There's a lot of strategic talk in Big Sky Country these days about the power of biometric screenings, health care analytics, value-based pharmacy benefit management, captives insurance and state-run health cooperatives under the Patient Protection and Affordable Care Act.

Much of the chatter about ways to improve medical outcomes and reduce costs comes courtesy of Jim Edwards, president and chief executive of Mountain West Benefits - EBA's 2011 Health Plan Adviser of the Year.

It's no wonder that his small firm, with offices in Helena and Billings, Mont., is prospering at a time when so many businesses are stuck in neutral. MWB has posted incremental increases in revenue since the economy went south, reaching the $2.5 million mark last year, up from $2.1 million in 2009 and $1.5 million in 2008.

 

Fielding a team of all-stars

Edwards was nominated for Health Plan Adviser of the Year by Chris Gittings, who left a 15-year career at a law firm to become MWB's vice president of operations. Gittings was drawn to a veritable all-star team his mentor had assembled. "They are just the absolute brightest people that you could get together," he says.

"I might be the quarterback here," Edwards says modestly, "but really it's an honor to have such a group of very skilled, capable and dedicated people. I have great players on this team. We have 11 people, and every one of them is uniquely important to how we do our work."

Once a banker in search of new challenges, Edwards developed a specialty in association plans early in his career with BlueCross BlueShield of Montana, when he served many of these groups as a marketing liaison.

When Edwards started MWB, he decided to think squarely outside the proverbial box by putting brokers on salary rather than commission. That way, they could focus on providing clients with the same level of outstanding service without having to expend valuable time and energy on prospecting for new work and big paydays.

As a result, MWB staffers are able to think up solutions that Gittings describes as unusual, creative and effective. One example: Purchasing a wellness company.

"Who does that?" Edwards asks. "I don't know how many health plan consultants would go out and say, 'I believe in this company. I see how it benefits my clients. Let's just buy the company.'"

Appropriately named It Starts with Me ("I swim," for short, after the ISWM acronym), the small wellness company featured some marquee clients and was highly recommended across MWB's client base when Edwards decided to buy it about five years ago. The deal was made in the spirit of businessman Victor Kiam's famous TV commercial catch-phrase about his purchase of Remington: "I liked the shaver so much, I bought the company."

Since PPACA mandates that employer-provided health plans pay 100% of preventive care coverage, ISWM's onsite biometric screenings made the acquisition particularly appealing. Edwards says ISWM provides these services, which can run anywhere from $250 to $400 per employee, for just 25 cents to 30 cents on the dollar.

Another selling point is that the screening information can be easily imported into MWB's sophisticated analytic claims database. Some screenings can lead to surprising results. For example, 60% of clients' health plan participants with high cholesterol first learn of their diagnosis through a vision exam.

 

'Insightful recommendations'

But that's just scratching the surface. Clients rave about some of the hidden surprises Edwards and his charges have uncovered for them in recent years.

Take Bruce Lahti, plan administrator for the Pipe Trades Trust of the Northern Rocky Mountain Area in Great Falls, who was particularly impressed by how an MWB analysis of the Trust's stop-loss contract submitted as part of an RFP identified as much as $600,000 in excessive premiums. The firm's sharp pencil ended up saving the Trust 6% in plan costs for the next plan year.

"They have now been providing us with insightful recommendations that the trustees have been implementing for the past five years," according to a letter praising MWB's work on behalf of the Trust, which provides a comprehensive suite of employee benefits to 1,400 plumbers, pipefitters and their families. Since that time, the Trust's expenses "have increased less than 10% compared to what they were in 2007," Lahti reports.

Other highlights lauded by the Trust include:

* An $80,000 refund in 2009 from the Centers for Medicare & Medicaid Services for the Trust's retiree drug subsidy, as well as sizeable refunds in subsequent plan years.

* Anticipation of 0% pharmacy cost trend from 2011 to 2012, down from more than 20% a year, following the adoption of MWB's PBM, URx, which features a value-based insurance design.

* An enhanced analytics and reporting capability resulting from the transfer of medical and prescription claims data to a claims warehouse vendor with deep expertise in this area, which is expected to significantly improve medical outcomes and reduce costs for at-risk plan participants.

 

Rethinking the PBM model

One of Edwards' sources of inspiration is Paul Bogumill, who last year built a provocative alternative to the PBM model called URx, whose value-based insurance design significantly expands access to prescription drugs rather than shift costs to plan participants.

A popular example is Lipitor to treat cholesterol, a popular drug class with a dozen different scripts. Edwards says 98% of people taking Lipitor at $170 a month should instead be on the generic equivalent, Simvistatin, an efficacious alternative at just $5 a month. Under the URx plan design, plan participants pay nothing for Simvistatin compared with 50% of the cost of Lipitor.

"Through URx, we are able to reduce expenditures for both the plan and our plan participants, thus mitigating the premiums that need to be charged or the funding that needs to accompany the self-funded plans," says Edwards, who reports that MWB's prescription spend is down 30%.

Bogumill's hiring was "a game changer," according to Steve Turkiewicz, president and CEO of the Montana Bankers Association, who appreciated his visionary approach to replace a traditional PBM model that lacked transparency.

In nominating Edwards for EBA's Health Plan Adviser of the Year, Turkiewicz lauded the "imagination, expertise and client dedication" of Edwards' firm, as well as its analytics and benchmarking capabilities. He also cited significant cost savings as another reason why Edwards deserves industry recognition.

MBA's State Bankers Association Group Benefits Trust decided to adopt a self-funded approach for its 72 banks and 4,000 plan participants when its insurance carrier would not agree to carve out the pharmacy benefit from the minimum premium contract.

"To our knowledge," Turkiewicz wrote in a letter on behalf of Edwards, "GBT was the first plan to offer preventive prescriptions in front of the deductible on our HDHP options. This was necessary to maximize URx's with our plans' high HDHP penetration."

In another recommendation, MWB saved the group's trustees nearly $1 million following a particularly rough year in terms of health care claims. A significant lump-sum payment was made from reserve funds to GBT's insurance carrier in exchange for a write-off of its deficit balance during 2009 health plan renewal negotiations.

 

Captivated by captive insurance

Edwards says Bogumill also has been offering MWB invaluable insight on unique opportunities involving risk management. "We spend time on the 85% of a plan's cost, which is claims, not the 15% that is administrative and stop-loss reinsurance," Edwards explains.

Nearly one-third of MWB's plan participants have no medical or pharmacy claims over the course of a year, while a similar percentage has annual claims that are less than $500. Edwards expects a premium holiday for a banking client in the first half of 2011, barring any surprises.

As part of that approach, captive insurance is being touted as a promising savings vehicle that will provide an additional strategic management tool for health plan sponsors. Montana has passed legislation that treats such policies in a favorable light.

Captive insurance also is an area of expertise for TrueNorth, which like MWB, is a member of United Benefit Advisors. What Edwards loves about the UBA business model is having access to best-of-breed providers specializing in several different areas such as dental benefits, disability income and Section 105 plans.

Between regulatory compliance trends and health care reform, Edwards says he's moving more clients into self-funded medical plans for greater flexibility and better access to claims data. He also has had an ERISA attorney on staff since June who used to work for the Albertsons supermarket chain.

MWB created the National Alliance of State Health Cooperatives earlier in the year and held the first of what Edwards hopes will be an annual conference.

The group is on the cusp of dramatic change ushered in by PPACA, serving as a repository for developing best practices and governance on nonprofit health cooperatives that the new law will fund in all 50 states.

"Everybody is trying to do something [in this area], and there's no guidance," Edwards says.

Edwards is bullish about HDHPs and health savings accounts. In fact, his firm matches 150% of HSA contributions from its own employees, which adds up, considering that some of them have accumulated more than $20,000 in their accounts.

"We have an inordinate amount of our clients that are on HSA-eligible plans because we got to them early," Edwards says. "We frankly almost make the employer do a match to employee deferral."

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