Insight, analysis & opinion from Joe Paduda
My post a couple of weeks ago about the RFP process generated a lot of public and even more private comment. It got me thinking about one of the more contentious issues in the vendor-customer relationship – price.
I’m having a tough time getting mad at United Healthcare. The huge managed care company is under fire for penalizing docs who use any lab other than UHC’s preferred partner, LabCorp. The AMA, regulators, individual physicians, and a few consumer groups are all screaming about UHC’s heavy-handed, dictatorial infringement on their right to practice medicine.
They’ve got it all wrong.
Insurance companies, employers, and TPAs rely on vendors to process bills, build and operate networks, manage prescriptions and PT, support litigation, and provide expert advice on problematic medical issues. In many instances the vendors are selected thru a competitive bidding process, wherein the lowest bidder gets the deal, or at the least has a much better chance of landing the business than their more costly competitors.
But in others, the selection process goes on seemingly without end.
Bob Laszewski weighs in on the Wellpoint insurance cancellation debacle. As a former health insurance company president, Bob’s perspective is unique.
URAC, the accreditation body that seems to be into every aspect of managed care, is now looking to certify PBMs. In a presentation at the PBMI conference in Phoenix last week, a representative provided an overview of the process, modules, timing and certification levels contemplated by URAC.
While the process is only for health lines today, URAC is seriously looking into accrediting WC PBMs…
Brace yourselves.
Continue reading URAC’s foray into pharmacy benefit management
How drugs make it on to formularies has always puzzled me. After listening to a talk on the process, I’m even more mystified.
It’s called “managing the delta.”
The health plan business is pretty healthy these days, and the reason is simple – HMOs are keeping health care cost increases under 6% while increasing premiums by 7%+.
Sure, expense management is key, but so is revenue management. The question is, can HMOs manage cost increases for more than a few quarters? History indicates Not.
Thanks to Bob Laszewski for doing the heavy lifting by explaining how this happens.
I’ve been virtually talking with other interested parties and staff from Sen. Ron Wyden’s (D OR) office about his Healthy Americans Act and how it deals with pricing. Here’s my preliminary take.
There are two core concepts central to HAA’s viability. First, universal coverage. If everyone has coverage, than there is no (or at least a lot less) need for providers to charge folks with insurance more to cover their losses incurred when they treat people without insurance. Cost-shifting drives up health insurance costs for those folks fortunate and employed enough to have coverage.
United HealthCare’s bare-knuckle approach to contracting may cost it members. Employers in the San Francisco bay area are deciding to go with other health plans as UHC experiences ongoing difficulties in recruiting and retaining docs.
One of UHC’s competitors is aggressively pursuing UHC customers by offering to sign them up at the same rates UHC was charging.
There is quite a bit of interest among private equity and venture capital firms in the work comp managed care “space”. These investors seek to buy into companies that are poised for growth, that have a “sustainable competitive advantage”, solid management, long term contracts with customers, and a profitable business model.
A key to success for these investors is to find these firms before the other investors do, which means identifying good companies quickly. Analysts spend lots of time, energy, and brain power analyzing, assessing, and interpreting data. looking for the wheat among the chaff.
A much faster, and probably more accurate way, is to pick up the phone and call the company. Talk to the receptionist, someone in customer service and someone in billing. What they say doesn’t matter nearly as much as how they say it.
Good companies have energy, enthusiasm, and a desire to help that comes through the phone. Not so good ones have none of the above.