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Vericred is
now Ideon.

pronounced: “eye-dee-ahn”

While we have a different name, we have the same great mission: to connect the health insurance and employee benefits ecosystem. Faster. Beer. Awesomely.
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Author: Michael Levin

HITRUST, the standard-setters in data security, now vouches for Ideon

Posted on by Michael Levin

By Michael W.  Levin, co-founder and CEO of Ideon

At Ideon, our work is predicated on a straightforward belief: Choosing, buying, and managing health insurance and employee benefits should be no more complex than any other digital experience. And in creating the infrastructure that powers digital connectivity between carriers and technology platforms, we’ve been humbled to materially help improve the benefits experiences for countless Americans.

But even as we engineer and maintain the industry-best infrastructure that allows for free-flowing data, we are continuously ensuring that those “pipes” are not only unobstructed, but also airtight. To put it another way: We are obsessed with data security. Our APIs are the conduits for streams of personally identifiable information (PII) and protected health information (PHI)—and ensuring the safe passage of every last datum is a staggering responsibility we don’t take lightly. 

Nor have we ever. From its beginnings, Ideon prioritized transparency and security, working diligently to protect the sensitive member information that carriers, InsurTechs, BenAdmin platforms, and others send through Ideon’s platform.

Because cybersecurity threats are always mutating, data protection is a journey more than a destination. Last year, I reported that Ideon had met an important milestone of that journey when our data security protocols were validated by System and Organization Controls 2 Type II (SOC 2), an examination performed by a public accounting firm with expertise in information security audits. 

This year, I’m deeply proud to announce that Ideon’s Enrollment & Member Management API has earned certified status for information security from HITRUST. As detailed in a recent press release, this credential affirms that Ideon has addressed security risks through an exhaustive set of highly prescriptive controls. 

This step was necessary because unlike most other regulatory standards, HIPAA legislation provides no prescriptive white paper or rules for adherence. HITRUST was created by industry players looking to define standards around health information security. Its unparalleled rigor and scope makes HITRUST the gold standard for PHI treatment and storage.

Achieving the HITRUST certification was an arduous process. After conducting a gap analysis against nearly 300 controls, we began implementing the changes necessary for HITRUST compliance. It’s hard to overstate how monumental that effort was: We took measures to ensure that every Ideon action is logged and reproducible on demand. We instituted company-wide protocols governing mobile device use. We refined role-based accesses, installed cameras, updated policies and procedures, retrained staff, and prepared mounds of evidence.

And that description only scratches the surface. (For a technical dive into Ideon’s HITRUST certification, read this blog)

The process touched everyone at Ideon, consuming significant amounts of most employees’ time last year. An IT team was substantially dedicated to this effort for the past year, led by the remarkably talented Tim Hochman, our VP of information security and IT. Tim had previously taken another healthcare organization through the HITRUST initiation process, and he’s intimately familiar with its proceedings. (And, happily for us, he’s exceptionally organized—a must for a project so labyrinthine and minutely detailed!)

All told, it was a costly undertaking for the company, and at times even a challenging and uncomfortable one.

And yet: Aligning Ideon’s operations with HITRUST’s standards was as worthwhile as it was ambitious. In earning this designation, we signal to the industry that we understand the importance of handling sensitive information with the utmost gravity. We expect that this will usher in important new customers and partnerships.

But aside from the benefits that will no doubt accrue to Ideon, we’re excited about our HITRUST certification because it represents movement in a crucial direction for our industry. As migration toward APIs and data sharing intensifies, the need for increasingly tough security heightens across the space. 

Ideon has long been a pacesetter for innovation, vision, execution—and security. We’re eager to support the industry as it seeks to match progress with protection. If you have questions or want more information about Ideon’s security policies, please reach out to my team.

Bad employee benefit data has been institutionalized. We believe that’s a solvable problem.

Posted on by Michael Levin

Up to 9 million employees may have a coverage issue

By Michael W. Levin, Ideon co-founder and CEO

Over the past two years, as we have scaled our enrollment and member-management solution, we’ve been surprised less by the data problems we have seen than by the resignation among various constituencies that such problems are inevitable and unsolvable. As an industry, we’ve institutionalized issues that undermine the protection of covered members, not to mention the great experiences that we’ve become accustomed to in other industries.

The data problems we see include incorrect identifiers (e.g. Social Security numbers), birth dates, effective dates, classes, divisions, addresses, phone numbers and more. Some of these are less critical than others, but many create coverage issues. 

How broad are these issues? Overall, we see existing problems with approximately 10% of subscribers we migrate on to the Ideon middleware platform. Importantly, we regularly see coverage issues with 8% of the lives we migrate onto the Ideon platform. The members in this 8% are either missing coverage for which they enrolled, or are still enrolled when they should have been “termed.”  Fifty-six percent of all groups we migrate on to Ideon have pre-existing, critical (coverage) errors. And substantially all large groups have such errors.

To put this into perspective: 110 million employees in the U.S. have employer sponsored health insurance and employee benefits. So if our experience holds true to the broader base, almost 9 million employees could have a coverage issue. Are we surprised? Doesn’t matter. What’s more important is that we pull on this thread to see the impacts across our ecosystem.

Let’s start with the employee, or member. Stories of arriving at the doctor only to find the coverage for yourself, or your child, is not in place are rampant. Although bad enough, this can be solved (albeit retroactively). But what about someone who dies and wasn’t properly enrolled in life insurance? Imagine the impact on the family. These are not trivial issues.

So now let’s look to the employer. Both sides of the coverage coin adversely affect the employer. If an employee is not properly terminated, the employer will continue to pay for their  coverage. Worse are instances when an employee is not covered and should be. Nothing undermines employee benefits goodwill like coverage issues. Imagine a new employee whose spouse visits the doctor with a sick child only to discover the child is not covered. 

Brokers and consultants are likewise not immune from the impact of coverage issues. Their responsibility often extends to open enrollment and making sure coverage is correct. This is exacerbated when they are the ones actually responsible for entering enrollment data into a broker portal or enrollment platform. The broker/consultant is often the first call from an angry HR manager. At the same time, incomplete enrollments may mean lower commissions. In a recent migration of one BenAdmin we found data issues preventing coverage that aggregated  more than $1 million in premium. While certainly not all with one broker, commissions on this business were absent because of these data issues.

Which brings us to the carrier. Many put the onus on insurers to fix all issues, but they simply cannot do so without the help and cooperation of all the above entities. Unfortunately, and in the absence of solving the problem, carriers have been forced to allocate substantial resources, and develop systems and processes (think member operations and customer support), to deal with the symptoms of these issues: the unhappy member, employer and/or brokers. And as noted above, the premium leakage affecting the carriers can be substantial.

The frustrating aspect of all of this is that these problems are solvable—but it takes a village.

A role for every stakeholder

Fixing our industry’s data problems will require contribution from many stakeholders. No single party can solve these issues alone. The good news is that the benefits of resolving these issues accrue to all. 

Carriers: The most important step toward resolving these issues and keeping the data clean over time is for carriers to expose group structures and censuses through some kind of repeatable digital process. With this data, the same data from the employer, through their BenAdmin, can be compared and differences surfaced. Today, very few carriers make it easy to access these data on a regular basis. This is one reason we at Ideon have written that the most important API a carrier should develop is a census API.

Middleware: The role of middleware encompasses far more than connecting carriers, BenAdmins, and other industry participants. Middleware, such as Ideon, also plays a key role in cleaning up data discrepancies and keeping employee benefit data accurate. Middleware’s role is to 1) identify discrepancies between the various parties; and 2) normalize, structure, and deliver those errors to the appropriate party to adjudicate. While the first role is obvious, the second is less so. The reality today is that each carrier describes, and delivers, the same error differently. Some may use plain language “the social security number is invalid” while others may use a code to describe that error. Many of these errors are sent by email, while some carriers send these errors in files, and a very few through APIs.

Middleware’s role of normalizing and structuring this data is critical to delivering great experiences for all of the parties who ultimately need to fix the errors. If brokers, employers and members need to parse through emails and files for errors from different carriers and/or interpret what the error is, we will never create an environment conducive to fixing these problems and keeping them fixed.

The industry-changing potential of middleware was evident in one recent migration of about 200,000 employees onto the Ideon platform, all enrolled with a large national carrier. During that migration, our technology identified errors impacting more than 16% of the employees, resulting in nearly $1 million in lost premium for the carrier—and, we expect, lost broker commissions.

In summary: we found $1 million in additional premium for the carrier, and we saved more than 30K employees from potential coverage issues. All from one migration of approximately 200,000 employees. Projected across the industry, we can safely assume carriers are leaving tens, if not hundreds of millions of dollars on the table.

BenAdmins: BenAdmins play a critical role in creating a path for these errors to be addressed. While we, as middleware, can surface these problems, we cannot adjudicate many of them. As such, BenAdmins need to build into their solutions a means of directing each error to the appropriate party. A demographic error can be sent directly to the employee. But class, division and other such errors need to be addressed by the employer. Still other information may need the broker or consultant to weigh in. 

Ideon triages, classifies, and structures these errors allowing for easy and repeatable direction of errors to the responsible party.

Brokers: For some employers, especially smaller companies who may not be using a benefit administration system, the responsibility for fixing the errors falls on the broker. Once surfaced, brokers have a responsibility to fix the data discrepancies. At first this can be daunting when confronted with the sheer number of problems that need to be addressed. This is especially true as we all set on a path to clean up pre-existing problems. Fixing Social Security numbers, birth dates, effective dates and the like is self-evident.  But some may be inclined to dismiss errors in addresses, or such demographic data. But ultimately a great member experience relies on these data being right. Whether it is for receipt of plan materials, or a claim check, this often-ignored data is critical.

The good news is that once the heavy lift of cleaning-up existing problems is complete, very little ongoing work by the broker should be required to keep the data clean.

Employers: Employers too have a role to play. It is incumbent upon the employer to make sure enrollment and effective dates are corrected and to address any inconsistencies around an employee’s classification including assignments to certain divisions, departments etc.

The first step: A shift in mindset

If the above framework feels daunting — I get it. Fixing a deeply embedded, decades-long problem is always challenging, made more difficult in a complex industry with numerous stakeholders and competing priorities. But we must start somewhere.

As a starting point, I hope to see the industry to coalesce around—and be inspired by—these three convictions:

1) It’s a problem worth fixing.
2) It’s solvable.
3) It requires industry-wide collaboration.

If we as an industry can shift our mindset and unite behind these three beliefs, we’ll be on our way to eliminating inaccurate benefit data—and its harmful impact.

Looking back, powering ahead

Posted on by Michael Levin

**Ideon is the company formerly known as Vericred. Vericred began operating as Ideon on May 18, 2022.**

By Michael W. Levin, Vericred co-founder and CEO

Vericred experienced record growth in new customers and revenue in 2021. 

That’s good news by any measure, for any company.

But what is especially gratifying to this company is the extent to which leaders on both the carrier and InsurTech sides of our world increasingly share our vision, one in which data liquidity and connectivity is the minimum operating standard of the industry. Our business won’t succeed—and our industry will not evolve—if buy-in to these ideas does not become universal. Our results strongly suggest this is happening.

That Vericred can handle such rapid growth in a business with resource-intensive, data-integration processes reflects the efforts of an incredible team. It will also serve as a catalyst for expansion. 

The fourth quarter is always an intense time in our industry, but this year gave new meaning to the word, as we built plan and rate data for over 45,000 ACA plans and oversaw a 100x increase in employer group renewals. And we accomplished all of that in the midst of a pandemic, when remote work generally remains our norm. I say “generally” because our data operations team has been coming into the office since July. For that, the rest of us are thankful, not only for their excellent work but also because they avoided significant COVID-related health issues.

Account growth often leads to strategic additions to the staff, and that was the case for us. We increased our employee ranks by 70% in 2021, and more hires are expected in 2022. Recruiting is always difficult, and it is especially so in today’s unique environment. But one reason we’re as good as we are at attracting strong leaders and superior engineering, product, marketing, sales and operations contributors is because every new hire knows they will be joining a team already filled with top talent. We could not be prouder of our people, the work they put in, and the product they put out.

Earlier this year we completed a Series B round of funding totaling $22.7 million. We are gratified to have received sizable monetary votes of confidence from four new investors (Aquiline Technology Growth, Echo Health Ventures, MassMutual Ventures, and Guardian Strategic Ventures) and three existing ones (Riverside Acceleration Capital, First Health Capital Partners, and FCA Venture Partners). That said, we’re also grateful to the potential investors who passed. We learn a lot from “no” votes that test our theories and challenge our views. We cannot fall prey to confirmation bias or any other decision trap if we are to succeed in this societally crucial business.

Our progress in 2021—in customer growth, staff expansion, and investor approbation—suggests that our industry is genuinely ready to embrace transparency and connectivity. That’s no small thing. The time will soon arrive, if it hasn’t already, when employers and members will demand the kinds of seamless digital experiences in choosing and using health insurance and benefits that they have come to expect from most other commercial interactions. 

Indeed, we expect 2022 to be a year that the industry focuses with laser intensity on the member experience, in all its manifestations and with all its opportunities. This can only help Vericred, given how efficiently our platform powers carrier connectivity and digital experiences for benefits-focused insurtechs. But it’s also good for our industry and our country. If there’s anything we’ve learned in the past two years, it’s just how important an efficient insurance-and-benefits ecosystem is to our collective wellbeing. We’re thrilled to be in a position to meaningfully help facilitate that, in this or any year.

We’ve always been committed to data security. Now we have the audit to prove it.

Posted on by Michael Levin
**Ideon is the company formerly known as Vericred. Vericred began operating as Ideon on May 18, 2022.**

By Michael W. Levin, co-founder and CEO of Vericred.

Our overarching goal at Vericred has always been to improve the experience of buying and using health insurance, which more than anything means getting the right information to the right people and places at the right time. But even as we’ve forged new paths in digital connectivity in pursuit of this goal we have never lost sight of the profound responsibility our mission entails. Trusted with highly sensitive information about millions of people—including medical, identity and employment data—we have from our earliest days felt obligated to do all we can to ensure that our systems are as secure as possible.

Never an easy task, our efforts to protect the data we handle has grown more challenging every day, as increasingly devious cybercriminals launch the kinds of attacks that now regularly make news. But in recent years and months we have invested thousands of person-hours in both the “hardening” of our information technology and the tightening of procedures in every aspect of our business. 

The result of this often burdensome work is the internal certainty that in this realm, too, we are setting industry standards and, now, important external confirmation of that belief. Vericred’s data security initiatives, I can report, were recently validated by a new System and Organization Controls 2 Type II (SOC 2) examination for security, availability, and confidentiality, conducted by a public accounting firm specializing in information-security audits.

The American Institute of Certified Public Accountants (AICPA) developed the SOC 2 process to reassure customers of cloud computing and other digital services that their information is secure. As with an accounting audit, in which an independent firm examines a company’s procedures before issuing an opinion on the accuracy of that company’s financial statements, a positive SOC 2 report reflects an auditor’s confirmation that a company meets the AICPA’s Trust Services Criteria. 

Vericred has always aspired to the highest standards of transparency and integrity. From our earliest days, we had our financial statements audited, a process young private companies rarely undertake. And once we began to build our enrollment and member management API, we knew we had to invest in state-of-the-art information security. Health insurance carriers, benefit administration platforms, and employers would be trusting us to safeguard personally identifiable information (PII) and protected health information (PHI) of plan members.

Frankly, meeting the standards for the SOC 2 report was more involved—and invasive—than we expected. In addition to investing the resources necessary to harden our technology, we also instituted background checks for employees, added access controls for our facilities, and installed software to track what employees do on their work-issued computers. We have imposed a clean-desk policy to ensure that no confidential information ever lingers on a Post-it note or in an unlocked file. If we were to ever experience a breach, we have a detailed contingency plan, not to mention forensic experts on retainer to minimize any potential damage. 

If this all seems a bit over the top, maybe even obsessive, that’s largely the point. We’ve gone to such great lengths—and will continue to do so¸— both because it’s the right thing to do and because we want to be the model on security in our industry as with all other aspects of our operations. Over the years we’ve played a central role in building a community of carriers and technology companies, coming together to develop an interconnected ecosystem of powerful health insurance and benefits applications. Security needs to be part of this conversation, a top-of-the agenda item. 

Because a breach of the weakest link in the chain can undermine the credibility of every participant.

At Vericred, we want to help facilitate this mindset and support the industry as it strives to keep moving forward safely. Reach out to us with any questions and ideas at info@ideonapi.com.

Why our Series B raise will be good for our industry, too

Posted on by Michael Levin

**Ideon is the company formerly known as Vericred. Vericred began operating as Ideon on May 18, 2022.**

By Michael Levin, Co-founder and CEO, Vericred

A lot runs through your mind when you complete a Series B round of funding totaling $22.7 million. 

Two obvious feelings, for sure: pride and humility. 

Pride, because the round, which was oversubscribed, took less than three months—half the time we expected—and included monetary votes of confidence from four new investors (Aquiline Technology Growth, Echo Health Ventures, MassMutual Ventures, and Guardian Strategic Ventures) as well as three existing ones (Riverside Acceleration Capital, First Health Capital Partners, and FCA Venture Partners). It’s the ideal mix of strategic and venture capital partners. If we’re to be judged by the company we keep, we like our chances.

Humility, because we learned a lot about business and our industry from the fundraising process, even from those investors who passed on this round. There’s nothing like having dozens of microscopes focused on you, each with its own lens through which to view your decisions and theories. Humility also because we now feel even more pressure to keep delivering on our accumulating successes and evolving promise. We’ll use this new capital to expand our operational teams in New York City and Omaha, and to beef up our marketing and sales functions throughout the country. We don’t take a dollar of revenue—existing or new—for granted. 

But, if I’m leveling with you, what I’m also feeling right now is optimism and impatience. 

Optimism, because the vision that’s driven us from the beginning continues to prove its merit, producing real accomplishments and genuine approbation from stakeholders that matter. 

We are, all of us at Vericred, unapologetic benefit geeks who love a good API. And we started our infrastructure-as-a-service platform because we knew that the health insurance and benefits industry was about to enter a new phase of digital transformation, an inevitable evolution driven by a need for the operational efficiencies that would be necessary to improve member experiences and product innovation. 

Today, thanks to our talented team, Vericred offers a full suite of APIs across medical, life, dental, vision and other lines of coverage that power quoting, enrollment, member management, and renewals on multi-carrier InsurTech and BenTech platforms.  Our goals were to simplify the complex process of exchanging data among multiple partners—and set a standard for the industry. That’s what we’ve done, and that’s what we’ll continue to do. 

One measure of Vericred’s impact on the industry is the more than 300 carriers and 100+ tech companies (and counting) that have joined our platform, a roster of heavyweights and forward thinkers that includes Cigna, Guardian, Humana, MetLife, Principal, Kaiser, Rippling, Gusto, Ease, and Namely. This momentum, along with the strategic investment participation by industry leading carriers, reflects the inevitability of what’s coming as much as it does the excellence of our execution.

But our determination to grow the community of partners on our platform is not driven solely by the desire to generate returns for investors or to bring order to a far-too-siloed business. We have always been a little (maybe a lot) obsessed with the benefits ecosystems because we believe our industry—and our industry’s ability to serve individuals and organizations—is enhanced when we are all connected, when we are speaking the same language directly to each other in the smoothest possible “dialogue.” 

When I talk about connecting I’m not just referring to the efficient transmission and translation of data that Vericred is helping to simplify. I’m referring to real-life connections between actual humans—data scientists, C-suite execs, tech mavens, operations leaders, marketing pros—across companies and sectors of the industry. 

That’s really why I’m also a little impatient after this just-completed raise. I want to make that happen, sooner than later. Which is why some of the funds will be used to launch a series of initiatives that we believe will go a long way toward building the kind of community that a healthy industry needs, one in which the transfer of knowledge is not only API to API or system to system but also person to person. 

I’ll expand on the details of Vericred’s “connectivity agenda” in the coming weeks and months, but for now I’ll just say that we believe the people in every precinct of our expanding and evolving ecosystem—carriers, technology companies, regulators, researchers—need a new way of communicating and exchanging ideas. Just as we’ve made good on the promises we’ve made so far about standardizing health insurance and benefits data, we’re equally committed to accountability when it comes to unifying our more-in-common-than-not communities.

Covid is forcing a reckoning for the health insurance industry—and that’s good

Posted on by Michael Levin

By Michael Levin
Co-founder and CEO, Ideon

The Covid-19 pandemic is a once-in-a-lifetime stress test of the healthcare system. And while most of the attention has rightly been focused on front-line healthcare delivery, the provision of employer-sponsored health insurance has also been substantially disrupted. Those carriers, brokers, and employers who respond with speed, creativity and flexibility will emerge from this crisis with more modern, efficient, and resilient systems than ever before. Those who don’t, I believe, will regret their failure to seize the moment.

Until Covid, a great deal of the health insurance sales cycle has involved face-to-face contact. Brokers met with employers, often using paper presentations to compare various options. Then, in open enrollment, many employees would explore their options by meeting in a cafeteria or conference room with carrier or broker reps. A lot of administrative details were still processed through paper forms.

Today, much of this interaction has gone digital, via video calls, webinars, micro sites, and apps. For some clients, this forced transition has meant a loss of intimacy and trust. But in general, those people who had been reluctant technology users have discovered the speed and convenience of online interaction. 

At the same time, the pandemic has spurred some in the industry to modernize anachronistic practices. For example, some carriers have scrambled to figure out how to accept credit cards, as some business clients were no longer working in offices where they could easily cut checks.

We can expect a good deal of this behavior to continue and even expand after the pandemic subsides, further reducing costs and improving service quality throughout the industry. 

But there are also more subtle changes that accompany these shifts from in-person to online interaction. To serve employers remotely, brokers are now providing access to online marketplace tools that allow such customers to compare plans  and rates  from multiple carriers. 

To be sure, many insurance companies have long been ambivalent about the rise of new technology-driven,  multi-carrier, distribution platforms. They would prefer to have direct interaction with brokers and clients, if not through their sales force than at least through proprietary online systems. Being just one item on a menu of carriers, they fear, neutralizes their differentiation, and focuses competition on price. Now, though, the market has been refocused by COVID, with brokers and employers alike demanding the transparency and efficiency of these platforms. As such, carriers are increasingly open to partnering with InsureTech companies.  

Carriers have faced similar choices about how to inform customers of expanding coverage for telemedicine and testing, relaxed policy rules, and other changes in response with Covid. Some have largely restricted this information to their own sites and apps, offering a rich stream of communication to the tiny fraction of their customers who use those channels. But others have partnered with brokers and technology companies to distribute their content—finding that what they lose in control is more than matched by gains in reach. 

This dilemma is neither new nor exclusive to the insurance industry. Airlines would rather sell tickets on their own sites than through Expedia. Banks would prefer you check your balance on their app, not Mint. But these companies have come to understand that they need to do business in the ways their customers want. 

The insurance industry must continue to absorb this lesson. And I believe it will. Indeed, if the new Covid vaccines are as effective as initial reports suggest, I suspect that a year from now we will start to see a significant restructuring of the health insurance industry. 

Because there’s no going back.

That is, a lot of customer behavior will already have permanently changed. Fewer people will work from offices, limiting the revival of face-to-face sales calls and common-area recruitment sessions. And many of even the most resistant to new technology will have learned to use digital tools for buying and managing their health insurance. Nobody will want to go back to filling out paper forms.

Most significantly, employers and plan participants will think back and remember how well—or how poorly—they were treated by their insurance companies. 

Were they able to get information and handle transactions easily and efficiently? 

Which companies responded creatively and with flexibility to the rapidly changing world—and which were stuck in an irrelevant past?

It’s a stress test for the entire industry. Not all will pass, but those that do will ultimately be grateful for the reckoning brought on by an otherwise awful pandemic.

The EpiPen Provides a Wake Up Call for Open Enrollment

Posted on by Michael Levin

**Ideon is the company formerly known as Vericred. Vericred began operating as Ideon on May 18, 2022.**

EpiPens are grabbing national headlines for their soaring prices.  The life-saving drug device treats anaphylaxis, a potentially fatal allergic reaction to certain foods, bee stings, medications, or latex. Amidst the rising calls for hearings and policy change, should be personal commitments to making informed decisions during the upcoming Open Enrollment Period.

Prescription Drugs and Health Plan Choices

Simply put, the prescription drugs you and your family members take should influence your choice of health plan. With over 50% of adults taking prescription drugs on a regular basis, and with these drugs accounting for more than 20% of the U.S. healthcare spend, attention should be paid to this often overlooked, but critical, element of plan selection.

Whether or not a drug is covered by a particular plan is governed by the “formulary” attached to that plan.  Formularies are lists of drugs, often found in PDF’s on carrier websites, that show whether or not a drug is covered, and at what “tier level”, along with any restrictions.  The tier level is important, as it drives what the individual will actually pay for that drug.  For example, tier 1 drugs often have a very low co-pay, perhaps $10. Meanwhile, tier 4 drugs may require the individual to pay 50% of the drug’s cost.

The price an individual pays differs, sometimes dramatically, from the wholesale and retail prices often raised in the press.  And at the end of the day, as individuals (as opposed to employers, especially self-insured employers), we care about what we actually pay out of pocket for a drug – not what occurs behind the scenes.

Formularies differ, sometimes considerably.  I have a son with peanut allergies and have bought EpiPens for years.  Last year, our health plan didn’t cover the EpiPen at all.  So we paid $600 out of pocket.  This year, the EpiPen is covered and we paid $100 for the exact same product.  This shows the significant difference between the two formularies attached to our plans this year versus  last.

The issue applies equally to seniors, especially with Medicare Advantage and Medicare Part D plans.  An article in the AARP Bulletin in November 2015 by Patricia Barry entitled “Save Money on Medicare in 2016” described the significant difference in cost a covered senior would pay for common drugs under different formularies attached to these Part D plans.  In the most extreme example, the monthly difference between the highest and lowest cost for Procrit was $535.  My personal experience was a swing of $500 a year. Imagine that on a monthly basis!

So how does one protect themselves from the shock of drugs that aren’t covered, or that are covered, but at a high out of pocket cost?

The first thing to do is check with your physician about generic alternatives as these are:

  1. much more likely to be covered by a plan
  2. will cost significantly less

The second thing to do is check the formularies of all available plans for the drugs you take on a regular basis.

Some health insurance shopping platforms are bringing transparency to this critical plan element through “shop by drug” functionality. This lets users enter the drugs they take to see if their drugs are covered by each available plan and, if so, at what tier level and cost.  This addresses the challenge of identifying and searching dozens of formularies.  Platforms like GetInsured.com and Take Command Health serve the individual under-65 market, while Medicare Pathfinder serves the senior (over 65) market.  Such platforms make easy work of identifying the “right” health plans based on the drugs you take and the doctors you see, all in the context of the costs and coverages of each plan.

So as we approach open enrollment, let’s use the EpiPen debate as a teaching moment to better inform ourselves and find the right plan.

Avoiding a Costly Out-of-Network Experience

Posted on by Michael Levin

The other day, I was in the car when I heard a commercial for a bariatric clinic offering lap-band surgery.  The commercial ended with these words: “…your PPO insurance should pay.”   This might lead someone to believe that their insurance would cover the entire procedure.  It.  Does.  Not.

This is by no means the only statement that may, purposely or not, mislead a consumer. The financial consequences of seeing an out-of-network provider are profound.  Absent some kind of negotiation, you’ll be responsible for the “list price” of any medical care you receive.  If your insurance plan is a PPO or a POS (a plan with out-of-network benefits), you’ll be billed for the difference between a procedure’s list price, and the amount allowed under your health plan.  That allowed amount may be a fraction of the list price, and you’re on the hook for the remainder.  This is called balance billing.  And if you have an EPO or HMO that limits you to in-network providers, you’ll be responsible for the full list price of any service rendered by an out-of-network provider.

The problem’s made worse because some healthcare providers play a little fast and loose with the terms.  A doctor who says they “accept” or “take” a plan, may simply be saying that they will bill the plan.  You’ll be responsible for any balance due.

So what do you do?  First, make sure your provider is in-network.  You can check with your insurance carrier or on your plan’s doctor search site.  But be careful. Your insurance carrier may offer many plans and many networks.  Make sure your provider participates in your particular plan.

And when speaking with a provider, you have to be very specific about asking “are you an in-network provider in my health plan.”  This leaves little room for ambiguity.  It’s also recommended that you make sure that any ancillary services are performed by in-network providers.  Your annual physical, for example, may include a blood draw, EKG and lab work – all done by different providers even though everything was taken care of in the same physical office.  So make sure those providers are also in-network.

It’s the only way to avoid having a costly out-of-network experience.