1. Cash Pricing – By design, your health plan isn’t paying the cash price. Medical Providers will accept cash for their services, the cash price is usually about half of what the PPO negotiated. The question is “How does my health plan get the cash price instead of the “contract price”?
2. Contingent Compensation Arrangements – Your broker would like to place your business where they have the largest block of business because they are often paid backdoor bonuses based on their entire block of business with their favorite carrier. This leads to reduced competition and stagnation of truly creative solutions. The question to ask is “Are you getting the competition that you are pay for?”
3. Service – Your broker probably claims that “All the quotes are the same to all brokers” therefore, you should do business with them because they have great service. Yet the vendors provide the same services for free to direct clients. The question to ask is “Can I save money in this area by using a smaller consultant with less overhead and more creative ideas?”
4. PPO Discounts Don’t Manage Risk… they promote fraud. For years insurance companies touted that you should contract with them because they pay the provider less. Sometimes this was true, sometimes it wasn’t. Discounts drove the providers to raise their retail pricing and overprescribe. The real question to ask is “What is being paid as a percentage of Medicare?”
5. Participant Involvement – Plan Participants have little incentive to control costs. Imagine giving every one of your Plan Participants a no-limit AMEX card. Every provider who touches the participant file bills your plan whether the participant is aware of it or not. The question to ask is “Does my open enrollment create a meaningful dialogue that motivates people to watch expenses closely?”
6. Drug companies – 76% of all prescriptions are processed by the “Big 3” Aetna, Express Scripts and Optum RX (United Healthcare). Traditional PBM’s retain a network spread, rebates and other revenue streams as compensation. Often, they share these rebates with their distribution partners instead of the Plan itself. The question to ask is “How do I find out the truth about the distribution of these incentives?”
7. Price Gouging – To some, charging $99 for a $5.00 case of water during an emergency may be considered price gouging, but is it okay for a hospital to charge $100 for a $5.00 bottle of saline? The question to ask here is “Who will pick up the phone and call these people out if Plans are auto-paying 95% of the claims using your money?”
8. Where the Money Goes – The healthcare industry is loaded with complex ideas and acronyms. Understanding all of it would take 20+ years. The question should be “Where exactly does the money go and why?”
9. Auto-Adjudication of claims drives fraud – You’ve probably been told that the Administrator has such great systems that they auto-pay 95% of the invoices. This “efficiency” gives every medical billing consultant an incentive to find a new way to game the insurance company systems. A better question to ask is “Who is paying attention and how much does it cost to fight a bill after a service has been provided?”
10. Dual-Tier PPO Network Contracts – A health insurance company who sells a fully-insured plan and a self-funded plan has two separate pots of money to work with to pay the providers. One is their money, (fully-insured) the other is their self-funded client’s money. If the health insurance company negotiates the PPO contract with the hospitals, “Which pot of money do you think they want to spend first?”