The CEO’s Guide to Restoring the American Dream
Chapter 9: You Run a Health Care Business Whether You Like It or Not
The reality is most companies wouldn’t hire their present benefits leader to run a multimillion dollar business unit or product. So why do they run a multimillion dollar benefits spend?
So, what’s different about employers who are winning the battle to slay the health care cost beast? It’s all about mindset. It’s about waking up to the understanding that improving the value of health benefits is the best way to improve the well-being of their employees while boosting the company’s bottom line – then committing to that path.
In choosing care providers partners, wide-awake employers understand that the well-being of caregivers has a direct impact on the care of their employees. … Like Fair Trade coffee … I’m proposing that you likewise insist that halth care organizations exhibit fair and ethical treatment of clinicians and patients before you become one of the [mistreated]. Here’s what Fair Trade for health care should include:
- Transparent Prices
- Bundled Prices
- A Culture of Safety
- Staff Treatment
- Ethics-based Organizations
- Data Liquidity
What you need is a sophisticated health administrator, analogous to the person who’s administering your 401(k). This is someone whose skills and experience are commensurate with the magnitude of your investment in health benefits and the level of fiduciary responsibility it carries. … In short, you need someone to run a major business, your health business. Some skills are listed on pg. 99
Chapter 10: How to Pick a Benefits Consultant (Broker)
[Instead of the traditional 60 day notice for annual renewal process] Most consultants (although not all) that support self-insured plans are far more sophisticated than the brokers profiled earlier. If they’re not, self-insured plans can be a financial disaster of epic proportions. A consultant in this space needs to know (1) how to set up a plan and build it out component by component and (2) how to put protections in place for your company to ensure your liability is no greater than you can financially stomach.
Here are the main components of high-performing self-insured plans:
- The third party administrator (TPA) that is responsible for paying claims (with your money) according to the specifications you set up and the supporting plan documents
- The network (usually “rented” from a large carrier) the provides discounts off billed charges
- Balance billing protection. Employers have a duty under ERISA to only pay fair and reasonable charges. After that price is determined and paid, some providers will try to get additional payments from an employee. A proper plan protects an employee against providers pursuing this. In extreme cases, that can include legal services for the employee.
- A pharmacy manager to handle the pharmacy network
- Pricing contracts
- Stop loss protection to pay for large claims
A common first misstep to lower costs is workplace wellness programs. As we saw in Chapter 8, at best, only a tiny percentage of such programs have a real ROI. … Instead, a progressive consultant brings you a multiyear health care plan designed to lower the quantity of care consumed, built on a proven approach to lower the actual cost of care for ALL employees – whether they are healthy or not.
The plan will generally reflect the following:
- Serious thought for ERISA fiduciary responsibility
- An emphasis on value-based primary care
- An emphasis on the highest-cost outlier patients
- Transparent medical markets / reference-based pricing (ie ways to know the actual prices you’ll pay for services)
- Transparent pharmacy benefits
- Data proficiency
The plan will also include payment arrangements with providers and, importantly, complete disclosure of the consultant’s sources of compensation.
As you can see, the actual “insurance” is a smaller and smaller piece of what the nontraditional benefits consultant brings to the table. In the self-insured model, stop-loss is the only insurance policy purchased, generally accounting for less than 20 percent of the overall costs. This person should be able to provide you with all the information you need to identify the best renewal options for noninsurance administrative functions and, critically, the right strategies to positively impact both the cost and quality of your employees’ care over the long term. … You don’t necessarily want to pick your consultant based on how low their fee is.
Chapter 11: The 7 Habits of Highly Effective Benefits Professionals
Habit #1: Insist on Value-Based Primary Care
Habit #2: Proactively Manage Pharmacy Benefits
Habit #3: Have Specific Plans for Uncommon (But Predictable) Gargantuan Claims
Habit #4: Deploy Evidence-based Musculoskeletal (MSK) Management Programs
Habit #5: Refuse to Sign Blank Checks to the Health Care Industry
Habit #6: Protect Employees by Sending Them to Providers With First-rate Safety Records
Habit #7: Avoid Reckless Plan Document Language that Costs Millions
All your moves to implement these habits should be properly documented for two reasons. First, you want your entire team (not to mention your successor) on the same page. Second, not doing so can leave you and your company vulnerable to litigation related to health plan design and administration.
Chapter 12: Centers of Excellence Offer A Golden Opportunity
What to look for in a Center of Excellence:
- Patients are seen by multiple specialists
- A multidisciplinary team does the diagnosis
- That same team prescribes treatment the treatment plan
- If surgery is required, it is done at the highest quality available
- The patient experience is excellent
- Health care is integrated, collaborative, and accountable
- Bundled payments and global fees rather than fee-for-service payments
Remember that organizations are usually only a center of excellence for certain procedures and specialties, not everything.
In health benefit plans today, about 6 to 8 percent of plan members are spending 80 percent of the plan dollars. Outliers may have wildly different medical conditions, but they have a lot in common. (see pg 120)
Admittedly, contracting directly with health systems that qualify to be centers of excellence usually takes a lot of effort, and you have to be a pretty large employer to get their attention. The good news is that “aggregators” are available today … to get prepackaged access to top-notch centers of excellence.