Financial Impact Of Premature Death

Many Americans have a difficult time determining how much life insurance is necessary for their family to be adequately covered.

MetLife completed a survey of surviving spouses several years ago which provides insight into what amounts of life insurance were adequate.

It was found that the premature death of a spouse caused a “major” or “devastating” financial impact according to most surviving families, and that this was attributable to a lack of adequate life insurance coverage:

• More than half of the surviving spouses who received life insurance proceeds described the amount of coverage as “inadequate.”
  

• On average, it took surviving families four to five years to recover financially from the premature death.
  

• The vast majority of surviving families had to make significant adjustments to cope with the financial impact of the death.
  

An ounce of prevention

I was visiting a client yesterday when several employees stopped to visit with me in the lobby. One employee in his early 50's said hello and shared he had just scheduled his annual physical. He told me of one cousin who had recently been diagnosed with early stages of cancer caught during a physical. Another cousin was admitted directly to the ER following a routine physical where after checking his highly elevated blood pressure the nurse called an ambulance. The nurse was amazed the man had been able to walk into the appointment his blood pressure was so high.

Whenever I conduct enrollment meetings I try to emphasize the importance of annual wellness physicals. I suppose my appearance in the lobby yesterday was a reminder to this employee to schedule his own physical. I wonder how many adults in the US could benefit by treating themselves as they treat their children--you know scheduling a checkup around every birthday and getting a full physical? How hard is that?

On Monday one of my clients, lets call him John, called to thank me for prodding him into getting his physical for additional life insurance. His PSA was elevated and his Dr had ignored it but the life insurance company did not and refused coverage until he was examined. MRI showed a tumor and the biopsy revealed prostate cancer. He starts radiation next week and due to being caught early the odds are in his favor.

Last week another client called to tell me his partner and he had decided to go ahead with life insurance to address a business buy-sell problem identified over two years ago. His 51 year old brother in law had died unexpectedly and he found himself scrambling trying to run his own business while taking on responsibility for his in-laws business.

What is it about our nature that requires us to experience a hurricane before we buy flood insurance or a death in the family before we buy life insurance?

A Few Good Fish from last week

Left-My son Brian with a 24' 5.5 lb Speckled trout

Right- My friend Steve with a 27" 6lb Speckled trout.

Tips From an Independent Benefits Consultant

• You have the right to hire and fire your benefits consultant or broker.

One of my customers owns a construction business with several hundred employees. During my initial visit with the owner I discovered they had been told one owner would need to lose weight in order to obtain disability coverage. I pointed out a group LTD plan could be implemented on all 20 salaried personnel for less than the cost of individual disability on the two owners and it come Guaranteed Issue. After being hired I was successful in placing LTD coverage and further reducing a 45% health plan rate increase to 20% with the incumbent carrier. Your customers do not tolerate bad advice from your firm so why not hire someone who focuses on your issues and offers sound counsel?

• Eliminate inefficient insurance costs

Insurance should be secured for catastrophic risks. Many employers continue to fund dental coverage when the annual maximums are limited to $1,000 or $1,500. This is not catastrophic protection and the cost can easily fund a risk that is catastrophic like disability for instance.

• Try Fixing service problems with vendors before Firing Them by dealing with the right vendor personnel.
  

Too many consultants and brokers begin a new relationship by replacing incumbents without any effort to resolve the underlying cause of a service related issue with the incumbent. In a vendor relationship as in a marriage communication is always less painful than a divorce. A competent consultant can often resolve issues with an incumbent thus eliminating a costly and time consuming vendor search and implementation. Several years ago a very large hospital system was facing a mid rate guarantee increase from their group life and disability insurer. After meeting with the employer and their carriers underwriters we were able to eliminate the rate increase altogether for Life and mitigate the needed increase for LTD plan. If we had not sat down face to face with the client and their vendors underwriters an agreement would never have been reached. If you have not met your underwriter face to face how can you have a relationship?

• Align funding, plan design and objectives

Several years ago I met with a customer with several thousand employees had a participating group life insurance plan and a self-funded Long Term Disability plan with an extremely limited benefit offering. The customer hated the cash flow fluctuations inherent with the minimum premium funding arrangement for Life and the FAS 112 exposure associated with the LTD plan.I recommended they needed to take advantage of the fixed cost of a fully insured life insurance plan and shift to a fully insured LTD plan. By changing the funding arrangement the employer was able to save over $100,000 annually while enhancing Life and Long Term Disability Benefits and generating a predictable monthly cost while eliminating future FAS 112 exposure.

• Boost your pharmacy generic utilization rate

Statistics show that only 33% of physicians discuss generic drug options with their patients and patients only bring the subject up 2% of the time to their doctors. It is possible for an employer to secure a PBM which will utilize a simple process and plan design to assure insureds are encouraged systematically to utilize the low cost in therapeutic class generic alternatives. This change alone can take many employers from an 8-10% pharmacy trend to flat or even negative territory.

• Demand relationships not transactions from consultants and brokers

The service models of many intermediaries at many broker and consulting firms is oriented towards their interests versus their clients. This is particularly true at many publicly traded firms where revenue growth and the pressure for billable hours focuses intermediaries on securing new business primarily while seeing that the service staff maintains just enough dialogue with existing clients to retain their revenue. Our clients deal exclusively with a principal who understands their objectives and translates them into plan design and actionable expectations for vendors so that a relationship rooted in performance over time. Our goal is a relationship not a transaction.

Texas Slam

Since I get so many responses for my fish picture at the bottom of the page here are a few recent ones.


Left-Skipjack released

Right-Texas Slam- 18"speckled trout, 24"redfish, 19"flounder.
middle-tailing redfish in 8" of water--look at the upper left and you can see the tails.

Vacation

My family was on vacation earlier this month walking along the beach when we found this bale of marijuana washed up at the waters edge along the Texas coast.

This beach is maybe 5 miles from a major US Coast Guard station. We will all hear a great deal about securing our borders in the coming election. Perhaps we should keep our coastline in mind?

Wellness Plans For Free

www.fitday.com is a great and free site where employees can track the impact of calories they consume along with what they burn

Baseball and Talent

Houston Astro's 1st baseman Lance Berkman was ejected from last nights Astro's-Rockies game in the 8 th inning over a called strike out on a pitch he thought was clearly a ball.

Lance Berkman is known as a very cool customer who rarely displays much emotion so to see the meltdown with him throwing helmets and equipment onto the field was a rarity. I skipped the 9Th but learned I missed a bench clearing brawl which followed Carlos Lee being beaned and manager Phil Garner felt compelled to get his own self tossed.

The appeal of baseball to me is that you can enjoy it so many ways over the course of a season and there is drama in it always;

• Reading the box score to see whose performing (OK)
• Listening to the game on the radio (good)
  
• Watching the game on TV (better)
  
• Watching the game live in person when you are working or supposed to be working and someone else is paying for the tickets (best)
• Second guessing the manager (big fun)
• Watching young talent develop like Hunter Pence (cool)
  
• Second guessing the GM ( we all live for this, right)
  

Next time your gathering with family and friends and someone starts talking about their job candidly and whats really happening on the job stop and ponder how you would react if that employer was your favorite baseball team.

Lets look at companies from an baseball perspective.

• Is the company competing for a pennant?
• Does the team have the talent to compete?
  
• Is talent deployed properly?
• Is the company well managed and well coached?
• Does the team play with passion or are they just mailing it in?
• Would fans buy the pay scale as commensurate with performance ?
• Who is poisoning the clubhouse and whats being done to prevent that?
• Is the team passionate?
• Do people leave when they become free agents or do they choose to stay?
• How is the culture? Really, how is it?
  

Frankly, I think most Astro's fans were relieved to see a spark from Berkman. It shows he still cares and that's important when your team is 9 games under .500.

HR professionals know the tired sports analogy may be the only way to convey quickly to management the merits of a proposal or the case for change.

Fear Not Vendors

Sixty three years ago today Allied forces landed in France to liberate Europe as operation Overlord began. As I write this US forces in Iraq and Afghanistan are without question deployed in harms way. We owe these individual's gratitude and respect for they must manage their own fear to accomplish their job. They faced and still face great danger.

There is a great deal of fear I observe almost daily coming from vendors who are certainly not faced with life threatening danger. As an independent insurance consultant most of the fear I encounter comes from vendor carrier personnel who fear the impact loss of a key account can have on their employment. This fear is very real for many. Shifts to centralized service models by many vendors have stretched many account managers very thin. This has impacted the vendors ability to spend sufficient time with their customers to stay in touch with their employers issues and objectives. The end result of infrequent interaction and common understanding between vendor and customer often leads employers to wonder why they are being ignored. When a problem invariably arises communication is difficult when neither party understands where the other is coming from.

Unfortunately, the culture at some vendors provides legitimate concerns for account managers who know all too well their job is tied to key account retention despite a caseload which affords 60-70 hour weeks just to fight service related fires. It can be a recipe not just for personal unemployment but also for burnout especially when you factor in corporate culture, re-engineering frequency not to mention family obligations--two parents working, single parents, aging family members.

Many vendor service models are predicated on hiring account managers who are fundamentally uncomfortable with conflict. This is a conscious effort to sever a relationship which could be used against the vendor who fears if they were good enough to move the business initially they could do so again to a competitor should they leave. These vendors transition their customers systematically from type A salespeople to support staff. Of course, the sales people are quite adept at communicating and understanding where their prospects are coming from because their income is tied to this skill and they further recognize that conflict presents opportunity masquerading as a problem. Using a DISC variation the sales people are primarily D & I personalities and the service personnel are normally C & S personalities.

In assessing vendors and in addressing service related issues it is often helpful to focus obviously fearful service employees on specific tasks and a time frame for completion. Fear is a palpable and discernible emotion we should all recognize. Understanding where the fear is coming from is essential to properly managing a vendor or even selecting a vendor.

Fear can be a powerful motivator for the soldier attempting to stay alive but can also be usefully harnessed in vendor management when understood and alleviated with a focus on required tasks. At the end of the day fear either works for you or against you and the choice is your own.

Independent Contractors or Employees

There seems to be a great deal of confusion among small business concerning the classification of independent contractors when they are in fact employees in the eyes of the IRS.

Here is a useful IRS site (Wow! thats an oxymoron!) which goes into quite a bit of detail on the matter.

The owl in my planter

A few weeks ago this juvenile great horned owl took up residence in my wifes planter on the front porch. I had a teleconference that afternoon and we watched each other through the front door for about an hour.

Practicing What We Preach

Later today during an enrollment meeting I will without question be approached by a morbidly obese employee inquring about bariatric surgery. It happens every time I visit this company.
In fact it happens today at a lot of company's. My experience in speaking with employees about wellness shows they are interested in avoiding illness but many have simply not made the connection between their behavior and its inherent risks aside from smoking. So when I explain that 70% of health care costs are linked directly to lifestyle choices--what we eat, how much exercise we get, or do not get--I will observe lightbulbs going off in the room.

Personally I am down 23 lbs for the year and have a ways to go on my own goal. My hope is to be able to deliver my wellness message with a before and after picture that encourages behavioral change.

The Cenek Report has an interesting post today on obesity and wellness.

The Drug War

The National Community Pharmacy Association (NCPA) commented on a "bogus"
study released by The Pharmaceutical Care Management Association (PCMA)
in a spin war designed to garner support for H.R.971, the Community Pharmacy
Fairness Act of 2007. See if you can detect the hatred here;

The study paid for by the prescription middlemen lobby claims
that one of the main provisions of H.R.971, which allows
independent community pharmacists to join together in
negotiating lower prescription drug prices,would increase
health care costs.
In response, National Community Pharmacists Association(NCPA)
Executive Vice President and CEO Bruce Roberts, RPh, issued
the following statement:"Pharmacy benefit managers are
continuing to post record profits while many independent
community pharmacists are being driven outof business due
to anticompetitive PBM business practices. The nation's giant
PBMs are the subject of a slew of investigations and
prosecutions for deceptive business practices, but oppose state
and federal efforts to reform their business
practices and bring transparency to the PBM industry.
The statistics cited in the self-serving, self-funded report
are particularly questionable in light of the fact that PBMs
keep their business operations, upon which the conclusions are
based, a closely guarded secret. In fact, the giant PBMs
make much of their profits by taking kickbacks from drug
companies and through interest earned by delaying reimbursements
owed to community pharmacies.
"The report's figures are nothing more than an attempt by PBMs to put
Congress and the public on notice that they intend to hold American
taxpayers hostage if attempts are made to reform the PBMs'
anti competitive business practices.

The NCPA left out price spreads on generics--hey they want in on that action too.
But the NCPA is correct to call out the PBM's for keeping their reimbursement levels to retail pharmacies a secret even from the employers for whom they purportedly work as vendors. There ought to be a law against that and in short order I sincerely hope there is.

So I applaud the NCPA for pointing out the record profits PBM's are enjoying while telling their clients to shut up and take the pain. Employers all have a huge stake in this fight. By the way Iowa has passed a new law which awaits the governors signature which would regulate PBM's.

Dr Spin Medicine Woman

Kudos to Matthew Holt from The Healthcare Blog for turning up this Daily Show Episode where Dan Bakkedahl delves into the the wonderful world of pharmaceutical sales and interviews Miss Florida, who you guessed it, is in pharmaceutical sales

Mental Health Drives Indirect Absenteeism Costs

HR Web Cafe has a great post today on highlighting mental illness as the leading driver of indirect absenteeism costs for employers according to an Employee Benefit News Survey.

Of interest is that only 12% of employers screen for mental health and primary care providers are not compensated in many cases. Compounding the issue is the fact that managers and supervisors are not trained to recognize at risk employees.

Another reason employees may not be utilizing mental health benefits is that managers do not encourage it. Less than one-fourth of the HR-benefits directors surveyed believe the managers in their companies have an overall understanding of the toll mental health takes on a person and family members. Furthermore, only a third say their companies provide managers with education on mental health issues, and only 15% say they train managers in recognizing mental health problems and directing employees to treatment.

PBM Mail Fails Employers

For the last decade PBM's have actively engaged employers to move maintenance drugs to mail ostensibly for the lower costs available via that channel.

Yet a study published in The Journal of Managed Care Pharmacy reveals mail relative to community pharmacy;

1. Generated lower generic utilization rates (37.7% Mail versus 49% Community Pharmacy);
2. Produced higher costs in roughly half the top 20 generic categories;
3. Plan sponsors were found to make higher payments per day of drug therapy for prescriptions dispensed via mail order for many therapeutic categories.
4. One plan sponsor paid higher net costs for generic drugs secured through mail
   

This study was conducted from claims data from two public entities in Texas covering over 637,000 members and 8.7M pharmacy claims. In other words it is we taxpayers in The State of Texas who get to pay for "failed mail". I call it failed mail simply because implementing a process that moves members who desire the low cost in therapuetic class generics could easily take the overall generic utilization rate at least to 49% and likely into the 70% range for some employers.

Assuming mail order is less costly may prove to be an expensive mistake.

Employers with a $250,000 annual drug spend can request a 12 month claim file from their PBM with the right data elements below and know with certainty whether they are getting the best deal.

Would it not make sense to bend your pharmacy trend into a negative direction before all the specialty drugs hit the market?

Cinco De Mayo Manana

For all music lovers my iMix "Cinco De Mayo" has been published in the iTunes Music store at:
http://phobos.apple.com/WebObjects/MZStore.woa/wa/viewIMix?id=253708118

Song Name		Artist
No Ha Parado de Llover		Maná
Corona Con Lima		Larry Joe Taylor
Inna from Mexico		Jack Ingram
Smooth		Santana & Rob Thomas
Corazon Espinado		Santana & Mana
Hey Say May / Guacamole		Reckless Kelly
Sangria Wine (Live Version)		Jerry Jeff Walker

A Tale of Two Business Models

Human Resource Executive recently announced its best of the web including Blog's. HR & Benefits professionals working for employers routinely go to the web for rich content.

In contrast EmployeeBenefitAdvisor.com recently posted a poll on its website concerning blogs as a customer interaction/attraction tool with the following results.

• 97% of respondents do not read any blogs regularly.
• Only 3% of respondents write a blog and 5% were thinking about it.
• 19% of respondents indicated writing a blog had never crossed their mind

Now technology always out pace's pure science but in the era of Google and You Tube it is truly amazing to me so few purportedly independent benefit advisers can go about their business oblivious to all the rich content which is out there in the blogosphere just waiting to be surfed. Yet it does not really surprise me.

Several close friends have asked me why would you want to write a blog and let everyone else know what you think. Well thats easy--most competitors do not even read blogs as evidenced by the poll above.

Several consultants have asked me if the blog has brought in any new business and in that question lies some useful insight into the fundamental problems associated with many consulting and broker business models; There is simply no time for anything but billable hours or achieving revenue growth objectives at too many firms. To focus any energy on ideas with application for employers is the role of the firms thought leaders and the employees job is to sell or bill hours, or spend face time with your key accounts. The firm can produce powerpoint presentations and practice leaders on any number of technical subjects but the average employee interfacing with an employer is often incapable of thought leadership in many fields related to benefits. The firms thought leaders speak to the employees in the same outdated manner Judge Smails used in Caddyshack--"The world needs ditchdiggers too". When top talent is needed at executive levels they buy it or acquire it externally.This business model has outlived its usefulness.

Yet there is a new business model better suited to the information age which can be characterized by the values which guide our interactions with employer clients.

1. Client relationships rooted in performance over time are primary and revenue is simply a product of a job well done. It is secondary.
   
2. Seeking out best in class professionals precludes using just a single firm for all advice.
3. Providing opinions and counsel in real-time via access to Principals.
4. Putting ideas rooted in practical experience into the Blogosphere for employers seeking answers.
5. Aligning specific employer objectives with plan designs and vendors capable of achieving measurable results.

For the life of me I do not see how any professional intermediary could ignore the blogosphere and remain current on the best ideas available. But hey, thats just me and Judge Smails always struck me as a comic figure.

Now For Something Completely Different

This blog is long overdue to recognize some very fine work from several sites that provide rich content and that I read regularly. All of these sites are listed on my resource link to the right.

I have been reading Workers Comp Insider for years and believe it covers safety and Workers compensation better than any other site on the web.

John Mack at Pharma Marketing Blog covers Pharma better than anyone else on the web and does so with a fine sense of humor as exhibited here.

The following sites were recently recognized by Human Resource Executive as best of the web after, ahem, first being listed here as resources.

HR Webcafe is a very welldone blog that covers HR and EAP's in particular very well.

The Cenek Report By Robert Cenek does fine original work by a longtime HR veteran.

John Nail at The Industry Radar provides outstanding News aggregation spanning the entire HR & Benefits space.

I have been reading Benefitslink for years so imagine my smile when shortly after starting this blog I got an email from Dave Baker at Benefitslink complimenting me on my trout at the bottom of the page. There is no better source particularly for qualified plans.

On a lighter note here are a few other good ones.

I do not know how this site missed the HRE but maybe the exec's did not appreciate seeing all the cartoon strips wallpapered over their cubicle farms. Imagine what Scott Adams uncensored would look like? But wait this is it.

I know I bag on The Houston Comical quite a bit but some of their sports blogs like this one are quite good with the possible exception of the writer who covers The Fighting Texas Aggies--can we change that please Comical?

John Kerry To The Rescue With Reinsurance

John Kerry has written an op-ed piece in The Boston Globe outlining how re-insurance is the solution to high health plan costs and the uninsured.

Fully reforming the healthcare system will require that the federal government begin shouldering some of the burden to help alleviate costs. One percent of patients account for a quarter of healthcare costs. By the same token, 2 out of 10 patients account for more than 80 percent of all healthcare costs. . To make healthcare more affordable, there must be a better way to share the immense burden of insuring the chronically ill and seriously injured.

Part of the reason that businesses and health plans today fail to cover their workers is an aversion to risk -- a fear that they will be saddled with a sick employee whose high premiums will bankrupt them. Take a small business with just five employees, for example. If one worker has a major heart attack, the cost of care for the other four shoots up, potentially causing the company to drop health coverage entirely.

But there's a way to combat these costs. And Washington should make employers and healthcare plans an offer they can't refuse.

It's called "reinsurance." Reinsurance means that if employers agree to offer all their workers preventative care and quality coverage, then the federal government will reimburse them for a significant portion of the costs of their chronically ill employees.

It's simple: If the federal government can help small and large businesses bear the burden of cost in the most expensive cases, we'll dramatically improve the health of everyone.

John Kerry has all the answers. Brilliant! A federal re-insurance backstop for health claims over $50,000. The US Treasury(read the US Taxpayer) as the payer as the payer of last resort. And how long before the US government as the re-insurer demands lifestyle adjustments (see my post on Preventable Disease and Health Care Costs ) and puts the IRS in charge of auditing behavior which is unhealthy, or worse you are denied a lifesaving operation because the QALY ROI is insufficient according to Government rationing guidelines?

Pardon my brevity, I think I need to explore a Roth 401(k) and do more research on setting up a cyber bar in the Caribbean where my meager retirement savings may one day provide sustenance free from the coming 80% tax rate that inevitably follows intelligentsia like Mr Kerry writing bills.

Pay or Play Law For City of Houston Contractors

So the City of Houston has passed an ordinance requiring contractors doing $100,000 or more of work with the city to provide health care for workers or pay as reported here by The Houston Comical.

Contractors with more than $100,000 of business with the city must provide their employees with health insurance or pay a penalty fee starting in July under an ordinance approved by the City Council on Wednesday.

The requirement is largely symbolic since most city contractors already provide health benefits, but officials said it will serve as an example for other employers across the city.

``(It) hopefully will encourage other public entities - and I already have my letters ready to go to Metro and to the port - to encourage them to do the same thing,'' said Councilwoman Carol Alvarado, who has pushed the measure for about a year.

``I think we can also use this as leverage to encourage the private sector to do this as well.''

As I read Councilwoman Alvarado's comments I was reminded once again what we should expect from politicians regarding health care and that is political correctness ,and always bear in mind the definition of the term.

"Political Correctness is a doctrine fostered by a delusional, illogical liberal minority, and rabidly promoted by an unscrupulous mainstream media, which holds forth the proposition that it is entirely possible to pick up a turd by the clean end."

Only one council member, Councilwoman Addie Wiseman, opposed the ordinance and hit the nail squarely on the head with these comments;

``This will only add to our costs, and the taxpayers will be paying,'' Wiseman said. ``We have no business telling businesses how to conduct their business.''

So in a week where Hugo Chavez took steps to nationalize the property of Houston Based Conoco Phillips we have more May Day symbolism from The City Council of Houston. Ah, the power of incrementalism. How long before health care becomes a basic human right in America--I bet its number 11 on this list by May 1, 2008. I think Howard Dean sees a voting bloc here.

Hearts or Minds

I have written about the hiring practices of Pharmaceutical Companies in A Picture is Worth 1000 words and Prilosec OTC, Wine & Cheese.

A Hat tip to Joe Padua at Managed Care Matters for providing details on a 21 year old pharmacy rep in South Florida without a degree yet but with the title of Miss FHM 2006 whose picture I have included here.

So now I have another image for use in enrollment meetings to illustrate how certain drugs come to be commonly prescribed and trust me the employees get the picture immediately as to what is really happening.
You really cannot make this stuff up.

The Big Lie

I ran across this explanation last week from the Kaiser Foundation on pharmacy trend and am reprinting it in full below to expose its true nature as pure cow dung.

Daily Health Policy Report

Prescription Drugs | Prescription Drug Spending Growth Rate Expected To Increase, Report Finds

[Apr 26, 2007]

Prescription drug costs increased at a slower rate in 2006 than in 2005, but the growth rate is projected to increase in 2008 and 2009 because of fewer generic drug releases and higher spending on specialty drugs, according to Express Scripts' annual drug trend report, the St. Louis Post-Dispatch reports. The report, released on Wednesday at the company's annual Outcomes Conference in St. Louis, examines data from its three million members to estimate national prescription drug costs. Express Scripts found that drug prices rose 8.2% in 2006, compared with 9% in 2005. The report projected that prescription drug spending would increase at higher rates in 2008 and beyond, according to the Post-Dispatch. Express Scripts attributes the future higher growth rates to fewer blockbuster drugs losing patent protection in 2008 and 2009. In 2006, several blockbuster drugs went off patent and lower drug spending resulted from patients switching to generics. In addition, because companies have launched aggressive campaigns to encourage patients to use generic drugs, much of the costs savings already have been realized, according to Tim Simpson, a principal at Mercer Human Resource Consulting. The report also found that certain drugs had higher levels of cost growth in 2006, including medications to treat diabetes, which experienced a 15.5% growth -- the second year of double-digit increases. Express Scripts expects the costs of diabetes medications to continue to grow at double-digit rates for the next four years, according to Julayna Meyer, vice president of trend management for the company. Spending on specialty medications -- high-cost, often injectable drugs -- is experiencing the fastest growth rate. Spending on those drugs is expected to reach $99 million by 2010, nearly double the $54 million spent in 2006. One in four dollars of prescription drug spending will go toward specialty drugs by 2010, Express Scripts predicts. Express Scripts CEO George Paz said employers could use the same cost-control measures on specialty drugs as are used on traditional drugs to limit spending (Feldstein, St. Louis Post-Dispatch, 4/26).

On the surface you get the distinct impression that there is absolutely nothing which can be done to mitigate rising drug costs and for corroboration we have evidence from Express Scripts' annual drug trend report as well as from Tim Simpson, a principal at Mercer Human Resource Consulting.

Since no big drugs are moving from brand to generic in 2007 we all just have to suck it up and take it. What is worse we are told is that by 2010 specialty drugs will account for $1 out of every $4 spent on prescription drugs. Well BOHICA! Think of employers across America struggling to manage their health care spend while standing up, because the pain when they sit is too great. What an utter load of excrement. There is quite a bit employers can do to whip this problem.

• The truth of the matter is that employers with a drug spend of at least $250,000 annually can adopt a plan design which encourages members to request the low cost in class generic because if they do the co-pay is zero.
  
• You need a PBM with a bullet-proof process to move your population into the low cost generic in therapeutic class.
  
• You need to negotiate the right to audit claims to make sure you are not subsidizing a huge generic mark-up like those I mentioned here.
• You need to understand plan design can change behavior which can reduce cost and higher admin fees for a truly transparent PBM are more than offset by lower claims costs as I wrote about in Lowering Rx Co-pays Produces Big Savings.
• You need to internalize that project driven consultants are transactionally oriented and in many cases may be using the same PBM RFP Template in Word and doing a find & replace all for your companies name and emailing it to CareMark, Express Scripts and MEDCO.
• If you let your PBM set your formulary you might not sit comfortably for some time.
• If your experience relative to pharmacy trend is reminiscent of Bill Murray's Groundhog's Day Movie you may need a new PBM or a new consultant or both.
  

The big lie IMHO is that some PBM's and Consultants enrich themselves while purportedly acting in the best interest of the employers which pay their bills. Unfortunately, the application of standardized project plans and workflows coupled with the insatiable quest for billable hours at transactionally driven consulting firms produces this behavior. Throw in overworked analysts skilled at data mining but lacking in specialized pharmacy experience familiarity or real world experience interacting with employees--you see consulting firms do not do enrollment meetings, they have call center and online web enrollment personnel for the transactional work that does not pay $500 per hour--and there you have it. Finally, if you ever really solved the prescription drug trend problem where would new revenue for PBM's or all the new projects for consultants come from?

At a deeper level, astute HR and Benefits personnel may want to ask whether you can ever obtain solutions to employee benefit cost problems from employees at a consulting firm. In the US market for professional services, the best professionals are principal owners not employees and this is true of attorneys, physicians, geologists, engineers, bankers and employee benefit consultants. As owners they can focus on working for their customers not on growing their departments fee revenue by 20% annually to meet Wall Street's earnings expectations.

Price Swings for Generic & OTC Drugs

Yesterday driving to an enrollment meetings I notice the Claritin advertised for $17.99 for a 30 day supply at Walgreens. A Froogle search after stopping shows a 600 day supply is available for $32.70 with shipping included.

The WSJ Health Blog recently pointed out the wide swings on the generic version of Ambien.

A Rite Aid spokesman tells Health Blog that generic Ambien will be available chain-wide today. A 30-pill supply of both the 5 milligram and 10 milligram doses will retail for $124.99. That’s a hefty markup over the wholesale prices–ranging from $9.74 to $25.01 for 100 tablets–that Health Blog found Tuesday. The margins on generics make them among pharmacies’ most-profitable lines of business.

Drugstore.com will be offering the generic sleeping pills as early as next week. The Web site partners with Rite Aid and handles the pharmacy chain’s online prescriptions. Prices are likely to be in line with store prices, the Rite Aid spokesman says.

For those not too exhausted to hunt for a bargain, online pharmacy RxUSA.com is offering a 30-day generic supply of the 5 mg dose for $15; the 10 mg dose is $19.50.

Obviously it pays not to be too exhausted to search for lower costs.

It's The Thought That Counts

In a "largely symbolic" move The City of Houston has decreed a pay or play health plan for contractors doing business with the city as detailed here in The Houston Comical;

In an effort to encourage more employers to provide health insurance, Mayor Bill White proposed a plan Tuesday that would require about half the city's contractors to offer health benefits to employees or contribute to a fund that would help cover the costs of medical care for the uninsured.

The proposal, expected to be considered by the City Council today, is largely a symbolic move since most city contractors already provide workers with insurance. But it sets an example, White said, that he hopes other public and private employers will follow.

"If enough employers did this, we would create a fund that could be used to make health care more accessible to the residents of Houston and to defray some of those costs that we are currently encountering in our emergency rooms because of the uninsured," he said.

I must give credit to the comical for at least inferring that many contractors will simply;

1. Stop bidding on City contracts and stick with private sector jobs ;
2. Build the cost into their contracts on a cost plus basis;

Yet one would have to be obtuse to miss those points, no?

The good news is Harris County collected $22M from Big tobacco so hopefully the new smoking ban will not inhibit future health care for all in the Bayou City.

HIPAA ,ADA, Cho Seung-Hui & Unintended Consequences

Walter Olson has written a lucid account of the role privacy laws like HIPAA and others contributed in preventing VA Tech authorities from acting to avoid the recent shooting. It is worth two minutes of your life to read it here.

Walter Olson edits two fine blogs Overlawyered.com and PointOfLaw.com and is a senior fellow at the Manhattan Institute

File this one under unintended consequences.

In a way it is akin to all the employers trying to engage their workforce in a serious good faith wellness effort who are hindered by ADA & HIPAA and bad thoughts of the EEOC in your workplace asking "What were you thinking?" So you water down the effort to keep the lawyers and Fed's out of the benefit department. Yet the whole time you must ask whether the intent of the ADA & HIPAA was to prevent making a member conscious of what they are at risk for absent an intervention? I mean a disability is imminent from a cursory scan of a lot of pharmacy records in many cases not to mention the Health Risk Assessment right? How Ironic. The Americans With Disabilities Act actually results in more disabilities. Unintended Consequences.

I can almost picture Ronald Reagan whispering, "I Told Ya."

Dealing with a Pain In The Butt

Life is short. I refuse to handle customers who are abusive or rude. I just fired a prospect who was both in every interaction to date. I feel much better now thank you.

Depression Untreated Got EAP?

On the heels of the VT shootings Houston has seen murder suicides at Johnson Space Center last Friday as well as another murder suicide at an upscale apartment complex yesterday.

On a personal note my own 6 year old niece was spending Sunday evening with her nanny when the nanny's spouse attempted suicide. He had been depressed recently.

60 Minutes ran a very interesting piece Sunday night highlighting similarity between school shooters and presidential assassins.

As 60 Minutes noted;

"With the school attackers that we studied there’s no profile, there’s no set of demographics that they share. But there are certain behaviors that they undertake," Georgeann Rooney, a threat assessment specialist at the Secret Service, tells 60 Minutes.

Behaviors that, she says, are like those of assassins. "This isn’t an individual who just snaps and wakes up and decides they are going to attack their school. There’s a planning process," Rooney says. "This planning, a lot of times, if you know what to look for it can be detectable."

And one theme they detected was bullying: two-thirds of the school shooters were victims of bullies. "They'd call you gay, call you stupid or fat or whatever. Kids would sometimes throw rocks at me and push me and kick me and hit me and stuff like that," Luke Woodham [school shooter]told researchers.

The Secret Service research reads like a road map to the mind of Virginia Tech killer Seung-Hui Cho; he mentioned suicide to others, and he planned for months, buying one of his guns nearly three months before the attack.

HR & Benefit managers are frequently challenged to justify the ROI associated with EAP programs. Yet after every tragic event we are faced with evidence friends, families and co-workers were often aware of a problem manifested in behavior.

Murder is the Number One cause of on-the-job death for women in the workplace and 20% of those women, on average, are murdered by their partner at the workplace (Bureau of Labor Statistics, 1993). Here are some tips for managers and supervisors to make your workforce safer

The Rewards of Being Nice

At a TD Club meeting many years before his death, Coach Paul "Bear" Bryant told the following story, which was typical of the way he operated.

"I had just been named the new head coach at Alabama and was off in my old car down in South Alabama recruiting a prospect who was supposed to have been a pretty good player and I was 'havin' trouble finding the place.

Getting hungry I spied an old cinder block building with a small sign out front that simply said "Restaurant."

I pull up, go in and every head in the place turns to stare at me. Seems I'm the only white 'fella' in the place. But the food smelled good.

So I skip a table and go up to a cement bar and sit. A big ole man in a tee shirt and cap comes over and says, "What do you need?" I told him I needed lunch and what did they have today?

He says, "You probably won't like it here, today we're having chitlins, collared greens and black eyed peas with cornbread. I'll bet you don't even know what chitlins are, do you?"

I looked him square in the eye and said, "I'm from Arkansas , I've probably eaten a mile of them. Sounds like I'm in the right place." They all smiled as he left to serve me up a big plate.

When he comes back he says, "You ain't from around here then?"

And I explain I'm the new football coach up in Tuscaloosa at the University and I'm here to find whatever that boy's name was and he says, yeah I've heard of him, he's supposed to be pretty good. And he gives me directions to the school so I can meet him and his coach. As I'm paying up to leave, I remember my manners and leave a tip, not too big to be flashy, but a good one and he told me lunch was on him, but I told him for a lunch that good, I felt I should pay.

The big man asked me if I had a photograph or something he could hang up to show I'd been there. I was so new that I didn't have any yet. It really wasn't that big a thing back then to be asked for, but I took a napkin and wrote his name and address on it and told him I'd get him one.

I met the kid I was 'lookin' for later that afternoon and I don't remember his name, but do remember I didn't think much of him when I met him. I had wasted a day, or so I thought.

When I got back to Tuscaloosa late that night, I took that napkin from my shirt pocket and put it under my keys so I wouldn't forget it. Heck, back then I was excited that anybody would want a picture of me. And the next day we found a picture and I wrote on it, "Thanks for the best lunch I've ever had. Paul Bear Bryant."



Now let's go a whole 'buncha' years down the road. Now we have black players at Alabama and I'm back down in that part of the country scouting an offensive lineman we sure needed. Well, he's got two friends going to Auburn and he tells me he's got his heart set on Auburn too, so I leave empty handed and go on to see some others while I'm down there.

Two days later, I'm in my office in Tuscaloosa and the phone rings and it's this kid who just turned me down, and he says, "Coach, do you still want me at Alabama?" And I said, "Yes I sure do." And he says okay, he'll come. And I say, "Well son, what changed your mind?" And he said, "When my grandpa found out that I had a chance to play for you and said no, he pitched a fit and told me I wasn't going nowhere but Alabama , and wasn't playing for nobody but you. He thinks a lot of you and has ever since y'all met."

Well, I didn't know his granddad from Adam's housecat so I asked him who his granddaddy was and he said, "You probly don't remember him, but you ate in his restaurant your first year at Alabama and you sent him a picture that he's had hung in that place ever since. That picture's his pride and joy and he still tells everybody about the day that Bear Bryant came in and had chitlins with him. My grandpa said that when you left there, he never expected you to remember him or to send him that picture, but you kept your word to him and to Grandpa, that's everything. He said you could teach me more than football and I had to play for a man like you, so I guess I'm going to."

I was floored. But I learned that the lessons my mama taught me were always right. It don't cost nuthin' to be nice. It don't cost 'nuthin' to do the right thing most of the time, and it costs a lot to lose your good name by breakin' your word to someone. When I went back to sign that boy, I looked up his Grandpa and he's still running that place, but it looks a lot better now; and he didn't have chitlins that day, but he had some ribs that 'woulda' made Dreamland proud and I made sure I posed for a lot of pictures; and don't think I didn't leave some new ones for him, too, along with a signed football. I made it clear to all my assistants to keep this story and these lessons in mind when they're out on the road. And if you remember anything else from me, remember this - It really doesn't cost anything to be nice, and the rewards can be unimaginable."

Coach Bryant was in the presence of these few gentlemen for only minutes, and he defined himself for life, to these gentlemen, as a nice man.

Regardless of our profession, we do define ourselves by how we treat others, and how we behave in the presence of others, and most of the time, we have only minutes or seconds to leave a lasting impression - we can be rude, crude, arrogant, cantankerous, or we can be nice. Nice is always a better choice.

Promises Broken In California

The LA Times is reporting The California Medical Association and The California Hospital Association are both suing Blue Cross of California for failure to reimburse for health care services rendered for insureds whose individual health policies were subsequently rescinded following treatment due to fraud on the part of the applicant.

Trying to buy individual health insurance is akin to seeking credit; When you really need it, you just cannot get it.

The Real Story of The Uninsured in Texas

The Houston Comical treated their readers to a page one story on the uninsured in TX. Here are a few of the facts presented.

WHO ARE THE UNINSURED?

The Texas Health Institute, a nonpartisan health advocacy group, described them this way in a report that was released in January:

• They work. At least 72 percent live in households where one or more family members work full time.

• They are young. Twenty-three percent are children, and an additional 36 percent are between 18 and 34.

• They are not all poor. Forty percent of families without coverage have incomes of $40,000 a year or more.

• Geography matters. Almost half of the uninsured live in Texas' five largest urban centers, and Harris County leads the pack with about 1.1 million, according to state estimates.

• Ethnicity matters. Hispanics are three times more likely to be uninsured than whites; blacks are twice as likely.

Now the Comical neglected to include some of their very telling demographic charts on the uninsured population in this online version but if memory serves me the magnitude of the uninsured Hispanic population in Texas under age 45 is in the neighborhood of 70%.

What they did include is that in South Texas 1/3 of the Hispanic population is uninsured. i would call that figure extremely conservative as noted below.

'Mecca of uninsured'

An even greater percentage of Texans are uninsured in the Rio Grande Valley. In Hidalgo, Cameron and Webb counties, all on the border, roughly one of every three residents is uninsured.

"We are ... the mecca of uninsured in our state," says Linda Villareal, an Edinburg physician and chairwoman of the Rio Grande Valley Health Service District. "We have the fastest-growing population but the lowest in terms of socioeconomics."

Medicaid is far and away the largest insurer here. The South Texas Health System, the largest health care provider in Hidalgo County with six hospitals, reports that 51 percent of its patients in 2006 were Medicaid recipients and only 10 percent had private insurance.

"South of San Antonio, if a doctor doesn't take Medicaid he's going to lose his business," Villareal said.

The Valley also has a large population of people who earn just enough to be disqualified from Medicaid. A family of four, for example, cannot earn more than $20,650 annually to get Medicaid coverage for children older than 6.

And there are thousands who qualify for Medicaid or CHIP but are not enrolled either out of ignorance or because they find it too difficult to keep up with the programs' myriad requirements.

Some legal residents are afraid to apply for aid because they have undocumented family members.

So you have half the the uninsured in TX living in the 5 largest Metropolitan areas and 90 of the patients in deep south Texas' Hidalgo County lack private insurance although 51% have Medicaid coverage. In this area people historically go across the border for free coverage, a point that is not referenced in the article. I know this because I have seen the loss ratios on valley accounts and it has historically been highly profitable for insurers. Why pay a deductible or coinsurance when you can cross the border and get treated for free? It remains to be seen what effect the new passport requirements will have on border crossings on foot. In the 5 largest metropolitan areas of Texas people without coverage regardless of citizenship access free coverage through hospital districts often in the ER. By the way, most of the best paying jobs for unskilled or semi-skilled labor are in the 5 largest metropolitan areas

Now understand I am making no value judgement here but it should be noted that there is a safety net in place. Further, when Comical reporters begin to put out wire service stories like this one its time to call them out on general laziness for not presenting the whole picture. I was once a paperboy for the Comical in my youth and must admit the only redeeming components are the paper today are the comics, the sports page and the obituaries. They certainly do not cover items like this story.

Property taxes are already an enormous political issue in Texas so when Health Care becomes free as a basic human right for all regardless of citizenship, expect more reporting as the masses initiate pilgrimages to Mecca. Be careful what you wish for over at TPM Cafe . How are senior citizens in Texas on fixed incomes going to stomach additional property taxes to fund free or subsidized health care for non U.S. citizens? This is not time for another unfunded federal mandate.

You ain't seen nothing yet folks.

Bid Rigging At Marsh:A Look Behind The Curtain

For anyone interested in getting a firsthand look into the behavior which led to the fraud trial against two executives at Marsh currently underway in NY take a peek at the documents which detail the correspondence between Marsh and its vendors and ask yourself how any of this is in the interest of their customers.

Life, Liberty, Happiness and Health Care

There is an interesting and frequently amusing debate underway at The TPM Cafe discussing Jonathan Cohn's new book Sick:The Untold Story Of America's Health Care Crisis and The People Who Pay The Price.

The discussion has devolved into what you might encounter if you happened to be a physicist who stumbled into a watering hole in Berkeley, CA or Cambridge, MA and overheard a large group of undergraduates discussing the next breakthrough in Theoretical Physics despite no obvious familiarity among most particpants with Calculus or Quantum Mechanics. But, there is the passion of youth and idealism, and fueled by relatively cheap pitchers of beer and the occasional jager-bomb the theories just flow. You notice an older participant guiding the discussion and recall your own undergraduate days when liberal arts professors like Jengs in Animal House provided the cool-aid and had no issues spewing forth theory on subjects outside their field like political reality. That is what the whole discussion reminds me of at TPM except Donald Sutherland has been cloned .

The comments are fascinating. I keep waiting for Mr Hand to show up and ask, "What's wrong with you people? Are you on Dope?" Single payer seems to be the mantra at TPM but no one is discussing the fact that 67% of the US population is either obese or overweight and preventable disease today accounts for 65-70% of our Health Care spend. So how does single-payer change behavior? Or does that come later in phase 2? Who is going to mention the elephant in the room?

Not a single person has mentioned the abject failure of a culture and an educational system which produces citizens who do not seem to comprehend the relationship between their behavior and their health much less the importance of a good education to securing employment with great benefits including Health care and disability income in the event sickness strikes. There are a lot of victims stepping out as policymakers. But I digress and find myself about to quote a great rock n roll song thats not very PC.

I guess I find the discussion somewhat comical only because my clients deal in reality, but I certainly recognize the subject of financial ruin due to sickness is very serious. Reality requires employers to do what they can right now to achieve results. The emphasis is on tactical programs like engaging members to become active participants in their own health and well being. This involves behavioral changes in diet, exercise,pharmacy compliance and disease management among others. Employers have no choice but to act or be acted upon.

Smokers & Sickdays

A study has concluded smokers take an additional 11 sick days per year.

Pay No Attention To That Man Behind The Curtain

Two former executives of Marsh went on trial April 10, 2007 in Manhattan's NY Supreme Court with scheme to defraud, grand larceny and restraint of trade and the details are covered in an AP story by Samuel Maull here.

Their lawyers say the state attorney general's office did not like the way their clients worked but the defendants did nothing criminal.

The prosecution says the defendants and others conspired with brokers and other insurance companies to arrange noncompetitive bids for New York-based Marsh & McLennan's corporate customers from November 1998 to September 2004.

(defense lawyers)...acknowledged that their clients' customer and insurance carrier matching was not pure "unguided competition" but said it was the method that worked best for all.

They said some carriers are not suited to, nor are they interested in, insuring specific kinds of businesses. They also said Marsh helped companies keep a client's business because of benefits to both: There are no gaps in coverage, and there is more stability in premium costs.

They face 25 years if convicted. Whether they are ultimately convicted who knows? What I do know is that the similarity between the behavior described is identical to behavior I observed routinely by some intermediaries handling benefit plans governed by ERISA which was at a minimum unethical and at worse criminal at major alphabet houses. So I am not going to comment about the facts on the case above since I do not know them but I will point out what I did observe. Here are just a handful of examples.

1. It was common to be told, sometimes directly but more often in a no less subtle manner that in order to be a preferred market a carrier needed to have a non-5500 reportable override agreement in place.
2. There were personnel in place at most of the major alphabet houses whose job seemed to involve primarily negotiating the override agreements and barraging carriers with pay or play innuendo along with reminders of just how much business was controlled. In short there was the A list and the B list. Guess who earned most of the business?
3. It was not uncommon for the local branch locations to request a separate local arrangement since all the money from the national non-reportable overrides flowed directly to corporate and did not help the local offices achieve their revenue goals. "Can you help us, so we can help you with your goals?"
4. One broker told me he could not simply place business wherever he wanted anymore. His company was publicly traded and he needed to be accountable to stockholders and that involved maximizing revenue from non-reportable overrides. He needed a level 15% commission plus a level 5% override. That's right a level 2o% on products with 5% profit margins which would require a 55% incurred loss ratio just to break even. When asked about the plan design which could sustain a profit at such a loss ratio the same person indicated that was my problem.
   
5. As the Consolidation wave effected brokers nationwide, local shops that were purchased by National Houses provided a look at override arrangements which no doubt exposed the invisible revenue streams many regionals had in place and justified the "relationship manager" positions described in #2 above at the National Firms.
6. Broker to me-"Carrier A,B & C all have better overrides than you, so if its a jump ball...are you sure we could not beef up the arrangement? I mean you are so close"
7. If conduct was not pure unguided competition would it not logically follow it was patently guided competition?
   

The issue is disclosure. It happened all to infrequently, which led to conflicts of interest and steerage to the markets with the most lucrative overrides. Spitzer had only started chipping away at the tip of the iceberg. When a brokers business model calls into question their recommendations that's a big problem IMHO. But that's just me. Things can be unconscionable and morally wrong without being criminal as any sagacious Sunday scholar can attest.

So lets hear from a few carrier personnel. Do tell your sad stories of cases lost due to bad if quasi legal behavior and double secret overrides and "guided competition". Use the anonymous button if you must.