Here's a fully-insured renewal story from a small company I'm networked with... Feel the pain, my friends....
Here’s What You Need to Know:
1. Premiums paid by company to BCBS: 323K
2. Claims paid out by BCBS to cover company claims: 181K
3.“Pooling Effect” Applied by BCBS: 139K
4. Administrative Costs Applied by BCBS: 56K
5. Sum of #2 through #4, BCBS Stated Cost Line: 376K
6. Result: BCBS gives company 1% rate increase
*** Note: BCBS uses past premiums paid, not resulting in claims cost, to decrease the % increase that would be called for (#5-#1).
That's right - this company had claims representing 60% of the total fully-insured premiums paid into the system for the year - a great year in claims experience by any measure. And took a 1% increase...
A follow up to one of my first ever posts over at the HR Capitalist. Scott Rodrigues had been working as a lawn-care employee for The Scotts Co. for only about two weeks when he was fired in 2006 after a drug test found nicotine in his urine, a violation of a company policy forbidding employees to smoke on or off the job. He promptly filed a lawsuit that argued, among other things, that the company violated his right to privacy.
As the Boston Globe reports, that case has made it through the courts, and the courts upheld the Ability of Scotts to terminate Rodriques for smoking:
"Now a federal judge has dismissed the Bourne man’s suit, ruling that Rodrigues’s smoking was not a protected privacy interest because he never kept his puffing a secret.
In granting Scotts’s motion for summary judgment, US District Court Judge George A. O’Toole Jr. said that Rodrigues admitted in a deposition that he smoked while walking down the street and in a restaurant parking lot and was caught by a Scotts supervisor with a pack of cigarettes on his dashboard.
“It is clear from those admissions that Rodrigues has not attempted to keep the fact of his smoking private,’’ O’Toole wrote.
The judge also rejected Rodrigues’s contention that his firing violated the 1974 federal law that protects employees’ rights to their benefits. O’Toole said that law did not protect Rodrigues because he was not yet a bona fide employee and was only working on the condition that he passed the urinalysis.
Jim King, a spokesman for Scotts, which is based in Marysville, Ohio, said the smoking ban has never been used to fire “an existing employee,’’ only to screen out applicants. Since the ban went into effect, he said, the percentage of smokers among the company’s roughly 7,000 employees has fallen from 28 percent to 7 percent.
“We’re obviously pleased with how [O’Toole] ruled,’’ he said. “We think the ruling speaks for itself.’’
Scotts’s smoking ban was announced in 2005 by chief executive Jim Hagedorn, a former two-pack-a-day smoker, and went into effect Oct. 1, 2006, giving the company’s employees nearly a year to prepare. Scotts has paid for employees and their families to take part in smoking cessation programs.
King told the Globe after Rodrigues filed his suit that the tobacco policy was intended to reduce medical costs for the self-insured company, which he described as deeply committed to promoting good health among employees. He pointed out that Scotts built a $5 million wellness center in Marysville and reimburses some workers for fitness club memberships."
Now for the big question based on the wording of the ruling. What if the prospective employee had attempt to keep his smoking a secret? Would the ruling have stood?
Interesting stuff. I'm not sure we can get to wherever it is we are going in the healthcare debate (especially from a cost perspective) until employees have incentives or penalties to motivate them to live healthier.
As the future of President Obama’s health care reform initiative and its ambitious timetable grow more uncertain, you may be interested in learning how some states are taking matters into their own hands with practical solutions that can be quickly implemented – rather than waiting around for a federal plan.
In the first phase of the Exchange’s implementation, the plan will create the “defined contribution” model for small employers (2 to 50 employees). In this model, employers define a specific dollar amount to contribute to their employees’ health insurance premiums and then employees can “shop” at the Exchange from a menu of plans offered by participating insurers. This model enhances private competition and transparency in the health care system by giving employees the necessary information and purchasing power to make informed health insurance choices. It also offers relief to employers who will no longer bear the full burden of administering a health plan for their employees.
The technology behind the Utah plan is suited to the Exchange’s model because it can present consumers with side-by-side comparisons of plan options and costs with “drill down” details and links to forms and documents all in one location and at the “point of purchase.” It can also handle the numerous administrative complexities raised by this approach, including the transmission of electronic feeds to multiple carriers and the funding of health insurance premiums from multiple sources such as the government or a spouse’s employer.
I've always been amazed that the USA always shows up in the mid-teens regarding outcomes/effectiveness of care when compared to other industrialized nations. All the money we spend, and we trail Europe?
One reason might be a over-reliance on surgery, which we've been trained is the path to take when you're serious about getting healthy. A recent BusinessWeek article focuses on this tendency in the USA using heart disease and prostate cancer as examples:
"Each year, more than 1.3 million Americans have their clogged arteries widened with a tiny balloon and then kept open with slender mesh tubes called stents, made by companies like Johnson & Johnson (JNJ) and Boston Scientific (BSX). The total bill for these angioplasties is more than $21 billion a year. But while many patients and doctors firmly believe that angioplasties prevent heart attacks, the data say otherwise. A series of studies—the newest published in the June 11 issue of The New England Journal of Medicine—finds that stable patients with chronic heart disease who have the procedure get little benefit compared with similar patients treated just with drugs, such as Pfizer's (PFE) cholesterol-lowering Lipitor and other statins, and aspirin. "There are still many patients who undergo angioplasty without really understanding that it will not reduce chances of heart attacks or death—though it will reduce symptoms," says Dr. Judith S. Hochman, director of the Cardiovascular Clinical Research Center at the New York University School of Medicine.
That's why there's a growing effort, led by physicians, health insurers, and even state legislatures, to make sure patients truly understand the medical evidence about angioplasty and other treatments and procedures. Once informed, the patients are encouraged to make their own choices. This idea goes by the somewhat clunky name of shared, or informed, decision-making. Instead of being routinely whisked in for a prostate screening PSA test, for instance, men would first be told that major studies have failed to show the test saves lives. What's more, the test increases the chances a patient will undergo surgery or treatments that cause incontinence, impotence, and other problems. "The fact that PSA screening is more likely to cause mischief than save a life is not intuitive to patients or even physicians," says Dr. Paul J. Wallace, medical director for health and productivity management programs at health-care provider Kaiser Permanente, which is testing this approach.
Studies show this process, using comprehensive videos and other materials prepared by groups such as the nonprofit Foundation for Informed Medical Decision Making (FIMDM), leads patients to choose conservative options more often. It reduces rates of angioplasty or prostate surgery, for instance, by 15% to 30%. Put into widespread use, the approach has the potential to trim hundreds of billions of dollars from the nation's $2.4 trillion health-care bill. Yet patients do as well or better than if they had opted for the procedures. Surveys done after the decision also show patients to be more satisfied, no matter which choice they made. "That's the kind of win that doesn't fall into your lap very often," says Washington State Senator Cheryl Pflug, a Republican.
Hundreds of Billions. Kinda catches your eye, although the specter of making decisions in terms of who gets surgery and who doesn't would be a rallying cry for those who claim nationalized health care will take the decision out of the hands of the patient/doctor.
It'll be interesting to see this play out in the scope of nationalizing health care...
Are you updating your facebook status via Twitter from your iPhone as you apply your make-up or eat your burger on the driveto your next open enrollment meeting? Many Americans feel as though they are good at multitasking and engaging in multiple activities simultaneously leads them to believe they are accomplishing more.
In her book, Distracted: The Erosion of Attention And The Coming Dark Age, author Maggie Jackson points to a growing body of research studies that seem to suggest the opposite. A flood of stimulation, interruption and fleeting human contact have created a culture of "diffusion, fragmentation."
She points out the consequencesof what most of us consider par for the course in our lives and working environments:
Interruption and the knowledge worker:
Knowledge workers switch tasks every three minutes. And once interrupted, a worker takes an average 25 minutes to return to their original task, according to informatics scientist Gloria Mark.
How often are we interrupted? The average worker gets 156 emails a day, according to the Radicati research group. And that's just the beginning; instant-messages, phone calls, faxes and snail mail add to the influx.
Making a national habit of multitasking:
Sixty-five percent of people eat while they drive.
Sixty percent of kids age eight to 18 multitask some or most of the time they're doing homework.
Twenty-five percent of restaurant meals are ordered from the car, up from 15 percent from 1988.
American kids are exposed on average to nearly six hours a day of non-print media.
Two-thirds of children under six live in homes that keep the tv on half or more of the time, an environment linked to attention-deficiencies.
Time and time again in the world of wellness we see this habitual tendency toward mindless overcommitment, interruption, and multitasking lead to programs that are too diffuse to do much good if the desired outcome is a healthier workforce and reduced health care costs.
Why wellness fragmentation does not equal results
How does ROI for wellness work? It is more of a cost avoidance than an actual savings in most cases. Here is a simple (and maybe a little too simplistic) example to help walk you through the "savings."
Half of your workforce participates in a risk based population health strategy (wellness program) and the other half does not.
For the participating half of the population, whose risk is known, you are able to offer outbound (active) and passive programs that directly impact and address the risks you've identified as prevalent to this group.
Let's say the programs you've implemented are effective, engagement in them is high, and you retain these employees. Over a series of years you should see something happen that is counter to what will have happened with no intervention.
That is to say, this group will not get sick as often as non-participants because your interventions were effective and employees stuck around long enough for you to see results.
The non-participants at your company, as an aggregate, are an unknown entity to you. You have very little data on their risks and, as a group, they will most likely continue to use health care at the same rate as before.
Yet, if your company-wide wellness communications are effective and appealing, your participant group is vocal and influential, and your non-participants stay at your company without developing any major illness then some studies indicate that your wellness program might actually have a halo effect.
That is to say, even non-participants will learn a little more about self care whether they participate or not. Sure, that could slow the rate of health care cost growth in that group, though probably not by a lot.
Both groups' cost trends together is your overall trend. Both may continue to rise, but your participant group's trend over several years will rise more slowly - making your overall costs appear to grow more slowly.
UNLESS. Yes, there is an unless. Unless, your participant group is so small and the growth in the cost of health care is so large that your non-participants' health care usage effectively nullifies any impact you had on participants.
Wellness is not Wii Fit. You need to focus.
As much as we know that on an individual level good health is as simple as: sleep well, eat right, and move more, achieving a successful organizational wellness strategy is as much an art as it is a science. It takes focus, discipline and rigorous measurement to impact behavior, motivate and sustain participation, and to quantify results.
If your program is to be successful then you will need to engage a large chunk of your workforce, stratify their risks, and follow a disciplined series of stepsover several years in order to see return on investment. Oh, and do all of this while simultaneously carrying out the core work of your company.
Fight the urge to multi-task
While multi-tasking may be transitioning out of vogue when it comes to work effectiveness, its cousin - work sequencing - can help break large and complex tasks into more manageable pieces.
Plan to succeed by drafting a multi-year strategy with a realistic timeline. Schedule monthly (core team), quarterly (key shareholders and decision makers) and annual reviews (company wide) of a the wellness program before you even begin work. This will hold you accountable for reporting progress toward implementing your strategy and plan.
Build up to maximum efficiency by starting with only a few key program components that will get you the most bang for your buck. Gradually add complexity as your initial program begins to show results.
More often than not, companies initially underestimate how much time it takes to implement a strategic wellness program. They allocate too few resources and take on too many program components to ever really get much traction. As a result, their programs suffer from poor participation due to fragmented management and the overall program shows high attrition. Plan intelligently and sidestep this common trap.
Editor's Note: By day, Kris Dunn is the VP of People at DAXKO, a cool software firm dedicated to providing solutions to the best membership-driven organizations in America. At night, he morphs into a blogger at The HR Capitalist and the Founder and Executive Editor of Fistful of Talent. That makes him a career VP of HR, a blogger, a dad and a hoops junkie, the order of which changes based on his mood. Tweet him @kris_dunn...
Here are some snippets from an email I received from the US Department of Health and Human Services today:
"We know that the health care crisis impacts every American, but our mothers, daughters and sisters are paying a particularly heavy price. Today, 21 million women and girls are uninsured. Women who try to purchase insurance find that the private market is often stacked against them. Premiums in the private market for young women are often higher than they are for men. In some states, insurance companies can legally discriminate against women, and leave them with higher health care bills or inadequate coverage.
We know America's women can't afford to wait for comprehensive health reform. Roadblocks to Health Care reports:
In the individual insurance market, women are often charged higher premiums than men during their reproductive years. Holding other factors constant, a 22 year old woman can be charged one and a half times the premium of a 22 year old man.
In a recent national survey, more than half of women (52%) reported delaying or avoiding needed care because of cost, compared with 39% of men."
Why are women charged more? Among other things, because we can get pregnant and pregnancy in the US is very expensive. We therefore use more health care and are charged more or denied insurance coverage. But here is the crazy part, folks: women cannot self-impregnate!
Not long ago, I received a very personal lesson on the wacky state of preventative health care for maternity. As an otherwise extremely healthy person with a good track record for taking care of myself and little in the way of worrisome health risks, I'd gone the way of financial prudence. I purchased a health plan with a high deductible, but with inexpensive co-pays on doctor's visits and alternative medicine as well as discounts on pharmaceuticals, should I need them.
This was all working out very well. I continued to do my part for the team by taking good care of myself, paying my insurance company dutifully and not using any medical care! I was mentally prepared should a catastrophe befall me. I figured, should that happen, my piddly $5k deductible would seem like chump change in comparison to what I would otherwise have had to spend out of pocket for catastrophic care. All those years of paying unused premiums to my carrier would have been put to good use!
Then, about 6 months ago I developed a small "medical" problem. That's right. I got pregnant. Ok, so this is no catastrophic illness or disease condition, right? I mean, there are more than 6 billion people on earth and, unless I am mistaken, pregnancy is the way we all got here. As a scientist, I will grudgingly agree that pregnancy looks suspiciously like a highly evolved parasitic infection. Yet, unlike malaria - for instance - my health plan wasn't ponying up any cash for pregnancy vaccines or other preventative measures against this "disease."
So, it was one $20 co pay with my primary care doc, the cost of a pregnancy confirmation test, and then I was on my own. At that point my options were to start clocking maternity care against my catastrophic deductible. After meeting that limit I'd pay 30-70%. After doing the math, I realized that if I ended up in a hospital for a routine, healthy birth, with no serious complications, that I would most likely end up paying $7,500+ out of pocket for my "disease." Compare this to a $2000-2500 bill if I pay cash for a home birth with a certified nurse/midwife, including all prenatal scans and labs and two months of well baby care, and it left me scratching my head. Now if there were complications (need for surgery, premature birth, gestational diabetes, preclampsia, etc.) that led to a need for emergency medical intervention then, as I said, there is not much room to gripe over the deductible when so many dollars and someone's life are on the line. Yet when all signs in my case (and in the case of nearly 75% of pregnancies that come full term) point to a completely normal, healthy pregnancy and birth, I am perplexed about how this situation serves any sort of greater good.
In my case, I simply opted to pay the midwife out of pocket and should an emergency arise, well, it's an emergency - deductible be damned. Yet I think about all of the women whose partners may have left them; women whose partners lost their jobs; women who have lost their own job and are not sure how to afford COBRA, but would be denied individual coverage due to their "pre-existing condition"; women who are short on the cash to be able to afford the relatively less expensive but still cost prohibitive bill for good prenatal care and who end up with very costly bills later on down the line due to having delayed or avoided care.
And these mothers who were impregnated by partners who - in most cases - will not be denied coverage or see rate increases due to their partners' "disease," are left unable to pay and to pass on the costs to the remaining payers in the current insurance system - thus becoming contributors to the astronomical rise is insurance rates. These are not some handful of bad people "out there." If you are reading this blog, breathing and have a pulse right now then you have a pregnant woman to thank.
People are not going to stop making more people, people. It just isn't going to happen. So what are our options when it comes to taking pregnant women off of the bad apple list with regards to health care costs?
Provide safe, effective and affordable contraception and family planning services to women of reproductive age (yes, this means after menarche) .
Ensure that health plans rapidly identify and direct high risk pregnancies to maternity care and coaching programs that help manage behavioral risk factors and more closely monitor pregnancy through birth.
If you are an employer providing maternity benefits and health insurance for your employees and spouses, make sure you emphasize prental care and maternity benefits offered by your health plan. Consider setting aside lactation rooms to encourage breastfeeding mothers to pump so that they can continue to feed their babies breastmilk (which has health benefits for the mother and child).
Support legislation that accomplishes all of the above and funds community health education centers that provide outreach, education and services to uninsured populations - eliminating a cost barrier which might keep pregnant women from seeking care until it is too late.
If altruism isn't your bag, then consider that early prenatal care helps all payers in the health insurance game by lowering costs shared by the pool. And if you are still feeling the glow from that gift that had your mom in tears last weekend, then - hey - do it for the lady who loved you enough to endure nausea, swollen feet, ill-fitting clothes and a whole lot more to bring you into this world.
Editor's Note - It's hard to be humble when you're bloggin' straight out of Portland, Oregon. Tanya Barham is the Founder and CEO of Recess Wellness, a company where all the staff works like little elves at Christmastime to transform their client's workplaces into healthy, happy, productive places akin to Santa's workshop at the North Pole. Seriously. Of course, Santa's fat, so they still have work to do.
Last week, I wrote about the fact that scared employees are motivated to use benefits to a higher degree, in essence "stocking up" and getting procedures that could easily be classified as voluntary in nature. The reason? The economy has many scared that they may not have a job for long, so they're using the benefits to a larger degree while they have them. Makes sense...
The only thing that motivates an employee to use benefits more than economic fear? How about the fact that you've lost your job, and you're on a subsidized form of COBRA? From Employee Benefit News:
"This likely won't come as much of a surprise, unfortunately, but new survey numbers from Aon show 60% of employers expect their overall health care costs to increase as a result of implementing the federal COBRA subsidy.
Polling some 300 employers who attended recent Aon COBRA webinars, the consulting firm finds 40% expect their overall health care costs to increase 1% to 5% because of the subsidy; another 40 percent expect costs to spike between 6% and 10%; 12 percent forecast increases from 11% to 15%; 8% expect an increase of 16% or more.
“Typically, 5% to 10% of former employees enroll in COBRA, and we expect that number to increase to 14% to 18% as a result of the subsidy. As employers begin to plan for their 2010 health benefits, they must take the new COBRA subsidy costs into consideration,” says Tom Lerche, Aon’s health care practice leader. “Most plan sponsors continue to experience a 7% to 11% health care cost trend rate, so additional costs from this subsidy will impact overall health care plan strategy for 2010.”
So, add the COBRA factor to the list of reasons why your trend rate will be greater than it might have been for 2009, as well as 2010. The only saving grace? It's the COBRA subsidy mandated by the stimulus package itself. It could be that former employees who know they have a 2/3 subsidy for the cost of COBRA for the better part of a year might be less inclined to get the optional knee operation right away due to the security of the package.
We'll see. Of course, you'll have to fork over that $600-800 per month for the 2/3 cost of family coverage up front.
In a down economy, there's plenty of humanity to go around. Layoffs, how to find the next job, financial stress, etc. One thing you may not have added to the list. A mushrooming utilization of your medical plan, including big ticket items, as employees rush to have procedures that (1) they might have put off having done, or (2) are borderline necessary.
Bad knee? Sure you might be able to work through the issue with some therapy, but if you're worried a job loss might be in your future, you might want to go ahead and get that 30K knee surgery performed next month.
Multiply that by 10% of your employee base and you've got an issue. From Time Magazine:
"When Sophie, a financial analyst in Paris, learned that her bank would lay off 50 employees by this summer, she didn't react by mailing out résumés or trying to ingratiate herself with her managers — she scheduled arthroscopic knee surgery. "I'm doing it now because I won't be able to if I wait and lose my job," says the 27-year-old, who, fearing questions from her employer, spoke with TIME on condition of anonymity. By going under the knife ahead of her potential job loss, Sophie can use the firm's supplementary health insurance to cover the $4,000 procedure. As she says: "Insurance is one of the parts of having a good job you take for granted until you realize you may lose it all."
Sophie isn't alone. As the global economy continues to tank — the U.S. shed 663,000 jobs in March, and millions of jobs are disappearing from Madrid to Mumbai — employees are scurrying to exploit company benefits while they have them, scheduling dental exams, indulging in massages, utilizing company-covered therapists and buying bicycles at discounted rates. "People are petrified," says Dai Williams, an occupational psychologist at Eos, a career-consulting firm in the U.K. "It's a question of grabbing what you can while you can."
You can't really stop the thought process, and for the most part, you won't be able to stop the marginal calls on whether to have a procedure performed. The economy's doing what I always thought about employees who opted for COBRA - my take was that if an employee takes COBRA, why wouldn't they take every opportunity to get procedures completed ASAP, in case they couldn't afford the payments down the road?
Now the economy's taken that same fear to employees who won't be impacted by layoffs, etc. Nice...
Weight reduction surgery has long been controversial for employers, with healthcare insurers putting up multiple behavioral goals and other gates before providing access to extreme solutions like bariatric surgery to covered individuals.
Is that the right or wrong approach? I've never had enough information to really have an opinion.
Here's the first research I've ever seen as a HR pro that talks about expected payback to the extreme weight loss procedures. Follow me after the snippet from the article to talk about what it means for you and me as advocates of healthcare and retention.
"Health insurers can offset the cost of laparoscopic or traditional bariatric surgery as a weight-loss treatment for obese patients within two to four years as a result of savings on other medical costs, according to a study published this month in the American Journal of Managed Care, the Wall Street Journal reports.
For the study, Pierre-Yves Crémieux, a health economist and principal at Analysis Group, and colleagues analyzed health insurance claims data for 2003 through 2005 for 3,651 severely obese patients who underwent either laparoscopic or traditional bariatric surgery. The patients in large part were female, with an average age of 44; more than one-third of the patients had high blood pressure, and many of them had high cholesterol, diabetes and other health problems.
Researchers matched each patient based on age, gender, geography, health status and baseline costs with a patient who did not undergo either of the surgeries. Researchers tracked claims data for the patients who underwent either of the surgeries for six months of pre-surgical examination and care, the procedures themselves, and about 18 months of post-surgical care; tracked claims data for post-surgical care for some patients for as long as five years; and tracked claims data for the matched patients over the same period.
According to the study, health insurers that covered patients who underwent laparoscopic surgery, which has an average cost of $17,000, offset the cost in about 25 months. Health insurers that covered patients who underwent traditional bariatric surgery, which has an average cost of $26,000, offset the cost in about 49 months. Crémieux said, "The most cost-effective treatment for obesity is bariatric surgery," adding, "If you do that, within two to four years, you will get your money back." In addition, he said, "We have identified the break-even point for insurers."
The 2-4 year break even point is important to me, because it allows me to get my head around payback. The thing that's confusing to me is that there's a lot of other research that talks about the failure rate of the surgery - meaning employees can have the surgery or procedure, then not do the things they need to do to keep the weight off. I haven't read the study in full, so I also wonder if the cost of the medical complications so often written about is reflected here.
Still, the concept of payback is good to have. We're talking about an investment in an employee to help them improve their life, much like tuition aid. Many tuition aid programs mandate a payback agreement that an employee stay with the company for a year or two once the company has made the investment.
Now that we have payback numbers and companies have to bear the cost of this surgery, I wish companies could short circuit the red tape by allowing the employee to say, "I want to be at this company long term, and I'm willing to sign a payback agreement making that pledge as a part of this optional proceedure".
I know there are a million legal reasons why you can't do this, and I'm not looking to tie payback to other big ticket items. Medical necessity still rules the day on that end, but it seems like the big question with this one is medical necessity and payback. That said, my take is that a lot of employees who want the optional surgery would be willing to fast track the process and would accept a payback agreement of 2 years for improved access.
The big idea to control medical trend this year, and every year after that? Get in shape? Well... yeah, but let's start with something that isn't at the apex of behavior modification and for the most part, doesn't hurt.
Take your drugs people. That the hundred billion dollar idea is what CVS CEO Tom Ryan is pushing. Before you get up on your soapbox about the overmedicated state of the United States, hear him out, please... (?)
"During his 15 years as CEO of CVS (CVS), Tom Ryan transformed the company from a New England drugstore chain into a national health-care colossus with $76.3 billion in annual sales. He did that through a string of major acquisitions, paying $27 billion for drug middleman Caremark in 2007 and $2.9 billion for West Coast regional chain Longs Drug Stores (LDG) last October.
CVS/Caremark is now one of the 20 biggest companies in America, surpassing Boeing (BA), Target (TGT), and Johnson & Johnson (JNJ). The Woonsocket (R.I.) outfit is the largest single buyer and dispenser of prescription drugs in the nation. The Longs deal extends the chain's retail presence from Maine to Hawaii, with nearly 7,000 stores and more than 50 million users of its CVS loyalty card in the U.S.
What does Ryan intend to do with his drugstore empire? His goal, he says, is to help transform America's expensive and often ineffective health-care system. Seeking to take advantage of President Barack Obama's commitment to health-care reform, Ryan wants to use CVS's vast prescription database and burgeoning network of in-store clinics to treat patients with chronic diseases and help keep them out of the hospital, where most medical costs are incurred. "I don't think our health-care system is broken," Ryan says. "We are just spending too much, and it's unproductive."
Few industry experts would argue. Hospital visits prompted by chronic illnesses such as diabetes, heart disease, and arthritis impose an immense burden on health resources in the U.S. The total annual bill for diabetes alone is upwards of $170 billion, according to the American Diabetes Assn. Many of these costs would evaporate if patients simply complied with their doctors' orders and took their medications. In fact, about one-third of all patients who begin a drug regimen never refill the prescription, either because they don't feel sick, they forget, or they don't want to spend the money.
Ryan believes CVS could help solve this problem and, in the process, boost its own bottom line. As a pharmacy benefit management company, the Caremark unit handles drug coverage for large employers and health plans, negotiating discounts with drugmakers. It owns a treasure trove of prescription drug data, as does CVS. The merged company is thus an info tech Goliath, filling or managing more than a billion prescriptions a year. It can use that information to figure out which customers require a gentle reminder to come in for a refill."
The key issue here is privacy, how hard the nudge can be, and what the penalty could be if people don't follow the drug regiments.
So we have Billions on the table that can be captured by allowing hard nudges? I'm for it, but only if we're willing to withdraw funding or coverage who don't do what they need to do.
I work for a Veteran's Health Research organization so naturally we get November 11th off each year as a holiday. Not so for me this year. Instead I attended a "Wells Fargo Health Solutions Seminar with Dr. John Abramson".
In 2004 Dr. Abramson wrote a book called "Overdo$ed America The Broken Promise Of American Medicine--How The Pharmaceutical Companies Are Corrupting Science, Misleading Doctors, And Threatening Your Health (And up in the left hand corner there is a little balloon that says "The Truth About Vioxx, Celebrex, Statins, and More). OK, that's all you need to know--end of POST--just READ THE BOOK... In it he totally busts Big Pharma and a lot of the so-called research findings that come out of studies funded by Pharmaceutical companies. I know this isn't necessarily news to many of us, however the facts and statistics he lays out, and analysis he uses to derive his conclusions are very compelling. In person he is an impassioned speaker on behalf of reasonable, sane, effective health-care reform. Do away with the expensive drugs and procedures as routine, matter of course
From the book, pg 209-210...
"Pretending to care about our health is often just part of the drug and other medical industries' overall strategy to increase their sales. They dominate the medical journals, airwaves, newspapers, and magazines with "information" designed to convince doctors and patients that their products are essential for good health. They focus attention on the health problems and solutions that are the most commercially advantageous rather than most beneficial for our health." ...
"The truth, as we have seen, is that the benefits of medical care are real but limited, and more is not always better, and is often worse. These awkward facts get shoved into the background of our common wisdom buy the bright lights of advertising and medical news that shine incessantly on the "breakthroughs" in medical progress and the drugs you should "talk to your doctor about." By saturating our sources of information, the medical industry has convinced most Americans that the answer to almost every health problem can be found in a brand-name pill or high-priced medical procedure.
That's the bad news. And it's very bad, costing Americans hundreds of billions of dollars a year, and even worse, compromising our health and quality of life. But there is good news too--and it's enormously good: the evidence from study after study, including gold-standard randomized clinical trials, shows that we can usually do a great deal more to maintain our own health than the medical industry, particularly the drug industry, promises it can do for us."
In subsequent posts I'll discuss what Dr. Abramson suggests we can we can do, from the inside, as Benefits Professionals, to begin to make an impact and change how things are now to how they could possibly be in the future.
Editor's Note - Joan Gibson is a Benefits Analyst for NCIRE, which is the non-profit organization charted by congress back in the 80's to manage all the government funding/grants/contracts for the medical research projects happening at the SF VA Medical Center. When she's not attending a conference, you'll find her on the phone trying to squeeze usage stats out of unsuspecting targets like the NCIRE EAP vendor....
Think the Wall Street credit crisis is bad for business? Well, you ain’t seen nothin’ yet! I heard a commentary on NPR where an economist being interviewed referred to health care as a “train barreling down on the US Economy.” And while everyone is busy untying the maiden that is the finance industry from the tracks, our back is turned to the real threat chugging toward us with increasing speed.
At $700 billion the current financial bailout is roughly equivalent to 5% of the US GDP. That’s chump change compared to the more than 16% of GDP (yes, that’s over $2.2 trillion) the US spent on health care in 2007. Pop quiz: What’s 34% of 2.2 trillion? Trick answer: The portion of the health care bill that is paid by business. The costs of poor health are outpacing wages, inflation and GDP. By a lot. According to the Kaiser Family Foundation Health care spending has risen about 2.4 percentage points faster than GDP since 1970.
The train shows no signs of slowing. The Centers for Medicare and Medicaid Services projects that by 2016 health care spending will be over $4.1 trillion, or, about 20% of GDP. Okay now do the math again! What’s 34% of $4.1 trillion? Answer: If you are planning to be in business in 9 years then we better get this credit crisis solved or you won’t be able to borrow enough money to pay for health care expenses!
Oh and by the way, this is all happening at a point where growth in corporate profits is on the decline and American productivity has reached an all time high – holding steady after impressive gains. In its annual report the International Labor Organization stated “The difference in [productivity] rankings can be explained by the fact that annual working hours per person employed are considerably higher in the United States than in the majority of European economies.” Unless business plans on lobbying for more hours in a day, their best bet for improving worker productivity will be investing in worker health.
In a study funded by the RAND Corporation, Soeren Mattke and his colleagues stated that “Annual US health-related productivity losses are estimated to reach some $260 billion, attributable not only to absenteeism but also to presenteeism (being present at work but working at a reduced capacity)”. Yes, you did the math correctly, that is $10 billion more than the current infusion of cash that the US treasury will be putting into American banks, but this number directly impacts business’ bottom line!
The Centers for Disease Control and Prevention (CDC) says chronic diseases are responsible for 75 percent of the $2 trillion spent on health care in 2005. Such diseases can be dramatically improved by things like: better diet, exercise and self-care. A study published in the Archives of Internal Medicine showed that if you took all of the Americans who: do not smoke, maintain a healthy weight, consume five or more fruits and vegetables per day, and exercise the surgeon’s general’s recommended 30 minutes 5 days per week, you’d have a whopping 3% of the US population.
So what do employees’ health habits have to do with business?!? Quite a bit as it turns out. American workers spend close to 2,000 hours per year on the job. At the end of a long work day, a half an hour commute and a family waiting to be fed, how many people are realistically going to change and head back out to exercise for 30 minutes? Would you?
If we are going to stop this train then Americans need help with their health. Serious help. Currently the place where they spend the majority of their waking hours is not effectively reinforcing healthy behavior. When it comes to employee health you are competing against things like: physical exhaustion, donuts, prepared foods, comfortable couches, a pack of smokes, and beer! Your savviest competitor’s slickest product has nothing on beer!
If you are busy freaking out about the credit crisis and have relegated employee health to some dark little corner of your organization where the sad, unimaginative and ineffective solutions proposed to reverse the state of your workers' health fly in the face of reality, then good luck with that and we’ll see you in the bread line in 2016.
OK, this video is a total farce from the Onion... But, with recent brainstorms/innovations in the pizza industry, like the stuffed crust pizza and bacon as a topping, can it really be far from the truth?
So, do this - get the double crust WITH Bacon three times a week for the next year. Cholesterol and risk for a cardiovascular event higher as a result? Who cares? You still pay the same employee contributions for health care as the skinny guy eating carrots and running in the heat at lunchtime.
You spend 30% of payroll on benefits for your employees. You'd probably like them to understand the benefits you're spending all the cash on, right?
So, do they actually understand what you're providing? They can't value what they can't understand, and of course, there's the whole thing about ensuring the spouse understands the benefits as well.
Don't bet on the fact that employees have any clue about the total value of the benefits package you're provdiding. From CBS Marketwatch:
"Colonial Life surveyed more than 650 human resource managers and benefits administrators at the recent national conference of the Society for Human Resource Management. Employers were asked about the benefits they provide and how much their employees understand those benefits.
More than 90 percent of employers who responded said it was important to their business that employees understand and appreciate the value of their benefits. Only 21 percent of employers think their employees have a good understanding of their benefits. Nearly 5 percent think their employees know nothing at all about their benefits.
In a research study conducted by Watson Wyatt Worldwide(1), a global consulting firm that specializes in employee benefits, employees gave higher marks to employers who provided fewer benefits but explained them well, rather than a richer array of benefits they didn't understand."
If we're rating the understanding of benefits that low in a self-reported fashion, how bad must the reality be? Additonally, what's the understanding of benefits mean? With the right investment, can you get the number past 50%?
If not, should your strategy be to "lead" the market when it comes to benefits? Is it better, as the Wyatt study concludes, to do fewer things and drive the value proposition harder through a real communications plan?
What leads to increased retention or engagement?
Heavy questions to ponder. Apparently, it takes more than the "Dude, we're getting an HMO campaign"...
One thing that most HR people aren't aware of is that medical plans can ask for documentation from any third party action (that's a lawsuit for all my plain English friends), related to settlements that might be used to pay medical expenses.
Why? Let's say you are involved in a crash with a drunk driver, and as part of the insurance settlement, the drunk driver's insurance provides a settlement that includes $$ for your medical care. From the insurers point of view, if there are other funds available to pay your claims, it's in their best interest to force you to utilize those funds.
I see requests for documentation flowing through our plans at least once a month. That type of process is alive and well in plans that are self insured, as well as fully insured.
Of course, it's best to ask for clarification before the claim is paid. If you try and go back after the claim is paid, it's like asking someone to dig into their own wallet to pay the claim, regardless of the terms of the settlement. The Blue Cross networks I've worked with are pretty sensitive to the negative press that can go along with this.
Then there's Wal-Mart - for every step it takes forward to repair its image, it seems like it takes two steps back. Like this one, where the big retailer is seeking 470K from a brain-damaged ex-employee's trust fund. CNN.com has the details:
"Debbie Shank suffered severe brain damage after a traffic accident nearly eight years ago that robbed her of much of her short-term memory and left her in a wheelchair and living in a nursing home.
It was the beginning of a series of battles -- both personal and legal -- that loomed for Shank and her family. One of their biggest was with Wal-Mart's health plan.
Eight years ago, Shank was stocking shelves for the retail giant and signed up for Wal-Mart's health and benefits plan.
Two years after the accident, Shank and her husband, Jim, were awarded about $1 million in a lawsuit against the trucking company involved in the crash. After legal fees were paid, $417,000 was placed in a trust to pay for Debbie Shank's long-term care.
Wal-Mart had paid out about $470,000 for Shank's medical expenses and later sued for the same amount. However, the court ruled it can only recoup what is left in the family's trust.
The Shanks didn't notice in the fine print of Wal-Mart's health plan policy that the company has the right to recoup medical expenses if an employee collects damages in a lawsuit."
Good call on Wal-Mart's part? I report, you decide. Here's one stat I'll provide. Wal-Mart earned about 348 billion in revenue in 2007. So what's 470K come to as a percentage of revenue? Maybe some of my economics friends can run the numbers in the comments.
Now say you are running a HR shop at a company with 100M in revenue. What would a proportional claim be to your plan?
I'd say most of us would walk away from that because of the internal PR damage alone.... Especially if we had to go back to the employee after the fact, once the claim had already been paid...
With health care costs rising 7-9% each year, any HR person who thinks like a business owner is looking for ways to manage costs, if to do nothing but attempt to minimize the annual trend increase in costs.
Big ideas from past years to help you do that. Carve out your Rx plan to gain deeper discounts, wellness programs, call-in services like Tele-Doc to minimize the need for a primary care visit and the lost productivity that is part of that visit, etc. What did I miss? There are only a few tools, a few good ideas that can help you control costs without a drop in care.
So, what's next? Would you believe the on-site doctor? The situation with medical costs has now escalated to the point where it now makes sense to bring the doctor back on the campus of big companies. Warning - if you don't have at least 1,000 employees at a location or in your company, this one isn't for you.
"When a company unveils a new plan to rein in health-care costs, workers usually groan. Yet Toyota Motor (TM) is getting rave reviews for the on-site medical center it built at its truck factory in San Antonio. Ask line worker Louis Aguillon. He went to the clinic in May with nagging back pain, and paid just $5 for the visit. "I saw the doctor for 20 minutes," Aguillon beams. "You're not just a number there."
A recent study by benefits-consulting firm Watson Wyatt Worldwide (WW) found that 32% of all employers with more than 1,000 workers either have an on-site medical center or plan to build one by 2009. "We're talking about a microcosm of health-care reform," says Hal Rosenbluth, president of Walgreen's health and wellness division. "Companies can take control and understand their health-care costs."
Managers of on-site centers such as Toyota's make a variety of bold claims. Rosenbluth says every dollar invested in setting up a clinic will return $3 to $5, even though on-site doctors spend an average of 20 minutes with each patient—more than double the national average for primary-care physicians. Some of the biggest savings are on referrals to specialists and visits to emergency rooms, where the financial burden falls mainly on the worker's employer. Peter Hotz, president of Take Care Employer Solutions, the on-site medical division of Walgreen, says the clinic-management companies Walgreen acquired refer 40% fewer patients to specialists, compared to the primary-care physicians who treated the workers previously. And emergency room visits are down 72% at companies where Take Care is managing medical facilities."
So that's the big trend for 2009. If you're a small company? Best you can do is a service like Tele-Doc, where your employees can phone in for a diagnosis, then get medication prescribed over the phone for about 80% of the things that ail them.
I'm taking a guess here - but maybe the next trend will be real estate owners, who lease space in big office parks, jumping on this model as a benefit for their tenets. Anywhere you can aggregate 1,000 employees might be a match for the model...
Recent Comments