Imagine your plan has a member in Wisconsin needing open heart surgery. The procedure would cost at least $200,000 in state, but Baltimore-based Johns Hopkins Health System could do it for $80,000.
This was a real scenario for Self Fund Health CEO Jonathan Baran. He said the patient ended up on the plane, and the employer paid $80,000.
“Every single one of your employees will travel three states away to save a grand on a pickup truck,” he said in a recent interview with Becker’s. “They do the exact same thing for healthcare when you make it really simple for them.”
Employers have become increasingly vocal about steep healthcare costs and interest in self-funding has grown substantially over the last decade. To top it off, Mark Cuban recently launched Cost Plus Wellness, a direct contracting platform linking self-insured employers to providers.
With Self Fund Health, which covers nearly 10,000 total lives and mostly focuses on companies with 50 to 500 employees, members can either “go where the prices are fair” to get services for free or face a deductible. In Wisconsin, Self Fund Health defines “fair” as 200% of Medicare or less.
Primary care serves as the model’s basis.
“Where you go for primary care is where you go for expensive care. This is what primary care serves as: It’s the funnel to get you further downstream,” Mr. Baran said. He added independent primary care doctors, rather than health systems, are often the ones with the fairest prices.
Mr. Baran said Epic can act as “the digital four walls” that keep patients going back to the same organization, even if it is not cost effective.
“You’ve got to break this chain,” he said.
Some employers have opted for individual coverage health reimbursement arrangements — where employers give workers an allowance to purchase their own coverage — so employees have more flexibility, but Mr. Baran views self-funding as something “180 degrees” in the other direction.
“Option one is … you lean all the way in, and you learn to buy healthcare like you buy anything else: You look at the cost, you look at the quality, you incentivize behavior, you manage it, you track it,” he said. “ICHRAs are the entire other end of the spectrum, which is the employer saying, ‘Peace, I’m out of this game. It’s up to you now.'”
Mr. Baran also challenged health savings accounts. Kevin Knight, chief marketing officer of Sidecar Health, separately questioned the effectiveness of HSAs in a recent “Becker’s Payer Issues Podcast,” particularly due to a lack of transparency in healthcare that could hurt decision making. Mr. Baran focused on whether HSAs can truly shake up the cost equation.
“What have HSAs done to help us change the cost of healthcare? Let’s be real: HSAs are tax-deferment vehicles for the executives, not for the rank-and-file employees,” Mr. Baran said. “HSAs have done nothing to bend the cost curve.”
For a successful self-insured transition, Mr. Baran said there also needs to be a cultural shift away from reliance on big hospitals.
“If a company thinks they can go self-insured and not do anything about actually changing how healthcare is purchased, it’s the equivalent of complaining about the cost of groceries from Whole Foods and then switching from cash to credit card and expecting to pay a different price,” Mr. Baran said. “The only way you’re going to spend less on your groceries is if you buy less groceries, or you go somewhere else where the cost of the groceries is cheaper.”
At the Becker's 5th Annual Fall Payer Issues Roundtable, taking place November 2–3 in Chicago, payer executives and healthcare leaders will come together to discuss value-based care, regulatory changes, cost management strategies and innovations shaping the future of payer-provider collaboration. Apply for complimentary registration now.
