CVS and Caremark under fire on many fronts

Posted via Rx Mole

http://rxmole.com/blog/2010/04/07/cvs-caremark-under-fire-on-many-fronts/

Is the Insurance Company Really Saving Us $$$?

True Story

I am sitting in a meeting with a local hospital.  This hospital is very reputable and ethical.  They do things the right way.  I ask the CEO, “What is my discount if I use [INSERT ANY INSURANCE COMPANY] at your hospital?”  His reply is, “55% discount”.  At this point I am thinking this sounds like I am getting a pretty good deal.  I am getting 55% off the “normal price”.

I then ask this same CEO, “What is my discount if I pay cash?” (meaning pay the hospital without them running my claim through the insurance company)  His reply, “We will give a 60% discount”.

Let me give you a second to process what just happened …..

So if I go through the insurance company my discount is 55%, but if I pay cash then my discount is 60%!!!

So my next question seems logical.  How do insurance companies arrive at the following statement?

“You saved XXX dollars by using our service”

The top number appears to be totally fictitious.  I think the term most insurance companies and even health care providers use is “normal and customary charges”, but how do they arrive at such a number? Look at the following example

You go in for a CAT scan.  For the sake of easy math I will use small numbers.

Insurance Company Model
CAT scan cost = $1,000
Discount = 55%
Your price = $450

Cash Price Model
CAT scan cost = $1000
Discount  = 60%
Your price = $400

OK, so now that I have concluded that the “normal and customary” number is in fact fictitious, what number should I use?  Normal logic leads me to consider the “Cash Price” number.  This is the price quoted to those that don’t have insurance right?

With this said a normal person can easily conclude that it is more expensive to use the insurance company in this example.

Why the health care vote wasn’t true representation

Most you may or may not be aware that the House of Representatives voted on 3/21/10 to muscle a bill through on health care reform.  This bill is,  as President Obama put it, historic.  Historic in that this bill has shown how truly mis representative and misaligned our legislative system really is.

I have posted a few different short posts touching on this topic.  The most recent was called “How much is a ‘YES’ vote worth?” and  “What is the purpose of a representative?“.  Additionally George posted a well worded article on his blog, where he witnessed first hand the back end dealing and special interest influence that is robbing all of us of true representation.

This health care bill is intended to help the 30 million “uninsured” Americans.  I use the quotes around uninsured since in reality none of us are uninsured.  Do you really think that if you go into any emergency room that you will be denied care?  We all have coverage, the true question becomes who pays for it.

Do we all realize that 30 million represents 10% of our population? Why wouldn’t we simply put together legislation that addresses that specific group rather than increase costs for us all?  I am personally in favor of health care coverage for all Americans, as long as it is a system built on personal accountability and everyone pays into it.  I am tired of the “free rides” people continue to get from my tax dollars (that by the way continues to increase each year due to more “free rides” being issued).

All of us have a choice to make our stand on how we feel about this issue.  In 2010 nearly all the House of Representatives and Senate seats are up for re-election.  If you are as fed up as me about not getting true representation in Washington then lets #cleanhouse2010 and send a strong message that enough is enough.

Perhaps a good start would be term limits on all representatives.

How much is a “YES” vote for “health care reform” worth?

I recent colleague of mine was given a suggestion to run for public office and “fix this mess” we have today.  He is very well respected and versed in government and especially health care.  His response via email was enlightening and I would like to share it.  As an aside, the company he references utilizes only an HSA plan for it’s employees.

Dear (you fill in the blank),

Mrs. Howard was my ninth grade civics teacher back in West Virginia.  This was my entry into learning about government.  We learned that the United States was not governed under a true democracy, but by a democratic republic where the people elect public officials that represent the peoples interests in passing and administering laws.

Mrs. Howard taught that the people would elect their representatives to Congress, who would work with other Congressional representatives to pass laws of which the majority of the people would approve.  The implication was that all 435 representatives and senators would be involved in the law making process, and that the laws would apply to all citizens equally.

After watching the Waxman-Marley Bill go through the House and the Senate pass their Healthcare Bill, it has become obvious that Mrs. Howard did not completely understand the process.  Not all the 435 representatives and senators are involved in the process.  It appears that only a few are involved, and those that are receive extremely lucrative benefits for their participation.  Mrs. Howard did not explain political payoffs. Such payoffs were not in our books.  But political payoffs and special deals are now being used more and more.

• For a vote in favor of health care, Florida residents will not lose the Medicare Advantage benefits that other states’ residents will lose at a cost of $3 to $5 billion.
• Senator Mary Landrieu obtained $300 million in Medicare subsidies for Louisiana as a state recovering from a medical disaster.
• Massachusetts and Vermont will receive $500 million and $300 million, respectively, in higher Medicare reimbursements.
• Montana, North Dakota, South Dakota, and Wyoming obtained higher Medicare payments for frontier hospitals.
• Senator Dodd obtained $100 million for the University of Connecticut’s Medical Center.
• For holding the final vote needed for passage, Senator Nelson was able to secure exemption for the insurance fees for Nebraska insurance companies and federal payment for new Medicare coverage for Nebraskans at a cost of $100 million.

All these arrangements mean that any health care reform bill that becomes law will not apply in the same manner to all Americans.  Mrs. Howard never taught us this principle back in civics class.

Unfortunately, if the health care reform bill becomes law, a lot of good work in health care accomplished by our company and the community will be destroyed.

• Our Company has only had one health care premium increase in the past eight years.  Premiums will now rise significantly annually.
• The Health Savings Accounts will be taken away.
• Wellness incentives will be penalized.  The focus will return to entitlement and be taken off of personal accountabilities.
• The freedom for one to personally control the health care monies will be removed.
• The National deficits will soar causing the taxes paid by our company and our employees to soar.
• Jobs will be reduced.
• Local initiatives to help the uninsured will become more difficult.

If Mrs. Howard were alive, I know she would be greatly disappointed with all these happenings.  Everyone in our Company and community that I have talked to about these happenings are very concerned.  Hopefully our representatives will hold to our nation’s founding principles and resist the health care reform bill and the special deals.

I encourage all of you to email or contact your representatives to vote “no” on this weekend’s vote for health care reform.

Cash Price for Healthcare. Can it help you?

As an HR professional working in manufacturing I am constantly looking for better and more efficient ways to help my employees live and work.  The company I work for utilizes an HSA fronted by a high deductible health plan.  This HSA has given our company a health culture of personal decision making and accountability for choices on health care (which we make every day of our lives).  Some of the benefits we have seen are consistent with the recent article posted in the WSJ by Mitch Daniels.  I posted some of these results a fews weeks back on this topic.

Something very interesting I have come across in my recent project called Rx Mole are benefits in requesting “cash price”.   Quite simply this is paying cash for your prescription rather than run it through your insurance company.  At times this can be very beneficial and you can still run the cost through your insurance company on the back end via a manual claim.   Here is an example.

You have a prescription for Nortriptyline.  The cost through your insurance company is $15.  You ask for the cash price and the pharmacist tells you it is $7.  You can pay the cash price (not run it through your insurance company) and then submit a manual claim on the back end and get reimbursed for this prescription.

Why would the pharmacy have a higher price if run through my insurance company?

1) There are a few answers to this.  One possibility is that your plan has a co-pay option that states all prescriptions are $15.  We all naturally assume that this is saving us BIG $$$, however in many cases (especially with generic drugs) the savings are an illusion and actually the insurance company may make money on the deal.  Use this as an example.

Prescription cost = $5
You co-pay = $15
Insurance company makes $10

2)  The insurance company tells the pharmacy at what price they will sell the drug.

This selling price is normally based on AWP or average warehouse price.  The drug companies control this pricing.  A pharmacy in the “network” has no say in what the selling price is set, however if they don’t run the prescription through the insurance company then they can sell the drug at a competitive price.

Understand there are many factors that come into play that I don’t go into here.   At a minimum, I would encourage you to ask for “cash price” the next time you visit your pharmacy to determine if you can get a better deal on your next prescription.

I welcome feedback.

Health Savings Accounts vs. Obama Healthcare Plan

This week an article was submitted by Mitch Daniels, Indiana Governor on the healthcare debate.  The article is well written and discusses the positive outcomes of the state of Indiana utilizing an HSA (health savings account).  Here are a few highlights:

• The HSA option has proven highly popular. This year, over 70% of our 30,000 Indiana state workers chose it.
• Individually owned and directed health-care coverage has a startlingly positive effect on costs for both employees and the state.
• State employees enrolled in the consumer-driven plan will save more than $8 million in 2010 compared to their coworkers in the old-fashioned preferred provider organization (PPO) alternative.
• Indiana will save at least $20 million in 2010 because of our high HSA enrollment.
• In 2009, for example, state workers with the HSA visited emergency rooms and physicians 67% less frequently than co-workers with traditional health care.
• Overall, participants in our new plan ran up only $65 in cost for every $100 incurred by their associates under the old coverage.

The article then answers the question that most critics of HSA’s ask:

It turns out that, when someone is spending his own money alone for routine expenses, he is far more likely to ask the questions he would ask if purchasing any other good or service: “Is there a generic version of that drug?” “Didn’t I take that same test just recently?” “Where can I get the colonoscopy at the best price?”

This is the key to anything we do as a society.  When people have control to make our own choices they are much happier.   Child psychologists use this with little kids.  They tell parents to “give them a choice”.  Even if we are faced with 2 bad choices, at least we had a say in which bad choice we made.

My company has been offering an HSA plan for 4 years. Our results are consistent with those in this article.  We have seen positive trends in our claims and feedback from our employees.  I would note that initially our employees were confused and apprehensive about the plan, but with education and time to learn, I feel confident that our employees would be angry if we took the HSA away from them.

In comparison, how is the state of Massachusetts doing?  A recent article on The DC website gives statistics that are not surprising to those who understand consumer driven healthcare and the benefits of choice.  Here are some of their findings.

• Since 2006, the cost of the Massachusetts insurance program has increased by 42 percent, or almost $600 million.
• According to an analysis by the Rand Corporation, “in the absence of policy change, health care spending in Massachusetts is projected to nearly double to $123 billion in 2020, increasing 8 percent faster than the Massachusetts gross domestic product (GDP).”
• The cost of insurance premiums in the state is the highest in the nation, and double-digit rate hikes are expected again in 2010.
• Physicians for a National Health Plan, a doctor’s group that supports a fully socialized, single-payer health-care system, warned in a February 2009 report that the new system had failed to reduce medical spending, and has subsequently drawn funding away from crucial health resources such as emergency room care.
• In summer 2009, the state announced plans to drop coverage for 30,000 legal immigrants with a goal of cutting $130 million in health-care expenses.

In summary,

One problem the state has faced is that it failed to accurately anticipate the true cost of the program. At the time the program was signed into law, estimates indicated that the cost of Commonwealth Care, which is responsible for the program’s biggest single cost, its health insurance subsidies, would be about $725 million per year. But by 2008, those projections had been revised. New estimates indicated that the plan was to cost $869 million in 2009 and $880 million 2010, an upwards increase of nearly 20 percent.

As I understand it, the Obama healthcare plan uses the template established by Massachusetts.  The question becomes, can we all afford it?

I welcome your thoughts.