“For businesses, the cost of health care has evolved from a difficult, oft-misunderstood, unavoidable issue, to an uncontrollable cost of doing business,” said Julie Mueller, president of Custom Design Benefits, a Cincinnati-based third-party administrator. “We launched this product, TrueCost, with no networks, no deductibles, and no co-insurance (employees pay flat dollar co-pays), based on tangible, certified Medicare pricing.”
“In the development of TrueCost, Custom Design Benefits worked with National Underwriting Services, Inc., The Phia Group (for PD and consultation), CPR Risk Solutions (for medical management and patient advocacy), and Chart-Tech (for re-pricing of claims.”
Custom Design Benefits Develops TrueCost ffor Innovative Health Care Cost Control Using Medicare-referenced Pricing
MyHealthGuide Source: Julie Mueller, 1/23/2013, President, Custom Design Benefits, www.CustomDesignBenefits.com
TrueCost: Innovation in Health Care Cost Control
Cincinnati, OH — Having spent innumerable years with the knife of out-of-control, spiraling health care costs at their throat, Cincinnati employers and their employees have finally found a way to breathe easier, more freely, and without the perennial roller coaster of lethal, runaway health care prices.
The solution is TrueCost from Custom Design Benefits, a self-funded plan built upon a Medicare plus 40 percent payment formula, gaining steam with private companies and public payrolls alike.
“For businesses, the cost of health care has evolved from a difficult, oft-misunderstood, unavoidable issue, to an uncontrollable cost of doing business,” said Julie Mueller, president of Custom Design Benefits, a Cincinnati-based third-party administrator. “We launched this product, TrueCost, with no networks, no deductibles, and no co-insurance (employees pay flat dollar co-pays), based on tangible, certified Medicare pricing.”
Reimbursement Based on Medicare Pricing In essence, TrueCost offers corporate America a revolutionary payment structure, in which reimbursement rates are based on Medicare pricing, plus a 40 percent provider bonus. It is the simplest of consumer-driven plans, in which employees are free to select any provider they choose. Employers can be confident they are paying a consistent, fair amount, regardless of which provider their employees choose, and providers know what they are going to be paid. Custom Design Benefits (CDB) is the author and administrator of TrueCost, unveiled last year and growing in popularity with private enterprises such as the 325-employee group ILSCO and the 250-employee group Home City Ice in Cincinnati, as well as the publicly-funded Mason City Schools and its 1,400 employees. TrueCost has been embraced by many employers and CDB clients since its rollout last year, one of whom will save at least $1 million annually.
TrueCost: Serving the Cincinnati Community’s Best Interests
“One of the key reasons for our decision to change to TrueCost is that we are a tax-supported public school district facing significant financial challenges, due to a stagnant economy and its impact on our families and our revenues. We have been reducing our staff and costs for many years, and we believe that we provide an excellent service to our community at a reasonable cost,” said Richard Gardner, Treasurer of Mason City Schools. “At some point, additional reductions are going to impact our students,” Gardner continued. “Health care is a major part of our costs that we have found very difficult to understand and control. We have made many changes over the years, in our pursuit of reasonable coverage at a reasonable cost, including HMOs, PPOs and, more recently, moving to a self-insured, consumer-driven, high-deductible plan. I believe that our health plan members understand a whole lot more about the huge variances of costs between different providers, for basically the same service, and are making better-informed decisions that are having an impact on our costs.
“I think all of us have become more knowledgeable about health care — and we need to be, in order to better control this significant part of our cost. During this learning process, we found that a number of hospitals, which receive special non-profit status from our government, are charging us prices that are an unbelievable multiple of their actual cost. The current method of relying on health care networks to negotiate our prices, without consideration of the actual costs, is just not working, and it’s not in our community’s best interest for us to continue paying for health care in this way,” Gardner said. Gardner is gatekeeper for the health care program catering to 1,400 employees, and a total of more than 2,700 people, counting spouses and children.
“What TrueCost does is provide health care providers with a consistent, reasonable payment based on a reasonable percentage over their documented costs. This permits us to better understand and control our health care plan costs while offering a reasonable, cost-based payment to providers, at a justifiable cost to our staff and taxpayers,” Gardner said. “I want to emphasize the words ‘reasonable’ and ‘justifiable.’ ”
Besides “reasonable,” the TrueCost plan is also “consistent, defensible, fair, rational and transparent,” according to Andrew Quinn, president of ILSCO Corporation, one of the local area companies that have implemented the TrueCost plan. ILSCO, founded in 1894 as the Incandescent Light & Stove Co., employs 325 in the Cincinnati area. “With more than a century of experience, (our) company does not haphazardly rush into anything,” said Quinn, who explored multiple options before choosing CDB and TrueCost.
“Providing strong benefits to our employees has always been a focus, a goal, of ours. We have to keep good people. But the truth is, as we look at the way costs are increasing in health care, and the way the Affordable Health Care Act is written, TrueCost is our only option, and thankfully it is available in our market,” Quinn added. “The standard PPO plans had no options with regards to cost increases or risk. When looking at our healthcare plan each year, the general response we received was, ‘That’s just the way it is.’ And that’s just not acceptable for us.
“Out-of-control, rising health care costs do not seem to be going away. The Affordable Health Care Act isn’t going away. We’re trying to do something proactive about the situation, and not just whine. It seems that Medicare plus 40 percent, reimbursing hospitals based on their costs, as reported to the Federal government, with a reasonable profit margin, is fair to the provider and the employees,” Quinn added. “It also encourages a level of consumerism that is significantly beyond anything we have seen.”
“The brokers, insurance companies and the PPOs should be about trying to find solutions. What we have found is our previous broker and TPA did not offer any innovative solutions. It was not until we changed brokers to Hylant that we started to hear any new ideas. True Cost, from Custom Design Benefits, was by far the best option out there,” Quinn said. “When I tell other business leaders about TrueCost, they’re eager to hear more about it.”
Voice of Independence: The Brokers Speak
Matt Larmann, president of Larmann Financial in Cincinnati, is a financial expert, as well as a broker of health care plans. Larmann is the first of a new breed of brokers to embrace the TrueCost plan, and sell it, earning his status as the most prolific TrueCost sales rep. He’s been in the health care business for almost 30 years.
“I’ve been through the whole evolution of things, from before there were PPO plans, to when HMOs were just gaining a foothold, through the managed-care process, and there’s never been anything like TrueCost that helps to control medical costs,” Larmann said. “For my clients, closely-held and family businesses, it’s very troublesome and frustrating that the No. 1 expense you cannot budget, year-in and year-out, is health care. Medical charges are like flying on Delta. There are a whole lot of people, and we’re all on the same flight, taking off and landing at the same time, but everybody is paying a different price.”
“The current system is not working. It’s failing everybody. It’s failing the clients, the employers, the employees, while the hospitals and the insurance companies profit from it,” Larmann said. “TrueCost, to me, makes perfect sense, because if Medicare is paying the lowest possible price out there (excluding Medicaid), and providers can get that, plus 40 percent and get paid fast, why wouldn’t you be willing to take that?” Larmann queried.
“It’s an extremely progressive plan that offers employers a unique alternative to managing, and controlling, their benefit costs,” said d Susan Walker, Vice President of insurance broker Hylant Group in Cincinnati. “The really helpful part about TrueCost is I’m able, and my clients are able, to provide predictable claims data for customers with existing claim information. On a scale of 1-10 for innovation, I’d give Custom Design Benefits and TrueCost a 10. It’s simply a much more aggressive, proactive approach to providing pricing details, future pricing, for budgeting purposes on an annual basis,” Walker said.
“This has been done in other parts of the country for over 10 years, with great success,” concludes CDB’s Mueller.
“Since it’s new to Cincinnati, it’s very cutting-edge. We are known for providing cost-containment solutions to employers with high-touch customer service, and we are proud of our reputation and our newest solution, TrueCost. Medicare has a process, and a reimbursement methodology, that’s reasonable and fair and accepted far and wide. And we’re paying 40 percent over that.
“Our firm has worked hard to develop a sophisticated, member-support process,” Mueller added. “TrueCost members have access to patient advocates ready to help them through this new process, and are also available to help educate the doctors and hospitals. If this isn’t fair and reasonable, we’re open to discussion. We realize you can’t introduce a major paradigm shift, to an enormous industry, without suffering the slings and arrows. While some hospitals have embraced this approach, others are pushing back and that’s okay. Employers have been pushed to the wall. With TrueCost, the business community has a tool with which to push back.” “A paradigm shift in how we spend our healthcare dollars needs to take place in this country, if we want to bring costs under control. There has to be transparency, so the cost of health care is known prior to the service. What else do you purchase without knowing the cost first? TrueCost will lead to real competition, better health care and ultimately lower costs,” added Steve Chapel, CEO of Custom Design Benefits.
“In the development of TrueCost, Custom Design Benefits worked with National Underwriting Services, Inc., The Phia Group (for PD and consultation), CPR Risk Solutions (for medical management and patient advocacy), and Chart-Tech (for re-pricing of claims),” said Dana Driscoll, National Marketing Director, National Underwriting Services. “TrueCost has enabled us to effectively underwrite and competitively price the stop loss coverages for employers taking this route to maintain their health plans. It’s exciting!”
About Custom Design Benefits
Custom Design Benefits is a TPA serving clients with caring, personalized service to employees and their families. Services include Self-Funded Health Benefits, Wellness Solutions, Compliance Solutions, Cost Management Solutions, Consumer Driven Solutions, Flexible Benefit Solutions. Contact Julie Mueller, President, at 800-598-2929, jmueller@customdesignbenefits.com and visit www.customdesignbenefits.com
