A Catalyst For Action
Although this newsletter has been in the works for months, I rewrote the intro to this inaugural issue in light of recent events.
The tragic murder of UnitedHealthcare CEO Brian Thompson has drawn national attention—not just to the act itself but to the anger many feel toward insurers. As Barron’s reported, “The response to Thompson’s murder has uncovered a seething public discontent with private health insurers.”
The shell casings reportedly found at the scene—marked “Delay” and “Deny”—are a grim symbol of the frustration brewing across the country.
Clearly murder and violence aren’t the answer. After all, the true mission of healthcare, and those called to it, is to help people. The question is:
How do we disrupt the status quo to help people get the benefits and care they need at a price they can afford?
That brings me to the reason I decided to write this newsletter.
I hope you believe, as I do, writing and expressing thoughts can have a greater influence on people and events than using violence.
My goal for this newsletter is to bring together like minded people, and change the minds of a few others, to catalyze action and hopefully show “The Pen Is Mightier Than The Sword.”
Healthcare Is Broken
Employers Can Fix It
By now it’s clear, the healthcare system is failing us. Employers, employees, and their families are paying the price.
My professional and personal healthcare experiences have led me to believe employers have the power to make a difference. By fulfilling their fiduciary duties, employer-sponsored health plans can make huge improvements in compliance.
Real world experience of many different employers shows sound compliance leads to cost savings, superior benefits, and employee satisfaction.
That’s why this newsletter is named The Health Plan Compliance Advantage. Compliance enables a whole host of advantages.
As A Patient I Saw The Broken Side
This newsletter came about after I developed a serious health condition. I’d been the ideal health plan member—never sick or hospitalized—until “the warranty ran out,” as my doctor joked.
I’ve worked in healthcare for 30 years. As a patient I saw its broken side. My condition forced me to:
- Navigate unfamiliar benefit and care options
- Make uniformed decisions with a lack of data or direction
- Submit to opaque authorization and claim processes
- Pay above market rates for medications, tests, and treatments
- Dispute inaccurate and erroneous medical claims
- Become an advocate for my own care
I saw firsthand how my employer’s health plan could have (should have) shortened my care journey and reduced costs for both me and the plan.
Lax compliance by employers has led to runaway costs. Employers must embrace their fiduciary duties to achieve compliance and cost savings.
Yes, both compliance and savings are possible. In fact, they are tightly linked and should be analyzed and pursued together.
Where To Begin?
Your pharmacy benefit manager (PBM) contract is probably a good place to start on the road to compliance. All three PBM-related issues below are common, increase costs, create litigation risks, and are eminently fixable.
1. Are Employees Overpaying by 10x?
My generic medications cost over $100 a month. A Google search found alternatives for under $100 a year. Even with ‘good’ insurance, I overpaid 10x. It became apparent why Mark Cuban said, “This is literally the easiest industry to disintermediate that I’ve ever been involved with.”
Overpaying for drugs = #ComplianceFailure
2. Do You Use Diligence In Contracting?
Supply chain professionals know this level of expense variability is rare in other spend categories. Healthcare is different. Benefit decisions have been outsourced to “experts”, many with deep conflicts of interests. Oversight from the CFO and General Counsel has been lacking. Lax compliance explains why healthcare costs have outpaced wages and inflation.
Inadequate diligence = #ComplianceFailure
3. Why Do Employees Sue Over Benefits?
Some employees are suing their employers over health benefits. For example, Johnson & Johnson (J&J) is facing a class action lawsuit alleging the company breached its ERISA fiduciary duties including:
- Didn’t exercise prudence in choosing its PBM
- Didn’t negotiate the pharmacy benefit manager (PBM) contract
- Didn’t monitor plan expenses
- Didn’t fully inform participants about the mail-order program
- Agreed to undesirable contract terms
- Allowed the plan to overpay for prescription drugs
Fiduciary breaches = #ComplianceFailure
Every company in America is likely experiencing these compliance issues.
The Solution Is Compliance + Cost Savings
Will you be sued like J&J? Maybe not—but why take the chance? Why risk angry employees, costly lawyers, reputational damage, and court battles?
Particularly when health plan compliance is simply good business. It can be good for your company, employees, and their families.
I’ve seen examples where employers saved more than $1M per 1,000 employees with good compliance and pragmatic solutions. Often a portion of the savings went back into employee pockets and a portion was directed into more effective benefits.
What could be better than letting sick employees know they will have access to high quality, cost effective care? That beats the annual benefits meeting message of: ‘Your premiums are going up 10% again this year.’
By fulfilling their fiduciary duties, any employer can reap the benefits of The Health Plan Compliance Advantage.
Key Takeaways
- Employees are upset at their benefit coverage and costs – often when they’re sick with costly conditions and need benefits the most.
- Employees may be paying substantially more than the market price for medications and services which is the crux of recent lawsuits.
- Service providers are often conflicted, not aligned with plan and participant interests, and contracted with minimal diligence.
- Employers can achieve both compliance and cost savings by embracing their fiduciary duties.
- Savings can be provided back to employees as premium reductions, lower out of pocket costs, bonuses, and better benefits.
Resources
ABOUT THIS NEWSLETTER
Who Is This Newsletter For?
Definitely not the traditional entrenched interests – insurers, TPAs, PBMs, stop-loss carriers – tenacious about protecting their profit-extracting models. They obfuscate, lie to Congress, and play hardball. So that’s why I’m writing: to shine light into areas where employers can make a difference.
Who will benefit from reading this newsletter?
- CFOs & General Counsels: As Albert Einstein once said, “Problems cannot be solved at the same level they were created.” To me, that means CFOs and General Counsels need to get involved. In many companies, CFOs and General Counsels have been distant from benefits selection and management. This newsletter can help them become a key component of a high performing benefits committee tackling lax compliance and runaway costs.
- Benefit Committees & Fiduciaries: ERISA, the law governing employer health plans, states fiduciaries must “act solely in the interest of plan participants and beneficiaries.” That’s not the norm for many benefits committees who see their job as protecting the plan’s interests. This newsletter can help benefit committees and fiduciaries address this quandary and deliver compliant benefits while avoiding liability, both corporate and individually.
- Advisors, Lawyers, Service Providers: Helping benefits committees do the best job possible is a key success criteria for all benefits industry professionals. The ERISA requirement to focus on participant interests is a critical component where many employers need help. This newsletter helps differentiate your services by promoting strong employer fiduciaries.
Call To Action
This newsletter urges employer executives, benefit committees, and fiduciaries to pursue The Health Plan Compliance Advantage. In the coming issues, we’ll provide education, actionable advice, and insights on:
- The Employer’s Crucial Role in Healthcare Benefits
- Understanding and Acting On Fiduciary Responsibility
- Operating A High-Performing Benefits Committee
- Implementing Strategies for Compliance and Cost Reduction
Each issue will offer compliance tips, cost-saving strategies, and helpful tools based on professional expertise and personal experience.
Don’t wait for the system to change—no cavalry is coming. Subscribe and read to take the first step. Working together, we can fix healthcare.
