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Phia Group Media

Clearly it’s (Not) Transparency

By: Ron Peck, Esq.

I’ve been reading articles about the Amazon / JPMorgan / Berkshire Hathaway foray into healthcare, and how this alliance will likely disrupt the market.  The analysts seem to think these powerful entities will “fix” what’s “broken” by collecting data, analyzing the data, and customizing benefits to match user need.  Forgive me, but isn’t that already something self-funded employers can do today?  Indeed, for decades, the ability to collect usage information, and customize your self-funded plan to meet the specific needs of your population has been a benefit of self-funding.  If you’ve not already leveraged this to your advantage, shame on you.  You already have the same tools at your disposal that the likes of Amazon tout as what makes them special, and you’ve done nothing with it?  Ouch.

Another “advantage” these new players in the market supposedly have is the “power of transparency.”  They will publish the prices of medical care, for all to see.  Setting aside the legal and contractual hurdles one must overcome to “publish prices,” and ignoring the fact that there IS NO FIXED PRICE to publish, as the amount charged varies from payer to payer, day to day, depending upon the weather and logo on the card… forgetting all of that and pretending that there actually is a readily available fixed fee for services to “reveal,” why (or how) will this change anything?  If the consumer of healthcare (the patient) is different than the purchaser of healthcare (the plan or insurance carrier), how will knowing the price change the consumer’s behavior?

If I go to a baseball game, and am paying for beer and hot dogs out of my own pocket – if the prices are “transparent” – I may hesitate to drop $20 on solo cup of watered down “beer?” But… if someone else is paying?  Give me the keg!  Until the consumer actually benefits or suffers based on their purchasing decisions, transparency – means – nothing.

Wait … strike that.  Transparency means something… something BAD.  In psychology, we’ve identified a certain human behavior and titled it, “the irrational consumer.”  In a nutshell, this behavior is seen when a person purchases a more expensive option for no other reason than it’s more expensive.  They believe that the higher price must be associated with higher quality.  Additionally, it’s an opportunity to use the purchase as an indicator of status.  Thus, even when an “as good” or “better” option is offered for less, people will purchase the less-good/more-expensive option, either to impress people with their ability to spend, and/or because it must be better – it’s more expensive.

Introduce transparency into healthcare (intending to get patients to be better about spending) and you run the risk of seeing irrational consumerism in healthcare.  People will ignore indicators of quality, and – (horror) – simply seek care from the most expensive provider.

“Clearly” this isn’t what we intended when we all started singing transparency’s praises.  Let’s figure out how to achieve rational pricing in healthcare, and teach consumers what is truly “good” healthcare, before creating plans that force patients to have skin in the game.  Then and only then would transparency make sense to me.

Phia Undercover: Two Chargemasters at Addiction Centers
At Phia we sincerely try to be reasonable in all our provider settlements, but every once in a while we have problems achieving our goals.  A few weeks ago, we received claims with four different addiction centers, using the same biller.  This biller was billing $4,500.00 per day for detox, $1,200.00 for labs – the works.  We were asking for reasonable per diem rates which we typically get without too much hassle; they offered 10%, and then 20% and then 50% (which was still ridiculous).

They kept telling us all the other agreements they had with large PPOs or other “big” cost-containment vendors were for 50% discounts – so what was our problem, why were we asking for a greater discount?
Because that is the Phia way and discounts mean nothing!  We tried nearly everything to break through:

•    We sent them the plan document language and had an attorney argue the merits
•    We blitzed them with objective data
•    Eventually we even tendered conditional payments to try and settle the dispute…which they actually sent back!

Nothing was working, and we were stuck – but necessity is the mother of invention, and so we invented a way to push for a better rate.

I had recently read the book “Scar Tissue” by Anthony Kiedis (lead singer for the Red Hot Chili Peppers).  In his book he describes his struggles with addiction and the costs of treatment…and they were way less than what I was seeing billed, and it occurred to me that Kiedis was paying cash for his treatment (he could certainly afford it). That gave me an idea…

Using pseudonyms and personal email accounts, we emailed each addiction center advising that we were inquiring about the costs for treatment.  To be honest, we intimated that we were personally seeking treatment, which we understand could be seen as in poor taste; please note that I am married to a marriage and family therapist and so I am not insensitive to mental health issues – but diligence for our client was the priority.

We advised that we did not want to use “insurance” but wanted to see the private pay rates instead, which they quoted, and shockingly they were 10-20% of what the insurance rates were, representing 80%-90% discounts off the billed charges.  They have (at least) two completely separate charge masters: one for self-paying individuals, and one for insurance.

Taking off our self-pay beanies and putting our Phia cowboy hats back on, we informed the biller that we were aware of their private pay rates and with that in mind, we strongly urged them to reconsider our offer.
Miracle of miracles, they signed off, and we were able to close the accounts for a fair rate with a signed agreement. A little creativity and some elbow grease can go a long way!

In God We Trust; All Others Pay CASH…I wish…
I love calling a provider before medical services are rendered to settle on financial terms, and I love it when they have a reasonable cash price ready for me – but it’s all too rare to get a reasonable price easily.  Usually, I need to wade through concepts and terminology like “regular rates,” “commercial contracts,” and “networks,” and excuses like “I’ll see what I can do,” “our clients don’t process claims that way,” and plenty more. It never ends.

I want to pay a cash lump-sum for a service you’ve provided hundreds (or thousands) of times, and you really can’t tell me the price?

However, with the steady emergence of more consumers being responsible for paying for their medical care (in the form of higher OOP) and perhaps continued provider frustration, more providers are now offering cash discounts (thanks to transparency pioneers like Surgery Center of Oklahoma). Consider these other examples:

[This clinic] does not accept any third-party payment and makes no apologies for this. In order to keep costs down for the uninsured and the increasing number of patients who have high copays and deductibles, we choose to not assume the massive overhead involved in billing third-party payers. This has the added benefit of eliminating bureaucratic hassles and intrusions into the doctor-patient relationship, ensuring confidentiality of patient information and keeping our typical charges usually between the costs of an oil change and a brake job.1

* * *    

[This health system] offers cash pricing for selected services. Cash-pricing packages must be paid in advance of receiving services. Insurance will not be billed and claim forms will not be provided. If you would like information on cash packages, please call …2  

* * *

Does [this hospital] offer a discount if I self-pay for services? [This hospital] offers a 75 percent discount on eligible services to patients who pay out of pocket for medical services — whether it’s because you don’t have insurance, your insurance doesn’t cover the services, or you’d prefer not to bill through your insurance provider.3

Swedish Health Services may have seen the writing on the wall when they decided to lower their charges for certain outpatient services (bear in mind these are ordinary charges, not cash rates). On their old billing platform, an MRI of the brain was billed at $6,143; the new billing is $1,810 (70% less).

In many ways, cash rates are a type of network unto themselves. Providers are basically saying, “If you can pay cash at the time of service, these are the rates, and they are good. If you want us to bill an insurer, have the claim repriced, pended, denied, re-coded, covered, denied, covered, we will bill you our much maligned chargemaster rates, and the claim will be paid with our equally maligned network rates.”   

We are truly only at the beginning of this trend, and it is difficult to assess how many providers are now offering cash rates and how many are publicizing that fact; offering cash rates can be viewed as a form of direct-to-consumer contracting.

The American Academy of Private Physicians estimates there are about 6,000 physicians in the US who contract directly with their patients without an intermediary. That is roughly 1% of physicians, but this number has reportedly been growing at a rate of 25% per year for the last four years 4, and despite the fact that this is decimal dust compared to the market at large, the trend is likely to continue.

All things considered, we need more providers to step up and post their cash prices for consumers to consider.  The providers who pioneer in this area will be rewarded with business from a large market that is getting increasingly desperate for honesty and transparency.

1 Sean Parnell, “The Self-Pay Patient”, January 2014, pg. 28
4 Sara Rosenbaum, “Additional Requirement for Charitable Hospitals: Final Rules on Community Health Needs Assessments and Financial Assistance”, (January 23, 2015)

Reverse Medical Tourism
By: Jen McCormick, Esq.

On the way home to Boston from a recent international family vacation, I had the pleasure of sitting next to a young gentleman.  He was very friendly and didn’t seem to mind a wiggly toddler so we started to chat.   He told me that he would be in Boston for a month with his father (who was also on the flight), because his father needed medical treatment.  He explained that the services his father needed were not available on the island, and his father’s health insurance would cover a small part of these services via ‘reverse medical tourism.’  The gentleman implied that the family would be covering the balance.  It shouldn’t have come as a surprise that US hospitals are likely enthusiastic to offer services to affluent international patients (maybe because they might pay the hospital at a higher rate than an insurance company).  

During the flight, the gentleman also wanted to know if he could ask me a few questions about where to go in Boston.  Of course I was ready and excited to tell him all the places to visit and see in Boston, but he instead pulled out a list of medical supplies that needed to be purchased (some for the trip and some to bring home).  The gentleman explained that he had been instructed to purchase these basic supplies to avoid having insurance pay for them and/or due to some of these items being difficult to locate (or too expensive) on the island.  

On a daily basis we work to ensure employers are aware of how they can stretch their budgets while still providing comprehensive benefits to their loyal employees.  One popular way is via international medical tourism.  My chat with this gentleman on my short flight home was a reminder that medical tourism works in a variety of ways - US patients are seeking services abroad to obtain services and care at more affordable rates, while at the same time the international patients are seeking services in the US because they can afford to self pay.

It’s Time for a Wake-Up Call!
By: Jen McCormick, Esq.

Healthcare has received so much attention over the past 10 years. Everyone has something to say about its current form, how comprehensive it should be, or who should be have a role in providing the coverage.   The most contentious piece of the conversation, however, is cost.  Healthcare can be expensive – particularly if you don’t pay attention.  Guess what – it’s time to pay attention… This mean you employers!

As an employer, do you take steps to encourage employees to make smart choices when it comes to healthcare? Are they encouraged to select generics? Are they told to read and understand the benefits available to them? Are they aware of the incentives the employer may offer for making an informed choice? These incentives don’t have to be limited to the plan document either!  Consider having a staff meeting to review all the great benefits the plan offers, maybe poll the staff and see if the employees want to offer a certain benefit (i.e. acupuncture), or even have a quiz which asks questions about the benefits and rewards the highest scoring employee.  

Whatever the method – it’s time to do something different and get employees engaged at the outset (prior to receiving healthcare benefits)!

Bite the Hand
By: Ron Peck, Esq.

In case you missed it, there is a movement afoot.  It’s found some real purchase in California, but you hear rumblings everywhere.  A call for a single payer system.  Medicare for all.  I’m going to avoid discussing the pros and cons of this idea, as it relates to patients, employers, and us – the folks tied into the benefit plan industry.  Instead, I’m going to focus on (*gasp*) the provider community.  I was researching this topic when I stumbled upon the Physicians for a National Health Program (“PNHP”) website.  Interesting stuff!  While there, I saw a massive “FAQ” page; (  Looking at the first few lines, I suddenly realized how far apart some people are from each other.  For instance, consider the following: “Question: Is national health insurance ‘socialized medicine’?  Answer: No. Socialized medicine is a system in which doctors and hospitals work for and draw salaries from the government. Doctors in the Veterans Administration and the Armed Services are paid this way. The health systems in Great Britain and Spain are other examples. But in most European countries, Canada, Australia and Japan they have socialized health insurance, not socialized medicine. The government pays for care that is delivered in the private (mostly not-for-profit) sector. This is similar to how Medicare works in this country. Doctors are in private practice and are paid on a fee-for-service basis from government funds. The government does not own or manage medical practices or hospitals.  The term socialized medicine is often used to conjure up images of government bureaucratic interference in medical care. That does not describe what happens in countries with national health insurance where doctors and patients often have more clinical freedom than in the U.S., where bureaucrats attempt to direct care.”

Stop.  Wait.  This seems to indicate that providers are free to charge whatever they want, and Medicare (blessed, generous Medicare) pays the bill.  Yet, whenever a private benefit plan offers to pay Medicare PLUS 20%, 40%, or even (sometimes) 200% of Medicare, they are laughed at by the hospital.  They are told that if the hospital accepted what Medicare pays (or even double what Medicare pays), from its privately insured patients, they’d go bankrupt!  Why?  Because Medicare has the size (steerage), clout, and statutory backing to set its own prices.  So, despite the aforementioned FAQ, Medicare DOES dictate what is paid, and DOES control what hospitals and doctors receive.  Imagine how much MORE power Medicare would have, to dictate what is and is not payable, if they WERE THE ONLY PAYER IN THE NATION!!!

This, then, is my point.  Support for a single payer / Medicare for all model is out there… and it is growing.  If this became a reality, forgetting all the other issues, as it relates to providers – hospitals wouldn’t be getting Medicare “plus” anything.  In fact, once Medicare (or whatever the single-payer called itself) literally holds ALL THE PURSE STRINGS I imagine the payable rates would drop BELOW the current Medicare payable rates.  Ouch!

So… doesn’t it benefit these hospitals to preserve private benefit delivery systems?  Shouldn’t they be scrambling to retreat from a single payer?  Given what balance billing hospitals say to me about “Medicare based payments,” I should think so.  Yet, every time a private plan or carrier is charged 1,000% or more of what Medicare pays, that payer is being pushed one step closer to financial ruin.  If that happens, and we are stuck with a single payer, I am convinced it will end badly for my friends in the health care delivery community.  Thus, every time a provider refuses to work with a private payer, to find common ground… it is a prime example of biting the hand that feeds you.  You may be able to squeeze a few more bucks out of the plan today, but mark my words, those dollars will cost you exponentially when the legs are kicked out from under our system and we’re stuck with a single payer.  Trust me.  It is a simple economic truth that when there is one, and only one customer – that customer controls the pricing.

The time has come to play along, for everyone’s sake.

Adam’s Key Takeaway from the 2017 MassAHU Benefest Conference
By: Adam Russo, Esq.

I spoke at the 2017 MassAHU Benefest Conference today in Westborough, MA, where I was lucky enough to see 9 of the CEOs for the various insurance carriers in our state.  I was pleasantly surprised to hear what they had to say.  They not only talked about transparency needs and the fact that pharmacy costs are out of control, many of them actually stated that we need to increase the incentives that we offer employees and members, in order to get them to care about the cost of care.  

This wasn’t just some vendor saying this, or a self-funded employer, these were actual carriers who said the word “empower”.  We do need to empower our plans and their employees to care about the actual cost of care, and the best way to do this is through real and valuable incentives – not just some small co-pay differential.  This is what The Phia Group has been preaching for years.  Words are a great start - so let’s hope for some action!

Cyborgs – Moving From Science Fiction to Science Fact
By: Garrick Hunt

The word “cybernetics” tends to invoke images of Robocop or The Million Dollar Man.  These examples are just the creation of the imagination, but how far away are we really from such technological and biological advancements?

The answer is that it has already begun. While we don’t have 7-foot-tall walking cyborgs that administer swift justice in some kind of post-apocalyptic nightmare world, we are seeing advancements in the realm of prosthetic limbs, ocular augmentation, and even artificially grown organs.

While I was recently traveling, I picked up a National Geographic which had an amazing article on the future of human evolution and how humans are beginning to influence biological advancements. The article discussed a man, who was born colorblind and underwent a procedure that implanted a device (a sort of antenna) at the back of his head. This device can interpret the ultraviolet (UV) light spectrum and infrared (IR) spectrum, then convert these light waves into sound that feeds to his brain and allows him to “hear” color. Technology is helping this man use synesthesia, often considered a disorder of sorts, to his advantage.  What could this mean for the future of healthcare?  Who would be responsible for the costs of such augmentations? What would be the medical standards and indications of such an adventurous advancement?

Implants, like the one described above, offers a glimpse of the future.  While all of this seems a little farfetched, I would argue that no one anticipated George Klein’s electric wheelchair in the early twentieth century nor the profound change it would cause in our industry and in the lives of so many people. No one thought that anyone would be able to afford one, and now I can buy one on eBay for a cool $700, cheaper than a road bike.

The initial shock of new technology will always be a cost concern.  For example, exoskeletons, like those being developed for the military to  increase  lifting power and allow the wearer to walk and run long distances without becoming fatigued, are currently very much cost-prohibitive, yet these  devices are also being developed for paraplegics to utilize in the civilian sector. The ReWalk is one such exoskeleton that has been FDA approved, and at a price point of $70,000, it poses a high cost barrier that most people could never afford on their own. This means benefit plans may be on the hook for this new bill and others like it. Now, if a healthy individual wants to squander their savings to purchase an exoskeleton and pretend to be Iron Man, then all the power to them – but what about someone who needs it?

It’s not just exoskeletons; many prosthetic limbs can cost up to $50,000 in the current market.  Throw in a few computer chips and motherboards that allow for advanced articulation and a wide range of movement, and we could be looking at a hefty $100,000 price tag for that prosthesis. It seems likely that early medical applications of new technologies would bring with them medical indications for periodic maintenance, upgrades, or replacement… on the health plan’s dime.

There are three major ways a health plan can address this emerging technology; all three stem from solid plan language. First, a plan should assure it has the ability to review invoices against some sort of cost standard. Ensuring that the plan includes language indicating that alternating pricing, at the Plan Administrator’s discretion, will be applied when a particular medical device exceeds the set standards will help ensure that the plan has secured its right to properly utilize such standards. Secondly, a plan should including language that grants the plan the ability to suggest to the member a more cost-effective treatment option so long as it does not reduce the quality of treatment – and if the member foregoes that suggestion, the plan should ideally retain the right to limit its payment for the chosen service to the price of the lower-cost service that the member has chosen to forego. This means that while the plan will cover treatment for medical device, it will only do so up to a reasonable cost limit, and members are encouraged to not be extravagant simply because their OOP amount is the same either way.  Finally, a plan must include strong “experimental and investigational” language, ensuring that the procedure is FDA approved, has been adequately tested, and is actual applied science rather than still science fiction.

It will still be many years before we see a proper medical cyborg, but this doesn’t mean that we shouldn’t prepare for costs now…

Sometimes... The Truth Hurts...
By: Tim Callender, Esq.

The following is completely fictional.  Well, not really, but it makes me feel better to pretend that it’s not true.  As always, with my posts, the guilty (and innocent) shall remain nameless.  All the names and places I have used in this blog are fictional.

In the past 10 years I have attended many fundraisers for many different causes.  As I sit here today, pondering healthcare spend and the insanity that is our system, I think back to a particular fundraiser that I attended and how my experience at the event was so drastically different from all the other attendees.

A close family friend experienced a stroke.  For storytelling purposes I’ll name her Sally.  Obviously this was a terrible occurrence.

Sally had young children and she was the primary breadwinner for the household.  Sally spent weeks in the ICU and then months admitted to in-patient physical / occupational therapy.  Although she “recovered,” Sally would never be the same.

Sally’s medical bills piled high and her family buckled under the financial and emotional strain.  The community rallied around Sally and her family.  A fundraiser was put together, advertised, and executed incredibly.  There was live music, numerous food vendors, a silent auction, corporate sponsors, etc.

Oddly enough, the local health system sent representatives to the fundraiser.  They took the stage and provided heartwarming stories about Sally, her road to recovery, and how amazing it was to see the community rally around Sally to help pay her medical bills.  “Yeah… to pad your pockets,” I remember thinking as I stared at the stage, slack-jawed.

By the end of the evening, the event’s organizers announced that the event had raised nearly $80,000.00 for Sally and her family – a staggering amount.  Now.  Here’s where my pessimism (and knowledge of provider billing practices) overrides the “rainbows and unicorns” happy feeling of a successful fundraiser.  While everyone else applauded the giant, fake check being paraded across the stage, and cried while hugging one another, I leaned over to my friend and chirped, “You know she’s judgment proof, right?  The health system could sue her all day long, get a judgment against her, and end up garnishing $10 per paycheck for the next 40 years.  She doesn’t own anything they can attach a judgment to!  She’s judgment proof!  Why are we all here enabling the hospital’s egregious billing practices by helping Sally pay these ridiculous bills!”  That’s when I realized the room had gone silent and numerous people were listening to my ranting.  Suddenly I was the bad guy.  Oops.

Why do I tell this story?  Is it to reminisce about a Friday evening gone bad?  Is it to poke fun at Sally?  Is it to demonize a local health system?  No.  My purpose is none of these things.  Instead, I provide this brief story as a reminder that all of us “normal people” on the street own a great deal of responsibility when it comes to “feeding the dog.”  As often as we want to decry health systems for egregious billing – for predatory financial practices – for “war profiteering” – we need to step back and honestly assess whether we have enabled this reality.  Were there more claims that could have been negotiated?  Were there changes that could have been made to the health plan to control these charges such as a better definition of “maximum allowable?”  Were there plan member incentives that could have encouraged the member to choose other, high-result but less-expensive treatment options?  Were there wellness or medical management steps that were missed?  Was there an opportunity to educate plan beneficiaries as to the landscape of medical billing practices?  Were there plan design opportunities missed?  The list goes on.

In short, as we sit back and observe a system that is rife with out-of-control billing, we have a duty to not only criticize but also look for causes and real solutions at every step, including those that directly involve us.  And also – be careful who might be listening when you start popping off at fundraisers.