Noting that as much as $3.2 trillion a year in medical care is “secretly priced,” an entrepreneurial physician named Bill Hennessey is on a mission to unmask those costs for self-insured employers with the help of brokers and advisers. The secret weapon: an ability to identify by ZIP code known charges and claim allowables before services are actually rendered. The proprietary platform, Pratter, instantly identifies, itemizes and targets a host of outpatient procedures, seeks to break the confounding cycle of contractual arrangements with TPAs or insurance carriers that prevent employers from auditing their own claims.
One adviser working with Pratter is Steve Dalaba, co-founder and managing partner of WBS Benefit Advisors. He was surprised by the eye-popping variation of a simple lipid panel test in Pittsburgh, which a live demo of Hennessey’s transparent pricing tool pegged at anywhere from $25 to $1,900. “We fully believe that knowledge is power,” he says, noting how more careful shopping by employees will save their employer money as well.
Hennessey’s Pratter startup recently was named by EBA to a list of 21 innovators who are transforming benefits technology. He says employers not only have a right to know, but not knowing this information violates their fiduciary responsibility under ERISA to manage all benefits. Employers in this situation obviously can’t manage what they can’t measure, he adds.
“In a working-age population where we’re paying for everything out of pocket, there needs to be a new standard: known pricing,” Hennessey says. “Every outpatient procedure has its own five-digit, unique CPT [current procedural terminology] billing code and claim-allowable or negotiated-discount rate, which should all be published.”
He knows of one company that spent $60 million on healthcare last year, half of which was revenue instead of CPT coded. With no way to itemize those costs, which are often hidden by nondisclosure agreements, it was a case of the tail wagging the dog.
Alecia Nash, a benefits consultant with Beneficial Associates, was drawn to Pratter’s quest for transparent medical pricing late last year. “If you have a high-deductible health plan and go to the doctor, get blood work and an MRI, you have no idea what it’s going to cost until you get a bill,” she says. “If we actually want to have a serious discussion about fixing healthcare in general, I think we have to talk about pricing transparency, and I don’t hear a lot of people talking about that.”
She thinks this approach makes particular sense on a self-funded platform, especially when it comes to negotiating with reinsurers, and sees tremendous power in knowing the numbers.
Nash is receiving a great reception from clients whose employee populations were urged to shop for healthcare just as they would other goods or services by making an informed decision. “People were excited about the idea that they could actually have a little more control over what was going on with their healthcare,” she report, noting that the tool is embedded within each health plan for a modest per employee per month price. Her clients have used gift cards as an incentive for employees who use the service.
Since last September, the Pratter tool became an integral part of WBS’ offerings to brokers and partners primarily starting in North Carolina, where the general agency is located, and quickly fanning out across the U.S.
“We believe that the biggest lie in the healthcare industry is that employers cannot take control of their costs without sacrificing benefits,” says Mike Miner, who’s also a co-founder and managing partner at WBS.
He describes the sweet spot as self-insured groups with 100 employees or more and wants his firm to have one or two brokers in every state spread the word to their client base. Miner says it’s worth noting that the tool offers a “real, accurate, quantifiable return on investment that’s usually seven to 10 times the cost, and that’s with only 25% of the employees engaging.”
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