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Transparency Does Not End with Providers and Insurers – Benefits Brokers Are Next

On a sunny October day in 2004, I was expecting a phone call from a Wall Street Journal reporter who wanted to discuss the latest practices of insurance brokers steering their clients to higher-commissioned products. At the time, I was operating my employee-benefits consulting organization, assisting Iowa employers by obtaining and servicing their employee benefit plans. For the record, since October 2011, I no longer practice as a benefits consultant.

During 2004, New York State Attorney General Eliot Spitzer filed a civil lawsuit against insurance broker Marsh & McLennan, alleging it rigged bids and steered business to insurers who paid enticing commissions, even if the product and insurance company were not in the client’s best interest. It was a scandal that rocked the industry that I was part of at that time.

How this New York reporter became aware of my organization was somewhat of a mystery to me. She did mention that our website was ‘dripping’ with language that suggested “complete independence” from “outside influence” and that “we act in our clients’ best interest – always.” From her perspective, I presumed, maybe we were indirectly referring to activities in our industry that bordered being nefarious. She wanted to learn more.

Our firm, when possible, avoided such contracts with insurance vendors because our desire was to be paid directly by our clients. Unfortunately, for many of our smaller employer clients, insurers would not segregate commissions from the premiums they paid, so we accepted the commission but voluntarily shared with the client the amount we received on their behalf.

Cash and gifts quietly given to insurance brokers and consultants by vendors – in exchange for business – may create a conflict-of-interest that adversely impacts the ‘independent’ guidance employer clients expect to receive from their advisors. During that time, voluntary reporting of commissions and bonuses were seldom being practiced by others – both locally and nationally.

Unfortunately, the WSJ interview never happened as an unexpected priority required my immediate attention at the time.

Fast forward to now.

The $900 Million Stimulus Bill – Includes Broker Transparency Provision

Buried deep in the 5,593-page $900 million stimulus package that was signed into law on December 27 is a little-known provision that impacts the aforementioned conflict-of-interest issues. For brokers, consultants and employers, this provision can be found on page 4475, Section 202 BB of the stimulus package. I learned of this provision from a ProPublica article (January 6), aptly titled: “Lavish Bonus? Luxury Trip? Health Benefits Brokers Will Have to Disclose What They Receive from the Insurance Industry.” The title says it all.

Author Marshall Allen, whom I have corresponded with in the past, has written quite a bit about this subject. In fact, his 2019 article prompted senators to propose legislation that requires disclosure of such perks and payments. This legislation was never enacted until now.

Brokers – and Employers – Take Note

The provision requires brokers and consultants to share with their employer clients (in writing) the various forms of direct or indirect compensation they receive from vendors associated with the health plan purchased by the employer. Further, the disclosures must take place at the time the employer enters into the agreement with the broker/consultant – or when the plan is renewed. This requirement also includes brokers who sell individual health insurance coverage.

Additionally, any service provider acting as a consultant who reasonably expects to receive direct or indirect compensation relating to the development of the following services must also comply:

  • Plan design
  • Insurance or insurance product selection (including vision and dental)
  • Record-keeping
  • Medical management
  • Benefits selection
  • Stop-loss insurance
  • Pharmacy benefit management services
  • Wellness design and management services
  • Transparency tools
  • Group purchasing organization agreements and services
  • Participation in and services from preferred vendor panels
  • Disease management
  • Compliance services
  • Employee assistance programs
  • Third party administration services

The disclosure section of this stimulus package applies to a producer or entity expecting to receive more than $1,000 in direct or indirect compensation for selling or administering to ‘employer-sponsored health plans’ and ‘enrollees in plans on the individual market.’

Conclusion

The delivery and payment of healthcare is fraught with many incentives and disincentives that drive appalling behaviors, causing costs to soar. As a benefits consultant, I was a big proponent of disclosing any renumerations we received to each affected client. Philosophically, this behavior is similar to expecting hospitals, physicians and insurance companies to reveal the negotiated prices of medical services.

Brokers and consultants owe it to their clients to be open with how they are being compensated by various sources to assure the client is being properly (and ethically) served at all times. This behavior cements trust and can promote a strong bond between the buyer and seller.

It is simply the right thing to do.

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Another One Bites the Dust – Haven Ends Healthcare Quest

The medical industrial complex has claimed yet another innocent victim. But this is not just any victim.

Three years ago, an independent company, Haven Health, was formed by three powerhouse forces in the business world: Amazon, JPMorgan Chase and Berkshire Hathaway. Meant to transform healthcare, Haven was a very unique collaboration that put the healthcare industry on notice that a new sheriff would be in town to help clean up a messy and unruly industry dominated by legacy players.

The likes of Jeff Bezos (Amazon), Jamie Dimon (JPMorgan Chase) and Warren Buffett (Berkshire Hathaway) were serving as the newly-assembled sheriff that would instill both fear and respect by industry inhabitants.  When this marriage was announced in 2018, I wrote a blog about the likelihood of having three disruptive ‘outsiders’ force long overdue changes to healthcare practices. I ended this blog with one stark sentence: “Only time will tell.”

Time is Now Here

It appears the healthcare industry is more complex (and unforgiving) than even the sheriff had believed. This most recent development reminds me of what President Trump naively claimed while attempting to repeal and replace Obamacare in 2017: “Nobody knew that healthcare could be so complicated…”

On Monday of this week, Haven announced that it will end its mission of exploring healthcare solutions, such as “piloting new ways to make primary care easier to access, insurance benefits simpler to understand and easier to use, and prescription drugs more affordable.” According to the Wall Street Journal (subscription required), any collaboration between these companies will become less formal in the future.

In addition to impacting their own respective workforces, the collaboration also intended to influence and disrupt the payment and delivery models currently in place. Reading between the lines, however, when their appointed chief executive, Dr. Atul Gawande, stepped down from his role in May of 2020, perhaps the proverbial ‘flywheel’ lost any inertia it may have gained.

Lesson Learned

Going forward, it will take more than three highly-respected leaders and their innovative organizations to mildly disrupt a system that desperately needs disruption, but has largely resisted meaningful changes. Many have tried to reform this massive industry, but up to this point, there has been very limited success.

In healthcare, bold changes may only come after America experiences an unimaginable crisis beyond anything we’ve ever encountered before.  But then again, only time will tell.

–Update on Hospital Price Transparency Requirement

My Tuesday blog on the new hospital price transparency mandate revealed that two major Des Moines hospitals have not posted the required pricing information despite a national mandate to do so – beginning January 1. The penalty for noncompliance is, quite frankly, small potatoes for at least larger hospitals – just $300 a day. To learn more, the CMS issued a FAQ on December 23.

According to POLITICO Pulse just one-third of the top 20 hospitals have posted visible price lists as of New Year’s Day. Politico reports, of those hospitals that have posted, the information is often vague or hard-to-decifer. More to come in future blogs on this subject.

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Hospital Price Transparency Took Effect New Year’s Day
But, Where is it?

Happy 2021!!!

In this brand-new year, imagine that you have found your most desired showroom vehicle at a local dealership. After haggling with the salesperson (and the backroom manager), a process that is similar to playing ‘Let’s Make a Deal,’ you are handed the following purchase agreement that reads (in short):

This negotiated price is an estimate only and is not a quote or a guarantee of the amount that you will eventually owe…

Now wouldn’t that be a twist on the old way of doing things! But in healthcare, this is precisely the norm.

Recent Ruling on Hospital Transparency Pricing

On Tuesday, December 29, the U.S. Court of Appeals for the District of Columbia circuit rebuked the hospital industry’s legal attempt to banish new rules on price transparency from taking effect on New Year’s Day. I have written about the new rules frequently in the past. The price transparency rule, published in November 2019, was pushed by President Trump and HHS Secretary Alex Azar.

As it now stands, barring a President Biden ‘stay of execution’ order to relax these rules, hospitals must post their negotiated rates online beginning January 1, 2021. The online rates must be conveyed in a machine-readable format and also list their negotiated rates for at least 300 shoppable services in a consumer-friendly format – including 70 services picked by the Centers for Medicare and Medicaid Services (CMS).

Starting Jan. 1, 2022, health plans and insurance companies will have to provide a publicly available, updated data file on costs. By January 1, 2023, payers, such as commercial insurance companies and large, self-funded employer health plans will also need to comply with similar price transparency rules demanded of hospitals. This was discussed in my November blog, “Finalized Price Transparency Rules for Insurers.”

Not surprisingly, the American Hospital Association is disappointed by this latest decision and, according to their General Counsel, Melinda Hatton, “…are reviewing the decision carefully to determine (our) next steps.”

It’s Now 2021 – Have These Rates Been Posted?

On January 2, I’m sitting at my computer attempting to discern what actions a few Central Iowa hospitals have taken to comply with this new requirement to inform Iowan’s about specific ‘negotiated’ health prices, not just merely ‘estimated’ prices. Estimations, I might add, are simply playing a game of horseshoes and hand grenades, providing just enough information to check boxes to ‘inform’ an already confused public.

Below is a rather quick assessment of three Des Moines-area hospitals – in addition to the Iowa Hospital Association – and what they have listed on their websites as of January 2, 2021. Since that date, any changes made by the following organizations have not been reflected in my comments found below.

MercyOne – Des Moines

As I understand the requirements, MercyOne’s ‘Estimate Your Costs’ webpage does not conform with the new regulations on hospital price transparency. This webpage allows one to download a list of their ‘standard charges’ (in Excel format), but does not provide the ‘negotiated’ rates by payer. MercyOne cautions that this information is only a ‘partial estimate,’ as it does not include other fees beyond hospitals charges, such as “physician fees, charges for your emergency room physician, radiologist or anesthesiologist”.

Before an interested patient can gain access to “generate the most accurate estimate for your health care procedure,” one must click “Estimate Your Costs” and agree to the ‘Disclaimer’ before providing your name, DOB, type of desired medical procedure and your insurance vendor. I attempted to complete this exercise but was met with ‘an error’ both times.

Just as troubling to me is this disclaimer: “Benefits and eligibility are subject to change at any time. This estimate may contain private information that is protected by law. If you are not the patient, patient representative or guarantor, sharing, copying or using this information in any way is against the law.

Frankly, I thought this regulation was all about ‘transparency’ of negotiated medical prices. If I want to publish what MercyOne has negotiated with any particular payer, I should be able to do so. I will assume this site has not been adequately updated and, consequently, this language requires a revision.

UnityPoint Health – Des Moines

The Patient Charges and Costs webpage for UnityPoint Health appears to be helpful, but when looking more closely, it has not changed to reflect the new regulation. The UnityPoint site refers to the January 1, 2019 requirement that hospitals list their ‘standard charges’ of Diagnostic-Related Group (DRG) charges. This information should be deleted from the website as it no longer is compliant with the new regulations. UnityPoint Health cautions the patient to ‘first contact your insurance provider’ who may provide their own ‘estimates’ for out-of-pocket costs based on the insurance plan of the patient. But doing so will likely invite the patient to enter a new labyrinth of confusion that is full of disclaimers, etc.

UnityPoint’s ‘Financial Estimate‘ webpage requires completion and submission before releasing prices. I did so, but when it was submitted, I received the following message: “Thank you for your request.  We’re striving to provide an easier and more personal way for you to plan your health care. A UnityPoint Health financial representative will reach out to you within 2 business days to provide your estimate information.

This website is both confusing and non-compliant – based on my review date (January 2).

Iowa Hospital Association (IHA)

After a cursory review of the IHA website, there are no specific updates that provide revised information about this latest regulation.

Broadlawns Medical Center – Des Moines

With Broadlawns, we actually have a BINGO!

Two days before the required posting of negotiated rates, Broadlawns posted their ‘Pricing Directory’. Broadlawns provides this information in two formats: PDF file and CVS file. The 450-page PDF has the following disclaimer at the top of the first page:

This is an estimate only and is not a quote or a guarantee of the amount that you will owe or what the charges for services will be. The actual charges may be lower or higher than the estimates depending upon many factors – including actual services rendered, complications, your particular health care needs, and your actual insurance policy coverage.

The 450-page PDF includes 15 health insurance products offered by eight insurance companies: Aetna, CIGNA, Coventry, Health Partners, Medica, United Healthcare and Wellmark. Many shoppable services are broken down by professional (physician) and hospital services. You will find the procedure code, gross amount of the service, cash discount offered, negotiated rate with that particular insurer, and the minimum and maximum charge.

Out of sheer curiosity, I did a quick price comparison between Wellmark PPO and United Healthcare PPO for a few random procedures at Broadlawns (found below). Please note, this comparison does not suggest that these negotiated prices are the same at other hospitals. This information is only specific to Broadlawns Medical Center.In lieu of searching for the correct procedure code and shoppable services at Broadlawns, the patient can request a ‘Personalized Price Estimate’ from Broadlawns using the web-based Cost Estimator Request Form (or by calling a Broadlawns financial representative).

Conclusion

Because each patient encounter is so unique and may require various procedures, caveats by hospitals are certainly understandable when quoting specific procedure code prices. There are MANY hurdles to full-blown price transparency that cannot be categorically described in this particular blog. One obvious hiccup is – just how much the patient has remaining on his/her deductible and out-of-pocket maximum to determine their personal liability for the procedure(s). The patient will need to toggle between the health provider for specific prices and with their insurance vendor on whether the service is covered by their plan and, if so, how much the patient will be liable to pay. Transparency in medical prices help, but clarity on how to use this transparency will be problematic until a new world of simplicity evolves.

Many experts agree that price transparency in healthcare will eventually be a valuable thing to have, but this particular requirement is merely a first step toward a ‘Marie Kondo’ approach that will hopefully clean up a very messy industry when it comes to pricing. Kaiser Health News just published an article about the implications of having transparent medical pricing for consumers.

I envision that enterprising third parties will take this newly-released public data and morph it into usable consumer-centric information that can be easily accessed through a smart phone app for the patient. In addition, innovative clinician tools can help health providers perform real-time cost/value trade-offs with the patient while ordering procedures and diagnostic tests that impact the cost.

Simplifying a complex system will take patience, time and a general willingness to invoke needed change.

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