Two Minute Drill

$19,616.00. Yes, You Read It Correctly — $19,616.00.

$19,616 — that’s the average cost nationwide of an employer-provided family health plan in 2018 according to recent employer study conducted by the nonprofit Kaiser Family Foundation and reported in today’s Wall Street Journal.  It’s pretty staggering to think about the fact that $19,616 is only the average and that there are more than a few folks across the country paying a lot more than the average.

The dirty little secret that’s fast becoming less of a secret is that hospitals charge health plans anywhere from 2 to 5 times more for hospital services than they charge Medicare.

Health Insurance Multiple Choice Question

Per the WSJ article,  a “major driver of employer premium growth over the years has been the prices that insurers and employers pay for health care”.

For several years now, and possibly even more so today, the increasing prices for hospital-related services and hospital stays have been the major cost driver of insurance premiums for private insurance coverage.  The prime drivers for the hospital price hikes include hospital pricing for emergency-room visits, surgical hospital admissions and administered drugs.

Hospital pricing is especially crazy.  This is particularly true as it relates to the health plans that employers provide to the approximately 150+ million Americans that rely on employer-sponsored health plan coverage.    The dirty little secret that’s fast becoming less of a secret is that hospitals charge health plans anywhere from 2 to 5 times more for hospital services than they charge Medicare.

We’ll be reporting more about this conundrum that is hospital pricing and what’s being done to combat or rein in the crazy pricing in upcoming posts.  

$19,616.

Coupons for Prescription Drugs: The Good, The Bad and The Ugly

Drug Coupons Explained

We encourage and help anyone we can to obtain a coupon for their prescriptions.. We know, however, that there are emerging issues with them.

Some background 

Drug manufacturers have some amazing but expensive medications. They have created coupon programs that help the consumer pay for the prescriptions up until that consumer reaches their insurance company deductible (most coupon programs require the consumer has insurance).

For the consumer, that appears to be fine.  That is the good.

Once the member meets their deductible (even though they may not have actually paid that full amount, due to the coupon), the insurance company is hit with the cost.  For the remainder of the year the carrier is paying the full cost on refills for that prescription.  That is the bad (at least for the insurance company).

The battle between the manufacturer and insurance company is now heating up. The manufacturer wants to let the consumer off the hook for the cost (so they will use their product) but wants to get to the carrier reimbursement portion. Some insurance carriers have concluded that since the consumer did not actually pay for the prescription, deductible credit should only be given for what the consumer actually paid. We assume more carriers will follow suit.

We are beginning to see the consumer caught in the middle. The manufacturers do not want to keep filling the prescriptions for free.  If they see that the member was not given deductible credit from the insurance carrier, the member is then billed for the full cost.  The consumer assumes the coupon will work and does not find out it was rejected until after the prescription has been filled. The consumer then gets billed.  And, that is the ugly.

We at BBG still see the coupon option to be worth researching and using.  However, we are urging our clients’ employees and dependents to research this and reach out to us for help. We know a lot about these options and are learning how get ahead of being blindsided.

Association Health Plans: No Clear Picture Yet of What Will Emerge Out of the New Regs

On June 19th the Department of Labor released final regs that offer new options for associations to sponsor health plans for their members.  There’s no clear picture yet of what will emerge out of the new “Association Health Plan” (AHP) regs and how the new regs will impact health coverage options for small businesses.  Here are a few of the highlights from what we know so far about the status and the market implications of the new AHP regs:

  • Association plans will be treated as large employer plans.  This frees them from some of the ACA provisions (i.e. Essential Health Benefits or EHB’s) that apply to small group and individual plans.  AHP’s are still required to comply with the ACA and ERISA rules that apply to large employer plans (e.g. ACA – deductible/out of pocket, preventive care, annual and lifetime limits, minimum actuarial value, etc; ERISA – Cobra).  And, fully insured plans must also comply with state mandated rules that apply.
  • A major piece of the new AHP regs is that Individual states are maintaining their existing authority (as established under ERISA) and will continue to regulate AHPs as they currently do. This is expected to make multiple state AHP’s difficult to establish.  AHPs will have to comply with the rules in the state where the employee is located regardless of where the policy originates.
  • In general, states are being very deliberate in reviewing the new regs and appear to be slow-walking how they will respond to and assimilate these recent changes.  Adding to the crawl is the fact that twelve (12) states have responded by filing suit and legally challenging the law.
  • Also, from what we hear, there hasn’t been much reaction, interest or enthusiasm to jump in on the part of the established insurance carriers.

We’ll continue to monitor and report back with any significant developments.  For those interested in peeling back the onion on the new regs, healthcare attorney Larry Grudzien has an informative webinar posted on his website that does a good job of diving into the details.

 

Part 2 of Highlights from Atul Gawande Interview, Head of the New ABJ (Amazon/Berkshire/JP Morgan Chase) Healthcare Endeavor

(Note: Yesterday in Part 1 we highlighted Gawande’s view of the three big systemic problems with healthcare.  Today in Part 2 we’ll summarize his vision for the ABJ-HCE.)

Last week Amazon/Berkshire/JP Morgan Chase announced the appointment of renowned author, surgeon, and researcher Atul Gawande to head up their ambitious new healthcare endeavor (still unnamed, we’ll refer to it as ABJ-HCE for now). In a long form interview at the Aspen Ideas Festival Gawande expounded on his view of the problem facing the U.S. healthcare system and his thoughts on what the ABJ-HCE can do to make the whole system work better.

(So, Atul, what’s really up with your new gig dude?) 

Here are few of Gawande’s thoughts on what he’s been charged to do, some of the resources he has to work with, and then his big picture leap.

First, in separate conversations with each, Messers Bezos, Buffett, and Dimon were very clear and very consistent about the three things they want Gawande to accomplish:

  1. Improve Patient Outcomes. Improve Patient Satisfaction.  And, Improve Cost Efficiency.
  2. Create Scalable Models That Can Benefit All. (“what they discover has to be open to everybody”)
  3. Gear It to a Long-Term Horizon (He went on to say “part of our problem in healthcare is short-term ism.)

On the resources he has to work with:

  • Resources won’t be a problem. Human behavior will be.  Achieving scale will be.”
  • ABJ-HCE will be an independent non-profit entity. No money will go back to Amazon, Berkshire, or JP.  He reiterated that the only goal will be to improve, scale, and do it for the long haul.
  • 1.2 million employees (plus dependents) representing a broad spectrum of people (fulfillment centers (Amazon), traditional and established industries (Berkshire), financial services (JP), geographically dispersed (many locations across the country)
  • Interestingly, he mentioned that most of the people ABJ-HCE will be serving fall into the gap between Medicare and Medicaid. While these folks are not covered by either, Gawande said they are the ones paying the taxes to enable and that Medicaid is better coverage – no copays , no deductibles, no premium — than the ABJ-HCE employees could ever get.

So, netting it all out — it sounds like he has a boatload of financial resources, a critical mass of covered lives, a cross section of people that are geographically dispersed, under a not-for-profit operating mode and a long-term horizon.

And, he must deliver better outcomes, greater patient satisfaction, significantly reduce financial waste in the system, create scalable new models for better healthcare delivery (right care, right time, right way, right cost) and can then be shared with all.

In a future post, we’ll summarize the potpourri of other interesting and compelling Gawande related thoughts including the what, the why, and the how (with the help of changes in public policy) we get to a “consistent system where every human being has a regular source of care for most of their healthcare needs”.

Highlights from Wide-Ranging Interview with Atul Gawande, Head of the New ABJ (Amazon/Berkshire/JP Morgan Chase) Healthcare Endeavor, Provides Glimpse of Vision and What They Hope to Accomplish

(Note: In keeping with our 2 Minute Drill mantra, we’ve broken this into two parts. Today in Part 1 we’ll highlight Gawande’s view of the three big systemic problems with healthcare. Tomorrow in Part 2 we’ll summarize his vision for the ABJ-HCE.)

Last week Amazon/Berkshire/JP Morgan Chase announced the appointment of renowned author, surgeon, and researcher Atul Gawande to head up their ambitious new “Amazon/Berkshire/JP Morgan Chase healthcare endeavor” (still unnamed, we’ll refer to it as ABJ-HCE for now). In a long form interview at the Aspen Ideas Festival Gawande expounded on his view of the problem facing the U.S. healthcare system and his thoughts on what the ABJ-HCE can do to make the whole system work better.

Here are few of Gawande’s thoughts that struck me as I watched the interview:

  • While healthcare comprises 18% of the U.S. economy, 30% of those expenditures are of no benefit to the patient.
  • The three biggest sources of waste are:
    • Very high administrative costs. He said there are a lot of “middlemen” in the system some of which must be taken out of the system to simplify the equation.
    • Pricing (I think he’s referencing the price of healthcare services and the method of paying providers for the services)
    • Mis-utilization of treatment. This is identified as by far the biggest of the three buckets. He defined mis-utilization as the wrong care, delivered at the wrong time, and in the wrong way.
  • On the reality of our healthcare system:
    • It was built in the 1940’s and 1950’s when there were only a handful of treatments.
    • Then: A system where the clinician could be expected to do it all – administer the right medicine and treatment. Add in some staff and a place for the patient to recover otherwise leave the clinician alone to do it all.
    • Now: We’ve discovered in the last century that the number of illnesses we can have and the number of ways the human body can fail exceeds 70,000 (covering 13 organ systems).
    • And, in the last fifty years we’ve generated 4,000 new surgical procedures and 6,000 new drugs.
    • Yet, we’re still deploying all these new discoveries and capabilities on a 40’s and 50’s system where the clinician will take care of it.

Gwande points to a broken system. Healthcare is now so complex “that everybody involved feels it’s out of their control – payors, patients, and providers — with no real influence over the end results. “Obamacare is on life support” and “even though I’m going to work for a bunch of employers, employer-based care is broken”.

Tomorrow in Part 2, Gawande on what’s needed, what ABJ-HCE brings to the table, and achieving his goal for the endeavor:  “Scalable solutions for better healthcare delivery everywhere”.

About High Deductible Health Plans — Say It Ain’t Always So Joe!

Great friend, colleague, and highly respected industry consultant Joe Paduda writes today in his widely read Manage Care Matters column about the possible cost and claim shifting implications of uninsured and underinsured workers. In it he makes specific reference to HDHP’s.  Among the points Joe makes about ‘High’ deductible health plans are the following:

“44% of working-age adults were covered by high-deductible plans – but more than half of them don’t have health savings accounts needed to fund those high deductibles.”

“ ‘High’ deductible health plans aren’t much different than no insurance at all if the patient can’t afford the deductible – and over half can’t. So, more incentive to cost- and claim-shift.”

I have great respect for Joe and his point of view. He’s as smart as they come, his points are always thoughtful, well-supported by research, and totally authentic (well maybe except for April 1 every year).

However, when it comes to high deductible plans I’d like to remind Joe and others — let’s not throw the baby out with the bath water. There are some innovative and practical uses of HDHP’s to lower costs and deliver better coverage that are most times overlooked by the national stats, commentators and think tanks.

As famed radio commentator the late Paul Harvey used to always say “And now for the rest of the story”.

The “rest of the story” is this: HDHP plans can be and are often used, at least in our little slice of the healthcare world, by savvy and practical employers to lower costs while still providing strong benefits. There’s a core of strong employers out there — many that we are very grateful to count as clients — that are utilizing high deductible plans in combination with reimbursement plans like our own SharedFunding  to reduce costs AND provide better coverage to their employees.

Comments like these from a recent conversation among a group of CEO’s speaking to a fellow CEO about SharedFunding are not unusual:

“Helped us tremendously with health costs.”

“We have had zero increases in premiums in the last 4 years.”

“We hired them last year (our year 1) to replicate the comprehensive plan most of our employees had……….. They did it – even using same insurer.”

“Here’s the key – they contract a very high deductible plan (like $11,000 for a family), and then manage all claims & reimbursements. All the paperwork flows through them. Our employees have much lower deductibles and copays they have to meet….”

Just sayin’.

Have a great Memorial Day Weekend.

Deja Vu: CMS extends Transitional Relief Plans (pre-ACA) Through 2019

The Centers for Medicare and Medicaid (CMS) recently announced that employers in the small group market that are currently still enrolled in Transitional Relief Plans (also known alternatively as Keep Your Plan, Grandmothered Plan, Pre-ACA Plan, etc.,) may keep their existing policies and plans for another year.  

CMS stipulates that ultimately granting the extension is left to the discretion of state regulators and to the respective participating insurance carriers. Most — if not all – states and carriers are expected to grant the extensions and allow employers to keep the Transitional Relief Plans in place for another year.

The CMS announcement also noted that the Transitional Relief Plans will not be considered out of compliance.

This extension, first granted in 2014 and granted every year since, runs through December 31, 2019.

We’ll be following this closely with the insurance carriers and will keep all of our clients who currently have Transitional Relief Plans informed.

For more info click on the link below:

CMS_Extension-Transitional-Policy-Through-CY2019

As Expected, States Will Have More Control and Greater Flexibility in Regulating Obamacare Starting in 2019

In a CMS press release the Trump Administration announced yesterday, as expected, that beginning in 2019 individual states will have more control and greater flexibility in regulating the individual health insurance market and the Obamacare Marketplace (aka the Exchange). In a summary of the “final 2019 Payment Notice Rule” CMS highlighted provisions that were intended to increase flexibility, improve affordability, and decrease administrative burdens.

 

It’s likely that changes made at the individual state level will ultimately have some impact either directly or indirectly on employer sponsored health coverage, particularly the small group market. We will be monitoring this very closely for our clients and will report back, especially as we get closer to 2019 and more information becomes available.

In the meantime, here’s a sampling of the headlines and links to the respective articles following yesterday’s announcement by CMS:

Here’s a link to the CMS press release:

 

Facebook Iconfacebook like buttonTwitter Icontwitter follow buttonVisit Our LinkedIN Profile