Changing Logos

By Bill Rusteberg

A favorite strategy to lower health care costs by plan sponsors is to change the logo on one’s I.D. card.  Everything else remains essentially the same.

Benefits include in-network providers and out-of-network providers. Plan members are punished if they, purposely or not, seek care from out-of-network providers. That’s not too much of a problem though since managed care intermediaries have signed up just about every provider in every community (we call that an APO – All Provider Organization). They are compelled do that in order to “compete” for business because the first question a health insurance salesman gets is “Is my doctor in your network?” If the answer is “No” the sale is lost.

Regardless, there is little difference in reimbursement rates among competing managed care networks although managed care vendors will argue that’s not the case at all. Perceived reimbursement shortfalls are easily made up through more services and creative billing facilitated by the all prevalent fee-for-service system of reimbursement in this country. “Let’s run a blood panel for pregnancy Mr. Jones.”

Managed care contracts memorialize medical trend through annual escalator clauses that guarantee cost increases compounded year after year. The leveraging effect of these escalator clauses double the percentage increase which hover around, and in some cases exceed, 10% annually.

Changing a logo on one’s I.D. card remains the cost containment choice of almost all plan sponsors these days. Yet the results are always the same. A public purchasing manager who I worked with on a joint assignment several years ago said it best:

Bill, it doesn’t matter which proposal we go with this year, our costs will be $17 million next plan year, up by $1 million from this year. Our costs go up by that amount every year no matter who we go with.”

Changing the logo on one’s I.D. card alone  to reduce costs is a sign of third party induced plan sponsor ignorance.