Mark Cuban has been chiding self-insured employers for a while, saying that they have more power to change healthcare than any politician. One has to only look at his tweets to know that he has asked employers to stop letting insurance companies and pharmacy benefit managers dictate what they can offer to employees. He has exhorted them to “demand transparency and pay cash prices [for drugs] when it’s cheaper.”
He has charged employers of being complicit.
It was a theme that he returned to in his main stage appearance at the recently concluded HLTH conference that draws many prominent healthcare executives to Las Vegas annually.
It’s important to note that 154 million Americans get health insurance from their employers and, of those, 63% are covered by self-insured employers. These are no small numbers for sure.
But is Cuban right?
“No,” said Darcy Sementi emphatically as the gathered HLTH audience in the room broke out in laughter.
Sementi, who manages healthcare benefits for all employees at State Farm Insurance, was speaking on a panel about healthcare benefits moderated by MedCity News just two days after Cuban took the stage.
She added:
“I wish it was as simple as what Mark Cuban thinks it is, but it’s far from the reality of the power that we have as employers.”
Sementi noted that while State Farm employees number 67,000, even in a geographical area where the company has the most employees, the employee base is still only a fraction of the area’s overall population.
“So there’s no employer in any single community that has the purchasing power to truly make a difference in that community,” Sementi countered.
She highlighted the fact that only a handful of people within State Farm work on health benefits — just seven out of the 67,000.
“The focus is the core business,” she declared. “The priority at State Farm is not to disrupt and correct healthcare or to fix healthcare in our country.”
But that’s not the only thing Sementi took issue with when it came to Cuban’s remarks.
“We do demand transparency,” she declared. “I have a transparent contract with my PBM. Guess what? It did not lower my cost. It simply let me know where the money is flowing to and who is getting what out of the pie. If we are going to lower the cost of healthcare in this country, someone has to make less money ….”
And then she named the two entities that she believes is most responsible for runaway healthcare costs.
“My personal opinion is that pharma manufacturers — it’s the actual cost of drugs that’s driving up pharmacy costs — and if you look at profit margins of a PBM compared to a profit margin of a Big Pharma, I think you will find who is making more money on this deal,” Sementi said. “And the second one is the health systems.”
A co-panelist – Kristen Strobel, senior director, BD (Becton Dickinson) agreed “150,000 percent” that Cuban is wrong about how much power employers wield, but did acknowledge that “there are opportunities for us to step up around the change to implement creative solutions within our ecosystem that can help us navigate and drive down the spend and impact the market.”
BD has 23,000 U.S. employees and many of them are in manufacturing.
“Folks that could be earning “$55,000 a year on average, single-income homes living in the most rural parts of the country. Nebraska,” Strobel said. “We have a heavy concentration in Nebraska. Can we use that to navigate 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, chief network officer, Carrum Health, a company that connects employees at self-insured employers to a variety of specialty care, said that employers are under tremendous pressure with rising healthcare costs and the two ways to address this challenge is to create competition among providers and put in place the right financial incentives.
“You want the best, the highest-quality providers and then you want them competing on price,” Dankert said.
Carrum Health’s solutions to lower costs for specialty care have been adopted by BD.
He added that in a place like Nebraska it’s not “as dire as you think,” noting that Carrum Health goes into any market, crunches numbers and performs data analysis to identify who the higher quality physicians are in that area. Once that is done, then a conversation begins about how these higher-quality physicians who have good outcomes benchmarks are actually getting paid for their services. That may involve removing any prior authorization requirements that providers despise, he said.
“I am not going to micromanage you and look over your shoulder and tell you, ‘You can do this now, but no, no you cannot 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 when you unleash the creativity, when you let providers roam freely and put the right guardrails in place, that’s when great things can happen,” Dankert said. “That’s when you can bring down the cost — in surgeries, you can bring down costs by 45%.”
Like Carrum Health, Lantern takes a similar approach of finding the best providers in the area and then connecting employees of self-insured employers to them. Dickon Waterfield, president of the company, said that he fundamentally believes that employees don’t want to travel to get care. Waterfield explained that Lantern reviews physicians very closely looking at their training at the procedure level, their case volumes and other metrics.
“Very similar to Christoph, we think about creating competition in the local marketplace,” he said. Waterfield also added that the goal should be dual — lowering costs for employers but also increasing affordability for members.
Dankert and Waterfield both represent companies that are focused on lowering costs for self-insured employers and while their solutions were readily adopted by BD and State Farm Insurance, the reality for them is indeed difficult: Next year healthcare costs are set to rise 9%, the highest it has been in a decade, according to a survey.
Photo: Carrum Health
