Jack Sullivan, Health Benefits Manager of the Northeast Carpenters Funds, sat down for a Take Five with Symptoms & Cures. Jack is the Quality Institute’s newest board member.

You have been managing the health benefits of the Carpenters Funds for more than two decades and have a unique perspective into long-term trends in health care benefits. Can you share some of your views?

The long-term trend of course has been cost. Costs have continually gone up. More recently we’ve seen a lot of self-pay plans such as ours being challenged by the new regulations associated with the Affordable Care Act. As a payer of claims, we need to make sure that we stay compliant with all the new rules. There are 20,000 pages of regulations. And of course we have seen the rising costs of pharmaceuticals.

What are your concerns about the costs of pharmaceuticals?

Our members need access to medications that improve their lives and may even cure their health problems. That’s a priority for us. But the high cost of many of these medications makes delivering them to our carpenters and their families a real challenge. The most challenging areas are the costs of the specialty drugs, such as new cancer drugs and those for hepatitis C. We are talking about drugs that can cost $100,000 for a year of treatment. And multiple drugs in the pipeline are getting fast-tracked. There does not seem to be anyone willing to stop the madness of what these drugs are costing. As new drugs are being approved, they are even costlier than the drugs released the previous year. And pharmaceutical companies can — and do — raise the cost of existing drugs all the time.  I also think that direct-to-consumer pharmaceutical advertising drives up the cost of drugs and should be stopped. Doctors should be aware of all available treatments for their patients and not prescribe a drug because a patient saw a commercial with Phil Mickelson in it. Do you notice that you never see commercials for generic drugs?

So what can a fund like yours do to control costs?

One way is that we work with prescription benefit managers who will look at two different manufacturers who produce the same or very similar drugs. The PBM sees what company is willing to provide the best price. There was one manufacturer of an asthma drug that refused to work with the PBM on pricing.  They were taken out of the formulary and they saw their sales plummet. The drugs with the best prices get in the formulary — and our fund will be able to pay far less for drugs in the formulary. We also work on our plan design to reduce costs.

You have created some other innovative ways to both improve care and reduce costs. Can you tell us about them?

As a self-insured and self-administered plan, we have flexibility. For instance, we work to deliver some care at home instead of in the hospital. Our members are happy, the risks of infection are significantly reduced, and the costs are less. We found ways to help our members who need certain IV infusions get their medicine at home. Delivering IV infusions at home can cost one tenth of the cost at the hospital. Over a few years we’ve saved more than $1 million. We have two case managers on staff who deal directly with our membership on issues like this.

And we carefully check every claim. Although we work with a health insurer as an administrative partner, we pay and review every claim. You would be surprised at how often the pricing is wrong. I am talking hundreds of thousands of dollars each year. We will challenge a claim if we don’t think it’s correct.

You were there at the beginning when the Quality Institute was created. You were pushing for quality health care. Is quality care more expensive than poor care?

Bad care is the most expensive.  With bad health care you are not resolving the situation, not resolving the problem. We have employee case managers who work with our membership and often can guide them to the right providers — the providers our members have had good experiences with in the past. We can hold their hands through the process. We have almost cradle to grave membership, with many of our members the sons and daughters of carpenters who have become carpenters. We have a great retiree program. So we have a lot of experience with our members seeking health care in the region. Even though we have experience we still need good data reporting, such as Leapfrog.  Today Medicare will not pay for mistakes or high rates of re-admissions. Medicare will say, ‘We’re not paying for that claim.’ It shakes people up and you see numbers improve. Putting the numbers out there gets providers thinking of ways to perform at a higher level.

As a self-administered fund, we see every piece of health care billing, from dental to drugs to hospitals to tests to doctors. It can be ugly be out there. That’s why I am always looking for ways to improve quality and reduce costs.