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Connections - 04.29.21

When it Comes to Sky-High Health Plan Costs, The Emperor Has No Clothes

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By Nick Castellano, Castle Benefits Group

After almost 45 years in the employee benefits arena, we have the experience and know-how to see through the tricks of the medical and pharmaceutical trade that end up costing you and your employees outrageous sums of money. 

Consider the health care benefits you offer your employees. The two largest cost drivers affecting your health care claims are the facility and the pharmacy. Plan design, industry type, demographics and ZIP codes certainly affect your overall plan cost, but what happens behind closed boardroom doors between the carrier and the hospital (though rarely ever talked about) has the biggest impact. In a nutshell, these two entities will take each diagnostic code, use Medicare and Medicare Advantage to set the base rate, and then the “horse trading” begins. In the end, you and your employees are told by staying in-network, you will save 50-65%. This is not off of the billed charge, though, but instead off the negotiated rates referred to as the “Charge Master.” When you peel away the layers, most hospitals are charging between 400-1,000% above Medicare rates.

Suddenly, the touted “discounts” aren’t really saving as much as you might have thought. When more than 90% of hospital claims are auto-adjudicated, they get paid quickly with your money. It’s amazing how a “mucus dispensing module” can cost more than $40, considering most of us know this as a box of tissues. That $300 cranium support device? Yeah, that’s a pillow. On average, health care facilities are charging 189% above Medicare.

Enter Castle Benefits Group’s ALLEANZA program. We designed ALLEANZA to flip things around by charging what we see as a fair and reasonable 25% above Medicare. The spread between that model and the traditional facility model is your savings. To further ramp up your savings, we audit all facility claims. 

On the pharmacy side of the equation, approximately 75% of all claims are paid by the big three PBMs (pharmacy benefit managers). These organizations are either owned by an insurance carrier or they own the insurance carrier. They make their money by spread pricing, meaning they purchase the prescription for one price and sell it at a much higher price. They own their own specialty pharmacy so your employees must go through them for their very expensive medications.

In the ALLEANZA program, we use what’s called a Fiduciary PBM. They sit on the same side of the table as you. They do not spread price; rather, they charge a fixed amount per prescription. They do not own their own specialty pharmacy, which means they’re driven to find the lowest possible cost, just like you.

Because of our focus on these two major cost drivers, our clients save 30-45% on their healthcare cost. The groups in the ALLEANZA program have not had to change plan designs, they have not faced increases in contributions, and they have more money in their claim funds than ever before. In other words, we align your goals with your needs and wants, not the goals of the carriers and their shareholders.

Employees in our ALLEANZA program love not having to change carriers every year or so, not having more money taken out of their check each pay period and not having to spend more when they need to use their plan. They appreciate having additional support through education and communication when it comes to their benefits.

For more information, visit our website at castlebenefitsconsultinggroup.com or email us directly at [email protected].