Episode Transcript
[00:00:01] Speaker A: The single largest source of personal bankruptcy is healthcare debt. Because about 15 years ago, as healthcare costs kept rising, employers started shifting more and more the healthcare cost onto their employees.
And through a series of what can be described as maybe tragic, but maybe not intentional situations, we just have an enormous number of people who do not have healthcare insurance in this country. We cannot find a way to alter that economic trajectory. We are eventually going to face a crisis in which my concern would be that the chief financial officers of businesses in this country will say I need more predictability in my health care cost. And they will make a decision like a decision that they made 40 years ago, and healthcare will become a defined contribution rather than a defined benefit. And when that happens, the enormous shift of healthcare cost burden to the individual means that it will become unaffordable, maybe for the majority of people in this country.
[00:01:08] Speaker B: Welcome to AM Healthcare Industry Group's what's yous Moonshot? Podcast series where world class healthcare leaders.
[00:01:15] Speaker A: Seek to solve big problems.
[00:01:17] Speaker B: Listen as we talk to Today's health system CEOs about the journey to achieve their moonshots.
Well, welcome to A&M's what's your moonshot Podcast series. I'm Chris George, your Managing Director in the healthcare industry group and leader of our health system practice. I'm joined today by my co Host, the Honorable Dr. David Shulkin, 9th Secretary of the U.S. department of Veteran affairs and an A and M Senior Advisor. Today we are glad to welcome Dr. Bruce Mayer, executive Vice President and Chief Population Health Officer for Highmark Health.
In his role, Dr. Meyer creates value by designing and implementing solutions that deliver clinically appropriate and high quality care while ensuring affordability and access.
He's also focused on shaping health plan designs to incentivize cost effective care. Dr. Meyer has authored more than 70 peer reviewed publications and served as President of Jefferson Health prior to joining Highmark. Welcome to the podcast and I'm looking forward to a great discussion.
[00:02:19] Speaker A: Thank you. Truly my honor.
[00:02:21] Speaker B: Your moonshot is to bring payers and providers together to improve community health. Tell us more about that moonshot and what inspired the vision and why it's so critical in today's world.
[00:02:32] Speaker A: Yeah, well, I would say I think we have sort of an unsustainable economic trajectory in terms of the cost of health in this country. And you can see those kinds of things in so many different ways. But I think the most profound for me is that the single largest source of personal bankruptcy is healthcare debt. Because about 15 years ago, give or take, as healthcare costs kept rising, employers started Shifting more and more of the healthcare cost onto their employees, and through a series of what can be described as maybe tragic, but maybe not intentional situations. We just have an enormous number of people who do not have health care insurance in this country. We made a transformative effort with Obamacare, the Affordable Care act, that really covered an enormous swath of the people who didn't have health care insurance. But we still have a significant proportion of folks in this country who don't have health care insurance. And we have people who are underinsured and have trouble affording insurance. So if we cannot find a way to alter that economic trajectory, we are eventually going to, you know, face a crisis in which my concern would be that the chief financial officers of businesses in this country will say, I need more predictability in my health care cost. And they will make a decision like a decision that they made, you know, 40 years ago.
And healthcare will become a defined contribution rather than a defined benefit. And when that happens, the enormous shift of healthcare cost burden to the individual means that it will become unaffordable, maybe for the majority of people in this country.
And then we really get ourselves into danger in terms of healthcare outcomes.
And truthfully, just what the entire economic system of the country is, we're founded around capitalism and the idea that people can found their own business, can grow their own business, can have an opportunity to do those kinds of things. If you can't afford healthcare, then how do you, how are you present in that business? How can you manage to hire people who can be present in the business? And how can your business afford to pay for health care for your employees? So that's the inspiration. I mean, I think the other piece of it I would say for me personally is, you know, I spent years as a, as a practicing clinician. For a portion of those years, I really didn't understand the economics of healthcare in any way, shape or form, kind of thing. Like I knew I had to submit a bill and money appeared and then somebody else managed that. And because I was an academic physician, I was paid a salary. And so I had very predictable economics.
When I began sort of being more of an administrator and working around doctor's practices and private practice docs and trying to work with them together in an ACO and a clinically integrated network, I started to understand the nature of the small business that they were running because they were all small business owners of their own individual practice. And, and I realized the challenges they were facing.
And then I've been fortunate to have opportunities to work on the payer side in particularly heavily in the governmental space in Medicaid and Medicare and the challenges there in terms of actually managing a population of folks and trying to understand sort of the economics of the payer side that's very different than the economics of the provider side.
And realize that we just really struggle even to have the same vision of how those economics should work in any way, shape or form.
[00:06:08] Speaker C: Bruce, I think everybody shares your aspiration for this moonshot. So let's dig in a little bit deeper about how this could be done. And I want to make sure the people watching us today understand the unique position that you sit in.
I wouldn't necessarily describe yourself as a typical payvider because the big part of your organization is actually the payer that maybe the smaller part, not that small actually, as you know, is the provider. With Highmark and Allegheny, many payviders in this country have it the other way, which is it's the big health system with the small health plan.
So I think you do have a unique opportunity.
And so do you have any evidence that the model that you're pursuing can lead to this moonshot and affordability?
[00:07:05] Speaker A: Sure.
So we have instituted what we call the quality shared risk program between Allegheny Health Network and Highmark as a payer. And that is a full shared risk program across sort of what we call all segments. So that includes fully insured, commercial, self insured, ACA enrollees, our Medicare Advantage program and our Medicaid programs.
And so there are targets for medical expense ratio in each of those and PMPM costs. And as an example, so that's a relatively new program, we're 18 months deep. But in, but last calendar year, which for us is a fiscal year in 2024, our rate of increase in terms of medical costs was 30 to 40% lower for members who were enrolled in that program than it was for members who were not in the program in Western Pennsylvania or any of our members who were in other markets. You know, Highmark is in the rest of Pennsylvania, but also in Delaware, West Virginia and parts of New York.
And so we were able to show that despite increased utilization across all of our markets, the rate of increase was significantly lower when we were in this shared risk program.
And the reason why, I mean, why we believe that that is true, is because in our shared risk program, we are able to integrate the clinical data and the claims data and put that information directly into the workflow of all of our clinicians, not just the docs, PAs, NPs, you know, the medical office assistants, the social workers, the nutritionists, etc. And because they don't have to, it is a push technology, not a pull. So they don't have to go in, find stuff, figure out what happened to Mrs. Jones. And whether it's important or not, it pushes at them. Hey, this week you're going to see these folks and here are the things that you know. And Mrs. Jones was in the ER two weeks ago, had an exacerbation of this, saw two other doctors that are not in your practice in the last month for these kinds of things.
And that information allows our primary care docs to much more effectively manage the care of folks. But more importantly, I would say, and I think this is where in my priority, you know, organizations, we struggled because we were very primary care focused. Our specialty care docs have attributed lives so that if you have heart failure, instead of being attributed to a primary care doctor, you're attributed to a cardiologist.
If you have copd, you're attributed to a pulmonologist. If you have diabetes that's poorly controlled or moderately controlled, you're attributing to endocrinologists, not a primary care doctor. And it gives those dots. And if you have IBD or something like that, you're attributed to gastroenterologist. It means that those specialists now have to care about total cost of care and coordinating the care of their members and their patients that they're seeing.
And I think that's been part of the failing that we've had in the past where we've been so focused on primary care that specialists were just whatever happened, happened. And you hope that your primary care doctor could be enough of a gatekeeper to make it work.
And those models haven't shown a ton of success.
It's gotta be that specialists are involved and specialists have that data put in front of them.
And so our docs all see the total cost of care trend line for all of their attributed lives.
[00:10:48] Speaker B: That's fascinating. Thinking back to your experience at Jefferson and now what you know, now here, what barriers exist for a place like Jefferson, for a large health system that may not have a plan?
How can they work with their payers to achieve the same outcome that you're talking about? Is it possible?
[00:11:08] Speaker A: Yeah. Well, for transparency, Jefferson has a health plan. It's just a Medicaid with a very small Medicare Advantage program attached to it. But the question you're asking is a really critical one. And I think it's deals with sort of the inherent conflict of interest of a fee for service arrangement in a fee for service arrangement. The health plan wants to limit care to the degree possible without harming people, but the provider wants to do as much care as they possibly can because that's the only way you have a revenue stream.
And I don't want to suggest that docs get up in the morning and think about, okay, how much, how do I do more stuff to people today so that I can bring in a revenue stream. But every doctor knows that they need to fill their office and, and because if they don't, they're not going to be able to pay the bills.
And so it creates a perverse incentive. It also creates. There's also a tremendous lack of transparency, right? I mean, when I was a practicing clinician, I thought that insurance companies were sitting on this giant pile of money, you know, buried under their buildings that they refused to share with me as a provider kind of thing, right?
But as an insurance executive, I recognize that part of that giant pool of money that I have I can't touch because the department of insurance says you must have reserves in order to be a functioning insurer. And so I can't muck with that. So it's not that I'm not sharing that money, that's the required reserve legally to make the company viable.
And, but at the same token, all of my colleagues who are non physicians firmly believe that every doctor is trying to gain the system, trying to, you know, just plow more volume through their office every single day in order to just churn revenue out of the payer. And that inherent lack of transparency and lack of trust gets amplified in a fee for service environment because you are just at the table on a regular basis arguing with each other about the value that you are each providing into the system.
And I think the only way to resolve that is to create a shared risk program where both payer and provider have risk in the system, but have more access to the premium dollar, whether that premium dollars being from a governmental program or, you know, from, from a business. Because if you don't share in the risk and in the dollar, then there's no way to align your incentives.
[00:13:40] Speaker C: Let's bring this up to the national policy level because I don't think there are that many examples that are as powerful as what you've provided with a 30 to 40% change in the rate of spend.
When you look at the ACO model, when you look at the primary care risk models out there, are you saying that you really need to have this integrated payer provider relationship to have it as powerful as what you're seeing.
[00:14:14] Speaker A: I think the short answer would be yes, you know, a traditional value based reimbursement program, the problem with it, and I'll just say this is what I say to people all the time. It's like today I'm paying you a dollar, tomorrow I'm going to pay you 90 cents and I'm going to let you earn the 10 cents back. But I'll give you an opportunity to earn another 10 cents.
And if you're really successful, you're earning more than the dollar you're getting paid today. But the risk is, hey, I got to earn the first 10 just to get back to where I am. So that's hard. It's hard to transform the system that way. More importantly, it's that the sharing there is too light.
The beneficiary fundamentally is still the payer because for every dollar you know that you scavenge out of the revenue stream by doing less stuff to people, keeping people out of the ed, you know, preventing exacerbations of chronic disease, you're scavenging the revenue stream of the provider, but the provider's not getting a fair share of that dollar that they saved back. And so it's hard to reinvest in figuring out how to continue to save more money while you're providing high quality care.
And unless you get really aligned tightly where hey, our risk is equal or reasonably proximal, then everybody reverts back to a fee for service mentality where it's, you know what, I got to preserve my revenue stream because it's too dangerous for me. If I'm, if I am that small business clinical provider, it's hey, I got to be able to, you know, pay for my kids college and pay the mortgage and those kinds of things. And if I can't, if I'm worried about I can't do it, then I'd rather have something more assured.
If I'm the payer, it's because I want to be able to go to the market with really good pricing that allows me to grow my membership.
And to do that I need to be able to be sure that I'm not going to pay the provider significantly more next year than I'm paying them this year.
And those incentives compete with each other until you reach a place where incentives are aligned.
[00:16:34] Speaker B: So it comes down to relationships between payers and providers. What, what advice would you give to other health care leaders looking to break down these silos that exist?
[00:16:45] Speaker A: Yeah, well that's hard. I mean, that's really hard because in Most environments, the relationship between the payer and the provider is so adversarial that it's hard to figure out a way to get a trusting piece.
So if I were going to give advice, it would be, hey, you know what?
Go to the table and say, if I take some risk, I need you to take some risk. And if we take some risk together, even if we put a corridor around that where that risk is relatively small and over time we grow it so that everybody benefits. Because in truth, if we can get to a shared risk program where we can decrease the total cost of care or at least plateau the total cost of care, everyone wins, including members, patients, you know, providers, payers, and the businesses, whether that's the government or private businesses, pay less or at least get predictability in terms of what their healthcare cost is going to be. And so everybody wins. It's the weird. You know, I think the hardest thing that I have from a cognitive dissonance standpoint is if everybody wins in that kind of system, why is it so hard for us to agree that we have to move to that kind of system?
[00:18:04] Speaker B: I was just going to ask one quick follow up question. Looking in your crystal ball, do you think more health systems that either like Jefferson have a small health plan or ones that don't have ones at all, do you, do you see in the future that expanding, do you see more health systems expanding their health plans are getting into the health plan business where they haven't been before?
[00:18:25] Speaker A: You know what, I really don't, and I'll tell you why. Because it is prohibitively expensive because of the reserves that you have to have in the lockbox are so large in order to be able to be, you know, eligible in terms of every department of insurance in this country, that it's really hard for a payer to generate the level of dollars that they can put in a lockbox to do that?
So I actually think it's. And it is increasingly hard, increasingly hard to do that.
[00:18:58] Speaker B: Great insight, Bruce.
[00:18:59] Speaker C: This is, this is a really important discussion that I think people are going to be paying attention to at the national level.
One of the issues that, you know, that has been a real struggle has been the issue of risk adjustments and Medicare Advantage programs really putting a lot of effort into assuring appropriate risk adjustments as opposed to necessarily other areas that they could be spending resources on. In the model that you're talking about, are you risk adjusting or do you feel like that's not a necessary component when you put the payer provider together?
[00:19:41] Speaker A: I'm going to say yes to both of those. So we are risk adjusting. Okay? And I'll admit that some of that is there's, there is an odd game that we play with the federal government around Medicare Advantage, and that is that you get, you get a better fixed payment if the higher your risk score is. And so there is an incentive to say, let me ensure that I am documenting all of the risk that these individuals have so that I get an appropriate fixed payment from that.
You can't get away from that until the federal government says, well, you know what? We're going to change that system. Having said that, the shared risk program is designed to say, we are not incentivizing perverse behavior. We do not want people going.
And I, you know, I don't necessarily want to criticize one of my colleagues in the insurance business, but we're not going to have people go to your home and see if you have varicose veins that are completely asymptomatic. But if I document that you have varicose veins, I get a little bump in my payment score. We're trying to get away from that perverse behavior. What we're trying to do is document the things that actually affect your health or may affect your health in the future, that we can prevent things for the future and say, you know, so get a fair payment. But to get away from the idea that we're trying to game the system and that there's an opportunity for us to say, let's try to minimize the value proposition between the payer and provider for maximizing the risk score. We need the documentation, but let's get away from trying to game the system.
[00:21:19] Speaker C: Okay. No, thank you. I think that's fair.
I think my final question has to do with going back to your moonshot. And if you're. I know you're early on in this journey and appreciate you sharing what you're seeing, but what do you think the potential here is to bring costs out of the system? Do you think 30 to 40% is the ceiling?
And if these results hold up, I guess the ultimate issue for affordability is whether you think you're going to be confident enough to actually pass some of those savings on to the employer and to the community?
And if so, you know, I think we haven't really seen a lot of that yet in the market. But when do you think you might be at a point that there's a long enough track record that you have confidence in lowering the cost of care?
[00:22:20] Speaker A: So you're kind of asking me how conservative are our actuaries.
And actuaries as a group are hyper conservative in their philosophy. If I were to ask our chief actuary, he would like a 10 year track record before we do anything, but that's hopelessly unrealistic. Our goal is that by no later than the end of the third year we will be able to incorporate this into our pricing and that and our goal is to be able to say as an example to employers, look, what we'd like to do is we'd like to have a three year contract with you. And in that three year contract we will guarantee you that your rate of rise of cost is no more than 2% a year.
And then we will take the risk that anything bigger than that happens or in the perfect world, we'd like to say we're going to say you're flat for the next three years. And if we can't manage cost inside that envelope, then we take that risk, we'll pay for it. But if we manage under that envelope, then we keep it and you get the benefit of predictability and you get the benefit of a, or a lower rate of inflation. Because what we want to do is we want to keep our rate of inflation of health care costs. At worst case scenario, a rate of inflation for health care costs under the cpi.
[00:23:43] Speaker C: Well, I think there's a lot of people out there really hoping that this works out because this issue of affordability has not gotten any better over the decades. We've all been doing this and we do need new solutions and I think you're doing something very unique. So we appreciate you spending the time with us today and sharing that and I'm sure there's a lot of people who are going to be rooting for you.
[00:24:09] Speaker A: Thank you. Truly a pleasure. And you know, I hope to come back in a year and show you that we're making more progress.
[00:24:16] Speaker C: Fantastic.
[00:24:17] Speaker B: Thank you.
[00:24:18] Speaker C: Thank you.
[00:24:18] Speaker A: All right, a pleasure.
[00:24:28] Speaker B: Alvarez and Marcel, Leadership Action results.
