Tag Archives: optum

Wellness Isn’t the Only Scam in Healthcare

Healthcare meets Network.

That is the one-sentence summary of Dave Chase’s new book, A CEO’s Guide to Restoring the American Dream: How to Deliver World-Class Healthcare to Your Employees at Half the Cost.

Dissecting the title, the “restoring the American Dream” reference is as follows: While wages have barely budged in the last 20 years, employee compensation has risen quite a bit — with most of the increase being the health benefit. Dave’s observation is that if the health benefit were managed much more tightly, wages could climb noticeably for the workforce without increasing the total employee compensation budget.

As for “half the cost,” that number may be overstated…but not by much. For instance, I just saw a wellness vendor send 2/3 of a company’s employees to the doctor because they have “conditions” they didn’t know about, that this vendor “discovered” by — you guessed it — screening the stuffing out of them by flouting clinical guidelines. This employer could save about 3% simply by firing the vendor and not consigning all those employees to the treatment trap. (Of course, there has been no measurable improvement in outcomes from all these doctor visits.)

This employer and others could save another 0.5% simply by not insisting that their employees and spouses get annual checkups (and “well-woman” visits) because as readers of this site know, they have no value. The good news is that checkups are not likely to harm employees, which is more than can be said for many wellness programs.

See also: Wellness Vendors Keep Dreaming  

So we are already saving 3.5%, and we haven’t even done anything hard yet, where “hard” is defined as “something that does not delight employees, like getting rid of ‘pry, poke and prod’ programs.” In other words, “hard” isn’t really hard.

Slightly harder opportunities

In addition to an expose on wellness, Dave Chase exposes some scams that make wellness look like child’s play. (Wellness is child’s play, in the sense that any fifth-grader knows more arithmetic than a wellness vendor. And a 14-year-old knows more about BMI.)

In no particular order, we’ll start with PBMs. Their stock prices have exploded — literally, 300-fold — in the last 30 years.  You think they achieved that growth honestly? They make wellness vendors look like Boy Scouts. They obfuscate everything, with “rebates” and “formularies” and under-the-table payments from drug companies, and all sorts of other things that we probably don’t even know about. Here is a New York Times article that casts just a little light on the subject…but more than enough light to indict the entire industry.

It isn’t easy to ditch a PBM, but increasing numbers of alternatives are popping up. A good rule of thumb is, the thicker the contract with your PBM, the more you are getting ripped off.  I invite folks who offer one of these new alternatives to add a comment at the bottom of this posting or on LinkedIn following this posting.

Then there are the carriers, who typically make more money, the more money gets spent. The number of scams is mind-boggling. For example, consider Dave’s explanation of what happens when a claim is overbilled:

Another fee opportunity is so-called “pay and chase” programs,
in which the insurance carrier doing your claims administration
gets paid 30-40 percent for recovering fraudulent or
duplicative claims. Thus, there is a perverse incentive to tacitly
allow fraudulent and duplicative claims to be paid, get paid as
the plan administrator, then get paid a second time for recovering
the originally paid claim.

Good luck trying to ferret your own claims data out of carriers so that you can do your own analysis on them and change policy accordingly. I do quite a bit of work for top-flight carriers, measuring their wellness-sensitive medical events. They always seem to have the data at their fingertips. We can complete the analysis for the year within weeks after claims run-out ends, meaning sometime in April. Meanwhile, I’ve got a Fortune 50 client whose carrier, Optum, still hasn’t managed to provide them (at an extra fee!) with their own event rates for 2016, a delay which more than coincidentally will make it impossible to implement any cutbacks in Optum’s services for 2018 if the event rates show that — hang onto your hats — Optum didn’t achieve anything.

Don’t get Dave started on providers, who find highly creative ways to snooker employers and employees.  Like staffing in-network facilities with out-of-network doctors, who then bill patients ridiculously high charges. You need to re-contract with your carrier and put that one on them.  Or, if you’re large enough, recontract with the hospital.

And speaking of hospitals, why have Leapfrog D- and F-rated hospitals in your network at all? If a geographic necessity, then at a minimum educate your employees that it might be worth the extra drive to avoid some major complications.

Providers also bill companies what they think they can get away with, rather than what a buyer would expect to pay given what others in the area are charging. Because the company is generally not the decision-maker (the employee or doctor generally decides where to go, not based on price), providers often get away with it. An entire chapter is devoted to provider pricing scams and the importance of transparency.

See also: A Wellness Program Everyone Can Love  

Or, my own personal favorite provider scam, disguising emergency rooms as urgent care centers. (A rather naively idealistic Colorado legislator tried to make freestanding ERs disclose that they are not urgent care centers, but the provider lobbyists prevailed.)

A sidebar: Quizzify trains employees to be on the lookout for these scams, which is helpful for the 0.1% of the 150,000,000 commercially insured employees who actually have access to the quizzes. The other 99.9% are on their own.

And yet it all comes back to wellness

Employer obsession with wellness has caused them to take their eyes off these many other balls, because wellness was supposed to solve everything (including industrial waste, according to HERO stalwart Bruce Sherman). Truly, wellness has been the Maginot Line of healthcare cost containment strategies. While a vastly disproportionate share of resources has gone into wellness, PBMs, carriers, providers and various middlemen simply circumvented these efforts, to dig right into your pocketbooks.

I can only scratch the surface here — just go out and buy the book, and then you’ll understand both why when it comes to scamming employers and employees, wellness vendors have a lot to learn, and also why you should be mad as hell and not take it any more.

Potential Key to Tackling Opioid Issues

The use of urine drug testing (UDT) for injured workers raises challenges and questions for workers’ compensation stakeholders. Who should be tested? How many tests are too many? Too few? How often should the tests be performed? And, perhaps most importantly, what — if any — action should be taken in response to test results?

These questions have been brought to the forefront with the rise of opioid-related challenges — the same challenges that led a large workers’ compensation insurer to turn to experts for help.

The carrier saw a significant increase in opioid use among injured workers. Claims adjusters did not have the expertise on their own to aid in the problem.

See also: Opioids Are the Opiates of the Masses

Over the past several years, the insurer has aligned with Optum (its pharmacy benefit manager) and Millennium Health (a health solutions company that specializes in medication monitoring) to create a program that identifies and works with injured workers who are potentially at risk for poor recoveries. The insurer has reported impressive results, with reductions on spending for opioid analgesics and decreases in the number of supply days of the medications. Using the clinical experts and toxicologists of Millennium to help interpret test results has helped the clinical pharmacists at Optum provide recommendations to the adjusters and providers.

Medical treatment guidelines increasingly include UDTs for injured workers who are prescribed opioids; however, the decision of how often to test is largely left to the medical provider’s discretion. Experts say UDT, used in conjunction with other tools, can provide objective information regarding current medication, as well as illicit substance use. The results can help identify injured workers who may be abusing, misusing or diverting prescribed opioids.

“The clinical utility of UDT has been well established and is promoted in several medical guidelines. However, in some segments, there is still an underutilization for various reasons,” said Maria Chianta, director for clinical affairs and managed markets at Millennium Health. “It could be a lack of awareness or a lack of time — it takes time to perform the tests and interpret them.”

(Chianta will lead a discussion at the National Workers’ Compensation and Disability Conference & Expo on Dec. 2 in New Orleans. The discussion will cover the use of UDT in workers’ compensation; explain what led the insurer to enlist the help of its pharmacy benefit manager and Millennium Health; and show the results the company has achieved.)

Non-adherence to guidelines

The latest research from the Workers’ Compensation Research Institute bears out the inconsistent use of UDTs in workers’ compensation. A study of 25 states showed that the percentage of injured workers with longer-term use of opioids receiving drug testing was lower than recommended by treatment guidelines. At the same time, however, the frequency of drug tests was unusually high among the top 5% of injured workers who received opioids on a longer-term basis and had drug testing.

A lack of understanding of what actions to take based on UDT results is perhaps one of the major barriers. “It takes time to walk through those results,” Chianta said. “If you get something unexpected, you have to try to get to the cause of that, which takes time. Some providers may not know the best ways to respond to the test results.”

Follow-up is among the key issues for the effective use of UDT. Depending on the results of the tests, the insurer, for example, may engage the services of a telephonic case manager or conduct a pain management program review.

See also: Urine Drug Testing Must Get Smarter

Another area of confusion over UDTs concerns the types of tests available. “Primarily, there is immunoassay technology and mass spectrometry,” Chianta said. “Immunoassay is a presumptive screening, and mass spectrometry is a definitive or confirmation test.”

Chianta will discuss the types of tests in more detail. Some people on the health plan side may be seeing drug tests coming in and paying for them — and that’s the end of the process. The speakers aim to give session attendees an appreciation of the value of becoming more involved with the outcomes of the tests and follow-up actions that are necessary.

Gene Testing: Time Is Ripe in Work Comp

Pharmacogenetic testing (PGT) has the potential to help clinicians improve outcomes for injured workers and reduce costs for payers. While research showing the clinical value of PGT continues to grow rapidly, evidence of the return on investment in the workers’ comp space is just beginning to emerge. Practitioners can benefit from the technology without falling victim to the hype of some proponents by becoming better educated about PGT and those providing it.

Because the use of PGT in the workers’ comp population is relatively uncommon, practitioners may find it challenging to realize the true value of the tests. “A few of our customers are trying PGT on select claimants,” said Dianne Tharp, pharmacist and executive clinical liaison for pharmacy benefit manager Healthcare Solutions, an Optum company. “This is a complex area; everything is evolving. It’s relatively new for the industry, and we are all still learning.”

One growing area of interest is in genetic tests that can identify injured workers most at risk for addiction and abuse. However, there are many challenges with such tests, including uncertainty about their predictive performance in clinical settings, which must be overcome before clinicians can use them to help identify whether an injured worker may misuse or abuse a prescribed opioid. While PGT could be a welcome tool, the science is not yet at a level where clinical application is appropriate.

“On the other hand, pharmacogenetic testing for drug response is often more — and in some cases highly — predictive,” said Naissan Hussainzada, senior director of genetics strategy and commercialization at Millennium Health. “For example, certain genetic variations can change how an individual metabolizes some opioid medications. Using this information, clinicians can identify patients at higher risk for medication failure and/or side effects, which may help them make more informed and tailored treatment decisions.”

Injured workers with preexisting conditions or those who develop comorbid conditions post-injury may especially benefit from PGT — as they may be receiving multiple medications that could potentially elevate their risk for drug-drug and gene-drug interactions. PGT information could also help the clinician better understand whether drugs prescribed for comorbid conditions will be effective.

“In the workers’ comp space, PGT could be used to help the clinician optimize medication prescribing and avoid trial and error,” Hussainzada said. “This has the potential to translate to faster recovery, less time away from work and shorter claim duration for the injured worker.”

See also: Genetic Testing: The New Wellness Frontier

Polypharmacy challenges

Multiple medication regimens and comorbid conditions are frequently present in workers who are injured on the job. The inability to work and the presence of pain can result in additional comorbidities, especially depression.

Metabolism can play an important role in how patients respond to medications, particularly antidepressants, opioids, certain anticoagulants and cardiovascular medications. Mental health providers, in fact, were among the first to recognize the value of PGT in guiding medication therapy and dosing.

“Mental health disorders are often assessed subjectively, and drug therapy can be lengthy, unpredictable and suboptimal,” Hussainzada said. “It may take several months to stabilize a patient on an effective antidepressant using trial and error.”

PGT can be especially useful for antidepressants. “There are actionable PGT results with good evidence for the antidepressants,” Tharp said. “That would be an instance where PGT may be useful [among injured workers].”

In addition to antidepressants, Tharp said PGT is also being used to help determine a patient’s ability to properly metabolize warfarin, which is used to prevent blood clots.

Drug-drug interactions

Individuals metabolize medications differently, partly depending on a person’s genetic makeup and partly on clinical factors, such as hepatic (liver) disease, lifestyle factors and administration of other medications. For example, introducing a new medication may change how existing drugs are metabolized, which can change their effectiveness or tolerability. Conversely, an existing medication may have an impact on the metabolism of a new medication.

“There are well-documented drug-drug interactions between opioid analgesics and certain antidepressants,” Hussainzada said. “This is because some antidepressants can inhibit or ‘turn off’ the enzymes responsible for metabolizing opioids. This can lead to the opioid becoming less effective, or in some cases, intolerable or potentially toxic. Making matters more challenging, there are some individuals that carry certain genetic variations that can make them more susceptible to a phenomenon called ‘phenoconversion,’ which can elevate their risk for certain types of drug-drug interactions. For injured workers receiving polypharmacy, PGT may help clinicians identify these higher-risk individuals and help mitigate some of the risks of phenoconversion.”

There are four categories of metabolizer type that correspond to how individuals may metabolize certain medications via hepatic enzymes. Individuals classified as “extensive” metabolizers possess fully functional enzymes and are able to metabolize medications normally. However, some individuals carry genetic variations that lead to reduced or significantly reduced enzyme function, and are classified as “intermediate” or “poor” metabolizers. Finally, some people may have genetic variations that lead to significantly increased enzyme function and are classified as “ultra-rapid” metabolizers. What that means is: Two people taking the same drug at the same dose can have very different responses because of their metabolizer status.

Individuals susceptible to phenoconversion can “switch” metabolism type, for example, from an intermediate or extensive metabolizer to a poor metabolizer. The trigger for these conversions is non-genetic extrinsic factors, such as administering a drug that inhibits the enzyme pathway. Certain metabolizer types are associated with higher risk of phenoconversion and risk of drug-drug interactions.

“Intermediate metabolizers may be at higher risk for phenoconversion compared to normal metabolizers,” Hussainzada said. “However, it can be difficult to identify these patients because they may display normal or typical response to a medication, even if they are metabolizing that drug at a reduced rate. However, if an inhibitor of the drug is added to their regimen, this can shift the individual from intermediate to poor metabolism and lead to medication failure and/or potentially serious side effects.”

For some claimants who take medications for pre-existing conditions, adding a pain medication can increase the risk for drug-drug interactions and phenotypic conversion. “So a claimant who has been taking antidepressants for years is now also prescribed an opioid because of his injury,” Hussainzada said. “If he is an intermediate metabolizer for the opioid, the antidepressant may convert him to a poor metabolizer. This could lead to inadequate pain relief, which may delay recovery and increase risk of poor outcomes.”

In another scenario, an injured worker who is taking opioids for his injury and who later develops depressive symptoms may be treated with concomitant antidepressant therapy. “In this case, the opioid may have been initially effective, but certain opioids would lose analgesic potency once the inhibitor, or antidepressant, is added,” Hussainzada said.

PGT can also help a clinician identify patients who may need to be started with atypical or non-standard doses of certain analgesics. One particular enzyme responsible for the metabolism of a large number of medications is cytochrome P450 2D6, or CYP2D6. Claimants who are reduced metabolizers for the pathway may not respond adequately to a standard dose of oxycodone.

“If you are a CYP2D6 poor metabolizer, standard doses of oxycodone or hydrocodone may not effectively control your pain,” Hussainzada said. “However, without knowing this type of genetic information beforehand, it may appear to the clinician that these individuals are drug-seeking if they continue to ask for higher doses.”

Some poor metabolizers may not get any pain relief, even with very high doses of a medication. Identifying these patients through PGT can lead the clinician to prescribe a different pain medication from the start, something that can be critical to getting an injured worker back to function.

According to a recent position paper from Healthcare Solutions, the rates of comorbidity and polypharmacy are on the rise in workers’ comp and can lead to increased medical costs, delayed returns to work and longer claim durations. Clinical depression is a common comorbidity, and the use of antidepressants is prevalent; however, both are associated with poor recoveries and outcomes.

“For patients taking multiple medications, there may be multiple enzymes that are recruited to metabolize and eliminate these drug combinations from the body,” Hussainzada said. “Some recent data indicates that when you look across multiple enzymes, genetic variation is much more common than when you look at a single enzyme. So for the claimant receiving polypharmacy, it may be even more important to understand how their genetics will contribute to their medication response since it is likely that at least one enzyme system may be variant.”

Clinicians can use PGT information at the beginning of a claim to optimize initial prescribing and dosing of opioids and other medications, which may hasten the recovery time. “In workers’ comp, the data are pretty clear: The faster we can facilitate post-injury recovery and get the claimant back to work, the better their overall prognosis,” Hussainzada said. “Particularly with opioid therapy, we want to use these drugs judicially and effectively.

See also: Urine Drug Testing Must Get Smarter

The future

Researchers and workers’ comp practitioners continue to monitor the clinical evidence for testing in an effort to help clearly identify those injured workers who would benefit most from PGT — in terms of better outcomes and lower costs. For now, there are several types of injured workers who may be good candidates for testing.

“A claimant taking multiple medications from several therapeutic classes, one who has failed several therapies and changing dosages or a patient on ultra-high daily morphine equivalent doses may be a good candidate for PGT,” Healthcare Solutions’ Tharp said.

Ultimately, proponents hope PGT can be a useful tool in getting the right medication at the right dose to each patient. If test interpretations are based on firm clinical evidence, PGT can provide clinicians with a road map for navigating prescribing decisions that can often be complex and subjective. However, providers are advised to become familiar with PGT and, especially, the companies marketing these services.

“Payers, clinicians and patients need to be aware that not all pharmacogenetic testing is equal. Ask questions about the evidence for specific genes and drugs and make sure there are clinical standards in place for how results are interpreted,” Hussainzada advised. “Some tests may not be ready for clinical use, so it’s important to be informed.”

10 Most Dangerous Wellness Programs

If corporate wellness didn’t already exist, no one would invent it. In that sense, it’s a little like communism, baseball, pennies or Outlook.

After all, why would any company want to purchase programs that damage moralereduce productivitydrive costs up…and don’t work 90% to 95% of the time? And those are the results reported by wellness proponents.

Those are the employers’ problems, but the employers’ problems become the employees’ problems when employees are “voluntarily” forced to submit to programs that are likely to harm them. (As the New York Times recently pointed out, there is nothing voluntary about most of these programs.)

Recently, the head of United Healthcare’s (UHC) wellness operations (Optum), Seth Serxner, admitted that Optum’s programs consciously ignore U.S. Preventive Services Task Force (USPSTF) screening guidelines. Rather than apologize, Serxner blamed employers for insisting on overscreening and overdiagnosing their own employees…and (by implication) overpaying for the privilege of doing so. “Our clients make us do it,” were his exact words.

We asked our own clients who use Optum about why they turned down Optum’s generous offer to do more appropriate screenings at a lower price. None of them remember receiving such an offer.

A UHC executive wrote and said we were making the company look bad. I said I would happily revise or even retract statements about the company if the executive could introduce me to just one single Optum customer — one out of their thousands — who recalls insisting on overscreening and overpaying. Never heard back….

United Healthcare isn’t alone in harming employees. It is just the first company to admit doing so. It is also far from the worst offender, as the harms of its overscreening for glucose and cholesterol don’t hold a candle to the ideas listed below, in increasing order of harms:

#10 Provant

We would say: “Someone should inform Provant that you are not supposed to drink eight glasses of water a day,” except that we already did, and they didn’t believe us. Obsessive hydration remains one of their core recommendations despite the overwhelming evidence that you should drink when you are thirsty.

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By contrast, the New York Times, which has an Internet connection, writes the opposite:

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#9 Cerner

The employee who recorded this blood pressure is essentially dead. Cerner’s diagnosis? Blood pressure “higher than what is ideal.” Cerner’s recommendation? “Talk to your healthcare provider.” A real doctor’s recommendation? “Call an ambulance. The guy barely has a pulse.”

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This is not a random mistake. This is the front cover of the company’s brochure.

#8 Nebraska/Health Fitness Corp.

USPSTF screening age recommendations aren’t minimums. They are optimums, the ages at which screening benefits might start to exceed harms, even if they still fall far short of costs. Otherwise, you are taking way too much risk. This is especially true for colonoscopies, one of this program’s favorite screens — complications from the test itself can be very serious.

Your preventive coverage is not supposed to be “greater than healthcare reform guidelines.” That’s like rounding up twice the number of usual suspects. And you aren’t supposed to waive “age restrictions.” That’s like a state waiving minimum “age restrictions” to get a driver’s license.

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Yet this program won a C. Everett Koop Award for excellence in wellness, not to mention the unwavering support and admiration of leading wellness apologist Ron Goetzel.

#7-#6 (tie) ShapeUp and Wellness Corporate Solutions

Both these outfits pitch exactly the opposite of what you are supposed to do in weight control: unhealthy crash dieting. Attaching money to this idea and setting a start date make the plan even worse: along with crash-dieting during these eight weeks, you’re encouraging employees to binge before the initial weigh-in.

Here is ShapeUp:

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Here is Wellness Corporate Solutions:

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Both also made up outcomes. In ShapeUp’s case, the company had to rescind its “findings” after the customer, Highmark, skewered the company in the press. And neither seems to care that corporate weight control programs are proven not to work.

#5 Aetna

In addition to its wellness program that collects employee DNA (partnered, ironically, with a company called Newtopia) and then makes up claims about savings, Aetna owns the distinction of launching the only wellness program whose core drugs are specifically editorialized against in the Journal of the American Medical Association. This would literally be the most harmful wellness program ever, except that the only employees being harmed are (1) obese employees who (2) answer the phone when their employer’s health plan calls them to pitch these two drugs; (3) who have a doctor who would willingly prescribe drugs that almost no other doctors will prescribe, because of their side effect profile; and (4) who don’t Google the drugs. Presumably, this combination is a very low percentage of all employees.

The good news is that the drugs, Belviq and Qsymia, should be off the market in a couple of years because almost no one wants to take them, so the harms of this Aetna program should be self-limited.

#4 Star Wellness

Star Wellness offers a full range of USPSTF D-rated screens. “D” is the lowest USPSTF rating and means harms exceed benefits. Star gets extra credit for being the first wellness vendor to sell franchises. All you need is a background in sales or “municipal administration” plus $67,000 and five days of training, and you, too, can poke employees with needles and lie about your outcomes. Is this a great country, or what?

Also, the company’s vaccination clinic features Vitamin B12 shots. We don’t know which is more appalling–routinely giving employees Vitamin B12 shots or thinking Vitamin B12 is a vaccine.

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#3 Angioscreen

Angioscreen doesn’t have the most USPSTF D-rated screens. In fact, it offers only one screen in total, for carotid artery stenosis. That screen gets a D grade from USPSTF, giving Angioscreen the unique distinction of being the only vendor 100% guaranteed to harm your workforce.

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Angioscreen’s other distinction is that the company admits right on its website that this screen is a bad idea. Angioscreen is probably the only non-tobacco company in America to admit you are better off not using its product.

#2 Total Wellness

In addition to the usual assortment of D-rated tests, the company offers screens that the USPSTF hasn’t even rated, because it never, ever occurred to the USPSTF that anyone would use these tests for mass screening of patients or employees. Criticizing the USPSTF for not rating these “screens” (CBCs and Chem-20s) would be like criticizing Sanofi-Aventis for not warning against taking Ambien after parking your car on a railroad crossing.

#1 HealthFair

Let’s leave aside the fact that the majority of its other screens are harmful and focus on its screening for H.pylori, the strain of bacteria associated with ulcers.

Visit our full treatment here. In a nutshell, the majority of us harbor H.pylori–without symptoms. It may even be beneficial. The screening test is expensive and notoriously unreliable, and the only way to get rid of H.pylori is with some very powerful antibiotics, a treatment rarely even used on patients with symptoms, because of its inconvenience, ineffectiveness and potential long-term side-effects.

A Modest Proposal

So how should we as a country protect employees from these harms? Our policy recommendation is always the same and very non-intrusive. We aren’t saying wellness vendors shouldn’t be allowed to harm employees. That proposal would be too radical to ever pass Congress. If it did, the Business Roundtable would pressure the White House again, to preserve the hard-earned right to “medicalize” the workplace and show employees who’s boss.

Instead, we recommend merely a disclosure requirement. The harms of screens or (in United Healthcare’s case) screening intervals that don’t earn at least a “B” from USPSTF should be disclosed to employees, and employees should get a chance to “opt out” into something that isn’t harmful (like Quizzify, perhaps?) without suffering financial consequences.

Call us cockeyed optimists, but we don’t think employers should be able to force employees to choose between harming themselves and paying fines.

End of Health Insurers As We Know Them

I want to start by saying that I am knowingly writing an article that is going to throw fuel on a fire. Being from New England, this article strikes me as the equivalent of writing an article in the Denver Post that says New England Patriots quarterback Tom Brady is better than Denver Broncos quarterback Peyton Manning. Letters will be written. Darts will be thrown. So, I will make sure I put on my steel vest before I publish.

I already started writing on this topic, in a recent article titled, “Apple HealthKit – The Next Step to the End of Employer-Based Health Insurance.” In this article, I will provide a more detailed analysis of why the premise presented in my first article may come true — that within five to 10 years employers will be out of the health risk business. I will then provide a plan for what I think benefit brokers should do to prepare. Taking action may be the difference between those that survive and thrive in this new health insurance world vs. those that may struggle or even fail.

What do I mean when I say employers will be out of the health risk business? To repeat what I said in my last article, “By health risk, I mean the cost of the employee’s health insurance will not be priced by the employer. It won’t be a function of average age of the employee population, claims experience or any of the standard underwriting/pricing rules today.” In fact, health insurance will most likely become an individually purchased product, and the insurers of the future may not be the companies that dominate the market today.

As a consultant to benefits brokers, I educate them on technology and advise them on how they can maintain a competitive position. My future depends on brokers’ remaining significant, so I am as concerned about their future as any broker would be. If you study the significant market events over the past few years, you get a picture of what the future may be like. While many may think Obamacare is the big market change, I believe that the health insurance market is going to change much more dramatically and that, while the government may be nudging things along, competitive market forces will drive the change.

So let’s get to the point. I believe that within five to 10 years health insurance will be delivered primarily through staff model health maintenance organizations (HMOs). These will be Kaiser-like plans where the providers of care will also be the risk takers/insurers. Individuals will pay a fee directly to a healthcare system that will be responsible for the health, wellness and treatment of the person. Employers may still give employees money to pay for some of the cost, but they won’t be in the “risk” business. We are beginning to see this evolution today through the expansion of what people are calling accountable care organizations (ACOs). However, the future will go well beyond the limited risk sharing of today’s ACOs.

Four Catalysts to Change

If you had been in the health insurance business in the ’80s, you would say we tried this before, and it didn’t work. Well, today, things are different. There are four major differences that will be the catalysts for the coming changes:

Changes in consumer buying behavior

In the ’80s, employers often paid for 100% of an employee’s health insurance and a large part of the family’s. When cost wasn’t an issue for employees, they looked at access to providers as the No. 1 variable. So, all the HMOs and preferred provider organizations (PPOs) tried to expand their networks to appease more people. Today, cost is the No 1 issue. As a result, we are seeing networks shrinking to save cost.

Expansion of government health insurance programs, combined with the reduction in Medicare and Medicaid reimbursements to providers.

If I am a healthcare provider and am getting less money to perform services on a growing population, then I need to do things differently. I need to get money from healthy people and from people needing less care. I would also need to keep people healthy or provide care in more cost-effective settings.

Advancing mobile technology

With advancing technology, it will be easier for providers to have real-time access to a patient’s medical information. Things like weight, blood pressure and blood glucose levels can be measured in the home, sent via Bluetooth to a mobile device, and immediately be available to the primary care physician in the individual’s web-based medical/wellness record. Other health metrics will also soon be possible. Systems can automatically notify the responsible physician of any changes in the metrics that warrant attention. Information will help provide proper treatment in a timely manner.

Change in tax laws, allowing personally purchased insurance on a pre-tax basis

With Republicans taking over Congress, the idea of making an individually purchased insurance policy tax-deductible is now on the table. While this is not a necessary catalyst for change, it certainly would put the nail in the coffin and get employers out of the health risk business.

Not only is there a perfect storm forming for the coming changes, but I believe the majority of the participants in today’s healthcare market will welcome this change. We have all heard the saying that “healthcare should be between the doctor and her patient.” We know the government wants this. I think employers, employees and healthcare providers would want this, too. It is the insurers, and by extension benefits brokers, that may not want this. However, as we all know, there is little sympathy for the insurance companies.

Employers would want this because I don’t think employers got into the health insurance business after World War II to be in the position they are in today. While I don’t think they mind giving employees money to pay for health insurance, they don’t want their profit margins affected by the health of their employees. Bad claims experience, and their profits go down. Every year, they agonize over the health insurance renewal, deciding whether to charge their employees more or make changes in plans (delivering bad news, either way) or absorb increases in the business. I don’t think employers want to be in the wellness business, either. They may want to provide wellness programs to make people feel better, be more productive at work or boost morale, but not to control or reduce healthcare costs.

Employees want change, too. Do employees want their employers asking for things like health risk assessments? My health should not be my employer’s business. To me, there is a slippery slope as it is. I do want my physician to care about my health. I want my doctor to know my weight and blood tests and care whether I got a colonoscopy when I turned 50. I often joke that I get an email from Jiffy Lube saying that my car is due for an oil change, but my doctor never sends me an email to get a check-up, test or whatever is needed to keep my engine running the right way.

I believe doctors and other healthcare providers want change, too. They want to practice health care. This would include helping their patients make the right lifestyle decisions and keeping them informed about what is good for them vs. what is not. Providers don’t want the paperwork. They don’t want third-parties telling them what to do, and they are getting tired of reduced reimbursements from the government.

The Market Reacting

I am not the only one using the term “Kaiser-like.” Emanuel Ezekiel, one of Obama’s healthcare advisers, expects healthcare insurers to be obsolete by 2025. According to Ezekiel, “ACOs and hospital systems will become integrated delivery systems like Kaiser or Group Health of Puget Sound. Then they will cut out the insurance company middle man — and keep the insurance company profits for themselves.” (Source: New Republic – March 2014)

Now, I am not going to just listen to Emanuel as my source. I am listening to the market. Hospital systems have been acquiring physician practices and entering the insurance business across the country. In my own backyard, there was this acquisition highlighted in the Boston Globe.

State insurance regulators Friday signed off on Partners HealthCare System Inc.’s acquisition of Neighborhood Health Plan, a transaction that will put the state’s largest hospital and physician organization into the health insurance business for the first time.” (Source: Boston Globe September 2012)

In Massachusetts, this is very big news. Partners HealthCare owns some of the leading hospitals in the country, including Mass General and Brigham and Women’s Hospital.

Hospital systems getting into the health insurance business is not limited to Massachusetts. In New York, New Jersey, Pennsylvania, Maryland, Michigan and all across the country hospitals are getting into the health insurance business. (See Kaiser Health News.)

Concurrently, insurance companies are getting into the healthcare business. According to Hospital and Health Networks Magazine January 2012, the following insurers have made healthcare acquisitions:

  • WellPoint bought CareMore.
  • Optum bought Orange County’s Monarch HealthCare and two smaller independent physician associations (IPAs).
  • United Healthcare acquired a multispecialty group in Nevada in 2008.
  • Humana purchased Concentra, which provides occupational care and other medical services.

Aetna Making Moves

What I have find most interesting is the acquisitions by Aetna and some of the comments by CEO Mark Bertolini. Let’s first look at some of the comments Bertolini has been making over the past few years.

“The end is near for profit-driven health insurance companies. The system doesn’t work, it’s broke today. The end of insurance companies, the way we’ve run the business in the past, is here.”

“We need to move the system from underwriting risk to managing populations,” he said. “We want to have a different relationship with the providers, physicians and the hospitals we do business with.”

In his presentation titled “The Creative Destruction of HealthCare,” he states:

“Not too far away from now – in the next six to seven – 75 million Americans will be retail buyers of healthcare. And they’ll come to the marketplace with their own money and either a subsidy from their employer or a subsidy from their government. And it doesn’t much matter – they’ll be spending their money.”

Aetna is not just talking. If you look at Aetna’s acquisitions and partnerships over the past few years, you can see that Aetna is preparing for the future that Bertolini describes. The company has spent billions of dollars acquiring technologies that can be critical to the future in managing healthcare and healthcare information, including:

  • iTriage – Mobile App for employee to check symptoms – Find doctor – Make appointment
  • ActiveHealth – View and update personal health record (PHR) – Personalized alerts and content – Communicate with doctor
  • Medicity – Promotes coordination of care – Real-time patient data

(Source: Aetna 2013 Investor Presentation)

According to Aetna’s website, Aetna was ranked #52 on InformationWeek’s 2013 list of the 500 leading technology innovators, surging ahead of many of the top names associated with technological innovation. Aetna ranked first among health insurers.

To move to this new model, healthcare providers will need to add capabilities that insurance companies currently have. For example, hospitals provide care but don’t have the actuarial skills to price their patient population in the event they were to get into the risk business. Many also don’t have the capital to assume risk. Those with enough capital can simply buy an insurance company. Others will have to partner with an insurance company that has the capital and reserves to share risk and provide the needed services.

So if I am an insurance company, I can either buy providers to stay viable or provide some products, services or capital that the new healthcare systems will need. Buying hospitals or physician groups across the country can be very expensive. So it may appear that a company like Aetna is setting itself up to be the technology, actuarial, reinsurer and other service provider for these future healthcare systems. I won’t claim to know if Aetna thinks the market will move as far as I am saying, to a Kaiser-like model, but the company certainly is preparing for a different healthcare model.

Some may think that this is somewhat what insurance companies are doing today. Here is the critical difference. Today, the risk-sharing arrangements are still in a fee-for-service environment. In the future, a hospital system may be in close to a 100% capitation environment (where the system receives a set amount per period for each person covered by the arrangement). Provider systems that purchase these services or develop a risk-sharing relationship with an insurance company in such an environment can’t have two such relationships. They will need a single risk pool to properly manage the population and risk. There won’t be a Blue Cross version, a United HealthCare version and an Aetna version of a local ACO/staff model system.

A good example of healthcare financing is my own healthcare. Since I moved back to Massachusetts 16 years ago, I have had the same primary care physician and used the same hospital facility on a number of occasions. Yet I have had seven different health insurance programs. Assuming an average insurance premium of $10,000 per year for my family, over the 16 past years I have paid $160,000 in premiums. I understand insurance, spreading the risk and all the other insurance arguments about where that money goes, but think of how it could be different if all $160,000 went to the system that was actually providing care to my family and me.

What Benefit Brokers Can Do

Okay, so the world may change. What would I do if I were a broker today to prepare for this change? First, change does not happen easily and overnight. The whole country of healthcare consumers, distributors and providers will need to adapt. As a benefits broker, your buyer may no longer be the employer but the employee. If this is the case, then some existing services may not be needed.

  • No more risk analysis/actuary and underwriting
  • No more claims analysis tools
  • No more wellness programs to reduce healthcare costs
  • No more disease management programs
  • No more company medical renewals

Before someone points out the obvious to me, I will say that I do know that most groups with fewer than 100 employees are community-rated and those with more than 100 employees are experience-rated. Small employers are still faced with balancing budgets based on their healthcare renewal. This anxiety will go away.

Most of these types of services are a core competency of many of the national benefits firms and the larger independent brokerage organizations. These services are viewed as key differentiators. For these firms, change may be even more dramatic because providing these types of analytical skills is part of their culture.

So let’s talk about the things brokers can do. I am going to break this down to a list of tasks.

1.       Understand what the players in your market are doing – Brokers should start analyzing their local medical market and see what the providers are doing in this area. Have they made acquisitions? Have they created new partnerships? What is their leadership saying publicly? Whatever they say or do, believe them.

2.       Add an employee call center – Employers will welcome the support in helping employees move to a new environment. Provider systems will welcome and pay for the support in helping those same employees navigate the market.

3.       Add personal financial consulting – It is estimated that close to 40% of employees lose some productivity at work because of financial stress. The healthcare insurance purchase is going to be a major decision for an employee, and it should be made in the context of an employee’s entire financial position.

4.       Understand the new technologies – How many of you who have read this up to this point understand what Aetna’s technologies for the consumer are? Do you know how to “Bluetooth” your weight from a scale to a smartphone? The place of employment can also be a great place to help employees with technology to track health information. Could an employer have a scale at work that is Bluetooth-enabled to send a person’s weight to their smartphone? Could the employer have a blood pressure machine at work? How about setting up a private room with teleconferencing capabilities so an employee can consult a doctor face-to-face via the web without leaving the place of employment? Could a broker make himself available to consult employees one-on-one as to how this whole system will work?

5.       Develop technology engagement and education strategy – After you learn what you need to know about the new technologies, are you ready to deliver? I believe the provider systems (the new Kaisers) will welcome the opportunity to educate the population through the employer. At the employer level, you can reach a large amount of people fairly easily. And the employers will care that their employees understand this new healthcare delivery system. Employers don’t want stressed employees, because stressed employees are not as productive. I believe employers and these new provider systems will pay to help these individual consumers.

6.       Invest in new internal technology and processes – If your entire infrastructure is geared around engaging the employer, then things will need to change. Can you record a phone call? Can you engage in online chat with an employee? Are you prepared to sell individual insurance? To sell a high volume of individual policies and service employees, you will need extremely efficient internal operations.

7.       Start thinking about helping employers exit the risk business – Rather than advise employers how to control costs and mitigate risk, should you start advising them on how to get out of the risk business? I guess private exchanges and defined contribution plans are the start. However, if the healthcare market changes, the pace will accelerate because there will be more options for the employer to get out.

8.       Engage new providers – Carrier reps are always calling on brokers, but these new organizations may not call on brokers in the same way. You may need to reach out to them. If you have something of value for the new provider system, you will need to engage the carriers.

To move to this new model, it will require that brokers invest in technology and people. To attract the provider systems benefits, firms will need to have the services, size and scale to deliver. Most independent benefits firms either don’t have the capacity or capital to move to this model. They will either have to sell to a larger firm or join forces with peers who share the same vision and are willing to collectively invest in preparing for the future. The national firms and larger independent firms with the capital and resources will need to have the will to change.

In today’s environment, many brokers may not feel the need to make these changes. Other firms have already started preparing for a much different future. For example, several national firms have opened call centers for employees. Whether that is for a future market I have described, or simply to service employees today, I don’t know, but the centers are a sign that the benefits game is changing.

I may not end up being right with my market predictions, but my advice is to pay close attention. There is change going on out there, and I think a picture of the future is being drawn that looks much different from the healthcare market today.