Mark Cuban has been chastising self-insured employers for some time, saying they have more power to change health care than any politician. You just have to look at your tweets know that he has asked employers to stop allowing insurance companies and pharmacy benefit managers to dictate what they can offer employees. He has urged them to “demand transparency and pay cash prices.” [for drugs] when it is cheaper.”
He has accused employers of being complicit.
was a topic he returned to as he appeared on the main stage at the recently concluded HLTH conference that annually draws many prominent healthcare executives to Las Vegas.
It is important to note that 154 million Americans obtain health insurance from their employers, and of those, 63% are covered by self-insured employers. These are surely not small numbers.
But is Cuba right?
“No,” Darcy Sementi said emphatically as the HLTH audience gathered in the room burst into laughter.
Sementi, who manages health care benefits for all State Farm Insurance employees, spoke on a health care benefits panel moderated by MedCity News just two days after Cuban took the stage.
She added:
“I wish it were as simple as Mark Cuban thinks it is, but it’s far from the reality of the power we have as employers.”
Sementi noted that while State Farm employees number 67,000, even in a geographic area where the company has the largest number of employees, the employee base is still only a fraction of the area’s overall population.
“So there is no employer in any community that has the purchasing power to really make a difference in that community,” Sementi responded.
He highlighted the fact that only a handful of people within State Farm work with health benefits: just seven out of 67,000.
“The focus is the core business,” he declared. “The priority at State Farm is not to disrupt and fix health care or to fix health care in our country.”
But that’s not the only thing Sementi took issue with when it comes to Cuban’s comments.
“We demand transparency,” he declared. “I have a transparent contract with my PBM. Guess what? It didn’t reduce my costs. It just lets me know where the money is flowing and who’s getting what out of the pie. If we’re going to lower the cost of healthcare in this country, someone has to make less money…”
And then he named the two entities he believes are most responsible for runaway health care costs.
“My personal opinion is that pharmaceutical manufacturers – it’s the real cost of drugs that drives up pharmacy costs – and if you compare the profit margins of a PBM to the profit margin of a big pharma, I think you’ll find who is making more money from this deal,” Sementi said. “And the second is health systems.”
One co-panelist, Kristen Strobel, senior director at BD (Becton Dickinson), agreed “150,000 percent” that Cuban is wrong about how much power employers wield, but acknowledged that “there are opportunities for us to step up the change to implement creative solutions within our ecosystem that can help us navigate and reduce spend and impact the market.”
BD has 23,000 employees in the United States and many of them are in the manufacturing sector.
People who could make “$55,000 a year on average, single-income households living in the most rural areas of the country. Nebraska,” Strobel said. “We have a huge concentration in Nebraska. Can we use that to navigate the change in healthcare…? No. Why? Because there are no providers in Nebraska. It’s not in my job description to build a network in Nebraska. So that’s how I would respond to [Cuban] to say, ‘Show me how to do it.’ … I can’t force doctors to work in Nebraska if they don’t want to.”
Christoph Dankert, network director at Carrum Health, a company that connects employees of self-insured employers with a variety of specialty care, said employers are under tremendous pressure due to rising health care costs and the two ways to address this challenge are to create competition among providers and establish the right financial incentives.
“You want the best suppliers, the highest quality, and then you want them to compete on price,” Dankert said.
BD has adopted Carrum Health solutions to reduce the costs of specialty care.
He added that in a place like Nebraska it’s “not as bad as you think,” noting that Carrum Health goes into any market, crunches the numbers and performs data analysis to identify who the highest-quality doctors are in that area. Once this is done, a conversation begins about how these higher quality doctors who have good results are paid for their services. That may mean eliminating any prior authorization requirements that providers despise, he said.
“I’m not going to police you and look over your shoulder and tell you, ‘You can do this now, but no, no, you can’t do that now,’” Dankert declared.
The self-insured employer can then pay a lump sum for the episode of care and then the provider can determine the best path forward.
“It turns out that when creativity is unleashed, when suppliers are allowed to move freely and the right barriers are put in place, that’s when great things can happen,” Dankert said. “That’s when you can reduce costs: in surgeries, you can reduce costs by 45%.”
Like Carrum Health, Lantern takes a similar approach by finding the best providers in the area and then connecting employees of self-insured employers with them. Dickon Waterfield, the company’s president, said he fundamentally believes employees don’t want to travel for care. Waterfield explained that Lantern reviews doctors very closely, looking at their procedural-level training, their case volumes and other metrics.
“Like Christoph, we thought about creating competition in the local market,” he says. Waterfield also added that the goal should be two-fold: reducing costs for employers but also increasing affordability for members.
Dankert and Waterfield represent companies that focus on reducing costs for self-insured employers, and while their solutions were easily adopted by BD and State Farm Insurance, the reality for them is certainly difficult: Health care costs will rise 9% next year, the highest level in a decade, according to a survey.
Photo: Carrum Health
