serious cost containment without cost shifting to employees webinar
TRANSCRIPT
![Page 1: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/1.jpg)
![Page 2: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/2.jpg)
Everyone Who Sponsors A Plan Has A Cost Problem
The Cost Problem
![Page 3: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/3.jpg)
Average CostsAverage Annual Health Care Cost Increases, 2000 - 2010 (with sample projection)
Medical Benefits:
Hewitt Associates, October 9, 2006 and
Hewitt 2010 Survey
9.4%10.2%
15.2%14.7%
12.3%
9.2%
7.9%8.6%
8.0%7.1%
8.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
$265,249Plan Cost in 2010
$109,400
$120,559$138,884
$159,300$179,212
$195,700
$100,000Plan Cost in 2000
$211,160$229,320
$247,665
The Cost Problem
![Page 4: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/4.jpg)
Everyone Has Taken Actions To Try To Bring
Costs Under Control
The Cost Problem
![Page 5: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/5.jpg)
What Can I Do About Costs Right Now?
• Plan Document stating Plan rules, conditions & benefits
• Wellness Programs
• Pre-Certification
• In-Patient
• Out-Patient Surgery
• Scans, Scopes, Expensive Tests
• Care Management
• Discharge Planning
• Large Case Management
• Chronic Care Management
• Claims Edit System
• Claims Process Based on Plan Design
Reduce
Eligible
Bills
![Page 6: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/6.jpg)
What Can I Do About Costs Right Now?
• General Medical Network
• Centers of Excellence for Transplants
• Dialysis Programs
• Specialty Pharmacy
• Out-of-Network Fee Negotiation
Discounts
![Page 7: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/7.jpg)
Health Care ReformLack of Perceived Success
Due to Continued Cost Increases& Inability to Afford Costs.
The Environment
![Page 8: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/8.jpg)
Politicians Are UpsetPerceived As Ineffective
Looking for The Bad Guys…
The Environment
![Page 9: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/9.jpg)
Attack on Bad Guys So Far:
The Environment
1. Big Pharma
2. Insurance Companies
3. Networks & Cost of Service
![Page 10: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/10.jpg)
What Are Providers Charging?
Provider Reimbursement
![Page 11: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/11.jpg)
Comparison of Hospital Charges
Hospital % of Cost
Barberton 489%
Akron City 427%
Cleveland Clinic 391%
Akron General Hospital
346%
Affinity 233%
Mercy 231%
Aultman 215%
Alliance 185%
Wooster 176%
Average 316%Lowest to Highest 313%
Average to Highest 176%
Lowest to Average 137%
All hospitals listed are within 25 miles of Hospital #1.
All hospitals listed (except #16) are mid-sized community or general hospitals.
Comparisons based on identical services only.
![Page 12: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/12.jpg)
Comparison of Professional Charges
Office Visit, Established Patient, 15 minute
Lowest Charge Amount
$36.00
Highest Charge Amount
$477.00
CPT Code:
992141325%
550%127%
Difference of
700%
Difference of
52.80%
Medicare Allowable
$68.18
Average Charge Amount
$86.70
![Page 13: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/13.jpg)
Comparison of Hospital Charges
Sense nerve conduction test MRI joint lower
Lowest Charge Amount
$70.00
Highest Charge Amount
$2,560.00
CPT Code:
959043657%
548%932%
Difference of
5112%
Difference of
139.78%
Medicare Allowable
$50.08
Average Charge Amount
$466.89
![Page 14: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/14.jpg)
Government Sponsored Attack on Health Care Cost
The Environment
![Page 15: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/15.jpg)
The Key
Herzlinger’s Iron Triangle
Who Killed Health Care?, Regina Herzlinger
Congress
HospitalsInsurers / Networks
![Page 16: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/16.jpg)
Attack On Health Care Costs
1. Federal Trade Commission & Massachusetts Attorney General Investigating Massachusetts General Hospital and Brigham & Woman’s Hospital
Subject: Network Inability to Effectively Negotiate Pricing Due to Provider Market Leverage After Mergers.
![Page 17: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/17.jpg)
Attack On Health Care Costs
2. Federal Trade Commission & Michigan Attorney General Investigating Favored Nation Agreements Between Blue Cross Network and Hospitals
![Page 18: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/18.jpg)
Attack On Health Care Costs
3. Federal Trade Commission & Texas Attorney General Settles With United Regional Health Care System (Wichita Falls, Texas)
Settlement: Prohibits Pricing And Discounts Based On Whether Networks Contract With Other Area Providers; Also Prohibits Retaliatory Actions Against Network.
![Page 19: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/19.jpg)
The Relationship Of These Cases:
Attack On Health Care Costs
All 3 Look At Inflated Hospital Pricing
and The Network
![Page 20: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/20.jpg)
Attack On Health Care Costs
Massachusetts is Proposing what is basically State Controlled Pricing of All Services Regardless of Network
Objection: Government Control and Lack of Free Market
![Page 21: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/21.jpg)
Attack On Health Care Costs
4. State of California versus Sutter Hospitals and MultiPlan/PHCS
Allegation: Fraudulent Billing Practices and Enabling & Profiting From Fraudulent Billing Practices
![Page 22: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/22.jpg)
What Does This Mean?
What Does the Attack Mean?
![Page 23: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/23.jpg)
Why Is This Important?
What Does the Attack Mean?
These Practices Are Rampant
and Involve Most
Types of Services.
![Page 24: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/24.jpg)
Obligations Of Plan
ProviderPPO Network
Patient
Plan of Benefits
Employer
•A
gre
es t
o P
ay A
ssig
ned
R
epri
ced
Cla
im
Wit
hin
30
Day
s
•A
gre
es t
o A
dvi
se P
atie
nt
on
E
OB
th
at U
np
aid
Po
rtio
n Is
P
atie
nt’
s R
esp
on
sib
ility
•G
ives
Up
Au
dit
Rig
hts
•Disco
un
t Off B
illed C
harg
e
•No
Balan
ce Bill To
Patien
t
•Remove Possibility of Audit
•Delivers To Patients
•Discount Off Billed Charge
•No Impact on Provider-Patient Relationship
![Page 25: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/25.jpg)
Obligations To Patient
ProviderPPO Network
Patient
Plan of Benefits
Employer
• Billed Charge Not To Exceed AmountsAgreed To In Exchange For Assignment
• Deductible, Co-Pay, Co-Ins
• Reasonable Value of Services For Covered Services
![Page 26: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/26.jpg)
Obligations To Patient
“(Network), TPA, and/or Payor does not in any manner
interfere with or participate in the provider-patient relationship
and all health care decisions are between the patient and a provider.”
- TPA/Network Contract
![Page 27: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/27.jpg)
Variance of Charges
What do we do?
![Page 28: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/28.jpg)
Billed Amount is an irrelevant number, no provider expects to be paid the billed amount. Reasonable amount is what provider accepts as
payments in full from others.
The Key
“[T]he reality is that the rates hospitals charge for services do not always
accurately reflect the value of the services, especially when the hospital routinely
accepts much less for them.”
- Court Case Definition
![Page 29: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/29.jpg)
• This includes Medicare & Medicaid
• No Mention of Negotiation or Contracts
• Providers say that “insurance companies” determine their payments, that they have no say in amounts paid.
The Key
![Page 30: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/30.jpg)
What Are Providers Actually Getting Paid?
According to the American Hospital Association…
Provider Reimbursement
![Page 31: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/31.jpg)
Provider Reimbursement
Aggregate Hospital Payment-to-Cost Ratios for Private Payers, Medicare and Medicaid, 1988 -2008
Source: Avalere Health analysis of American Hospital Association
Annual Survey data, 2008, for community hospitals
![Page 32: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/32.jpg)
Plan Design
Plan Design
Fee Schedule Based on 130% of Medicare
OR
1XX% of Hospital’s Cost(as determined by cost to charge ratio)
And
1XX% of Medicare Fee Schedule For Professional Services
Maximum Benefit =
![Page 33: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/33.jpg)
The Communication Effort
What Effort Is Involved?
• Establish a fee schedule for payments from the plan based on lower cost providers
• Communicate thoroughly and clearly what the plan is doing and why it is doing it
• Change plan document to reflect intentions
![Page 34: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/34.jpg)
What Plan Sponsors Need to Have in Place
to Make These Approaches Work.
Succeeding: Approach for Participants
![Page 35: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/35.jpg)
• Process to assist patients with balance billing issues
– Fair Debt Collections Practices Act
• Access to Patient Advocate
• Legal Representation when Necessary
– Assure Participants that if a balance needs to be paid, employer will pay it
– Enforce Consumer Rights!
Succeeding: Approach for Participants
![Page 36: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/36.jpg)
• Assure Participant that if a balance needs to be paid, the plan will pay it
– Billing disputes settle for 30 cents per dollar
– Need to settle rarely occurs, you are working from a position of strength
Succeeding: Approach for Participants
![Page 37: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/37.jpg)
$2 Million of Billed Unbundled Charges
50% Discount = $1,000,000 of Allowable Expense
150% of Medicare < $600, 000 of Allowable Expenses
Savings = 40% +
Succeeding
Success
![Page 38: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/38.jpg)
Questions
Call J.P. Farley for more details at 800.634.0173 if you have additional questions on this concept.
Jim Farley [email protected]
or visit our website at jpfarley.com
![Page 39: Serious Cost Containment Without Cost Shifting to Employees Webinar](https://reader033.vdocument.in/reader033/viewer/2022042715/559633cb1a28abc02e8b482e/html5/thumbnails/39.jpg)
THANK YOU
for attending today
Please visit JPFarley.com or more learning opportunities.