All posts by Larry Hightower

Insight: How Physicians can Remain Independent and Thrive

Robert Patricelli, CEO Women’s Health USA and Jonathan Bush, CEO and Founder Athena Health are dedicated to helping OBGYN physicians remain independent, thrive economically, and excel at patient care. Their insights and advise are Robert Patricelli, CEO Women’s Health USA and Jonathan Bush, CEO and Founder Athena Health are dedicated to helping OBGYN physicians remain independent, thrive economically, and excel at patient care. Their insights and advise are Robert Patricelli, CEO Women’s Health USA and Jonathan Bush, CEO and Founder Athena Health are dedicated to helping OBGYN physicians remain independent, thrive economically, and excel at patient care. Their insights and advise are

Jonathan Bush, CEO and Founder Athena Health, like Vxtra Partners, is dedicated to helping physicians remain independent, thrive economically, and excel at patient care.

In this video Jonathan shares his humor, insights, experience and thought leadership.

Learn more about the Solution Physicians Need to be Embracing.

Video: Jonathan Bush Speaking at USWHA

Learn more about the Solution Physicians Need to be Embracing.

Small to Midsized Employers are Now Contracting Directly with Healthcare Providers

Cutting out the “middle man” results in substantial savings and puts employers in control

With the cost of health insurance growing to unsustainable levels, employers are desperate for a way to stop the skyrocketing expense. Healthcare costs are predicted to reach $30,000 by 2020 for a family of four, according to a 2016 Benefits Benchmarking Survey. And according to a study of independent insurance agencies, the median in-network deductible with an employer-sponsored health plan increased 50% in 2016.

There is a growing recognition by employers that the old approach of raising deductibles and increasing the premium contribution from employees will no longer work. As a result, employers are coming full circle from the 1980s when the idea of inserting an intermediary between the employer and the healthcare provider arose in the form of a Preferred Provider Organization (“PPO”) or managed-care company.

An increasing number of employers, particularly mid-market firms, are going back to removing the middle-man altogether, and working directly with healthcare providers.

In a recent study conducted by Oliver Wyman, nearly half of all employers said they would be interested in contracting directly with provider organizations. The direct contracting approach offers savings of as much as 40% over traditional fixed cost PPO health plans.

While the approach of direct contracting—for the most part—has been limited to large employers such as Boeing, Intel and Walmart, this too is beginning to change as self-funding grows in the middle market. According to the Employee Benefit Research Institute, the proportion of midsized companies with 100 to 499 employees that were self-funded increased 19%, to 30.1%, between 2013 and 2015.

Spurring this growth is a new insurance product known as a stop loss group captive. This health insurance solution enables employers with as few as 25 employees to self-fund their employee health benefits while mitigating the volatility that historically prevented smaller employers from utilizing the cost-cutting strategies 98% of larger employers utilized for years.

To explain, the most damage in today’s health insurance market is being conducted by managed-care intermediaries that hold employee health data hostage. A medical captive eliminates this bad behavior and opens the door for employers and their providers to take control.

Cost containment is impossible without health data, and with claim data transparency, employers are able to take action and mitigate rising costs. In addition, strategies to reduce the cost of pharmacy, chronic care and preventable illness are best delivered by the clinicians of the provider under a direct relationship with the employer.

As such, the direct contracting approach is a community effort. All participants—from the CEO of the provider system to the employee to the CEO of the employer—work together toward a common goal of improving health and eliminating waste.

Incremental Fixes Won’t Save the U.S. Health Care System

Tom Price, President-elect’s Trump pick to be the next U.S. secretary of health and human services, is a fierce and long-time critic of the Affordable Care Act (ACA), including initiatives that restructure how some doctors are paid.

Many are interpreting this opposition to mean that he will slow the shift from traditional fee-for-service health care, where doctors are paid per visit, test, or procedure, to value-based care, where doctors are rewarded for quality care and better outcomes. But I hope it means that he recognizes we need to take bold action to correct our health system’s current trajectory. Incremental shifts, the approach to date, simply won’t address the real challenge confronting the U.S. health care system — that is, a disjointed care delivery system that results in inefficiency, overspending, lack of consumer accountability, and a sub-par experience all across health care.

Instead, we need to adopt policies that result in significant discomfort for the laggards and outsized rewards for the leaders. Only then might we achieve what Price has called “the principle of health care that Americans hold dear: accessibility, affordability, choices, innovation, quality, and responsiveness.”

The ACA was touted as a remedy for our broken health system, but its overarching focus was expansion of coverage. It didn’t do enough to address the system’s root-cause cost and quality issues. Experts understood that to transform health care we needed to first shift the focus from transactional fee-for-service medicine to value-based care.

The ACA did launch several value-based initiatives. These were intended to drive change in the market. However, the way they were structured and the cautious approach to implementation has unintentionally handicapped them. There is too little penalty for staying the course in fee for service and not enough upside to take the risk of disruptive change.

Consider the Medicare Shared Savings Program (MSSP), which was created by the ACA. Under MSSP, eligible Medicare providers and hospitals can come together to form accountable care organizations (ACOs). The program provides bonuses for ACOs that reduce health spending and deliver high-quality care. It offers the possibility of even greater financial rewards for those who assume full financial risk for their Medicare patients, but few providers have been willing to take the leap. Consequently, the majority are ACOs in name only, not truly accountable for their performance and continuing down the same path as before.

In fact, the vast majority (95%) of MSSP ACOs are still operating in a largely fee-for-service payment model, working for bonuses for lowering costs, but assuming no downside risk. Few ACOs have done the hard work of changing how health care is delivered — moving from a physician-centric “doctor-knows-all” model to a patient-centric model that relies on a team and collaboration.

Who can blame them? Most realize that remaking their business model to succeed in a value-based care world is the right thing to do. But the push to transform their businesses occurred at exactly the same time the government was cutting reimbursement rates, putting significant pressure on hospital financials. And the reality is the pivot to value can be costly and is sure to be disruptive. By contrast, the consequence of staying in their fee-for-service world is minimal in the short term. This leaves many toe-dipping into the world of value through pilots like MSSP, while still depending on the fee-for-service model for the majority of their revenue.

The problem with this approach is it encourages players to operate completely different models with fundamentally different economic drivers under the same roof at the same time.

Accelerate value-based pilots. To achieve real change in our health care system, it is time now to accelerate past the pilot phase and push the industry toward value-based models. If there is any lingering doubt about the positive impact such a shift would have, note the outsized performance of organizations that are already delivering value-based care. These players use a different kind of care model, one that provides coordinated, whole-person care, as opposed to episodic, transactional medicine.

Consider Cornerstone Health Care, a multi-specialty group practice in North Carolina that wholly redesigned the care model for its five highest-risk populations and then saw the cost-of-care drop nearly 13% and inpatient hospital costs fall 30%.

Or take CareMore, a California-based integrated health plan and provider network for frail elders and those with chronic conditions. CareMore wraps services around the sickest patients and provides a variety of non-medical services (such as transportation) to all patients. It claims 22% fewer hospitalizations, shorter hospital stays, and 32% fewer readmissions than the Medicare fee-for-service average.

Or look at Iora Health, a Boston-based network of clinics that targets services to individual patients’ needs using both sophisticated analytics and a high-touch, team-based approach. It tallies a net promoter score (a measure of customer satisfaction and loyalty) of 88; the national average for primary care providers is 3. Usually only the Amazons and Nordstroms of the world see such sky-high scores.

Create discomfort and outsized rewards. These organizations offer ample evidence that the value-based approach can be successful — in terms of savings, outcomes, and improved experience. The challenge now is creating enough incentives and pressure to move the bulk of the market.

A first step is making it more painful for providers to stay stuck in their fee-for-service models. That means more aggressively reducing fee-for-service reimbursement rates relative to value-based payments. However, this isn’t just about providers; we also must challenge private health insurance companies to accelerate their shift to value-based payment models. It will be impossible for providers to succeed while operating both fee-for-service and value-based models, and so health insurers should move in lockstep.

At the other end of the spectrum, we need to pour money and attention into those who are delivering better-quality, lower-cost care. Our system should be massively rewarding the likes of Cornerstone, CareMore, and Iora that have taken the risk and made the commitment. We need outsized financial incentives and more upside for taking the risk.

The government also should encourage consumers to use the best doctors; and it could use its influence to drive volume and financial benefit to those providers that transform their models and methods. How? The federal government funds 64% of health care costs in the United States, yet it does little to direct consumers to the best performers. Current quality and satisfaction measures (like the consumer-friendly star ratings available at the Hospital Compare website) tend to evaluate hospitals as a whole, when the reality is that it is individual practitioners where the variation on efficiency and quality tends to occur. With that many potential customers on the table, the government could make it worth every single provider’s while to shift to value.

Finally, let’s encourage Americans to act like consumers of health care — rather than just patients — and give them the information and tools they need to make smart decisions that also allow the best players to thrive. We need the equivalent of Consumer Reports for health care or Morningstar ratings for clinical services. We also need to hold people accountable for the impact of lifestyle choices and where they choose to seek care. If you have a bad credit rating, you pay more for your credit; if you are a bad driver you pay more for your auto insurance. However, in health care, we do not have as much direct accountability.

What comes next won’t be easy and we might see some players fail. It will force organizational leaders to think and act outside their comfort zones. And it will require our political leaders having the guts to push through reforms that may challenge the status quo, but could make America a world leader in providing the highest-quality health care and patient experience at the lowest cost.

Terry Stone is the managing partner of the Health & Life Sciences practice of Oliver Wyman, a global management consulting firm.

How free coupons for patients help drugmakers hike prices by 1,000%

Horizon Pharma charges more than $2,000 for a month’s supply of a prescription pain reliever that is the combination of two cheap drugs available separately over the counter.

Another company, Novum, sells a small tube of a prescription skin rash cream, containing two inexpensive decades-old medicines, for nearly $8,000.

What is key to the companies’ business plan of raising prices by 1,000% or more?

The answer: coupons that deliver Horizon’s pain reliever Vimovo and Novum’s skin cream Alcortin A for as little as nothing to the patient, while leaving America’s health system to pick up much of the rest of the price.

Experts warn that the coupons, increasingly being used by dozens of companies, are sharply adding to the nation’s medicine bill. That cost is passed along to most Americans through higher insurance premiums and taxes needed to pay for government health programs.

The success of Horizon and Novum using this strategy demonstrates how America’s convoluted and opaque system of paying for prescription drugs enables executives to set extraordinary prices on modest medicines that have been around for years. The coupons keep patients and doctors from seeing the medicine’s true price tag.

“Via a coupon, the manufacturer can make its high-priced drug look as cheap as these over-the-counter medicines,” explained Matt Schmitt, an assistant professor at the UCLA Anderson School of Management.

In two recent papers, Schmitt, along with professors from Harvard and Northwestern, showed how the coupons propelled companies to charge “the highest price possible.”

They found that spending on 23 medicines sold through coupons was as much as $2.7 billion higher over five years than it would have been if the coupons were not used.

In 2007, a quarter of sales from brand-name medicines came from drugs backed by co-pay coupons, the group said. By 2010, that proportion had more than doubled and “the availability of coupons has since become rampant,” they said.

By boosting prices, companies can bolster revenue without spending more on research to discover new medicines. Horizon, for example, has increased the price of Vivomo eight times in the last two years. The price hikes lift the corporate bottom line, and often executives’ compensation.

Last year, Horizon’s board handed Chief Executive Timothy Walbert a pay package worth $93.4 million – a 10-fold rise from the previous year.

Novum, founded last year and owned by a small group of investors who don’t release financial figures, has sold more than $85 million worth of Alcortin A this year through the end of July, according to QuintilesIMS, which tracks drug spending. Before Novum bought the drug from another company, the prescription skin cream’s annual sales were less than $4 million.

Of the three medicines Novum sells, Alcortin A is by far its most popular.

In answers to questions sent by email, Geoffrey Curtis, Horizon’s senior vice president of corporate communications, said the coupons help patients get needed medicines.

“Our goal is to provide access to medicines a patient’s physician prescribes while limiting the patients’ financial burden,” Curtis said.

He said the wholesale price of the company’s pain reliever Vimovo “is not reflective of the cost to patients.”

Rand Walton, a spokesman for Novum, declined to answer questions about its skin cream. In a statement, Walton said Novum was owned “by a group of like-minded investors who believe in the company’s business model to provide no-hassle and affordable access to therapies.”

An example of a drug coupon. (Gary Coronado / Los Angeles Times)

An example of a drug coupon. (Gary Coronado / Los Angeles Times)

Some patient advocacy groups support industry coupons, a position that has somewhat muffled the outcry over soaring medicine prices.

“Co-pay coupons are something our case managers will continue to use until there’s no need for them,” said Caitlin Donovan at the National Patient Advocate Foundation. The group, which is partly funded by drug companies, runs a program to help patients pay for medicines.

Alcortin A is a combination of hydrocortisone and an antibacterial drug called iodoquinol – both discovered many decades ago. The gel also includes a compound from the aloe vera plant, similar to what is sold to soothe sunburn. Its label explains that it is “possibly” effective for eczema and other skin conditions.

Horizon’s Vimovo is a combination of naproxen, the generic pain reliever sold under the brand name Aleve, and the generic version of the heartburn medicine Nexium. Both are available over the counter. Some doctors suggest taking the two medicines together to try to avoid stomach ulcers, a dangerous side effect of pain relievers, like Aleve, known as NSAIDS.

The wholesale, or list price of Vimovo is $34 per tablet. The pain reliever is taken twice daily for a total cost of $68. If a patient instead bought naproxen and Nexium over the counter at the drugstore, a day’s worth of medicine would cost as little as 57 cents.

Horizon bought the rights to sell Vimovo and quickly raised its price for 60 tablets from $115 to $799 on Jan. 1, 2014, according to data from Truven Health Analytics.  After seven more price hikes, the drug now sells for $2,061.

Curtis, the Horizon executive, said the combination drug is worth its price because it lowers a pain patient’s risk of potentially deadly ulcers. “To assume that you can substitute OTC [over the counter] and/or generic medicines sequentially is inaccurate,” he wrote in an email.

The strategy of purchasing an older medicine and hiking its price has become so common in the pharmaceutical industry that Wall Street analysts call it “buy-and-raise.”

Last year, executives from Valeant Pharmaceuticals International and Turing Pharmaceuticals were called before a congressional committee to explain their large price hikes on medicines purchased from other companies.

Novum bought the rights to sell Alcortin A in the spring of 2015 and soon hiked its price from $189 to $2,496, according to Truven. The price jumped to $3,489 in January and to $7,968 on Sept. 12.

Experts say it would be far more difficult for drug companies to aggressively boost prices without the coupons. They defeat one of the few tools that the nation’s health system has to try to stop doctors from prescribing high-priced medicines not worth their cost.

Insurers often put higher co-payments or co-pays — the fixed payment made by a patient — on expensive, brand-name drugs in an attempt to get patients to take cheaper generic alternatives. With the coupons, though, patients and doctors don’t have to worry about those higher co-pays.

But experts say widespread use of the coupons leads to overall higher premiums. “This is raising the cost to everyone,” said Steve Miller, chief medical officer at Express Scripts, the nation’s largest manager of prescription drug benefits for insurers and employers.

Last year, drug costs for patients covered by private insurance policies rose nearly 16%, according to the S&P Global Institute.

Patients can find the coupons on Internet sites and in drug ads in magazines. Pharmaceutical salespeople deliver handfuls of them to doctors’ offices. Consulting firms embed the coupons on electronic prescribing services so that doctors see them on their mobile devices.

The coupons are submitted to the pharmacy with the patient’s prescription. The drug companies have hired firms that specialize in making the process fast and easy for patients and physicians.

Horizon said it spent more than $1 billion last year on coupons and other financial assistance for patients.

The companies’ coupon strategy only works if insurers continue to include the drugs on their lists of covered medicines, known as formularies, and pay for the cost that the coupons don’t cover.

Some insurers, including Express Scripts, have tried to put up roadblocks to the exorbitantly priced drugs by removing them from their formularies.

But Horizon and other companies have learned how to keep the number of prescriptions rising despite the cutoff from some insurers.

With the help of electronic prescribing systems, Horizon has doctors send the medicine order with a few taps on their mobile device to mail-order pharmacies that the company has partnered with, according to its annual report filed in 2014. The pharmacy ships the pills to patients overnight.

The mail-order pharmacies fill out paperwork required by insurers when doctors say patients need medicines that have been excluded from the formulary.

Horizon executives have explained to investors and analysts that fewer prescriptions have been rejected for payment by insurers when they are sent through the mail-order pharmacies.

Miller at Express Scripts said the firm had found the mail-order pharmacies resubmitting claims that had originally been rejected. The drug is so inexpensive to manufacture, he said, that if just some of the prescriptions are eventually approved for payment by insurers the companies still make money.

“This is people profiteering off sick individuals,” Miller said. “It’s very unfortunate.”

Doctors wrote more than 95,000 prescriptions for Vimovo in the first three months of the year, according to Horizon. That was 40% more than in those same months the year before.

Curtis said the decision of which pharmacy to use was “between the physician and the patient.”

As an incentive to use the mail-order pharmacy, Horizon guarantees that the patient will receive those prescriptions even if the insurer doesn’t pay.

Breast Cancer Action, a patient advocacy group that does not accept donations from drug companies, opposes the coupons, saying they can lead patients to choose a medicine with higher risks or that is not best for their condition.

“They allow corporations to look like good corporate citizens,” said Karuna Jaggar, the San Francisco-based group’s executive director, but are actually “a thinly veiled program to drive up revenue.”

“Coupons are not the answer” to high drug prices, Jaggar said. “There should be cost controls to make sure patients aren’t being left out.”

The industry doesn’t give coupons to patients covered by Medicare or other federal healthcare programs. That’s because the federal government has long viewed the coupons as illegal kickbacks given to get doctors to prescribe high-priced drugs.

That ban has created harsh surprises for some patients who say they need the drugs.

Jim McCamphill, 71, of Venice, Fla., said Alcortin A is the only medication that works for a recurring skin rash.

His doctor gave him a free sample, he said. But now, even though he tries to limit his use, McCamphill said he is running out. His pharmacist told him that for Medicare patients who can’t use a coupon, the next tube would cost $9,373.

“It’s a question of do you eat or do you put on an ointment?” McCamphill said. “It’s a disgrace. The system is so skewed, it’s scary.”

By Melody Petersen, LA Times

CEO Ignorance of Fraud & Abuse Happening Under Their Nose Won’t Be a Viable Defense

A Growing Nightmare for Corporate Risk Managers: Dereliction of ERISA Fiduciary Duty

Most of us think of fraud in healthcare as the domain of a few bad doctors similar to what can be found in virtually any human enterprise. I have since learned of the extent and magnitude of this fraud and it is staggering. The scale may seem overwhelming, yet it is remarkably straightforward to stop — but only if one is financially incented to stop it. Fig-leaf fraud protection that happens after the fact is like trying to stop fraud with a musket in an era of unmanned drones.

As I’ll detail in the follow-up to this piece, it’s even more alarming that much of the $300 billion in annual fraud (likely a conservative estimate) is going to foreign actors. In some cases, the connection to terrorism is quite clear. Stopping the fraud would be like providing the American economy with an annual recurring economic stimulus. Over two-plus years, that stimulus would be equivalent to the massive economic stimulus that saved America from another Great Depression. However, the reality is that the American middle class was left behind due in major part to healthcare fraud and remains in an economic depression longer than the Great Depression. Once you recognize this fact, it would be surprising if populist presidential candidates didn’t get massive traction in this year’s election.

Health Insurance companies acting rationally

David Goldhill beautifully debunked myths many in healthcare take as gospel in his book Catastrophic Care. There are two keys to understanding what drives the economics for a health insurance company:

  1. Anything that drives upward premium pressure is good whether that is overall prices going up or more things to insure (e.g., an auto insurance company would much rather cover four vehicles than one just as a health insurer likes to be “forced” to cover more healthcare services).
  2. Especially after the well-intentioned, but misguided, Medical Loss Ratio cap in the ACA, there is an even greater desire to see healthcare spending grow. That is, if one’s profit margin is capped, the only way to increase profits is to grow the denominator. It was shockingly obvious when I returned to healthcare after a dozen years and wrote my 1st healthcare piece — Health Insurance’s Bunker Buster in the Huffington Post. I think the highest level Economics course I ever took was Econ 201 and I could figure this one out. Headlines in recent weeks lay bare how this has played out exactly as predicted 6 ½ years ago.

Against that backdrop, I described the perfect storm that has put companies in a bad pickle. Employees are unhappy with unrelenting healthcare cost increases with no apparent improvement in benefits. This is causing increased legal risk from not managing health benefits with the same rigor as their retirement benefits.

Before getting into the massive fraud, it’s important to highlight how the existing only-in-healthcare dynamic set up perfectly for large scale fraud. For simplification, I’ll refer to the claim administration for self-insured companies done by health insurance companies as “ASOs” and those done by independent third-party administrators as “TPAs” (note: most of the workforce works for self-insured employers).

  1. Imagine a napping guard getting paid to chase after a criminal who’d just cleaned out the bank vault the guard was being paid to watch. You have to admire the chutzpah (well, not really) of health insurers being paid 30-40% of what they recover when they allowed the theft to happen.
  2. Opportunistic ASOs do something similar to fraud with out-of-network charges. They happily pay–with someone else’s money–an inflated out-of-network charge (more straightforward TPAs negotiate the claims before payment). That creates a terrific opportunity to then “renegotiate” to a more reasonable rate. After they complete the relatively trivial renegotiation, the employer pays the ASO a fee for that “renegotiation” that never should have been paid (occurred?). Even worse, there are a spate of lawsuits that Mark Flores has reported on that allege the ASO actually retained the “recovered” money.

These are two significant revenue streams that allow ASOs to charge “low administrative fees” and still have highly profitable accounts. That’s above and beyond the PPO networks offering dubious value such as allowing $444 boxes of Kleenex and $1000 toothbrushes. Presumably, these are legal (if nutty) ways of doing business but the “fun” doesn’t end with purely legal activity.

Fraud is good for business

“Healthcare fraud and waste is the secret $300 billion handicap on a $3.3 trillion healthcare marketplace, states Dave Adams, CEO of HealthcarePays (HCP), “and it has been perpetuated for too long by a system unwilling to embrace transparency and adopt fraud abuse technologies used by other industries.”

More fraud equates to more upward premium pressure. Good for health insurers. Bad for the middle class. The U.S. healthcare system’s current claims methodology is fraught with invisibility, disconnection, a lack of transparency and control between the employers, patients, providers, insurers and payers. In contrast, the financial industry recognizes the true cost of fraud and abuse and has been utilizing a preventive methodology for decades, giving the consumers both security assurances and control over their credit. The comparably large and equally complex healthcare industry has generally avoided the fraud and waste prevention methodology embraced by the financial industry, erroneously citing an inherently complex billing and payment system.  The occasional and much-heralded, yet woefully incomplete efforts by healthcare systems, employers, lawyers, and the government attempting to solve the problem haven’t begun to address the massive resource-draining issue.

Employers are left with no recourse other than taking a reactive and largely ineffective approach to recovering their money after a claim has been paid.  This “pay and chase” method of recovery delivers a dismal average return rate of only 2-4 percent.

For the first couple years of their existence HealthcarePays tried to sell into health insurance companies but hit a brick wall. Like many healthtech startups, it was only when they decoded healthcare’s perverse incentives did they realize they needed an alternative go-to-market strategy. As mentioned above, anything driving upward premium pressure was considered a good thing for the health insurer…including clearly fraudulent activity. Only when they began to sell directly to self-insured employers did HCP get traction.

HCP is an example of a solution to healthcare’s $300 billion fraud and abuse problem, and it involves adopting the framework of a solution devised by the financial industry some 30 plus years ago. In short, it prevents fraudulent actors from ripping off the healthcare system.

“Healthcare has no shortage of sizeable challenges. Together we can embrace a real solution with HealthcarePays to the growing fraud and abuse problem that is pulling money out of care and reducing our competitiveness,” said Tommy Thompson, HCP’s Chairman and Former Secretary of Health and Human Services during the George W. Bush Administration.

In HCP, Thompson saw an innovative approach to helping both private sector and public sector healthcare payers tame this growing threat.  In the past year, HCP has been engaged by some of the largest companies in the country to help them control their healthcare spend by proactively reducing fraud and waste, while working with these companies to meet their obligations under the ERISA Act.

The basis of healthcare confusion: The data problem

No one; not payers, providers or even employers understands the myriad of healthcare payment systems, creating incredible chaos and confusion as to who owes what to whom.  Historically, insurance companies have relied on sampling methodologies to determine whether or not the claims process is sufficiently secure.  Healthcare claims reviews are done independently on a per-visit basis, and are largely a paper-driven process.  Assessing claims data with this method allows fraud and waste to fall through the cracks because there is so much disparate data and no standard format for how the data is being analyzed and processed. If an employer changes to another insurance company, or a patient changes to another provider, the data formats change and the data gets lost in the system.

“The current work flow process is predicated on rapid processing of healthcare transactions with little real emphasis on the legitimacy and accuracy of the claims themselves,” states Scott Haas, Vice President of Wells Fargo Insurance Services USA, Inc. “The Department of Labor claim processing regulations emphasize the timeframe in which claim payors must either pay or deny claims.  The regulations assume payors actually are diligent in assessing whether or not the claims require any form of audit or scrutiny.”

Such an antiquated, non-data driven process is ripe with interpretation of claims and their accompanying data, and the eventual reconciliation of plan coverage is often too late; this process is a costly failure for all parties involved.

Connecting the Data Points

Fraud and waste become visible only when you connect all of the participants and events.  For example, there are cases of women undergoing multiple hysterectomies or men getting multiple circumcisions in a given week by different providers. These cases, viewed independently, meet all of the basic claims review and adjudication criteria. Therefore, they pass the (low) sufficiency test and the claims are paid.

Another case where 4 doctors provided the same service to the same patient during the same procedure meets all of the criteria when each provider is viewed independently for the procedure and passes the paid claims review test. But, the total amount of what they are all charging exceeds the total allowable amount for the contract. When you connect the specific participants of each of these cases, a major problem is exposed.

HCP’s platform analyzes all of the disparate claims data between the employer, patient, provider, insurer and payer simultaneously across all healthcare systems. HCP can connect the behavior of what has happened in a patient’s life and then connects that behavior with the series of doctors around that patient. This is similar to the banking industry which finds patterns of behavior both at the retailer level and the consumer level to determine if a purchase does not fit the consumer’s normal pattern of behavior.

The claims data in HCP’s engine is translated into a common language and format so machines can integrate and talk to each other and people can talk to people in the same language before any claim is released for payment and funds are released from an employer’s ERISA account. All claims transactions are standardized so the playing field is leveled for all healthcare system participants. HCP then analyzes the relationships between each of the participants in the healthcare system to establish a graded score for each claim. Based on the score given, a claim is either flagged as proper and the money owed moves seamlessly from the payer entity to the receiving entity or it is set aside and flagged as improper, is not paid, and is diverted for investigation.   This process is very similar to the credit card companies who freeze a consumer’s account when they flag an anomalous purchase for investigation.

HCP has broken the reactive “pay and chase” approach with an innovative solution which is revolutionizing healthcare. Employers will no longer have to attempt to recover money spent from their ERISA accounts because HCP discovers the problem before the claim is paid. The HCP solution will play a critical role in reducing the exorbitant amounts of money lost to fraud and waste in the healthcare system every year.

Ignorance understandable but no longer valid excuse

One can understand how a CEO who is busy managing their business isn’t thinking about the minutiae of their health plan. One could make that same argument about the company’s 401-k plan and all of the investment options, fees, etc. one can put into a retirement plan. However, as cases that have gone all the way to the Supreme Court have demonstrated, fiduciary duty doesn’t allow for ignorance as an excuse. Typically two and a half times as much money is spent on health benefits as retirement benefits so it’s clear that the same scrutiny will be applied health benefits that is the norm with retirement benefits.

As the populist presidential candidate traction has demonstrated, there is palpable angst about the fact that the middle class has gone backwards the last 20 years (economically). This is especially true when it is easy to see that a women having 4 hysterectomies or a middle-aged man having 7 circumcisions isn’t right. You don’t have to be a doctor to figure that out and any rudimentary effort at stopping fraud would catch those items. Even without the fraud, employers are spending 20-55% less per capita with excellent health benefits following time-tested techniques.

As the populist presidential candidate traction has demonstrated, there is palpable angst about the fact that the middle class has gone backwards the last 20 years (economically). This is especially true when it is easy to see that a women having 4 hysterectomies or a middle-aged man having 7 circumcisions isn’t right. You don’t have to be a doctor to figure that out and any rudimentary effort at stopping fraud would catch those abuses. Even without the fraud, some employers are spending 20-55% less per capita with excellent health benefits following time-tested techniques.

In a follow-up piece, I share how the dereliction of duties is contributing to our greatest national security threats. In the future, I’ll also share specifics on the staggering sums of fraud that have directly contributed to wage suppression at heartland companies. After all I’ve seen in healthcare, I didn’t think I could be surprised. I was wrong. I was not only wrong, I was floored by the implications.

Dave Chase, Executive Producer at The Big Heist

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