Silent epidemic generates special challenges for brokers
The soaring cost of renal dialysis for the nearly 40 million Americans with kidney disease — known as a “silent” epidemic because it’s often not detected until late stages — has become a huge concern. It’s considered one of four conditions that drive a quarter of U.S. healthcare spending.
The impact is being felt by benefit brokers, advisers and boutique providers in tangible ways. Take, for example, Dawn Sheue, president of Summit Insurance Services and one of EBA’s 2017 Most Influential Women in Benefit Advising. She had less than 45 days to find a reasonable and creative solution for a level-funded employer that faced a $500,000-plus hit for a spouse’s kidney transplant and dialysis at renewal.
The effort not only involved two undocumented workers, but also winning back an old client whose new HR leadership had sought a brokerage change in the middle of a plan year.
Another practitioner caught in the crosshairs is Mark Wilcox, CEO and founder of Wellness Partners, whose firm arranged a direct contract for full-treatment dialysis and care after the progression of kidney disease couldn’t be halted in a patient from one of his employer groups. Blue Cross and Blue Shield of Nebraska, the customer’s carrier, later accused him of diminishing its value and quality. The charge came after lowering the liability on that high-cost claim by about $800,000, which the plan viewed as a 15% reduction of income.
Kidney disease accounts for $40 billion of a $455 billion U.S. healthcare tab, an amount topped only by three other complex and costly conditions: cardiovascular ($181 billion), musculoskeletal ($130 billion) and oncology ($104 billion), according to Optum. The company’s research suggests that future spending in this category is expected to grow by $22 billion by 2024.
One significant factor in the high cost of providing renal dialysis is the crushing domination of this market segment by two national operators of dialysis clinics: DaVita and Fresenius Medical Care, which critics have labeled a duopoly. These clinics, which have been demonized for gouging customers, were the subject of a highly contentious 2018 battle in California where voters rejected a ballot initiative to refund patients and payers revenue above 115% of the cost of care and health improvements.
Industry producers who are unfamiliar with the complexity and cost of managing kidney disease could be exacerbating matters, says Wilcox, who has a closing ratio of less than 1% when a benefits broker is involved. He laments an inability to communicate the value of his service to their employer clients as well as insurance carriers that perceive it as a threat to their business.
Wilcox chatted with a local broker whose fatalistic mindset was that there’s no stopping some million-dollar claims, regardless of clinical intervention. According to Wilcox, the broker said he was already doing everything in his power to lower claims costs but that if you add in the fact that “they're getting paid off the carrier’s revenue stream, there’s no incentive on the part of the broker to change.
In the case of BCBSN, Wilcox says, Wellness Partners has endured years of hostile communications and blacklisting among brokers and their employer-clients in the rural region. Conflicts have arisen over a rejection of pre-authorization requests to provide preventive care to about 1,500 patients. Wilcox says carriers “don’t care whether a claim is paid by the reinsurance carrier or employer in the form of premiums. Either way, it’s revenue to the company.”
A BCBSN spokeswoman counters that the carrier pays claims for “medically necessary and appropriate care” consistent with an agreement it signed with Wellness Partners, adding that it serves as “a steward of our members’ premium dollars.”
Another challenge for Wellness Partners – which Wilcox’s website says takes a preventive, predictive and personalized approach to care – is that the medical establishment doesn’t worry about kidney disease until patients are symptomatic and dialysis is necessary.
“We’ve actually had patients show up at the nephrologist and not realize that they’re there to start dialysis, and [have] never been told they had kidney failure,” says Wilcox, in what he notes is a clear breach of fiduciary responsibilities.
Broker to the rescue
In Sheue’s case, her close encounter with managing kidney disease involved an over-60 life group, whose generous group benefits included spousal coverage, reads almost like a best-selling novel.
Two years ago, a long-time employee learned that her long-time significant other needed a kidney transplant and dialysis. The couple married so he could join her group medical policy and receive the costly treatment. There were so many moving parts to the employee’s situation that the company’s new broker wilted under pressure. Sheue was summoned to save the day.
Her initial thought was to involve the American Kidney Fund to cover the costs under a 1972 program that allows early acceptance into Medicare for patients with end-stage renal disease. But she quickly found out that neither the employee nor her new spouse were U.S. citizens, a necessary qualification for Medicare.
With a Nov. 1 plan renewal deadline nearing, no self-funded carrier would accept the group with its known complication. One possibility was to switch over to Wyoming’s sole fully insured carrier, which was entitled under the law to jack up rates to more than $2,000 per employee, per month from just $420. Needless to say, that wasn’t a viable option.
The group was suddenly on the brink of facing a complete loss of coverage and being penalized more than $200,000 under the Affordable Care Act. Sheue feverishly researched multiple solutions to avoid this doomsday scenario. Two handy resources included her ERISA attorney and colleagues of the NextGen Benefits Mastermind Partnership, comprised of elite brokers and advisers.
Sheue ultimately finally found a happy resolution albeit one with plenty of plot twists: While it’s mandatory for a group offering benefits to include employees and children under ERISA guidelines, spouses are exempt from such coverage, so the employer decided to impose a two-year wait period on spousal coverage for all current and new spouses before they could be deemed eligible for joining the group plan. Two other newly married spouses were affected by the new policy, which triggered a loss-of-coverage qualifying event for them to join their own group plan or the exchange within 30 days of the event.
None of the three spouses lost coverage and the employer was able to join a new plan at an affordable rate through an employer coalition without the encumbrance of the potential medical complications of the dependent spouse.
Thus, the original dependent in question was moved to an individual plan that did not ask about U.S. citizenship and the kidney transplant was a success. As an added bonus, the recipient hugged Sheue during an unexpected and emotional encounter at a restaurant, thanking her for saving his life.
One final postscript: she won back the employer client. After 30 years in this industry, Sheue has seldom encountered benefit brokers who are willing to go to the mat for their employer customers and do whatever it takes to reduce the rising cost of healthcare. In the end, she was determined to find the best possible outcome, even for a former client.
“And I think that’s what sets apart a true adviser from a broker agent,” Sheue says.