Brian Lindenberg wrote another excellent column recently. In his piece (Taking action on mental illness), he referenced ideas with respect to what plan sponsors can be doing to address mental health. His comments had me reflecting back on the incredible work that the visionary Bill Wilkerson has accomplished over the last 15 years with his Global Business and Economic Roundtable on Addiction & Mental Health, and how far we have come in recognizing issues such as mental health in the workplace.
Here is something to add to the discussion: what could we do in an area like this if we had nearly $62 million every year to invest in plan members instead of lighting that money on fire?
Brian’s column hit home for me as I lost a friend recently. He was a guy who made a room vibrant. He always had something kind and funny to say about everyone. He was also fighting demons that even his closest friends and family couldn’t see. One afternoon, he jumped off a bridge and ended his life after walking his daughter back to school after lunch. Nobody can reconcile what happened. In addition to leaving behind grieving family and friends, he also left behind a Fortune 500 employer—a global leader in their space. They lost an employee with nearly 15 years of experience who had assumed ever-increasing positions of responsibility. His co-workers didn’t see this coming either.
We all have our stories of incredible tragedy as it relates to physical and mental health, and the fragility of both. I can’t imagine many readers who haven’t had a cancer diagnosis within their immediate or extended family in 2014. If nearly one in six Canadian employees is being treated for depression at any point in a given year, how many readers aren’t already dealing with that challenge either personally or within their immediate family?
What bothers me is that too often we are standing idly by while enormous sums of money get wasted inexplicably in our plans, resources that could be more appropriately invested in areas of real value to our plan members and our Canadian economy.
There is a spectacular leadership role that the employee benefits/group insurance industry, and the HR and finance leaders who intersect with benefits can play in optimizing the human capital that is the lifeblood of our Canadian economy. We are all collectively dropping the ball when we aren’t doing all that we can to support our Canadians workforce and their families with sufficient opportunities to optimize their health, well-being and productivity.
We looked at a plan experience recently where the plan sponsor watched $143,749 get flushed down the toilet over the last 36 months in an area that added no benefit to the plan or its members. Here is how it happened:
- Our co-ordination of benefits (COB) guidelines in Canada are broken, and they need to be fixed. This is a dynamic market, and areas such as the COB guidelines need to be constantly reviewed, but for many years they were completely ignored. My understanding is that the Canadian Life & Health Insurance Association (CLHIA) is now in the process of overseeing these necessary changes, and plans will see the benefit at some point in 2015.
- What is currently happening is that when drug claims are submitted that have multiple plans on board (i.e., separate spousal and employee private plans), our current system allows for the total amount submitted to be reimbursed by the two plans through COB, as opposed to the total amount eligible. Where there is a difference between those values, overpayment happens.
- In other words, the pricing controls plans thought they had go out the window in cases where the submitted amounts from pharmacies exceed what is deemed eligible during adjudication when we have more than one payer on board for the claim.
- The result: this plan overpaid $143,749 over 36 months because the sum of what all payers paid exceeded the total amount eligible by $143,749. This isn’t the fault of a specific insurance carrier or claims processor—this is related to a structural problem in the current Canadian system, which can be fixed, and, as previously mentioned, it is my understanding that is being addressed now.
The solution isn’t complicated: change the system so that the most all payers combined can pay, in any case, is the maximum of the total amount that is eligible for a given claim and problem solved.
According to the Canadian Institute of Health Information (CIHI) in its Prescribed Drug Spending in Canada report published earlier this year, 34.5% of Canada’s drug expenditure is paid for by private payers with the balanced paid by governments and Canadians out of pocket. CIHI estimated prescription drug spending at $29.3 billion as of 2013.
If the plan referenced above overspent by $143,749 because of the existing limitations in the COB system, if we extrapolate that to the total amount paid for by private payers, that equates to $61,583,229 annually. This isn’t a one-time hit. This waste has been happening year after year after year. This is an annuity that adds zero value to plan sponsors and plan members.
Nearly $62 million, just in this one area alone, every year. It’s a shame it has taken this long to get the COB guidelines addressed because it has clearly been costing Canadian plans an enormous amount annually, but at least something is happening. Before plan sponsors and advisors get too worked up over this $62 million figure, let’s reflect back to this same plan for a moment.
This plan threw away 11.3% of its plan spending in the most recent year in just three areas of inefficiency where the plan could have been optimized without adversely impacting members. This isn’t the full picture of missed opportunity in this plan, this is just in three discreet areas. If this plan doesn’t take action to implement needed change to rid the plan of this unnecessary spending that adds no value to the plan or its members, where are we going to come up with the resources to properly influence member health and well-being?
If CLHIA is fixing the COB problem, and plans can start fixing their own inefficiency issues, the pool of resources that will be available to invest in areas of need would be enormous. We have an opportunity to do something great with resources like this, so when Brian Lindenberg says in his recent column: “We can do better. We must do better.”—he is exactly right: we can do better. The starting point isn’t that complicated either. CLHIA is hopefully going to find plans $62 million to get things started, and there are multiples of that figure sitting there being wasted inside of plans as we speak.
These resources may have done nothing to prevent what happened on the bridge to my friend. These resources may not be able to affect the kind of change that everyone wants to see on a national level, but I have to think that much greater minds than mine could figure out what to do with the hundreds of millions of dollars from the COB trough and inefficient plan spending every year to help keep Canadians healthy, productive and engaged—not to mention to protect the sustainability of their plans.