Health insurance industry expert: “The business model is broken.”

Our health insurance industry is in need of repair, according to experts, but there are things employers can do to help.

“The business model is broken,” said Laura Vela, senior director of the Pacific Business Group on Health, a not-for-profit organization that advocates for employers who are purchasing health care plans. Vela spoke at a Feb. 3 health care symposium at Lehigh University, organized by the Lehigh Valley Business Coalition on Health Care, an organization that advocates on behalf of employers regarding health care choices.

Vela advised employers in attendance to question health care networks extensively before purchasing a health care plan for their employees.

“And if they won’t answer your questions,” Vela said, “find a different company that will. We as purchasers of health care have a responsibility to make change.”

To Vela, pharmacy benefit managers, better known as PBMs, are an area where costs can be cut if the right questions are asked.  PBMs are third party administrators for prescription health plans. PBMs act as intermediaries between drug manufacturers and employee benefit plans.

According to Vela, PBM’s can make money in “56 different ways from one prescription.”

“We as health plan purchasers need to find another way,” she said.

Also at the symposium, Dr. Stephen Parodi, executive vice president of external affairs for the San Francisco-based Permanente Federation, a managed care consortium, advised employers to analyze the data on their health care plans before making a future health care plan choice.

Parodi said that health care is slowly evolving from a pay for service model, where health care services are paid for on a per-service basis to value-based care, where payments cover bundled overall care.

For example, in the old model, for a knee replacement, the patient would be charged individually for the before care, the surgery, the follow up visits and the physical therapy. With value-based care, the patient would pay one lower fee that covered all of those services.

“It’s the best of times and it’s the worst of times,” he said. “People are talking about value-based care, but nobody knows what it means…If you don’t know where you are at, there is no way to improve.”