Each year, the National Association of Health Underwriters (NAHU) holds a legislative “fly-in” called Capitol (CAP) Conference. Well over a 1,000 brokers, consultants and employee benefit professionals make the annual pilgrimage to DC to share best practices, educate their legislators and build long-lasting relationships by supporting our profession and the clients and consumers we serve.

As the President of the Massachusetts Association of Health Underwriters (MassAHU), I look forward to this trip every year because it gives me the opportunity to work with my colleagues and make a difference to over 100,000 brokers, consultants and employee benefit professionals and the millions of people they protect through insurance and financial services.

After a couple of challenging and often frustrating years culminating with the passage of the Patient Protection and Affordable Care Act (PPACA), we returned to the Hill with two specific messages:

1. The Medical Loss Ratio (MLR) provision needs to be amended to exclude broker compensation
2. Support transparency by requiring the disclosure of cost & quality information to help consumers make informed choices

What happened?

We gained considerable ground by the time we left DC – securing commitment for 20+ more Congressmen to support HR 1206 in the House of Representatives and receiving word that the Senate would be introducing a companion bill.

On the 3rd and final day of our meeting, it was announced that a bill modeled after HR 1206 will be sponsored by Senators Landrieu (D-LA), Isakson (D-GA) and Nelson (D-NE). The new legislation will not be identical to H.R. 1206, but instead will include minor targeted improvements based on the market’s response to the MLR requirements over the past year. The lead co-sponsors of H.R. 1206, Congressmen Mike Rogers (R-MI) and John Barrow (D-GA), have indicated their support for the updated Senate measure.

This is tangible proof that our legislators understand and value our role as trusted advisors to employers and consumers for health insurance and comprehensive employee benefits. It provides relief to thousands of small businesses who employ benefit professionals that make a difference in lives of their clients every day…and it demonstrates the power of working together toward a common set of ideals.

If you refer back to my first blog, it will not surprise you that I’m writing about transparency. Without it, we will NEVER solve the problem of rising healthcare costs. What did we do about it at this CAP Conference? We sharpened our focus and delivered a message that is being well received from both sides of the aisle.

Our clients want to make informed healthcare choices and we need to equip them with easy to understand information. How? Let’s start with making the language healthcare providers and insurers use to talk to each other visible to the American public…procedural or billing codes (CPT and ICD-9). Rather than “reform” the way providers are paid (like the last blog I wrote), let’s make contracted costs transparent to the consumer so BEFORE they seek the care they need in non-emergency situations, they use that information to look for the best value weighing both cost and quality. And rather than waiting for quality to be defined and used as a reason not to expose cost, let’s support transparency first and let the market and competitive pressure sort out how quality is measured.

Can you imagine a world where the “new norm” required insurers and providers to disclose what they charge upfront so consumers could make informed decisions, avoid unnecessary care and helps us understand that care can be expensive but not necessarily better in value? I can see it…I hope you can too. Next time you see your State NAHU Chapter volunteers, thank them for making a difference, they are working hard for you.

New England is home to 4 of the top 10 health plans in the country. Our health plans are not for profit and operate their businesses with around 10 cents of every premium dollar. They deliver broad access to high quality care and earn high marks in member satisfaction. Could our health plans reduce their administrative costs? Sure, but by how much? And why aren’t we focusing on the real problem?

The real drivers of rising health care costs are provider prices (unit cost), uninformed consumer decisions and poor lifestyle choices (utilization). So how do we solve this problem?

In my first blog post, we chatted about transparency and the responsibility of the health care consumer to make informed purchasing decisions and live a healthy lifestyle. Now, I want to make you aware of a “new” trend to solve the cost problem in New England – it’s not so new – but it’s a trend. Tiered and defined network products as well as global payments are making a comeback.

I’m confused. Didn’t we try this and fail in the 80’s and 90’s? Over time, didn’t consumers push back on smaller networks and limited choice? Didn’t they resist doctor directed care and health plan provider payments that restricted access to the care they needed?

As I sit here writing, our health plans are passionately renegotiating their contracts with providers (hospitals, doctors and prescription drug managers) and both sides are lobbying for their position in the newspapers, trying to win over public support. Why are they arguing?

Providers have traditionally negotiated discounted fee for service contracts and charged health plans much higher prices (rates) to make up for the low reimbursement they get from the federal government by accepting Medicare and Medicaid patients — typically 40% lower than what they need to run their businesses. They also built in annual escalators into their contracts that are well above CPI. But there’s a shift. For the first time in quite some time, big powerful Providers are feeling the political pressure for rising healthcare costs. They are responding by reducing annual inflation to 3-4%, more closely aligned to CPI.

At the same time, health plans are entering into Global Payment risk contracts with providers. Learning from the past, health plans are not using the word “capitation” because it was wildly unpopular and ineffective in 80’s and 90’s. They are entering into these risk arrangements with Providers to “encourage quality and hold providers accountable.” What’s not said is the potential impact these contracts could have on the doctor/patient relationship or the solutions employers are implementing now that promote consumerism, health and wellness. Where is the consumer incentive to make informed choices when the cost of the service they are buying is hidden from them? Or worse, socialized with other consumers who are not engaging in healthy lifestyles or informed decision making?

Without diving too deeply into the weeds, the challenge with this “new” solution is it doesn’t work over the long-term. And the reason it doesn’t work is because it asks the doctors to assume more control and accountability for managing the patient’s choices, ultimately reducing the consumer’s responsibility. Essentially, in this payment model, the doctor is paid a flat fee every month for each patient throughout the year, regardless of the patient’s actual utilization. At the end of the year, providers settle up with the health plans and earn a “quality bonus” rewarding those doctors that are more “efficient.”

With these new contracts and public pressure remaining hot on health care costs, New England health plans are rejoicing that their “reduction” in inflation is a success because it is below 10%. From my standpoint, it’s a start but doesn’t go far enough. Annual escalators in provider contracts should be tied to CPI – and the actual cost and quality metrics should be transparent to the healthcare consumer so they can make informed choices.

Solving rising healthcare costs is a shared responsibility – reducing provider choice, increasing provider responsibility for consumer choices, implementing creative methods of provider payment and limiting consumer engagement is not the solution — it’s a page from the past and we can do better.

Choose to live a healthy lifestyle. Eat right, check out Dr. Gundry on Google for some good advice.  Get enough sleep, always easier said than done, but so worth the effort. Workout, find a cardio routine that you enjoy and do some resistance training as well. Manage your stress by taking some time to reflect and slow down. And see your doctor once a year to get a routine physical.  Getting to know your numbers (bloodwork) is important and so is having your skin checked . . . it’s the largest organ in our bodies and often overlooked. All of these behaviors will help you feel better physically and help you catch things early if you’re not so lucky.

Choose to make informed health care choices by thinking about what you are going to do first and then where you are going to do it. Quite often, when you consider overall cost and quality, more expensive is not always a higher standard like in other areas of our life. It’s “you get what you negotiate” – that’s the standard in the provider to insurance carrier relationship and the challenge we all face to effectively manage our healthcare costs.

The principle of opportunity suggests when you make healthy choices and maintain your health – you earn the opportunity to feel better physically and be more productive.  At the same time, when you make cost conscious choices to manage your health concern, you earn the opportunity to save money today and also for the future.

The principles of consumerism, health and wellness are transparency, responsibility and opportunity. They are the pillars of a bold change in the way we think about how we live our lives and buy our health care and health insurance – and I think that’s a good thing, don’t you?

Wiki defines responsibility as the state of having the duty to deal with something, to be accountable or to blame for something . . . though in my experience, blame is usually a waste of time and distracts attention from what’s really important. So, what does responsibility in health care look like?

Responsibility in health care means two things to me. First, I believe that every one of us has a responsibility to live a healthy lifestyle. Eat right, exercise, get enough rest, manage your stress, wash your hands, get an annual flu shot and see your primary care doctor at least once per year for a full physical check-up are a few good habits.

It also means making informed choices when we don’t feel well provided we’re not shot, stabbed, bleeding profusely, missing a body part, experiencing severe chest pain or dealing with massive head trauma. In those emergency, life and death situations, we are fighting for our lives and need to seek immediate care at the closest facility . . . but let’s face it, those situations are infrequent (hopefully). The majority of health care situations are not life threatening emergencies and as a result, we can make educated choices when we seek help if we care to take the time to do so.

When you take time to shop for health care — assuming we live in a world of transparency — you begin to understand the value of it, then it’s up to you to make informed decisions about how you use those services. A responsible decision about using health services could be as simple as buying a generic drug instead of a brand name drug, speaking to a nurse to get advice or taking a day off from work to rest instead of making a trip to the doctor.  It could also mean avoiding an unnecessary visit to the emergency room when seeking care from your family physician might be a better choice.

When you make responsible decisions by educating yourself about the real cost and quality of health services and consistently seek preventive care on your own, the cost of health care is reduced for you — and if you are covered by your employer, it could lower their healthcare costs as well.  Wow, what a concept . . . make responsible choices, stay well and lower health care costs.  Can you imagine if all of us lived our lives this way?

Why is buying healthcare so much more complicated than anything else we buy? Why can’t we see the cost and quality measures of the services we buy BEFORE we buy them? How can we ask people to make more informed choices without information? The answer is we can’t.

I grew up in a family of health care entrepreneurs and know firsthand the “billing and collection” game that exists between doctors and hospitals (providers) and health insurance companies – I played it.

When providers and health plans negotiate contracts, they create a financial term called a contractual allowance. Simply put, it’s the negotiated difference between the parties for a particular service. Providers bill one fee (higher) and accept a lower negotiated fee, writing off the contractual allowance. What is most curious and frustrating is the variation in cost for the same service between health insurance companies with no discernable difference in quality. See a doctor for a sniffle and get a different price for the same service depending on who you are insured by.

So, what does this mean to the consumer and how does it tie back into the notion of transparency?  As a healthcare consumer, we should be able to see what a service costs in advance of the treatment. We should have access to quality information scored by objective measures and an independent source who maintains the integrity of such information so we can weigh the cost with overall value. Kind of sounds like everything else in life that we buy, doesn’t it?

Legislators, health insurance companies and providers will tell you health care is too complicated and making cost and quality information available to consumers will only confuse them. Insurers resist full transparency because they fear a “race to the top” where lower compensated providers will want their contracts improved. And, depending on their size and sophistication, providers aren’t in a hurry to disclose their negotiated arrangements either. Both parties hide behind “contract law” to protect their business practices.

Ok, so what can we do? Advocate for the principle of transparency and support consumerism, health and wellness. Let’s encourage the health insurers to start small by making the top 25 CPT coded services visible to their membership. Let’s ask them to create tools and resources to help people become smarter, more informed healthcare purchasers.

Can you imagine if all of us behave like consumers with our health care resources? A world where the “new norm” asks us to make informed decisions to avoid unnecessary care, helps us understand that care can be expensive but not necessarily better in value – and supports us in making better choices where we have the ability. I can see it…I hope you can too.

You can listen to Jennifer’s segment HERE, where she discusses the role of Borislow Insurance, transparency of the healthcare system, Health Care Reform, and how to “Bend the Healthcare Trend”.

Listen to the Podcast HERE!

American healthcare spending reached $2.4 trillion in 2008 – and will exceed $4 trillion by 2018 if left on its current course.

Traditional health insurance options haven’t just failed to stop the bleeding – they have also kept us in the dark and robbed of us our choices. Everyone is responsible for a small part of healthcare spending, and individuals have the power to turn the situation around.

What can you do to lower costs and improve the health and well-being of your employees? You can embrace the three principles of Consumer-Driven Health Plans (CDHP):

1. Transparency – seek out information such as the cost and quality of healthcare
2. Responsibility – live a healthy lifestyle and evaluate treatment options
3. Opportunity – become healthier and more productive, which will make you feel better AND save money by “banking” what you don’t spend for the future

Real behavior change isn’t easy and your employees need help learning how to live a healthier, more responsible lifestyle. How do you help them? You can start by building a culture of wellness and implementing a wellness program that is tailored to meet the unique needs of your employees and their families.