Mark Cuban has been railing against self-insured employers for some time, saying they have more power than any politician to change health care. Just look at his tweets to see that he has asked employers to stop letting insurance companies and pharmacy benefit managers decide what they can offer their employees. He exhorted them to “demand transparency and pay a cash price” [for drugs] When will it be cheaper. “
He accused his employer of collusion.
It was a theme he brought up again on the main stage at the recently concluded HLTH conference, which draws many prominent healthcare executives to Las Vegas each year.
Notably, 154 million Americans receive health insurance from their employer, 63% of whom are covered by self-insured employers. These are certainly not small numbers.
But is Cuban right?
“No,” Darcy Sementi said emphatically, as the assembled HLTH audience in the room erupted in laughter.
Sementi, who manages health benefits for all State Farm Insurance employees, spoke on a panel about health benefits hosted by MedCity News just two days after Cuban took office.
She added:
“I wish it were as simple as Mark Cuban imagined, but that's far from the reality of the power we have as employers.”
Sementi noted that while State Farm employs 67,000 people, even in the geographic areas where the company has the most employees, the number of employees is still a small fraction of the region's total population.
“So no employer in any one community has the purchasing power to actually make a difference in that community,” Sementi countered.
She highlighted the fact that only a handful of people work in health benefits at State Farm — just seven out of 67,000 people.
“The focus is on the core business,” she declared. “State Farm’s priority is not to destroy and correct health care, nor to fix health care in our country.”
But that wasn't the only issue Sementi took issue with Cuban's comments.
“We do demand transparency,” she declared. “I have a transparent contract with my PBM. Guess what? It doesn't lower my costs. It just lets me know where the money is going and who's getting what out of the pie. If we're going to lower the cost of health care in this country, someone's got to make less money…”
She then listed the two entities she believes are most responsible for out-of-control health care costs.
“My personal view is that drug manufacturers — the actual cost of drugs drives up the cost of drugs — if you compare the margins of PBMs to the margins of big pharma, I think you'll find who makes more money on the deal. The second one is the health system,” Sementi explained.
Co-panelist Kristen Strobel, senior director at BD, agreed that Cuban's statement about how much power employers have is “150,000 percent” wrong, but acknowledged that “we have opportunities to act around change and implement creative solutions across our ecosystem that can help us navigate and lower spend and impact the marketplace.”
BD has 23,000 employees in the United States, many of whom work in manufacturing.
“People making an average of $55,000 a year, living in single-income households in the most rural areas of the country. Nebraska. We're mostly concentrated in Nebraska. Can we use this to guide changes in health care…? No. Why? Because there are no providers in Nebraska,” Strobel said. “Building a network in Nebraska was not in my job description. So this is how I responded [Cuban] Say, “Tell 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 at Carrum Health, a company that provides a variety of specialty care services to employees of self-insured employers, said employers are facing significant pressure from rising health care costs. Two ways to deal with this challenge are to create competition among providers and implement appropriate financial incentives.
“You want the best, highest quality suppliers, and then you want them to compete on price,” Dankert said.
BD adopts Carrum Health's solution to reduce specialty care costs.
He added that in a place like Nebraska, the situation isn't “as dire as you might think,” noting that Carrum Health goes into any market, crunches the data and performs data analysis to determine who are the higher-quality doctors in the area. Once that's done, the conversation begins about how these high-quality doctors with good outcome benchmarks actually get paid for their services. That could involve removing any prior authorization requirements that providers despise, he said.
“I'm not going to micromanage you and spy on you and tell you, 'You can do this now, but no, no, you can't do this now,'” Dankert declared.
Self-insured employers can then pay a lump sum for the care, and the provider can determine the best path forward.
“It turns out that when you unleash creativity, when you give healthcare providers free rein and put the right guardrails in place, great things happen. That's when you can reduce costs — in surgery, you can reduce costs by 45 percent.”
Like Carrum Health, Lantern takes a similar approach, finding the best medical 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 treatment. Waterfield explained that Lantern scrutinizes doctors' surgical training, caseloads and other metrics very carefully.
“Much like Christophe, we think about creating competition in the local market,” he said. Waterfield added that the goal should be twofold – lowering costs for employers while increasing affordability for members.
Dankert and Waterfield are both companies focused on lowering costs for self-insured employers, and while their solutions could easily be adopted by BD and State Farm Insurance, the reality is hard for them: Medical costs will rise 9% next year, the largest increase in a decade, according to one survey.
Photo: Callum Health
