The $81 Billion Toll of Substance Use Disorders on the Workplace: Employer Strategies for Cost Effective Care and Treatment

Substance use disorders related to alcohol and drug addiction are having a heavy emotional and financial toll on the workplace. It’s estimated that addiction costs employers upwards of $81 billion per year and employers struggle with how to provide the correct care. Finding in-network providers is challenging and health plans are paying a significant amount in out of network fees and “Shared Savings” that the carrier then takes.

Tune into this episode of The Pulse as we examine the health plan impacts of substance abuse, including uncovering why so many facilities are not in network, what the carriers’ role is in this issue and how employers can create better strategies.

Panelists will discuss:

• The advantages and disadvantages of an addiction treatment center setting up in-network contracts.
• How the laws related to Mental Health Parity influence employers and health plan decisions.
• How claims for these services are handled when out of network and who may be winning in that negotiation. 
• How employers can improve their strategy to supporting the needs of their plan members  

This episode includes guest speakers:

Tim Clement, VP of Federal Government Affairs at Mental Health America.

Chris Deacon, JD, Principal/Founder VerSan Consulting

Damon Eisenbrey, Partner, Arnall Golden Gregory LLP

Kirsten Suto Seckler, Chief Marketing & Communications Officer at Shatterproof

Transcript

HOST

Welcome to The Pulse, produced by Vital Incite, where we keep pace with what's trending in employee benefits. This series was developed to bring together nationally recognized subject matter experts from the health and pharmacy industry as well as top academic and research institutions. Our goal is to provide unbiased information and offer scalable strategies that give you clarity amid the chaos and provide answers to your most burning questions. I'm your host, Mary Delaney, Managing Partner of Vital Incite an Alera Group company.

Today we are going to discuss a hot topic of how employers can improve their strategies to support substance use disorders. The reason we're talking about this topic today is because in our data, we see that the incidence of mental health disorders has doubled since 2020 and we know substance use disorders can be a coexisting condition with mental health disorders. Further, the diagnosis through treatment of substance use disorders went up from 4 in 1,000 members in 2020 to more than 10 per 1,000 members in 2024.

The fact is that provider reimbursement, and I will emphasize provider reimbursement, because we will discuss where employers are paying beyond just providers for this service, but the provider reimbursement for substance use disorders accounts for less than 1% of medical spend, but the burden is huge on an employer in terms of presenteeism, losing valuable employees, or even worse, the loss of lives. According to Kaiser Family Foundation, 2/3 of our country are impacted by substance use disorders in some way. We find employers are always searching for what they can do to provide effective care, and of course, raise concerns related to the cost of a large single case and are never sure if they're getting their return on investment. 

This is another podcast that we will turn to our quote from Buckminster Fuller, who said, “You never change things by fighting the existing reality. To change something, build a new model that makes the existing obsolete.” Well, during today's podcast, our panel of experts will discuss why we need to make the existing reality obsolete and what we can do to create something that is better. In preparing for this conversation, I really struggled to get connected with the right people who could help us move the needle, and almost gave up on the topic. But today we are joined by 4 experts, and we have so much to cover with this topic that it ends up that this will be the first in a 2-part series. We will be sure to hit on the most critical elements that employers need to hear today, and we will be continuing this discussion related to the treatment resources in our next podcast. So with that, let me start off by introducing our panelists.

Chris Deacon is Founder/Principal of VerSan Consulting. She is a distinguished consultant and legal expert in employer sponsored healthcare, advocating for cost-effective strategies that benefit both employers and employees. Chris' background includes serving as New Jersey Deputy Attorney General and Special Counsel to Governor Christie. Her tenure at the New Jersey Department of Treasury was notable for implementing cost-saving measures exceeding $3 billion. I am grateful to have you here today, Chris.

CHRIS

Thanks for having me. I'm excited to be here.

 HOST

Damon Eisenbrey is a partner of Arnall Golden Gregory healthcare practice with an extensive background, completely devoted to litigation, he represents patients and healthcare providers against insurance companies on plan coverage, benefits and reimbursement related matters, including state and federal class and consolidated class actions. Damon, I can't wait for you to share what you have learned.

DAMON

Thank you for that introduction, Mary and I'm really excited to be here today for this very important topic with this esteemed panel. So thank you.

HOST

Next is Kirsten Seckler. Kirsten is Chief Marketing and Communications Officer for Shatterproof, a national not-for-profit dedicated to reversing the addictions crisis. Kirsten has spent her career using marketing to drive social impact. Currently, she addresses the ever-growing substance use disorder epidemic. She is also an adjunct professor at Georgetown University and is the board chair for Special Olympics District of Columbia. Thanks for joining us, Kirsten, so we too can work to drive social impact.

KIRSTEN

Thank you so much for having me and joining this incredible panel and for covering this subject. It's such an important subject that's so prevalent in the United States right now, and it's so important we're talking about it.

HOST

Thanks for helping us talk about it.

Last but not least, Tim Clement is the Vice President of Federal Government Affairs at Mental Health America. Tim drafts legislation, works with Congress and partners with federal regulatory agencies, all for the purpose of advancing mental health policy. He has written dozens of state laws and multiple federal laws, including the 2020 amendment to the Mental Health Parity and Addictions Equity Act. Yes, we were able to pull in the expert related to the Mental Health Parity Act so we can be sure as we build better, we build safely. Tim, thanks for sharing your expertise with us.

TIM

Yeah, thanks for having me, Mary. Really excited to be here and be a part of this very distinguished panel.

HOST

Okay, so with this powerhouse panel, let's dig in. As we know employers are trying to improve how they can better support their plan members with substance use disorders and then are agonizing over the expenses for these services. As I interviewed potential people to help with this podcast, several of them on their own, brought up the great things that Shatterproof has to offer. Kirsten, can you share with us a bit about what you offer as a company and what your resources are?

KIRSTEN

Yes, Shatterproof is a national nonprofit organization that was founded about 11 years ago, and we have been focused on being that trusted guide through the complexities of substance use disorder. We like to say that the proof in Shatterproof is that everything we do is evidence- and science-based. And so we offer great educational resources on our website. We also empower communities by giving them the resources that they need to be a great advocate for themselves in this subject matter. We're ending addiction stigma, because that is a huge barrier for people to seek the treatment that they need and to feel safe talking about this medical condition that is treatable. And speaking of treatment, we are working on transforming the addiction treatment space, because so many people who are struggling, which it's about 49 million people as we speak, only 1 in 10 are getting the treatment that they need, and so it's really important that we make sure that people have access to quality care. So that's what Shatterproof is doing. And you know, we are so glad that this subject matter is being talked about. We hear from companies on a regular basis that they know they need to address this, but they just don't know how. And so hopefully they will learn from this podcast the resources and the things that they need to know.

HOST

Thank you. It's incredible what you have put together as a not-for-profit, and thanks for being here today to share that. Now, let's take some time to explore the problems that exist in the billing and payments for these services, and why employers have a reason to agonize over the expenses. In the Vital Incite data, we found that substance use disorders are paid as out-of-network services 41% of the time. What that out-of-network payment means is that employers are paying, likely, an additional 22-33% of the bill charges back to the carriers as shared savings. Further, most employers are not even aware that this is taking place, because it doesn't come through the claim line. So the full cost of treatment is even higher, but the monies are not even going to the providers. Damon, can you start us off by explaining what your firm has found related to an incredible case with Cigna, and I'm sure other cases?

DAMON

Yes, definitely. And the overarching theme that we found over the last 5 years that we've been in litigation against commercial insurance companies on behalf of treatment providers and/or members, is that we have a healthcare crisis right here in our backyard, in connection with all the money that the insurance companies, in my opinion, are secretly making on the backs – on the backs – of the American workers’ healthcare claims. Not just medical claims, also mental health and substance use disorder treatment claims. We find this most evident in the ERISA self-funded plans, when the insurance company is acting more as the third-party administrator, and the claims are actually paid from the employers’ or the employees’ assets. In those types of situations, we find that there's an administrative service agreement between the insurance company and the employer, and pursuant to these administrative services agreements, there's an incentive for the insurance companies to reduce as much as possible the allowed amounts on these substance use disorder treatment claims, because, as you just touched on, Mary, the insurance companies get to keep approximately 30% of the delta – the delta between the billed charge and the allowed amount. And these are staggering numbers that we found in discovery and in litigation, you know, a residential detox claim of, you know, $2,500 for a day. Uh, ERISA self-funded plan has an administrative service agreement attached to it. The insurance company allows $500 a day for that claim. Then the insurance company gets to keep 30% of the delta between the billed charge of $2,500 and the allowed amount of $500. And when you start to see those line items on a claim-by-claim basis starting to add up, it's staggering, it's shocking, and in my opinion, it's disgusting. I view it as the insurance companies are profiteering.

They need to account for that; they need to disclose it to the employee, and they need to account for it, and they need to be responsible for it. And the members don't know. And how do you help— what's the best way to let a member know? On the EOB, you know when you go into treatment, out-of-network claim, on the EOB it'll say, here's the charged amount, here's the date of service, here's the allowed amount, here's the deductible that comes off of it, co-insurance, and here's the amount that is paid to your provider. All good, important stuff that ERISA mandates that the employers and the insurance company advise the employees. Now when it comes to cost containment fees or shared savings fees that are attached to an administrative services agreement, somehow, I guess the employers and the insurance companies don't think they have a fiduciary duty to the members, to the employees, to advise them of those cost sharing amounts, and that's a shame. I think it would do a lot of good to the American public, to the health care system, full transparency, full disclosure, full accountability by the insurance companies and everybody involved that wherever the money is going that it's disclosed clearly, concisely, and if an employee wants to appeal it, they have the rights to appeal it.

So this is a big problem. In my view, the employers are fiduciaries of their employees when it comes to their retirement accounts and health benefits, definitely the insurance companies, because the employers delegate that fiduciary responsibility to the big insurers to administer the claims. I don't see a world where the fiduciary hat can come on and off, but apparently in this world, in the US currently, when it comes to ERISA self-insured plans, I guess the fiduciary hat kind of comes off— on and off, and sometimes the insurance companies disclose to the members, but a lot of times they don't, and they don't disclose when they take money, take money from the plans in connection with these administrative services agreements. And if ever there was a need for more transparency, more accountability, it's when an insurance company is taking from an employee and it's not there.

And we're not the only ones who are complaining about this; Congress, the Senate and the House – bipartisan – launched their own investigations into the big commercial payers on this issue. The Department of Justice has launched its own investigation. Department of Labor its own investigation. The New York Times has been reporting on this extensively over the past 8 months, and they will continue to do so.

So we need the government's help. We need the government to get involved, make sure, maybe ERISA needs to be amended, you know? It looks to me like the insurance companies with these ERISA self-funded plans have two sets of books. They have their ERISA books, which they detail, and they keep track of the claim payments, and they disclose that to the employees. Then they have their cost containment fees, shared savings fees. They don't share that with anybody. That's a second set of books, and that set of books, if you can get a court, you're in litigation against an insurance company, you need to get that second set of books to expose that financial conflict of interest, and the government needs to get involved immediately, because this is a dire situation that is not sustainable, and it's not the American way.

 HOST

So you're a little passionate about this, which is great. We need to be passionate. Because to me, of all of the diagnoses, this is by far the highest percentage of out-of-network payments that we see. So we know that there's a problem with the way the contracts are, you know, what the negotiation looks like between the carrier and the providers. And of all the things to take advantage of, it's really the carriers that are making money off of this. So just, I want to make sure you under— that we're all clear that even the employers of a self-funded plan did not understand, and do not understand many times, that these extra fees are being paid to the carrier. They're thinking they're going to the provider. So that's some of the stuff that we need to clean up in this relationship. And Speaking of cleanup, Chris, I think you have some, some stuff to share also that you've learned.

CHRIS

Those are all great points raised by Damon, and I share the passion around the issue of transparency and accountability. I do put the onus here, and a large part of the blame on the employers that are the fiduciaries to the plan, to the health plan, because they've been delinquent in their duties, right? One of the reasons that in some of these cases, where you see, for example, on Cigna, is a $4 million claim that the employer paid. The provider in that case got $874,000. Cigna kept about $2.5 million, and MultiPlan kept around $675,000. So to an employer, they thought they were paying a $4 million claim, when in fact the provider only got $875,000 of that. That's egregious, and that is wrong. And you know, it can really only be stopped through more transparency and having employers actually pay attention to the data. 

The reason that that happened, that one claim and many others like it, is because an employer signed a contract that said Cigna could do that, and that said MultiPlan could do that, they signed off on it. So again, I think employers share a large part of the blame here. But when you get an engaged employer, say, like the state of New Jersey, or any other sort of employer across the country that wants to do their fiduciary duty well, and manage the plan prudently, they are getting roadblocks every step of the way when they're trying to get access to their data in order to be prudent fiduciaries. And that's what I spend a lot of my time, sort of in Washington, working on policy to help employers gain access to data, because again, we won't solve this without transparency. Is transparency the final solution? Absolutely not. But it has to be the foundation to any solution that we have.

HOST

So I will defend employers a bit, not, not completely, but I just want you to give some perspective of what we've experienced. We tried to get information on shared savings and where that really was allocated. We pretty much got a cease-and-desist email from a very large carrier pointing out that in the contract, it says that this language is there, so, and that they don't, we don't even, can't even figure out where the shared savings is calculated. Then we dug deeper, and so we went back and said, Okay, let's renegotiate this. And they pretty much chuckle at you. So I can tell you that employers are feeling stuck here, that we can talk about all these great things that they should be doing, but they are stuck because the carriers are pretty much saying, Nope, this is our standard contract – we're not going to change it. So we're in a pickle, and something really needs to change.

And I will tell you that when I was talking to different employers and benefit advisors, they were talking about their fear of the Mental Health Parity Act, and legally, what are they going to do? So they're fighting with the carrier. They know things are wrong. They can't figure out how to change it. It's pretty clear that any mental health services, especially substance use disorders, are out of network, and the carriers give them all these excuses why they can't contract, etc., but then they're afraid to do something different. So Tim, we have you here as the expert, just to, like, tell us the good, bad and the ugly. What should employers that are self-funded be thinking about, and what can they do and where should they protect themselves?

TIM

Yeah, sure, absolutely. And so maybe a little just, history lesson and background on the parity law. So, it's actually not new. I think there's been a lot of attention paid to it in the last several years, and rightfully so, as it was amended in a significant way, but goes all the way back to 2008, President George W. Bush actually signed it into law initially. And then President Obama signed an amendment, they extended it to individuals and small group plans, and President Trump signed a major amendment, fundamentally altered the way the law works and created an arena of enhanced oversight, which I think is what's gotten the attention of a lot of employers in the last few years. And then President Biden's administration issued new rules for implementing that filled in some details.

But one thing that's important to note about their parity law, first of all, it's, the fundamental purpose of the law is it's designed to make sure that insurance coverage for mental health and substance use disorder treatment is no more restrictive than insurance coverage for medical and surgical treatment, and that's important to understand the no more restrictive part. So a lot of times, people get hung up on the parity part, like things have to be the same. That's not how the law works. It's just it can't be more restrictive for mental health and substance use disorder than other medical care. So if you're an employer and you want to have the most generous mental health or substance use disorder benefits that any plan has ever seen – way more generous than it is for medical – that's not a problem with the parity law.

That's one thing, I think, if you're an employer and you're listening, to take away nothing else, if you make your plan design, your benefits for substance use disorder or mental health, as generous as they could possibly be, with the greatest ease of access to care, you're definitely not going to run into any problems with parity law. But as you mentioned, this has been an issue of concern and unease with employers, because the amendment that President Trump signed in 2020, basically what it does is so in the lead-up to that amendment, a bunch of states were passing similar laws for fully insured plans, individual plans, Medicaid managed care, basically requiring, as we've heard so far on this podcast, greater transparency and accountability on the part of insurers. And so the reason for that was even though the law is very old, there become a good amount of evidence in the last— starting around 2017 or so, that insurers and plans probably weren't in compliance with some of the really complicated parts of the law. And the law is mind-numbingly complex. And what we can't get around that is a very, very complex law, and it's, it's one of the most complex and challenging federal laws that exists.

So what it does now, what the law does is, if you're a plan, an employer plan or an insurer, that's state regulated, you have to perform these analyses that basically prove that you're following the law, and then submit them to federal regulators and state regulators upon request. And the federal regulators – the United States Department of Labor, mainly – have to request a certain number of these analyses every year for the rest of time, the way the statute’s written. So if you're an employer, this took effect in February, 2021, so that's a lot of the angst employers have been feeling is now with this law that's really complex has a PROVE IT component to it. In other words, to follow the law, you have to prove you're following the rest of the law. There are very few laws that are designed like that. So it makes it very challenging and complex, and employers have understandably been a little concerned of how this might affect them, and also something that's kind of the federal agencies, Department Labor is required to submit a report to Congress every year about what they're finding when they look at these analyses, and unfortunately, it's been bad news. In terms of one, a lot of plans were unprepared to submit these analyses when they were asked for them, and two, upon further digging, they found lots of actual like hardcore violations, particularly in the substance use disorder realm.

So it's something that I think a lot of people advocated for. This changed the law because they thought, well, I don't think the insurers and plans are actually following the law. This has kind of confirmed those beliefs. That they were, in fact, right. But I think that, you know, it's something you mentioned, Mary, that's the very big challenge for employers. You're a self-funded employer, is, you know, you have your third-party administrator, usually a major insurance company, like some of the ones we've heard mentioned so far in this podcast, is that you, when, Department of Labor comes knocking at your door and says, I need your analyses to prove that you're following the law, you go to your third-party administrator and say, I need the analyses, do you have that? Because you run my health plan, kind of have to have the analyses. And they're like, yeah, here's our off-the-shelf analysis for our company. And they said, well, Department of Labor is asking for my information, not, you know, Cigna’s, you know, book of business. Like, yeah, this is, what we're going to give you. And no matter how hard they try, they've been struggling to actually get the major, the TPAs, the administrative services, those organizations to provide them the data they need to satisfy the federal government's request. So that's been a big challenge for employers.

But I will say this, there's been a lot of, you know, attention paid to the rule that was finalized recently the Biden administration say how that's, I don't see that as really markedly changing things all that much. The thing that changed things would be the amendment in 2020 that created, this enhanced oversight. So that's really what I think employers need to do, is they need to, as much as they can, get their, try to get their TPA, the insurer, to cooperate with them when, they get a request. And I would say, also, I'd highly recommend to employers if you're not getting that cooperation, I would say be proactive and report that to the federal agents. They will look more kindly upon you if you say, hey, Major Mega Insurance Company X that provides ASO benefits to me and probably 6,000 other employers isn't going to give me the information I would need to give you the analysis. And the reason I say that, was one thing that did also change in the way the law was amended in 2020, is Department of Labor can now go after, can go look into insurers themselves in terms of these analyses. So if they notice that Mega Insurer X, that is the TPA for 6,000 different plans, they notice that 3, 4, 5, 6, 7, 8, 9 of those plans seem to be having the same problem, they'll just go to Mega Insurer X and say, No, we want to see your analysis. We're not concerned about the employer now; we want to see what you're doing both as a TPA and as a health insurance issuer in this fully insured market.

So I would say, recommend that for an employer, don't fear, don't be afraid. Like nothing's dramatically has changed in the last year or two, despite what you might have seen about these new rules. It's mostly the same era of enhanced oversight that we've seen for the last four years. And I would say that if you're not getting cooperation from your TPA, I would alert, I would alert the Department of Labor if that's the case.

DAMON

Yeah, Tim, huge congratulations to, in my opinion, to the Department of Labor and the federal government for these new federal parity laws, or the update what you were just explaining. You know, as a litigator, somebody who represents providers and patients, and all the obstacles that we find even in litigation, to get this data from an insurance company, it’s excruciating. Now, to have this mechanism you know, where at least the members and definitely the employers can get the comparative analysis from the insurance companies. I'm optimistic that that level, assuming there's cooperation, that level of transparency is going to start, will start to unwind what I see as a big problem in our health care system for it's the, it's to me, it's the incentive for the TPAs with these ERISA self and self-funded plans, the incentive is to keep the claims out of network so they can get higher cost containment fees.

I think that if we have true, robust networks for mental health and substance use disorder treatment, assuming we can get there, that's an ideal situation, in my opinion, where the members, because if you have a network, it's capitated, you don't have to worry about the co-insurance, you know, you have a smaller deductible. And these are American workers, and most of them are living paycheck to paycheck, so we need to make sure they get the help they need, and they're not getting gouged financially because they're getting help, and if insurance companies are making secret profits, uh, my goal in life is to, to seek it and find it and to expose it.

But congratulations to the Department of Labor and even to SAMHSA recently. You know, I know SAMHSA has the Recovery-Ready Workplace initiative that it recently released; I think in conjunction with the Department of Labor, and kind of like what Kirsten was talking about earlier, could be another resource for employers to go to, to kind of find out, you know, Hey, how do we make sure that our members, you know, know how to talk about this substance use disorder treatment, who to talk about it with, what type of help they need? Whether it's an EPA or a nonprofit, there's lots of good stuff going on with the government, and that's really what I wanted to say following up on Tim was, congratulations, in my opinion, to the Department of Labor.

HOST

That was great conversation. And Kirsten, I'm going to ask you to speak up a little bit. One of the things that we tried to get different providers to talk to us about is, what does that negotiation look like, and why are so many out of network? And really, what everyone was saying is they just offer us such ridiculously low reimbursement rates that we can't afford to be in network. They do that deliberately, because, of course, then the carrier makes more money than anyone else out of this. So another thing I heard from the carriers is like, Oh, it's just so hard to find good, good resources, which is a terrible answer when these people are desperate and in a situation where they really have to have access to resources. Kirsten, any comments about that?

 KIRSTEN

Yeah, and everything that we're talking about is really rooted in a huge misunderstanding that this nation is facing around substance use disorder. We know from the Shatterproof Addiction Stigma Index that we just conducted in September of this year, that 75% of this country does not understand substance use disorder as a treatable medical condition. Over 50% of those people actually saw it as a moral failing, and so that really is the root cause of the issue that we're dealing with here, because most people do not understand this as a medical condition like other diseases, right? So that's why this Parity Act is so important, and it's so critical that we start to really change our mindset around substance use disorder in this country. In fact, 50% of medical workers in this country don't see substance use disorder as a medical condition. So we are up against major misunderstanding, major stigma, that's really holding people back from getting the care that they need. And so the facts that we're hearing, Oh, there's enough resources or not enough help, that's not the case. I think the case is, is that a lot of people have bias in this space, number one, and number two, people just don't know where to find the resources that are available.

And so we mentioned, you know, SAMHSA has great resources. There's a lot of really good, great organizations that have resources. Shatterproof has been bringing all those resources together at shatterproof.org, so we actually have a whole section on our website, shatterproof.org/employeeresources, which helps direct people to things that they might be interested in or need, from just information about the dangers of fentanyl to how to find quality addiction treatment through our website, treatmentatlas.org, so there's resources that are available. It's just that we need to make them more prevalent. We need to make sure that this is a safe topic to talk about in society, especially when you break down the vast numbers of people who are impacted. At the end of the day, it's 1 in 3 people are impacted, whether it's themselves or a loved one, and that's by drug or alcohol use. In fact, just recently, there was an incredible study done around alcohol abuse disorder in this country, which is again a substance. And we really need to be paying attention to this, and open our minds and hearts, that this is a treatable medical condition. And if we treat it like that, we're going to see some of these issues really start to change, because we don't see this with other diseases. We may, but we, not at the extreme levels in which we're talking about today.

TIM

It’s hard to build on what Kirsten just said there, the stigma and the bias that's a huge— that filters over to the insurance landscape as well. So the parity law very explicitly applies to reimbursement rate setting and how insurers design their provider networks. And one thing that you see is that, you know, I think if you have a shortage of neurosurgeons or cardiologists or pediatric oncologists in your network, and people just can't access them in-network, that doesn't happen. You don't just refuse to negotiate with a neurosurgeon, so, Well, we don't have brain surgery in-network this year, sorry. But, when it comes to substance use disorder and mental health conditions, even more so substance use disorder, because there is that historical and still long – as Kirsten pointed out – long-standing bias, prejudice and discrimination, remember the parity law is actually antidiscrimination law. It was, it was created because there was rampant discrimination in health insurance coverage against those with mental health conditions and substance use disorders. And just to show the level of stigma and bias against substance use disorder, it was a major debate in Congress as to whether it would even apply to substance use disorder. So, for example, the sponsor of the law, Patrick Kennedy, wanted it to apply to substance use disorder; his father, Ted Kennedy, did not want it to apply to substance use disorder. Ultimately Patrick Kennedy won out. We now have protection for substance use disorder. But that wasn't that long ago, and there was a Congress who voted for a law who didn't want it to apply to the substance use disorder, because of that bias that exists against people with substance use disorder, and the people that treat them. And that's what I think you find in the reimbursement rates and the refusal to do anything to get people in your network. There's still that historical— the statistics that Kirsten just shared. Well that means that some of those people work in the insurance industry, and so for people with bias that have that idea that this is not a real condition, or this is, there's also this, this prevalent thought within the insurance industry, that it’s all a scam – all the substance use disorder treatment's a scam. It's all a hoax. Everyone's going Florida, to have, to get a resort spas getaway, while they pretend to get some sort of fake treatment – that, that's very prevalent, that belief.

So because of that, you see the insurers are not willing to raise the reimbursement rates to meet the demand. And that's what's happened in the last 15 years, the last 10 years, especially with the opioid epidemic, demand for treatment has surged. Supply of treatment has largely stayed the same, what does that, what does that usually mean in a capitalistic market? That means prices go up. That's not happened. Reimbursed prices stayed relatively static for substance use. So I think that's largely because of the bias Kirsten mentioned and the prejudice and the historical stigma that we have.

KIRSTEN

I was just going to add to that is the collaborative care model is really something that we need to work on in this country as well, which is where we bring substance use disorder treatment into the primary care space. And that is not happening as well. Most people, most of the treatment system, it’s, kind of its own maverick system on the side, and it’s not been baked into the healthcare system of this country. And so that's another thing that needs to get addressed, and that's where, you know, these insurance providers can really help as they begin to, you know, grow and expand and focus on how they're going to solve this is again, tying that stigma and changing the understanding that this is a medical condition, and bringing that into the primary care setting is really going to start to see a big change as well.

CHRIS

Could I chime in with just some experience as sort of a purchaser with the state of New Jersey? We had 800,000, over 800,000 lives that we provided benefits for. And I think it speaks to sort of real practical, like what a purchaser experiences. So we had, uh, had a situation where we did have, and I know that there are bad actors, and bad actors give the whole industry a sort of bad rap, but we did have a Florida clinic who would regularly fly certain union representatives down to Florida for very lavish vacations, sponsored scholarships and other organizations very, uh, with a lot of money, so that they would be the first call when somebody needed to go for treatment. They would call the union rep, union rep calls the treatment facility, treatment facility flies somebody in New Jersey, picks up the person, flies them and their family down to Florida, and the state of New Jersey gets a very, very big bill at the end of it. And we paid 90% of fair health charge base index. So we were paying. We weren't getting those rates negotiated down by our carrier. And so it was a problem for us. It was, it was very, very high spend.

But rather than sort of going the traditional route and going to Blue Cross Blue Shield and saying, What are you going to do about this? Because that, that doesn't work. Instead, we went to the unions, and we said, What is your, what is your pain point? And how can we solve this problem? We want your members to get help. And there, you know, yes, the vacations were nice, and yes, the sponsorships were nice, but at the end of the day what the unions wanted was to be able to pick up the phone and know that there was a bed for their members when they needed to make that call. That was the most important thing to them. And so what we did was work with those union reps to try and locate first responder-specific treatment centers, best in class, so that we could get those members to the right place for them. And so we solved that problem for them, or we attempted to solve that problem for them. And it was something that we told our carrier that we were doing. It wasn't something so, what I heard a lot of in the discussion was sort of like, depending on the carrier and the insurance company to solve these problems for us. And I know not everybody has 800,000 lives and that kind of, sort of, ability to do direct contracting, but we said, you know, sort of, screw the screw the carrier, like they're not solving this problem for us, and they haven't solved it. We're going to go solve it ourselves. And so it's, you know, it sort of touches on what we were, everybody was talking about. But I think there are creative solutions out there that employers can find.

HOST

It’s that build a new model that we talked about. We have to be comfortable building something new. Go ahead, Damon.

DAMON

Yeah, Chris, did your organization, did you guys establish a network of mental health and substance use disorder treatment providers that individuals could go to?

CHRIS

So it was in process as I left the state in September of 2021, but I do believe that there is work underway to continue to build that sort of direct network out, so that people are going to place where there is a negotiated rate, and they're able to pick up the phone and make sure that there's always a bed available for our members.

DAMON

That's fantastic. I love hearing all that, you know, everything comes back to the individual, the employees, the members, you know, to make sure that they get treatment, and get treatment, you know, quickly, and not be stuck with large balance bills. And I know too that there's a, we need to make sure that for employers, you know, they have limited resources in their, their health plan assets, and, you know, they need to be protected, too. They can't be, we can't allow the employers to be gouged by the insurance companies with these ASO cost containment or shared savings fees. But at the same time, we can't allow employers just to get gouged by out-of-network providers. There's a lot that needs to be talked about. But I really, Chris, I really like what, you know, direct engagement with providers in the area, in the union, is fantastic.

CHRIS

Yeah, and it's taking, you know, what's important to an employer, presenteeism, the health of my you know, my people, obviously cost is important. And what is important to the member, right, finding a high quality— like our interests are very aligned, very aligned. It's that sort of reliance on that third-party intermediary where you begin to lose sight of that. And so, yeah, I think that there are creative solutions out there. And if we could ban the term network from our vocabulary in the future, I would, like that's the future that I envision, and I would love to build.

DAMON

That is fantastic. And just so you know, the group knows, I don't want to be, sound like I'm bashing on employers. I obviously, as a litigator, represent providers and members, so we have questions about what the employers are doing. But in the litigation context, we get fed a lot on a regular basis by the insurance companies, especially for these ERISA self-insured plans, self-funded plans, they tell the courts, ‘The employer decided this. We had nothing to do with this. This is the employer's decision about how they want to handle their plan assets and work with their members.’ And what I'm hearing is, what, I suspected that was not the case as we trudged further and further into these cases in litigation heading towards trial. It's not the case. The employers don't know exactly what's going on, and they're being sold a bill of goods in my opinion. The anti-story by the insurance companies, they, they wheel their Trojan horse into the, to the corporation for the benefits board of directors, whoever they need to talk to, who's going to make the determination, who's going to administer their ERISA self-funded plan. And they pump this anti-story about egregious billers, and then, you know, the employer signed these agreements. And, so there’s a lot that needs to be unwound, but I like, I like everything I've heard.

HOST

Well, since we have 3 people in the legal world here, I'm going to pose you a question, because what I'm really seeing is the employers are sitting there realizing these ASO agreements have language in there that is quite ridiculous. But when a carrier, or a TPA, is not willing to change that language – and it is ALL of them – they are all using the same templates, because I pretty much begged an employer say, You either need to tell them they're going to get fired or they're going to change. And they're like, we can't – there's, this is the same thing we got from this carrier and that carrier. So what, what is going to change this? What gives the employer hope, as we finish this conversation today, that something is going to change so that that language goes away.

TIM

Well, I could say, you know, sorry, but, thanks, Chris. I would say that I do think that's a tough that's a tough hill to climb actually. I was on, called the Fortune 50 corporation not that long ago, I said, well, what if you asked your, your TPA to make the change? And he’s, ah, they won’t do it. And this is, you know, multi, multi, multi-billion-dollar corporation and even they can't get their TPA to do it and they're very, all of them are kind of like, Sorry, we're not going to do that.

I think what Chris just mentioned, what they did in New Jersey, I think that's a model for employee, at least for substance use disorder care. Because if you, if you’re an employer and you really care about this and you're self-funded, I think Chris is right that the term network, maybe that needs to be a thing of the past. Because, you know, one thing you hear from the insurance industry is that oh there’s a provider shortage… Not really – if we have all this out-of-network utilization, and there are providers there, so if there aren't any network service fee, and your employees, they can just get treatment on demand. Of course, you're gonna have to set up safeguards to prevent, you know, that, you know, the bad actors—. I was just looking before we got on here, you know, there's, healthcare fraud is a multi multi-billion-dollar industry, so there's always going to be that, it's not just limited to substance use disorder treatment, or mental health treatment. We will have to set up structure to make sure that you don't have that.

But if you're an employer, and you want your employees to get access to substance use disorder treatment, and reduce the absenteeism, presenteeism, injuries at work, that kind of thing, you know, I think you might want to look into saying, You know what? If our— maybe we do something on the side? We set up agreements with providers. Or you just say to your TPA, it is your money that's paying for the claims, ultimately. Look, when it comes to my members, I know you have, your network is comprised, as our plan, and many others. Yeah, I think you could say, like, just allow our, our members access to out-of-network care and charge the in-network rates, and reimburse the provider’s percentage, it’s closer to, whatever the network rate is. Do something where you're thinking, you're not, probably going to get them to change their agreements with you. Do something that, I think, at least until, you know, there's, there's more robust networks. Try to break down the existence of the networks, because I think that so much care is provided out of network that we have to start thinking in terms of that context is that, rather than try to maybe improve the networks that the insurers have, which may be impossible, to seek to maybe increase that access to out-of-network care and in-network cost sharing to your members.

HOST

Chris, any other thoughts?

CHRIS

Yeah, I was gonna say from, you know, why? Why have hope here as an employer? I do think that change is afoot. It's much slower than I had hoped – you know, two, three years ago, after passage of the CAA, I was very hopeful that change would happen much sooner. It hasn't. The lawsuits have been slow to trickle down that sort of use this fiduciary model and language to try and help employers get access to data and become true fiduciaries to the plan. But there's, there is more legislation, I think, coming down the pipe that is going to improve upon the CAA. Be more explicit with claims data being made available to employers on frequency and sort of the standardization and format, which will really accelerate employers’ ability to do more innovative things, and, you know, check the carrier's work. And I think that there are, again, there are alternative models out there. Are they, you know, is, are we going to convince IBM to go with, you know, an independent TPA and, you know, rent a network or do direct contracting, I don't know, maybe not. But there are big employers and small employers doing some really innovative things, and hopefully that just catches and keeps building momentum.

HOST

Just so that I can give hope to our employers that are smaller. I use an example we did for oncology. Actually, we didn't, the employer set it up with a local, independent oncology practice that was exceptional. And the other option in town is a very expensive hospital system. And what they set up was like a concierge service, where this group said, within 24 hours, someone with an oncology concern will speak to a provider, if not meet with them directly. Here's all the other things we're going to do. And they set up a payment that they actually billed the employer directly and circumvented the carrier altogether. Nothing is better to make a carrier think twice about their process as if you're starting to build a structure around them, too. So I think that's a way to let your voice be heard. But it is possible, so I don't want the small employers to think they can't do that. And in our next podcast, we're going to talk to Kirsten further about some of the resources so that they could, and Tim, you correct me if I'm wrong, so that they can say that they made these choices based off of the best information they had. This is their people they're referring to. So that is to protect themselves against any lawsuits that perhaps, you know, someone's treatment went bad and they sent them to the wrong place. They can show that, as a fiduciary, this is the reason they set this up. Is that okay, Tim, or should employers be afraid of that?

TIM

No, I think that would probably, yeah, I think that would probably be okay, for sure.

HOST 

Alright, so… Unfortunately, I knew this would happen. We are running out of time, because you all are such a wealth of knowledge and really help so much. So this has been great stuff and wonderful insight and advice. You all did a perfect job outlining, kind of the hope of where we can go. So thank you so much.

I knew this was a critical topic before, but now we realize how critical it is and why we have to change our strategies to support strong outcomes and not waste money through certain arrangements. I'd like to thank our panelists again for a truly insightful, inspiring discussion. For our audience, I hope you feel more equipped to demand more from your carriers, create a more progressive approach to provide for early identification, acceptance, and therefore more cost efficient and effective treatment strategies.

In our next podcast, we will go deeper into the resources that Kirsten mentioned, and discuss how we do move the needle in creating a safe place for early identification and better support. One of my key takeaways is that we need to think of this more like we do type 2 diabetes or hypertension – ID early and then provide the correct resources so the condition does not progress to a catastrophic state. I believe we're dealing with mostly catastrophic care unfortunately right now.

Thanks for listening to this episode of The Pulse. If you enjoyed it as much as we did, be sure to subscribe, so you will always stay up-to-date on our most recent conversations. Share the link with others so we all can start to demand something new, and follow us on LinkedIn. The Pulse is produced by Vital Incite an Alera Group company. Vital Incite is on a mission to help organizations identify medical spending waste through data-driven strategies, while helping to improve the health of their employees. If you want to make healthcare easier to understand and manage and to improve your organization's bottom line, reach out to us at vitalincite.com. I'm Mary Delaney, thanks for listening.