Ending the myth of 'the claims are the claims'
Steeped in rising healthcare costs, many employers who Jim McCauley, a Phoenix-based vice president at USI Insurance Services, meets have become resigned to the inevitability of a big bill. McCauley spoke with EBA about how he’s working with these companies to dispel the myth that nothing can be done about insurance claims and seemingly unstoppable healthcare costs. The following conversation has been edited for brevity and clarity.
EBA: There’s a push in the self-funded market to really empower employees to better take control of their own healthcare. Is that what you're seeing with your client groups?
Jim McCauley: What we're seeing is just increased pressure on cost containment. Where the costs are continuing to go up. At some point, it's going to burst. Different clients are at different places in that process.
EBA: Do they ever come to you with that realization?
McCauley: The business has worked a certain way for so long that employers are reluctant to believe that anything else is possible. They've heard for so long, “Well, you can't really do anything about claims. The claims are the claims.” So now, when you go to them and say, “Hey, actually, you can do something about the claims,” they look at you like, “No, I don't know that I believe you, because I've heard this from people I trust over the last 10, 15, 20 years. Why, all of a sudden, is it different? How is it different?”
EBA: So how do you make it different?
McCauley: Gently peel back the layers of the onion. Reference-based pricing, I'm not saying that it's the only solution, but that's the one that has the biggest bang for the buck and the biggest a-ha moment, where you can actually show them data of what a PPO network is charging for a procedure in the world that they're accustomed to, versus a model where, ‘Here's what Medicare's paying.’
If a joint replacement in Phoenix at Hospital A is $100,000 minus a 50% discount, if I'm your employee and I go into the doctor and I get a joint replacement, the cost to your plan is going to be 50 grand. If my neighbor goes in right after me, they're a Medicaid patient, same hospital, same doctor, same everything, it's 12 grand. That starts to open their eyes. I think they've always known there's a discrepancy, but they never really understood how much.
Trying to have those discussions, I've learned it's a little bit of an art, because you can throw too much at people, and they walk away kind of scratching their heads, thinking that it's not real.
EBA: Like they think it’s too much savings?
McCauley: Yeah, like, “This is too different from how I've been told the market works.” Where I initially thought, boy, people are just going to love this. They're going to be all over this. There's a lot of time spent getting them comfortable.
EBA: Do you have a particular client who has really embraced this approach?
McCauley: We had a client that had a runaway, high-cost drug problem that we had very few levers to pull to help them because of the stop-loss program structure that we were in, which is 99% of what you see out there. Our population health management team came in and saw what was going on with the population in general, how they utilized services. Also made some pretty astute observations on this one claim. By putting pressure on the claim payer, we were able to bring it from $67,000 an infusion twice a month to $33,000. That happened, like, overnight. We were able to get it back down to $33,000 by just bringing in AIMM [Ault International Medical Management] and their team and really providing medical management, case management, to this individual.
We went from a bundled, self-funded approach to an unbundled approach, where we carved out the pharmacy. We carved out the medical management. We did away with the network, and we just went to a reference-based pricing model, which was different. I'm not going to say there's no noise in that approach. There is noise.
EBA: What is the noise?
McCauley: Just noise from members because it's different. In the old world, they get an ID card that they go to the hospital or they go to the doctor, and the person at the desk turns it over and they want to see a Blue Cross logo, an Aetna logo, a UnitedHealthcare logo. They want to see if they're going to get paid. They want to see, “OK, you're coming in network.”
In the reference-based pricing model, there is no network, so you don't have that. On the one hand, it's good because there's no network. You can go anywhere you want. On the other hand, we're paying them, but we're paying them differently than what they're used to being paid. An employee has to go through maybe some more hoops when they go to the doctor to be seen. Those are all mitigated, but it's different. It creates some noise in the population.