“We can’t continue to choose “none of the above” – that’s not a plan. It’s a $3 trillion copout.”
William G. (Bill) Stuart
Director of Strategy and Compliance
February 1, 2018
Your high school English teacher probably told you that there’s no difference between those who can’t read and those who don’t. And he or she (thank you, Miss Hubbard!) is right. Those of us in the medical insurance/employee benefits industry know that without constantly reading and re-educating ourselves, we’ll quickly become obsolete in an ever-changing market.
I read a number of books last year, both for fun and professional development. And I’m an avid listener of audiobooks, as I (like many readers) spend more time in my car than college students spend in class. Of the volumes that I’ve read, four stand out. Each book has either challenged my assumptions, strengthened my beliefs or forced me to confront and process new information or points of view. These books are to my mind what my BodyPump class is to my biceps and abs.
Which books have influenced you most recently? I look forward to you sharing your thoughts.
You won’t find the town of Xalisco, located in the Nayarit state in western Mexico, on a typical tour itinerary. Yet this town of less than 25,000 has a disproportionate impact on life in the United States as it harvests poppy crops and ships black tar heroin (along with young men who distribute it through cells in major and secondary US cities) north in staggering quantities.
If you haven’t read Dreamland, a book published in 2015 that focuses on the opioid crisis in the US, you don’t really begin to understand the full dimension of the problem. In what one reviewer calls a “fascinating, disturbing and important book,” author Sam Quinones weaves together a compelling narrative that involves a Rust Bent city where one unscrupulous physician’s pain-management clinic spawned a county of opium addicts and created a distribution model as efficient as McDonald’s that franchisees and imitators successfully followed: An organized, nimble distribution network staffed by residents of one Mexican town (Xalisco), who blend into US cities and created an efficient distribution that would make most major corporations proud. Parents who went broke trying to get their kids off the stuff and other parents with the courage to break the silence about their children’s overdose deaths, and the district attorneys, police officers and activists who tried to stop the trafficking, only to see arrests create a void in the distribution system that typically was filled within 24 hours.
Quinones focuses on a number of people who are key players in the story, but it’s not a biography or linear account of individuals’ spirals into addiction. Rather, he presents a fast-moving narrative that explores the depth of the opioid trade in cities ranging from Salt Lake City, Las Vegas and Albuquerque to Columbus, Nashville, New Orleans and as far north as Weymouth, Mass. He traces the drug market’s migration from OxyContin prescriptions to black tar heroin and the devastating effect that readily available quantities of low-cost heroin had on patients who could no longer secure prescriptions for (or no longer bear the cost of) legal opioids. And he discusses how Medicaid, notably the Medicaid expansion under the Affordable Care Act, aided and abetted this drug trafficking by putting high doses into the pockets of patients for little or no cost, allowing them to sell pills on the black market at exorbitant mark-ups either themselves or through organized middlemen.
For an NPR interview with Quinones about the book, click here.
To order a copy of the book, click here.
Employee Benefits and the New Health Care Landscape: How Private Exchanges are Bringing Choice and Consumerism to America’s Workforce
Author Alan Cohen is a founder of Liazon, a pioneer in delivering an online shopping experience for benefits. Full disclosure: I worked with the author and with his Liazon team extensively during the first two years that Harvard Pilgrim, then my employer, offered products on Liazon’s Bright Choices exchange. I’ve listened to his insights and read his white papers and analyses for years and have come to regard him as one of the true pioneers in a strategy that revolutionizes the benefits shopping experience by delivering individual advice and optimal customized benefits solutions to employees.
Employers give their employees a defined contribution called a wage every pay period. Employees then use this money to purchase their own housing, food, transportation, clothing and leisure, fund their priorities (including retirement and children’s education) and pay for most forms of financial protection. This approach makes sense, since every employee has a different family situation, a different set of priorities and a different view of spending money now vs. investing for future consumption and different risk tolerances.
Why, then, do employers assume the responsibility of choosing one or two or three medical plans for their employees and incent them to choose one of these plans by withholding a portion of their income as an employer contribution to employer-sponsored medical insurance? This concept makes no sense to Cohen, the chief strategy officer with Liazon, which is now a part of Willis TowersWatson.
A private online marketplace offers employers financial certainty and employees broader choice. Employer’s typically provide a defined contribution, or set amount of money (often varying the figure to reflect family size) that they commit to helping employees manage their unique financial risks. Employers contract with an online marketplace (like Liazon’s Bright Choices) to provide employees with typically six to 10 medical plan choices, multiple dental options and other standard (vision coverage; disability and life insurance; accident, hospitalization and critical-illness protection) and not-so-standard (pet insurance, prepaid legal, identity protection) products to help each employee manage the risk that she and her family face.
The online marketplace adds value by offering a decision-support tool to help employees look at open enrollment not merely as an opportunity to renew benefits, but rather to survey all potential risks that they face. The tool, populated by employees’ answers to some standard questions, guides each user to a unique set of recommended products. The online marketplace brings a spouse into the open-enrollment process, allows employees to learn when it’s convenient for them (online videos and plan documents available on-demand) and provides one-stop shopping for information throughout the benefit year.
So, why aren’t more employers moving toward an Amazon experience for their employees? You’ll have to read the book to find out. Spoiler alert: There is a huge disconnect between how employers view the current cost and distribution of medical coverage and what steps they’re actually willing to explore to manage this growing cost center.
In addition to the book, you can read Cohen’s thoughts on how brokers are more important than ever in the private marketplace and pore over this interview in The New York Times at the dawn of ACA marketplaces. You can order his book here.
An American Sickness: How Healthcare Became Big Business and How You Can Take It Back
Have you ever seen blood boil? If not, read Elisabeth Rosenthal’s book in front of a mirror!
The Harvard-trained physician has been following and writing about medical issues for more than two decades, first as a reporter, correspondent and senior writer at The New York Times and now as editor-in-chief of Kaiser Health News. She breaks down the medical delivery system by examining the history and tactics of the key players, from insurance companies, physicians and hospitals to pharmaceutical manufacturers, medical-device makers and testing and ancillary service providers. She examines the transformation of medical delivery from a series of unconnected players motivated primarily by altruism (including the many not-for-profit hospitals and community health centers) to the growth of for-profit market participants and the conglomerates that they formed as the industry shifted toward profit maximization.
Rosenthal portrays all these players as very logical rent-seekers. They’ve learned how to play the game within the rules. The American Medical Association, once described by economist Milton Friedman as the nation’s most powerful trade union, limits competition through state laws that prohibit nurse practitioners from independent practice not supervised by a physician and fighting the introduction of telemedicine, while simultaneously fighting for the right to use “physician extenders” (physician assistants, nurse anesthetists) so that they can bill at their contracted rates for four or five simultaneous patient encounters.
Pharmaceutical companies that had to keep prices affordable for drugs that senior citizens use disproportionately (rheumatoid arthritis, cholesterol, blood pressure) suddenly had an opportunity to raise prices substantially with the passage of Medicare Part D, which removed patients from direct responsibility for much of the cost of their drugs.
And hospital systems merged to increase their negotiating power, then introduced electronic medical records that defaulted any ancillary services (like imaging and lab work) to their facilities. Freestanding competitors with much lower cost structures suffered from this arrangement, a perversion of typical economic markets in which low-cost sellers are rewarded with additional business.
Rosenthal humanizes the narrative with example after example of real people caught in the middle. The doctor who sells his practice to the local hospital, then recoils when he finds that his patients can’t afford the tripling of his fees overnight; the patient who needs surgery for a spinal condition, but her very specialized surgeon isn’t in her new insurer’s network and won’t accept the new insurer’s offer of $56,000 reimbursement for a procedure for which the surgeon’s listed price is in excess of $130,000; the parsimonious appliance store owner who bequeathed $40 million to his community hospital to assist patients who couldn’t otherwise afford care and died before the hospital was bought by a for-profit conglomerate that kept the bequest when it sold the facility to a second for-profit hospital company.
Rosenthal devotes the final one-third of her book to solutions. She provides patients with practical lists of questions to ask before they see a physician, agree to a course of treatment or commit to a facility. She also outlines public-policy options to restore balance and curb the most egregious rent-seeking activity in the medical delivery and payment systems. You can feel free to agree or disagree with her solutions, but you need to understand and think about them.
Key thought about future reform: “We can’t continue to choose “none of the above”, that’s not a plan. It’s a $3 trillion copout.”
CEO’s Guide to Restoring the American Dream: How to Deliver World Class Health Care to Your Employees at Half the Cost
Dave Chase is out to revolutionize the way you think about delivering and financing medical care.
I read this book shortly before I had the discussion with a Midwest-based benefits advisor that I described in this blog; that conversation highlighted some of the differences between traditional and Chase-inspired thinking about self-insurance.
America Has Gone to War for Far Less is the opening chapter in this book. Does that give you an idea of the reading experience that awaits you?
Or how about Chapter 5, 7 Tricks Used to Redistribute Profits From Your Organization to the Health Care Industry. (“Trick #7: Suppressing Quality and Safety Data , “Not only is it statistically safer to be in an airplane than a hospital, it’s also statistically far safer to deliberately jump out of that plane [skydiving] than to be in a hospital.”)
Or Chapter 9, which is the crux of Chase’s work, “You Run a Health Care Business Whether You Like It or Not.
Chase is CEO and founder of The Health Rosetta, a company organized to show employers how to reduce, yes, not just minimize increases, but actually reduce, medical spending and then delivers the integrated solution to achieve this remarkable result.
Most employees and benefits advisors haven’t begun to harness the power of self-insuring their medical benefits. While these players celebrate when they negotiate an additional 2% discount with their incumbent insurer or switch insurers who offer a 5% discount off list price, savvy benefits advisors are steering their clients to an entirely different model of care. In their world, self-insurance isn’t about avoiding a mandate, negotiating a slightly larger discount or even eliminating the “fudge factor” that insurers include in an insured quote to cover them if the group’s claims experience in a given year is higher than projected.
Chase and his guest authors/acolytes describe a very different approach to coverage. In a dynamic self-insured program, employers direct their employees to the providers who deliver the best outcomes per dollar of investment. These plans often use reference pricing, which limits reimbursement to the value of the service itself regardless of the location of service. This simile mechanism ensures that employers (and other employees covered by the plan) don’t bear the burden of employees’ choosing high-cost providers who don’t deliver superior quality.
Self-insured plans still reimburse all medically-necessary care, but employees and their dependents might visit Health City and the Cayman Islands (superior results at a fraction of the cost of similar services domestically) or a domestic center of excellence like the Cleveland Clinic for cardiac care. They may participate in a virtual visit with a specialist at Mayo Clinic to receive a second opinion before undergoing a procedure (an important step that changes the treatment plan more than two-thirds of the time). Their drugs may be sourced from a trusted foreign source in England, Australia or New Zealand that offers the same prescription medication at a fraction of the cost of an American drug.
Many of these plans also encourage direct primary care. In this model, a form of value-based primary care, patients pay a fixed monthly fee to a primary-care physician. In exchange, the physician offers consultations (extended office visits, virtual visits, e-mail exchanges), often provides immediate access to other providers (like behavioral health clinicians, nutritionists, drug counselors and clinical social workers) who can treat the patient holistically and helps patients navigate the medical-delivery maze. No longer constrained by insurer’s paperwork or reimbursement schedules that encourage a higher volume of shorter patient visits, physicians are free to deliver optimal care customized to each patient.
Do you see the mind-set shift? Employers and benefits advisors who have adopted this approach aren’t accepting the status quo and then negotiation a few percentage points off their costs. They’re literally rebuilding their coverage, focusing on cost and quality. They’re resetting their baselines, often reducing costs by 20% or more in the first year, and often reducing costs of holding even three and four years after introduction.
Chase and his guest writers advise readers on how to choose the right benefits advisor to implement this program; how to encourage and incent patients to use transparency tools; how to design a network of providers that maximizes the cost. Quality ratio; how and when to offer onsite clinics; why an independent claims processor offers advantages that a traditional insurer doesn’t; how fiduciary responsibility shifts with an independent administrator vs. a traditional insurer on a self-insured funding arrangement and much, much more.
Most memorable quote, addressing some benefits advisors’ and insurers’ focus on evaluating their negotiated discounts as a percentage of the retail price: “I’ll give you a 99 percent discount on anything if I get to choose the undiscounted price.”
And best of all you can receive an electronic copy of the book at no cost. Think of it as a preventive service, preventing your client or your business from developing (or curtailing the magnitude of) severe illness associated with the cost of medical care; that’s covered at no patient cost at the time of service. Hey, I like that concept, diagnosis and a treatment plan delivered without direct cost to the patient.