Tag Archives: direct primary care

Health Insurance: Near-Record Panic?

I’ve been caught a little off guard recently. I am seeing a level of panic in the industry that I don’t think I’ve seen since Parker Conrad was threatening to drink the industry’s milkshake.

Chances are, you have been reading about the exciting trend taking root in the industry. Advisers are reengineering how they build medical plans for their clients. Direct primary care (DPC), bundled services and transparent pharmacy are just a few of the ideas strategies being put into place.

The result? Advisers now have a way to improve the level of benefits their clients receive while actually, and significantly, reducing the overall cost. That’s freakin’ awesome!!

Putting on a brave face

As awesome as I think most of us can agree this trend is for the industry and employers/employees, I can’t tell you how many times I’ve had verge-of-breakdown conversations with very sophisticated advisers. Many of you are convinced you are the last in the industry to be learning these approaches.

You are reading about the success stories of other advisers online and hearing about their implementation victories from the stages of conferences. Many of you have drawn the conclusion that the rest of the industry is putting every one of these solutions in place for every client they have.

Friends, the reality could not be further from the truth!!!

First, it’s only a very small part of the industry that is even aware of these new solutions. Trust me, we talk to agencies big and small that are sometimes not even aware of these trends, let alone putting them in place.

Second, a significant percentage of the ones talking about the solutions are talking a big game but have yet to take the first step of any meaningful walk.

Third, even the most advanced advisers are only putting these strategies together for a relatively small portion of their book. (I’m sure there are exceptions. If that’s you, congratulations; you are a pink unicorn.)

Now, don’t get me wrong, I am not saying you shouldn’t make learning these strategies a priority. Maintain a sense of urgency, but take a deep breath, relax a bit and lay out an overall strategy as to how you will position yourself to use these ideas most effectively.

But make a conscious decision to move forward with a realistic sense of the effort actually required. Way too many talking a big game have yet to figure this out for themselves.

See also: How Likely Is Zenefits to Change? 

The unintended consequence?

Too many advisers see the new trend as a silver bullet that will separate them from their competitors and drive growth. Those who try to hunt with a silver bullet are destined to shoot themselves in the foot.

As much as advisers need to be arming themselves with this new strategy, there are a few things you need to remember.

  1. Not every client or market is ready for these strategies.
  2. No one solution satisfies all the HR/benefit needs of a client.
  3. You (still) have to ensure that the foundation of your agency is strong.

Are clients really ready?

Many of these new strategies are dependent on moving clients to a partially self-insured program. Of course, this idea isn’t new at all, and you likely already know it can take a long time to get a prospect/client comfortable with this idea. And, that’s okay, educating them to the point of comfort/confidence with this idea is a critical part of your job.

But, if this is a prospect you’re talking to and you are depending on this as your single strategy to earn their business, it’s going to take a while to uncheck the Prospect box and check the New Client box.

Of course, these ideas aren’t just about moving to self-insured; there is additional education to take place as to how direct primary care, bundled services and transparent pharmacy can be managed effectively and successfully. The thing is, even once they understand, some employers just don’t want to be that involved in the management of their benefits program.

Right or wrong, some will only want a plug-and-play program regardless of how tilted that game is against them. That’s just the reality, regardless of how much you may want to help them make the change. And then it’s up to you to decide if you’re going to help them in their fully insured program or walk away. But, if you choose to walk away at this point, you’re missing out on a lot of opportunities – opportunities to still help and opportunities to grow your business.

Finally, some markets just aren’t ready to allow these solutions to be implemented. If you believe, as I do, that a strong network of direct primary care (DPC) physicians is a key to this new direction, you also understand that the framework/infrastructure of those DPC practices doesn’t yet exist and will take a while to build.

Live by a single solution, die by a single solution

I have watched many times as this industry gets giddy with excitement over a solution being introduced to the market; this isn’t the first silver bullet for the industry. It’s happened with technology solutions, compliance solutions, HR resources. The list is long.

If you put all of your chips on any single solution, no matter how important it might be, you’ll eventually lose.

As an adviser, you will never be differentiated by the solutions you offer. Your greatest chance for sustainable and meaningful differentiation is in how you use those solutions. Even if you are the first to market with a solution, the advantage will be short-lived. Every viable competitor will soon be promoting the same solution.

Besides, your clients need WAY more than any single solution. It is more difficult to run a business today than ever before, and your clients need guidance in ways they never have before.

I wouldn’t criticize anyone for a moment leading with new strategies and solutions, but I strongly advise that you better be plugging any solution you offer into a value proposition that addresses the broader needs of your prospects and clients. Face the obvious: Just because you have a powerful strategy to control healthcare doesn’t diminish your clients’ needs for help with compliance, technology and HR, to name a few.

And, with more complex solutions being put in place, the need for compliance and an effective employee communication strategy has never been greater.

If you’re going to try to live on a single idea, just know it will only work until one of the following inevitably happens:

  • You run into prospects/clients/market that just aren’t ready;
  • Every competitor arms itself with the same idea;
  • Competitors show up with the same idea and have built it into a broader platform of solutions (again, compliance, technology, etc.).

See also: Zenefits’ Troubles Don’t Let Brokers Off

Are YOU really ready?

When your value proposition and solutions become more complex, it is more important than ever to ensure that the foundation of the agency is strong enough to support it. Here are a few areas you need to evaluate to determine if you can really support these new solutions/strategies:

Sales Process — One of the things that concerns me about these new solutions/strategies is that advisers will simply see them as another insurance solution and feel the right time to talk about them is at renewal. Now more than ever, it is critical to be meeting with buyers off renewal to prepare them for the ideas and strategies you can bring at renewal. And, with off-renewal conversations, having a structured sales process in place is an absolute requirement.

And, no, going out to get quotes is not an effective process. You have to have a process that allows you to help the buyer effectively evaluate the insurance and non-insurance parts of the business to determine what is working and what isn’t working and create an overall plan of improvement.

Marketing — But, for that sales process to be effective, you have to have an effective marketing strategy in place. These ideas need to be featured on your website. You need to be writing about them regularly in your blog. You need to be out on social media sharing these ideas and participating in conversations. You have to integrate these ideas into your automated marketing campaigns.

Team education/training — You must have a plan for how are you going to educate your team to sell and service these more complex solutions. You must develop more effective team structures/processes to ensure your sales and service teams work together effectively enough to sell/service these programs.

Compensation — Because these new strategies are outside the traditional insurance products with attached commissions, you have to be comfortable with charging fees, discussing how much you need to get paid and articulating what you do in return for that compensation. I know this is pretty scary for many of you.

Take a deep breath

The world of employee benefits is going through one of those transformational eras that redefines an industry.

  • Yes, it’s a bit scary
  • No, not all of the answers are clear
  • Yes, it’s a lot of freakin’ hard work
  • No, doing more of what you’ve always done isn’t the answer
  • Yes, you are going to have to reengineer your agency
  • No, not everyone is going to survive

Don’t curse these facts, celebrate them. Celebrate because very few of your competitors have the courage, curiosity, work ethic, creativity, grit or resilience it will take.

Those of you who emerge on the other side will find there has NEVER been a more exciting or rewarding time to be in this industry. The destination is exciting, but let’s not forget to enjoy the journey.

Finally, don’t make your journey any more difficult than it needs to be. There are many groups out there working together to help one another learn these ideas and put them into practice. My advice is to find a group that fits with your style and get started sooner rather than later. Your success, and that of your clients, may very well depend on it.

This article originally appeared on Q4intel.com.

Consumer-Friendly Healthcare Model

Best-selling Author Og Mandino once said:  “Always seek out the seed of triumph in every adversity.”

It appears that a small, yet growing number of America’s front line health providers are doing just that. Instead taking on increased risk, greater healthcare bureaucracy and more administration headaches, these medical mavericks have drawn a philosophical line in the sand.

I’m speaking of direct primary care (DPC). For the uninitiated, DPC is an emerging model where general practitioners elect to disassociate from, and no longer bill services to, health payers, including Medicare. DPC practices average between 600 and 800 total patients (vs. the national 2,300-patient average for traditional primary care provider (PCP) patient panels).

This return to front-line doctoring — “sans insurance” — translates into a cost-reduction of as much as 40% in staffing and reduced administrative complexity. Electronic health records (EHR) software finds itself replaced with lighter applications to track, schedule and bill patients. Practices may also choose to use mhealth/telehealth technology to monitor/connect with patients.

Patients in these practices are often those with low to middle incomes, with high-deductible health plans (HDHPs). For this reason, DPC doctors develop network relationships with other local medical specialists and services. The result is patients gaining access to discounted medications, imaging and labs, plus lower service fees from local specialists — all on a cash basis.

And presto! We have a true two-party care relationship, where doctors focus purely on patients, instead of blending in payers as their second healthcare customer.

The median monthly DPC fee for an adult is about $70; and fees for kids are priced between $10 and $20 per child. Many DPC practices also cap monthly family fees. Pricing is independent of pre-existing conditions and current health status and allows for more face-to-face time, as often as needed.

These practices report reducing urgent care and ER visits, plus hospital admits and re-admits. Quality and outcome data has apparently started reaching malpractice insurers, now quoting lower rates for direct vs. traditional primary care practices.

Here is where it gets sticky. DPC is rightly considered a “health service,” both by the Affordable Care Act (ACA) and by 16 states. However, under section 223(c) of the U.S. tax code, the I.R.S. wrongly considers DPC a “gap,” or secondary, health plan. Therefore, DPC is not a qualified medical expense — and fees paid by patients are not reimbursable by health savings accounts (HSAs).

Changes are in the works, per the introduction of Senate Bill 1989 – The Primary Care Enhancement Act of 2015, which would make DPC fees a part of HSAs. The bill, with strong support from the American Academy of Family Physicians, also seeks to require the Center for Medicare and Medicaid Innovation (CMMI) to create a new payment pathway for DPC as an alternative payment model (APM) in Medicare and with dual eligibles.

The plan is for DPC to show Medicare its mettle — and eventually receive a modest flat fee payment for primary care services offered by a DPC medical home. The legislation includes allowing qualified physicians who have opted out of Medicare to participate in the program. It also serves as a partnering catalyst with Medicare Advantage, in an affordable care organization (ACO)-like structure.

DPC is a disruptive “hot knife” model, whose entry is well-timed to cut through the cold stick of butter called high health costs.

Today, PCP co-pays have gone up to $45, and deductibles are sky high. Many consumers have no idea that at or around the same per-visit patient fee, DPC exists as an option. Employers are just beginning, on a larger scale, to integrate DPC with other options such as HDHPs and self-insured health coverage. Using this new model with self-insured companies makes sense, to hedge risk, lower health costs, improve outcomes and improve quality of care.

One county in North Carolina, which employed a DPC option, saved nearly $1.5 million on yearly medical expenses — on just 800 covered lives! It may surprise you that, apart from HSA standing, there are already early employer adopters who have chosen to pay the monthly DPC fees for employees themselves.

A British Medical Journal study showed patients of Washington state DPC provider Qliance coming in with 35% fewer hospitalizations, 65% fewer emergency department visits, 66% fewer specialist visits and 82% fewer surgeries. DPC benefits appear to not only reduce primary care costs, but lessen the healthcare costs and utilization outside of their practices.

Payer transparency is a significantly important strategy to the future growth and integration of DPC.

We talk about the importance of transparency in hospital pricing to patients, and for drug companies to reveal their true R&D costs. But have you ever stopped to consider the importance of transparency in how payers calculate and price plan premiums for each covered member? Just how much of the premium payment can be carved out as estimated primary care services to be received?

More than ever, healthcare consumer groups and fully insured employers should push health payers for transparency. Because I’ll bet what payers have estimated for per-person primary care usage and costs, adding in the associated patient responsibility portions (co-pays, and any applicable deductible or co-insurance fees) will be much more than an $840 yearly DPC payment.

But wait…there’s more. Don’t forget to have payers deduct an additional…let’s be conservative…1/3 of the Qliance savings percentages for the estimated care cost savings relating to carved-out estimated care outside of primary services.

Next, look at Medicare and do the same thing. But…instead of the wallets of health plan members, think federal budgets, taxpayers, subsidies, growing liabilities and the potential to hold off future tax increases.

Then look at Medicaid for the same reasons, remembering that DPC would certainly create a greater improvement of care quality than Medicaid care providers and facilities. Remember the “triple aim” — cost, outcomes and quality — and that doctors are happier.

DPC injects disruption and greater consumerism into healthcare.

Something interesting happened along the way to transforming our healthcare system. The ACA fell far short of its goals, and America’s care delivery and coverage became even less affordable for millions of employers and individual consumers.

We should know by now that improving quality and pricing for all will not come from laws — specifically, from those who force people into lower-quality Medicaid coverage, and insurance plan exchange options with punishing deductibles; in essence, giving people a broken Christmas toy with a pretty bow on it and pretending they will enjoy it.  

No matter how you dress it up, and much money you throw at it: Healthcare coverage is not the same as affordable healthcare.

In the heart of even the toughest situations, there are innately driven people who make bold, fresh choices and take stands — efforts that emphasize principles we know to be just and right, rather than gaining financially on the backs of others’ misery. My hope resides in what Lincoln called “the better angels of our nature.”

DPC offers a free-market “injection” into healthcare’s regulated pricing model. If Senate Bill 1989 or a similar law passes, it will provide individuals and companies a better chance to gain better quality, more affordable care. Unlike some DPC purists, I see a future inflow of Medicare dollars to non-enrolled DPC qualified providers as stimulating a transformation where coordinated care begins from outside of the umbrella of big medicine ownership.

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Like the plunging penguins who emulate the courageous actions of others, I believe many primary care physicians are looking for the right time to enter a DPC model. Whether that happens individually, through groups, or by strategic partnerships, is up to industry forces. It’s the beauty of filling consumer demand.

Making healthcare services, drugs and coverage affordable to consumers appears completely disconnected from the industry’s mission to improve care quality and outcomes, and lowering health “costs.”

Free market forces are what bring down consumer prices in most every market. Their introduction into U.S. healthcare will likely cause short-term fallout and financial pain within healthcare industries, but it would leave us, and future generations, with a more sustainable, stronger system. We’ve gotten to the point where healthcare bloat and unaffordability will require sacrifice from all involved.

By allowing consumer-friendly models like DPC to enter the regulated world of healthcare, perhaps slowly through the back door, we will see transformation come from within. History has repeatedly shown us that better models fueled by consumer desire rise to the top.

A New Focus for Health Insurance: ‘Negaclaims’

Historically, the “do more, bill more” fee-for-service model of healthcare measured success by increased billings. In the fee-for-value era, we need a new framework for assessing healthcare results. Quality indicators are logical, but they are mostly geared toward measuring actions taken. We can borrow a concept from the energy sector for an additional metric.  We need a concept for removing waste and unnecessary care that could be inspired by a concept from the energy sector described in this blurb from Wikipedia for something called Negawatts.

Negawatt power  is a theoretical unit of power representing an amount of energy (measured in watts) saved. The energy saved is a direct result of energy conservation or increased energy efficiency. The term was coined by the chief scientist of the Rocky Mountain Institute and environmentalist Amory Lovins in 1989, arguing that utility customers don’t want kilowatt-hours of electricity; they want energy services such as hot showers, cold beer, lit rooms, and spinning shafts, which can come more cheaply if electricity is used more efficiently. Lovins felt an international behavioral change was necessary in order to decrease countries’ dependence on excessive amounts of energy. The concept of a negawatt could influence a behavioral change in consumers by encouraging them to think about the energy that they spend.

The healthcare parallel would be a “Negaclaim™” — i.e., an unnecessary claim avoided. This isn’t about simply denying care. Just as consumers aren’t interested in kilowatt hours, patients aren’t interested in claims — they want health restored and diseases prevented, which can be done more efficiently and effectively. When individuals are fully educated on the trade-offs associated with interventions, they generally choose the less invasive approach. A nice byproduct is that the invasive approaches are frequently more costly and medically unnecessary. The following are a few of many examples of how unnecessary care can be eliminated while improving the patient experience:

  • Day-to-day and chronic disease care: One of the key reasons Direct Primary Care (DPC) has proven itself to be the Triple Aim  leader is that a proper primary care relationship involves time spent with patients to explain trade-offs of various medical options.  Without incentives to push for “more,” DPC providers have demonstrated that they can reduce unnecessary utilization by 40-80%. By contrast, “hamster wheel” primary care has effectively turned primary care into 7-minute, drive-by appointments that leave little time to do anything but direct patients toward additional costly items, whether it’s ordering a prescription, test, hospitalization or specialist visit. In many cases, those could be avoided with a robust primary care relationship.
  • High Cost Procedures: Leah Binder wrote about what major employers such as Walmart, Loews, Pepsico and others are doing to reduce risk to their employees while also saving money, in What We Can Learn From Walmart: How Our Healthcare System Can Save Lives and Dollars. Employees found that 40% of the transplants that were recommended by local hospitals were deemed medically unnecessary by top physicians at the Mayo Clinic and other nationally renowned facilities. Employees were thrilled to avoid risky (and expensive) procedures. It also sent a great message to employees that their employer valued them enough to send them to the best medical centers in the world for second opinions.
  • End of Life: Quality of life is affected dramatically by the end-of-life decisions we make. This was outlined in How Not to Die. The system is oriented to do more even if it is at odds with quality of life. Doctors themselves recognize this when they are the patient, as described in Why Doctors Die Differently. While quality of life is the driving factor for patients and families, there is a second-order benefit that the procedures that reduce quality of life are typically very expensive.

The problem in healthcare has been that providers have incentives to do stuff because of the flawed reimbursement models that dominate our present healthcare system. Respected studies such as from the Institute of Medicine demonstrate that there is more than $750 billion in waste. PwC stated that more than half of healthcare spending is waste. Incentives have driven providers to encourage more interventions, and consumers have been led to believe that more is better even though, in many cases, less is more.

That has added a challenge for health insurers. The general perception is that health insurers reflexively deny claims (sometimes getting in trouble for that). This has resulted in health insurers having the lowest Net Promoter Score of any industry. Consumers have clearly decided that health insurers aren’t doing this for consumer benefit. Fair or not, they have concluded it’s simply for the financial health of the insurer. Clearly, health insurers need a different approach if they want to improve their image and the health of their customers while ensuring their financial viability.

One incentive that has changed revolves around the Medical Loss Ratio (see Aetna’s explanation here).  In contrast to “customer service” reps focused on claims, an investment in patient engagement can have the same or greater effect on reducing claims while qualifying as a healthcare expense. Enter patient engagement.

Patient Engagement Is the Blockbuster Drug of the Century
Leonard Kish made the case that if patient engagement was a drug, it would eclipse all blockbuster drugs before it. Kish cited results of studies showing benefit when patients were successfully engaged in their health.

Compared to those not enrolled in the study, coordinated care “patients have an 88 percent reduced risk of dying of a cardiac-related cause when enrolled within 90 days of a heart attack, compared to those not in the program.” And, clinical care teams reduced overall mortality by 76 percent and cardiac mortality by 73 percent.

Rather than reflexively denying claims and building up a mountain of ill will, insurance companies should invest resources in helping their customers get engaged in their health. Their customers would, in effect, “self-deny” their own claims.

Note that when I describe patient engagement, I’m including family members and caregivers. Did you know that families provide care valued at more than $450 billion per year  – more than our total spending on Medicare! Thus, much of what is outlined below speaks to caregivers (particularly with elderly patients), not just the patient. Having more resources/tools as a caregiver would be welcomed, as most of us have no clinical background and are thrown into a caregiving role virtually overnight.

[Disclosure: My patient relationship management company is one of the organizations providing patient engagement tools to healthcare providers, which is why I'm familiar with these examples.]

Just about every myth has been debunked about how patients of all types supposedly won’t get engaged in their health, whether it’s low-income diabetes patients, native American populations or the elderly. However, providers are largely failing in their efforts at engaging patients as they haven’t had the incentives, tools or training.  Provider-patient communications guru Stephen Wilkins points this out clearly in a few pieces.

Despite less than stellar results that Wilkins highlights, the initial attempts by providers at engaging patients are welcomed just as a muddy puddle of water in the Sahara Desert is welcomed. However, much more can be done.

Catalyzing Patient Engagement in Health Plans’ Best Interests
A wave of new requirements and challenges have crashed on top of providers. Insurers could help if they focus in the right areas and are mindful of the challenges. JAMA recently wrote a piece highlighting one facet of patient engagement — shared decision-making (SDM). Physicians aren’t going to magically take on this challenge without a change.

The brevity of visits constrains the opportunities to address these elements of SDM. Furthermore, clinicians are not adequately trained to facilitate SDM, especially eliciting patient values and preferences for treatment.

[Note: Resources to train clinicians on patient engagement are emerging. One would expect that a host of continuing education courses will emerge. One example is HIMSS (the professional association for healthIT), which released a seminal book on patient engagement.]

In the places where providers have successfully achieved the Triple Aim objectives with challenging patient populations, they have had payment aligned with outcomes. Teams were unleashed, led by doctors, to get creative about how to tackle the challenges. While doctors are vital, they use non-physicians for a substantial part of the interaction with patients. It turns out, for example, that doctors and even nurses can be less effective at effecting behavioral change in patients than non-typical care team members. Rather than being relegated to low-level tasks, medical assistants and health coaches play a vital role in the successful models. Once again, while the goal is an improved health outcome, there is a second-order benefit that being more effective lowers costs by avoiding complications, and the medical assistants and health coaches are generally paid less than doctors and nurses. Unfortunately, in a typical fee-for-service reimbursement model, these types of services typically aren’t compensated despite their impressive results.

Dr. Rob Lamberts described this problem in detail in Washington, We Have a Problem. He summarizes the conflict between people’s desires and healthcare’s flawed reimbursement framework.

This is why, I believe, any system that profits more from people with “problems” than those without is destined to collapse. Our system is opposed to the goal of every person I see: to stay healthy and stay on as few drugs, have as few procedures, and avoid as many doctors (and drug companies) as possible.

Health insurers have implicitly viewed their customers as adversaries by creating a claim-denying framework as the default. The smart health plans will figure out how to harness the consumer goals. This isn’t some fanciful dream as it has been demonstrated (profitably, I might add) by the physician-entrepreneur organizations outlined in The Hot Spotters Sequel: Population Health Heroes.

This isn’t about minor tweaks to a fundamentally flawed model. Rather, as one physician-entrepreneur put it, too many models are “putting wings on cars and calling them airplanes.” Rather, it’s supporting proven models where they have rethought care delivery – here’s how one physician-entrepreneur describes rethinking care delivery from the ground up (video).

While financial rewards are important, most physicians are not motivated primarily by money but by autonomy, mastery and purpose. In the successful models, the physician-entrepreneurs created their own autonomy and recognized that the focus of their mastery and purpose had to fundamentally shift. A nice byproduct was the growth of “Negaclaims” as the educated and empowered patients better understood the significant risks of overtreatment and errors.

Too frequently, health plans have tried to micromanage clinical processes. With proper financial incentives combined with a move toward enabling clinical teams to become masters at driving patient engagement, the health plan is much more likely to achieve the desired outcomes. As the Stephen Wilkins pieces referenced above illustrate, clinicians haven’t been trained or rewarded directly or indirectly for encouraging patient engagement. It should be no surprise that most haven’t achieved mastery in helping their patients achieve patient engagement. Instead, the language of medicine has been punitive and demeaning, talking about “non-compliant” patients as though they were petulant criminals. That doesn’t further the partnership between patients and their care teams, which is necessary for optimal outcomes.

Previously, I outlined the strong business case for patient engagement. Those who have understood that business case have moved on to practice the 7 habits of highly patient-centric providers. It’s clear that past efforts by health plans to reduce claims have fallen short and created ill will and sub-optimal health outcomes. Putting the patient/member at the center need not be a marketing gimmick. Rather, it’s central to the notion of “Negaclaims” and to a winning strategy in the fee-for-value era.