Melina Kambitsi, Ph.D.
SVP, Business Development & Strategic Marketing at The Alliance
Melina Kambitsi Ph.D. joined The Alliance in 2017 and leads the teams responsible for business development, client development, and strategic marketing. Dr. Kambitsi came from Network Health in Milwaukee and Menasha, Wis. where she was chief sales and strategy officer. In this role, she was responsible for sales and underwriting, strategic planning, product development and risk-based contract analytics. Earlier she was senior vice president of sales at Blue Cross Blue Shield in Honolulu, Hawaii and the vice president of sales, marketing, and product development at Blue Cross of Northeastern Pennsylvania.
Last month, The Alliance was pleased to host National CooperativeRx CEO Josh Bindl, for a webinar where he discussed all things prescription drugs. Missed the webinar? You can view it here.
The High Price We Pay
Bindl opened his presentation with a plain and simple message: “Employers spend too much.” He explained that complex pricing models, the ability to reclassify prescription drugs (and their prices,) and clever combinations of common, over-the-counter medications at substantial markups create a perfect storm for Big Pharma to keep prescription drug costs high.
The Role of Pharmacy Benefits Managers
Bindl stressed the important role that Pharmacy Benefits Managers (PBM's) play in providing oversight against pharmaceutical companies. He acknowledged that PBMs have had a lot of dirt thrown on their names recently in the news media: “PBMs have taken a lot of heat as only taking profits, but we need to remind people of the value they provide. PBMs negotiate lower prices for payers – aka employer groups – by offering cost utilization and education.
He said the latter duties help ensure that patients take their medications and that if patients didn’t receive education from PBMs they would only receive it from pharmaceutical programs, which are not impartial.
Bindl stated plainly that National CooperativeRx members are not chasing rebates but explained that rebates are a significant part of pricing. In fact, across all their members, National CooperativeRx saw more than 90% of its gross costs through rebates. “Good or bad – they’ve become a huge pricing component – and if you’re not getting a significant proportion of gross costs in the form of rebates, that means someone else is keeping it,” he said, “If you do not get 100% rebate pass through you can have that audited, but it’s expensive, so your best defense is to again, define what prescription drugs are considered specialty versus generic.” Nearly 50% of total prescription drug spend accounts for specialty medications alone, so employers should check their contract and see if they’re getting an overall discount, a fee-for-specialty payout, or an overall guaranteed discount off those medications. To add to the convolution, he laid out the differences between pass-through pricing, traditional pricing, and fully transparent pricing, and said that you should align incentives with your PBM. “We find the most value in traditional pricing because that way the PBM bets on the future value of their contract and our employers end up saving more money.”
Contract Best Practices
Bindl listed some guidance on drawing up a contract and enforcing them, too:
Always double-check the contract to make sure you’re not narrowing the network so much so that your employees will be left unsatisfied with their options.
Make sure you have access to your own data and that you can get it within a reasonable timeframe.
Ensure there are guarantees (and penalties for not reaching them) in the contract.
Longer-term contracts typically garner much better discounts.
Have strong definitions of what a brand medication is and what a specialty medication is, etc.
Trust but verify – audit your PBM and don’t let them pick the auditor.
National CooperativeRx also recommends utilizing co-insurance for your plan. Though not for everybody, it promotes good consumerism and high patient awareness. If it’s feasible within your plan, he also suggests using mail-order prescriptions because there are deeper discounts and high patient adherence due to regular, automatic refills.
Moreover, Bindl encourages possibly mandating generics because, “for every 1% you improve the generic dispense rate, your overall plan savings rate can be 1%-2.5% lower."
Across all members of National CooperativeRx, the patient cost share is roughly 10%, which equals roughly $1,000 per member. National CooperativeRx has saved over $13 million over the past three years with $700-$900 in discounts per member, annually.
Public Policy & The Future of Rx
Thanks to higher patient engagement, elected officials are hearing about the increasingly higher costs of prescription drugs. Subsequently, there’s now been over 100 bills signed by state governors targeting high prescription drug costs as well as hundreds of federal proposals. But Bindl says those have only provided a modest impact due to most bills passed focus solely on regulating PBMs, and a lot of the proposals on regulating them come with hidden ramifications like eliminating narrow networks, mail-order prescriptions, and restricting changing formularies mid-year.
He did explain how some change has been made through kickbacks. Though a rare occurrence, they've now been made illegal, as well as a prohibition on the prescription gag clause, which stipulated pharmacists could not tell a patient if there was a lower-cost medication.
Bindl also added that thanks to a recommendation by The Alliance, he was invited to be part of Wisconsin Governor Tony Evers’ Task Force on Reducing Prescription Drug Prices as one of the few stakeholders from an employer perspective.
Perhaps the most effective form of change this public pressure is creating has been on Big Pharma themselves. “All this attention has made Big Pharma reduce their price hikes overall,” Bindl said. Even though prices are still going up, they only went up by 5% last year compared to 11% in 2016.
Bindl ended his presentation by saying that international generic alternatives will continue to be talked about, but National CooperativeRx does not trust them due to no FDA oversight, and when asked the likelihood of prescription rebates going away he responded, “Based on what I’m hearing, there’s less than a 1% chance of that happening.”
As a not-for-profit cooperative of employers and insurance trusts that self-fund their health benefits, The Alliance is pleased to work with many forward-thinking, ethical brokers for health benefits. Most brokers will steer you to a product that’s right for your business.
You may still question how do you properly vet your broker?
The simplest way to identify good broker behavior is to ask questions. We’re going to outline the three easiest, most important ones below.
“How Do You Get Paid?”
To begin, you’ll want to ask where the broker gets their money. This question will help you learn about any financial incentives that may influence a broker’s decision-making.
This is a necessary ask because some payment arrangements from vendors or health systems are structured in a way that allows brokers and brokerage firms to receive commissions for guiding a client’s business to a particular vendor.
In this scenario, a broker might get a bonus for retaining a specific percentage of customers, or for guiding a minimum percentage of their business to a specific insurance carrier. Since it’s not labeled as “commission,” they may deny receiving one.
That’s why it’s important to broaden your question. A proper way to pose it might be, “Do you receive any money from insurance carriers or from vendors who provide services to self-funded employers? Does this include any commissions, bonuses, or other types of rewards?”
Sometimes brokers claim to work on fees – not commissions – but they sometimes build commissions into ancillary service lines, like life or dental insurance.
And if the broker won’t respond to this question? Well, you’ve probably got your answer.
“Who Pays You?”
We suggest following up with a more specific question: “Do you receive the majority of your revenue—more than 50%—from a single insurance carrier or another source?”
Why does this matter? Brokers who receive the majority of their profit from a single source are unlikely to look for a better deal for you and your employees. They’re also more likely to reject new ideas, options, or approaches, which means you could miss out on innovations that deliver big cost-savings.
You want to work with someone who’s motivated to find you innovative, cost-saving opportunities.
“What Makes You Effective?”
The final question you should ask a broker is, “How will you find the right solution for my organization?”
If a broker assures you that they always look around but consistently end up with an HMO, a fully-insured plan, or a solution from large national carriers, then it’s possible they’re limiting your solutions.
Look for a broker who examines the marketplace with vigor to find opportunities that work for you. In most cases, that means finding a broker who is experienced with self-funding so they understand all available options for employers today.
Aim for Transparency
While it seems simple, these questions play an integral part in finding a good broker – one who’s transparent.
Satisfied with the answers to these three questions? Then you’re ready to learn more. (Of course, that means asking more questions!) Other areas to explore with your broker include:
Their knowledge of self-funding, and if it’s a good option for the employer or not.
Their ability to use data and dive into costs and potential savings.
Their willingness to explore plan design to deliver better outcomes for employees.
Their approach to learning about innovations that could help you improve services or reduce costs.
Their willingness to consider performance-based contracting – where the broker and business mutually agree on goals for the plan year, then tie a set percentage of compensation to achieving them.
To learn more about how The Alliance works with employers and brokers to make health care more affordable, contact our Business Development team. Members and their advisers are encouraged to contact the Member Services Team.
In a new study released by GNS Healthcare, data shows that employers could save hundreds of millions of dollars by steering consumers toward high-quality, low-cost physicians.
Using 2017 Wisconsin Health Information Organization (WHIO) claims data, they analyzed 3,760 primary care physicians who performed at least 100 evidence-based measurements, totaling $1.4 billion in costs. The result? If the bottom 50% of providers increased their performance, it could save up to $394 million.
Health care costs have increased every year since 1960, and the only strategy fully-insured employers had to stave off cost increases was to shift the financial burden to employees – who have grown dissatisfied with their ever-increasing high-deductible health plans. This trend has caused an overall lower rate of health care utilization, and when combined with a competitive hiring market, it’s causing employers to look for a new health care solution.
There is no correlation that higher cost equals better care, and nearly 1,000 doctors in the study ranked better than average on cost and quality.
The answer then is to educate patients and encourage them to use high-value providers. The only way to lower health care costs substantially is to provide shareable data that employers can use to educate plan beneficiaries. By banding together and volunteering claims data to future studies, employers could push the public policy pendulum towards better cost transparency, forcing that change.
It’s why The Alliance is participating in the new Rand 3.0 study, set to be released in May, which takes an in-depth look at the prices paid by private health care plans in comparison to Medicare. The study will supply the market with much-needed cost transparency, and hopefully drive employers to demand necessary, immediate change
As Dana Richardson, the CEO of WHIO, puts it, “When I think about cost, I say to myself, this journey that we have been on for quality has been 30 years and we don’t have 30 more years to address cost. I contend that we need to think about our work to slow the rise of healthcare cost as an expedition instead of a journey. And we need to do that because it needs to be a serious movement from one point to another.”
What Employers Can Do
Employers can work with an employer-owned cooperative like The Alliance and encourage patients to utilize high-performance providers.
If employers educated their employees and encouraged them to seek low-cost, high-value health care, both groups could save a substantial amount of money. Employers can also participate in future studies by releasing their health care data to increase transparency in the market.
Additionally, they can join other employers in self-funding to increase their collective bargaining power.
For more information on how the Alliance can use data to help you steer employees to the right care, contact Member Services.
There’s been a lot of buzz about self-funding vs. fully insured plans, so let’s discuss the numbers. Health care costs in the US have increased every year since 1960. And according to Nelson Griswold, an employee benefit advisor, family health insurance premiums nearly tripled from 1999-2018, while wages during that time increased by just 17%.
The good news is that traditional health care is changing. Employer-owned cooperatives, like The Alliance, are introducing the next generation of health care by empowering employers to gain access to their data and provide high-value health care at low-cost providers. And while the benefits year may have just kicked off for some, for those organizations that may be considering self-funding in the future, we’ve compiled information on the risks, benefits, and differences between fully insured and self-funded plans.
Self-Funding vs. Fully Insured
Fully insured is what most people mean when they talk about insurance. The employer pays a premium to the insurance carrier on behalf of each employee. In return, the carrier pays medical claims for covered services that are beyond the out-of-pocket maximum for which an individual or family is responsible. In a fully insured model, it doesn’t matter whether an employee has a medical procedure that costs $20,000 or $80,000. The insurance company has contracted to pay all claims and assume all financial risk. The fully insured model may mean that employers pay higher premiums to cover the risks and generate profits for insurance companies.
Self-funded insurance is almost the opposite. The employer pays the claims of its employees, so it matters how much an individual pays for care. And because there’s always the possibility of claims being higher than expected, most self-funded plans have a form of insurance in place, called “reinsurance” or “stop-loss insurance.” A third-party administrator (TPA) processes the medical claims and issues benefits on behalf of the employer. But while the employer may assume the risk, they also keep the difference, including interest income.
The Benefits of Self-Funding
Self-funding your health insurance provides you with full access to claims and pharmaceutical data you can use – because you own it – to guide your plan design and decision-making. The Alliance provides its members with accurate, easy-to-access information comparing cost and quality from providers. This enables employers to be informed when deciding their provider network and benefits plan design.
Depending on the needs of your employee population, self-funding can give employers the option to approach provider contracting differently. By offering tiered options, you can still give employees choice while also steering them to the most cost-effective options. Employers can also consider broader or narrower networks than are often available through the traditional fully insured model. And having the ability to make the recommended customizations related to steering to high-quality, low-cost providers can also help keep costs in check for the employer and employees.
Being self-insured can also help support company culture. If an organization cares about the well-being of its employees, they can align their benefits to those values. And when an employer shows that they believe their employees’ health is important, it sets an expectation for employees to become more mindful of their health. And can lead to higher employee satisfaction.
Want to learn more?
Employers interested in learning more about self-funding can contact the Business Development Team for more information, and to see if self-funding is right for your organization.
“A small group of empowered purchasers can change the system.”
Members who attended The Alliance annual meeting this year heard these words of encouragement from Suzanne Delbanco, Executive Director of the Catalyst for Payment Reform (CPR).
Suzanne provided many examples of employers influencing the value of health care delivery in recent years and explained how their work is becoming even more important, given physician and hospital consolidations. More and more research studies show that consolidation drives up the price of health care for employers. This is something that certainly impacts the markets where we buy health care, with few independent physician groups and hospitals remaining.
Employers have the power to demand better health care spend. They just need to use it. This blog is the fifth in a series that explains how the four core drivers on The Alliance Roadmap to High-Value Health Care fit together. Our last core driver is benefit plan design, which accomplishes two important things:
It makes the right care more convenient, accessible, and transparent to employees, making it more likely that enrollees choose cost-effective and high-quality health care; and
It provides financial incentives for employees and their families to choose high-value health care that delivers better results for lower costs.
Benefit plan design is the driver that brings all the components of high-value health care together: transparency, payment reform, and provider network design.
Examples of Strategic Benefit Design
Financial incentives that reward enrollees for choosing higher-value health care are probably the most common benefit design strategy that employers utilize today. Network tiering is an example of this, where high-value health care providers are more affordable for plan participants. Providers who don’t want to be in lower tiers are driven to change their business model, usually by lowering their prices.
Employers are also using benefit design to help employees get the right care. According to Suzanne, 33% of employers today are increasing out-of-pocket costs for services that are overused or potentially inappropriate without an evidence-based approach. Others are lowering out-of-pocket costs for services that employees need to stay healthy, like diabetic supplies. Yet another strategy is offering advanced primary care through onsite or shared-site clinics at low or no cost. These providers can then help educate employees and refer care to high-value specialists.
What can Employers Do?
Employers can use the tools The Alliance has developed to create benefit plans that make high-value health care accessible and less expensive for their employees. Because when enough employers get involved and
provide these kinds of incentives, physicians will be motivated to improve the value of their care and make real change in the market. Please reach out to the Member Services Team to start strategizing today.
You might expect employees who benefit from an employee stock ownership plan (ESOP) to quickly become good health care consumers. When employees save money by making smart health care choices, both the company and the employees (as owners) will benefit financially. But even employees who own the company need help understanding how their decisions impact health plan costs, according to the leaders of Trachte Building Systems, Sun Prairie, Wis.
This blog is part one of a four-part blog series that aims to go deeper into each of these four core drivers on the Roadmap to High-Value Health Care, as explained at The Alliance 2019 Annual meeting. The goal is to provide transparency, helping employers get more value from their health benefit investment and driving real change in the market.
Transparency is the first core driver and has been a buzzword in health care for some time. But what does it really mean? At The Alliance, we’ve always defined it as putting accurate, comparable, and understandable information about health care cost and quality at employers’ fingertips, enabling them to share that information with employees and dependents to make informed decisions about their care.
It’s also being open and collaborative with health care providers about how we measure their performance so that we can reward them for value instead of volume. What is critically important to understand is how interdependent these pieces of the puzzle are. We can’t reward providers for value unless employers and consumers become active health care shoppers. And we know that won’t happen unless we help employers provide actionable information and help them align incentives for employees and their families to choose high-value providers. After years of advocacy on behalf of our members in this arena, we firmly believe this chain of events is key to driving change for the better at hospitals and clinics.
Transparency in Action
Many Alliance employers are using QualityPath® as the catalyst to make this vision a reality. Through QualityPath®, we provide reliable information to both employers and providers on specific areas of care, such as inpatient surgeries like knee/hip replacements and outpatient testing like CT scans and MRIs. Employers are then able to use that information in their plan design to encourage enrollees to choose providers that deliver great results at a lower price. We’ll talk more about benefit plan design in a future blog post, but this is a critical element.
We also offer bundled payments as an option for outpatient surgeries. We know that transparent cost information is only half the battle, but believe it is preferable to choosing health care in a void. Many of the surgeries for both QualityPath® and bundled payments also come with warranties for additional peace-of-mind. There exist major swings in costs per episode of care from one network health provider to the next, and that provides an opportunity for cost savings if employers learn to harness this information.
Quality measurement in health care has come a long way, but gaps remain between the information we need and what is available today. We are evaluating quality information from both publicly available and commercial sources and will soon invest in new, meaningful quality indicators to add to our comparative price information used by employers. Our health policy advocacy at both the state and federal levels aims to advance and accelerate these efforts.
What Can Employers Do?
Employees and their families want answers to questions about health care options, how much they cost, and where to go for safer, quality care. We want to help them find the answers. Our solutions are customizable to each of our member-employers’ circumstances and appetite for change and the ensuing cost savings. It’s going to take the power of many employers to be successful, but we will meet you where you are and bring you along on this journey. Members and their advisors are encouraged to contact their Account Executive as the first step.
The Alliance Annual Meeting served as the launchpad for our Roadmap to High-Value Health Care, featuring real-life examples from employers that use the flexibility and data The Alliance provides to move the needle on quality and cost.
Brakebush Brothers Inc., headquartered in Westfield, Wis., uses self-funding to look for opportunities to lower the cost and increase the value of their employee health benefits. Many of these opportunities arise because Brakebush is willing to challenge the status quo in employee health benefits, according to Dan Ludwig, director of benefits and safety.
The status quo for employers typically means that insurance plans own the employer’s health benefits data; providers set their own prices and increase them regularly; and patients have limited ability to judge where to go for care based on cost and quality.
Instead, Brakebush utilized their claims data (a perk of self-funding their health benefits) to find opportunities where they could modify their health benefits plan to lower costs and promote better health outcomes. Employees and vendor partners were included in this process.
The result of Brakebush’s collaborative efforts provided employee health care options that were more easily accessible, less costly and provided high-value specialty referrals.
Support from The Top
Ludwig praises open-minded executives at Brakebush for their support for changing the company’s approach to health benefit costs.
“Employers have to get rid of the status quo,” Ludwig said. “That means employers can’t do it the way they’ve always done it. At Brakebush, we’re given the freedom to explore opportunities. We have to justify every one of these changes, but we’re given the ability to go and explore.”
Ludwig believes that only companies who realize health care can be controlled will be able to achieve flat or lower benefit costs. Employers who are unwilling to challenge the status quo, learn about health care pricing or embrace innovative approaches are unlikely to gain the full benefits of self-funding.
“The lack of understanding in the world of how health care is paid and what impact it has on business has really led us to this problem,” Ludwig said. “Employers have to look at health care and say, ‘We’re done with this.’
“As employers, we control everything else that is on our budget and we hold vendors accountable for giving us high-value products and services. Why are we not holding health care to the same standards?”
Are you an employer searching for self-funded health benefit solutions? If so, Ludwig offers the following tips for you to consider.
Brakebush Brothers’ Top Tips for Self-Funding Results
Get ready to self-fund. Looking back, Ludwig thinks Brakebush should have had new solutions ready to introduce when self-funding started in 2014, so employees immediately noticed the difference.
Be willing to change. Employers get the best results by combining self-funding with data-driven changes in their health plan.
Develop a team of collaborators, internally and externally. Internally, create a team of employees who take responsibility for changing the health plan to focus on high-value health care. Externally, network with peers at other companies and then find vendor partners who are interested in working with you on innovative solutions. Your relationships will make a difference in what you achieve.
Make sure partners have aligned incentives. They should “win” financially when your company wins and lose when it loses.
Tell employees how self-funding makes a difference to their out-of-pocket costs. Explaining the relationship between the company’s costs and their health benefit premiums is a great place to start.
Remind employees of ways to save, again and again. Sharing information at open enrollment is critical, but employees also need reminders throughout the year. If you have an onsite clinic, make sure clinic providers know all the current options for employees to use programs such as Centers of Excellence.
Use employers’ combined power. Employers’ ability to change how they purchase health care grows when they work together.
Read the case study on Brakebush Brothers for details about their award-winning approach to changing employer-sponsored health benefits.
There are two things people often mention when they talk about health care frustrations. They want:
A bill they can actually understand.
A price they can compare in advance.
Of course, that’s not the way that most health care is purchased. In our current “fee-for-service” health care system, each separate item or service carries a separate fee, which usually makes it impossible to know what a surgery or test will cost in advance.
Health care bundles are the exception. Health care bundles are now available for many surgeries and tests.
What’s a Bundle?
When you buy health care in a bundle, it means you:
Pay a single price for many different services that are part of a surgery or test.
Know the price in advance.
Typically save a significant amount when compared to buying the services one-by-one and fee-plus-fee.
Unfortunately, not every surgery or test can be easily turned into a bundle of care. Surgeries and tests typically work well as a bundle when they:
Are not emergencies. That means that patients have time to “shop” for care and compare prices.
Can be delivered in an outpatient setting. Bundled prices can sometimes be used for “inpatient” care, where the patient stays in the facility overnight. For example, The Alliance QualityPath program offers bundled prices for some inpatient joint replacements, as well as outpatient colonoscopies and MRI and CT scans. But most surgeries and tests with bundled prices are available only for outpatient care. These outpatient options usually have the greatest savings for employers.
Are available from many different providers. That means patients have an opportunity to compare their options for where to have care. At The Alliance, for example, patients can choose between multiple bundled providers as well as traditional fee-for-service care for many surgeries and tests. Well-known providers who offer “bundles” for care and are part of The Alliance network include NOVO Health, Twin Cities Orthopedics, Marshfield Clinic Health System and Smart Choice MRI.
An Employer Opportunity
Knowing the price in advance gives employers the opportunity to decide whether to offer incentives for using bundled care. If you can know you can save hundreds or even thousands of dollars on a surgery or test by using a specific bundled provider, for example, you may decide to share a portion of the savings with employees as a way to increase participation.
Encouraging employees to choose a bundled provider also helps employers begin to move away from buying health care on a fee-for-service basis. We all know that fee-for-service health care prices vary wildly from provider to provider and from service to service, even when a provider network provides discounts on the cost of care. Bundled pricing provides a framework that lets you fairly compare these prices and make clear decisions.
The health care marketplace has a long way to go before we can all make sense of bills and pricing. In the meantime, buying care in a bundle is one way to gain savings while helping the market find better approaches to paying for care.