Rules are established to ensure the rights and protect the welfare of people. However, in the healthcare industry, the rules don’t always work the way they were intended. Discrepancies, hidden costs and misleadings are common in many areas of healthcare, perhaps most noticeably in pharmaceuticals. 

We need to start seeing past the smoke and mirrors and uncover the truth about the costs paid by carriers, our employees and our business.

Carriers prefer to keep the system opaque, this is especially true when we look at pharmacy spend, where pharmacy benefit managers can establish rates that benefit the provider, and not your business and people. Leaving you unaware of the true costs.

Spread pricing, administrative fees, rebates from drug manufacturers, and other revenues have the potential to drive profits for carriers while being hidden to employers and users. These hidden profits can become more apparent when you separate, or carve out, your pharmacy from the carrier.

Here’s how. 

Comparison quotes for pharmacy carve out vs using a carriers pharmacy services can look something like this:

Pharmacy included:

• $71.88 pepm (per-employee-per-month)for medical and prescription services.
• A $47.65 pepm prescription rebate is issued
• Total amount charged, as an admin fee, per employee is $24.23 pepm.

Pharmacy carved out:

• $73.88 pepm for medical services
• $0 prescription rebate.
• Total amount charged, as an admin fee, per employee is $73.88 pepm.

Another example shows a large carrier subscription quoted for $52.13 pepm, with a $47.13 pepm rebate, creating a $5 pepm admin fee. When we take out the prescription drug component and bring it to another party the quote becomes $60.04, no rebates. 

Same group. Same Data. Same Plan.

Why would the plan cost more when the carrier is technically doing less? The answer is simple — they want you to use their pharmacy benefit manager because they can profit more. In fact some carriers also offer carve-in programs to their brokers, which means the broker can get a big bonus when they sign a client with their pharmacy. 

Sometimes that bonus means they receive up to $100 per employee.

Enhanced by industry opacity, this current profitability method for carriers is suspicious, unfair and surprisingly legal. Carriers are able to use incentives to encourage brokers and companies are being penalized for not using their pharmacy program.

Where does that leave you?

If you are large enough, self-funded, and have all of your data, you can do an analysis and determine what the real prices are.

There are groups that can reprice 12 months of past pharmacy claims to estimate what your savings would be based on their solutions. Most times the savings from a more efficient pharmacy spend offsets the  increases in admin  premium (and normally creates significant savings).

Until you look at your plans data, you can’t know if you’re making the smartest decisions for your business and your people. That data analysis allows you to make an educated choice, not a choice based on your carrier’s marketing tactics or a broker’s backend incentives that you may or may not be aware of. 

Let the data show you what the correct solution is.

With this data you can remove the smoke and mirrors and reduce the opacity of the healthcare industry. You can get a clearer picture about your plans’ real costs and your carrier’s real profits.

In Blackjack, if you know the dealer’s hole card, you can make smart and logical bets to ensure a beneficial outcome. But that’s not how the game works. You don’t get to find out if you made the right bets until the game is done. Health insurance is the same way. Imagine the dealer is your insurance provider and the hole card is the data on your plan. The dealer has information you need, they make the rules and the house has the advantage. But what if you could get access to that hole card? 

As a business owner you are expected to make decisions about your group benefits plan without knowing key details, like if there is any compensation for agents, what percentage of your premium was used for care in a given year, or the amount of money expensed towards the cost of care for employees. In other areas of business, making decisions without knowing all of the facts is considered unacceptable. 

For example, if you provide a cellular data plan for your employees, you have constant access to how much the plan costs as well as how much of the plan is being used by employees. If the cost of the plan suddenly goes up or if you see a big spike in usage in a singular week, you would investigate the change to make an informed decision about what comes next.

Maybe the phone provider made a mistake. Maybe an employee misused the cell phone plan. Maybe a feature was added that your business doesn’t actually need. Understanding the cause allows you to pick the right solution moving forward.

In a health insurance setting, these details are rarely shared. If the rate of your benefits plan changes, you deserve to know why, and you deserve to know how the money is being spent because changes in your insurance plan not only affect you, they affect your employees too.

From budgets to employee morale

Group benefits are offered to ensure the well-being of your employees and their families. The lack of transparency in costs to your business can also impact the costs for your employees, which means they could be getting surprise bills for procedures they thought were fully covered. This can lead to employees who are frustrated by a plan put there to support them, and that frustration is often directed at the employer. 

With data transparency, you could reverse this narrative. If you learned that, year over year, most of your healthcare spend went unused (pure profit for the insurance company), you could unlock that wasted capital and use it to improve the business and the lives of your people. You could invest in 401ks for employees, hire new staff, update equipment, or implement employee appreciation days, all of which can improve the quality of life for your employees.

But you can’t make those strategic changes when you don’t know what’s really happening in your plan.

Unlocking your data

When asked to disclose your data, providers may dodge the question and hide behind the complexity of benefits plans or blame HIPAA regulations. To put this into context, let’s say you spend X amount of dollars for your plan, you have no way of knowing if the insurance company paid double to cover care or if they paid less. 

An experienced advisor has the means to get access to your plans data. This information gives you the ability to see what your plan actually spends, allowing you to make informed decisions on the value it provides. You may discover that based on your plans actual costs, you are getting a good deal and an increase in your bill is justified. You may also discover that you are setting aside far more budget for your plan than necessary, which can be a potential gain of revenue for the business if you can unlock that unused budget and invest it elsewhere. 

Once you have that data, you know exactly what’s on the table, and you can make easier, smarter decisions. You get to see the dealer’s hole card and this clarity tips the odds back in your favor. 

Imagine the team goes to a restaurant for lunch. Everyone takes a seat and orders lunch. Conversations fly, food and drinks are enjoyed, and team morale is high. The bill arrives, appears accurate, and your business pays the tab. Then two weeks later, the restaurant sends an invoice with a charge for premiere seating. The waiter never mentioned the charge, the restaurant never advertised it, and you definitely didn’t ask for it. You try to dispute the restaurant, but they point to some fine print and shrug their shoulders, saying that you’re stuck paying for the charge whether you like it or not.

As absurd as this sounds, this scenario happens every day in healthcare. 

Before COVID, one of our clients reached out with concerns following an employee’s telemedicine appointment. The call was scheduled through her health plan. She was pleased to complete the consultation in the comfort of her own home, speaking to her doctor remotely. The paperwork appeared to be finished and the doctor was paid according to the contract between her insurance company and the national network of physicians in which the doctor worked. Ten months later, the employee received a bill for a facility fee, for the telemedicine appointment. 

But this employee never stepped foot in the building, but the hospital argued that since the doctor could have used the officer for the appointment, the facility fee was still justified.

In our client’s case, the concerns were clear: 

• Their employee never stepped foot into a facility
• The appointment was completely virtual
• She was unaware and not informed there would be an additional fee on top of the covered telemedicine appointment
• After speaking to the provider, who was part of the integrated health system, the response was simply “we are allowed to do it.”

Facility Fees are Unethical 

Our client is not alone. Healthcare providers hide behind the complexity of healthcare billing and hidden disclaimers to charge facility fees on top of covered procedures or services. We believe this practice is unethical and quite possibly illegal. In fact, the state of Connecticut requires hospitals and medical providers to better disclose facility fees. While this is a step in the right direction, the disclaimer can be easily overlooked or hidden in confusing billing language. Many employees are still left surprised when they receive a secondary bill for hundreds and in some cases thousands of dollars. 

Facility fees are not limited to the walls of the hospital. Outpatient services and physicians practicing outside of the hospital are subject to fees, making them difficult to avoid. For example, a facility fee can be charged when an employee has routine blood work performed at an outpatient facility. The lab work gets covered, but the employee is left to pay significant balances after the fact. A report by Orlando Sentinel, citing information from the Medical Payment Advisory Committee, states that facility fees “can increase the total cost of a service by three to five times,” putting recipients in a difficult position. 

Surprise expenses of any kind can put enormous strain on a working family, and that stress can impact the employer. Not only will general morale suffer, but the employee may also blame the benefits plan, which can mean problems with retention and performance even if the employer did their best to provide the best benefits possible.

This is unfair for everyone involved.

The Game Changer

An advisor can help. Having someone in your corner who understands the complexity of the healthcare system can protect your employees from unexpected and costly medical bills and allows you to stay focused on your business. An advisor dedicated to your business can help employees navigate their options, avoid unexpected charges, and advocate on their behalf if they are overcharged is the individualized attention your business deserves.

We hope that legislation will eventually address this problem in healthcare, but for now, you should take steps to protect your business and your employees from unfair charges.

I meet a lot of business owners in my work, and very rarely do I meet someone who genuinely wants anything less but the best for their employees. These are the leaders who, even in the face of an opaque and unwieldy healthcare system, invest significant portions of their revenue to give their people better benefits.

But in our healthcare system, even the “right thing” can backfire to the point that no one wins– not the business owner, not the employees, and not the families of the employees.

Higher Costs, Less Coverage

This is a true story:

I spoke with the owner of a lumberyard who covers 94% of premium costs for employees, which is well above the average and fairly generous. To achieve this, he spent an additional $7 on their hourly rates, yet the deductible was still $7500, and his broker had recently informed him that he should expect a 43 percent cost increase in the coming year.

Yes, 43 percent.

With a $7500 deductible, this employer’s generous approach to benefits was already not manageable for his employees, many of whom are unskilled blue collar workers. For those families, a medical emergency with that kind of price tag would be devastating financially, which hardly feels generous from the employee perspective.

And then the plan is due to get worse next year, forcing everyone involved to spend more to get less. That’s simply unsustainable. And the worst part is that this employer was actively trying to do right by his employees, using all of the resources he had available to him to do so.

When the “Right” Choice is Hidden

In a situation like this one, the most affordable path for the employer and his employees might be an aggressive self-funded strategy, or at least a partially self-funded strategy. In the worst cases, he might be better off dropping what he contributes to employee healthcare so that his people qualify for a subsidy on the healthcare exchange.

That approach, on the surface, can sound like the employer wanting to cut costs, but the “penalty” he faces could half his total expenses while at the same time giving his people access to better care. At that point, his challenges would be around educating employees on how best to take advantage of the healthcare exchange to get the plans that best suit them and their families.

Unfortunately, businesses across the country face challenges like this every year, and the best solutions are not always the intuitive “right” answer. You need an advisor who can see the big picture of both your business and your potential options to help you find a path that is sustainable for the business without sacrificing the employee experience.

See the Full Picture of Your Benefits Options

Solutions aren’t always easy, of course, but as soon as you see that your healthcare costs are trending in an unsustainable direction–which is the case for nearly all businesses, eventually–you should dig deep for every possible switch to flip and button to press to put you on the path to sustainability.

Otherwise, everyone loses. But it is possible to win.

Few aspects of your business may feel as unwieldy as your benefits plan. We often talk with business owners who are frustrated by the year-over-year increases in benefits costs, but the challenge of making substantial changes to a plan deters many leaders from actually addressing the problem.

Most business owners are not benefits experts. They don’t want to upset their employees by making the wrong change. And decades of benefits frustration can make any attempt to alter the trajectory of this situation feel like a pointless exercise.

So when we reach the point of a leader being willing to make a change, this question sometimes comes next: “Can I keep working with my current broker?”

Impactful Change Without Leaving Your Broker

For how scary a benefits change can seem, keeping your existing broker can feel like a security blanket. You likely have rapport with the broker, have worked with them for years, and may even have come to trust their advice and insights. Though many leaders may not admit to this part directly, keeping the broker relationship intact could make it easier to reverse course if the experiments with the new advisor don’t work out.

Is it possible to make meaningful changes in the cost and quality of your benefits plan with your current broker in the mix? Yes.

Is it practical? Maybe.

Is it easy? Absolutely not.

If a broker is fully willing to collaborate with an advisor like myself, the process of unlocking new revenue with your benefits plan can go smoothly, but the reality is that brokers often represent the status quo, creating natural friction between them and anyone who challenges the business to think differently.

Sources of Broker Friction

In a traditional benefits cycle–the one that increases your annual costs by 10 to 20 percent each year–most broker activity happens annually around plan renewals with some light administrative work peppered throughout the rest of the year.

Self-funded benefits plans and partially self-funded benefits plans require much more activity. These approaches are designed to be agile and responsive to improve efficiency and to reduce overall costs, which means that your broker now has to manage their normal day-to-day work , such as:

• Additions to the plan
• Deletions from the plan

But also assist in the management of:

• Directly address claims and claims-related issues
• Field benefits questions from you and your employees
• Managing ongoing education for your employees revolving around a changing employee and employer mindset of how they are accessing the healthcare system

While the broker takes on these tasks, our team is implementing cost-savings strategies, addressing your pharmaceutical spend (which could mean doing the legwork to source drugs at a lower costs), analyzing your historical benefits data and your ongoing data, and negotiating with providers to lower your expenses while increasing the quality of care.

That’s everyday at the office for our team, but for a broker, this is a very different model and can be much more demanding than the status quo alternative.

On top of the logistics, each suggestion our team makes hints at an unspoken but troublesome question: “If this new solution has merit, why didn’t your broker recommend it in the first place?”

The potential answers to that question can be uncomfortable for the broker and deter them from fully collaborating.

What’s Possible vs. What’s Practical

Our team is always willing to work with a broker, but the broker has to be willing to work with us. They need to put your interests first and lean into new ideas so that we can do our jobs as the advisor or consultant in this dynamic. 

Many business owners see their benefits savings as one-off opportunities. The changes that are made in their plan, such as implementing telehealth options or sourcing more cost-effective medication, may save them hundreds of thousands of dollars in one year. To see the full potential of a cost-effective benefits plan often takes time, however, and employers who are willing to wait often see even more massive savings years down the line.

Trusting your adviser to create long-term savings from your benefits plan is crucial to using your plan as a tool that can help your business grow. Here’s why:

Short-Term Risks for Long-Term Rewards

Change can be intimidating, especially when the future of your business is on the line. That’s why, for many business owners, even the prospect of savings thousands on their benefits plan in one year still isn’t enough to convince them to make changes. Looking toward the future, though, those savings can multiply and turn into a strategic advantage for your company.

A good adviser will understand your concerns and do their part to educate you and your employees so that you understand how their proposed changes would impact everyone involved in your benefits plan. If you still don’t think the money you could save in one year is worth the risk, multiply those savings by a few years. Your future self will thank you for making a choice now that will have saved you hundreds of thousands of dollars in a decade’s time.

The Impact Of Years of Savings

What could $10,000 do for your business? How about $50,000? Or $100,000? Even seemingly small, simple changes can yield these results and more over the years, creating opportunities to grow your business.

For example, while working with one client, we discovered that we could bring the cost of just one drug down from $88,525 to $16,179, saving them $72,346. Imagine how these savings could impact a business as they multiply over time, providing a company with sufficient funds to:

• Hire more employees
• Purchase new machinery
• Increase employee salaries

To truly understand how your benefits plan can change your business for the better, you need to look ahead, not just until the end of the year.

The Bigger Plan

A great benefits adviser won’t consider their work done after they unlock savings opportunities within your benefits plan. Just as your business evolves over time, your adviser will ensure that your plan evolves with it. The savings uncovered in the first year of your new plan will likely expand over time to reflect the changes in your company.

Your benefits plan isn’t a stagnant expense – it’s a strategic advantage for your business. Working with an adviser who respects the long-term potential of your plan by treating it as an ever-evolving tool can ensure that the savings you unlock this year will only grow in the years that follow.

A Brighter Future in Benefits

One-time savings are great, but accumulating savings are even better, especially when that money can be put right back into your growing business. Though changing your benefits plan can be intimidating, a great adviser will ensure that your risk pays off in the form of big savings that can used to help your company evolve in both the immediate and distant future.

Contact me today to learn more about the long-term impact of a great benefits plan.

Many business owners know that they can’t afford to keep spending as much as they are on their benefits plan. The prospect of big changes, however, can be intimidating, even when they understand that the ultimate goal is to create huge savings that can help them grow their business.

One of the quickest and easiest ways to create big savings in your benefits plan is to have your adviser find alternative sources for your employees’ medication. Rather than accepting the astronomical expenses of drugs, your adviser can find less costly sources that provide the exact same medication for a fraction of the price. It’s a simple change that can create incredible savings for your business, and your employees have nothing to lose and everything to gain.

An Unnecessarily Costly Expense

Just as clothes, foods, and home supplies can cost more depending on where you buy them, drugs can also vary wildly in price depending on their source. Many insurance plans don’t allow alternative sourcing, but working with a great adviser can allow your employees to have the exact same medication for a fraction of the cost. Better yet, your adviser may be able to arrange for your employees’ drugs to be sent directly to their home, saving them time as well as money. There’s no reason for you and your employees to spend so much money on an expense that can so easily be slashed by thousands of dollars.

Zeroing in on Easy Savings

Focusing on medication-based savings can save your business tens or even hundreds of thousands of dollars, even if you have only one employee who needs just one expensive drug. We saw this firsthand with one business we’ve worked with. Their existing plan saw them paying $88,525 for the 14mg multiple sclerosis medication Aubagio and $102,122 for all their employees’ drugs.

Under our plan, we would be able to:

• Find an alternative source for Aubagio to bring the cost down to $16,179, which would save them $72,346, or about 82 percent of the original cost
• Bring the total drug costs of $102,122 down to $19,437, saving the company $82,686 in just one year
• Eliminate the employees’ copay, saving them a total of $2,516 on their medication

The numbers don’t lie – sourcing drugs is an easy fix that can save you and your employees a significant amount of money.

A Swift Path to Growth

Most changes in your benefits plan will require time for your business to see the full effect – usually between three months and a year. Though the savings are worth it, business owners are understandably eager to see faster results. The challenge, of course, is figuring out how to achieve fast, significant savings that will contribute to long-term business growth.

Alternative drug sourcing can be the answer your company is looking for. Finding low-cost alternative sources for your employees’ medication is a solution that can be implemented almost immediately, offering huge savings for both your company and workers. Best of all, there are virtually no negative effects – people don’t care where there medication comes from as long as it’s the same drug they need, and they’ll appreciate it even more if their drug costs are reduced by hundreds or thousands of dollars a year.

A Small Change With a Big Impact

As you prepare to make big changes in your benefits plan, kick things off with savings that stem from cost-effective medication choices. When you let your adviser find a low-cost source the drugs your employees need, you immediately open the door to massive savings that can help your business grow and thrive for months to come without any negative effects on your employees.

Contact me today to learn more about how sourcing medication can be a fast and simple way to save your business thousands.

The end of the year ushers in a number of important dates, and amidst all the holidays and festivities, many employers also have to focus on their upcoming benefits plan renewal. Business owners have long been convinced that their renewal must take place at the end of the year, or at the very least, they’ve become so accustomed to that annual routine that they haven’t even thought about scheduling their renewal for a different time of the year.

The reality, however, is that you can reschedule your renewal for virtually any time of the year if you’re working with a great benefits adviser. By pushing your renewal to a different date, you can avoid adding any more big changes to an already hectic time, and your adviser can help you navigate such an important switch.

Making Time for Change

One of the biggest challenges for many businesses toward the end of the year is the amount of time employees spend away from work. In addition to the company-wide days off like Thanksgiving, Christmas, and New Year’s Day, many workers also try to fit in their annual vacation time during the final two months of the year. This can be challenging for business owners trying to renew a plan that impacts their entire workforce.

Imagine how moving your renewal date ahead could combat this struggle. With the holidays over, you and your employees can come back to work feeling refreshed after some time off. Plus, with those sporadic days off out of the way, you can comfortably schedule educational meetings for your employees to ask questions about any changes to their plan without worrying that a large number of them won’t be able to attend.

Focusing on What Matters

Your benefits plan is probably the second- or third-largest expense for your business, and it deserves the attention that reflects its impact on your company. With your and your employees’ focus likely dedicated elsewhere in the busy final weeks of year, scheduling your renewal for the holiday season might result in details being overlooked or changes being forgotten.

By changing your renewal date, you and your employees can put your focus on any remaining end-of-year goals while properly enjoying your time off with your families. Rather than adding more to your plate during a time when you and your staff have other matters on your minds, waiting for the new year allows you to focus on what’s important as the final months of the year come to a close.

The Power of a Great Adviser

The prospect of changing your renewal date can be intimidating to some business owners, but that’s what your adviser is there for. A good adviser can help take the stress out of both the holiday season and moving your renewal date by:

• Working with your business throughout the year to understand your plan’s evolving needs
• Preparing your employees for the changes that will take place in their benefits plan
• Helping your business transition with the steps needed to move your renewal date

By working with an adviser who understands your business, you can make big upcoming changes – including a new renewal date – exciting rather than intimidating.

The Gift of Better Benefits

Developing an improved benefits plan means being willing to implement big changes, and one of those changes may involve moving the date of your renewal. With a great adviser who can help you navigate that switch, moving your renewal away from the holiday season can enable you and your employees to dedicate more time and attention to your plan as it develops with your business.

Contact us today to learn more about the positive impacts of changing your renewal date.