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Protect Your Firm from Hacking by Disgruntled Former Employees

While hacking by outsiders is posing a larger and more significant threat to companies of all sizes, the threat of insider jobs – particularly by disgruntled former employees – is often an even bigger one.

These attacks, carried out with malicious intent to hamstring a company’s operations, can cause serious problems. Take, for example, the following recent events:

  • A former employee of Spellman High Voltage Electronics Corp. is facing charges after strange things started happening to the company’s systems after he resigned, due to allegedly being passed over for a promotion.

Shortly after he left, employees at Spellman began reporting that they were unable to process routine transactions and were receiving error messages. An applicant for his old position received an e-mail from an anonymous address, warning him, “Don’t accept any position.” And the company’s business calendar was changed by a month, throwing production and finance operations into disorder.

The mayhem cost his former employer more than $90,000, and he was arrested. “The defendant engaged in a 21st-century campaign of cyber-vandalism and high-tech revenge,” said Loretta Lynch, the United States attorney for the Eastern District.

  • A former employee of McLane Advanced Technologies was sentenced to 27 months in prison and ordered to pay $35,816 in restitution after pleading guilty to hacking into McLane’s systems and deleting payroll files to the point that staff could not clock in and the company could not issue payroll checks.

He was upset after the company had fired him and then refused to help him obtain unemployment benefits.

  • A network engineer, who was fired by the American branch of Gucci, stands accused of breaking into the computer systems of the Italian luxury goods organization, shutting down servers and deleting data.

The New York County District Attorney’s office accuses the former employee of using an account that he had secretly created while employed by Gucci to access the network after his employment was terminated.

He has been charged with computer tampering, identity theft, falsifying business records, computer trespass, criminal possession of computer-related material, unlawful duplication of computer-related material, and unauthorized use of a computer. The intrusion is said to have cost the company some $200,000.

What you can do

With these cases in mind, there are internal steps you can take to avoid this sort of thing happening at your company.

Route all offsite access through a VPN – This can typically prevent someone from entering your system altogether. But, once you have such a system in place, all outside connections need to be logged and monitored for suspicious activity.

Test your disaster recovery plan – You need to have a disaster recovery plan in place that includes backing up data every day, just in case someone deletes it from your servers. That way, if data is deleted you can immediately switch to a back-up IT environment.

A lot of times, organizations do disaster recovery, but unless they practice the actual recovery, they don’t know if it will work, and it doesn’t matter whether they have a physical or a virtual environment. So, don’t forget to test any plans you have.

Block unapproved software – Sometimes your employee hackers will install extra software that makes it easier for them to root through your system and create havoc. You should have systems in place that do not allow anybody to install unapproved software.

Disable ex-employee accounts and passwords – Whenever an employee or contractor ceases to work at your business – or in the case of layoffs, beforehand – you must disable their network access, accounts and passwords. You should regularly review which users have access to your systems, and know that changing passwords and resetting access rights is essential when a member of your staff leaves your employment.

Think like a malicious insider – IT managers must think like an inside attacker, and identify the weak points of their infrastructure that they themselves would exploit were they so inclined. As a senior manager, you should ask your IT managers just what they are doing to thwart any possible insider attacks.

Make suspect behavior cause for concern – Watch for human-behavior warning signs, such as complaining to others about the company and a more than usual amount of time spent accessing company data on your network. Develop a response plan for when such signs get spotted.

Beware resignations, terminations – Most insider attacks occur within a narrow window. Most people who steal intellectual property or destroy systems do so within 30 days of resignation. Accordingly, keep a close eye on departing or departed employees, and what they viewed.

If someone resigns who has had access to your most sensitive company information, including trade secrets, you need to pay special attention to ensure it’s not compromised.

Marshal forces – Businesses that prepare for attacks in advance tend to better manage the aftermath. When it comes to combating cases of suspected insider threat, include human resources, management, upper management, security, legal and software engineering.


Health system consolidation: Can employer groups, brokers survive it?

By Dan Cook

Evidence suggests that consolidation among health systems leads to higher prices for services and stable or lower quality of care.

Health care systems have been buying up one another, and physician practices, at an alarming rate. The 115 announced health care system deals in 2017 was a record, with 2018’s 90 close behind.

This level of consolidation activity 2017 “shook the health care landscape,” said consulting firm Kaufman Hall, which produces an annual mergers and acquisitions review. “These tremors continued into 2018 and are beginning to fundamentally reshape the health care landscape,” KH said in its 2018 review.

The consolidation within the physician practice sector was no less titanic. Hospital systems acquired more than 5,000 standalone practices in 2015 and 2016 alone. Meantime, practices are also being swallowed up by UnitedHealthcare and other non-hospital enterprises.

Analysts tend to focus on two major outcomes of this consolidation craze: financial and quality of care. So far, evidence suggests that consolidation among health care systems leads to higher prices for services and thus costs to users, and stable or lower quality of care.

These trends are not the friends of two very specific groups: health insurance brokers, and employer groups created to negotiate better terms for their members with hospitals.

“It is frustrating,” admits Brian Marcotte, CEO, The National Business Group on Health. “Scale for the sake of scale leads to higher costs, and that’s what we are seeing. When we look at what actually happens when hospitals buy hospitals or physician groups, we see higher cost and price.”

One of the primary objectives of NBGH’s 435 enterprise level members–all of which are self insured–has been to negotiate better terms with medical providers. As consolidation creates ever larger health care systems, its members report that “consolidation has not led to the efficiencies you’d see in other industries. … Most report that costs went up or were unchanged. Very few saw them go down.”

Employer groups are promoting Centers of Excellence and encouraging plan members to seek care from top performing practitioners. But consolidation among hospitals can erode quality of care for employer plan members by bringing into an existing system underperforming hospitals and physicians, Marcotte says.

“Let’s say you have a 12-hospital system that dominates a market or several markets,” he says. “The health plan is looking to contract with eight higher performing hospitals, but not all 12. The hospital system’s negotiating position is, ‘You take the whole system or you don’t get any of our system.’ These are the tactics that go on when providers are dominating a particular market.”

The decline of bargaining power

Smaller employers that band together into health care purchasing groups lose negotiating power when consolidation sweeps through a market. Employer groups negotiate locally or regionally for terms for their members with hospital systems. Their cache is numbers: They guarantee a large number of patients in exchange for favorable terms.

But, says Den Bishop, president, Holmes Murphy, an insurance advisor, as the systems expand, the group’s bargaining power diminishes.

Meantime, consolidation among physician practices is driving costs up for plan members. Physicians are highly incentivized to merge practices and then sell to a health care system. “They want to get out from under the administrative burden and just practice medicine,” Bishop says. “As soon as they buy the practice, the hospital system goes to the insurance company and says, ‘Our contract rate is much higher than the physicians, so you will now pay us this rate.’ That rate gets passed on to the employer. By paying higher prices for physician services, employers are paying the acquisition price for the hospital.”

In Atlanta not long ago, a major health system purchased a large physician practice–and employer plan costs for those physicians increased 40 percent, says Suzannah Gill, benefits strategy consultant with EPIC in Atlanta. “Sadly, when hospitals buys practices, the hospital wins and the member loses,” she says.

The national movement toward greater price and cost transparency among providers faces a threat from consolidation, Marcotte and others say. As systems expand, “you see a reluctance to have a price listed in transparency tools,” Marcotte says. “They refuse to list their prices, effectively eliminating any real ability for a consumer to choose a cost effective site of service.”

Josh Luke, MD, a former hospital CEO who now writes and lectures on hospital system strategies, believes the transparency issue may prove to be a turning point battleground for hospitals.

“There’s a transparency movement uprising coming with overall health and cost,” he says. “That momentum will be tough for any market to turn away from. Pricing transparency may outweigh a monopoly’s ability to gouge employers.”

Broker adaptation

On the broker side, a major threat to traditional brokers comes from the hospitals themselves. As they expand, many are moving into the health insurance business.

“The hospital systems are moving quickly, while they still have the most money, to compete with insurers. They are becoming insurers,” says Luke. “The bottom line is that is the [hospital] model of the future is an insurance model.”

To adapt to this new model, brokers need to become advisors and consultants to their clients. Their role may revolve more around transparency, advising clients on negotiating specific terms with health care systems, guiding them through the opaque pricing lens hospitals have thrown up.

Longer term, the health care system as insurer could have a positive effect on plan design and cost, several experts agree. The insurance component of a hospital system benefits from a healthier patient population, on more efficient use of services and facilities, and on a leaner brick-and-mortar footprint. These systems will focus more on convenience for patients and on value-based cost structures, and will be more responsive to negotiating with large employer groups.

“If the hospital system becomes big enough, it can negotiate directly with employers,” Bishop says. “They don’t need the insurance broker. The great hope [for employers] is that the hospital companies become insurers and have an incentive to provide better quality at a lower cost. It is still a ways off. We are in the cocoon period right now.”

EPIC’s Gill agrees that hospital systems that branch out into insurance will seek to contain the costs of medical care. “Health care providers have an incentive to increase costs. Insurance carriers have incentives to reduce or maintain costs. So when a health system develops an insurance business, there are incentives for them to do things efficiently,” she says.

The broker/advisor can play a crucial role in a consolidating market, Gill and others say.

“Employers need advisors to guide them today. They are focused on running their business, so you are seeing more advisors introducing interesting, cutting edge practices to meet their needs,” she says. “Sometimes when you tell a provider or facility, ‘My client will pay on the spot and you won’t have to worry about collections later,’ [the health care provider] will take it. I see all of the changes as very good for the broker/advisor market. The market is evolving, becoming more complex, and that’s where employers turn to brokers for guidance.”

The overall effects of hospital consolidation in a major market “are probably indifferent to most forward-thinking brokers,” says Allison De Paoili, founder and owner, De Paoli Professional Services, San Antonio. “But in the smaller markets, where you have two health systems that merge, then you have a problem,” she says. “With no competition, there is no incentive to negotiate price.”

In the end, the final chapters on health system consolidation have yet to be written. The merger frenzy of the past two years is still working itself out. As hospital systems seek market domination, creative brokers, concerned large employers, and national organizations like NBGH are still developing their responses.

Pockets of positive physician practice and hospital system consolidation do exist, NBGH’s Marcotte says. The hospital-as-insurer places the parent company in a position to accept some of the risks, he says, and that’s where innovation and efficiencies will emerge. It’s mostly happening on the Medicare Advantage side, but could translate to commercial insurance, he says.

“What I worry about with provider consolidation is when I have the whole market, I have no incentive to move to a value based direction, unless I have to do it to get paid differently,” he says.

Total market domination may be the goal of health systems. But it could also be their undoing.

“When there’s a monopoly, people will walk away,” says Josh Luke. “People are getting fed up. The public pressure is starting to rival the doctor and hospital lobby. Major employers, like Disney and Amazon, are saying ‘We are gonna blow it up and start over.’ Hospitals haven’t started feeling the pain yet. But it’s coming.”


Five Ways Employers Can Save on Health Care Costs

In recent years, many companies have been dealing with rising health care costs largely by transferring more of the expense and risk on to their employees.

But some employers have found smarter, more creative ways to limit health costs without further burdening valued employees. Here are some of the best solutions:

  1. Pharmacy benefit managers. Pharmacy benefit managers are independent third party administrators who work with pharmacists, employers and workers to reduce costs and inefficiencies. For example, they may help workers migrate from expensive brand name drugs to equally effective generics for a fraction of the cost.
    Or they may be able to migrate workers from bricks-and-mortar pharmacies to mail order. They also assist employers with contract negotiations.
  2. Telemedicine. Some companies are contracting with doctors to provide health services online, via a video feed. It’s no substitute for an in-person examination, but workers can get consultations and routine assessments done and get a prescription for a fraction of the cost of an in-person visit. Furthermore, the worker doesn’t have to take time off work for an appointment. It can be done from the office.  A typical insurance billing for a basic medical appointment can run as high as $150. But a telemedicine visit can cost about a third of that amount, according to reporting from U.S. News.
  3. Wellness programs. Healthy employees cost much less than sick ones over time. Smokers and the obese generate much more frequent and higher medical claims than normal-weight employees.
    Employers are fighting back by offering access to smoking cessation and weight loss programs, as well as additional programs for the management of common conditions such as high blood pressure, diabetes and asthma. About 58% of health plans nationwide offer an incentive for participating in a wellness program, according to research from CEB, the best-practice insight and technology company.
  4. Consumer-directed health plans. Employers are also giving employees greater control over their spending decisions. They are doing this via high-deductible health plans, which come with access to health savings accounts. These allow either an employee or an employer to contribute pre-tax dollars to an HSA. Withdrawals from an HSA to pay for qualified health care expenses are tax-free.
    These plans are less expensive for employers than comparable traditional insurance plans, and can work very well for employees in good health. Some employers choose to contribute to HSAs on their workers’ behalf.
  5. Transparency tools. Cost-transparency tools make the cost of every medical procedure or service visible to employers and patients alike.

 

A claims analysis from UnitedHealthCare found that those who used the company’s transparency tools spent an average of 36% less on health services. When consumers used price-transparency tools, CEB researchers found an average saving of $173 for employees and $409 for employers per procedure.


Employers Rethink HDHPs as More People Struggle with Medical Bills

As the number of employers offering high-deductible health plans continues growing, the spotlight recently has highlighted an inconvenient truth: some employees are going broke and filing bankruptcy because they cannot afford all of the out-of-pocket expenses and deductibles they must pay in these plans – just like the bad old days in the 1990s and 2000s.

Besides being in plans with high deductibles, many employees are also paying more for coverage as employers have shifted more and more of the premium burden to their staff.
Making matters worse, studies are showing that many people with HDHPs are forgoing necessary treatment and not taking the recommended dosages of medicines because they can’t afford the extra costs.
Consider:

  • Enrollment in HDHP plans grew to 21.8 million in 2017, up from 20.2 million the year prior, and 5.4 million in 2007, according to a report by America’s Health Insurance Plans.
  • Nearly 40% of large employers offered only high-deductible plans in 2018, up from 7% in 2009, according to a survey by the National Business Group on Health.
  • 50% of all workers had health insurance with a deductible of at least $1,000 for an individual in 2018, up from 22% in 2009, according to the Kaiser Family Foundation.

Despite that, a 2017 report by the Centers for Disease Control and Prevention found that 15.4% of adults in HDHPs in 2016 had issues paying bills, compared to 9% of those with other types of insurance. And there have been a number of news reports about the deep financial toll on HDHP enrollees that have suddenly been hit by serious maladies.

Meanwhile, the average deductible for a family had risen to an average of $4,500 in 2017 from $3,500 in 2006, according to the Kaiser-HRET 2017 survey of employer-sponsored health plans.
As a result, some employers are rethinking their use of these HDHPs and trying to reduce the burden on their workers, according to news reports.

Skimping on care

Studies show that many put off routine care or skip medication to save money. That can mean illnesses that might have been caught early can go undiagnosed, becoming potentially life-threatening and enormously costly for the medical system.

A study by economists at University of California, Berkeley and Harvard Research, published in the Journal of Clinical Oncology

Findings: When one large employer switched all its employees to high-deductible plans, medical spending dropped by about 13%. That was not because the workers were shopping around for less expensive treatments, but rather because they had reduced the amount of medical care they used, including preventative care.

The study found that women in HDHPs were more likely to delay follow-up tests after mammograms, including imaging, biopsies and early-stage diagnoses that could detect tumors when they’re easiest to treat.

A report by the Robert Graham Center for Policy Studies in Family Medicine and Primary Care, published in Translational Behavioral Medicine

Findings: People with HDHPs but no health savings accounts are less likely to see primary care physicians, receive preventive care or seek subspecialty services. Compared to individuals with no deductibles, those enrolled in HDHPs without HSAs were 7% less likely to be screened for breast cancer and 4% less likely to be screened for hypertension, and had 8% lower rates of flu vaccination.
The study authors noted that although more individuals have health insurance under the Affordable Care Act, premiums and deductibles have increased, leaving many Americans unable to afford these costs.

Oddly, many people in HDHPs are also forgoing preventative care services, even though they are exempted from out-of-pocket charges, including the deductible under the ACA. This is likely because most people don’t know that the ACA covers preventive care office visits, screening tests, immunizations and counseling with no out-of-pocket charges. As a result, they do not benefit from preventive care services and recommendations.

Companies with second thoughts

A few large employers – including JPMorgan Chase & Co. and CVS Health Corp. – recently announced that they would reduce deductibles in the health plans they offer their employees or cover more care before workers are exposed to costs.

CVS Pharmacy, part of CVS Health Corp., in 2013 had moved all of its 200,000 employees and families into HDHPs. During routine questionnaires, CVS later found that that some of its employees had stopped taking their medications because of costs. The company, in response, expanded the list of generic drugs its employees could buy for free to include some brand name medications, as well as insulins.


DOL Employers Expect 6% Hike in Health Costs for 2019

The IRS has released the inflation-adjusted amounts for 2019 used to determine whether employer-sponsored coverage is “affordable” for purposes of the Affordable Care Act’s employer shared responsibility provisions.

For plan years beginning in 2019, the affordability percentage has increased to 9.86% (from 9.56% in 2018) of an employee’s household income or wages stated on their W-2 form. The higher rate is indicative of the anticipated small group plan inflation that continues hitting premiums.

If you are an applicable large employer under the ACA (with 50 or more full-time staff), you should examine the affordability percentages for your lower-waged employees so you don’t run afoul of the law. Fortunately, as the percentage has increased, you’ll have more flexibility when setting your employees’ contribution rates.

A recent study by PricewaterhouseCooper’s Health Research Institute found that employers and insurers are expecting a 6% increase in health care costs in 2019. While that rate is just slightly above the average 5.6% increases since the ACA took effect, many employers have increasingly been passing the inflationary costs on to their covered employees.

The report by PwC noted three trends that are having the largest effect on health care costs.

Abundance of treatment options – With covered individuals demanding more convenience in their treatment options, employers and health plans have responded by giving them more ways to obtain care, like retail clinics, urgent care clinics and electronic physician consultations. While the long-term goal is to reduce health care spending on services, currently the increased offerings have resulted in higher utilization.

Mergers by providers – Hospitals and other health care providers have been consolidating for the better part of a decade, and that trend is expected to continue in light of several recently announced mega-deals. Prices tend to rise when two health systems merge and the consolidated entity gains market share and negotiating power.

Physician consolidation and employment – Hospitals, health systems and medical groups are hiring more and more doctors out of private practice. And when that happens, costs tend to go up since these organizations tend to charge higher prices than independent practitioners.

In 2016, 42% of physicians were employed by hospitals, compared to just 25% in 2012, according to the PwC report. Hospitals and medical groups tend to charge between 14% and 30% more than physicians in private practice.

Restraining factors

At the same time, there are some factors that are dampening overall cost increases:

  • Expectations that next year’s flu will be milder than this year’s main virus.
  • More employers are offering care advocates who help covered individuals navigate the insurance system to find the best quality care at the best price. According to the survey, 72% of employers offered health-advocacy services to their employees in 2018.
  • More employers are using “high-performance networks,” also known as “narrow networks.” In essence, a plan will use a narrow network of doctors who care for the bulk of covered individuals. Not contracting with as many doctors means lower overall outlays for medical services.

While the doctors in these networks are not always the least expensive providers, they typically are ones who have proven over time to yield the best results.

The takeaway

We are here to help you get the most value for your and your employees’ health care spend. Talk to us about any of the tools mentioned above to see if we have a program that might work for your organization.


Business Insanity Podcast

If you don’t know Barry Moltz of Business Insanity podcast – you need to get him on your radar. He is a wonderful host who is enthusiastic about introducing you to the people and ideas that can improve your life.

On this episode, we talk about control and predictability to provide benefits, offer quality access to care and reduce costs.


timecode: 19:10-36:00

This podcast is special for me because I’m extremely passionate about changing the way employers access and pay for healthcare. Listen to segment 2 (about 20 minutes into the podcast) and let me know your feedback! I’m all ears.

  • Did my story resonate with you in some way?
  • Are you ready to gain control over your healthcare spend?
  • Did you want to learn how to make a healthcare plan predictable and repeatable?
  • Did you just want to learn more about that voice you heard?

Whatever the reason, I’m glad you are here.

Happy listening!


Pharmacy Benefit Managers: A Break On Rising Prescription Costs Or a Cause of Them?

In 2015, spending on prescription drugs grew 9%, faster than any other category of healthcare spending, according to the U.S. Centers for Medicare and Medicaid Services.

The report cited increased use of new medicines, price increases for existing ones, and more spending on generic drugs as the reasons for this growth. Increasingly, though, observers of the healthcare system point to one player – pharmacy benefit managers.

Pharmacy benefit managers are intermediaries, acting as go-betweens for insurance companies, self-insured employers, drug manufacturers and pharmacies. They can handle prescription claims administration for insurers and employers, facilitate mail-order drug delivery, market drugs to pharmacies, and manage formularies (lists of drugs for which health plans will reimburse patients.)

Express Scripts, which provides network-pharmacy claims processing, drug utilization review, and formulary management among other services, is the best-known PBM. CVS Caremark and UnitedHealth Group’s OptumRx are other major players.

A PBM typically has contracts with both insurers and pharmacies. It charges health plans fees for administering their prescription drug claims. It also negotiates the amounts that plans pay for each of the drugs.

At the same time, it creates the formularies that spell out the prices pharmacies receive for each drug on the lists. Commonly, the price the plan pays for a drug is more than the pharmacy receives for it. The PBM collects the difference between the two prices.

It can do this because the health plan does not know what the PBM’s arrangement is with the pharmacy and vice versa. Also, one health plan does not know the details of the PBM’s arrangements with its competitors.

A PBM could charge one plan $200 for a month’s supply of an antidepressant, charge another plan $190 for the same drug, and sell it to a pharmacy for $170. None of the three parties know what the other parties are paying or receiving.

In addition, drug manufacturers, who recognize the influence PBM’s have over the market, offer them rebates off the prices of their products.

In theory, the PBM’s pass these rebates back to the health plans, who use them to moderate premium increases. However, because these arrangements are also confidential, the extent to which these savings are passed back to health plans is unknown. Many observers believe that PBM’s are keeping all or most of the rebates.

To fund the rebates, drug manufacturers may increase their prices. The CEO of drug maker Mylan testified before Congress in 2016 that more than half the $600 price of an anti-allergy drug used in emergencies went to intermediaries.

The PBM’s argue that they help hold down drug prices by promoting the use of generic drugs and by passing on the savings from rebates to health plans and consumers.

They reject the notion that they are somehow taking advantage of health plans and pharmacies, pointing out that they are “sophisticated buyers” of their services. They also argue that revealing the details of their contracts would harm their abilities to compete and keep prices low.

Nevertheless, PBM’s are now attracting scrutiny from Congress, health plans and employers. At least one major insurer has sued its PBM for allegedly failing to negotiate new pricing concessions in good faith. In addition, businesses such as Amazon are considering getting into the PBM business. Walmart is already selling vials of insulin at relatively inexpensive prices.

PBM’s earn billions of dollars in profits each year. With the increased attention those profits have brought, it is uncertain how long that will continue.


What’s the Good News Ladies

Susan Comb’s recently featured me in her “What’s the Good News, Ladies” column for BenefitsPRO magazine.

I am in great company this month – Paula Beersdorf and Cerrina Jensen have great things going on also.

It is easy to forget all the good things that have happened in the past year!  So much has happened and we are just getting started, look out 2018!!

 

 

You can read the full article here:

https://www.benefitspro.com/2018/03/12/whats-the-good-news-ladies-march-madness-edition/?slreturn=20180212134428

 


How to deliver value to your client

I was recently invited to the Workplace Benefits Renaissance Conference in Atlantic City NJ to speak on one of the Increasing Sales Revenue track – Optimizing Enrollment & Improving Employee Engagement.

 

The whole panel – moderator Ron Kleiman and fellow panelists Rachel Pennington and Adam Maggio – gave diverse views about how to effectively deliver value to the employer, the employee and grow their business.

Here is my take featured in EBA magazine.

https://www.employeebenefitadviser.com/opinion/how-to-optimize-enrollment-and-improve-worker-engagement


Healthcare Think Tank

It was such a pleasure to sponsor Adam L Hamilton, PE, the new President and CEO of Southwest Research Institute. He spoke at the October 25 Healthcare Think Tank luncheon. We talked about the stars, the oceans and everything in between.. even healthcare!

We are incredibly fortunate to have SWI here is San Antonio!!


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