1 you have an ugly baby the unpleasant truth about your company’s health care cost daniel rickard...

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You Have an Ugly BabyYou Have an Ugly Baby

The unpleasant truth about your The unpleasant truth about your company’s health care costcompany’s health care cost

Daniel RickardDaniel RickardMcGriff, Seibels and Williams of Louisiana, IncMcGriff, Seibels and Williams of Louisiana, Inc

© McGriff, Seibels and Williams of Louisiana, Inc

Houston, we have a Houston, we have a problemproblem

The US will spend over 2.8 The US will spend over 2.8 trillion dollars on health care in trillion dollars on health care in 2011. That’s over $8,700 for 2011. That’s over $8,700 for every man, woman and child.every man, woman and child.

We are #1 in dollars spent.We are #1 in dollars spent. ((we’ve yet to crack the top 25 in we’ve yet to crack the top 25 in

qualityquality))

© 2011 McGriff, Seibels and Williams of Louisiana, Inc

What’sWhat’s the problem?the problem?

According to Hewitt, According to Hewitt, employers will spend over employers will spend over

$10,000 on health $10,000 on health insurance on each of their insurance on each of their

full-time employees in full-time employees in 20112011


GDP vs. Health Care CostGDP vs. Health Care Cost A worker today who makes an A worker today who makes an

average of $36,000 annually average of $36,000 annually has a health care cost of has a health care cost of $10,000$10,000

At 4% inflation over the next ten At 4% inflation over the next ten years, that worker will make years, that worker will make $52,000 annually, but the cost $52,000 annually, but the cost of health care will be $26,000of health care will be $26,000


I’m sorry but you’re I’m sorry but you’re disconnecteddisconnected

70% of hypertension in the US is NOT 70% of hypertension in the US is NOT under control using medicationunder control using medication

7 of 10 employees think wellness 7 of 10 employees think wellness programs are a good ideaprograms are a good idea

3 of 10 would participate3 of 10 would participate 82% of CFO’s surveyed said they expect 82% of CFO’s surveyed said they expect

to control health care costs by changing to control health care costs by changing their health care plans.their health care plans.

40% of CFO’s surveyed said they intend to 40% of CFO’s surveyed said they intend to reduce company contributions this yearreduce company contributions this year


How did we get here?How did we get here? 1929 Dr. Justin Ford Kimball, a former 1929 Dr. Justin Ford Kimball, a former

school superintendent becomes school superintendent becomes administrator at Baylor Hospitaladministrator at Baylor Hospital

Recognizing many teachers from his Recognizing many teachers from his former position on the receivable list, he former position on the receivable list, he creates the ‘Baylor Plan’, which at a cost creates the ‘Baylor Plan’, which at a cost of 50 cents buys 21 days of of 50 cents buys 21 days of hospitalization annuallyhospitalization annually

1944 The Baylor plan becomes Blue 1944 The Baylor plan becomes Blue Cross of Texas, with coverage for Doctors Cross of Texas, with coverage for Doctors added later under the name ‘Blue Shield”added later under the name ‘Blue Shield”© 2011 McGriff, Seibels and Williams of Louisiana, Inc

Fast Track to NowhereFast Track to Nowhere 1929 Health Care Invented1929 Health Care Invented 1981 Traditional Health Plans1981 Traditional Health Plans 1988 HMO plans1988 HMO plans 1991 Point of Service Plans1991 Point of Service Plans 1994 PPO (Preferred Provider Plans)1994 PPO (Preferred Provider Plans) 2001 Consumer Driven Plans including the 2001 Consumer Driven Plans including the

alphabet soup (HRA, HSA, CDHP, FSA)alphabet soup (HRA, HSA, CDHP, FSA)


Who’s to blame for high Who’s to blame for high cost?cost?

Insurance CompaniesInsurance Companies Pharmaceutical CompaniesPharmaceutical Companies Medical InflationMedical Inflation Lawsuits/MalpracticeLawsuits/Malpractice Consultants/BrokersConsultants/Brokers


What about the uninsured?What about the uninsured?

In 2010, the uninsured received $130 billion In 2010, the uninsured received $130 billion worth of care.worth of care.

Those costs were covered in the following ways:Those costs were covered in the following ways: The uninsured paid for, on average, more than The uninsured paid for, on average, more than

one-third (37 percent) one-third (37 percent) Third-party sources, government programs and Third-party sources, government programs and

charities, paid for another 26 percent.charities, paid for another 26 percent. The remaining amount, approximately $61.7 The remaining amount, approximately $61.7

billion in 2010, was unpaid and constituted billion in 2010, was unpaid and constituted uncompensated care.uncompensated care.

For family health care coverage, the hidden For family health care coverage, the hidden health tax was $1,400.health tax was $1,400.

For health coverage provided to single For health coverage provided to single individuals, the hidden health tax was $402. individuals, the hidden health tax was $402. © 2011 McGriff, Seibels and Williams of Louisiana, Inc

Bad MedicineBad Medicine

Cost Shifting via plan designCost Shifting via plan design Cheapest Networks/biggest Cheapest Networks/biggest

discountdiscount Lowest price TPA’sLowest price TPA’s Gate KeepersGate Keepers PBM with biggest rebatesPBM with biggest rebates


Reality CheckReality Check

The health care system exists The health care system exists to provide value to it’s to provide value to it’s shareholders.shareholders.

Employers and patients are Employers and patients are not shareholders.not shareholders.


How Healthcare is FinancedHow Healthcare is Financed Behind the curtain…Behind the curtain… Claims payor - Usually a Claims payor - Usually a

TPA(third party administrator)TPA(third party administrator) Provider Networks-Discount off Provider Networks-Discount off

retail chargesretail charges Reinsurance or Stop LossReinsurance or Stop Loss


Heavy PriceHeavy Price Every adult in the US will be obese by 2048 Every adult in the US will be obese by 2048

according to a study by Johns Hopkins.according to a study by Johns Hopkins. Scientist estimate that within 21 years, 1 in 6 Scientist estimate that within 21 years, 1 in 6

health care dollars will be attributable to the health care dollars will be attributable to the obesity epidemic.obesity epidemic.


Metabolic SyndromeMetabolic Syndrome The Cleveland Clinic defines metabolic The Cleveland Clinic defines metabolic

syndrome as having three or more of syndrome as having three or more of the following:the following:

Waistline over 40” for men, 35” for Waistline over 40” for men, 35” for womenwomen

BP over 130/85BP over 130/85 Triglyceride level greater than 150Triglyceride level greater than 150 Fasting blood glucose>100 mgFasting blood glucose>100 mg HDL < 40 mg (men) <50 mg (women)HDL < 40 mg (men) <50 mg (women)


Metabolic SyndromeMetabolic Syndrome

An easier test for metabolic An easier test for metabolic syndrome:syndrome:

When you walk into a room, if When you walk into a room, if your belly enters first you your belly enters first you might have metabolic might have metabolic syndromesyndrome


Metabolic SyndromeMetabolic Syndrome Americans with metabolic syndrome Americans with metabolic syndrome

account for $4 of every $10 spent on account for $4 of every $10 spent on prescription drugs for adults, prescription drugs for adults, according to a study by Medco. according to a study by Medco. Annual prescription costs for people Annual prescription costs for people 20 and older with metabolic 20 and older with metabolic syndrome averaged $4,116 last syndrome averaged $4,116 last year, 4.2 times the average amount year, 4.2 times the average amount spent on drugs for that age group.spent on drugs for that age group.


Teenage ObesityTeenage Obesity 37% of teenagers are overweight or obese 37% of teenagers are overweight or obese

according to CDCaccording to CDC 90% of 8th graders take PE vs. 34% of 1290% of 8th graders take PE vs. 34% of 12thth

gradersgraders Food products account for 26% of TV ads seen Food products account for 26% of TV ads seen

by children age 12-17by children age 12-17 Virtually all products are high in fat, sugar or Virtually all products are high in fat, sugar or

sodiumsodium FAsT FoodFAsT Food Lack of sleepLack of sleep Parents are dietary/activity role models (ouch)Parents are dietary/activity role models (ouch)


Deadly InheritanceDeadly Inheritance One third of children are overweight or One third of children are overweight or

obese according to the CDCobese according to the CDC Non alcoholic fatty liver disease had Non alcoholic fatty liver disease had

never been diagnosed in children until never been diagnosed in children until 19901990

5% of children over the age of five are 5% of children over the age of five are affected according to the American affected according to the American Liver Foundation.Liver Foundation.

They will need a liver transplant before They will need a liver transplant before they are 40they are 40


1199

QuickTime™ and a decompressor

are needed to see this picture.

Better living through Better living through chemistrychemistry

New diet pill causes weight loss in mice.New diet pill causes weight loss in mice. Researchers have found a way to trigger a gene Researchers have found a way to trigger a gene

that causes the body to burn fat—without that causes the body to burn fat—without exercise. Mice tested with the wonder drug not exercise. Mice tested with the wonder drug not only lost weight, but kept the pounds off while only lost weight, but kept the pounds off while eating fatty foods. Needless to say, the same eating fatty foods. Needless to say, the same effect can be achieved through a healthy effect can be achieved through a healthy lifestyle, but who has the time?lifestyle, but who has the time?


2211

Heading home with a little extra…

§After a two year loan to the Smithsonian Institute, Michelangelo’s David completed his US tour and returned to Italy. Proudly sponsored by:

http://67.207.145.155/attachments/2009/2/3/123370241398_ATT.jpg




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Elsewhere around the Elsewhere around the globe…globe…

In Japan, health officials measure the In Japan, health officials measure the waistlines of citizens over 40, those waistlines of citizens over 40, those considered too fat undergo diet considered too fat undergo diet counseling. Failure to slim down leads to counseling. Failure to slim down leads to fines.fines.

New Zealand has rule barring anyone it New Zealand has rule barring anyone it deems obese from immigrating into the deems obese from immigrating into the country.country.

In a Parade magazine survey, 66% of In a Parade magazine survey, 66% of respondents said the US needs a respondents said the US needs a government backed effort to end obesitygovernment backed effort to end obesity© 2011 McGriff, Seibels and Williams of Louisiana, Inc

Cause and EffectCause and Effect The percentage of employers offering health The percentage of employers offering health

insurance has dropped from 69% in 2000 to 60% in insurance has dropped from 69% in 2000 to 60% in 2007 (Kaiser Foundation)2007 (Kaiser Foundation)

Indianapolis based Clarian Health recently Indianapolis based Clarian Health recently announced a penalty program for 2010 for workers announced a penalty program for 2010 for workers who engage in unhealthy habits.who engage in unhealthy habits.

The state of Alabama has given it’s 37,527 The state of Alabama has given it’s 37,527 employees until this last January to get fit - or employees until this last January to get fit - or they’ll start paying for insurance that is now free. they’ll start paying for insurance that is now free. (smokers already have a surcharge)(smokers already have a surcharge)

France is reviewing legislation to increase tax on France is reviewing legislation to increase tax on unhealthy foods from 5.5% to 19.6%. (brie and unhealthy foods from 5.5% to 19.6%. (brie and éclairs excluded, of course)éclairs excluded, of course)


Wellness PlansWellness Plans


What’s that cost?What’s that cost?

No other business in the U.S. No other business in the U.S. performs a service and then haggles performs a service and then haggles over how they get paidover how they get paid

Network discounts cost you big Network discounts cost you big time, and are the #1 factor in cost time, and are the #1 factor in cost increases.increases.


The cycle of network The cycle of network inflationinflation


Dropping the ropeDropping the rope

Replace PPO networks with ‘Cost Replace PPO networks with ‘Cost Plus’ pricing and add filters for errorsPlus’ pricing and add filters for errorsIncludes all providers, eliminates out Includes all providers, eliminates out of networkof networkInsures fair and accurate Insures fair and accurate reimbursementreimbursement


Data Driven Decision Data Driven Decision MakingMaking

Human Risk

2727

Output

Biometric Data

Health Care Utilization

Data

Pharmacy Data

Health Risk Appraisal

Data

Raw Data From Insurer & Employer

Control Panel - Query Data to Identify Cost Drivers

Risk-Specific Money-Saving Solutions

Occupational Risk /

Workers Comp

Data Driven Decision Data Driven Decision MakingMaking

WellnessWellness Number of employers using wellness Number of employers using wellness

programs rose from 62% in 2007 to 71% programs rose from 62% in 2007 to 71% in 2010.in 2010.

7 in 10 employees said wellness programs 7 in 10 employees said wellness programs are a good ideaare a good idea

3 in 10 participate3 in 10 participate Voluntary wellness is highly overratedVoluntary wellness is highly overrated Wellness effects have flattened over the Wellness effects have flattened over the

last five years because focus has been on last five years because focus has been on behavioral change which in many cases is behavioral change which in many cases is temporarytemporary


Best Practices in WellnessBest Practices in Wellness Perform a cultural auditPerform a cultural audit Think long termThink long term Make sure your payor screens for quality, Make sure your payor screens for quality,

fraud and redundancyfraud and redundancy C Suite buy inC Suite buy in Understand the difference between Understand the difference between

cultural morph and behavioral change-The cultural morph and behavioral change-The Hawthorn EffectHawthorn Effect

Ongoing reinforcement strategyOngoing reinforcement strategy Share the successShare the success


Accountability: Connecting Accountability: Connecting behavior to consequencebehavior to consequence

Start thinking longer Start thinking longer term/permanent changeterm/permanent change

Choose your partners accordinglyChoose your partners accordingly Become comfortable with the Become comfortable with the

phrase “Pain creates change”phrase “Pain creates change” Apply your parenting skillsApply your parenting skills The “Trust” factor in WellnessThe “Trust” factor in Wellness


It’s a startIt’s a start Wii game systemWii game system NFL/Play60NFL/Play60 Indiana Tobacco Prevention and Indiana Tobacco Prevention and

Cessation Cessation The Biggest LoserThe Biggest Loser Michigan Blue Health ConnectionMichigan Blue Health Connection International walk to school day- International walk to school day-

October 6October 6thth © 2011 McGriff, Seibels and Williams of Louisiana, Inc

Quality MattersQuality Matters

The Dartmouth Medicare study showed The Dartmouth Medicare study showed that higher quality outcomes resulted in that higher quality outcomes resulted in lower cost.lower cost.

Medicare has also issued a list of “never” Medicare has also issued a list of “never” events, that were a result of provider error events, that were a result of provider error or negligence that are non-reimbursable.or negligence that are non-reimbursable.

If all hospitals performed at the same level If all hospitals performed at the same level as the top five percent in six indices, we as the top five percent in six indices, we could avoid 56,000 deaths annually.could avoid 56,000 deaths annually.

Healthgrades.comHealthgrades.com© 2011 McGriff, Seibels and Williams of Louisiana, Inc

Rx for Health Care CostRx for Health Care Cost Use the appropriate forensic Use the appropriate forensic

analytics to ID cost driversanalytics to ID cost drivers Value Based Insurance DesignValue Based Insurance Design Accurately reprice claims/I.D. errorsAccurately reprice claims/I.D. errors Add filters for qualityAdd filters for quality Never EventsNever Events Carve out post 65 retireesCarve out post 65 retirees


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1 you have an ugly baby the unpleasant truth about your company’s health care cost daniel rickard...

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