GM&A

Consumerism works when an employer allows genuine competition to work in the health care marketplace. GM&A has 7 years of success: 1. Building Custom Provider Networks; 2. Increasing Bottom Lines; 3. Reducing Employee Out-of-pocket Costs; and 4. Eliminating the Need For Benefit Changes backed by a 100% Performance Guarantee. “During our first year of partnering with GM&A, medical claim costs went down over $700,000 from the previous year (including GM&A’s fees). This represents a 33% decrease in the amount we paid out in claims from the previous year.” Houston Client w/500 employees

Situation

Healthcare is a business and a service commodity that has not been required to respond to genuine competition. The result has been grossly inflated consumer pricing. Highly effective emotional marketing and complicated pricing structures have fueled the tendency for consumers to make unwise choices. When competition is allowed to work in healthcare, the outcomes are

1. Reduced cost of service;
   
2. Transparent rates;
   
3. Accountability; and
   
4. A monetary (competitive) incentive to increase and maintain a high quality of service. Competition is not a new concept and has a history of producing significant, positive results for consumers.

Solution

GM&A was formed by two former healthcare insiders. Michael Jenike M.H.A. spent his career as a hospital administrator during the time that managed care came on the scene. He was intimately involved in designing pricing structures and negotiating rate contracts. David Herbert M.D. spent his career as a physician, Chief of Hospital Medical Staff, and managed physician groups.

GM&A’s successful model is based on two essential criteria: 1. Employers who have or are willing to convert to a fully/partially self-funded health plan; 2. Enough leverage to spark genuine competition. There needs to be geographic concentrations of 500+ employees, 2 or more competing hospitals that serve the healthcare market being considered, and a political will to allow competition to work in order to significantly reduce costs without changing benefits. This model won’t work for all employers initially, however, the positive affect it will have on the cost of service will eventually help everyone who purchases healthcare.

GM&A’s healthcare insiders represent employers in the healthcare marketplace to negotiate complete, client specific, provider networks. All contracts are 3 year, direct contracts, with Medicare based fixed rates. GM&A then reviews all claims over $2,500 payable for payment accuracy. All large or unusual claims are audited using the patient’s medical records to make sure that everything that is being billed is recorded and reported in the patient’s records. Random audits are performed on claims under $2,500 payable. Good negotiated rates are only as good as the payment accuracy and a side benefit to closely monitoring claims is that it makes it easy to identify and review physicians and/or facilities that regularly generate more cost per visit.

GM&A’s compensation is based on a percentage of an actual reduction in health plan costs. A cost per member per month (CPMPM) benchmark that is based on the client’s current experience is established up front. GM&A receives a percentage of the difference between the actual cost and the benchmark for months that show a reduction. GM&A even shares the risk of high utilization months. If utilization causes a CPMPM to go over the benchmark, GM&A is not paid that month and the overage is credited to the next month that shows a reduction. In summary, every $1 paid unnecessarily or incorrectly out of the plan is money out of both pockets. The partnership aspect of this model insures that GM&A’s goals are aligned with the health plan goals.

Better Health and Lower Costs

• This graph shows actual results for three GM&A clients for years 2001-05. Keep in mind that benefits were not changed to affect the cost reduction.
• These employers have rich plans and in 2 of the 3 cases, the employee age and sex demographics are the types that typically drive costs to the high side of average. The red bars represent estimated US average PMPM health claim expenditures. The blue client represents a Texas manufacturer with employee locations in several states.
• The green client represents a medium (approx. 1,700 employees) school district in a Texas market that has two hospitals.
• The yellow client represents a small (approx. 500 employees) school district in one of the largest Texas markets.
• The commonalities are:
  1. Expert representation;
  2. Leverage;
  3. Two or more hospital systems in geographic proximity to the employee population;
  4. Employer willingness to allow the laws of true competition to work.
• Please note that not only have the employees represented in these groups enjoyed stable benefits and contribution levels, their out of pocket costs for coinsurance was reduced proportionate to the reduction in negotiated rates. Everyone wins!