With millions of dollars for health plans tied up in hidden fees and negotiations, Microsoft Healthcare founder Dave Chase sought to tamp down on growing healthcare costs.
He started Health Rosetta with the goal of improving transparency among insurance brokers and help employers keep healthcare costs in check. The company claims it can reduce employers’ healthcare costs by 20% to 50%.
So far, Health Rosetta has already delivered on that promise for some of its clients. The company said it helped Pacific Steel & Recycling reduce its spending from $8 million to about $3.5 million. It also helped Ohio-based Great Lakes Auto cut its healthcare costs by $1.8 million.
A big part of that is carving out unnecessary fees and conflicts of interest and improving primary care benefits.
“It’s a secret hiding in plain sight if you dig in,” Chase said.
But many companies, with overburdened human resources departments, often don’t.
To start, Chase said, companies can take a closer look at the summary plan document that governs their health plan.
“It’s just riddled with unnecessary fees and conflicts of interest. There are things in that boring stuff that can save you a huge amount of money without affecting the members whatsoever,” he said.
Another source of hidden cost can stem from undisclosed contracts between brokers and insurance companies. Many self-insured companies turn to brokers to help them design or manage their health plans. But those brokers often receive undisclosed commissions.
According to a report by ProPublica, insurers often pay brokers a commission of 3 to 6 percent of the total premium for employers they enroll. Retention bonuses also serve to keep brokers from shopping around.
“If you maintain 90% of your business with a carrier, you can get a huge bonus,” Chase said. “You have massive conflicts of interest, much of which is undisclosed.”
The solution that Chase proposes is a certification program for health insurance brokers. To participate in the program, they must agree to disclose all of their fees, direct and indirect. Instead of being paid through insurers, Health Rosetta’s brokers charge their clients a fee, which the company says better aligns them with employers’ interests.
So far, Health Rosetta has trained 170 benefits advisors through the program. Just as LEED certificates became a benchmark for building efficiency, Chase hopes that certifications to improve transparency among insurance brokers will become more commonplace.
The other big piece of Health Rosetta’s plan is restructuring primary care to give patients more time and better communication with their doctor rather than fall back on traditional fee-for-service medicine. That involves screening providers for certain quality metrics, such as how many patients required hospitalization, or quality results for common conditions such as hypertension and diabetes.
Members can be incentivized to go to these facilities by waiving out-of-pocket costs.
“The best way to slash health care costs is to improve benefits,” Chase said. “When you see proper primary care, you have fewer surgeries and ER visits, because people take time to talk to people.”
Chase knows it will take time to make substantive differences in the way people pay for healthcare.
“We know this is a 10-20 year journey, easily,” he said.
Photo credit: Getty images, utah778