Marshall Allen’s book, “Never Pay the First Bill: And Other Ways to Fight the Health Care System and Win,” shows individuals and employers how they can push back against the high cost of health care. It’s led to Allen Health Academy, which takes the principles of the book and communicates them through an engaging series of health care literacy videos for consumers. The videos are currently in production. Marshall’s stories have been featured by the New York Times, Washington Post, USA Today, The Today Show and other outlets. Speaking engagements include AcademyHealth, the Association of Health Care Journalists, the Michigan Hospital Association, the National Patient Safety Foundation and Stanford’s Medicine-X. Before journalism, Marshall spent five years in full-time ministry, including three years in Nairobi, Kenya. My Master’s degree is in Theology. I am currently working as an Assistant Regional Inspector General with the Office of the Inspector General – HHS. Lou and Marshall with share true stories of success including how real patients fought the system and won. Health care and insurance are overly complex by design. Learn what enhancing your IQ can mean for the average American and their employers.
Listen to the podcast here
Benefits With Friends – Season 2 Episode 6 With Our Guest Marshall Allen
I have a special guest I’m going to bring right into the room with me. Welcome, Marshall Allen.
Thank you. It’s great to be here with you.
I appreciate you joining me. We rescheduled to work with both of our times, which was awesome. This time of year, I know for me, is insane. It’s the fourth quarter of 2022, with so many January 2023 client renewals to deal with.
I’ve been fighting this flu bug that’s going around. My voice is recovered, so I’m going to be okay. I’ve got a cough drop going. I’ve got my tea here. My wife is, unfortunately, sick in the other room. It’s been a rough spell with this cold stuff going around.
I can’t wait to get to so much stuff. Let me introduce you to the audience. Marshall Allen is a best-selling author. We’re going to talk about his book. He calls himself an accidental healthcare journalist. He was an investigative reporter for ProPublica. He is the Founder of the Allen Health Academy and is also Assistant Regional Inspector General for Dallas.
I work at the office of the inspector general for the Department of Health and Human Services. I always have to make sure and add the caveat that I’m not here speaking on behalf of the OIG, but that is my day job. That’s what I have the privilege of doing every day.
He is an adjunct professor and was a minister for five years. You’ve covered a lot of spectrum.
It’s a diverse background.
We’ve had a lot of guests, but I don’t think anybody has as diverse a background as yours.
It all fits. It’s pretty unorthodox, especially when I went into journalism after being in full-time ministry for five years. I’m not a minister. I did youth ministry, so that’s ministry light. I ended up going to seminary. I got a Master’s degree in Theology and thought I would continue doing something ministry related for my career.
I started freelance writing. That’s why I say I’m an accidental healthcare journalist because I didn’t even plan on becoming a journalist. I didn’t even intend on covering healthcare. I had my editor at the Las Vegas Sun asked me to cover healthcare. I agreed to do it, and I’m glad I did. That was many years ago. Ever since then, I’ve been digging to uncover on behalf of the public, and especially for patients, working Americans, and employers, how they’re overpaying for healthcare and not getting their money’s worth.
When I say they’re not getting their money’s worth, they’re paying way more than they should. You could argue that they’re paying twice as much as they should be. They’re also not getting the quality of care they should be getting for their money. They’re being discriminated against because working Americans and employers are expected to pay 2 to 5 times more than patients on government plans, like Medicaid or Medicare. This is a big injustice that’s happening to working Americans. It’s causing a huge amount of harm. That’s what I did. That’s why I wrote the book, Never Pay the First Bill. That’s why we launched Allen Health Academy to try and build health literacy so that employers and working Americans can understand what they can do to fight back and win against these challenges.
That’s what’s so amazing to me. I’m a self-proclaimed benefit optimization officer. I was creating my business card and didn’t want to be a broker, consultant, or advisor any longer. Benefit optimization is something that is completely possible regardless of the type of funding mechanism. I would argue that Americans are the greatest consumers in the world. We can buy things if we look at anything, but for some reason, we’ve accepted no information or data related to quality, prices, or costs. There’s a difference between costs and prices. We’ve been groomed for so long as a society around healthcare and health insurance that there’s nothing we can do about it. Commercial employer-sponsored plans are paying so much more than everybody else. We’re subsidizing the system.
That’s right. Anybody who’s inside the system will tell you that. Any hospital executive will tell you that they cost shift by charging commercial health plans, which are employer-sponsored plans, more than they can get from the government plans because the government plans set their prices. It’s exponentially more for the same service at the same facility if you are a working American going through their employer-sponsored health plan.
I like what you said about we’ve been groomed because there’s a predatory aspect to this. Groom is a word that shows intent. There is a predatory aspect to this where the system is made to be intentionally complicated. It’s obfuscated. It’s hard to get basic information. I try and reframe this because what I’m trying to do is shake and get the attention of employers and working employees. I shake them up to say, “It doesn’t have to be this way.”
I use the term deceptive. These are deceptive schemes that have been created by the healthcare industry to take more money than they should. This is the definition of swindling. The word swindle means to use deceptive schemes to take people’s money. A lot of this is legal. This isn’t stuff that’s illegal. It’s deception. It’s immoral and unethical. That’s where my ministry background comes in. I’m comfortable using moral language, and this is wrong. It’s flat-out wrong.
I also believe in the power of moral force. When you see something wrong and call it out, even one voice of someone calling something out has a tremendous amount of power. Even every individual patient has a lot of power when they share their story or stand up for themselves. It feels like it’s David against Goliath. There’s nothing you can do to win.
There’s a lot of moral force when we stand up for what’s right. That’s why there’s a lot of hope and optimism here for employers and working Americans, even though it seems like the days are very dark. There is a lot of hope here. We’re seeing a lot of people, like yourself, who are optimizing health plans for employers and delivering much better benefits at a much lower price. That’s what I write about in my book. That’s what I talk about in my videos. That’s the message I’m trying to get the employers and the working Americans to snap to attention to.
Why this is so great for me as a benefits expert is here you are on one side of it, probably not so excited. Healthcare and investigative reporting is great, but once you see it, I’m sure that that moral aspect of who you are is what took over and said, “Wow.” When you peel it away, it gets deeper. That’s what happened to me. I was in the business for 25 years. I accidentally saw the prices versus the cost. It made me think of all of the renewals in the prior years where I gave the carriers and the healthcare system the benefit of the doubt because of their enormous size, assuming they were using that size and that leverage to get people the best prices and the best healthcare, but they’re not.
It’s not the individual doctors, the insurance carrier reps, or the underwriters. It’s the system we work in that most people would say, “Where can I go? What else can I do?” You wrote an article that caught my attention that I want to bring up. It’s titled Five Reasons the Time is Now for Consumer-Driven Disruption of the Healthcare Status Quo. I’m a subscriber of the Allen Health Academy, so I get your emails. I saved this one and was looking it over. It’s amazing when you’re on this path. We are all connecting the same dots. You don’t have to look that hard. This isn’t complicated. It makes exact sense what’s happening inside these systems.
It is a conversion process. To use religious language, Paul, on the road to Damascus, the light shown in his eyes, and he was blinded. They talk about how the scales fell from his eyes, and he could see. He saw things in a completely different way. That’s where I look at our world of employee benefits. I love to talk to employers who have been converted or people like yourself who were former brokers doing it the old way, and then the scales fell off their eyes, and they can see things in a new way. They’re connecting the dots and understanding what’s going on. That’s the type of awakening and enlightenment we see throughout the United States, whether it’s employers, brokers, health insurance industry insiders, or hospital executives.
We’re seeing a building movement of people who are seeing things as they are. It’s piercing the façade. You’ve seen behind the curtain, and you understand. Let’s talk about that column I wrote because I pointed to five reasons why the time is now for the consumer-driven disruption of the healthcare status quo. I was trying to play devil’s advocate with myself. A fair question someone might ask you or me is, “What’s different now?”
The costs have been outrageous for years. People have been talking about healthcare reform for decades, and nothing has changed. The Republicans haven’t changed it in a meaningful, disruptive way. The Democrats haven’t changed it in a disruptive way. Although I will say, some of these policies have the potential to be very disruptive. What’s different? Let’s talk about price transparency. One of the reasons I pointed to was the hospital price transparency final rule. You mentioned that you accidentally started seeing the prices. Hospitals are required because of this final rule to put their prices on their websites. What that’s showing is an absolute absurdity in pricing.
You’re seeing cases where a colonoscopy for a Medicare patient might be $1,200 at one hospital. That same hospital does the same colonoscopy for someone on an Aetna plan, Cigna, or UnitedHealthcare for $2,000. It might be $3,000 for someone on another commercial plan. It makes no sense. It’s the same colonoscopy, same hospital, same facility, and same doctors. This does not make any sense. When you start to see it and go, “Why would it be okay for one patient to pay twice, 3 times, or 5 times as much for a colonoscopy at the same hospital? It makes no sense,” that’s because it’s not fair. It’s not right. That’s what employers need to be asking.
That price transparency came into existence a couple of years ago. It’s also being applied to health plans. Health plans had to release their data. This is a massive amount of data. No consumer is going to go to UnitedHealthcare’s website and download these files. They are massive. I’ve talked to the data scientists who are downloading these things and trying to make sense of them. It’s hard for them to do. It’s not happening immediately. I know even hospital price transparency is not universal. In fact, compliance has been rather slow, but compliance is going to improve. It has started.
What’s happening now is startups, tech startups, data scientists, savvy advisors like yourself, employers, and journalists like me can look at that data. We can make sense of it. Since employers have that data, they’re empowered to redesign their benefit plans and say, “Why would I take a plan that’s going to pay 3 or 5 times the Medicare rate for a colonoscopy at a particular hospital?” It’s incredibly empowering information. It’s only been in existence for the last couple of years.
I use the word grooming, and you use the word swindling. It’s been deliberate. I’ve been doing this since before managed care when the prices were the prices. Even then, insurance carriers were manipulating reimbursements. You and I spoke a few years ago about the Ingenix lawsuit. For anybody out there, we don’t have to spend too much time on it. Even then, they were deliberately attempting to reimburse the patient when indemnity plans and PPO plans were starting. It’s despicable, but it’s business. Like all businesses, they have to answer to the court of public opinion.
Our main goal is to elevate the IQ of the American healthcare consumer, both the employer and the members. Once it’s conscious in their minds, and because that great shopping that we are capable of starts taking over, they will start taking their business elsewhere. They will start asking questions. There’s no reason why someone should find out whether it’s $1,500, $2,000, or $3,000 three weeks after they have the test. They need to know before they have that test. You could probably pay cash for 10% of the price with an independent facility.
Direct contracting is such a huge thing. It’s growing. I try to keep a pulse on the language the status quo uses. They are starting to change the conversation because they have to at least give the perception that they’re all for this or that this was accidental. This wasn’t deliberate. This is the system, and they were part of it.
Enough employers educate themselves, which is not easy. That’s why you need a certain type of advisor who is going to dig deep and want to deliver a better product. I was a GA for many years. I don’t fault brokers because they’re selling to the expectations of the consumer. They don’t want to shake it up. That moral part of it takes over, and you have to make a decision. It’s one that I made in a lot of other programs. You’re familiar, I’m sure.
Health Rosetta has been amazing for me because I thought I was on an island. I thought that this was bothering me. I started getting drawn to these conversations and meeting these other advisors, amazing people like Dave Chase, that whole team over there, and brokers throughout the country that are working tirelessly in ways that are so rewarding. We have successes I could only have dreamed of a few years ago. Conversations that I’m part of, I’m like, “When did this happen?”
We got someone a $240,000 medication for free. It’s only because we’re working with a transparent, independent pharmacy benefit manager that curates and builds a formulary understanding that these things are possible. Insurance carriers are never going to exclude that medication because it’s not their money. They have a huge rebate behind the scenes, which is another part of it.
You mentioned the importance of educating consumers. That is what I’m on a push for with Allen Health Academy. I wrote Never Pay the First Bill, and through the support of many people in this community, we did a crowdfunding campaign to create videos based on the book called the Never Pay Pathway. If people are interested, they can go to AllenHealthAcademy.com. I would invite you, all of your audience, and anybody reading this who’s an employer, broker, advisor, or consultant to look up the videos.
I’m looking for some progressively-minded advisors and employers who want to educate their employees and help them understand the why behind the optimization of these health plans. It has to be a partnership between the employer and the employees to work together to use direct contracting. That is a very smart thing to build into these health plans. If the employee doesn’t understand why they need to go the direct contracting route or should price out their medications before going through one direction that might cost more than necessary, the health plan can’t be optimized.
Go to AllenHealthAcademy.com. Send us an email at NeverPay@MarshallAllen.com and let me know. My pricing has flexibility, especially for these early adopters who are interested in educating their people. That’s our goal. It is to make sure that this gets rolled out to the employees so they can understand why they need to be engaged with their health benefits and active optimize participants in their health plan, especially for these health plans that are optimized to deliver better benefits at a lower price.
It all starts with that knowledge. You’re not going to look for something that you don’t think exists. We’ve been beaten over the head for years of pay more, get less. The experts, insurance carrier reps, and brokers, including myself, for years filled in the blanks. We assumed we heard the word discount at one time and that it truly meant something.
The healthcare system wasn’t going to sit there, roll over, and play dead when the insurance carriers had all the leverage because of the members they represented. They had millions of members. The healthcare systems wanted those hospitals that were independent back in the day. They wanted access to those patients. They realized. They got smart. Their boards got together and said, “Why don’t we merge?” There’s strength in numbers, so they merged horizontally. They grew into a huge behemoth of monopolies. When I went to school, those were legal, so I’m not sure what’s going on.
They merged vertically and took over all the doctors. That was the end game because they now control the gatekeepers. They control the primary care doctors who don’t know the prices either and are still overworked. They have to see a patient every seven minutes. They’re given a piece of paper by their healthcare system saying, “For every MRI you do, hand them the sheet and tell them to pick one,” as if they don’t have a choice. Those are where the MRI costs the most. I want to emphasize this because I was on it. I want to talk to you separately after this because I would love to be able to sponsor this for some of my employer groups. I would love to be a sponsor. I see there were sponsors on there, and I know a lot of them. I’m like, “How am I not on here?”
That was the crowdfunding campaign we did. We did a crowdfunding campaign, and a lot of generous people came together. Those are the people you see who have credits as sponsors.
It’s amazing. It’s so affordable. We’re talking about dollars to do something that can have such an impact. I know you’re not a broker, but I don’t do this to save companies money. That is not my goal. I know that that’s why ultimately, some employers will choose that or gain interest in what we’re trying to do for them. This is about getting people the highest quality healthcare possible.
I refuse to believe, even though statistically, it’s true that we don’t have the worst healthcare. Our practitioners are as good as anybody. It’s the system where it breaks down. It’s all the bureaucracy and all these different steps. We need to put the power back in the doctor’s or the practitioner’s hands. We need to let them lead the way and shake off all of that waste or all those hidden profits and artificial crises. It’s going to happen.
When people understand the waste in the system, they start to realize that the cost could be a lot lower. I spent the year 2017 doing nothing but investigating all the wasted healthcare spending in the United States. They estimate that that tab is up to almost $1 trillion a year of wasted healthcare spending. About 25% of what we spend on healthcare is wasted on things like overtreatment. That’s giving people tests, procedures, and drugs they don’t need that provide no benefit. This is research-based. This is not someone’s opinion.
The complex way we pay for healthcare, running everything through all these multiple payers, think of how much more complicated that is than a direct pay contract. There’s fraud. About 10% of healthcare spending is probably wasted on fraud, although no one’s tracking it closely. There’s no actual number of how much is being wasted on fraud. When we talk about fraud in healthcare, when employers get a hold of their data, and they have a savvy advisor or a data analytics company review the claims that are being paid by their big third-party administrator, BUCA carrier, or whoever’s administering their plan, they find significant amounts of bills that have been double paid or bills that have been unbundled. They’ve been paid way higher rates than they should be.
Upcoding is rampant in our healthcare system. It’s an opportunity for every patient. Every patient should be looking at their billing codes and challenging upcoding because there are hundreds or thousands of dollars to be saved per healthcare encounter when you spot these kinds of errors in your bills. That’s what I show people how to do in my videos and in my book. I know that’s what employers are doing. Those are the savvy employers who have brought in the right consultants and worked with the right vendors because these solutions exist. When people apply these solutions, they are saving much money.
It’s not just about saving money, but when you look at the debt being caused to working people, where we have 100 million Americans that are estimated to be in medical debt, this is breaking people financially. It’s causing people to have to choose between food, rent, and paying off their medical debt, or it’s causing people to avoid going to the doctor in the first place. This is causing real harm to people. We need to help employers understand that urgency. I feel sometimes, maybe, they’re inured to that same old year after year, but this is where they need to snap to attention. That’s where education for the employers and the employees, to me, is a starting place.
My background before I got into this business was I worked for a very large radiology practice in New York City on the Upper East Side for a few years. I was work working in the controller’s office. I was a jack of all trades. I did the billing. I did claims. I brought the receipts to the bank. I did collections. I did everything. I submitted the claim forms. I was young. I was 22 years old. I left there when I was 24. I was starting a family.
I started to get upset about what I saw. The doctors were nice people. It was a radiology practice. They were making millions a year, and that’s fine. What I couldn’t stomach were the buses. Every day, there were two buses from the adult homes of people. There were two a day. They would get there at 8:00 AM or 9:00 AM, and they would empty them out. They would sit all around the waiting room. A lot of them were almost comatose. We’re talking about people in bad shape. They would put them through the machine every single day. I would talk to the radiologist, and they say they got to deal with that home. None of these people are sick. They plug a name in and click.
That sounds like blatant Medicare fraud. Is that what was going on?
Absolutely. There’s no question. That happens. There have been huge cases settled around the country. It’s money. They’re like, “I’m not taking it out of that person’s pocket, so who am I hurting?” That’s been the mentality. They’re like, “Why should I save money? Why should I look to do better?” Back then, it was a $5 copay, 100% hospital, and 100% pharmacy to $7,000 individual deductibles and $14,000 family deductibles now. You get no coverage except for preventative care until you reach that out-of-pocket cost. You’re still paying $2,000 a month for your family. That’s not healthcare or health insurance anymore.
When you do these open enrollment meetings, I love the people. That was always about the people. That was my favorite day. At the end of those meetings, I would always stop by saying, “If anybody has any questions that are personal that they don’t feel comfortable asking in front of their employees, I will stick around.” Those were the ones that flashed through my brain when I saw the prices for the first time. All those times when people came up to me and said, “I’m already taking only 3 of my 5 medications, and I’m going to have to give up another one because I’m on a limited budget.” You have no answers for someone, but now you do. You know how bad it is.
There’s no right or wrong way to go about this. There’s no silver bullet health plan for everybody. The one thing that’s universal is that the consumer needs to be informed. If you know who Sy Syms is, I bring him up on a lot of the shows. The Syms store’s motto always sticks in my brain, “An educated consumer is our best customer.” They’re out of business, but that’s the point. The point is that if you are informed, you will know where to take your business. You’ll know who to align with. You’ll be savvier.
I always talk about it. The thing that’s lacking that’s difficult for an advisor to do is the educational piece. Your academy is amazing. I can’t wait to learn more about it because it’s the missing piece. There was a time when Columbus was standing on a ship somewhere over in Europe, screaming, “Who wants to go to the new world with me?” People thought he was crazy.
That’s right. It sounds crazy.
They were like, “Speed it up a little bit.” A couple of trillion people have probably been here over the years. It worked. He convinced people. Once he did, he brought them to a better place. You can notice this in the upper right-hand corner of the show, which is Bright Path. That became our philosophy. We had to make that our DBA for our agency because that’s what our passion is. That’s what we’re trying to do every day. I know that a lot of times, I’m wasting my breath with some employers because they’re not ready. This is a very complicated situation. You have to plant seeds before you grow a tree.
I also want to encourage people to sign up for my newsletter. It’s at MarshallAllen.Substack.com. I led that newsletter. You talked about how some employers aren’t ready. I’m also trying to show employers how this is the time for them to take a little more seriously what they do with their benefits. I had this conversation with some class action attorneys who are interested in suing employers for violating their fiduciary duty to defend their plan assets. Can you talk a little bit about the fiduciary duty that employers have?
I was talking to a pension advisor. A lot of things that happened on the health and welfare side probably follow way too many years of compensation disclosures, fiduciary responsibilities, and the lawsuits you are mentioning.
Speaking of the pension, these same attorneys I was talking to were some of the key attorneys in those 401(k) pension lawsuits.
That’s what I was getting at. I don’t know exactly because I don’t do pensions, but let’s say it has been the last couple of years. That’s been a big deal. In compensation disclosures, there is much corruption within those plans. There are fees. You’re stealing retirement money from people. Employers that sponsor those plans have an obligation to oversee that plan to the best of their ability. On the health and welfare side, especially for self-insured employers, because that’s a pool of money, you’re paying an administration fee to a TPA. The money going into the claims needs oversight, especially since the data is available.
For employers out there, you don’t realize the serious significance of where you are sitting. If you are not following these conversations, or maybe more importantly, if you are following these conversations about the significant overpricing, artificial costs, and hidden profits within your plan, they’re not going to go after the insurance carriers. They’re going to go after the employer because employees are going to sue and say, “We didn’t have any control over this. Why weren’t you doing a better job managing? Why did you continue to renew with that carrier, that network, and that pharmacy benefit manager when you knew that $240,000 was spent on a medication that could have been for free?”
Not only that, but this is employee compensation being used to pay for all these health benefits. The employer is funding it, but it is the employee compensation 100% that’s being used on all these health benefits. That’s why employees also need to realize this. I’m trying to create that urgency for the employees, too and help them see this is their compensation that’s being managed by their employer. It is being wasted on all of this overpricing unnecessary care, fraudulent treatment, or lack of treatment that’s flat-out fraud.
Employees need to get engaged and realize that their money is going to continue to disappear. Their premiums and deductibles are going to keep going up until they change their way of operating with the system and work with their employers, a savvy advisor, and some great solutions providers to do things in a different way. That fiduciary standard is going to start putting some heat on employers. That’s another key reason why things are different now.
They have the knowledge and the data now. The prices are right out there for them to see. Ignorance is no longer an option. If you’re a fiduciary, you’re responsible by law for managing those health plan assets. If you’re not paying attention to the price variation and you’re not designing a health plan that’s going to protect the assets, you’re creating liability for yourself and your company.
Several years ago, the C-Suite, owners, CFOs, and CEOs were all in the benefits meetings. They stopped coming, and they stopped coming because there was no data. It wasn’t worth their time. I had one within the last few months tell me there was nothing there for them to dig into. It wasn’t worth the hour or two for that meeting. They could be focusing on other parts of their business where they could have an impact.
I’m not trying to put HR directors. I call them the benefit decision-makers for anybody involved in this part from a company standpoint. I’m not trying to throw them under the bus. I’m saying they wear 50 hats. They do everything. There’s no one that’s been more consumed by COVID and post-COVID. At the same time, 9 out of 10 plans are pretty much overseen by the HR department.
The C-Suites need to get re-engaged because that’s when fiduciary responsibility, penalties, and compliance scares them. I try not to use scare tactics, but ignorance is bliss, and it’s no excuse. When the Department of Labor and IRS come calling, they’re not sitting there having a cup of coffee asking you, “Why didn’t you do this?”
That’s exactly right. Another reason I pointed to why things are different, and I’m curious about your thoughts about this coming from the broker advisor role, is the changes in the Consolidated Appropriation Act. That requires employers to have their broker advisors disclose to them all the sources of direct and indirect income that come to that broker via the health plan.
It’s an awkward thing to talk about the way brokers traditionally have been paid. Once employers start gathering that information, it’s going to help them see, “My broker is making bonuses and commissions from UnitedHealthcare, Cigna, or Aetna because they all do it. It might also be a PBM, TPA, some other wellness vendor, or someone else. Is that broker advising me based on what’s best for my health plan and my employees, or are they advising me based on what’s best for their bonuses and commissions?” It’s going to raise some uncomfortable conversations.
The funny thing with that legislation, and probably most legislation, is that employers aren’t aware of probably 90% of their responsibilities. One of the first things we got involved with was compliance after the Affordable Care Act. We got involved with helping our employers with the tax forms they needed to distribute to their employees, especially if they were applicable to large employers. When we started talking about that, we started talking about summary plan descriptions, plan documents, the right way to do things, and all these other things. No one knew anything. It’s not like someone sends you a postcard and sends you a reminder.
I would say probably 95% of the employers in this country are not aware of the Appropriations Act or the compensation disclosures that are required because they rely on that same advisor, broker, or consultant who is sometimes receiving inappropriate compensation to be the one to tell them about it. Most people don’t whistle blow on themselves, so they play dumb. The penalty doesn’t go to the advisor or the consultant. The penalty ultimately, if they choose to police this, will be on the employer for not collecting it.
All of our December renewals are getting the compensation disclosures that we haven’t already gotten them. I know that Health Rosetta was a big proponent of this. We’ve been talking about it since I joined, either in 2018 or 2019. One of the first things they handed me was the code of conduct and compensation disclosure, which I had to commit. At first, there’s a little bit of fear. Even if you’re being an honest broker, do they know what you make? Does that sound like a lot of money?
When you start thinking about it, and this is the process that went through my head, as I’m sure a lot of the advisors, especially the kind that reads this, it is that I’m proud of the work that I do. I’m working twice as hard as I did before. It’s usually for less money than before, but that’s fine. You have to walk the walk if you’re going to talk the talk. There are a ton of different things. Unfortunately, it moves very slowly.
We had a situation. I was talking to another advisor. I won’t mention his name. He is from Massachusetts. He called because he needed a recommendation for a contact here in New York, a carrier, or a general agent. I made that introduction. While we were on the phone call, he mentioned a group that he had taken a broker record. He was like, “Do you want to hear a funny story?” I was like, “Yes.” There’s a several hundred-person groups or several hundred employees in Massachusetts, which is a pretty highly regulated state when it comes to healthcare. They had a fixed compensation for this group because of the size that it was.
It took a lot of effort, but he got the ear of the CFO. They had a great conversation. It was a very impactful conversation. He said to him, “The plan that you’re in now has X amount of compensation.” Let’s say it was a $300,000 compensation. He was like, “You can switch to a slightly better plan written on different paperwork and save several hundred thousand dollars for your company and your employees. The problem is the compensation on that is about half.” He said, “What? Tell me that again.” He shared that his broker was a good friend of his. He says, “Will you put that in writing?” He said, “I’ll put it in writing. I’ll send it to you. It’s fixed. Here’s the compensation.”
He called up his friend and his broker. His friend admitted to it and said, “I didn’t recommend it, and I have no good reason why I didn’t. My compensation would have been cut in half.” He fired him on the spot. That’s a friend. If you have a friend like that where you’re putting these children through college, that’s some friend I want. I need more friends like that.
The point there, too, is that we are all vulnerable to incentives. I’m vulnerable to incentives, too. In fact, the joke I make in the book is that if you paid me $1 a word to write a book, I would still be writing the book. I would write you a million-page book. We’re all susceptible to incentives. We respond to incentives. The incentives need to be aligned so they’re in favor of the employer and the workers who are paying for the healthcare.
What’s happened is the incentives have all been created to reward the big healthcare stakeholders, whether it’s the brokers, doctors, hospitals, insurance companies, TPAs, or PBMs. All of them have been working together to create incentives to extract as much money as they can out of the employer’s and employee’s pockets, whether it’s justified spending or not. It’s not always as blatant as the fraud you saw with that radiology department, but there is some shady stuff that goes on. While it may not be technically fraudulent, it is unethical and immoral to deceptively take people’s money that way.
There’s no question. What I’ve noticed, and I wonder if you’ve noticed you probably have, is that the healthcare and the health insurance ecosystems know that the day has come. They know that, slowly but surely, some of their hidden profit centers are going to dry up. The court of public opinion will make sure of that. It might be slower than people like myself or you wish would happen, but they’re not stopping. They have a fiduciary responsibility, many of them, to their shareholders. They’re ten steps ahead of us. They know what’s happening. If they lose a quarter or a percent of the business, that might be a lot of money for them. It gets their attention, and they find out why because they have more attorneys and specialists behind the scenes than they frankly should need. It’s business. It’s capitalism. Until there’s a better option, it’s what we have.
Let me ask you this. What do you think is next on the horizon? Do you have any idea where they are if they’re ten steps ahead of us?
We can already see that the healthcare systems are the hospital systems. They’re attempting to become the insurers. Many of them are going to create networks that go direct to the self-insured market without the insurance companies. These networks of theirs are pretty substantial. They can fill in their pockets by doing that and reward employers with deeper discounts than they give the insurance company. If you think about that, you could self-insure, go to a healthcare system, and get a 20% greater profit than one of the BUCAHs. For those of you out there that don’t know BUCAHs, that’s Blue Cross, United, Cigna, Aetna, and Humana if you want to put the H on end. Some people don’t.
Why would they give a 300% group 20% more discount? It’s because they need to. They’re going to go direct. The health insurance companies are all purchasing large medical practices. The next step in my mind is that they’re going to build their plans, incentivize people, and give them better prices for going to their company-owned providers. They’re going to lower the out-of-pocket cost to go there. That doesn’t mean they’re going to lower the cost of the claim on the backend.
Aetna and CVS have already done this. That’s why some of the insurance companies are pushing back at them because CVS Caremark, which owns Aetna, has built plans where you can only fill a three-month supply at a pharmacy if you do it at CVS. It’s not because they’re saving you money. I use the terminology, “To net.” They’re casting a net. They want as little to escape as possible. They need this net to be bigger all the time.
They give them an offer that’s too good to refuse to join their network, or they give them a very low out-of-pocket cost to incentivize them to participate and then they hit them on the back end with a bigger bill.
If you can’t beat them, buy them. It used to be if you can’t beat them, join them. Buy them. There’s a lot of private equity money going into things like direct primary care, which hasn’t taken off here in New York. It’s a little bit alarming to me because private equity isn’t charities, but it can potentially be a door opener so that more doctors can leave this managed care fee service world and enter that. That’s important.
I’m afraid that maybe years down the road, if they’re not run properly or regulated in some way, they’ll be bought. They’ll be places where the insurance companies or the healthcare system can once again take advantage. This is something that will never sleep. I’m writing a book, too. I’m not a writer. It was a stressful process. Every time I thought I was done, there was something else that either changed or I had to update.
I’m curious to see what you think. It will probably be something like Unmanaged Care: The Stock Markets or Wall Street’s Favorite Spectator Sport. We are spectators. I use the analogy like this. If you’re a business owner paying for your healthcare or health insurance plan, you’re probably not involved. You’re giving money away. That’s millions sometimes. Sometimes, that’s tens of millions. It’s a lot of money. Even a 100-person group could be over $1 million a year.
You’re handing this money away and hiring an insurance company. You’re going to the doctors and the hospitals. You have a broker and all of these different things. They all appear. They’re all in your dressing room. They’re putting your uniform on. When you run out onto the field, they go into the other dugout. You are standing there. You have your HR team, CFOs, and employees. Everybody else that you thought was on your team is on the other side of the field.
The most important thing when I was going through this whole process in my mind was there was no manager. That’s where the role of the broker needs to be. You have to be fearless. You have to be able to tell the truth. You have to be able to make recommendations that are going to sound disruptive. The conversation’s complex, but the solutions are simple. When I say simple, I don’t mean it’s easy. The work is being done by other people. We’re not trying to put in more work. The only thing we ask the employers and members to do is what you are trying to do on the other end. We’re like, “Let us educate you. Get engaged. Follow the data. Let us get you the data. Can we please take a little bit more time?”
The cycle or life stage of a health plan is this. I don’t know if you’ve ever talked to anybody about this. Nobody wants to deal with the renewal. They know it’s coming. They try to keep it as away from them as long as possible. Like clockwork, it probably lands on about 90 or 60 days for most companies. From the second they get it, they can’t wait to be done with it and finish the renewal.
Everybody knows this. No one wants to change. If you can get close to the number that’s necessary, the company’s going to renew. Everybody knows that. They close the book and wait for another 9 to 10 months. That’s not the way to be a fiduciary, especially over your health plan. You have to give it more time. You have to be open to suggestions. Your renewal is not the end of the last year’s. Your renewal is the beginning of the new year. It’s telling you, “What can we do to make improvements to take this from a status quo plan to a high-performance health plan?” That’s the way we look at it.
I want to talk to employers immediately after they finish their renewal while it’s fresh in their brains. I can dictate, “This is what happened. What about this? Did you focus on insurance exclusively, which is what most people do?” You’re not buying insurance. You’re buying access to healthcare for your employees and their dependents. That’s what you’re buying. It’s wrapped up nicely in a box and looks like insurance.
Insurance is the way you finance it. It’s like American Express. You can go to the store every day and spend $200 with an American Express card. You get the bill at the end of the month and wonder, “What happened? Maybe I should switch to Visa and get a lower interest rate on my balance.” People do it every month. They get those checks. They’re like, “For a 4% fee, we’ll give you a 0% interest for the next month.” That’s not it. The only way to manage your American Express bill is to sit down and say, “What am I buying?”
You should be like, “What am I paying? Where am I paying? What could I save? What’s necessary? What’s not necessary?” That’s a great comparison.
I always have more. I even use it this way. A better analogy is you’re calling up American Express and saying, “I need a TV. Can you buy one for me?” They send it to you, and you get the bill at the end of the month for a $5,000 TV. You’re like, “Wait a second.” You have no way to compare. Could you imagine not being able to shop for a TV and you end up with a $5,000 TV if they sent you the bill 3 months later or 3 weeks later every single time? I want to be respectful of your time. Is there anything that you want to add?
I want to encourage people to sign up for my newsletter. It’s free. It’s MarshallAllen.Substack.com. I’m extending my invitation to you, other consultants, brokers, and employers who care about educating their employees. These Never Pay Pathway videos that we’ve created are an awesome resource. We’re getting great feedback from people who are using them. Go to AllenHealthAcademy.com for more information. I’m looking for some early adopters. We need those employers and brokers/advisors who get it, who have already converted, and understand that educating their employees is a key to optimizing their health plans. It’s been fun to create these videos.
Utilization is so important. We have a texting system for employees. We get their cell phone numbers and text them prompts to remind them to watch the videos. The goal is to get them to complete the videos, so they have this base level of education. When they get a medical bill or need treatment, they can go back to the videos and watch them again. We’re going for behavior change here. Thank you so much for having me here.
It makes me think on that point quickly about the Allen Health Academy. I’m going to look into whether or not that would qualify for the wellness dollars. Education is a no-brainer. I have one where we found out we had some wellness funds. If I can confirm that that would be eligible, I’m going to make that recommendation to them that they use it on that.
It’s health literacy. It’s certainly a wise thing to invest in. It’s not expensive.
I couldn’t believe it when I saw it. I want to talk to you about that offline. This has been great. Thank you so much for your time.
Thank you so much.
I hope your wife is feeling better soon.
Thank you so much. Have a great day. Bye, everyone.
You, too. Thank you. Take care. Bye.
About Marshall Allen
Author and educator Marshall Allen EQUIPS and EMPOWERS you to protect yourself and those you love from egregious health care costs. He is the founder of Allen Health Academy.