Your Employer-Sponsored Health Plan Is Required by Law to Serve You Better

Every family needs health care at some point. It is like access to clean water. For many of us, good affordable health care becomes a life-or-death issue. Good health care early can help us live longer healthier lives, but our system is broken. Everyone in healthcare talks about patient-centered care, but it is rare. Now, a new federal law called the Consolidated Appropriations Act requires your employer to document that your employer-sponsored health plan is indeed patient-centered. Employers “must run their health plan (including pharmacy, vision and dental benefits) solely in the interest of employees and their dependents.” This fiduciary responsibility is spelled out in the link above and is like managing your 401k retirement plan in your interest. We all have a stake in that.

Your employer’s healthcare costs are enormous, and it is important for you to realize that the insurance company name on the card that you have in your purse is misleading. The insurance company named on the card does not provide insurance. Most employers are self-insured. Your company pays your healthcare bills. The insurance company just processes the claims. People in the business call them a third-party administrator (TPA). I have read that General Motors spends more on healthcare than they do on steel. Their $1.1 billion healthcare spend in 2019 makes them a pretty big health insurance company. Starbucks spends more on healthcare than they do on coffee. Their annual spending of $300 million makes them a big health insurance company too. That should give them tremendous leverage when they buy healthcare, but it does not.

Despite the huge sums of money involved, your company’s health insurance program is not managed at the highest levels. It typically falls under the human resources department where it is just one of a host of concerns. Human resources depends on a broker to advise them on the best course of action, but the brokers are paid by your employer who is buying the service and the large “insurance” company selling it. The broker may get a bonus of as much as $150,000 for each self-insured employer she signs up! The “insurance company” is willing to pay so much for broker services because they get 15 to 20 percent of every dollar your company spends it health care. “The Affordable Care Act requires insurance companies to spend at least 80% or 85% of premium dollars on medical care, with the rate review provisions imposing tighter limits on health insurance rate increases. If an issuer fails to meet the applicable MLR (medical loss ration) standard in any given year, as of 2012, the issuer is required to provide a rebate to its customers.” The insurance company and the broker make more when care costs more. It is a pretty safe bet the broker often behaves in ways that are not in your employer’s best interest or yours. This law changes all that. Your employer is the one responsible for making certain that vendor payment serves your interests.

There is another provision of the law that is critically important. “Employers must now develop and document a process for monitoring vendor performance for value and alignment with the health plan’s interests. This monitoring process should include regular review of the plan’s vendors to determine whether fees and claims are reasonable.” Up until now, the pricing for all these arrangements have been totally opaque. Your employer does not know the details of broker compensation. They don’t know that their negotiated price for healthcare services is higher than the cash price. The new law changes all that. Your employer has the right to get detailed data about their healthcare spending from the “insurance” company. Even today, some “insurance” companies are refusing to grant access to this information citing health privacy concerns. You can relax. None of this data exposes your private information. Your employer understands the healthcare privacy laws and this is aggregated data without your personal identification. It is important for your employer to know this information to serve you better.

I don’t just write about better health at lower cost. I don’t merely write about patient-centered care. I spend more time working to achieve those goals. I am working with other stakeholders who can bring the benefits of this new law to you and your company. We are working with self-insured employers and their third-party administrators to provide them with a dashboard that shows them the details of their healthcare spending in a way that is very close to real time. As soon as the claims are adjudicated, they are on the dashboard. We identify the high-risk, high-cost employees and work with other stakeholders to improve their health and lower their costs. Most businesses, county governments, municipalities, and school districts are self-insured. Contact me at whbester@gmail.com if you would like to explore this issue further.