The Cost of Care: Why Being an Informed Consumer Has Never Been More Important

By Sarah Gunter

“High-cost claims are going to explode,” warns Edison Health’s Shawn Rutledge, who is speaking specifically about the backlog of elective surgeries due to Covid. If this has employers anxious, it should -- 6% of enrollees on a self-funded plan are spending the majority of that plans dollars on intensive medical procedures like hip and knee replacements, heart surgery, back surgery, cancer treatment, and the like. It may feel like as an employer, you’re powerless when it comes to these costs, but if there’s any silver-lining, it’s that you have far more control than you think. We sat down with Shawn Rutledge, CEO, and Marshall Allen, author of Never Pay the First Bill to learn more about what you can do to protect yourself and your employees from exorbitant medical bills. Here’s what you need to know.


Let’s start by diagnosing the problem: medical bills can be financially devastating, and it often feels like there’s nothing we can do if we get one. Americans spend about twice as much per person on healthcare than the citizens of other developed nations, and 1 in 6 Americans has medical debt in collections. Almost everyone can agree that healthcare in this country is too expensive, but answering the why is more complicated.


Allen points to a lack of industry transparency and consumer education. The cost of care is rising every year, but Allen says it should actually be going down, as 25% or more of healthcare spending is unnecessary. The average consumer tends to place blind faith in healthcare providers. When we receive a bill in the mail, we assume the amount is actually due. But when it comes to medical bills, not all are fair or accurate—in fact, experts actually say that the majority of bills have errors in them for a variety of reasons. One common “error” is up-coding, where providers bill higher-level services than the ones actually provided. Most consumers don’t review or even know how to decipher their bills, creating a lack of accountability where price-gouging practices thrive.


Rutledge too emphasizes the importance of reviewing bills (or claims, for employers), but he also questions the necessity of paying certain costs in the first place. “Misdiagnoses, overutilization, and inappropriate care is killing self-funded plans in America,” he says. These problems also suggest an overabundance of faith in healthcare providers. Studies show that patients tend to choose physicians based on convenience and friendly staff as opposed to outcomes and quality. Of course, trust is an essential part of the physician-patient relationship, but there’s a problem when patients don’t know the right metrics by which to discern where they should place their faith. It’s important that consumers are informed and armed with certain statistics, like the fact that 35% of cancer is misdiagnosed, according to statistics shared by Edison. 12 million Americans per year are misdiagnosed—that’s 1 in every 20 patients. People place different levels of blame for these outcomes, but regardless of how much culpability stakeholders share, the best defense is being an informed consumer.


This leads into what you, as a consultant or an employer, can do to protect yourself and your plan members from paying more than you should. First, empower your plan members with educational tools; informed employees will have the critical know-how to avoid inappropriate care, meaning there won’t be a claim in the first place. Health literacy initiatives are a great way to educate employees so they can take their health into their own hands and make the best decisions for themselves in the long run. Similarly, programs that promote financial literacy will help your employees be prepared in the case of an unexpected expense. Equip your employees with the tools to advocate for themselves if they are faced with a large bill, like Allen’s Never Pay Pathway, which includes six steps: get an itemized bill; look up billing codes; get the medical records; look up the fair price; challenge any price gouging; protect yourself in small claims court, if necessary. Informed consumers are ultimately what will help steer the industry in the right direction.


Outside of education, it’s important that every employer know the importance of second opinions and micromanaging claims. There’s little industry incentive to review claims for you; insurance companies and TPAs have about 96% or more of claims processed by the computer. Not only do employers need to seek a second opinion on claims after-the-fact, they also need a proactive system in place. Rutledge recommends incorporating a process of redundancies on each decision made in the healthcare process for each individual patient. “Triple check every diagnosis,” he advises, “employers need to be sure that employees are going to the right place at the right time and that care is appropriate.” If there’s one takeaway, it’s how crucial second opinions and double-checking are, because there’s a good chance that your employee really does not need that elective surgery, and, that if they do, they’re being overcharged. With the right information, you can help protect them, and yourself.


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