How advisers can bend the insurance cost curve

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On the final day of the National Association of Health Underwriter’s 2018 Capitol Conference, members were treated to a conversation between Janet Trautwein, CEO of NAHU, and Katy Spangler, principal of Spangler Strategies, about what they can do to help drive cost containment among their clients’ health plan options.

From Spangler’s experience on Capitol Hill, she says many congressmen believe that benefit design drives the cost of healthcare, but that is in fact not the case.

“The cost of care, MRIs, hospital visits and prescription drugs all drive the rise in healthcare spending,” Spangler says. “I frequently hear from large employers that a small percentage – estimated 13% – of the employee population is driving 82% of spending.”

To control the 13% of employees affecting healthcare cost, Spangler says it is up to brokers and their congressional leaders to offer better transparency when it comes to plan coverage as well as encourage the use of electronic medical records across the country and manage employees with chronic conditions through the redefining of prevention.

“When it comes to transparency in general, frankly I’ve been pretty disappointed in the pace that transparency has progressed,” Spangler says. “Even some of the top tools on the market only give employees a range of covered procedure prices.”

Through the assistance of a third party administrator, employers could gain access to their own health plan data in order to identify where the majority of expenses derive from; however Spangler says solving the transparency problem may not come from congressional or regulatory action, but rather working with employers on their contracting procedures when partnering with a third party administrator who specializes in transparency matters.

Trautwein says there also is a fear from carriers of releasing proprietary data that competitors could get ahold of. “If one carrier’s prices are different from another there could be negotiation between contract schedules,” she says.

Electronic health records
With large companies such as Amazon, Berkshire Hathaway and JPMorgan entering into the healthcare industry, Spangler says having mainstream electronic health records is instrumental to improving cost.

Yet, with the slow pace legislation and regulatory committees are known for when it comes to healthcare, it may cause innovators to leave the industry before any efforts are made. “When Microsoft gets into health information technology and then gets out, that does not look good,” Spangler says.

Efforts are being made in the right direction, however. Programs such as the merit-based Incentive Payment System – which earns users Medicare payment adjustments for evidenced-based and practice-specific quality data – and MACRA – the Medicare Access and CHIP Reauthorization Act – both encourage the utilization of electronic records, not just by hospitals but also by insured individuals and employers.

Redefining prevention
Through transparency and increased use of electronic health records, identifying employees with chronic conditions could also be accelerated. To do this and ensure those with chronic illnesses are receiving proper treatment in the first place, Spangler says the definition of prevention must be redefined.

“[Providers] can offer preventative care on a pre-deductible basis, but the way the Internal Revenue Service defines preventative care is very narrow,” Spangler says. “Providers can only screen for diseases, but once the disease is identified, anything used to manage the illness to prevent further complications must be done on an after-deductible basis.”

By including preventative measures following initial screening for a chronic condition into the pre-deductible guidelines of the IRS – especially with more employers planning to switch to high-deductible health plan offerings by the end of 2018 – as well as the inclusion of prescription drugs into the definition of prevention, Spangler says this would further drive down healthcare spending.

“I have had many conversations with the White House and the Treasury and I think we are definitely making progress on this front,” Spangler says. “We can do it through the regulatory path, but I am also working with Congress as well.”

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