Frank Thomas interviews Dr. Joseph Sanford and Dr. Kevin Sexton on employer wellness programs. They explore the data sets that are available between self-funded and fully-insured plans, the changes in healthcare visits since the start of the pandemic, the kinds of nudges that work to help employees to choose healthy behaviors and participate in wellness visits and screenings, and the economic costs associated with the treatment of late-stage illness and early-stage illness, especially with various common cancers. They explore how employers can save money with an effective and iterative wellness program while helping their employees reach optimal health outcomes. Listen to this educational discussion for ideas to improve your wellness program with Stephens.
[:42] Frank Thomas welcomes Dr. Joseph Sanford and Dr. Kevin Sexton of the Stephens Insurance Medical Claims Analytics Teams to the program.
[:56] COVID-19 is still disrupting many businesses. More than half of the U.S. workforce continues to work remotely. Career pressures are at a high in this atmosphere of workplace uncertainty. Employers need to structure more efficient wellness programs with a better understanding of the risk profile of their populations to drive positive outcomes.
[1:32] No wellness data set is complete and all wellness data sets are at a risk for bias. Individual, family, societal, and environmental factors impact health conditions and have to be approximated for a given population.
[1:57] With the pandemic, more people are comfortable with receiving health care online. There is a growing national conversation about value-based care.
[2:20] Wellness plans are designed to be preventative. Employers can encourage behaviors that keep employees in the best health possible. A well-planned program typically includes an annual wellness assessment through a survey, a biometric component with lab tests, wellness visits, and ongoing engagement with individual employees.
[3:28] Age-appropriate screenings for common cancers help employees and employers catch early-stage cancers when they are treatable at a far lesser expense.
[4:36] Encouraging wellness visits can help stabilize variations in care, decrease stop-loss plan costs, and result in more predictable models that help everybody. A new approach to wellness, including time scheduled during the workday for wellness visits, will require a culture shift.
[8:11] A company can help build a culture that focuses on the safety and well-being of its employees. A 2019 report in JAMA shows that employees in a wellness program are more likely to report healthy behaviors like exercise and active weight management or dieting. Wellness programs do not have to be a large expense.
[9:38] Working with a self-funded plan, Stephens is able to access all the claims data and use that data to isolate key drivers of cost. In a fully insured program, Stephens only sees aggregate medical and prescription spending. Stephens considers self-funded plans to be more flexible.
[10:23] Analytics can play a valuable role in providing direction to a self-funded wellness plan. A good wellness program has to be iterative, as a work in progress. Effective online portal interface design can encourage employee participation. Make the things you most want to occur the easiest to do in the plan.
[14:46] Behavioral economics, combining aspects of psychology and economic modeling, helps us to better understand human behavior and why people don’t often make the optimal decision, even when they have all the available information and tools to do so. Nudges can be incorporated into a plan to encourage healthy behaviors.
[16:27] The principles of behavioral economics are to make things easy, attractive, social, and timely. Research by Dr. Katy Milkman on three groups of Google employees with different exercise arrangements showed that flexible incentives work better than incentives that encourage a more rigid behavior or activity.
[18:35] To help employees see the value in a wellness program, institute policies and procedures that foster the best possible employee health outcome, relative to what they could get elsewhere for the same cost. Most people define quality as a perceived outcome divided by the cost they pay.
[20:09] Employers with self-funded programs can use Stephens’ claims data analysis to review more claims, more consistently, in less time. That data allows them to have a quantitative conversation with the employers’ Third-Party Administrators affecting how reimbursements can occur and what will be covered by the plan and how.
[21:25] Employers with self-funded programs are in a better position to demand change than employers relying on insurers, in Dr. Kevin Sexton’s opinion. Insurance companies have their own regulations and priorities for driving down healthcare costs and increasing their margins.
[22:12] Tele-medicine has advanced five to 10 years since the pandemic kicked off in March of 2020. It is used at every level of care. There is an ever-growing list of tools on popular consumer devices that bring diagnostic capabilities into the home. Sharing health data is as easy as sending an email or text message.
[25:02] Dr. Joseph Sanford predicts the future is going to focus on adding robustness to these systems through a hybrid model of a digital-first front door that is supplemented by in-person visits when and as they make sense and then is back-stopped through individual monitoring by personal devices.
[25:25] Dr. Kevin Sexton sees the wellness programs of the future as being highly customized to the individual, providing a mix of incentives and data reporting to help members achieve their personal wellness goals while making sure they’re participating in routine care, like age-appropriate cancer screening.
[25:45] Frank thanks Dr. Joseph Sanford and Dr. Kevin Sexton for their time.
[26:52] For more information on this topic, please contact Stephens Insurance at 1-800-643-9691.
Frank Thomas interviews Brian Chance on the complexities of the workers' compensation system, a state-regulated system that varies by state. They discuss how employers can obtain and manage state-compliant coverage, whether by buying a policy from an insurance company or third-party administrator, self-insuring, or buying a large deductible and acting as a self-insurer. Brian explains how the Cost Based Efficiency division of Stephens Insurance guides employers to realize substantial system savings in an insurance industry that has not seen innovation or disruption in decades.
[:29] What is workers’ compensation? Workers’ compensation was the country’s first no-fault payment system. It’s a state-by-state system that protects employees and their families when they’re injured. It insulates employers from negligence suits when employees get injured.
[1:05] The system was created in the United States in the early 1900s, as our economy moved away from agriculture toward industrial production. Before the states passed these laws, when employees were injured, they had to sue their employer to have their medical bills and lost wages paid. Employers could defend lawsuits by deflecting blame.
[1:40] With workers’ compensation laws, employers are required to purchase workers’ compensation insurance that covers medical bills, lost wages, and in the case of an employee killed in an accident at work, wage payments to the family for a long period. Some states also pay awards for permanent impairment of a body function.
[2:13] Employees are entitled to all of these benefits, even if the injury was caused by the negligence of the employee or a co-worker. If employers meet an exception and opt out of the workers’ compensation system, employees who are hurt at work can sue their employer.
[2:33] Why has workers’ compensation been the only profitable line of insurance over the last few years? Premium rates in workers’ comps are based on things that have happened in the past. Over the past five to ten years, we’ve seen a reduction in the number of injuries and a reduction in pharmacy prescription costs in those claims.
[3:29] Premium today assumes that prescription costs of four to five years ago will remain the same, but they haven’t been. There has been a huge reduction in prescribing opioids in workers’ compensation cases. That has resulted in a big drop in costs without a drop in premium.
[4:02] Large employers can significantly improve the quality of care their injured employees receive while reducing their costs, and improving their shareholder value. Workers’ compensation is one of the leading areas where an employer can make changes and reduce their total cost of risk.
[4:28] Declining volumes of claims resulted in a consolidation of service providers that are involved in managing workers' compensation claims. We’ve seen many mergers and acquisitions by third-party administrators (TPAs), medical bill review companies, nurse case management companies, specialty medical networks, and other providers.
[4:55] While the number of claims continues to drop, these service providers are compelled to generate more revenue from each claim transaction in order to satisfy their owners. COVID-19 will only accelerate that process.
[5:14] Workers’ comp pretty much covers everything that would happen to an injured employee, as long as they’re injured in the course and scope of their employment. Even companies that employ people who work at a desk still have an injury exposure for workers’ compensation.
[5:37] Employers have many options to finance the risk. Some options work best for different employers. The easiest but most expensive way to finance the risk is to simply buy the coverage from an insurance company. Employers can reduce the cost of that risk transfer by purchasing a deductible or going self-insured.
[6:10] Workers’ comp is a great risk to include in a captive program because it’s usually a high-frequency, low-severity risk type of program. When the workers’ compensation program is run well, costs are relatively predictable and readily financed through a captive.
[6:29] Self-insurance is a good option for large employers. There are several regulatory issues that have to be considered. In order to be self-insured, an employer has to guarantee the state that they have the financial ability to satisfy the benefits employees are entitled to if they’re injured. Most states allow employers to self-insure the risk.
[7:02] To self-insure the risk of workers’ compensation instead of buying insurance coverage, employers have to obtain approval from every state where they have employees and they want to self-insure, in order to be able to function that way. It would be difficult to become self-insured in 50 states and comply with each states’ regulations.
[7:22] It’s generally easier for you as an employer to buy a large deductible and function as though you are self-insured while avoiding regulatory headaches for each state.
[7:37] Workers’ compensation differs from state to state. Some states are more generous to employees than other states. National employers with multi-state operations should always look first to individual statutes to determine which state will have jurisdiction in workers’ compensation matters. Each state has its own statute.
[8:15] All states require lifetime payment of medical treatment for work-related injuries. Each state has a calculation for calculating lost wages and how they are paid, what limits are applied, how medical providers get paid, and sometimes awards for permanent physical impairment.
[8:39] Each state’s laws also address an employer’s subrogation interest and how jurisdiction is determined. Pennsylvania and New Jersey have different statutes on payments. The two states have different costs for medical care. Jurisdiction determines which state law applies for whether workers’ compensation is the exclusive remedy.
[9:48] Each state is a sovereign entity controlling the law within its boundary. Most states will try to apply jurisdiction outside of their borders if they have the most contact with the facts of the case.
[10:13] The finders of fact in a state will look for the number of connections that state has with the employee, such as their home state, the place where they were injured, and the state where their contract of employment originated. The employee’s home state or the state where the injury occurred will usually govern.
[10:50] It’s important to note that the courts will weigh heavily the employee’s requested jurisdiction. Jurisdiction may be shared between states in rare cases but it is difficult.
[11:14] An employee based in Michigan who travels to Ohio to work, who is injured at work in Ohio, will generally be treated near home. The place of treatment is usually where the benefits will be paid and so Michigan would have jurisdiction.
[12:12] Claims associated with COVID-19 have generally been less than $3,500. There are catastrophic cases but they are the exception. Shutdowns associated with COVID-19 caused a dramatic drop in claims frequency in the retail and hospitality industries. This drop almost offset the increase caused by COVID-19.
[13:12] COVID-19 should not affect the workers’ compensation industry dramatically. There are concerns developing about the lingering effects of COVID-19. There hasn’t been enough time to develop the data to study these effects yet.
[13:30] As the country reopens, restaurants operate in whatever the new normal looks like. The biggest challenge COVID-19 caused for restaurants was compliance with the evolving guidelines for reopening. Sometimes, individual cities enact unique rules and regulations. Compliance across multiple regulations is an operational nightmare.
[14:25] The best thing a restaurant chain can do is to make the workplace as safe as possible for their employees. If the restaurant is safe for your employees, it’s safe for your customers. The chain should designate a corporate office to monitor the regulations that govern each restaurant to ensure regulatory compliance.
[14:53] In most organizations, monitoring regulations for local compliance fell upon the risk management department. Without their guidance, most restaurants would not have been able to reopen. This is a witness to the advantage of strong risk management programs for every national chain that is up and running now.
[15:24] The recent consolidation in the industry has created conflicts of interest in large claim platforms. When a TPA is owned by the same company that owns the bill review company, or other service providers used in workers’ compensation, there is no internal pressure to deliver better results. Customary checks and balances are missing.
[16:00] Service agreements typically do not fully disclose or quantify arrangements that exist between separate service providers, so employers generally do not see the true cost of the services or obtaining data that makes these services transparent.
[16:29] Stephens has identified these arrangements and established associated benchmarks. Stephens’s Cost Based Efficiencies division works with clients to strip excess costs out of their workers’ compensation program.
[16:44] Stephens’s Cost Based Efficiencies division studied data from thousands of claims and developed metrics to evaluate the performance of a large claim-handling platform. Their metrics yielded conflicting and unusual results that caused Stephens to dig deeper into the data. They found perverse incentives within arrangements between providers.
[17:21] After discovering these hidden arrangements, Stephens worked to find solutions to eliminate them. Self-insured companies and companies that carry large deductibles have budgets and accruals for the claims they expect to pay. Stephens routinely finds savings of between 15 and 30 percent of the medical costs in these programs.
[17:57] With Stephens’s help, companies are able to realize a reduction in those costs and can reduce the accrual, which will immediately flow to the bottom line of the company. For publicly traded companies, those savings can affect earnings per share.
[18:08] Why are risk managers not finding and addressing these hidden costs? Workers’ compensation has not been a source of much pain for risk managers over the past few years. Results have improved slightly, year over year by maintaining the status quo. The insurance industry works hard to make sure these costs remain secret.
[18:54] Workers’ compensation will see dramatic data-driven changes in claims-handling philosophies, strategies, and staffing as Artificial Intelligence enters the industry.
[19:14] Over 20% of insurance industry employees are expected to retire over the next few years. There are not enough younger people entering the industry to fill the talent gap. Insurance carriers, TPAs, and other service providers are looking to technology to fill that talent gap.
[19:38] The most important thing for employers to consider when thinking about workers’ compensation is to recognize that they can control their workers’ compensation cost just like they do with any other business cost. Most employers don’t recognize the opportunity to improve results because they accept the industry’s status quo.
[20:05] The acceptance of the status quo has resulted in an industry that has not experienced any disruption or innovation for decades. Improved results over the last few years were not caused by industry efforts but by events like the reduction in injuries and opioid prescriptions.
[20:30] Employers should demand continuous improvements from their service providers and work with partners who want to help that innovation that’s long overdue.
[20:45] Frank thanks Brian for these important insights about workers’ compensation.
[20:50] For more information on this topic, please contact Stephens Insurance at 1-800-643-9691.
Frank Thomas interviews Dr. David Keisner on the meaning of the recent Supreme Court ruling for PBMs, how increased prescription costs may be passed along to employers and insured patents, how other states may act as a result of this ruling, and the potential ramifications of this ruling on other states’ regulation of healthcare providers, regardless of the federal Employee Retirement Income Security Act (ERISA). Listen in for action steps your company should take in considering the potential effects on your healthcare plan of this complicated ruling.
[:27] Frank Thomas introduces Dr. David Keisner. David specializes in pharmacy benefit management solutions, including contract negotiations with PBMs on behalf of employers.
[1:25] Act 900 was an Arkansas law dating back to 2015. It regulates what happens when a pharmacist fills a prescription medication through a patient’s health insurance plan. When the pharmacist runs a medication through a health insurance plan, the pharmacist is reimbursed for the cost by a Pharmacy Benefit Manager (PBM).
[2:04] Sometimes a PBM may reimburse a pharmacist less than the acquisition cost of the medication. Act 900 provided three things: a floor reimbursement based on the acquisition cost of the prescription, an administrative appeal procedure, and that a pharmacist may refuse to dispense a medication below the acquisition cost.
[2:53] Act 900 allowed independent, rural pharmacists to keep their doors open and provide broad access to healthcare in the state. People opposed to Act 900 pointed to increased costs to employers and employees.
[3:48] PBMs are hired by health insurers or directly by an employer to manage a prescription drug benefit for their employees. The “Big Three” of PBMs are CVS Caremark, Express Scripts, and OptumRx.
[4:10] PBMs perform electronic processing of prescription drug claims and establish a network of pharmacies for patients to use to fulfill their medication prescriptions. They contract with pharmacy chains and independent pharmacies to ensure that patients have the product and that the pharmacies will accept their drug plan.
[5:00] The question that the U.S. Supreme Court considered in reviewing this case was whether Act 900 applied to a self-insured health plan. The case was specifically whether Act 900 is preempted (displaced) by the federal Employee Retirement Income Security Act (ERISA).
[5:36] ERISA is a Federal law that sets minimum standards and establishes protections for private health plans and retirement plans. One notable exception is that fully insured health benefit plans are not preempted by ERISA. Laws like Arkansas Act 900 have traditionally applied to those plans.
[6:43] Justice Thomas wrote that language in ERISA that a state law does not apply if it relates to an employee benefit plan was so broad that it was essentially meaningless.
[7:06] Previously, the court had established that laws such as Act 900 do not apply to a self-insured plan if the law governs essential matters of a plan administration or interferes with national uniform plan administration.
[7:25] This recent court decision was an eight to zero decision (before Justice Coney Barrett was sworn in). The court ruled unanimously that Act 900 is not preempted by ERISA. The law does apply to self-insured plans.
[7:44] The court stated that this is a rate regulation and laws merely affecting cost are not preempted by ERISA. Laws like Act 900 do apply to self-funded plans even if they have the potential to raise costs for health plans and their beneficiaries.
[8:08] Can individual states regulate their health plans any way they want to? This is a subject of much discussion, and more clarification is needed. David does not believe that states can regulate matters that deal with plan design, such as mandating certain benefits or certain cost-sharing percentages.
[8:35] One big question David has is what other laws that typically did not apply to self-funded benefit plans will now apply as a result of this decision? If a state applies rate regulation that is so acute that it will effectively dictate plan choice, preemption may still apply. There is more to “play out.”
[9:23] How will states use this decision to regulate PBMs? What else do they feel they can do as a result of this Supreme Court decision?
[9:48] There is still a lot of discussion on whether this court decision is limited to PBMs. This may open a door to regulation on third-party administrators (TPAs) or other healthcare service providers. This potentially opens the door to inconsistent state regulation of various healthcare service providers.
[10:15] The main question David is getting is whether this decision will raise costs for patients and employers. David cites JB Hunt’s Friend of the Court Brief in favor of the PBMs, arguing that if Act 900 was in place it would significantly increase their plan costs.
[10:49] The opinion, written by Justice Sotomayer said “PBMs may well pass those increased costs on to plans, meaning that ERISA plans may pay more for prescription-drug benefits in Arkansas than in, say, Arizona. But ‘cost uniformity was almost certainly not an object of pre-emption.’”
[11:27] This could subject multi-state employers to different rates, from state to state.
[11:45] This court decision was focused on the contractual relationship between PBMs and pharmacists. How will it affect the contracts between PBMs and employers? David gives an example about contract language relating to renegotiating the contract if there are significant changes to federal regulation. PBMs may see this change as significant.
[12:45] Other contract language allows PBMs to limit services or apply additional fees to employers in states where they believe there are stricter laws.
[13:00] Stephens is currently reviewing all of their client contracts to see what the potential impact is and what the next steps are for those employers.
[13:33] Employers may be in a long-term deal with a PBM. All of a sudden, as a result of this decision, your PBM may attempt to renegotiate the financial terms of your agreement. It’s so important to have a benefit advisor on your side who is ready to engage in those renegotiations, should they take place.
[14:34] David shares his background. He started in nuclear pharmacy, working with radioactive materials. He has always been interested in unique aspects of health care. There is nothing more unique than the regulatory and insurance industries!
[14:58] One of the main things David does at Stephens is to negotiate and help employers with their contractual relationships with PBMs. Healthcare is very complex, so it’s very important for healthcare providers to be involved in the insurance and regulatory sides for the good of the industry.
[15:47] David’s advice to employers regarding this court decision is to thoroughly review your PBM contracts, talk to your benefits consultant and make sure they have a strategy, and that you have a long-term strategy for your company. The healthcare landscape is changing. Be in a position where you can be flexible and creative.
[16:18] Frank thanks David for his insights and direction in relation to this very complex issue involving the Supreme Court’s decision on Arkansas Act 900.
[16:29] For more information on this topic, please contact Stephens Insurance at 1-800-643-9691.