Andy Kim Highlights 'Mind-Boggling' Healthcare Costs and Administrative Waste

The High Cost of Healthcare Claims

• 💡 A specific case revealed a medical claim of $875,000, but the total paid by the health plan exceeded $4 million.
• 💰 Of the $4 million, approximately $2.5 million was retained by Sigma in administrative and other fees, and $677,000 by Multilan for repricing.
• 📊 This means that only $875,000, or 21% of the total $4 million, was for the actual healthcare provided; the remaining 79% was administrative waste.

Lack of Market Safeguards in Healthcare

• ⚠️ Profit-seeking in healthcare occurs within a system that lacks basic market safeguards like transparency, competition, and accountability.
• 🔍 Transparency is crucial, as demonstrated by the example of hidden fees and repricing agreements.
• ⚖️ A significant concern is the lack of competition and accountability among healthcare providers and administrators.

Retrospective Merger Review for PBMs

• 🔬 The FTC has successfully used retrospective merger reviews to improve its strategy on hospital mergers.
• 🎯 A similar approach is recommended for Pharmacy Benefit Managers (PBMs), reviewing past PBM mergers to understand analytical errors.
• 📈 The FTC's past approvals of PBM mergers, based on assumptions of price decrease and avoidance of monopsony power, have not prevented struggles for independent pharmacists.

PBMs as a 'Huge Cash Cow'

• 💰 Companies like CVS, which owns Etna, generate more revenue and profits from their PBM operations than from their retail stores or health plans.
• 📈 This highlights PBMs as a significant source of revenue and profit for integrated healthcare companies.

Impact on Quality of Care

• 🏥 Beyond cost, these administrative structures and profit motives negatively affect the quality of care people receive.
• ⚠️ An example is given of Medicare Advantage limiting a patient's stay in a subacute facility for rehab, disregarding doctor's recommendations.