Live Independent – 50 States, 50 Stories: Inspire with passionate, compelling stories that remind us why we became pharmacists in the first place. Demonstrate the advantages we offer over Amazon/big-box competitors. Show how we change lives, strengthen families, change communities. Publicly declare we will save 10,000,000 lives in three years. Prove the difference. Equip the you to close net new and profitable customers. Launch a national consumer campaign that will include: National and local PR, Broadcast and digital media Consumer-facing website driving traffic to local members
D I S R U P T I O N TM FitzMartin Inc. 2019
Self-Insured Health Plans: Opportunities to Both Save and Make You Money Multiple Locations Conference John Crumly, Mark Haegele, Brian Beach
Risk Alternatives for your Self-Insured Health Plan and Collaborative Care Case Studies Multiple Locations Conference John Crumly, CEO, PPOK Mark Haegele, Vice President, Lockton Companies
Learning objectives 1. Develop questions to ask your current broker about your health coverage. 2. Assess whether a self-funded health plan is right for your business. 3. Illustrate opportunities to sell pharmacy services to other self-insured plans.
Disclosures John Crumly, PharmD, is the CEO and Executive Director of MaxCareRx. The conflict of interest was resolved by peer review of the slide content. Mark Haegele is the Vice President of Lockton Companies. The conflict of interest was resolved by peer review of the slide content.
Risk alternatives for your health plan • Evolution of self funding • Self funded alternatives • 100% Risk Retention • Specific Only • Traditional – Specific and Aggregate Deductible • Aggregate Only/Level Funded • Captives • State by state implications
Risk alternatives for your health plan • Evolution of self funding • Market Trends • Risk/Reward • Advantages • Insurance cost savings • Transparency • Access to data • Administrative cost savings
Risk alternatives for your health plan Why? Potential Savings: • CLAIMS Take CONTROL of your employee benefits and create a STRATEGY: • Plan Design • Wellness • Make your plan an asset • HRA • Build up a reserve • Network • Renew based upon your claims, not others’ • STOP LOSS PREMIUM • Design your own plan • Specific • Aggregate • Reward wellness • Less Taxes Paid • Select your own network structure • ADMINISTRATION • Reinsurance protection • Claims Paying • Customized Services • ERISA Qualified
Macro self-funding vs. fully insured comparison (pros/cons) Self-Funding Fully Insured Tot otal Cos osts Tot otal Cos osts Governed by federal regs (ERISA) and not subject to state premium tax (1.75 – 2.50%). ). ❖ Subject to state taxes and state-mandated benefits. ❖ ❖ Subject to ACA taxes — PCORI and reinsurance fee ❖ Subject to ACA taxes — PCORI, reinsurance, and insurer tax. Avoid ACA insurer tax (-2.46%). ❖ Carrier padding and risk charges hidden in many pockets. ❖ Avoid carrier padding and risk charges (-2 to o -5%). ❖ Volatility Volatility ❖ Aggregate (all claims) and specific (shock claims) stop-loss insurance limits ultimate ❖ Locked in for 12 months. exposure. ❖ Good years benefit carriers, and bad years can result in double-digit increases. ❖ Good claim years benefit company, and bad years are capped. ❖ Can adjust budget to higher predictability/confidence level. Tran ansparency Tran ansparency ❖ Full transparency (encounter data). ❖ Good data access (premium vs. claims, high-level utilization). ❖ Ability to change any element of plan. ❖ Carriers determine plan elements. Reali ality Reali ality ❖ Generally saves money over three-year period. ❖ Carriers drive profitability through renewals for second year and beyond. ❖ Costs are all about claims — claim costs are discounts and utilization. ❖ Premiums typically increase regardless of great claims history. ❖ General benchmark — 85% of companies with $7M+ in spend are self-funded. S E L F - F U N D I N G
Components of premium % of Premium % of Premium Component Description Fully Insured Self-Funded ❖ Costs from a healthcare provider or facility for services provided (represents 60% 70% Claims the largest component of premium) ❖ Funds set aside to cover liability for claims incurred but not yet reported (IBNR) Reserves ❖ Estimate of 1.5 to 2 months of expected paid claims 15% 12% ❖ Fully insured will charge for reserve administration and risk ❖ A provision that limits the dollar amount a plan will have to pay for any Pooling Charge/ 8-10% 8-10% Stop Loss individual claimant to a predetermined level during the policy year ❖ Includes claims and eligibility administration, network, risk charges, profits, Administration 8-10% 6%-8% broker compensation 5-6.5% 1-1.5% ❖ State and ACA taxes Taxes Margin ❖ Fund established to protect a plan against unexpected claims fluctuations 5-9% 2-5% S E L F - F U N D I N G
Fully insured vs. self-funded Maximum Fixed Liability Liability for for the the Employer Employer Corridor for High Claims (25%) Total Savings 3% - 5% Claims Claims Fixed Costs Stop-Loss Premium Specific/ Administration for the Aggregate Employer Administration Fully Insured Self-Funded S E L F - F U N D I N G
Establishing IBNR reserves Plan is responsible for run-out claims when self-funded plan is terminated. Plan will only By the fourth month, plan should have pay ~50%. ~1.5 months of reserves on the books. IBNR reserves must be adjusted regularly. First Month Second Month Third Month Going Forward Plan will only pay ~20% of a normal Plan will only month’s worth of claims due to lag. pay ~80%. S E L F - F U N D I N G It takes 1-2 months for claims to be submitted and paid. 100% should be budgeted and 80% “RESERVED” on plan sponsor’s books for plan termination.
What is Stillwater Collaborative Care? • Provides opportunities to improve the physical and financial health of community businesses and members. • Allows us to partner with local communities to make healthcare affordable and stabilize healthcare cost. • Plan designed to keep the healthcare dollars local.
Why Stillwater Collaborative Care? Member Employer Provider
Why choose Stillwater Collaborative Care? The cost of everything we buy. 325% The cost of health insurance.
How we solved our health care cost crisis. • Provider owned Population Health. • Lower contracted rates for local employers. • Lower Fixed Cost for local employers. • 100% of Rx Rebates back to local employers. • Future increases tied to Medicare. • Transparency. • Multiple financing alternatives.
Features SCC Plan Current Plan Single $1,500 $2,000 Family $3,000 $6,000 Coinsurance 20% 20% Primary OV $10 $25 Specialist OV $25 $50 Urgent Care $50 $150 Rx Generic $5 $10 Rx Preferred Brand $30 $85 Specialty $250 $250 Cost Saving Results Annual employer premium savings was 18% or $24,000!
Benefit to employees • Concierge customer services covers: Member Health, Claim/Plan Questions, Issue resolution. • Better benefits. • Lower out of pocket
Concierge • Provides personalized care. • Point of contact for questions related to the plan, tier levels, or billing. • Can also assist with establishing members with a primary care provider or a specialist as needed.
Results - clients • Twelve employers have signed up. • 3,020 members on the program. • The clients’ industry varies: Churches, manufacturing, healthcare providers, cities, and local businesses. • Employers save 15-40% on spend.
Results - health • All members welcomed to the program via SCC’s onboarding call. • 212 participants received on-site health screenings. • 55 participants identified as tobacco users. • Several are now participating in the smoking cessation program. • Established primary care relationships with multiple members. • Assisted members with applying for and receiving financial assistance • Assisted members to resolve claim issues.
Results - claims Timeframe 1/1/18-12/31/18 Claims processed: 29,211 Member balance bill liability: $0. Eleven claims negotiated. Claims paid as Tier I benefits: 98%.
Results - financial • SCC has saved the community over $4 Million. • Clients specifically saved $1.25M by joining the program. • SMC’s Employee health plan is on track to saved over $2M for 2018 and reduce claims.
PPOk insurance experience • Initially, part of a Professional Employer Organization for 13 years. MaxCare subsidiary was the PBM. • PEO dissolved had to move to fully insured. • Only thing transparent were the premium increases. • 2016 returned to self insured w/ 90 employees. • Transparent pass through model w/ MaxCare. • Enjoy benefits of Pharma Copay assistance dollars and rebates. • Recently added Reference Based Pricing for Hospital. • Some pain in year 1, but now have access to direct contracts and concierge partner that minimizes the noise.
MaxCare growth challenges to solutions • Small sales force – • Too many RFP’s where we were not the “preferred” PBM. • “Good, Uneducated or Bad” Brokers. • Our Solution – Start a Brokerage. • Now we have an alternative for bad brokers. • Important to find like minded partners (e.g.) • PBM Consultants • Brokers • Third Party Administrators (TPA)
Brokerage – general agent • New alternative to fully insured for Oklahoma pharmacists • Oklahoma State Medical Association (OSMA) • Pharmacists, staff and families can join MEWA • Competitive pricing, transparent PBM, no mail order. • Intangible – physicians and pharmacists communicating as organizations. • Working on Opioid solution together • Challenge – Cannot cross state lines.
Local solution to vertical integration • Clear Benefits and partners • Provide alternative insurance solutions for our pharmacies and businesses in local community. • Self insure • Join an existing captive insurance company • Protected cell – each company is underwritten on its own merit for first tier risk. • Focus on transparency and keeping business local • Opportunity for pharmacists to show value with local hospital via collaborative care model. CPESN Opportunity for transition in care? • Should more independent pharmacy groups form their own captive?
Changing the future: Combining Self Funding, Direct Contracts and Reference Based Pricing
Reference Based Pricing Multiple Locations Conference Brian Beach, PharmD Co-Owner and CFO Kelley-Ross Pharmacy Group
Disclosure Brian Beach declares no conflicts of interest or financial interest in any product or service mentioned in this program, including grants, employment, gifts, stock holdings, and honoraria.
A Different way to pay for Health care 1 What is reference based pricing (RBP)? 2 RBP Solution
Status quo: the problem The Problem 1 No regulations on what hospitals can bill for services Today, for-profit hospitals charge 2 >700% of Medicare and non-profit hospitals charge >550% of Medicare What if there was a way to reduce the cost of healthcare With a traditional PPO “discount” 3 of 50% , employers still pay 300% starting at the source of the problem? of Medicare
Status quo: the problem HOSPITAL PRICE RETAIL PRICE Acetaminophen $.015 each $1.50 each (Tylenol) $1.49 (bottle of 100) Bacitracin $4.11 each $108.00 each (Neosporin equivalent) $12.33 (pack of 3) Diabetes Test Strip $1.85 each $18.00 each $27.00 (box of 50) Gauze Pads $0.098 each $77.00 a box of 50 $4.90 (box of 50) 100
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