STEVENS POINT — After some relief from health cost hyper-inflation during the COVID fall-off in treatments, costs are again rising, self-insured companies in central Wisconsin are revving up a rebellion against the Medical Industrial Complex. Among their tactics they are establishing “BUCA-Free” health plans.
Some 75 companies gathered here last week for a six-hour collaboration on next steps toward market-based, value-driven sourcing of health care. For most of them, that means they have moved away from fully insured health insurance through the BUCAs – Blue Cross, United Healthcare, Cigna and Aetna – to self-insurance.
These rebels see the big insurance companies as being in bed with the big health care corporations, resulting in annual, never-ending stiff premium increases. They have learned that if they assume the risk of health costs, they will manage the risk far better, just like they do in all other parts of their business.
They hedge against the large bills for catastrophic cases by buying stop loss insurance. Companies with as few as ten employees will limit their losses to $25,000, while companies with 500 employees will tourniquet their losses per case to $200,000. They are, in effect, partially insured.
Companies that move to self-insurance feel like they have been liberated. Health costs are invariably number two or number three of the highest costs in their companies. Controlling health costs can be make or break.
Three of the hard-chargers who are leading the way toward the creation of a Wisconsin health care consortium are Walker Forge, the Rice Lake School District and the Team Schierl Companies. Mark Gelhaus, chief financial officer of Walker Forge, summed up the mindset of the rebel companies: “If you are not self-insured, you are more of passenger on the bus. You want to drive the bus.”
Matt Ohrt, a Schierl executive, urged other companies: “Don’t feed the monster.” He cited the costs of MRI imaging as an example. They can run as high as $5000 in an insured plan, versus the $600 his companies pay. “Who pockets the $4400?” he asked.
Pat Blackaller, director of finance and operations, for the Rice Lake School District, said his district has faced some of the highest health costs in the nation and therefore was forced to take charge of its cost structure. He has led the way toward the creation of an employer health care coalition in Wisconsin.
Self-insurance in and of itself is not the answer, but leads to the creation of health plans that revolve around employee behaviors for managing the health of their families and their purchasing decisions when they need care.
Here are some of the major building blocks in the health plan devised by these cutting edge companies:
- Most have on-site or near-site primary care clinic The care there is usually free, because the costs are much lower and early detection of major health issues can head off enormous medical charges. The Rice Lake Clinic is open 40 hours a week and is staffed on staggered shifts with a medical doctor, a nurse practioner and a nurse. Other companies have more modest setups, but all report high employee satisfaction and utilization. Blackaller said, “Our people love it. We treat them like family.”
- The leading companies include a care navigator. The health care world is crazy complicated, so the companies use their clinics or hire a professional to search out the best value for a particular treatment. They have learned that high quality treatments and low prices go hand in hand. They use the navigators to pierce the fog surrounding health care pricing, which almost no individual can hope to understand. Several panelists asked the audience if they would buy a truck without knowing the price. Those kinds of costly transactions without clear pricing happen in health care all day and every day.
- Direct contracts with centers of excellence are part of the new architecture. Blackaller has traveled the state for several years to cut deals at fixed prices with high quality clinics. He now has 60 contracts in his portfolio, with 40 more in the works. Other members of the coalition have been given access to his hard-won deals. As an example, joint replacements can be bought for about $20,000 versus the average prices of $50,000 or much more. Congress has been unsuccessfully fussing around with transparency on health costs for a couple of decades. The fixed prices are the ultimate answer to transparency. There’s one price; that’s it.
- The rebel companies are hiring independent pharmacy managers that bring huge savings. Drug costs are often more than 20% of a company’s health cost bill. The cost-effective managers pass along all drug company’s discounts, rebates and use other channels, such as purchasing from Canada, to sharply lower their pharmaceutical charges. Some on-site clinics have their own pharmacies at much lower costs.
- Outrageous lab costs are also brought under control when sourced through an on-site clinic or through a center of excellence.
- The claims processing done by BUCAs has to be replaced when companies go self-insured. Thus BUCA-free companies have moved their business to independent TPAs (third party administrators). One of their choices has been Prairie States Enterprises out of Sheboygan. The independent TPAs essentially administer company health plans and often include the navigation function.
A lot of learning, risk-taking and bold management has been invested into the radical shift away from standard health care insurance. Several enlightened companies are averaging about $14,000 per employee, compared to national assessments that come in well over $20,000 per year. Milliman Consulting shows the highest number at $28,256 per employee per year in 2021.
Case closed on behalf of companies taking charge of their own health costs.
The battle against out-of-control health costs is far from over. What could be called hyper-inflation has been running at an unacceptable 6-8% per year over the last decade.