Tag Archives: health insurer

Will You Be the Broker of the Future?

Enrollment season is fast approaching, and shopping for insurance – especially for the first time – is overwhelming. That’s why individuals, families and businesses turn to brokers for help — the industry experts who are the front-line access point for understanding, purchasing and using health insurance.

Unfortunately, brokers are burdened by outdated technology, manual processes and complex new regulations that make the process of helping small businesses and individuals inefficient and impersonal.

The digital revolution in all other things e-commerce allows products and services to go directly to the consumer at the click of a button. How can brokers adapt to the increasing complexity of the business, attract more customers and grow their businesses?

These growing pains can be met with technology. But this can only happen as long as the end user is kept in mind, and the tech giants and startups that have flooded into the insurtech space to streamline and simplify the shopping and enrollment process have forgotten an important end user: the broker.

See also: Improve Reputations by Digital Risk Profiling  

The way we see it at Wellthie is that the health insurance broker business remains strong, and, for those who have embraced change and technology, it is only getting stronger. Individuals and small businesses aren’t just looking for answers at their fingertips, they are looking for service: a process that is transparent, trustworthy and efficient. However, unlike traditional goods and services, health insurance requires the skillful assistance of an expert. This indicates that unlike industries that have seen a decline in the use of brokers, such as the travel industry, the health insurance broker is an invaluable piece of the complex health care puzzle. Here’s why:

  1. Small businesses are the most reliant on brokers and spend a huge sum on health insurance. There are currently more than 5 million small businesses in the U.S., representing 90% of all U.S. enterprises and a total of 40 million employees. A small business with 10 employees would have to pay on average $50,000 per year for coverage, assuming 70% contribution. This is a large sum, and businesses will want to make sure they are spending their dollars wisely. This is why 74% of small businesses today rely on hundreds of thousands of licensed health insurance brokers.
  2. Regulation and compliance is a big deal. ACA, ERISA, HIPAA are just some of the acronyms of the complex body of regulations that govern what small businesses and individuals must keep in mind when offering coverage. These regulations continue to change and have many state-based nuances that require brokers in a given market who can navigate the waters.
  3. The products are complicated. Health insurance selection is a multivariable decision with many considerations and stakeholders. According to a Harris Poll survey, nearly three out of every four 18- to 34 year-olds said they are often confused about all the benefit options available to them. Although technology can make great strides at improving the process, buyers want to make sure that they didn’t make a mistake. Sellers also rely on brokers to ensure that the buyers follow the appropriate guidelines and underwriting rules of who can and cannot purchase benefits.

See also: 5 Accelerating Trends in Digital Marketing  

In health insurance, where the role of the broker is essential, technology provides the access point to improve the process for buyers, sellers and intermediaries. Brokers of the future who embrace technology will make health insurance more approachable and valued.

Do Healthcare Costs Shift to Work Comp?

A new study―Do Higher Fee Schedules Increase the Number of Workers’ Compensation Cases?―from the Workers Compensation Research Institute (WCRI) explores to what extent workers’ compensation reimbursement rates influence the decision by the medical provider on whether to classify an injury as work-related.

According to previously published WCRI research, in many states, workers’ compensation pays higher prices for treatment than group health does. For example, one study found that workers’ compensation prices were two to four times higher than group health prices in some states. And, in most states, workers’ compensation systems rely heavily on the treating physician to determine whether a patient’s injury is work-related.

”Physicians may call an injury work-related in order to receive a higher reimbursement for care he or she provides to the patient,” said Dr. Olesya Fomenko, the author of the report and an economist at WCRI.

See Also: Are Your Health Cost Savings an Illusion?

The study found, among other things:

  • If the cause of injury is not straightforward (e.g., soft tissue conditions), case-shifting is more common in the states with higher workers’ compensation reimbursement rates. In particular, the study estimated that a 20% increase in workers’ compensation payments for physician services provided during an office visit increases the number of soft tissue injuries being called work-related by 6%.
  • There was no evidence of case-shifting from group health to workers’ compensation for patients with conditions for which causation is more certain (e.g., fractures, lacerations, and contusions).

This analysis relies principally on workers’ compensation and group health medical data coming from a large commercial database. This database is based on a large national sample of patients where the data were provided by health insurers and self-insured employers. It includes individuals employed by mostly large employers and insured or administered by one of approximately 100 group health plans. The database is unique in that, for a given employee, it shows whether a given medical encounter (visit) was paid for by group health or workers’ compensation.

For more information about this study, visit here.

pill

The PBM vs. the Drug Manufacturer

In today’s American healthcare system, employers can’t order Lipitor directly from Pfizer fortheir employees. Instead, employers and employees are forced to buy drugs through a middleman, the pharmacy benefits manager (PBM).

Fingers have long been pointed in both directions to blame the other for the high cost of prescription drugs. The PBMs blame the drug manufacturers, and the drug manufacturers blame the PBMs, not unlike two children arguing on the playground.

Eli Lilly, one of the world’s largest drug manufacturers, recently claimed that the average price increase on Humalog, its injectable insulin used to treat diabetes, has only been a modest 1% to 2% annually over the last five years. Tim Walbert, the CEO of small drug manufacturer Horizon Pharmaceuticals, said in a recent interview, that he expects the company’s actual price increases to be 4% or less over the next year.

PBMs, on the other hand, portray the drug manufacturers as greedy price gougers that fail to keep prescriptions costs under control. Anthem, one of the nation’s largest health insurers, works hard to convince its employer clients to leverage the buying process by joining Anthem’s negotiated PBM program with Express Scripts Inc. (ESI) instead of negotiating a direct deal with a PBM. This month, however, Anthem came out swinging, accusing its partner ESI of more than $3 billion in overcharges – all of which were passed along and paid by clients.

Who should the employers believe is at fault? Employers are aware of their prescription benefit bills. They clearly see that costs are escalating at an unprecedented rate. What can they do about the problem? How can they succeed if a buyer as large as Anthem failed for its thousands of employer clients?

Today’s healthcare market only permits employers to buy the employee drugs from two different platforms. They can choose to buy through a PBM partnership (Anthem partnered with ESI) or a large benefits broker’s partnership with a PBM. Secondly, they can choose to work with a consultant for high-level advice and contract directly with a PBM.

Regardless, the employer always gambles that it knows more about the PBM’s 120-page contract, pricing calculations and methodology than Anthem apparently did. It is a monumental sign of the times that Anthem publicly blamed ESI for its failure to contract effectively with the company, leading to overcharges for its clients.

Our healthcare system today is broken by design – not necessity – and virtually everyone in the chain lacks the incentive to fix it. In fact, people are financially motivated to maintain the status quo. Until drugs can be purchased directly from the manufacturers for a direct discounted price, employers are trapped in our national prescription benefit system.

Radical Thought on End-of-Life Care

Pull up your drink and relax – you’re in for a deeper read. Thanks in advance for your eyes and time. Read on …

Here, I subscribe to the Elon Musk school of applying “first principles” to problem solving. I like to call this one my “Big W.” It has the potential to save tens to hundreds of billions of dollars annually, as well as provide solutions for other challenges we have outside of healthcare.

[Note: “Big W” comes from one of my favorite movies – if you know it, feel free to let me know. Chime back. Let’s just say a “Big W” is something so obvious many people simply pass right by. Often, value comes from finding and digging deeper.]

https://www.youtube.com/watch?v=r97Nv8N7-mI

OK, let’s get the scary numbers out of the way and frame the situation.

Numbers: According to the latest government statistics, private health insurers, Medicaid and Medicare collectively pay nearly $2.7 trillion annually to doctors, hospitals and other healthcare services. There is $53 trillion in Medicare and Medicaid unfunded liabilities. Mind you, expectations call for these numbers to rise considerably.

Players: On one side, we have services and products, including health insurers, doctors, medical services, hospitals and big pharma. On the other side, we have consumers, which are self- and fully insured companies, private pay citizens and individuals who receive state or government benefits.

Problems: Our healthcare system is for-profit, with publicly owned companies in different sectors, with shareholders, with funds held by current and future retirees and with massive numbers of employed individuals.

So, which companies willingly lower their charges to let customers keep more money to afford growing healthcare costs? Aetna, Merck, HCA? If they do lower their revenues, what happens to their stocks? Do people continue to hold? If not, how does that affect employment in the respective healthcare sectors?

The latest stats show that nearly 35% (78.6 million) of U.S. adults are obese. Obesity leads to heart disease, stroke, type 2 diabetes and certain types of cancer, which together are some of the leading causes of preventable death. About half of all adults – 117 million people – had one or more chronic health conditions. One in four adults had two or more chronic health conditions. Just think about the magnitude of this.

Do you honestly believe Americans are going to change their poor eating and exercise habits en masse and in a reasonably short term? Do you really expect the majority of obese individuals to take action to lose their excessive weight?

The reality is that we have a connected group of self-serving and self-centered individuals, businesses and political leaders, none of whom are willing to make sizable efforts to fix our healthcare system. Add in the massive marketing from food and beverage companies (sodas and alcohol), as well as fast-food restaurants that appeal to a majority of Americans who have little in the way of savings. That all spells a continuing downward spiral for our country’s healthcare costs and future affordability.

Enter the Big W

The Big W is the creation of what I call the “transition plan.” This starts with the revelation that a mere 6% of Medicare patients who die each year make up an astounding 27% to 30% of all Medicare costs. This accounts for nearly $200 billion in outgoing payments. According to statistics ​provided ​from the Center for American Progress fellow Ezekiel Emanuel and the latest CMS report on ​our 2014 ​national health expenditures (NHE), ​we add in another $250 billion for end-of-life care ​on those ​covered under Medicaid and private insur​ers. ​In all, that is nearly a half-trillion dollars per year, which plays, I believe, a very important role in our healthcare crisis.

The “transition plan” starts with an understanding that those insured individuals who will die in the next 12 months are, in a sad way, a monetary commodity for medical professionals, hospitals, big pharma and medical services/products companies.

Many of these individuals will die with little to no net worth. Since 1989, the proportion of those older than 75 with mortgage debt has quadrupled. Many seniors have large amounts of debt because of high medical bills, long-term care and dwindling retirement savings. In addition, credit card debt for seniors is larger and is rising faster than for the younger generations.

Let’s also not forget that many “last year” patients are people who are not senior citizens. Some come from the nearly 47 million Americans living in poverty or from the working, lower- to middle-income earners. While a portion of this population has life insurance, the industry reports that, of all U.S. adults, only 60% carry any level of coverage at all, and that our country is underinsured for life insurance by nearly $15 trillion.

We’ve extended life, and that is a noble task, but ask a chronically ill person or even an elderly person what they think about being kept alive for as long as possible. Those who are suffering recognize the importance of dying with dignity, instead of slowly wasting away through a myriad of medical appointments, drugs, therapies, surgeries and lab tests.

Here’s where the transition plan begins. It’s a system where health payers identify terminal patients or those who are highly likely to become terminal patients and willingly choose to forego payment for most related medical services. In return, they receive a guaranteed tax-free, single-windfall payment. The payment constitutes a large portion of what would have been paid out to the medical community.  

Take Charles Smith, a 68-year-old man who has been diagnosed with Stage 3B lung cancer. The average case has a 95% chance of death. Let’s estimate that between chemotherapy, radiation, lab tests, doctor visits, home health, costly medications, pulmonary therapy and several possible surgeries, a typical health payer can expect to reimburse between $345,000 and $375,000.

The health payer, ABC Insurance Co., receives the patient’s initial diagnosis on a medical claim. It’s flagged – the case is passed to the company’s medical management department. Once substantiated with medical records, the health payers’ actuaries set an estimated value of $350,000 on the case.

Now, the health payer gets in contact with the patient and presents the offer for the transition plan. The letter would state the following:

  • That, with the current diagnosis, the payer is offering the opportunity for the beneficiary to participate in the offer.
  • That the program is voluntary. If the beneficiary does not choose it, nothing will change with his current health coverage.
  • That, if the offer is accepted, the payer will send a one-time, tax-free, non-refundable payment to Mr. Charles Smith for $150,000.

Once the insurer makes the payment, the following would occur:

  • The health payer would no longer be responsible for payment for any treatment or services, directly or indirectly related to the chronic condition. All such conditions would be clearly identified in the Transition Plan Agreement.
  • The insured could continue to see medical providers and have them bill services to the health payer, so long as such conditions are separate from the main diagnosis and other listed conditions. However, payments for any future medical services billed, in keeping with company policy, must be determined to be medically necessary.
  • The insurer would continue to pay, on an as-needed and medically necessary basis, any palliative or “pain management” care associated with the main condition. This would not include hospitalization, therapy, home health or premium-brand medications.

What has just happened is a unique meeting of the minds between poor to middle-class dying Americans and the health insurance industry. In giving insureds the option to be financially compensated, health payers shift payments from the medical establishment back to individuals who are taking clear control of their lives.

In this specific case, corporate or private insureds receive back a large portion of the $200,000 cost savings in the form of reduced premiums, perhaps mandated by government to certain levels based on certain savings points. Naturally, for self-insured entities, the savings would flow back to the company or organization.

Imagine Mr. Smith having less than $5,000 of total savings and no insurance.  He is divorced, yet he has two children who are also in the lower income class.  While $150,000 of tax-free money is not millions, it could make a difference to that family and perhaps their ability to afford healthcare, a home or even college.

Without the transition plan, Mr. Smith might struggle to pay his remaining debts and have no money left over for funeral expenses. With the transition plan, he might take, or at least send, his two kids and their families on a trip around the world. Perhaps he would choose to contribute to several 529 plans for the education of his grandchildren.  He could also choose to give to charities, political groups or churches or even share with his most beloved friends.

The transition plan is the patient’s choice. If the patient is mentally unable to make a choice, she may default to the normal relationship with the health insurer, or the decision could shift to her immediate family or appointed surrogate. 

Public payers, private health insurers and corporations that pay for their own health benefits will now have the ability to help others make the transition and perhaps leave better legacies. Nothing puts a smile on someone’s face, especially in times of stress and depression, quite like when they give and get to see others enjoy their gifts.  Contrast this transaction with the same money going into medical and drug house pockets, leading to a continual raise of everyone’s plan premiums and a decrease in savings.

Who are the financial losers here? End-of-life medical services including chemotherapy, radiation, imaging, testing, surgeries, therapies, medical equipment sales and home health services.

The transition plan may not be the entire answer for our growing healthcare crisis and spiraling costs. Certainly, it is not going to be the choice for those who are dying and have plenty of savings to pass on to their loved ones or charity; nor will it be the choice for those who want to fight their diseases to the very end.

However, for a large majority of Americans who don’t have the assets to leave but recognize their value per historical healthcare payments to providers, the transition plan could be a useful measure. It would effectively allow them to stake a claim toward money normally ending up in the pockets of medical service professional  for cases not often resolving positively.

Future Has Arrived for Insurance

The good news from the PCI Tech Conference in 2015 is that futurists like Vivek Wadhwa give the insurance industry at least three to five years before it is disrupted beyond recognition by data, analytics, the Internet of Things, self-driving cars, 3D printing, hyper-aggressive technology companies and essentially free energy.

The bad news is, many large insurers are still planning five-year technology transformation initiatives to shed their legacy burdens and take advantage of today’s technology.

Insurer CIOs understand the challenge. They need to mitigate the effects of yesterday’s inheritances. They need to address today’s business needs, and they need to prepare the organization for tomorrow. They need a deep understanding of all three timelines, and the ability to help others understand.

CIOs need a new set of skills and new kinds of relationships. As one speaker put it, CIOs need to be communicators and story tellers as well as effective managers. They need visionary business executive partners who are willing to embrace the opportunities that technology creates, in the ability to deliver innovative products to changing markets. CIOs also need technology partners who will not just deliver today’s solutions but co-evolve with the CIOs to meet tomorrow’s challenges.

“I will invest in any technology initiative that increases our agility,” said one insurer CEO who understands. But far too many CEOs are still at a loss as to how to quantify the value of technology and continue to manage their technology investments as if spending more than 5% of premium on IT were a greater sin than letting the future pass them by.

Meanwhile, while the conference was in session, Google Ventures announced an investment in innovative health insurer Oscar. The clock is ticking in insurance, and it’s not counting down anymore. It’s counting forward.