How Brokers Can Take On the Medical Industry And Reduce Care Costs

KANSAS CITY, Mo.  – Traditional health insurance as we know it today will cease to exist in five years as rising costs will put it out of the reach of most employers.

That was the word from Daniel Meylan, national sales director at Allied National. He is heading up a panel discussion on how brokers can attack the rising cost of health care at the National Association of Health Underwriters annual convention.

The cost of employer-based health insurance continues to rise, but what is driving those increasing costs?

Eighty-five cents out of every insurance premium dollar goes toward paying claims, and that amount has gone up by 80 to 90 percent over the last five years, Meylan said.

“We will talk about how we are going to take on the medical industry and reduce the cost of care because it’s not insurance premiums that are the problem – it’s the cost of care,” he said. “Traditional health insurance as we know it today will cease to exist in five years.  You have to change how you do things because the traditional fully-insured product is going away.”

What can the person selling health insurance do to bring the cost down? Not much, Meylan said.

“But what they can do is recognize they have to find vendors and products to do the things that are necessary and they have to learn how to implement cost-saving measures on behalf of their clients. We have brokers all over the U.S. who have embraced these concepts.”

The session panelists will look at different approaches to defeating high health care costs.

Bill Ashley of Allied National will discuss self-funding for the small employer. His company deals in level-funded health plans for small groups. This is done in such a way that the liability for the small employer is capped. “So that employer knows what his liability is at the beginning of the year,” Meylan explained.  “It’s also a program that’s medically underwritten, meaning that we set the rates based on the medical conditions of the group. So the better the conditions, the lower the rates; the higher the conditions, the higher the rates.”

Dr. Joshua Umbher, founder of Atlas MD, will discuss physician contracting for primary care services. Umbher’s clients pay him a set fee each month in return for his providing them with all their primary care. Meylan said his company has integrated its level funding plan with Umbher’s program for the past five years, resulting in lower primary care costs.

Sean Kelly, president of Texas Free Market Surgery Center, will discuss his company’s method of keeping health care costs down. The center’s website lists their guaranteed prices for surgeries, which they perform for a fixed amount of money. “Many of the large self-funded employers have been using bundled pricing for years and they are shipping people to centers such as his,” Meylan said.

Gregory Everett, president of Payer Compass, will discuss his company’s role as a third-party administrator paying claims using a percentage of Medicare rates as a reference point. “Instead of going into a network like Cigna or Aetna, they go to the facility and say we’re going to pay you 125 percent of Medicare for physicians and 150 percent of Medicare for the facilities,” Meylan said. “And then they work with the client to make sure those services are rendered for those prices without having to use a network access fee. It eliminates the need for a network altogether. The employee can go to any physician who will take their card. And in the state of Texas the average bill charged is 1,000 percent of Medicare. So at 150 percent of Medicare you are saving a fair amount of money.”

David Beerman, a health insurance broker, will deliver the message that, “you need to all learn all the things you have to know to do the things these guys are talking about.

“Because your biggest problem in the next 10 years is your clients will no longer be able to afford the products you sell so you’ll have to come up with a different product. And you have to come up with a different way to sell it.”

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@innfeedback.com. Follow her on Twitter @INNsusan.

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