← All Resources
hero image

Lessons from Maine: an Interview with Peter Hayes, an Expert on Purchasing Employer-Sponsored Healthcare


Guest: Peter Hayes

Narrator (00:00):
Welcome to 360 degrees of healthcare with Dr. Stan an in depth. Look at our industry from our very own chief medical officer who will talk with other medical and industry professionals on the changing and evolving landscape of the healthcare system from the inside.

Stan (00:21):
Thanks for joining us. My name is Stan Schwartz. I’m an infectious diseases physician with decades of experience in healthcare. As a student, a teacher, a fellow, a researcher, a practicing physician in both solo and group practices, a health system executive, and now a healthcare entrepreneur. And as I get all older as a patient, I want to share my 360 degree view of healthcare with you. My thanks to zero studios for support of this podcast. I’ve got a great guest today. Peter Hayes, uh, fellow I’ve known for quite a while through the national Alliance of healthcare purchaser coalitions. Peter is the CEO and president of the healthcare purchase or Alliance of Maine, a role that he’s played, uh, at various levels for over 27 years with the last three years, being in the current role as president and CEO, Maine has been a very interesting example of healthcare at the state level with experiments that they did that actually showed that with the right incentives, you could improve not only the healthcare experience for members who access healthcare, but also you could improve the healthcare that’s delivered. Peter, glad to have you join us today. Can you give us a real quick review of your background?

Peter (01:42):
Yes. I’m glad to be here. Um, yeah, I’ve been around, I’ve actually liberal arts grad spent some time in public accounting. I actually spent about 25 years at a large regional supermarket chain about half those years or accounting, finance acquisition work that I was kind of tapped on the shoulder to do HR and I’ve been in and I was the be director, um, and really just got intrigued by healthcare and what was going on and just the huge opportunities to improve quality and access and price. So it’s really been a passion as, as you, as Stan set at the top for about 30 years now and still tilting at the same windmills. I mean the, the mantra we have all always used is, you know, let’s make sure we get the right care at the right place at the right price, because about half the time, you’re not getting the correct diagnosis up front, there can be a real issue for cancers and some of the other real serious diseases.

Peter (02:38):
Make sure you go to the right place. We’ll probably touch upon, but leapfrog measures, hospitals, patient safety on letter grades a to F if you go to a hospital that’s rated C or lower, you have about an 80% higher chance of having a fatality. And then let’s worry about price. Let’s make sure you get the right care at the right place. And then let’s make sure you, we pay the right price, cuz prices that we pay for healthcare can vary seven times you can pay $300 for an MRI, or you can pay $3,500 for an MRI. And with everybody on high deductible health plans, healthcare cost out of pocket cost are becoming a real access issue. 50% of are not getting some type of healthcare cuz they just can’t afford the deductibles. So it’s been a passion. That’s just a little bit of my background and look forward to the conversation.

Stan (03:28):
So let’s talk for a minute about the state of Maine. When I first got started in health economics, after I left practice at administration and punitively, I read about the state of Maine and the state of Maine is the largest healthcare purchaser organization started giving an incentive for covered members. If they would go to a leapfrog, a rated hospital for safety. And then I read that fast forward, not only did that work, but then the state of Maine wound up with, I think the most A-rated hospitals because everybody wound up getting better. Can you tell us about that?

Peter (04:08):
Yeah. I mean, I think that’s a great segue into, you know, at the top stand, you said this entity that, that I’m, it’s now called the healthcare purchaser Alliance of Maine, but it’s been renamed about three years ago. It was the main health management coalition. It was started by a bunch of public private purchasers, a real collaborative effort between the public payers, the teachers, the municipalities, the state and private businesses that were here. We came together saying, geez, you know, we, we really wanna understand where our healthcare dollars are going. We really think that there are some things that we can do collaboratively with health systems and providers, um, brought everybody under the 10 and we started to work on both quality and access issues. One of the places we thought was a good place to start. We, we started, everybody could agree that, you know, quality of care could be something we could all agree on is, is something that we should strive to improve.

Peter (05:01):
And right about that time, I was on the board of leapfrog, but leapfrog started measuring hospital, patient safety, just what are hospitals doing to keep patients safe? And they assigned a letter grade a through F um, when we started in the first year, Maine did not have very good results. Maine did not have some of the safe hospitals in the country. So we came together and actually I, at that point I was at a supermarket chain directing into the director of benefits and the state of Maine itself was a member of the Alliance. We started to say, well, gee, what we’re gonna do is we’re gonna incent. And this was almost two decades ago. Um, we are going to Inc members will waive copays and deductibles and give them incentives to go to those hospitals that are, that have the, a, the safer designations. And within a year’s time, all those hospitals that did not get that designation really worked to improve patient safety protocols and processes, and actually fast forward 20 years Maine, just one, actually our governor just accepted in Jan January of this year, Maine has had the safest hospitals in the country for the past decade.

Peter (06:15):
So it really, really is an example of, of all of us speaking with one voice, focusing on the right things. You can really drive, um, you know, a better care experience in a, in higher quality care within your marketplace. So that’s, that’s one example of, of where we, we focused on really trying to raise the bar for everybody.

Stan (06:35):
Where have you had the most success us in getting mid-size companies that are self-funded, but are not jumbos in, in terms of speaking with one loud voice in terms of collaborating and bringing pressure on providers, you know, to reduce price variation and improve quality outside of the state a main example.

Peter (07:00):
Yeah, I mean, I think, you know, we had much early, so the, the, the first effort we tried was around, you know, the hospitals, which I just described. The second place we went to is saying, gee, we, we really think that primary care is critically important, primary care. There were real act access issues. I know when I was of that benefit role at a supermarket, we had done a poll and a significant number of our employees and their families didn’t even have a primary care doc. So we actually worked with the primary care docs and said, gee, we we’d really like to come up with a way that we can measure quality. We’d really like to find a way that we could identify like leapfrog did who, who are the top primary care docs. And it was important to us to create metrics that were transparent, not black boxes actually, you know, at that point in time, again, I, I was at a supermarket chain.

Peter (07:52):
We wanted to create, you know, tiered provider. We wanted to identify, we called them providers of excellence, and we were gonna do the same thing he did for hospitals, which is wa copays and deductibles and other things to encourage folks to go. Um, we got some, some resistance from primary care. There really were no metrics in the marketplace. I kind of stood up and said, well, gee, if you know, I’ll come up with some metrics and the primary care doc stood up and said, no, no, no, no, we’ll do it. And they did. They at together, they came up with measures of what they considered quality. Um, and we actually told them as a purchaser group, you know, if, if we will give bonuses to those, we will give you an incentive structure payment for those provider groups that became providers of excellence. And they did.

Peter (08:38):
And we put it in place. We, we, we try to identify the top quartile of primary care docs. And there were a lot of ’em were, were PRI were process measures, but was really refreshing at the end of the year when it came time to pay out the bonuses, what the primary care docs practices said was we don’t want the money. What we want you to do is take full page ads out in the newspapers in Maine, and just highlight who were the providers of excellence. Don’t say anything about those that weren’t, but highlight those that really had achieved that, that, that quality bar. And so that was another play where we actually got participation of the primary care docs. We got them to raise their game. So everybody benefited. So that, that was another place. And again, our focus had always been on, can we do things and, and, you know, this actually starts with the state.

Peter (09:29):
The state really has articulated the principles there. The decision makers have articulated that they have always felt that they’re using taxpayer dollars to provide health benefits to their employees and families, but they also, and so they have an obligation to provide the best care they can for them, but they also feel that they have an obligation to try to make healthcare better for all taxpayers in the state of Maine. They really are trying to look for the, the broader or impact about how can they use state dollars to improve the outcomes for everybody else in the state, which I think is just, just a remarkable sort of commitment. So that, that was another example. More recent example is we’ve had a difficult time getting our health facilities and across the country. This is true is trying to pivot hospitals from, you know, a discount off master charge list to some type of bundled or episode based payments.

Peter (10:24):
Um, part of mine were one of the last things I did before I left the supermarket chain was we were self-insured as a company. We had a, a hip replacement that, that cost, you know, a million dollars that kind of violated that right care, right place, right price. The, the, the patient had shouldn’t have had a hip replaced in the first place. They had so many other health issues that they were just really high risk, um, that they went to the hospital, they had one of the highest infection rates. It failed three times and we paid each time it failed and it went to the highest price hospital. And in the state, I started looking around, I asked hospitals whether, you know, should we pay for error? Should we pay, you know, could we consider a bundled rate? They, they weren’t interested. I actually traveled the world.

Peter (11:10):
I went to Europe and I actually spent some time in Singapore. We put some benefit designs in place at that point in time, S poor would do hip and knee replacements for $10,000 guaranteed. Wow. Um, in the states, there were about 75,000. They would warranty it for a year. So if there was a complication, like I just described, they were on the hook to fix it. We put it in place. The wall street journal picked it up and, you know, we said, we’d wait, you know, we’d we pay for all travel, we’d pay to send the patient, we’d pay to have the family go, um, ran the wall street journal. And then we got calls from hospitals in the state saying, we’ll do the same deal or we’ll do a similar deal. So again, that’s another example of, of how purchasers can use their ability to really drive change in the marketplace.

Stan (12:02):
Let me go back to, to what you said about primary care and give you a double barrel question. Did the primary care doctor have any responsibility toward referring their members to the specialists that you would identify as being high value? In other words, were they invested with either the responsibility or incentivized and what did you do? Uh, what have you done more recently as primary care has kind of gotten deconstructed where, you know, between telehealth, urgent care, urgent, telehealth, and so forth, people don’t necessarily go to their primary, same primary care doctor to get advice and referrals.

Peter (12:49):
Yeah. I mean, I, it, it is a double barrel question and I’ll start the first part of your question. Yeah. But we, again, I, I described a little bit how the first year we worked with the primary care docs to identify, you know, from a process perspective who were, you know, doing the right things around diabetic care and cardiac care and some other things, they have electronic medical record. Second year we started to link. Um, we started to rate docs then on the total cost of care, we, we started to then look at, okay, what happened to that patient when they left the primary care docs office, and they got referred to other places, we, we tracked that index and it was really fascinating. The, the primary care doc started getting some of that information back. And they started asking questions about, you mean, if I refer that patient for an MRI and I refer it to the place that’s charging 3000, instead of 300, I get marked down.

Peter (13:50):
And we said, I mean, that’s, that’s the intent. They said, well, we wanna know, we wanna know, they didn’t know what the downstream costs were. They didn’t know the downstream quality. So they started saying, Hey, look, we want some information about who am I referring to and, and, and what what’s their cost. And what’s their quality if I’m gonna be braided. And so it was a fascinating, you know, there was tremendous buy-in for them at that part. And then double barrel questioning becomes a deconstruction. You know, you mentioned at the top stand about, you know, some of the, the what’s happening to primary care in our state, something like 80, 80% of the primary care docs are owned by health systems at this point. And if you talk to them, a lot of primary care docs are not very, very happy about being part of a corporate health system.

Peter (14:39):
They are getting really severe limitations on how much time they can spend with a patient they’re getting dinged and they’re getting their incentive. They’re getting dinged. If they do not refer certain volumes of procedures to the mothership, they’re getting dinged. If they refer out of network to the mothership. Um, that’s why I think you see some of the things like telehealth and other things growing up is because the primary care doc can have a huge impact on where they patients once they leave the primary care docs office. And if they’re owned by a corporate health system, that means that they have tremendous pressure to send everything into presumably the higher price. And again, the deconstruction was the work I’m describing. There were ton of independent primary care practices that were small in pendant practices that we’re very proud about what they were doing. They, they real passionate about being the best that they could.

Peter (15:39):
I think that’s really changed with, with sort of the way, you know, the way that primary care practices are now owned by either health systems or I think United healthcare owns the most physicians in the country, their network of physicians that they actually have on salary dwarfs. I think everybody else. So it’s, it’s been a real interesting dichotomy. And, you know, I, I think purchasers are really starting to say, we want to go back to the, the, some of these startup primary care clinics. I mean, they’ve moved to a model where, you know, a net promoter score, the patient satisfaction is in the high nineties. Patients can actually call, make an appointment. They go in, they get seen on time. They can get prescription drugs there at no cost or low cost. Um, it’s a much better care experience. Um, and I think it’s an offshoot of physicians aren’t necessarily very happy, you know, providing medicine under the corporate structure. They want, they want that patient engagement. The, some of the clinics that we have partnered with are, you know, they have our appointments with, with the patient they can call. Um, so I, I, I think you, you’re, you’re seeing an evolution that’s taken place right now.

Stan (16:52):
That’s interesting point about primary care docs, identifying high value providers, because in the employed model, you know, so many health systems want all their surgeons to be busy, for example, right.

Peter (17:06):

Stan (17:07):
What they don’t want is to have one surgeon being identified as the best and getting all their referrals and then patients disappointed when they don’t get to see the doc that their, the specialist that their primary care doc had recommended. So there’s certainly a lot of tensions there.

Peter (17:25):
Yeah. I take a step further stand that there’s, you know, the, there are health systems. I know this is hap this is, this is in our state, but it’s everywhere. There are a lot of health systems now that when they sign contracts with the Buka plans, they’re putting in their contract, that in exchange for a deeper discount to that particular health plan, they cannot administer any type of benefit that steers patients. It, you know, they have to take the whole panel. And, and why that’s important is we fast forward. We, our, our entity has for the last two years, and again, going back to the state of Maine that did leapfrog, the state of Maine was one of the first entities in the Northeast that put in a center of excellence program with Karen health. And what care health is doing is they’re actually going out and not only credentialing the facility, they’re actually going in credentialing, the individual surgeons, and a good example of one of the hospitals here.

Peter (18:22):
You know, they have a panel of orthopedic surgeons. They have, and it’s, it’s, it’s split 50 down the panel size 50%, 50% of the docs. The surgeons are outstanding. I mean, they’re just great surgeons, but the other 50% are at the, in the bottom quartile or close to the bottom quartile. So on average, you know, which door, you know, on average, that facility looks like it has above average outcomes for you, hip or knee replacements, the boy, which door you walk through, like that surgeon can make a big difference to that, to that outcome. And, but that’s health systems you’re absolutely right. Really want their whole panels to be fully employed. And they don’t like the, to be cherry picked, if you will,

Stan (19:08):
What are the things we’ve done, uh, with the local, a coalition here in Northeastern, Oklahoma is make Quantros, uh, Quantros care checks, data available to employers that, you know, the, the Medicare quality data that you know is in a form usable and readable by employers to help them make decisions. The problem we ran into though, is that so much healthcare, everyday healthcare doesn’t have quality metrics around it. Yeah. Advanced imaging, ambulatory surgery, physical therapy, how have you addressed value, quality cost and the, and the value equation when you’re dealing with, you know, all these everyday things for which there are no systematic data.

Peter (19:56):
Yeah. I mean, I, that is, you know, that is the holy grail that, that, that, you know, I, I think it’s by design. I mean, we, we’re getting a little bit better. Um, you know, I think you had asked her, we had talked about the pre-show, if you will, they’re starting to lots more information coming into the marketplace. That’s helping. I mean, the Rand studies that is starting to look at what are, what are each hospital costing, commercial payers and individual payers that they can use, you know, the patient safety ratings of leapfrog. They can use the CMMA as star ratings for the hospital. And what they’re finding is there is absolutely no relationship between hospital cost and quality. You can have very high quality hospitals that are some of the lowest cost. You can have very high cost hospitals that are really, you know, both good, both sides of the equation.

Peter (20:52):
You got hospitals that have high quality care and high cost hospitals that, that don’t. And so what we found to get to your point Stan, is that we found at least going back to my, you know, private employer experience, the, the problem becomes physicians are sort of like politicians. Most patients know that politicians not, not all of ’em are on the straight and narrow, but their politician is good. I mean, their, their, their local politician, you know, is, is just, you know, is doing a great job, the same thing with docs. And what we found is by the time a patient goes to a pro primary care doc, and the primary care doc says, you should go to X, Y, or Z specialist. And they go, and that specialist then says, you need to have surgery. That’s way too late, almost in the decision making process to change that, that course of care, you need to get way down to the primary care doc to make sure who you’re getting steered too, from that office are the high quality providers.

Peter (21:50):
And there just isn’t great information. I we’re aware of contrasts, but the problem becomes nobody’s accepted a, a standard report that’s used. So we have all sorts of dueling systems, even CMS and leapfrog. If you look at some of their ratings, they aren’t always in concert with each other. Um, so what we need to have, and a prior life, we try to create a national coalition that we need to have a standard way to measure outcomes by individual provider. That’s available to all of us to use, to, to derive our, to high value providers. And it’s going back to that leapfrog example. Once you make that information public, and you put it in the marketplace, that it there’s two forces at work. One consumers can make choices that will drive volume, but physicians are also, they wanna do a good job. So if, if they’re not at the top of the list, then an opportunity for them to try to figure out why they’re not, and raise the bar themselves. Sometimes very simple changes and processes can make a huge difference in outcomes.

Stan (23:00):
You know, I always liken that to, you know, if you wanna know what the best car is, you’re gonna get an entirely different perspective from road and track than you will from consumer reports.

Peter (23:10):

Stan (23:10):
That’s look at things yes. Completely differently. Um, can we talk a pivot for a second? You and I had talked in the past about the rice university studies, what it costs hospitals to do certain services, as opposed to what they charge for certain services.

Peter (23:26):
Yeah. It’s, it’s been it it’s and, and, and it actually to it a step further, I mean, the rice university, as, as we had talked about this at previously about making some information public, so everybody has the same common points. What Rand has done is they have gone out and from every single state they’ve assembled from the databases, what individual markets. So if you’re an individual buying health insurance through, you know, a blue cross or a Cigna or Aetna, or you’re a business, that’s buying it through them. It takes a look at what are, what are the, those payments to hospitals as compared to what Medicare pays hospitals for the same services. And the Medicare reimbursement to hospitals is actually based on that hospital’s filed cost report. So it’s not a made up number. They actually, the chief financial officer of a hospital has to sign off on what it costs that facility to provide care.

Peter (24:29):
And it takes an account, you know, the wage scales, it takes account of the economy and the marketplace. And it takes, you know, all, all the factors that go into what it costs to deliver care. And then what Medicare does is they will pay, you know, up a hundred percent of what they did term the cost to be what purchasers are paying. We’re paying hospitals on average across the country, almost three times more than that. So if it’s costing the hospital a dollar to deliver the care, all their margin is coming from current commercial individual markets. We’re paying $3 for that service. So what Rand has done is they have now made that public. It is, it is, you know, shown it’s been reported out and it’s pretty consistent across the country. And again, there’s no variation. There are some hospitals that are at 150% of Medicare that have positive margins that have very high quality there’s hospitals that are getting paid four to five to Medicare that have poor outcomes.

Peter (25:30):
And so what rice university is doing, and it’s Maryland Bartlett has been a champion of this. She was in Montana, but it’s called reference based pricing. But it’s saying instead of negotiating these secret discounts off charges and why this is important is effective a year ago, the consolidated appropriation act made it mandatory that hospitals have to provide an unusable format, 300 of their services. They have to show what the cash price was. If you went in as a customer and paid cash, versus what all the health plans are charging. And what they’re finding for those hospitals that are reporting is 70% of the time, the cash price is far lower than what your, your health plan is paying and what your deductibles and copays are based on. So a good example is as a particular hospital in Lafayette, Indiana, or a particular procedure was if you’d gone and paid cash, it would be $3,000.

Peter (26:30):
If you went in under one of the major plans, they were paying $30,000, that sync procedure. So if you have a $10,000 deductible, you would’ve paid $10,000 for a service, you could have paid cash for, for three. Um, so it’s really driving a light on hospital pricing and where it is, what, what rice is gonna do. It’s gonna take all that information. And what hospitals will say is we need to charge everybody else more. Cause we’re losing our shirts on charity care and we’re losing our shirts on Medicaid and Medicare. That’s always, or we have a sicker population. Rice is gonna go out and actually show where hospitals are and you know, we’ve done it for one hospital in our marketplace that is clean for years, that they’re losing money on Medicare. And actually if this report will show that they’re actually making money on Medicare, so it’s gonna really change the equation it’s been used in some markets where it has been used. Even hospital executives are surprised by the numbers. They, they say, well, gee, we didn’t know where our margins were. So it’s gonna be a game changer. And for fiduciary accountability, you know, we’ve, we’ve modeled it in our state and we’re paying on state about 250% of Medicare two, and have times, if we move to 200% of Medicare, it reduces healthcare costs to employers in patients by 40%. So it, it is a huge, huge number. And it’s gonna, I was

Stan (27:56):
Go ahead, go ahead, Stan. I was looking at the ran report and looking at the prices that Medicare, uh, percent of Medicare prices in Northern Illinois and Southern Wisconsin. What is it about the border between Illinois and Wisconsin that justifies the much higher prices in Wisconsin? Why is it, why is it statewide as opposed to market-wide

Peter (28:23):
Great. I mean, great question. I mean, I think, you know, goes back to the cope by you and Reinhard back in the seventies, it’s the prices stupid. It’s, you know, it, it really, it really gets back to the purchasers, you know, hospitals in markets, they they’ll charge what they can charge and the health plans that we are entrusting to negotiate good deal. You know, a lot of times their negotiation is based on, they just wanna make sure that they get a couple percentage points more than their discounts, more than their competitors. They’re not really necessarily. And again, the accountable care act really has set up some perverse incentives where, you know, with that, with that ruling health plans are regulated to how much margin they, you know, see 80, 80, you know, Mar marginal loss ratio. Um, and it, and it’s, you know, they’re, they could only make so much margin on every dollar of premium. So they have every incentive, the, the higher, the million dollars, the more they’re actually paying out for claims, you know, the more bottom line revenue they drive to shareholders into the business. And all they’re interested in is, is really getting a better deal than their competitors, like a CIG or Aetna, whoever it may be. Um, so it there’s, we we’ve set up some real perverse incentives that, that really enrich the entrenched stakeholders and really are not in the best interest of patients and or the payers of healthcare.

Stan (29:56):
Wow. You know, a, a hospital guy once told me, uh, I was asking about the difference between cash price and insurance price. And, you know, he said, you know, if somebody walks in with a double bag full of cash, all I gotta do is deposit it in the bank. If they walk in with a blue cross card, I’ve gotta file claims. I’ve gotta go accounts receivable, I’ve gotta collect my co-pays and deductibles. I’ve gotta send out bills. I rather send out bills that change colors, et cetera, et cetera. Of course, I’m gonna charge more to a carrier that I roll for cash. Do you, do you think that’s justified?

Peter (30:31):
Oh yeah. I mean, I think, I mean, yeah. I mean, I think we have built a system by which, you know, what, what what’s really scary is there, there’s some estimates that for every dollar we’re spending on how healthcare only about 30 cents is actually going into direct care. The rest of it is all the administrative stuff that gets, you know, that we’ve built up around the band margins, but I’ll go back to that example in Lafayette that if, if they’re accepting $3,000, um, for a procedure, the health plans are paying 30. I guess the real question is, is there $27,000 worth of admin related to that one procedure? And I, you know, I, I think there’s some, I think there’s validity to what you just said. Um, but the real question is, is, is does that account for all of the differential that exists, you know, and I, and I think going back, going back to your question, but why is it so different between borders?

Peter (31:31):
You know, they’re saying a lot of marketplaces now. I mean, we have, there are health systems now that have 60, 70% market shares and the markets that they’re in and they really are market makers. I mean, they, they really go to the health plans and say, you cannot afford not to have us in your network. Therefore you’re gonna pay us whatever these are that we think we need. And, and actually a great example, I had, it was a hospital executive once shared with us as the Alliance that, you know, in a business, most businesses, retail businesses, as in the supermarket business, you know, you, you, you build your budgets by saying, this is what we think we can do for revenue. This is where our expenses are. If we need to adjust our bottom line, you know, we can’t force the customer to pay more.

Peter (32:17):
What we need to do is go back and, and cut expenses. What, what this hospital, financial executive said, what we do and the hospital and industry, as we come up with what our expenses are, then we figure out what we need on the top line and the old models of a discount off charges. We just increase charges by, you know, whatever we think we need to, to balance the equation. So it’s an upside down sort of process. So most markets, you know, a lot of the hospitals are charging exactly what they think the market will bear. And if there’s not a lot of competition, and if there’s not a lot of, you know, savvy purchasers in the marketplace, then that explains some of the price differential.

Stan (32:57):
So final question, my name’s Joe and I run Joe’s Superstore with about 300 5300 employee employees covered members. And, you know, I’m self funded, but I’m really struggling with healthcare costs. What are two of three, three of the things I can do right now that will actually make a difference? Where do I start? Where do I put my stake of the ground?

Peter (33:25):
One, if you’re, if you’re self-insured one place to go is, you know, and we’ve done this, but the, the, the PBM industry, there’s a reason express scripts bought Cigna. There’s a reason that something like 70% of United healthcare as a revenue is coming from Optum, the PBMs in our estimation, there’s, there’s lots of literature in the marketplace saying for every dollar we’re paying in prescription drugs, 50 cents is going to margins. If you just went with one of these transparent PBMs, which means they pat, they don’t keep any spread. So a lot of the, the pharmacy chains, they will, you know, if they, if they’re paying the local pharmacy a dollar for the script that the patient got, they will charge the plan sponsor seven or $8. It’s called spread. And actually on Medicare, Medicaid business, almost every state has a suit, a pending suit against that to type of activity. But one thing they can do is go to a transparent PBM that only charges a script cost. All the re rebates get passed back, whatever they pay, the local pharmacy for the drug is what they get charged that was, will save them 50, 50 cents on their 50% of their RX spend. That’s one.

Stan (34:42):
How does, how does Joe find that transparent PBM?

Peter (34:47):
Um, you know, you can, you can cut, you know, there, I would just, I mean, the Google’s a great search or they can ask their broker, but, you know, we have heard in the past, I mean, we we’re working with the transparent PBM and the incentives and the marketplace are just crazy. There are some brokers, you know, we were told for one major PBM that a broker got paid $185,000 in commission for bringing a life of a thousand members to that PBM, our PB transparent PBM has told us that some brokers and are getting up to $10 per script attached to the script. Every time it gets a rung up at, at the drug store. So the way to find it is Google transparent PBMs. There are some out there Navitus is one, um, flip is another, but, or, you know, we’d be glad kind of offline. We can, we can give some references to how to find those or consultant though, and, and, and make sure, you know, pretty much, you know, if it’s an optimum, if it’s an express, if it’s CVS, look at some of the others that are new entries into marketplace,

Stan (35:57):
What else could Joe, do?

Peter (36:00):
You know, what, what Joe could do? You know, the other thing he could do on going back for a second, if he just uses a good RX card, they’re saying now, especially for generic drugs that just using the good RX card is cheaper than using your PBM benefit. So that’s, that’s another thing they can do. Um, I would, I would really look at, you know, looking at, um, the problem is it it’s really, that’s kind of a tough size. Um, there’s that, um, see if there’s a way that there are some narrower networks that they can do. Network, there are, are to be networks in marketplaces that doesn’t have every hospital and doesn’t have every provider. It really is trying, it’s narrowing it down to say, this is who we think the high value providers are. So it’s called a, a narrow network. It’s called a tiered net.

Peter (36:53):
There’s a lot of different names for it, but most of the major carriers have it, uh, um, I, what we see increasingly, I think, and, and it goes back to the earlier points of the conversation. There are benefit solutions. They should look at like ELAP, which is a new entry in the marketplace. That’s paying reference based prices. What it’s, what it’s doing is saying, you know, we’re gonna pay every hospital, 200% of Medicare, and, you know, you don’t need a network. You can go to any hospital that you want. Um, but we’re not gonna play the game of a discount off a master charge list. We’re gonna, it, it, you know, and, and they are, they are saving employers 25 to 30% on the dollar.

Stan (37:38):
Great. Any, anything you’d like to say in closing Peter?

Peter (37:42):
No. I mean, I think, um, yeah, I mean, I guess what I would, I would talk about is really almost this, this call to action by purchasers that, you know, we are paying a lot more than we should for healthcare. Our employees are not getting in. Families are not getting the best care they can. I mean, I, I, you know, example that I, I talked about earlier, but, you know, for cancer care that, so going back to your point, the other thing that employer can do is put in second opinions when you get a complex case, like cardiac, like cancers, um, call and get a second opinion mean there’s, there’s a couple entities out there that are doing it. Grand rounds is one, um, in the state of Maine, it’s still true. Um, and they’re Countrywide, but they’re saying when people call them about a recent cancer diagnosis, they’re finding 60% of the time the local, the, the local oncologist does not have it, right.

Peter (38:40):
It’s either not the right stage or type of cancer, which means anything that happens downstream is not gonna be helpful or th or, or it’s the right diagnosis and type of cancer, but it’s not the optimal therapy. I mean, just putting a second opinion program in on cancer could have a fundamental impact on the quality of care that patient, I mean, it’s literally life or death. The other thing I would do is ask them if they can create incentives, use the leapfrog, patient safety grades, don’t send patients, don’t let patients go to hospitals that are rated CD or F there are some states that don’t have any a or B hospitals. Um, so those are some things to think about.

Stan (39:27):
Great, Peter, I’d like to thank you. Our guest today has been Peter Hayes, president and CEO of the healthcare purchase or Alliance of Maine who has a long and deep experience in health, economics, and health purchasing. I’d also like to thank our sponsor zero health, uh, which you can find in the show notes, a quick plug zero health is also a bundle payments provider that does direct contracting with specialist for, uh, remarkable savings on healthcare. Thanks so much for being with us, and we hope to see you next month. Thank you.

Narrator (40:03):
We hope you’ve enjoyed the time with our very own doctor Stan for 360 degrees of healthcare with Dr. Stan Schwartz, a part of zero studios, tune in subscribe and review our gas to keep current with the ins and outs of the medical and healthcare industry from the inside out.

Get This For Free

Fill out this form to access this free resource.