Mar 9, 2010
Common Response to Description of Managed Care Industry: "Sounds Like a Racket!"
Feb 4, 2010
No Matter How Health Care Debate Turns Out, Employers Must "Reform" Their Thinking About Managed Care
Jan 15, 2010
Held Hostage By Managed Care Companies, Employers Seek Escape Plan
"Ironically, during the same 10-year period, private insurers posted record profits, while holding their employer-clients as hostages, feeding them only soaring costs, poor service, and lots of excuses."
Employers are desperately trying to escape their hostage situation. But one major east coast company may have found the way out. The privately-held company just celebrated its 8th straight year without a medical cost increase. In fact, while other companies reduced benefits to lessen crippling rate increases, this employer, whose medical plan covers 45,000 lives, actually enriched its benefits program. Today, its annual health plan costs per employee are 60% below the national average. These astonishing results were achieved without a major insurance company’s help. They simply eliminated the managed care middleman entirely and contracted directly with doctors and hospitals.
Cutting out the middleman is an age old idea, but when it comes to employer health plans, insurance carriers still hold employers hostage. Large managed care networks, controlled by profit-bloated and increasingly monopolistic private insurers, have emerged as the only means of coverage for employers. They’re also the dominant source of patient revenue for doctors and hospitals, so medical providers are held hostage, too. Consequently, the middleman controls both sides of the healthcare equation and effectively prevents buyer and seller from doing business directly with each other.
Though highly effective, direct contracting is still largely unknown to CEOs whose companies are held hostage. Whipsawed by relentless cost increases, their benefit departments still rely on profit-centric insurance companies for cost-containment strategies, most of which are based on conventional managed care networks and cost-shifting onto employees. As true hostages of the big carriers, employers have been brainwashed into believing there’s no viable alternative to the carrier’s approach. They’re convinced that if the big insurers like Blue Cross, United Healthcare, Cigna, and Aetna don’t have the answer, no one does. But direct contracting proves otherwise.
Direct contracting creates a “win-win” business relationship between employer and medical provider, the true “buyer” and “seller” in the managed care equation. By cutting out the managed care middleman, the employer and provider eliminate the inherent disadvantages and financial shortcomings found in commercial managed care contracts. The direct agreement saves the employer money without shortchanging the medical provider. It creates a strong, stable, long-term, and mutually beneficial business relationship.
Employer-owned networks are comprised of doctors and hospitals that provide medical care according to the employer’s health plan. For instance, the east-coast employer mentioned earlier has direct contracts in place with more than 10,000 physicians and 80 hospitals across 15 states. Direct agreements give employees and dependents easy access to medical care, while paying those providers quickly, fairly, and without administrative hassle.
Direct contracting bears no resemblance to the complex, adversarial, and financially disadvantageous network agreements forced upon medical providers by insurance companies. Direct networks truly unite physicians and employers in the goal of providing accessible and affordable medical care to employees, without the obstacles and costs found in commercial PPO networks.
As an alternative to HMOs, PPOs, and other commercial managed care approaches, directly contracting is a proven solution for employers who are desperate for relief from soaring costs. For employers held hostage by insurance carriers, direct contracting is a bold plan of escape. However, for such a plan to work, it takes strong leadership and a willingness to endure risks along the way. But for those companies that do, the rewards of freedom from the carriers can mean huge savings, happier employees, and better control over future health plan costs.
* According to Towers Perrin's 2009 Health Care Cost Survey, the average corporate health benefit expenditure in 2009 will be $9,660 per employee--an increase of 6% over 2008 figures.** Kaiser Family Foundation Employer Health Benefits 2009 Annual Survey.Dec 30, 2009
With Medical Plan Cost Inflation at 11%, Most Employers Still Won't Do Anything About It
The recent findings of two major surveys of employer health plan sponsors paints a pretty bleak picture of things to come in 2010. And employers will play the part of the proverbial lemmings.
Dec 11, 2009
Just Published, A White Paper for Docs: Cutting Out Adversarial PPO Agreements
Dec 7, 2009
The Public Option Sideshow & Congressional Mind Control
Zack Cooper's Huffington Post article The Public Option Sideshow brilliantly elucidates the distractive problem of elevating the public option to mythic proportions within the healthcare reform debate.
Nobody in Congress wants to acknowledge the unbridled influence the insurance industry has over the legislative process, nor the complete mind-control that Big Insurance exercises over our elected representatives. The "watered-down" public option has become a brilliant smoke-screen behind which the insurance industry can hide from real reform.
As long as debate and public awareness focus on the public option, and other "toothless" components of the bill, the spotlight will be shifted away from real reform. Any bill that emerges will be a victory for the insurance industry, as long as nothing is done to repeal antitrust exemptions, ban pre-existing condition denials, and regulate insurance markets.
Even if a public option should create market competition, private insurance companies will surely find a way to squash it. Look at all the experience Blue Cross, Cigna, Aetna, and United Healthcare have had squashing competition and building near-monopolies. Without concurrent regulation, there's no way in the world any public option, no matter how strong, can prevail over the profit-bloated insurance industry. Granted, more people may gain coverage after a bill is passed, but it's going to be the private insurance behemoths that win, not the American people.
The public option is a great sideshow. And, sadly, it has distracted Americans from the real issues. In the end, passage of any reform bill will be a hollow victory. Until Congress acknowledges what's wrong with the current system and the need for insurance reform, how can things possibly improve?
Nov 24, 2009
Health Care Bill: Template for Future Defeats?
I do hope a bill, any bill, reaches Obama's desk for signature. If it doesn't, I'm afraid the balance of his presidency will become as ineffectual as the bill that never made to his desk. The administration's handling of the healthcare debate will become the template for failure (or the game-plan for defeating Obama) on every subsequent reform he puts out there.
Point is, when it comes to health care reform, no matter how the debate turns out (bill or no bill), the only real winners are going to be the big insurance companies. Their monopolies will continue to grow. Their profits and executive compensations will continue to soar. In the end, Big Insurance's influence over the U.S. Congress will have come full-circle for those Senators and Representatives whose political lives seem to live and die by the contributions and lobbying efforts of the insurance industry.
Oct 23, 2009
Eliminate Anti-Trust Exemption for Health Insurers? Good Luck, Congressman!
So now, while the healthcare reform debate continues to be orchestrated according to the whims of the mighty insurance lobby in Washington, it's almost inconceivable to think that Big Insurance will sit still amidst any rumblings of anti-trust proponents. The insurance lobby has already demonstrated it can get exactly what it wants (or prevent what it doesn't want) from Congress, without having to pull out any of the stops. They've done it almost casually. Imagine the fight they could mount (over anti-trust) if they really put their minds and resources to it.
While I support Rep. Grijalva's sentiment with regard to removing the anti-trust exemption, and I wish him luck with his efforts, the odds of it succeeding fall somewhere between slim and none.
Oct 20, 2009
Right Steps? Wrong Directions? Congress Needs to Look at Itself First
Sep 29, 2009
When the Healthcare Debate Dust Settles, the Insurance Monopoly Will Be the Biggest Problem of All
Where's the Justice Department? Whatever happened to anti-trust laws? How has the insurance industry been able to vault itself to a position that appears above those laws? Anyone know?
Sep 22, 2009
Employers Held Hostage by Managed Care Companies: An Escape Plan
"Ironically, during the same 10-year period, private insurers posted record profits, while holding their employer-clients as hostages, feeding them only soaring costs, poor service, and lots of excuses."
But one major east coast company just celebrated its 8th straight year without a medical cost increase. In fact, while other companies reduced benefits to lessen crippling rate increases, this employer, whose medical plan covers 45,000 lives, actually enriched its benefits program. Today, its annual health plan costs per employee are 60% below the national average. These astonishing results were achieved without a major insurance company’s help. They simply eliminated the managed care middleman entirely and contracted directly with doctors and hospitals.
Cutting out the middleman is an age old idea, but when it comes to employer health plans, insurance carriers still hold employers hostage. Large managed care networks, controlled by profit-bloated and increasingly monopolistic private insurers, have emerged as the only means of coverage for employers. They’re also the dominant source of patient revenue for doctors and hospitals, so medical providers are held hostage, too. Consequently, the middleman controls both sides of the healthcare equation and effectively prevents buyer and seller from doing business directly with each other.
Though highly effective, direct contracting is still largely unknown to CEOs whose companies are held hostage. Whipsawed by relentless cost increases, their benefit departments still rely on profit-centric insurance companies for cost-containment strategies, most of which are based on conventional managed care networks and cost-shifting onto employees. As true hostages of the big carriers, employers have been brainwashed into believing there’s no viable alternative to the carrier’s approach. They’re convinced that if the big insurers like Blue Cross, United Healthcare, Cigna, and Aetna don’t have the answer, no one does. But direct contracting proves otherwise.
Direct contracting creates a “win-win” business relationship between employer and medical provider, the true “buyer” and “seller” in the managed care equation. By cutting out the managed care middleman, the employer and provider eliminate the inherent disadvantages and financial shortcomings found in commercial managed care contracts. The direct agreement saves the employer money without shortchanging the medical provider. It creates a strong, stable, long-term, and mutually beneficial business relationship.
Employer-owned networks are comprised of doctors and hospitals that provide medical care according to the employer’s health plan. For instance, the east-coast employer mentioned earlier has direct contracts in place with more than 10,000 physicians and 80 hospitals across 15 states. Direct agreements give employees and dependents easy access to medical care, while paying those providers quickly, fairly, and without administrative hassle.
Direct contracting bears no resemblance to the complex, adversarial, and financially disadvantageous network agreements forced upon medical providers by insurance companies. Direct networks truly unite physicians and employers in the goal of providing accessible and affordable medical care to employees, without the obstacles and costs found in commercial PPO networks.
As an alternative to HMOs, PPOs, and other commercial managed care approaches, directly contracting is a proven solution for employers who are desperate for relief from soaring costs. For employers held hostage by insurance carriers, direct contracting is a bold plan of escape. However, for such a plan to work, it takes strong leadership and a willingness to endure risks along the way. But for those companies that do, the rewards of freedom from the carriers can mean huge savings, happier employees, and better control over future health plan costs.
* According to Towers Perrin's 2009 Health Care Cost Survey, the average corporate health benefit expenditure in 2009 will be $9,660 per employee--an increase of 6% over 2008 figures.** Kaiser Family Foundation Employer Health Benefits 2009 Annual Survey.Sep 4, 2009
Where are Harry Reasoner and Howard K. Smith When You Need Them? Oh, That's Right, They're Dead (Sigh)
Who's watching World News Tonight anyway? Ask their sponsors (99% of whom are pharmaceutical companies) and you'll find nary a soul under the age of about 60. The makers of Viagra, Nexium, Plavix, Lipitor, and other Rx's for "Over-the-Hillers" (like me) spend millions mononpolizing virtually every minute of commercials on WNT for the simple reason that they'll never reach such viewers through the internet.
But, just in case an occasional viewer under middle-age tunes in, WNT makes sure to say "visit ABCnews.com" as the tag line to every sentence they utter. Not to mention, the ABCnews.com graphic that's obnoxiously burned itself into my plasma TV's display.
I've watched ABC News on and off for the past 40 years and, frankly, it's never ever been as good as when Harry Reasoner and Howard K. Smith were at the helm. Now there were a couple of anchors! Oh well, I'll probably watch Diane, just like I watched Charlie, but never in the same way I watched Harry and Howard.
I suppose when I want the real story, the hard-facts, the truth, I'll just have to go to The Onion or The Huffington Post. Just kidding....
Sep 2, 2009
Obama's Handling of Healthcare Reform Issue: Same as Bank Bailout?
However, unlike the financial crisis, most Americans have no realistic frame of reference for the healthcare crisis. No personal experience with the healthcare system itself. The financial meltdown touched virtually everyone, sick and healthy. From those with a few bucks to those who lost millions. But the shortcomings and injustices of healthcare seem to touch only those who use it. Considering the huge number of people who never see a doctor, the remainder's a pretty small basis for real support.
No wonder support for Obama has been so elusive. The strongest base he mobilized during the presidential campaign is comprised of mostly young, healthy people. There's no group whose lives are touched less by healthcare issues. For them, healthcare reform is, at best, ideological, unless they get sick and, even then, only gravely so.
Support from the young and healthy for reform of a system that seems to affect only the older and sickly, will require the same effort the Civil Rights movement needed in the 60's. Support from those who were not personally touched by racism grew only after the true injustices and inequality of the system were exposed. People today will respond to and mobilize around healthcare reform, but the administration and its supporters must expose the suffering that’s going on and stop waffling behind rhetoric.
Aug 31, 2009
If Only Their Voices Could Be Heard....
Opponents have become so clever and devious that it’s almost impossible to prove they’re kicking the sick, weakened, and disenfranchised while they’re down. But, they’re sure kicking-the-hell out of the people who are trying to help those others get up.
Aug 28, 2009
Apples-to-Oranges Comparison of Profits Among Healthcare Companies Lets Big Insurance Off the Hook
This kind of analysis is exactly what the insurance industry counts on to (yet again) shift the spotlight away from what they're doing and onto someone else.
But when you consider the role that Aetna, Unitedhealth, and WellPoint play in the actual day-to-day financing and delivery of healthcare, Mr. Newman's comparison is truly "apples-to-oranges" and here's why:
By virtue of their agreements with doctors and hospitals across the country, as well as thousands of employers representing millions of subscribers, managed care companies can literally control how medical care is provided. They pay or don't pay for services; authorize or don't authorize treatments; and can quickly interfere with the delivery of medical services by doctors, hospitals, and other medical providers at any time to fulfill the insurance companies' profit motives.
I don't know of one pharmaceutical company, biotech firm, or medical equipment manufacturer that can dictate how physicians practice medicine or control what services are covered or paid for. The freebies, trips, and other incentives that these companies offer medical providers may create a certain amount of influence over what medications doctors prescribe or equipment/techniques they use. But in the end, doctors are still free to practice medicine as they see fit, regardless of marketing efforts put upon them by such profit-rich companies on Morningstar's list.
Shifting blame away from the insurance companies will not serve the advancement of meaningful healthcare reform. The integral part that managed care companies play is simply too big to suggest that any other factor should be considered first or foremost. My suggestion: Keep the heat turned up the managed care companies and the insurance industry, and keep the fork ready.
Aug 26, 2009
Want to Link Patient Advocacy to Death Panels? Look No Further Than Your Nearest PPO
Of course, no one is talking about Blue Cross, United Healthcare, Aetna, or Cigna "death panels" because who'd ever admit they exist? Yet every day, at every managed care company, medical decisions are being made or, at very least, are being influenced by people who are not the patient's doctor. Patient advocates who work for the managed care companies, in the process of fulfilling their noble profession, are nonetheless feeding information back-and-forth to their employers. Information that influences length of hospital stay, treatment options, and other medical considerations that, over time and in many cases, can influence whether a person lives or dies. Yet no one talks about this, nor ever mentions the deep-seated motives that underlie "patient advocacy" as sponsored by commercial managed care entities.
Aug 25, 2009
Co-Ops vs. Big Insurance: David vs. Goliath?
The best way to compete is one that's worked for major clients of mine for the past 15 years: Eliminate the managed care middleman and contract directly with medical providers.
This approach, not co-ops, is the real David vs. Goliath. It calls for exceptionally bold and confident CEOs (who've historically stayed uninvolved in matters related to health benefits within their own companies) to leave their big carrier and contract directly with doctors and hospitals.
If you go to my corporate website ajlester. com, you'll find case studies of companies that have successfully developed their own direct networks. In doing so, they've regained the control over their health care plan operations and finances that most employers have relinquished to managed care companies.
For self-insured employers (the majority of larger companies are self-insured), medical claims are paid by the insurance company using the employer's funds according to the contracted terms and and reimbursements of the managed care network's provider agreements. The employer has zero input or control over these agreements, and little, if any influence over how the claims are paid. Blue Cross, United, Aetna, Cigna, and others never release details of their agreements with providers, so it's impossible for employers to know whether they're fair or the actual amount of the middleman "skim." All the employer knows is that plan costs keep rising every year.
In the direct contracting model, claims are paid from the employer's funds, but they're processed by independent Third Party Administrators (TPAs) according to the contractual terms and reimbursements negotiated directly between the employer and the medical providers. This pure "buyer-seller" relationship is unencumbered by the managed care middleman's profit motives and need for total control.
The idea behind co-ops is a good one, but unless the largest employers, who are now clients of and held hostage by the Big Insurance carriers, are willing to leave those carriers and get behind the co-ops, the whole idea will fail.
The giant managed care companies have been so effective as middlemen that most employers and providers believe there's no really credible alternative. The middlemen have created a fallacy that passes as a virtually unassailable form of conventional wisdom among employers. It goes something like this: "If Blue Cross (or United, Aetna, etc.) with their size and millions of members can't handle this, no one can." Consequently, otherwise business-savvy employers and medical providers summarily dismiss the idea of directly contracting with each other. They remain hostages of Big Insurance.
My concern is that this prevailing belief will carry over into any consideration of co-ops as a viable alternative. In any given market, co-ops will have to go in and compete with a middleman-created business model that's brainwashed employers and providers into thinking there's no other way to do business.
Over the years, I've found some success at overcoming that brainwashing whenever we've approached providers with the idea of contracting directly with employers in their own community. If the employer is committed to the approach, most providers jump at the opportunity for a direct agreement. Although it's almost always perceived as a good business decision for providers to make, sometimes its biggest attraction is that it is NOT a conventional commercial PPO network agreement. At those times, in that situation, the direct employer/provider agreement is the only respite from the managed care "hostage" situation that most employers or providers will ever experience.
Aug 24, 2009
Health Care Co-Ops: A Doomed Idea That Big Insurance Will Love
The idea that any newly-created, public-backed co-ops can compete with Big Insurance anywhere at any time is frankly ridiculous. It's like suggesting that a small co-op fruitstand will make the market more competitive by opening across the street from a Sam's Club/Wal-Mart mega-complex. It simply won't succeed.
If such co-ops are formed and try to compete with the Big Boys, it'll play right into the hands of the carriers. When the doomed co-op fails to work in a big market currently dominated by a couple of carriers (like Blue Cross and Aetna in Philadelphia), maybe Cigna will find a way to ride in on a white horse with some cockamamie plan to save the day, or, at very least, split spoils with BC and Aetna. In the end, no matter what the outcome, Big Insurance will still win.
I remember the days in the 1980's when independent staff-model and group HMOs were failing. Carriers waltzed in with PPOs and built their (now indomitable) position by acquiring those HMOs and selling providers on participating in their so-call "less restrictive" networks. The Big Carriers found a way to turn the fear and angst most employers and providers felt toward managed care at that time into a system of healthcare delivery and finance from which few have every been able to escape.
Aug 18, 2009
One Little Word - "Public" - Causing Real Trouble for Obama
If only they'd used the term "Anti-Insurance Industry" option or "Alternative to 8-figure CEO Salary" option, things might be going better. No matter how Obama or the administration spins it, the word "public" has inherently negative connotations. Probably hearkens back to visions of "public" relief or "public" assistance. Hell, these days, people could be thinking of "public" transportation or "public" bathrooms and getting a bad feeling.
The point is, this one word, "public," provides the perfect segue for the insurance lobby, anti-reformers, and squawk-radio to label the whole plan as "government -ontrolled", "socialist" , or, for some Right-wingers, "fascist".
No matter how negatively Americans perceive "Big Insurance", the notion of a "public" option seems much worse. Even if a public option is the only way mitigate the insurance industry's virtually dictatorial control of American health care, the negative "spin" that naysayers can attach to the word "public" is simply too strong.
Unfortunately, Obama's chief message for positive change is lost whenever he says the best alternative to Big Insurance is the "public" option. No wonder he's having a hard time. Americans understand the words "greedy", "self-serving", and "corrupt". Why, oh why can't someone among Obama's sharp staff find a way to define "public" option for what it really is: A viable alternative to everything that's wrong with commercial managed care.
Aug 14, 2009
Dr. Ornish is Right: Reimbursements a Major Determinant in the Way Medicine is Practiced
Managed care companies, through their self-serving provider agreements, shortchange PCPs on office visit fees and other primary services. That removes all incentive for these "front-line" doctors to spend time with patients, let alone offer them additional treatment or medical education. Whatever additional services a PCP might otherwise provide a patient by virtue of the doc's additional training, or sub-specialty, are derailed by inadequate reimbursements. So the PCP refers the patient away to a more costly specialist for treatment he might have handled himself.
In my experience negotiating direct agreements between employers and medical providers, cutting out the managed care middleman, we've found that "win-win" agreements based on fair reimbursements to PCPs are the best way to gain their support for employer-driven preventive care initiatives. Higher reimbursement of primary services also removes the disincentive to spend more time with patients and provide additional treatment. In the process of paying PCPs more, employer health plan costs have actually gone down, not up.
To create a healthcare system that removes disincentives for providing prevention and education, managed care companies will need to pay primary care doctors more, not less, for their services. Any public option will also need to do the same thing.
Ironically, most services provided by PCPs are relatively low-dollar evaluation and management (E&M) procedures, such as office visits, so the difference between a fair and unfair reimbursement is often just a few dollars. But that adds to a big loss of income, especially for PCPs who have lots of HMO and PPO patients. Until managed care companies stop gypping PCPs through unfair agreements and inadequate reimbursements, how can things possibly change?
Aug 7, 2009
Open Letter to Wendell Potter RE: Cutting Out the Middleman
Mr. Potter, I applaud your efforts on behalf of the CMD and would like your thoughts on one solution that's been entirely overlooked amidst the healthcare reform debate: Employers eliminating the managed care middleman and contracting directly with doctors and hospitals.
For the past 15 years, I've been working with major self-insured employers, negotiating direct agreements between those employers and medical providers as an alternative to conventional PPO networks. Coincidentally, one of my largest clients, a company with over 40,000 covered lives, was with Cigna when they opted to develop their own direct networks instead of using Cigna's PPO networks.
With direct networks now across 14 states, my client's medical trend has been essentially flat for the past 9 years, while companies their size suffered increases of 10% or more each and every year. This client's employer-owned networks, built upon fair "win-win" agreements, are stable and well-liked by providers. Compare that to the openly contentious and adversarial relationships you and I know exist in virtually every commercial PPO network.
The huge savings this particular employer has achieved by having its own direct networks for the past 9 years has allowed it to maintain a relatively rich medical benefits plan, with low deductibles and without shifting costs onto employees.
Incidentally, this employer uses a third party administrator (TPA) to process its claims according to the reimbursement and contractual terms of the direct agreements, as well as the UR, pre-cert, and case-management components. In this case, the TPA works for the client, and has no middleman loss-ratio to protect, so the admin costs are a fraction of what they run with Cigna.
I invite you to peruse the articles about the success of this approach that appeared in the WSJ, Business Insurance, Employee Benefits Review, and the Kiplinger Letter. Many of these are available at my website, AJLester.com.com, in the Resource Center-Newsroom.
For years, managed care companies have disdained my efforts to help employers bypass PPO networks by contracting directly with providers. Even Cigna tried to dissuade my client from developing their own networks, a story I'll share with you off-line, if you're interested.
Unfortunately, the insurance companies have done such a bullet-proof job as middlemen, that most doctors and employers believe there is no other way for them to do business with each other than through a managed care company. Ironically, the very first people that my prospective clients consult with about the idea of direct contracting is....you guessed it, their insurance company. Coming from Cigna, I'm sure you know how quickly employers can be talked out of that idea.
So, notwithstanding your background as a managed care guy, what are your thoughts about employers cutting out the middleman and contracting directly with doctors and hospitals? Shouldn't it be promoted as an alternative to commercial PPO networks? It's still a "private-payer" approach, which should appease opponents of the "public option". But the private part of it really is private. That is, between the employer as buyer and the medical provider as seller, without need of a middleman.
Lastly, is anyone else you know talking about this approach? If not, why not? If it's because no one thinks it'll work, where is that message coming from? There are companies out there, albeit not a huge number, who can tell a compelling story about the success of this approach. Is it possible to get people to listen?
Many thanks in advance for whatever insights you can lend.
Aug 6, 2009
Mobilizing Supporters of Obama's Healthcare Reform Requires New Strategy
The huge mobilized base of support Obama enjoyed during the presidential campaign was comprised of mostly young and healthy people. When it comes to healthcare, there's no group whose lives are touched less on a day-to-day basis than the healthy, robust masses in their 20's and 30's. For them personally, healthcare reform is, at best, an ideological issue. Unlike the economy or even the wars in Iraq and Afganistan, there's no perceivable impact from the issue, unless they get sick and, even then, only gravely so.
To gain the support of the young and healthy for reform of a system that seems to immediately affect only the old(er) and sickly, is going to require the same kind of effort that the Civil Rights movement of the 60's required. That movement garnered support from millions who were not personally touched by racism through actively exposing the injustices and inequality of the status quo. Young people today will respond and, hopefully, mobilize on the healthcare issue, but they'll have to witness the injustices and inequality that infect healthcare in the U.S. Specifically, they'll have to be shown how their parents, relatives, friends, and other members of society are suffering daily under the current system.
Aug 4, 2009
President Obama Needs to Take Case for Healthcare Reform Directly to Employers
There's been lots of talk that President Obama should have the courage to pull his healthcare bill away from the lobby-taintedCongress and pitch his case for reform directly to the American public. I disagree. If he takes it to the people, amidst the barrage of negative advertising funded by the insurance industry and big PHarma, perhaps they'll contact their elected representatives. But, by then,the lobbying juggernaught of the anti-reformers will have negated whatever positive effect that outraged public sentiment might otherwise have had on members of Congress.
No, the President should take his case to American employers. They’re the ones who’ve been paying the escalating tab of medical costs through their double-digit annual premium increases over the past ten years. If corporate CEOs and CFOs don’t already know it, Mr. Obama could remind them of how private insurance companies, as managed care middlemen, have built huge profits at the expense of American employers, while offering nothing in the way of true cooperation to lower costs or provide better service. The President could also remind them that every contract renewal signed by employers (whether they have any choice or not) is sending the clear message to the insurance companies: “Keep up the bad work.”
Employers that have been beaten-up by health insurance companies (are there any who haven’t?) are really the most powerful entity in the entire healthcare reform debate. They hold the true purse-strings. Imagine the impact of hundreds or thousands of major employers canceling their agreements with insurance companies and contracting with medical providers, either directly or through a public option. There are a handful of major employers out there right now who’ve eliminated the insurance company managed care middlemen to deal directly with doctors and hospitals. The results, in terms of lower costs, fewer administrative hassles, and higher satisfaction among patients and providers have been astounding. Unfortunately, however, those results have been largely overlooked. Seems most employers were too busy buying into new illusory savings alternatives offered by their insurance companies. Such as consumer-driven health plans and other ruses that simply shifted escalating costs onto the backs of employees, and did little to mitigate the long-term trend of rising premiums.
Demand by employers for an alternative to private insurance companies is key to the debate and something the President should focus on first. True, the lobbyists will have their way with Congress and the insurance industry will its way with the American public. But if major U.S. employers really are mad as hell and aren’t gonna take it anymore, they’ll choose not to buy what the insurance industry is selling and demand other options.
Aug 2, 2009
A Critical Omission in Bill Moyers' Interview w/Former Cigna VP
Bill Moyers' interview with former Cigna VP, Wendell Potter, was timely, though I wish it hadn't taken 15 years for Potter to see the light. Or was it that he felt the heat? Nevertheless, in an industry of tight lips and stealth PR tactics, it's good to have at least one insider willing to jump ship and spill the beans.
There was a critical omission, however, one key factor on which Mr. Potter needs to shed light. If the American public is going to know the whole story of the insurance industry's strangle-hold of American health care, lobbying efforts notwithstanding, this factor has to be exposed and addressed.
It concerns the insurance industry’s control of nation’s private medical delivery system via their managed care agreements with doctors and hospitals. These lengthy, complicated, and often adversarial contracts signed by medical providers to become part of a PPO or HMO network are heavily slanted toward the financial interests of the insurance companies. The denials of coverage and over-turned medical decisions that outrage patients, consumer-advocates, and members of Congress are actually stipulated by contractual clauses in the provider agreements. Or, they’re permitted by contractual reference to vague utilization review protocols and case management programs that the insurance companies also control.
Mr. Potter talked about insurance company bureaucrats standing between the doctor and patient. But, he needs to also acknowledge that Cigna’s agreements with its network providers completely allow it. Managed care companies leverage huge membership numbers to get exactly what they want in their contracts from providers. Whether it’s lower reimbursements or more control, insurance companies hold hospitals and physician groups hostage by the threat of losing patient revenue if they don’t agree to contractual terms. Even in the face of insufficient reimbursement levels or other unreasonable contractual stipulations, providers invariably sign these agreements because they have no other choice.
If Mr. Potter wants to expose some real dirt, let him find and release a copy of an actual provider agreement Cigna has with a network doctor or hospital. I doubt he’ll be able to do it. Such agreements are “proprietary,” you know. But, if he can, everyone will see just how lopsided those agreements really are in favor of the insurance companies. And, how they’ve completely codified a medical delivery system in which insurance company bureaucrats really can legally call all the shots.
Jul 28, 2009
Insurance Industry Fear Tactics...Nothing New
Insurance companies may be using fear to sway public opinion against healthcare reform, but everyone seems to forget: As managed care middlemen, they’ve used fear over the past 25 years to take as hostages two key components of the healthcare equation: Medical providers and employers.
Here’s how they did it: As managed care companies began to dominate the delivery of medical care through their HMO and PPO networks, physicians and hospitals who contracted with those companies reduced or eliminated all other means of doing business with employers. While HMO/PPO membership swelled, medical providers’ access to patients became increasingly limited to patients who were members of those HMOs and PPOs. So doctors and hospitals who wanted the business (patients) were forced to contract with the managed care companies. Once under contract, these providers were “held hostage’ by overwhelming fear that quitting the network meant losing the patient revenue.
As hostages, medical providers have been mercilessly hammered by declining reimbursements and administrative hassles. Yet few doctors or hospitals have ever been able to quit their managed care contracts and recoup the same patient revenue on their own. What’s more, while they rake in ungodly profits, managed care companies have somehow convinced medical providers that dwindling reimbursements are due to push-back from employer health plans. Ironically, those plans are also largely controlled by the managed care companies.
Through their agreements with employers, managed care companies control the “buyer” side of the health care equation. Beginning with the HMO Act of 1973, the managed care industry has grown to dominate employer health plans. From design to funding to administration to actual provider access, managed care’s “package” of services under the guise of saving employers money, has evolved into another hostage situation. In it, insurance companies control access to medical care through their HMO /PPO agreements with providers. To gain access to those providers and the “supposed” discounts they offer via the networks, employers must do business through the middleman.
With the growing monopolization of the health insurance industry among a handful of managed care behemouths, like Blue Cross, United Healthcare, Cigna, and Aetna, employer choice of health plans and, therefore, medical networks is severely limited. What’s worse, most employers blindly believe the only way to access affordable medical care is through a health plan completely controlled by a managed care company. The notion that employers could, if they want, contract directly with doctors and hospitals for the same services (a free-market approach) has been brainwashed away by insurance company representatives. Consequently, conventional wisdom among human resource executives is that, “if Blue Cross (Cigna, United, etc.) can’t give us what we need, nobody can.”
Unfortunately, the health insurance industry has been built upon the fear they created among the buyers (employers) and sellers (docs/hospitals) of medical care for years. With both sides willingly brainwashed by the middleman, there’s no way doctors or employers will be able to help mitigate the new fears being spread among their respective patients and employees. Both sides need to step up with courage to eliminate the managed care middleman and do business directly with each other.
Jul 24, 2009
Wall Street Running Healthcare! Oh, No!
Nick Gier’s article in New West provides a neat perspective of the insurance industry’s profit motives that drive ever-rising healthcare costs in the U.S. Nick is a Professor Emeritus at the University of Idaho, and his unabridged version of the article, “Do You Want Wall Street to Control Your Health Care” can be found on his website along with a YouTube on the same topic.
Nick’s synopsis of the situation is right on target. Unfortunately, managed care middlemen in the U.S. have only gotten stronger amidst all the healthcare debate. They’ve done a nearly perfect job of shifting the emphasis away from themselves and onto medical providers as the reason for the healthcare crisis. Whether blaming over-utilization, runaway technology, cost-shifting from Medicare, or other indictments, managed care companies have successfully (and somewhat ironically) convinced employers (the ultimate buyers in the healthcare equation) that they (the managed care companies) are victims, too. Amazingly, employers readily buy this lie and continue to swallow ever-increasing premiums from those same companies.
Over the past 15 years, my firm has specialized in negotiating direct agreements between major employers and medical providers, effectively eliminating the managed care middleman. The results have been astounding. One of my largest clients with 45,000 covered lives has had seven straight years of flat medical trend, that is, annual inflation in healthplan costs of less than 1%. Today, their per-employee-per-year medical cost runs 65% below the national average. With a success story like that, you’d think other major employers would be beating a path to their door to find out how they, too, can achieve the same results. They’re not.
Managed care companies have so effectively convinced employers that theirs is the only cost-containment approach that can possibly work, that my clients’ success story is greeted with skepticism and disbelief. The response I get, from the mostly misinformed HR executives that decide health plan policy for their companies, goes something like this: “AJ, Blue Cross (or United, Aetna, Cigna, etc.) get the best deals (e.g. deepest discounts, etc.) from doctors and hospitals. There’s no way we, as one employer, could negotiate anything better.” That may be true, but it completely obfuscates the fact that the managed care company’s “cut” (in terms of administrative/network access fees and other middleman “skims”) erodes any discount, and ends up costing the employer much more than they’d have with their own directly-contracted provider networks.
Jul 23, 2009
Celebrating Ten Years in Business!
In the summer of 1999, I started A.J. Lester & Associates, Inc. with a commitment to excellence in client service. Ten years and many satisfied clients later, we’re now celebrating the tenth anniversary of our fulfillment of that commitment. Our clients have been served with professionalism, respect, and integrity. Their success, as a result of our efforts, is proof-positive that client-centered attention always works. For them and for us.
On behalf of my entire firm, I wish to express my sincere thanks to those clients we’ve served over the past decade. May your company’s success and your own personal prosperity continue for many years to come!
Jul 14, 2009
It's the Middleman, Stupid!
Employers complain about rising healthplan costs. Doctors and hospitals complain about declining reimibursements. The public’s complaining about 46 million uninsured Americans. Politicians complain that there are no easy answers.
Everyone’s complaining about healthcare, except the managed care companies!
But, why should they complain? After all, Blue Cross, United Healthcare, Cigna, Aetna, and the other cash-bloated behemouths continue to rake in huge profits in their role as the proverbial “middleman” in the healthcare equation. Their CEOs earn eight-figure incomes and major shareholders are still fat and happy in the midst of the worst economic downturn. They’ve gained complete control over the buying and selling of medical care in this country to their own selfish ends, yet people still complain as if there were some other reason for this country’s health care crisis.
Since the HMO Act of 1973, HMOs, PPOs, and the handful of insurance companies that came to dominate the managed care industry have methodically isolated the buyers and sellers of medical care from each other in true middleman fashion. First, they built their networks by negotiating discounted rates with doctors and hospitals. Next, they built their memberships by getting employers to offer those networks as the limited source of medical care for employees and dependents. Along the way, managed care companies convinced medical providers and employers that neither side could do business with the other without going through the middleman.
As the nearly perfect middleman, commercial managed care has isolated employers and providers from each other by virtue of “proprietary” agreements. That is, neither side knows the contractual terms or financial details the middleman has with the other side. The middleman, and the middleman alone, dictates how much doctors get paid and, in turn, how much those services cost the employer. By revealing nothing to either side, the middleman effectively “skims” the difference. That’s where they make those un-Godly profits.
Jul 7, 2009
What's On My Mind is Worth Your Time
Welcome to A.J. Lester’s Blog, the blogsite for A.J. Lester & Associates, Inc. It’s here that you’ll read what’s on my mind as it relates to employee benefits, healthcare, insurance, and business in general. I’ll post information, opinions, advice, and observations on a wide range of topics, all based upon and influenced by my 30+ years as a health benefits consultant.
A.J. Lester & Associates, Inc. is about to celebrate our tenth year in business. I’m proud of what we’ve accomplished in the past decade, especially the tens of millions of dollars we’ve saved our corporate clients in health plan costs. We’ve done this by focusing on the narrow, but vital, niche of direct provider contracting. That is, negotiating direct managed care agreements between our employer-clients and medical providers. This cuts the HMO and PPO middlemen completely out of the picture and allows the ultimate buyers (employers) and sellers (doctors & hospitals) to do business directly with each other.
Our accomplishments with direct provider contracting speak for themselves. Visit our website, www.ajlester.com to learn more about what we do and our success in doing it.