Making medicine hurt less

Nov. 10--Financial penalties for smokers and prescription drugs from Canada are helping Catalyst Medical Group reduce insurance premiums at a time when many employers are seeing their rates skyrocket.

The medical practice, which includes Valley Medical Center and Lewiston Orthopedic Associates, is self-insured and functions very much like a small insurance company for its 250 employees and their dependents.

The premiums Catalyst Medical Group pays for most of its employees dropped by almost 4 percent this year. In contrast, a number of businesses are seeing their premiums climb by between 10 and 15 percent, said Catalyst CEO David Schlactus.

The industry standard is that 85 percent of insurance premiums go for medical care and plan administration, leaving 15 percent for profit. Catalyst cut that 85 percent figure to 52 percent and believes it can get it lower.

"Our savings have been pretty phenomenal," Schlactus said.

The achievement follows a comprehensive analysis by Schlactus, fellow Catalyst Medical Group executives and its physician owners that gave them information to develop strategies they believe could be replicated at other companies.

It pays most of the medical costs of those it covers out of premiums and carries extra policies that kick in for severe illnesses and accidents.

"You have to manage your risk," Schlactus said.

Catalyst started with incentives for employees to shift from a plan that had a $500 deductible to one with a $2,700 deductible.

Catalyst covers 100 percent of the premiums for nonsmoking employees who opt for the higher-deductible plan. Smokers pay $50 per month.

This year those employees also are receiving an additional $100 each because of the drop in premiums.

Plus, in a move Schlactus compares to adding steak knives to an already fantastic deal, all employees on the high-deductible plan get $500 deposited into a Health Savings Account.

The money isn't taxed as long as it is used on expenses permitted by the federal rules that govern the account. If employees don't need it one year, it can roll over into the next year and build until they retire.

"It's theirs for life," he said.

Catalyst still has a plan with a $1,000 deductible, but employees pay $200 a month for it, and more if they have dependents.

Once that change happened, the volume of employees using the low-deductible plan dropped from 90 percent to 10 percent.

More importantly, the restructuring forced employees to begin paying attention to medical expenses the same way they do household expenses like groceries, Schlactus said.

"We've encouraged people to become shoppers," he said.

Administrators at Catalyst provided guidance. They offer the lowest co-pays at Costco and Walmart because their market research showed those pharmacies generally had the most affordable prices.

They encourage employees to use an online tool of Regence BlueCross of Idaho where customers can type in their prescriptions and learn if they could be treated with less expensive drugs.

Where generics don't work or aren't available, Catalyst contracted with a Coeur d'Alene company that legally fills prescriptions at Canadian pharmacies, saving $175,000 since 2016.

This year, Catalyst is taking its approach further. Employees pay $25 more per month if they aren't tested for metabolic syndrome, a condition that puts people at risk for ailments such as heart disease and diabetes.

The assessment includes measuring blood sugar, cholesterol, blood pressure and the ratio of the width of the hips and waist. Employees who have metabolic syndrome are required to meet with a health coach, but don't pay a financial penalty.

So far, everyone has opted for the screening, Schlactus said.

Catalyst is finding people alter their behavior once they have data about what is going on in their bodies, said Dr. Timothy Dykstra.

Patients battling high blood sugar, for example, typically stop eating as many cookies if they are given monitors that show them what happens to their blood sugar when they consume sweets.

What Catalyst is learning is already being used to help its patients.

In one instance, it looked at the price of prescriptions for a single name-brand drug.

Catalyst saved $2 million over three years by switching its patients, employees and employees' dependents from the drug that cost $256 a month, to a generic that is $6 per month.

More generally, Catalyst has made it easier for its physicians to prescribe generics by giving them faster access to data that compares name-brand drugs and generics.

"A physician can click a button (on a laptop) and get this information in the patient room," Dykstra said.

Catalyst plans to continue innovating, looking for ways to provide equal or better care at lower costs.

The key, Dykstra said, is aligning the interests of the patients with their health care professionals and their insurance providers.

Williams may be contacted at ewilliam@lmtribune.com or (208) 848-2261.

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