Wednesday, April 17, 2019

The Cost of Hospital Care is Much Higher for those with Employer-Provided Coverage

When you go to the hospital, what you pay is based on what your insurance covers. This raises the question, how do insurers determine what a hospital is paid? On one end there is the chargemaster amount, the list price for services that hospitals are now required to post. On the other end, there is what Medicare pays. Traditionally insurers have negotiated discounts from the chargemaster prices, but that's starting to change. Employers are banding together to force insurers to negotiate up from Medicare instead of down from the chargemaster.

A group of self-insured employers in Indiana commissioned Rand to conduct a study that would provide useful information about the prices they are paying for health care services. The study showed that what employers paid varied wildly--200 to 600 percent over what Medicare reimburses. This is not a question of good hospitals charging more. It's poor hospitals charging too much. The amount considered appropriate as a percentage of Medicare varies. I've heard anywhere from 120 percent to 200 percent of what Medicare reimburses deemed acceptable. The Rand study was so informative that it has been expanded to include 22 states, and the results are due to be announced next month.

Ideally, this pricing information would be used in conjunction with quality data. This raises another issue where employers need to press insurance companies. I've encouraged people to use Leapfrog ratings to obtain care from the safest hospitals. I want to take the next step and build a financial incentive into the plan design for doing this, but the network contracts insurers have with hospitals prevent this. Here is the response I received from UHC.

Saturday, February 23, 2019

Are Hidden Fees Driving Up the Cost of Your Healthcare Coverage?

Every once in a while, you come across an article you wish you would have read a decade or two earlier. Propublica's Behind the Scenes, Health Insurers Use Cash and Gifts to Sway Which Benefits Employers Choose by Marshall Allen is one of those articles. For years, I compared the commission our broker was paid to what others were paying. The fees usually ranged between three and six percent. What I didn't see was the additional bonuses insurers paid our broker. I finally looked at the 5500 filings of other associations and was able to see the picture more completely. I created this scatter plot to see how what we were paying really compared. A quick look at this chart will show you how dramatically per employee per year broker fees varied among associations in the DC area in 2015. This caused us to make a change. We now work with Zack Pace at CBIZ. We pay Zack a monthly fee for his help and everything is transparent and above board. 

I've run into Dave Chase and David Contorno who were interviewed in this article at various meetings in the past year. It seems like the Health Rosetta movement is gaining steam which is good for all of us who have employer-provided health care coverage. Ask your HR team how your employer's advisors are paid.

Monday, February 4, 2019

Engaging Employees in Health Care Benefit Design

Traditionally, benefit managers get together with an advisor or broker and a representative from a health insurance company to decide what to include in their employer-provided health care coverage. No employer can afford to pay for everything, so this small team debates the tradeoffs and decides what's best for the organization. 

I asked myself what it would look like if employees had input into these decisions, and I set out to design a process to facilitate employee input. I invited ASHA employees to participate in this process, and together, we redesigned one of the health insurance plans we offer to staff and dubbed it the ASHA signature plan. 

You can read about this journey in Health Affairs. If you're interested in learning more, I wrote a white paper with Len Nichols, professor of Health Economics at George Mason University (GMU), Lisabeth Buelt, and her colleagues at NPC. NPC provided funding for me to contract with GMU to analyze what insights we could draw from all the data we collected. I hope our work inspires other employers to involve their employees in decisions about their benefits.