I have the same burning question that I think many of you have: If I am a self-funded employer, as a result of this pandemic, will my health care costs go up? This question boils down to an equation that has two parts: the additions and then the subtractions.
In the Additions column, how much will an employer spend on COVID-19 treatments—you know, both the ICU visits but also employees who haven’t been to the doctor in 15 years, get a cough, go to the doctor, and get diagnosed with some underlying condition (maybe after a lot of lab work and a few CT scans), and potentially wind up, for example, on some expensive therapy?
Back to our equation: In the Subtractions column, we have shelter in place, whether by mandate or fear based. Everyone who is forgoing or has forwent elective surgery or follow-up visits or anything else in a fee-for-service world results in less costs for an employer. Doctor visits are down 35% to 80%, depending on the specialty. And, nothing for nothing, health care industry revenue is an employer's cost. If we disregard payer mix for a sec, this could mean that employer costs are down the same percentage as any given doctor’s revenue.
In this health care podcast, I talk with Brian Scott. Brian has a background which is perfect for the question of “Will employer health care costs go up or down?” First, he was an underwriter at United. Then he was in a dedicated complex claims group for Lockton that managed self-funded plans. And now he’s at Point6 Healthcare, where he works to put together best-value plans for employers, including getting stop-loss. Brian works with TPAs (third-party administrators) across the country to this end.
So, this conversation with Brian has two parts: This first episode (episode 275) is mostly about the specific additions used in a lot of the cost models that are being floated relative to whether costs will go up or down for self-funded employers and also what some self-insured employers are doing or considering to address the underlying risk factors that might drive up costs in a plan and help reduce them. Episode 276, which is the next one after this one, includes Brian’s advice for self-insured employers, as well as a look into the fully insured market. We explore why estimates in the fully insured markets show that costs could go up anywhere from 4% to 40% when premiums are re-upped.
You can learn more at point6healthcare.com and brian.scott@point6healthcare.com. You can also connect with Brian on LinkedIn.
Brian Scott is an assistant vice president at Point6 Healthcare. He joined the team in 2019 to implement and lead a new type of ICU related to self-funded employers focused on implementation, consulting, and underwriting strategies on behalf of self-funded benefits plan sponsors. Point6 is an authority on employer-sponsored self-funded health care financing and risk transfer strategies in the United States and maximizes the value of interactions between those providing, receiving, and financing health care.
Brian has also worked as the strategic consultant for a major consulting firm specializing in employer stop-loss and cost-containment strategies, where he managed administrator and carrier relationships and opportunities, risk transfer strategies, and self-funding overall, while growing a team to ultimately handle stop-loss placements nationwide. Prior to that, Brian worked as a senior underwriting consultant for a BUCA managing stop-loss negotiation and placement, administration, and pharmacy pricing for large and complex self-funded, fully insured, and HMO cases.
Brian works to maximize employer strategies for managing high-cost claimant risk, focusing on opportunities to enhance plan designs, administrator-specific gap avoidance, and cost-containment processes. Brian has assisted with the formation of medical stop-loss captives, merger and acquisition risk coverage strategies, fully insured to self-funded conversion strategies, and reference-based pricing and alternative funding concerns as well.
03:27 Contemplating the additional costs an average employer might incur relative to employees and COVID-19.
04:34 “People want to interact differently with the health care system moving forward than they have in the past.”
06:55 “It’s not necessarily intuitive.”
07:03 The biggest point of care that’s probably going to be utilized post-COVID: telemedicine.
09:19 EP273 and EP274 with Jonathan Thierman, MD, PhD.
09:34 The health care shifts we’re likely to see moving forward.
13:00 Some of the negative consequences of COVID-19.
15:25 What a health care model without a pharmacy benefits manager (PBM) might look like moving forward.
17:22 “Their solution might be, ‘Change the formulary.’”
19:39 EP264 with Ron Wince.
21:02 “Finding ways to really dig into … these individual concerns … are not necessarily top of mind.”
22:37 COVID creating a flash point for change.
23:04 “I don’t know if it’s best to call it an opportunity.”
24:52 The different health model changes being discussed.
27:28 The incentive carriers have to make this COVID analysis.
28:51 “Costs have to come down.”