Here are a few excerpts from an interview he participated in with the Wall Street Journal.  It was published on May 23, 2012.

WSJ:  What were the biggest disagreements with Walgreen?
Mr. Paz:  I should only be paying for things that matter.  I shouldn’t be paying for things that don’t matter.  And, if Walgreen wants a premium, and they’re not doing anything different, why should I pay them more?  One of the issues was the way Walgreen defined generic drugs.  That would have been a billion dollar effect on my book of business.  That would’ve been a huge windfall back to Walgreen that doesn’t exist in any of my other [pharmacy] contracts.

[Regarding paying a premium, a Walgreen spokesman said virtually all other payers see that we are in line with the market and have us in their networks.”  On generics, the spokesman said that “Express Scripts insisted on being able to unilaterally define contract terms, including what does and does not constitute a brand and generic drug.”]

WSJ:  Talk about the role pharmacists should play in healthcare.
Mr. Paz:  I said one time that it shouldn’t matter who counts to 30 for filling up retail prescriptions, and I caught a lot of grief for that, and probably rightfully so. But that wasn’t the point.  The point is that putting pills in a bottle doesn’t change health outcomes.  It doesn’t matter whether you get your pills at Walgreen or CVS or Kroger.  The reality is:  What happens with that process?  Who is taking care if that patient?  It’s not counting pills and sticking them in bottles.  That doesn’t add any value.

WSJ:  How does Express Script use its pharmacists?
Mr. Paz:  I’ve taken those pharmacists and asked them to reach out to doctors.  Doctors still misprescribe very often.  They leave gaps with care.  People with asthma, they they don’t take their inhalers, they wait until they’re sick, and by then, it’s too late.  Now we’re already running up the bills and going to the emergency rooms.  We’re using our pharmacist to do the things they were educated to do, not to count pills.  That’s not where the value is.

WSJ:  How might the company’s size help drive down healthcare costs for individuals?
Mr. Paz:  Medicare and Medicaid costs are skyrocketing.  The cost of compliance with some pretty tough rules has become very costly.  If I’m small, I have to spend the same amount of money to comply with Medicare, whether I’m 10 members or I’m 10 million.  By creating size and scale, I can spread those covers over more and more people, and therefore lower the costs per person.

There are so many contradictions in these statements I don’t even know where to begin.  First, he talks about paying only for things that matter.  Well I’ve repriced more than enough of Express Scripts claims data to know that his clients are, in fact, paying far too much for things that don’t matter.

And you’re using pharmacists to call doctors at $55/hr?  Primary Care Physicians are extremely busy and it takes several call backs to reach them.  They don’t want too hear anyone tell them about their gaps in care especially a PBM that restricts their prescribing options.  This is a waste of time and money.  Particularly, when you consider the increasing popularity of e-prescribing.  Sounds to me like Express Scripts is searching for a reason to charge more for their service even when it doesn’t add value.  Control what you can control by implementing more compliance packaging, for example.

Furthermore, if Walgreen’s, one of the largest pharmacy chains in the world, statement is even partly true with regard too Express Script’s desire to unilaterally determine contract language then where does that leave a small to midsize company?  No chance to not pay for things that don’t matter is what’s left for smaller companies dealing with Express Scripts.

There is so much incentive provided in this interview for payors to re-evaluate their pharmacy benefit. But, unfortunately most won’t.  Who cares if your PBM account manager and/or consultant is telling you it’s raining outside when really they’re peeing down your back. George Paz said, “our size should help drive down costs for consumers.”  Before the merger was approved it was, “will drive down costs for consumers.”

I’m not saying that ESI doesn’t provide a good service.  Instead, I’m saying that their customers aren’t being educated and as a result are paying far too much for similar services they could get for 20 to 30% less. You could be saying too yourself who am I too judge the CEO of a fortune 50 company. He must be more intelligent, trustworthy and industrious compared to the owner of a boutique PBM, right?  I’ve got two words for you – George Bush.

In-network providers have contracted with the insurance companies to provide medical care at reduced prices.  In exchange, the insurance companies direct patients to the in-network providers. The arrangement increases business for the providers and decreases claims cost for the insurance company.

Treatment out-of-network is a different story. Out-of-network providers have no agreement or incentive to reduce prices and control cost.  At times, however, they may provide a level of care or service that a particular patient needs or wants.  Patients seeking care out-of-network need to be aware of the way their benefits will be calculated.

There is more to it than the out-of-network deductible and co-insurance. Insurance policies have clauses and exclusions against treatment that is not medically necessary.  There are also provisions that the carrier only allows the Usual, Customary, and Reasonable (UCR) charge for a service provided.

Over the last few years, many carriers have begun to define their allowable charge or UCR limit as the amount negotiated with in-network providers. The difference can be substantial. For instance, if the retail price of a surgery is $4000, the discounted amount could be $2500, a $1500 discount.  If in-network benefits are paid at 80%, the patient would owe $500 for the surgery (20% of $2500). A patient receiving care out-of-network would not receive the benefit of the discount.

Out-of-network benefits may be paid at 60%. The patient’s responsibility is 40% of the UCR amount of $2500 or $1000, plus the difference between retail and the UCR amount ($4000 – $2500) or another $1500.  The total owed by the patient would be $2500 on a $4000 surgery.

To avoid surprises, it is important that your employees understand how out-of-network benefits are calculated.  Some providers will agree to write off all or part of the balance.  A financial agreement before receiving services is critical.  After services are rendered, many providers are not willing to discuss discounts.

• Defensive medicine is a key driver of the ever-expanding cost of U.S. healthcare
• Defensive medicine has important effects beyond cost
• Tort reform fails to reduce the practice of defensive medicine

1,440 physicians completed the latest survey. Analysis of the responses indicates physicians do not believe PPACA provides the necessary reforms to alleviate their concerns and they gave PPACA an average grade of D.

Key Findings:

• Nine out of ten physicians do not believe PPACA provides effective reform
• 38 percent believe PPACA did nothing to reform the healthcare system
• 31 percent believe PPACA did not go far enough
• 22 percent believe PPACA went too far and will impede physicians’ ability to practice medicine
• 52 percent of physician respondents believe PPACA will negatively affect their practice through    decreased reimbursements, revenues and longer work days
• 20 percent of physician respondents believe PPACA will positively affect their practice as more patients access care and the number of no-pay cases decreases
• 11 percent of physicians are making changes to their practices in response to PPACA, including EMR / HER implementation, changing careers / retiring, opting out of Medicare / Medicaid

Physicians are equally divided on whether PPACA should be repealed (52 percent in favor of repeal
vs. 48 percent).

HSA Qualified Medical Expenses: Confusion between 502 and 213

Confusion exists about what is a qualified medical expense for Health Savings Account (HSA) withdrawals.  Different government sources refer to IRS codes sections 502 and 213, as do industry sources.  Consumers want a list of qualified medical expenses yet no one, not even the government, is willing to commit in writing.

I will attempt to clarify this confusing HSA issue. The Treasury Department has released guidance for HSA implementation and use.  Treasury Notice 2004-2 was issued to clarify HSA rules and issues. Answer 26 of the guidance states “qualified medical expenses are expenses paid by the account beneficiary, his or her spouse or dependents for medical care as defined in Section 213d but only to the extent the expenses are not covered by insurance otherwise.”

This seems clear enough.  So where does the 502 language come into play? IRS Publication 969 (instructions for HSAs) says that qualified medical expenses are explained in Publication 502. I believe 213 and 502 provide essentially the same guidance to HSA beneficiaries. Internal Revenue Code 213d is the actual code section dealing with the definition of medical expenses. IRS Publication 502 is the tax filing instructions when claiming medical and dental expenses on your tax return. Publication 502 is a summary of IRC 213 and is more simply written.

Hopefully, this provides some clarification on this matter.  The aforementioned is my opinion; I cannot render tax or legal advise.  Please consult your attorney or tax advisor to review the facts and circumstances of your particular case.

The study, published by the nonpartisan Kaiser Family Foundation, said the data illustrated some of the tangible benefits that consumers and employers could expect from the embattled 2010 reform law if it survives two major legal and political election-year challenges.

Under the law, called the Patient Protection and Affordable Care Act, health insurers must spend at least 80 percentage of premium revenues on health expenses and quality improvements. The rule is intended to limit the amount the $850 billion health insurance industry devotes to marketing, administration and profits.

Kaiser, a nonprofit healthcare research group, found that 31 percent of consumers in the individual insurance market could expect to receive a total of $426 million in rebates on 2011 premiums, for an average of $127 per person.

About 20 percent of the insurance industry’s market for large employers could receive $541 million, while more than one-quarter of the small group market that serves small businesses could look forward to rebates totaling $377 million. The rebates are due by Aug. 1 and most of the money is expected to go to employers rather than consumers.

The healthcare law has proved unpopular with many voters and could be struck down by the U.S. Supreme Court by the end of June or repealed next year if Republicans gain control of the Congress and White House in the November election. If the high court overturned the law, insurers would no longer be required to comply with the rebate provision.

A main target for public dislike is a reform provision that requires most Americans to buy private health insurance by 2014 as part of a plan to extend health coverage to more than 32 million people who are uninsured.

Reform advocates insist that much of the public’s dislike for the law stems from a lack of knowledge about the advantages it offers to consumers and others.

Some of the biggest rebate payouts are expected in states, including Texas and Florida, where the reform law faces some of its stiffest opposition from Republican politicians and other conservatives.

“While the health reform law as a whole continues to divide the American public, there are tangible changes taking place that benefit consumers,” said Kaiser President Drew Altman.

“Greater regulatory scrutiny of private insurance is improving value and helping to get excess costs out of the system,” he added.

The Kaiser study is based on insurer filings to the standard-setting National Association of Insurance Commissioners and includes rebates already paid and insurer estimates of planned payments on 2011 premium revenues.

Take the rarely reported issue of  “name inflation.”  There was a time when a platinum credit card meant something.  You were someone who always paid bills on time, made a bit more money then the average consumer and had proven it over time.  It made you feel special. That you were being rewarded for your diligence. Now, even if one has bad credit he/she can qualify for a platinum credit card. The exclusivity of the platinum credit card has been devalued, but some consumers have yet to recognize this trend.  The travel industry is notorious for such hyperbole.

Many hotels no longer offer standard rooms, but instead offer deluxe rooms. How many times have you booked a superior or deluxe room at a hotel only to be disappointed upon check-in?  You walk into the hotel room and the view is of a brick wall. There is hair in the sink and the room smells like cigarette smoke. Webster’s dictionary clearly states that superior means, “above the average in excellence or of higher grade and quality.”  Inflating terms is a tool the travel industry utilizes to lure unsuspecting customers into making a purchasing decision.  The travel industry is not the only participant in this plague.

Next, let’s look at the rarely reported problem of “title inflation.” It seems as though everyone today is an expert, consultant or specialist.  When confronted with an important decision most of us tend to rely on these so called experts to help guide us through difficult processes. Sometimes we rely too heavily on people based solely upon a title. In most professions, excluding the obvious like a physician or lawyer, there is no special training required in order to be labeled as an expert or consultant. The PBM industry is notorious for this sort of title inflation.

I recently spoke with a benefit consultant from a reputable consulting company not to long ago. Our business together involved a client of hers seeking to reduce prescription drug expenses. Upon conclusion of our re-pricing analysis the results were presented and the savings substantial.  She proceeded to ask,”how am I able to determine if a PBM is fully transparent?”

When she posed this question I was both befuddled and disturbed at the same time. Her client is relatively large at almost 60,000 scripts per year and was grossly overpaying for its pharmacy benefit. They are relying on you [firm] to protect them, but you can’t even though you’re an “expert.”

Plan sponsors must make sure to have a basic understanding of pharmacy benefit management.  It takes some time, but not much.  Participate in webinars and read a blog or two for the most recent industry best practices. Then hold your PBM and its employees accountable by testing them.  If they don’t have the requisite knowledge why are you retaining them? In the healthcare industry, digging a bit deeper than all the hyperbole being offered on the surface may very well save your company quite a bit of money and time.

That’s why many insurance companies now provide treatment cost estimators which provide an easy way to see how much certain procedures and services will cost before a visit to a provider. Armed with this information, employees can make cost effective choices and more informed decisions.

Knowing the costs upfront is important due to their responsibility for paying a portion of their health care costs. And it’s helpful for budgeting aspects of their health benefits and health insurance plans, such as health savings accounts and flexible spending accounts, or for seeing how quickly they may reach their deductible and coinsurance limits.

Employees will need to create a login to their insurance company plan to access these tools. Also, it is important to note that some carriers’ sites display rates billed by the providers and others display the contracted, negotiated rates for in-network providers.

As of this posting, Medical Mutual, Aetna, and United HealthCare use the negotiated rates in their illustrations. However, Anthem uses only the rates billed by the provider, which may not provide an accurate picture to employees about their actual costs.

PPACA: What Will the Supreme Court Decide?

In late March the Supreme Court took the somewhat unusual step of setting aside three days on its calendar just to hear the various aspects of the Constitutional challenge to the Patient Protection And Affordable Care Act. The schedule affirms the universal expectation that the court will issue a ruling on the healthcare law in June, at the height of the 2012 campaign. The Supreme Court sessions began with one hour of arguments on whether it can reach a decision on the reform law before 2014.

There is a possibility that a separate federal law will prevent the courts from ruling until the law’s individual mandate has taken effect. The justices then heard two hours of arguments on the core question of whether the mandate is unconstitutional. And, finally, the court heard two and half hours of arguments on two issues: how much, if any, of the law’s other provisions can be upheld if the mandate is unconstitutional, and whether the health law’s Medicaid expansion is constitutional. There hasn’t been another case in recent memory that’s been argued on this kind of schedule. It no doubt reflects the Court’s own recognition of the complexity and importance of the issues involved.

SBC: Summary of Benefits and Coverage

The Departments of Health and Human Services, Labor, and Treasury, have issued the final regulations for the Summary of Benefits and Coverage. To help consumers better understand and compare health plans, insurers and group health plans are required to provide a new, uniform way to show benefits and define health care industry terms. The effective date for providing the SBC begins on September 23, 2012. Of course, the Supreme Court decision could affect this requirement.

The Signed Waiver: Important Protection

Most employers have some people in their workforce that do not need or want benefits for various reasons. Much of the time it is because they are covered by their spouse’s health insurance plan; although, other reasons do exist.

If your company has employees that are eligible to participate in the health insurance plan but have chosen not to for any reason, we suggest that you have them sign a “waiver of participation” form. This form is generally provided by your insurance carrier and normally is required to be completed by non-participating employees.

The signed waiver is your only protection against allegations that you did not offer coverage to an employee. The question of whether or not you allowed the employee to participate can easily be proven if you have a waiver that has been signed by the employee. Of course, this is not an allegation that comes up often. When it does, it is usually because there are outstanding claims and no insurance to cover them. This is a liability that most employers are not interested in self-insuring. A properly signed waiver is the best protection against this happening to your company.

From Wikipedia, “A true duopoly (from Greek duo δύο (two) + polein πωλεῖν (to sell)) is a specific type of oligopoly where only two producers exist in one market. In reality, this definition is generally used where only two firms have dominant control over a market. In the field of industrial organization, it is the most commonly studied form of oligopoly due to its simplicity.”

The merger of ESI and Medco essentially creates a duopoly.  Combined with CVS/Caremark, the nation’s second largest PBM, the two companies account for 73% of all prescriptions dispensed in the USA. Pharmaceutical manufacturers eager to place expensive brand prescription medications onto PBM formularies will experience more pressure from ESI to increase rebates and lower prices.  

All full-time and part-time employees are counted when determining if an employer had at least twenty employees in the previous calendar year. Part-time employees are counted as fractions of full-time employees based on the number of hours worked by full-time employees in that business. For example, if a full-time employee normally works a 6-hour day, then two part-time employees working three hours a day equal one full-time employee. Additional guidance and rules apply.

— Claim Problems —

Insurance carrier claim processors all too often look for reasons to deny a claim. At TransparentRx the mindset is different. We look for ways to get claims paid; thereby, satisfying your employees with the outcome. We don’t win every dispute, but we are successful much of the time. We encourage you or your employees to contact your broker if you’re experiencing claim difficulties.

— Dropping Coverage in Anticipation of Divorce —

Q: If an employee drops coverage on his spouse during open enrollment and the reason he is dropping her is in anticipation of a divorce, what are the requirements of the plan offering her COBRA coverage? Are there employer obligations regarding dropping the spouse’s coverage?

A: Yes. If coverage is reduced or eliminated in anticipation of a COBRA qualifying event, and the individual whose coverage was previously terminated or reduced is considered eligible for COBRA at least as of the qualifying event, the spouse must be offered the coverage, effective at least from the date of the qualifying event, which in this case is the divorce.

The final COBRA rules note that if an employee cancels a spouse’s coverage in anticipation of divorce or legal separation, “Upon receiving notice of divorce or legal separation, a plan is required to make COBRA continuation coverage available, effective on the date of the divorce or legal separation (but not for any period before the date of the divorce or legal separation).

— Small Business Health Care Tax Credits —

TransparentRx thinks it is important for employers to study and understand this section of the code, since some planning opportunities exist that could help them qualify for the maximum credit available. The availability of the Small Employer Tax Credit may encourage some employers to proceed with additional layoffs or terminations and to halt any plans to add employees in order to maximize their tax credit.

Below is a link to the IRS Website regarding the Small Business Tax Credit:
http://www.irs.gov/newsroom/article/0,,id=220839,00.html

In most RFP processes conducted by brokers or HR generalist consultants, they simply send out the request, get the top three bids and ask you, the payor, to select the vendor with the lowest price points.  The big problem here is that in most cases the price points for which your decision is based are often perceived and not real.  In fact the prices are often trivial!  As a payor your questions should be…

There are thousands of insurance sales people in this country. All can sell health insurance products and services to your firm. With that number of “suppliers” to choose from, how do you select the best organization to which you will entrust your employee benefits?

Be assured, TransparentRx, LLC is committed to customer service for our clients and the employees of our clients. Competitors have said, “When it comes to service, we are just like TransparentRx.” We are proud of the comparison but encourage you to dig a little deeper.

How should you evaluate the service attitude of one insurance agency vs. another? Open-ended questions are one of the best ways to get an in-depth look at someone’s service attitude. Some questions you might ask:

• What is the best way for my employee to resolve a claim problem?

• Are employees encouraged to call the agency for personal assistance or to call the insurance company themselves?

• What is the “problem resolution process” in your agency?

• Tell me about your staff.

• One person can only do so much; depth of staff is critical to an agency’s “service attitude”. What is your “commitment to service”?

• Is it written, verbal, or off the cuff? A written Commitment to Clients is one benchmark that an agency takes service seriously.

• Can I have a copy of your mission statement?

• Does the agency mission statement talk about growth and new sales or… focus on an attitude of service?

• What is your hiring process for service personnel?

• How do they uncover the “service attitude” of prospective employees… interviews, personality testing, references, or has it not been thought out?

• What do I do if I have a question about COBRA?