Mark: Welcome to unsuitable on Rea Radio, the award-winning financial services and business advisory show that challenges your old school business practices and a traditional business and culture. On the show, you’ll hear from industry professionals who will challenge you to think beyond the suit and tie, while offering you meaningful, modern solutions to help you enhance your company’s growth. I’m your host, Mark Van Benschoten. This week on unsuitable, we’re going to tackle a very big, very confusing topic for many employers, healthcare. Fortunately, we have Mike Stull, chief marketing officer of Employers Health and board chair for the Healthcare Collaborative of Greater Columbus to guide us through this difficult topic.
Mike actively represents employer and plan sponsors interest with regard to improving the healthcare delivery system, and I know he’s going to have a lot of great insight to give us about our healthcare options as employers. We have a lot to get to today, so let’s get started. Welcome to unsuitable, Mike.
Mike: Thank you. Glad to be here.
Mark: I appreciate it. Before we get started on our difficult topic there, I understand you have a podcast.
Mike: I do. I do.
Mark: What’s the name of it?
Mike: It is called the Employers Health HR Benecast.
Mark: Benecast
Mike: Not quite as creative as Rea Radio, but-
Mark: That was my idea. We can talk afterwards, and I can help you with yours.
Mike: Help us with the creative part of it. It’s always good when the chief marketing officer doesn’t have a good name, but we just finished our second episode, and had about 20 of our members that listened to it the first time, so continuing to try to get more members to listen to it.
Mark: Great, and you’re the host of it?
Mike: I am. I am, and so the first episode, it was just me. This past episode-
Mark: That’s a tough-
Mike: It is, and who wants to listen to me for 20 minutes straight?
Mark: I was just going to be quiet and let you talk. That’s why we have you on.
Mike: That’s right, but this past time, I actually did have a guest, so we’ll see how that plays out.
Mark: Great, and so where can people get that? How can they …
Mike: They can go to www.employershealthco.com, and there should be a link to the webcast on our webpage.
Mark: Great. Great. Congratulations with that.
Mike: Thanks.
Mark: I have enjoyed my time being a host, and I’m sure you seem to have a personality that would enjoy it also, so.
Mike: I think we’ll continue to grow it, and who knows. Someday maybe it’ll be nationally syndicated or something.
Mark: Huge, with advertising at the end. Yeah.
Mike: That’s right. That’s right.
Mark: If I had a better production, I could’ve done that, too, but … We’re going to talk about healthcare today, and as a business owner, I just … What can people do? It seems to me like we’re handcuffed. There’s not a whole lot of options out there. Am I wrong?
Mike: No. I think the system for health insurance and healthcare is relatively limited, in terms of what employers can and can’t do. I think that the Affordable Care Act, while it was meant to increase the number of insured adults and insured children in America, also set out some regulations that do make it a little bit more difficult for employers to be able to offer healthcare benefits. I think in general, we see the cost continue to increase. We see more cost shifting from employers to patients, so we see a big move to consumer-directed health plans and things like that. I think there are some good things going on in the marketplace as it relates to some of the changes that providers are making, and in terms of the way that they’re being paid not just for volume, but for actually producing some good value. It’s a long way of saying that yeah, we are kind of handcuffed in what we’re able to do, especially if we’re a fully insured employer, but there are new and exciting things that I think are happening that were in motion, and that were spurred by some of the healthcare reform efforts.
Mark: I’m glad to hear that someone’s optimistic about it. You typically don’t hear that.
Mike: Yeah. I think that the Affordable Care Act has certainly gotten a bad rap in the media, and just generally, if you ask someone about the act, typically you can tell which way they lean.
Mark: Do they call it Obamacare?
Mike: Because they call it Obamacare instead of the Affordable Care Act, or PPACA.
Mark: Correct.
Mike: There are certainly some unpopular pieces of it. The Cadillac tax, certainly an unpopular piece with a lot of people, even if they don’t understand it. It’s unpopular. There’s also a number of regulations that are in there, that are unpopular in terms of the individual mandate, and things like that. There’s also a lot of good stuff that’s in it. It was what? 2,000 plus pages of regulation, or of legislation, not to mention how many thousands of pages of regulations have come out on top of that. There’s bound to be good things in there, and there are. They set up an institute called PCORI, which has to do with comparative effectiveness research, and that’s great in healthcare because there’s so many things, new technologies that come to market. Let’s use pharmacy as a great example of this.
Where drug a company will launch a new drug, and to get approval, all that company has to do is prove that its new drug is more effective than a placebo.
Mark: That’s it?
Mike: That’s it, so it doesn’t have to prove-
Mark: That’s a low bar.
Mike: It is a low bar. It doesn’t have to prove that it’s more effective than what’s already on the market. It has to prove that it’s more effective-
Mark: Than a placebo.
Mike: Than a placebo. What ends up happening is, all the marketing goes around it. We get sucked into-
Mark: The glossy ads and stuff.
Mike: Right? We want the new thing, right?
Mark: Correct.
Mike: We’ll pay, and when I say, “we,” I pretty much mean employers and plan sponsors, will pay for the new thing, even though it doesn’t work any better, or maybe it works less effective than the old thing, which costs a lot less.
Mark: The PCORI? Did I say that correctly?
Mike: That’s right.
Mark: Good thing you’re doing this now, not a couple episodes more. That organization monitors the effectiveness of that?
Mike: They’ve started to do some studies around comparative effectiveness research, and the legislation puts a little bit of a handcuff on PCORI in terms of what it can do with the outcomes. It’s definitely a good place to start. I think that that’s one example of a place where the Affordable Care Act is making some progress. There’s also a number of demonstration projects that are funded through the Affordable Care Act, that are run by Medicare and Medicaid, and we have some of them right here in Ohio. The Comprehensive Primary Care Initiative is a multi-stakeholder approach. It’s been going on in the Cincinnati market for-
Mark: What do you mean by demonstrator project? Can you-
Mike: Right, so what Medicare has done, and this really started under the Bush Administration with the Secretary of Health and Human Services at that time was Mike Levitt, and Secretary Levitt talked about the Centers for Medicare and Medicaid Services being an incubator of good ideas out in the marketplace.
Mark: Seems to make sense.
Mike: It continued with Secretary Sebelius, and it’s continuing now today, where Medicare has basically said, “We will go into certain markets, and we will put Medicare dollars behind certain initiatives to see if they work.” If they do work, we can expand the program, and put our Medicare dollars behind it more broadly. That’s a huge differentiator in a marketplace when you’re trying to move provider behavior, because it’s one thing if Anthem, or Cigna, or Aetna, or Medical Mutual here in Ohio, if they do it, you may get limited reaction. When Medicare and Medicaid are doing it, you get a lot more attention. That specific initiative has to do with basically reinvigorating, or bringing back the relevance of primary care, and the relationship between a patient and his or her primary care doctor, in delivering healthcare, and keeping people healthy, and for those with chronic disease, making sure that they’re on the right treatment plan, and getting the right tests that they need.
For employers, how do we … A lot of times, employers say, “Well, that’s great that this is going on, but how in the world … ”
Mark: What does that mean to me?
Mike: Right. How do in the world do I relate to this?
Mark: Correct.
Mike: What it means is that today, we pay, whether we like it or not, we pay for a lot of crappy care, if that’s-
Mark: Is that a technical term?
Mike: That is. It’s an insurance term. Crappy care. What that means is for example, people with diabetes, it has been long acknowledged that patients with diabetes should have a series of about five different tests every year. When you look at the claims data, or you look at patient charts, it’s amazing how many of these patients go to the doctor on a pretty regular basis, and don’t get any of the care. Yet we still pay full for eight, and then we pay for an emergency room visit when they show up at the emergency room because their blood sugars are not under control. This initiative is really, in some levels, really aimed at making sure that patients are getting the recommended care, particularly in areas where it’s pretty well defined. It’s not like that for all medical care, and in some cases, it’s more art than science.
In this case, in cases where it’s pretty clear what needs to happen, we’ve changed the way, or these new initiatives are changing the way that doctors and provides are reimbursed based on their ability to deliver on kind of these fundamentals of care.
Mark: Can the employers have any impact in that?
Mike: Sure they can. When they’re out shopping for healthcare, traditionally we’ve only looked at, what’s my administrative fee, or if you’re fully insured, what’s my premium going to be, and what are my employees going to have to pay in terms of copays, or co-insurance, or deductibles? We don’t necessarily ask a lot of questions to the insurance company about, what are you doing, or how are you working with your network of providers, to improve the quality of care, and quality being a combination of patient outcome, inpatient experience divided by cost.
Mark: I think that’d be a great question, and what kind of responses have employers gotten? Do they say, “Oh, we’ll get back to you on that, but sign up with us, and we’ll get back?” Do the insurance companies, or do they respond? Do they have an answer?
Mike: Yeah. They have been. I think for smaller employers in the fully insured space, I think you are starting to see more of this because of the Affordable Care Act provision that requires the insurers to spend, I forget whether it’s 80% or 85% of the premium dollars in actual care. Those companies are inherently incented to be more efficient with the way that they pay for care. On the self-funded side, and let me just back up. Also on fully insured, the fact that any rate increases above a certain threshold have to be reviewed by the Department of Insurance that is also pushing the health insurance carriers to be more efficient. They’re more apt to embrace these types of reforms. On the self-funded side, for those employers that self-fund their health benefit, the plans are also doing these types of initiatives with those self-funded plans.
The self-funded plans typically have to opt into them. It is a little bit more administrative work on behalf of the health insurance carrier. It may be dollars that, when you talk about an administrative fee, that’s pretty cut and dry. An employer understands what that’s going for.
Mark: Correct.
Mike: When you talk about a shared savings program, now we’re going to give dollars to a provider for meeting certain metrics, and saving you money. Employers can get a little bit squeamish about that. They’re not quite sure. How do you quantify the value of an avoidable incident? There’s just-
Mark: I think they’d be excited about that. Oh, you’re going to make my employers healthy, and happier? I guess they’re just saying, how do I measure that? How do I know I’m not getting fleeced?
Mike: Right, and I think that’s the thing. There’s a little bit of a leap of faith there, right, so you’re going to take a little bit of risk. Okay, I may pay a little bit more up front, but I’m going to recoup that on the back end. Human resources and benefits traditionally have not been very … They’ve not been risk takers, and so this is a new concept. It requires a little bit of risk, and so it does require business owners and executives to empower those people that are handling benefits and HR to take some of those risks, if it makes good logical sense.
Mark: Let’s play a little game. I’m an employer, and I’m coming up, and I’m looking. It’s that time of the year where I need to renegotiate my healthcare. We’re having a drink or something, soda somewhere. Don’t laugh. What would you suggest I ask? What path do you think I should take?
Mike: I think depending on your size …
Mark: Let’s say 100 employees.
Mike: Okay.
Mark: Full-time employees.
Mike: 100 full-time, benefit eligible employees. What we’ve seen recently is a movement from a fully insured plan to a self-funded plan, particularly for groups in that 100 to 500 range, where historically, that has been a pretty solid fully insured range for company size.
Mark: When you say fully insured, they’re buying their insurance through an Anthem, a United Healthcare.
Mike: Right, and they pay that carrier a fixed monthly premium to take the risk for their population.
Mark: Okay.
Mike: What we’ve seen is, there are certainly some taxes that were part of the Affordable Care Act that are levied on those fully insured plans. There are requirements that are levied on the plans, in terms of things that they need to cover. What we’ve seen is a shift from fully insured to self-funded setups, meaning that the plan is now going to be responsible for paying the claims, and managing the risk of the population. Those plans will continue to contract with an Anthem or maybe a third party administrator, in order to access their network of doctors and hospitals, and to get their discounts, and to administer the claims. At the end of the day, the plan is really responsible for all of the charges incurred under the plan. If you have a good year, where you have fewer claims, then you save the difference between what you actually paid versus what you would have paid in premium and never gotten back.
We have seen a shift from fully insured to self-funded, not only because of the taxes that I talked about earlier, but also because there’s a re-insurance marketplace that is more accommodating to employers looking to make that move. What happens is, we say that the employer takes on the risk of its population. That’s up to a certain point, so what the employer will do is buy re-insurance, or stop loss coverage, and set it at a limit that they’re comfortable with.
Mark: Comfortableness.
Mike: Right, and so it’s almost like when you set your deductible for your homeowner’s insurance or your car insurance, you set it at a level that you’re comfortable with. It obviously affects your premium in terms of what you pay, but it definitely allows you to sleep at night, knowing that-
Mark: Knowing that you’re not totally exposed.
Mike: Right. You’re not totally exposed, and so the same thing occurs in the self-funded world with health insurance. You can have specific stop loss insurance, which looks at setting a cap on individual occurrences, so looking at if someone has a major medical event that requires a large amount of care, and a large amount of cost, you’re covered on that individual occurrence. Also in the aggregate for your entire plan, you can purchase stop loss insurance, or reinsurance, at a level that’s comfortable for you.
Mark: Interesting. We’re running out of time. There’s another session probably on self-insurance, and how it works, and the pros, and the cons, because I’m sure there’s some downside to it.
Mike: Absolutely.
Mark: We’ll have to save that for another episode. Before we wrap up, there’s a question that we ask every guest. If you could have one superpower, what would it be?
Mike: That’s a good one. I’m going to say, this is going to sound terrible, but … We have a contingency in our office that are big Star Wars fans, and we’ve been debating a lot about force lightning recently, and why Darth Vader didn’t have force lightning, and so I’m –
Mark: You guys go deep.
Mike: We do go deep, so I’m going to say force lightning would be a great superpower to have because particularly on days where maybe someone’s giving you a little bit of crap, you can just give them a little zap, almost like a shock collar. You can just give them a little zap.
Mark: That was the first time that we heard force lightning as a superpower.
Mike: There’s a new Star Wars movie coming out, so.
Mark: Yeah. I appreciate that.
Mike: Maybe you can get some sponsorships now from Disney on Star Wars.
Mark: There we go. I’ll get my agent working on that, if I get a new one. Thanks again for joining on unsuitable, Mike, and a big thank you to our listeners for tuning in. I knew this was going to be a valuable topic to our listeners, but I’m not sure I anticipated the covering as much as we did, and hopefully you will come back and talk more about the self-insured plans. We have some great additional resources online for those who want to learn more about it. Just to go www.reacpa.com/podcast, and click on the more resources link for today’s episode. If you found this episode valuable, let us know. Leave us a comment. Gives us a thumbs-up. Share the episode, and of course, don’t forget to subscribe to us on iTunes or on SoundCloud. Until next time, I’m Mark Van Benschoten for unsuitable on Rea Radio, encouraging you to loosen up your tie, and think outside the box.
