcare decisions for them. They run their own healthcare operations and can chose between 200 health insurance companies. The governing bodies are composed of elected representatives from the employee force and the employer. The customer decides what the priorities are, and they have access to all the information concerning their health plan. Your health care costs are too high to leave their management to a taxed HR department that depends on conflicted brokers and consultants to make these decisions.
There are conscientious people across the country who are working very hard to provide your company with the services that make it possible for you to have better, more convenient health care for much less money. Just imagine the benefit to you and your family if healthcare cost us half of what you are paying now. Remember your employer, on average, pays $23,000 per family for your health expenses. I bet you could use that $11,500 somewhere else. The big insurance companies are no longer really insurance companies for most employers. When you get a healthcare service, the provider of that service generates a claim. The “insurance company” merely administers that claim. Your employer pays for it. Health care people call these insurance companies third-party administrators or TPAs.
Now we are working with Health Direct Partners which is a collaboration of stakeholders that can replicate what the Germans are doing for any American employer—even those with as few as five employees. Health Direct Partners has identified three “insurance companies” (third party administrators) that are willing to share all data with us as soon as it has been processed or adjudicated. The first thing we do is obtain that data and break it down so that your company can see how much they are spending in each disease state like diabetes, heart disease, and musculoskeletal injuries. We can show how much is being spent in the ER, hospital, pharmacy, and clinic. We work with you to improve the health programs available to employees to make them more effective and more convenient. Every three months we do a detailed financial and clinical analysis and discuss with you how we can improve the health of your families at a lower cost. We provide every service that a regular insurance company gives you, but the big difference is we are actually improving health and reducing costs for our clients.
Our country is facing many challenges and some of them seem to defy solution. The path to better health at lower cost is clear and we can do that now. One thing is sure, we cannot keep doing the same thing and expect better results. Healthcare costs are taking your pay raises. Many of you can’t afford your deductibles. Too many are suffering bankruptcy because of high medical costs. German employees are not having those problems. Help your employer understand what is possible. Tell your union representatives. Democracy works for ordinary people when we all pull together. Help your friends understand this issue. Of all the posts I have written, this is the one you should share. We can do this! Let’s get started together!
Bypassing the corrupt system is important, and way overdue; however, the need for reform of how patients are diagnosed and treated is existential. There must adopt an honest approach to evaluating the safety and effectiveness of treatments offered to patients. The current legacy system is what I call a “late-stage-sickness-seeking-profiteering-kabuki-dance” theatrical release’s sponsored by the American Medical Industrial Complex. Root causes of chronic diseases are ignored and neglected. Effective early detection and primary prevention are marginalized. The legacy system pays lip service to these effective measures. Overwhelming majority of the NIH funding is focused on “diseases” in the costly and deadly late stages, which are often too little and too late. I call this legacy system the 20th Century Med 2.0
Fundamental changes of the system, including the corrupt “insurance middlemen” approach need to take place now. We have the tools, the knowledge, and the evidence to make the changes to a new system, the 21st Century Med 3.0. Some of us started this transformation more that twenty years ago; we are growing stronger each day! Join the conversation and join the community of this amazing journey!
Another wonderful very helpful article. Thank you