HRA and HSA Funding Statistics

There is a great article from the Nov/Dec 2013 Healthcare Consumerism Solutions by the CEO of United Benefit Advisors. The article is based on an employer health plan survey that United Benefit Advisors performs.

Health Reimbursement Arrangement (HRA) Average Annual Funding by Employers:

  • Single Employee: $1,766
  • Family: $3,506

Health Savings Account (HSA) Average Annual Funding by Employers:

  • Single Employee: $574
  • Family: $958

From this information, you can see that employers are willing to fund HRAs with more dollars than HSAs.  One potential reason for that is the great control the employer has over the HRA dollars.  If the employee leaves, the HRA dollars do not go with them and the employee cannot spend the HRA dollars on non-healthcare expenses.

What does this mean for employee benefits professionals and healthcare consumers?

  • In our Compass experience, we have seen more HRA utilization by clients over HSA—and the super-successful company Serigraph that kept its healthcare trend flat for the past 10 years and was the subject of the book ‘The Company That Solved Healthcare’ also uses an HRA, not an HSA.  Additionally, Compass has seen more success with employers that fully fund the HRA at the beginning of the year, rather than over time.
  • Finally, these account-based plans are well within the Obamacare requirements of individual out-of-pocket maxes of $6,350 for an individual and $12,700 for a family.

Click below to access the Compass Overview YouTube Video:






Cleveland Clinic Reports: Arthroscopic Knee Surgery Often NOT Needed in Certain Circumstances

There is an excellent article in the April 2014 issue of the Cleveland Clinic Journal of Medicine entitled “The METEOR trial: No rush to repair a torn meniscus.”

The article describes how many arthroscopic knee surgeries are unnecessary.  Below are some great quotes from the article:

  • “Many patients who have osteoarthritis of the knee and a torn meniscus can defer having the meniscus repaired and undergo physical therapy instead.  If a trial of physical therapy does not help, they can opt for surgery later.”
  • “MRI often incidentally reveals meniscal lesions (knee cartilage damage) in middle-aged and older patients who have osteoarthritis and knee pain.”
  • “The use of knee arthroscopy has increased sharply in middle-aged patients in recent years.  Indeed, this demographic group accounts for nearly half of the knee arthroscopic procedures performed for meniscal tears…”
  • “in a later publication… 146 patients with symptoms consistent with degenerative meniscal tear but no knee osteoarthritis were randomized to undergo arthroscopic partial meniscectomy (knee surgery) or a sham procedure (fake sugery where the patient thinks they had surgery, but they really didn’t).  At 12 months, NO differences were noted between the groups…”

What does this mean for employee benefits professionals and healthcare consumers?

  • Orthopedic surgery and musculoskeletal claims are often a top 3 cost category for employers.  Arthroscopic surgery is a very common outpatient orthopedic surgery that can cost anywhere from $3,000 to $16,000 per surgery.  According to the above journal article, many of those surgeries are no more effective than physical therapy.  Not only is physical therapy much less expensive, but there is not the pain of recovery or risk of surgical infection and complication.
  • Consider putting in place a second opinion program or concierge program for employees to have them check with another orthopedic surgeon to see if surgery is really necessary—it many cases it may not.

Click below to access the Compass Overview YouTube Video:





Mayo Clinic Reports: Rx Prescribing Patterns—48% of People Took Prescription within Past Month

There is an excellent article in Mayo Clinic Proceedings from July of 2013 entitled “Age and Sex Patterns of Drug Prescribing in a Defined American Population.”

The article describes an analysis of medication prescriptions in one community in Minnesota, but also contains nationwide stats and many of the findings are relevant to employers and employee populations as well.

Some of the results may surprise you:

  • 48% of people took at least 1 prescription medication in the previous month in 2008, up from 44% in 2000.  So almost half of America is taking prescription medication and that proportion is rising.
  • The most commonly prescribed drug groups were: (1) Antibiotics (17% of prescriptions), (2) antidepressants (13% of prescriptions), (3) narcotic pain medication (11% of prescriptions), (4) high cholesterol medication (11% of medications) and vaccines (11% of medications).
  • Vaccines and antibiotics were the most common medications for children under age 19.
  • Antidepressants and narcotic pain medication were the most common for young and middle age adults.

If pain is not depression related, it is often musculoskeletal related—i.e. from chronic low back pain, arthritis pain, etc.

What does this mean for employee benefits professionals and healthcare consumers:

  • Depression and pain are significant challenges within an employee population, as is often revealed in the drugs that are prescribed.  I don’t have any silver bullets, but innovative scar-tissue release/chiropractic interventions like Airrosti have been shown to be effective in chronic musculoskeletal pain.
  • In general A LOT of people are taking prescription medication and in my opinion, RX management should not be treated as a silo within a health plan, but rather needs to be integrated in an overall plan to improve quality and lower costs.  Increased use of primary care, value-based benefit design, consumer-directed health plans, price-transparency and step-therapy all need to be integrated from the employee’s perspective to achieve results.  That’s what John Torinus did at Serigraph, and he kept his claims-cost trend flat for 10 years!

Click below to access the Compass Overview YouTube Video:





Legal Liability for ACOs—Who May Get Sued When Employees Go to ACOs

There is an excellent article in the Journal of the American Medical Association (JAMA) from last summer entitled “The Looming Threat of Liability for Accountable Care Organizations and What to Do About It” by H. Benjamin Harvey and I. Glenn Cohen from Massachusetts General Hospital and Harvard.

The article discusses how the competing priorities of an Accountable Care Organization (ACO)—i.e. patient care and cost-containment—may set the ACO up for being sued by patients.  Below is a specific example from the article:

“If a poor outcome occurs in a patient with congestive heart failure (CHF), a plaintiff could challenge an ACO’s more stringent CHF hospital admission criteria, asserting a prioritization of cost savings over patient care.”

The article also discusses an important difference between ACOs and managed care organizations (MCOs), which were in the 1990s and still are today essentially health plans and/or self-funded employers.  The difference is that MCOs are immune from member law suits regarding medical decisions under the Employee Retirement Income Security Act (ERISA) and ACOs are NOT.  Let me repeat, this article is saying that ACOs are not immune from patient law suits, but MCOs are.

Here is a specific quote from the article:

“As agents of cost containment in the 1990s, managed care organizations (MCOs) were subject to a wave of member lawsuits that alleged negligent medical decisions and that were supported by a common assertion that MCOs negligently prioritized their financial success over the health of their members.  However, in 2004, the Supreme Court gave MCOs some immunity against these types of state law tort claims by recognizing federal preemption (i.e. federal law blocked enforcement) of these claims for employer-provided health insurance plans subject to the requirements of ERISA…. Unlike MCOs, however, ACOs will generally not have the benefit of ERISA, which does not cover them; nor are they slated to get comparable federal liability protections.”

What does this mean for employee benefits professionals and healthcare consumers?

  • As ACOs try to financially manage capitated payments, they will have to very carefully navigate the waters of having their patients potentially sue them for possibly withholding care for the sake of cost savings.
  • In my opinion, this Catch-22 for ACOs is all the more reason to promote consumerism vis-à-vis the more ‘social engineering’/capitation approach of ACOs.  Give consumers choice and caveat emptor—buyer beware.  Consumers have to navigate other complex/potentially dangerous situations (buying a home, financial planning, buying fruit from a roadside vendor, going on a safari to Africa, etc.) and there is no centralized entity that is given a capitated dollar amount, which then controls the consumer’s choice.

But that is just my opinion.  I could be completely wrong.

Click below to access the Compass Overview YouTube Video:






McKinsey Reports: 65% of Exchange Networks Either Narrow or ‘Ultra-Narrow’

There is a great article in the March 25th, 2014 issue of Medical Economics entitled “Narrow Networks-Obamacare’s broken promise, and how doctors and patients can fight back”

The article by Keith Griffin describes how insurers have used Obamacare as the excuse to expand narrow networks, which they have been wanting to promote for some time.  Here are some stats from the article:

  • 30% of exchange health insurance plans have narrow networks and 35% have Ultra-narrow networks
  • In October 2013, UHC dropped 2,200 Connecticut doctors from their Medicare Advantage networks—doctors in that state subsequently sued UHC and the case is currently under arbitration
  • The Kaiser Family Foundation found “that patients newly insured by exchange plans are more likely to prefer less costly plans with narrow networks over more expensive networks with broader networks.”

There has always been a tradeoff between choice and cost.  The more choice you want of in-network providers, the more it will cost.  Less choice, less cost.  The pendulum swung in the less choice-less choice direction during managed care in the 1990s.  Then the pendulum swung back to more choice-more cost.  Now the pendulum appears to be swinging back again—not only at the individual level, but at the employer level as well.

What does this mean for employee benefits professionals and healthcare consumers?

  • Health Insurance Exchanges may allow for people to decide on their own how they want to balance choice with cost—rather than having it be decided for them by their employer.
  • Directionally, most people are moving in the less choice-less cost direction.
  • That less choice-less cost direction may mean downward pressure on physician reimbursement and overall provider reimbursement.

Click below to access the Compass Overview YouTube Video:





New York Times Reports: CMS Releases Payment $$$ Paid to Doctors

The New York Times reported in an article on April 9th entitled “Sliver of Medicare Doctors Get Big Share of Payouts” that CMS (Centers for Medicare and Medicaid Services) released their payments to individuals doctors yesterday for the first time.  In other words, data on what Medicare paid doctor-by-doctor in ALL of the US was released for 2012.  The article also contains a link where people can type in individual physician names to see what he or she specifically was paid.

An analysis of the data by the New York Times revealed that a very small fraction of physicians were receiving HUGE payments from Medicare.  To quote the first sentence in the article, “A tiny fraction of the 880,000 doctors and other health care providers who take Medicare accounted for nearly a quarter of the roughly $77 billion paid out to them.”

The article goes on to state that the top 100 doctors were paid a total of $610 million, including one physician who was paid $21 million in 2012 alone.

A follow on article in the April 10th New York Times explains how CMS did not want to release the physician payment data, but only did so after they were sued by the Wall Street Journal and after a judge ruled in the newspaper’s favor.

There is a wealth of data contained in this release by CMS that will give insight into:

  • physician-specific practice patterns
  • hospital and group practice-specific practice patterns
  • geographic practice patterns

Analysis of the data has also revealed that some of the highest paid physicians were also major political contributors.

This CMS release is a real win for transparency.

What does this mean for employee benefits professionals and healthcare consumers?

  • Practice patterns for providers on their Medicare patients is likely similar to their practice pattern for privately insured patients—therefore, this data may be very useful to health plans, employers and healthcare consumers.  It is freely downloadable.

Click below to access the Compass Overview YouTube Video:






CDC Reports: 1 in 25 Patients Contracts Hospital-Acquired Infections During Stay

The Centers for Disease Control (CDC) released results from a study a few weeks ago, which found that 648,000 patients at 183 hospitals that they surveyed had suffered from a hospital-acquired infection. The CDC study is summarized very well in the following Washington Post article by Lenny Bernstein: http://www.washingtonpost.com/news/to-your-health/wp/2014/03/26/one-in-25-patients-has-an-infection-acquired-during-hospital-stay-cdc-says/

The article has a great infographic on how to avoid hospital acquired infections as well

Here are some more stats from the article:

  • Most common hospital-acquired infections are (1) pneumonia (22%), (2) surgical site infections (22%), (3) gastrointestinal infections (17%), (4) urinary tract infections (13%) and (5) blood stream infections (10%).
  • Common germs that cause hospital acquired infections are Clostridium Difficile and Methicillin-Resistant Staph Aureus (MRSA)
  • Blood stream infections have actually decreased by 50% and surgical site infections have decreased by 20% since 2008.

The article has a great infographic on how to avoid hospital acquired infections as well.  Interestingly, the very first recommendation on the infographic is  “Speak Up.”  I have asked healthcare consumers to speak up repeatedly in this blog.  The inertia of substandard care has to–in part–be stopped by healthcare consumers themselves.  Not speaking up, not educating employees to speak up, not educating health plan members to speak up is causing infections and suffering that does not need to happen.

What does this mean for employee benefits professionals?

  • 1 out of every 25 employees that is hospitalized suffers needlessly from an infection that they probably should not have picked up.
  • YOU are paying for an often-times avoidable and unnecessary infection for 1 out of every 25 of your members that is hospitalized.






Lead Story in Sunday NY Times: SMALL Medical Innovations = BIG BIG Healthcare Price Increases

NY Times reporter Elisabeth Rosenthal continued her series of fantastic articles on healthcare costs with this past Sunday’s article “Even Small Medical Advances Can Mean Big Jumps in Bills.”

The article describes how new medical devices and medications have dramatically increased the costs for chronic medical conditions like diabetes and rheumatoid arthritis.  Here are some statistics from the article:

  • Prescription drug costs for diabetes have increased over 400% to over $2,000 per healthcare consumer with diabetes per year.
  • Treatments for diabetes cost $200 billion in 2012—7% of TOTAL spending on healthcare in US.
  • Test strips for diabetes cost pennies to produce, but cost $1.50 per strip for healthcare consumers, who may use up to 5-10 strips per day.
  • 3-Hour outpatient infusion of Remicaid—a medication used to treat psoriatic arthritis, rheumatoid arthritis and Crohn’s Disease—costs $133,000 at NYU Hospital.  At a nearby hospital, the same infusion costs $19,000.

One physician in the article describes many of the advances that are used to justify these higher costs as “Wasteful.”

What do all these expensive treatments for chronic conditions mean for employee benefits professionals and healthcare consumers?

  • More aggressive application of step therapy and precertification may be necessary to curb this ‘Waste.’  Many have already seen this trend begin and it is likely to continue and expand.
  • Accordingly, there will be more ‘rules’ around what medications can be used and when—sounds a lot like Managed Care.  The question is—will the healthcare consumer and physician backlash that occurred in the 1990s against managed care happen again this time?  In many ways the tight labor market of the late 1990s killed managed care, as employers had to provide ‘richer’ and ‘more friendly’ PPO plans with fewer managed care components to attract and retain good employees.

My own bias is that companies like Compass Professional Health Services make these managed care provisions more ‘employee-friendly’ and therefore, more sustainable by offering a healthcare consumer concierge to hold employees’ hands through the complexity.







NY Times Reports Excellence on Submarines—Can It Be Done In Healthcare?

New York Times columnist Thomas Friedman—probably THE most famous columnist in America—had an excellent article in this past Sunday’s newspaper entitled, “Parallel Parking in the Arctic Circle.”

The article describes Thomas Friedman’s experience spending one day and night aboard a US nuclear submarine beneath the polar ice cap.  If you click on the link above there is a neat moving picture of the submarine breaking through the ice to pick up Mr. Friedman.

There were two particularly inspiring paragraphs in this article

“My strongest impression, though, was experiencing something you see too little of these days on land: “Excellence.” You’re riding in a pressurized steel tube undersea. If anyone turns one knob the wrong way on the reactor or leaves a vent open, it can be death for everyone. This produces a unique culture among these mostly 20-something submariners. As one officer put it: “You become addicted to integrity.” There is zero tolerance for hiding any mistake. The sense of ownership and mutual accountability is palpable.

And that is why, said Adm. Joseph Tofalo, the Navy’s director of undersea warfare, who was also on the trip, “There is no multiple-choice exam for running the sub’s nuclear reactor.” If you want to be certified to run any major system on this ship, he added, “everything is an oral and written exam to demonstrate competency.”

What if we had this type of ‘Excellence’ with doctors and hospitals?  What if we had this type of ‘Excellence’ within insurance carriers?  What if we had this type of ‘Excellence’ within benefit consulting firms and HR departments?  What if I had this type of ‘Excellence’ within my own company?

A culture of Integrity, Ownership, Mutual Accountability and Competency is necessary when operating a complex system where significant consequences–including death—exist.  Sounds a lot like running a submarine.  Sounds a lot like healthcare.

Thank you, Thomas Friedman, for raising the bar.






JAMA Reports: Doctors Should First Do No (Financial) Harm

There is an excellent article from an August 2013 issue of the Journal of the American Medical Association (JAMA) entitled, “First, Do No (Financial) Harm.”

The article discusses how COSTS are an important thing for doctors to think about and discuss with their patients.  The article has some great quotes:

–“Medical bills are now a leading cause of financial harm and physicians decide what goes on the bill.”

–“Just as physicians play an important role in preventing serious infections, physicians can also help patients avoid experiencing financial harm as a result of medical care.”

–“It is increasingly difficult to know which patients will be faced with insurmountable medical bills in the near future.  Since physicians cannot be sure which patients will ultimately have unaffordable medical bills, they should treat all patients as if they could be.”

What does this mean for employee benefits professionals and healthcare consumers:

–This article acknowledges that physicians usually do not appropriately take cost into consideration and that they don’t even know how to take cost into consideration.  So beware.  The doctor most likely does not understand the financial implications of what he or she is doing.

–Speak up.  If you do not speak up, the inertia of the doctor’s lack of understanding may carry you to a place of financial ruin.

–Educate employees on how to be better healthcare consumers.  If employers don’t educate employees, no one will.