By Sar Ruddenklau
In many ways, the US healthcare system — the world’s third-largest economy — is a great success. It has brought innovation in treatments and technologies that are extending lives and improving livelihoods for millions of people, the average lifespan in the US has increased by four years since the early nineties, and fewer people are uninsured than ever before.
Viewed through a different lens, however, the system is catastrophically failing Americans. Far too many measures of health have seen barely noticeable improvement, quality remains uneven, and the cost of care has become not just unsustainable, but intolerable for employers, purchasers, and families alike.
Consolidation of providers and services and a lack of access to and transparency of data is leading to employers being forced to face an impossible puzzle of finding a way to pay for 20%+ premium increases without shifting the burden onto employees or worse, laying them off.
Employers used to budget for 2-3 cases at around $100k per year, now 6-8 at $500k is the average. A show of hands during one panel revealed around one-third of attendees bearing $1million claims — one reporting that amount for a single drug — several reporting $2million claims, and one reporting a shocking $7million claim. One panelist calculated that, for less than a single high-cost claim her company had last year, she could send both her teenage daughters to the most expensive 4-year college in the US, then to law school.
The reasons behind skyrocketing claims costs are varied: health drivers like obesity, diabetes, and delayed care post-pandemic leading to more advanced disease are common, while industry practices can exacerbate and inflate price tags. A study by the Dallas-Fort Worth Coalition revealed that 95% of hospital charges have errors, while strategies like intermediary rebate focus leads to a capture of specialty drug spend rather than management of overall costs or patient-centered care.
However, panelists had success stories in mitigating and, in some cases, recovering funds from incorrectly billed high cost claims.
One of the most effective ways to keep control of costs is to audit every large claim, both for accounting accuracy and for clinical aspects: whether the care delivered is appropriate, if the code it was billed for is correct, and whether care was actually delivered.
While the panelist who put forward this strategy acknowledged that many employers don’t have the bandwidth or resources to run their own audit, he did encourage attendees to look for a vendor they could work with to share the cost from funds recovered. His company engaged an audit partner in 2021, and since then has recovered almost $14million in fraudulent or incorrect claims, including one duplicative $725,000 bill for the same patient in the same facility on the same dates. Both bills were paid by the BUCA plan’s own TPA without being caught upfront.
The big win: his organization hasn’t seen a raise in premiums in almost five years because they are armed with the right data. His take is that the cost of the external auditor has already paid for itself several times over.
GLP1s entered the conversation in virtually every session at the forum, whether invited in or not. The opinion on whether they should be covered was fairly evenly split, but it was obvious that they quickly have become a top cost driver for employers who do choose to cover them, despite intermittent supply issues.
In order for the headlines that espouse the effects of the drugs on lowering the risk of chronic conditions like heart disease and high blood pressure to be true, the weight loss needs to be maintained forever. Even with relatively short-term data, adherence to GLP1 treatment plans seems to be an issue: one panelist showed evidence that 50% of patients get to 12 months, only 10% make it to 18 months, and most seem to gain any lost weight back after they stop using the drug.
One panelist hypothesised that the side effects of GLP1s seem to be causing their own ripple, with digestive issues seeing a sharp trend upward in clinical and claims data. 10-15 years ago, GI complaints were barely a blip in claims compared with now, where 1 in 4 Americans have made a claim for digestive issues, including 70% of those on a GLP1 regime. A spike in PCP and ER visits for known GI side effects was seen among those in the first few months of their treatment.
Another five-year study cited showed an $85million per year decrease in costs associated with treating chronic disease. That program, however, carried a $900million per year price tag to administer.
So are GLP1s worth it for employers and members? While there’s no question that it’s an impressive class of drugs that leads to real physical and mental benefits of losing weight, plus a viable option to bariatric surgery for many, there was consensus at the forum that there needs to be much more in-depth, long-term research on managing side effects and maintaining weight loss.
The forum offered employers and brokers some meaningful, actionable ways to get control back over their healthcare costs.
The first was simple: proximity matters. People generally don’t want to travel for their healthcare, so employers were encouraged to work with their brokers and advisers to find high-quality, low-cost healthcare in their own community. The case studies presented showed a direct link between increased utilization of preventative care with employers shifting to providers within 30 miles of their main worksite, which in turn led to reduced downstream utilization of high-ticket care like ER and hospitalizations.
Secondly, employers should arm themselves with data, even if it requires being the “squeaky wheel” with vendors and TPAs. Smaller employers and brokers who may feel like they lack the weight to compel TPAs to provide data were encouraged to band together to try to negotiate a data-sharing agreement and not to be afraid to use the f-word: fiduciary. Ask for preventative care utilization data, dig into what off-campus providers a hospital system owns and what they charge, ask providers what they’re doing to control costs rather than shift the burden, and work with your broker, strategy team, and clinicians to find insights and innovative solutions.
Finally, have the courage to try a different approach. Talk to employees about their experience with vendors and facilities, consider dropping any that your people have consistently bad experiences with, and negotiate performance guarantees with new vendors. Use claims and population health data to strategically add or remove targeted point solutions and encourage use with incentives. Ultimately, be transparent with employees with any change: healthcare only works when trust is baked into it.
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