Does your health insurance work for the best benefit of your well-being, or is it simply another blatant cash grab? Louis Bernardi believes that the “machine” of healthcare and insurance must be significantly reworked, not just for the sake of the patients but the doctors as well. He explains what must be done to address the ever-blurring lines between insurance and healthcare, putting the patients’ needs above anything else. Louis also emphasizes the need for transparency in the insurance industry and why 340B pharmacy programs must be put under investigation.
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The Healthcare Heist Podcast
Follow the Money. Find the Truth. Fix the System.
Live from New York, it’s The Healthcare Heist podcast. I’m your host, Louis Bernardi. Welcome. It’s our first live show in a while from our new office here in Melville, New York. For those of you who are new to the show, it was previously known as the Benefits with Friends podcast, but was retitled about a year ago. We’ve had really only just one episode this year. That’s because of our move, transition, and my dedication to a book that I’ve been working on for several years now, which is near completion.
It’s going to be titled Inside the Healthcare Heist, and it’s really more of a guide than a book. It’s more like a dummy’s guide. I tend to use the word dummy, but dummy’s guide to health care and health insurance really helps benefit advisors, plan sponsors, CEOs, CFOs, HR directors, and even employees, patients get the most out of their healthcare spend, and really understand what’s going on behind the scenes of healthcare and health insurance. I see it as my job, and I know a lot of other really highly qualified advisors who are doing the same thing.
We really need to demystify healthcare and health insurance to help the benefit decision makers make smarter benefit decisions. I call it the healthcare heist because that’s how I see it. I’ve been in the industry for about 35 years now. Lucky me, before the managed care system of healthcare and health insurance started, and hadn’t really come to the Northeast yet. In the early ‘90s, on the back of community rating and other things that hit the New York market came managed care.
Rebuilding The ‘Machine’ Of Healthcare And Insurance
It really did change significantly the behavior of the consumer, and it continues to do that today, but more deliberately, more systematically. I wrote an article this morning, a newsletter went out called The Machine, because in my book, as I was writing it, I kept referring to the healthcare and the health insurance ecosystem, two ecosystems that are deliberately complicated, unnecessarily complex, but by design.
As I was going through the process of editing and writing the book with my coach and editor said, “I just don’t want to keep saying this over and over again.” It’s really like a machine. That’s when it dawned on me. That’s exactly what this is. It’s a machine, but like all machines. Machines can be retooled. They can be improved. They can be taken apart and put back together with better parts to help them perform better. That’s really what we’re trying to do.
Bright Path, many other advisors that are in different organizations that I’m part of, like the Health Rosetta or Aspirational Healthcare, really high-performing brokers, advisors, consultants, even doctors and solution partners, pharmacy benefit managers, third-party administrators, specialty medication vendors that are really dedicated to helping to rebuild that machine. Sometimes you’re stuck with what you’ve got.
Maybe you’re a plan sponsor, you’re fully insured, and because of the state that you’re in or the size of your organization, that’s what you’re stuck with. Even though you’re I would argue that there are other solutions, you do not have to have fully insured health insurance plans. There are other things, like it grows and PEOs. Some people pay cash for their health insurance.
We have some followers that I know are big into the direct pay cash pay solutions that are out there, even if you are in an area where you’ve looked into those other solutions and they’re not right for you. One of the things that is very important to understand is that health insurance alone is not a solution.
Health insurance alone is not a solution. It is just one way of financing your healthcare costs and risks.
Insurance is a way of financing the health care costs or risk of your employees or yourself individually. It is risky to go uninsured completely when you think about very long hospital stays, very complex surgeries, medications that are out there on the market that are in the tens of thousands and even hundreds of thousands of dollars per month in some cases. Going without insurance does have its risks.
That doesn’t mean you have to go with insurance alone because insurance is not your health care. It’s very important for people to understand that the lines have blurred between insurance and health care over the years. Insurers became health care providers. Some of the nation’s largest insurance companies employ more doctors than anyone else in the country.
They give those doctors designations, which might lead members or patients to believe that they’re higher quality. I doubt that that’s true, but they can build plans to drive people towards those doctors so that they can benefit and profit within their sister companies. They can build formularies for prescriptions, medication lists, or drug lists that incentivize people to fill medications where they’re profiting behind the scenes as a pharmacy benefit manager.
It shows up as a claim and maybe even a high-cost claimant on your insurance account that might hurt your loss ratio. There’s money to be made by many of the nation’s largest insurers in their sister companies. That’s something that really needs to be laid out there. It needs to be part of transparency laws.
I think there is some legislation potentially being considered that would require insurers to post their profits or share their net profits or net losses as an insurance company, taking into account their pharmacy benefit manager divisions and their healthcare division. The important thing, really, here for the consumers to understand that your insurance is almost like your American Express card. It’s not how you make smart shopping decisions.
Your insurance is almost like your American Express card. It is not how you make smart shopping decisions.
You don’t trust American Express to make all of your purchases. You might whip that card out to make a payment and actually pay later like you do just like your insurance ID card, but you still need resources to make smart decisions. That’s really where I think the consumer is lost and may not have understood how important that is, because they’ve been groomed to believe, and even I took part in this.
I believed until about 7 or 8 years ago, until I started to see the prices for myself, that insurance companies were getting you the best net price, that they were actually getting discounts. Maybe 30 years ago, that was the case. Over time, discounts disappeared, but the belief that discounts exist remains today. When you’re looking at your health insurance plan blanketly as a claim versus premium, you’re not seeing the entire picture, and you’re certainly not seeing the itemized claims to see what you’re paying for things like MRIs, radiology, which is really low-hanging fruit.
Anything that requires preauthorization is something that can trigger guidance for members under a properly orchestrated health insurance plan to help get people to the highest value care, fair price, high quality, and be able to see those costs and prices upfront. When I talk about this machine, most people probably think that when you purchase insurance, you’re dealing with just that logo on your ID card.
That really couldn’t be further from the truth. That ID card has a logo on it and has a bunch of toll-free numbers, usually for members and providers to call, things like pre-certification, billing claims, and customer service. Behind their scenes, there are hundreds, if not thousands, of layers of sister companies that are completely curated by your insurance company.
I believe, and I’ve spoken to people, that there are profits embedded in most of those contracts behind the scenes. Gag order attestation was something that passed a few years ago, requiring plan sponsors to eliminate gag clauses from their insurance contracts. In most cases, plan sponsors haven’t even seen their contracts with the insurance company.
How AI Helps Build The Best Insurance Alternatives
There’s really very little ability for a plan sponsor to remove gag clauses throughout an entire contract, the layers and layers of contracts that exist between insurance companies and their affiliated entities, whether they’re commonly owned entities or just third parties that they partnered with. There’s money embedded in those. There’s so much artificial cost waste. I hate to say fraud, but there’s definitely abuse by insurance companies. As a plan sponsor, you have to be aware of the potential. I just shared that I was at the Health Rosetta 25 Conference in Denver, Colorado. I missed last year’s because I became a grandfather that week on Grandfather’s Day or Grandparents Day. My wife would shoot me for that. Grandparents Day, 2024, became a grandpa. I wasn’t able to meet the Health Rosetta Conference that I believe was in Washington, DC, that year.
Missing one conference and then going to Denver this year was eye-opening because it really just like not looking at a scale for two years. You might lose or gain more weight than you thought you would. The progress within what I would say is the alternative universe of health care and health insurance is mind-boggling.
AI really has a tremendous amount to do with what’s happening. The capabilities behind the scenes of insurers and TPAs, and analytics companies. Care coordinators are astronomical. It’s very impressive. I couldn’t help but think while I was there, sitting through these presentations, that so often we find that the alternative industry of healthcare and insurance is really pushing forward so quickly. As advisors, we’re keeping up with that a few steps behind those solution partners.
I find that when I have conversations with plan sponsors, CEO, CFOs, and HR leaders, they’re lagging very far behind. I fear that when that AI button gets hit, it’s going to take off like warp speed in Star Trek, the industry, but it’s not necessarily going to take the plan sponsors and their members along with them.
I’ve seen my role as a benefit advisor as being someone who has to make sure that I’m keeping in touch with the advancements, the technology, and all of the resources that are out there that help us do our job better to help our customers make more informed decisions. First and foremost, I actually have to meet my prospects and clients where they are and walk alongside them.
Try to hurry them a little bit, try to help them with things like this show to make them aware that what they’ve probably gotten used to over the past 10, 20, 30 years of managed care, which is what I call pay more, get less results. The systems that control managed care, the health insurers, and the hospital systems have really shown in the data that their main objective and their allegiances with their shareholders are maximizing profits.
Perhaps, as many of them are publicly traded companies, that’s actually their fiduciary responsibility. It’s a shame that they’ve been allowed by the federal government and states to grow and expand not only horizontally, but vertically, with all other components of your health insurance plan, and also all components of healthcare, all the way down to the primary care doctors.
They control that machine. They control the doctor’s behavior. They control the patient’s behavior. They know what information you’ve been provided as a plan sponsor or a patient. They know it’s very easy to guide you towards where the next treatment is going to pay a higher claim. It costs you more out of pocket, but they don’t seem to be disturbed by that as much as they are concerned about maximizing revenue. It’s the model.
It’s not the doctors. The doctors don’t really know about the prices, the costs of healthcare, but many of the doctors do. I think it’s close to 80% or maybe even over 80% these days that primary care doctors work for either large medical practices, hospital groups, or the health insurers themselves. Their job, without a doubt, is to see an ungodly number of patients in a very short period of time.
Around 80% of primary care doctors work for large medical practices or health insurance companies. They often see an ungodly number of patients for a very short period of time.
I believe what I’ve been told by most of the experts is that you get 5 to 7 minutes with that primary care doctor. A lot of that time, unfortunately, is spent with their back towards you as they’re typing in their notes, because if they don’t keep the notes then and there, they’ll have to do it after hours, and that’s more time out of their day that they probably don’t want to be in the office because doctors are burnt out.
They’re underpaid, they’re underserved, they’re overworked by their new bosses. Who really pays the price is the patient. I write about it in my book, the two instances or two personal experiences that I’ve had with loved ones who I felt fell victim to a very predatory healthcare system. Again, doctors aren’t out, I don’t think most cases, to get somebody.
They are definitely forced to work within the confines of the machine and dot the I’s, cross the T’s, and steer people towards higher cost claims, often in the hospital system unnecessarily. It’s open enrollment. It’s a company down in Miami, and this particular member reached out wisely. I’m very happy to get the outreach, but I was concerned about a change that he’s seen in the cost. His out-of-pocket cost for outpatient diagnostic radiology. When you look at the plan summary, that could cost as little as $200, or $250, and even less than that, depending on the plan he selects.
However, he didn’t have it in a hospital. It was billed as a hospital claim. The site of service, the place was identified as a hospital, even though it was done in an office. Now that the facility is owned by a hospital, but wasn’t done at a hospital. The result was a $500 copay instead of a $250 copay. These are the types of things, upcoding, that are done by medical practices because they know that most of the time, patients, plan sponsors aren’t going to speak up.
Acknowledging The Lack Of Awareness About Insurance Policies
Their healthcare and health insurance IQ is very low in most cases, but we’re definitely seeing an uptick in awareness, and it gives me real room or reason to be optimistic about the future. I’ve been sharing here on LinkedIn and in other ways. I just went on to Substack, by the way, I think Bernardi L. is my handle at Substack. I posted my first article. Just repurposing the newsletter that I do here live on LinkedIn as well, but hoping to share my thoughts and concerns, and hopefully educate the consumer.
When I talk to my business coaches, one of the challenges I express is that I don’t think there’s anybody in the world, any plan sponsor, who intentionally and willingly overpays for healthcare, yet they’re all doing it. The reason is that I think it’s a lack of awareness, and the consumers’ habits have changed.
The financial minds of most businesses have stepped away from health insurance, and potentially rightly. Over the years, there was no data, and that’s about data. CFOs are number crunchers. They can make informed decisions when they have data to do so. Because there hasn’t been any data, it’s been deliberately kept for them for so long. They stepped away. They’re busy in other areas.
They’re ripping their hair out of the health in their heads, trying to find that nickel to grow their company. Our argument is, and I know a lot of advisors share my thoughts is that you’re sitting on a pot of gold. If you have a fully insured plan and you’re an employer with 50, 100, 200, or 500 employees, and you’ve been getting the same old, same old solutions year in and year out, and potentially found ways to meet that arbitrary budget that was set by the C-suite. You did your job.
You got to that five percent. The pain in doing that is often much greater than companies think because they pay more, get less watered-down benefits of the past 20, 30 years have taken $2 co-pays in the early ‘90s up to $10,000 deductibles, and even higher than that out-of-pocket costs these days.
That’s really the toll on the American healthcare consumer, the hardworking people who go to work just to get benefits. Yet that plan is working against them. Why do we call it a benefit? It should be a benefit. It should be a benefit to the employer. It should be that the plan sponsors should get something positive out of this investment they’re making into the healthcare of their employees.
Certainly businesses would expect that because of that significant investment, usually top 2 or 3 cost or expense to their business, they would hope they would give them an advantage and it can give them advantage. One of the amazing things about the Health Rosetta community is the highlight it puts on plan sponsors, thousands of plan sponsors that have adopted a new way of doing benefits with advisors throughout the entire country who are retooling their machine with transparent, aligned partners that replace the misaligned incentives that often exist with traditional insurance carriers.
Traditional insurance carriers are really motivated to pay higher claims, despite what people think, because higher claims justify higher premiums. When their profit is 1% to 3% of gross premiums charged, then you can imagine that if they get to charge a billion dollars, their profit is 1% to 3% of that. If they’re able to charge twice that, their profit goes up potentially and doubles.
That keeps shareholders happy. As long as they’re doing the perceived job that you, as the consumer, are expecting, no one pushes back. It’s time to push back because I think most employers throughout the country have reached the ceiling. They’ve reached the limit. Where do we go from here? Companies need to grow. People, individuals need more money to take home to cover other expenses that are going up, not less.
Open enrollment is usually a dreadful time of the year for most businesses and definitely for employees. That was really a hard awakening for me as a benefit advisor when I realized, “I felt like I was a hero every year, and I really couldn’t wait.” I was doing a good job. I was knocking down renewals from 25% to 5% and making very little plan change. Most of our clients still have really still to this day, a very high level of benefits compared to most employers, but it’s still usually negative.
Regardless of how successful you are with the renewal, it still usually means a little higher copay, a little higher deductible, a little more coming out of payroll, and higher claims when they hit the doctor’s office, and a healthcare system that really is very predatory as well. I hate to put doctors in that bucket, but they’re part of the system that they’re forced to work with.
Why 340B Pharmacy Programs Must Be Investigated
I started to see on TV recently. I don’t know if you’ve noticed it as well, but these commercials from the pharma industry are about the 340B pharmacy programs. I’m watching it. I understand what it is, but I’m thinking, “I’m not sure that the message is necessarily getting across to your average American, whether they be a plant sponsor or your average Joe who’s working and gets their insurance from an employer.”
What a 340B does basically, these hospitals are getting medications at next to nothing. The justification behind that is that they’re supposed to be using those medications on the underprivileged, for the poor, for the Medicaid members, and uninsured people. Instead, what the data is showing is that they’re taking these medications. The commercial mentions that they might pay a dollar for, and they’re turning around and they’re selling it to their commercial members or filling it with their commercial patients and getting thousands of dollars, potentially even tens of thousands of dollars for that medication.
I really hope that there is a crackdown on that. There’s got to be a way to follow the money to see what hospitals are doing that. They are doing that to remove them from that program, but also strip them of their not-for-profit status. Not-for-profit hospitals or hospitals just in general really should be serving their communities.
They make a significant amount of money, whether they show that on their balance sheet or not. There are investigations all over the place in healthcare. Pharmacy benefit managers are being investigated. Their insurer, sister companies are being investigated. The data analytics companies that they’re affiliated with are being investigated.
Their relationships with Big Pharma are being investigated. There are investigations everywhere. It’s complicated. Recently, I was on a podcast with a company that did a really thorough investigative analysis of the United Health Group. I’m not saying anything about United Health Group, but what they found is over 2,700 affiliate entities within the United Health Group.
That’s just mind-boggling. Why would an insurance company need 2,700 affiliated entities, all with their own names, tax ID numbers, payroll, and roles in the health insurance and healthcare process? The United Health Group is United Health Care, Optum Rx, Optum Health, I call it Optum Insights, I don’t know if that’s the name today, but then underneath those components are another 2,700 entities.
I would never have guessed anything like that existed, but it does. We need to get to the bottom of the role of insurance carriers. What is the role of health insurers? What is expected of them? What are they expected to deliver as far as performance, but also data to their consumers? I think that’s really the question that needs to be asked is “Are they serving the purpose? Are they serving the mission statements?”
Addressing The Problematic State Of Health Insurance
When you go to their website, their mission statements are to take care of the American healthcare member, their insureds. I’d argue to say that the data doesn’t show that they do that. They don’t. When we build an unbundled plan, we basically take what an insurance company does, and now we put it with what we would call best-in-class solution partners and replicate it, but with aligned, transparent partnerships.
The things that can be done by care coordinators and pharmacy benefit managers, and TPAs are astronomical. It is night and day. The support members can get out of it. That was one of the greatest surprises that we had was that with all of the medical, the cost savings that were incorporated into these plans, we’ve reduced claims by about 25%. What touched the members and what became the most important component of the plan had nothing to do with savings.
It had to do with the dedicated nurse navigators, nurse coordinators that were there to reach out to all employees, not just the high cost claimants, but all of the members had outreach, and many of them did engage with the nurses but the most vulnerable employees, the sickest, the ones who were the frequent flyers and had excessive claims in the past.
Over time really grew to trust the nurse in a way that we weren’t expecting. At Renewal, we’re often told we can look at the performance of the TPA, the PPM, and many of the other contracts that are built into that program, but do not take Nurse Sam or Nurse Angela away from our members. It’s more than just about cost savings. I’m very aware of that.
I don’t necessarily care about the cost all that much. For me, my mission is really about helping the consumer. I think one of the most despicable things about healthcare and health insurers is that they know who the best providers are, the highest performing providers, the doctors that have the best outcomes, the least amount of readmissions.
The appropriate rehab after surgeries, but also the same doctors who prescribe care most appropriately to begin with. You can have a doctor who gets great results, but is doing procedures on people who don’t need them. Why? It’s because we get paid because it’s free for the service. A doctor who will walk away from income and steer someone towards less invasive care is the doctor that you want to see to begin with.
We know that if they do it, they get it right, and it’s necessary. That’s really what people should be striving for. I actually had a call yesterday on that topic from an HR leader from a client of ours in Massachusetts, a nice-sized group, about 70 people on the plan. I believe 60, 70 employees are on the plan. Around their fully insured plan, we implemented a resource, which is an HRA with care coordination.
Members are asked to perform a doctor search whenever they need specialty care, surgeries, radiology, things of that nature. As long as they go to a high-performing doctor that they’re steered towards or guided towards, they don’t have to use these doctors. If they do, their out-of-pocket cost is completely waived. There’s always a little bit of skepticism. I don’t want someone telling me who a good doctor is.
If you think about today, how you make that decision, you probably would rethink that and say, “Maybe I should be using a company that has access to 80% of all the claims in the entire country and has built an algorithm around identifying the top-performing doctors.” Maybe that’s better than a Google search, but that’s just me who thinks that way.
Anyway, we implemented this plan, and the HR leader reached out and said, “I would love to have a call with you because they knew other people who had had a similar surgery, and all of them had been really forced to take opioids.” Pre-surgery, it was a very difficult surgery, not an unusual surgery, not something that’s uncommon, but it’s a painful recovery, and you’ll leave the outpatient facility with opioids for that night with a prescription to fill the next day.
This particular person, he’s like, “I don’t want to do it. I’ve known I’ve seen what it’s done to other people. I’ve heard from friends who have had the surgery that it’s very difficult.” There were alternatives. There were ways to avoid opioids completely. He couldn’t wait to share that with me. It meant spending a little money on a device that helped him ice around the clock, ice shoulder without even having to refill the ice, which was pretty cool.
He rented a machine that did that. By doing that, his recovery time was better, and the inflammation was better. He was able to forego the use of all opioids, and that was important to that member. That’s what healthcare should be. You want doctors who have time to listen, understand patients, and guide people towards the most appropriate care.
Doctors must have enough time to listen to and understand their patients so they can find the most appropriate care.
Episode Wrap-Up And Closing Words
Again, when they do have to perform a procedure, prescribe a medication, they’ve exhausted other avenues and really put the patient first. That’s really it. I wanted to talk about this machine. I put that visual in your head. It is a machine, but machines can be fixed. As I was thinking about earlier, I was actually thinking about race cars. If anything about drag racing, there are all these different levels, from stock cars to high-performance, different types of fuel, and you’ve seen them, they have the funny cars.
They have the I guess it’s called pro stock. They have all of these high-fuel cars. Some of them are like 25 feet long, with just they look like erector sets with wheels in this massive engine, and just a shield that pops over the driver, but those are all machines. When you think about that stock car that’s cut, that might be what you’re working with.
Stock cars have all the parts and components that are built by the manufacturer. If you have a fully insured health plan, I would argue that’s what you get. You get their car. They built it. It’s their components. It’s their tools. It doesn’t mean that you cannot take that car and make aftermarket changes to it. Maybe you’re still working off of that chassis, but you’re working on the engine.
You’re working on the transmission. You’re working on the battery. You’re working on the body of the car. Maybe it’s a cosmetic thing, maybe it’s something you want to get more gas mileage, maybe you don’t care about gas mileage, you want to go faster. You can do that with any type of machine.
Just need the tools, and you need the guidance to do it. I wouldn’t recommend buying a car and trying to make it into a high-performance, high-fuel alternative yourself. You would want a guide. I guess I see myself as that guide. I know that the advisors throughout the country. I see the struggles a lot of the advisors are going through, and you’d think, “If you could build a better health plan and you could save companies 25% and take better care of their employees and help them incentivize them to reinvest that savings, that 25 % dividend back into their company, their people, technology. Why wouldn’t everybody want to do this?”
I think it’s because there’s a lack of awareness, and we really need to crack through that. I won’t mention any of the advisors because I didn’t reach out to them ahead of time, but there are so many advisors. If you connected with me on LinkedIn, you’ll be able to see who I follow and who all the other advisors go to the Health Rosetta website. There’s a map of advisors on there.
If they’re involved with Health Rosetta, there’s a good chance that they are advisors that has really committed their practice to elevating the expectations of the consumer, building when appropriate and doable high-performance health plans that can help accomplish all of those things I mentioned a second ago.
What To Expect For This Season
That’s it. I’m to try to keep these to about 30 minutes instead of an hour, like they used to be. This season, I’m expecting to have some great guests from within the healthcare ecosystem. Hopefully, direct primary care doctors, practitioners, and people who have built virtual solutions for healthcare to help employees deal with a lack of care adherence, and really just maybe even access to care in many parts of the country.
We’ll also have solution partners, TPAs, pharmacy benefit managers, and nurse advocates. Wait until you meet the nurses. They’re just amazing people. If I can get them to come online, because sometimes they’re a little bit shy, but we’re going to try to get them. Just explain the experience that they have with members.
If I can get some members who would volunteer to come onto the show as well, talk about their own experiences with a health plan that is designed and built to take care of them, I will certainly be trying to do that. Anyway, thank you so much for joining me. Hopefully, there are people out there. I put this together on very short notice and didn’t promote it, but we’ll be sharing it on LinkedIn Live, and look out for the next episode. I’m hoping to have probably about one every two weeks. Thank you so much, and have a great day.
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