AH004 - Data, Fiduciary Responsibility, and Reversing Trend with Jeff Hogan

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Episode Transcript

Lightly edited for clarity.‍

[00:27] Justin Venneri: Hello, and thank you for joining us for this episode of the Astonishing Healthcare podcast. I'm Justin Venneri, your host, and Director of Communications at Capital Rx, and I'm so glad to have with us President of Upside Health Advisors, Jeffrey Hogan. Upside Health Advisors is a national healthcare advisory firm. Jeff's a longtime friend of mine. He's an advisor to Capital Rx, and I can't wait to ask him these questions. So, Jeff, thanks for being with us today.

[00:49] Jeff Hogan: Yeah, it's great to be with you.

[00:50] Justin Venneri: Thanks. So, Jeff, just to start off, how about you tell us a little bit about your background and then we'll get into some of the questions.

[00:55] Jeff Hogan: Sure thing. So I've been in healthcare for 38 years. The most interesting thing, I suppose, about my background is that I've worked in most every area of the healthcare ecosystem. I ran New England for a national healthcare benefits and advisory firm, primarily working with small, medium, and large groups doing self-funding. For the last 25 years, I've operated this healthcare advisory firm, which is very much focused on value-based healthcare payment reform and care transformation, with a lot of work on providers and health systems and others moving into risk arrangements. So most of my work now is with large employers around the country, Taft Hartley, state governments, and others who are really finally interested in getting down to brass tax and aligning supply and demand to serve the needs of their members.

[01:56] Justin Venneri: Awesome. All right, so my first question for you, Jeff. Two parts. One, what are the top two or three items that you're working on with plan know, employers, or other payers to start the year, and then why?

[02:09] Jeff Hogan: So it's a really good question. I'll tell you. I'm working on both sides. I'm working on the supply and the demand side. And there are a whole bunch of things that have occurred since COVID happened. With COVID, suddenly we manufactured a bona fide healthcare consumer. If you think about it, in the past, employers made decisions about what health plans would look like and really didn't take into consideration specifically the needs of employees and dependents and things like that. When Covid hit, unfortunately, much of the provider and health system supply chain shut down. People were hiding in their houses, and it was really hard to access healthcare unless it was direct Covid services. Typically, at the hospitals, a lot of docs hadn't set up virtual services to give access to their patients. So we've seen just a tremendous change since the COVID pandemic. Billions of dollars have gone into digital health assets.

What does that mean? Things that give employees and dependents access to virtual care, care at home, optimized sites of care. And suddenly we have a healthcare consumer who wants to be treated differently. They want the healthcare system to be relevant and respectful of their needs, and that's really pushed things a lot. We also saw the passage of the Consolidated Appropriations act that caused basically employers to really have to think about what they're paying for health services. Is it too much? Is it too little? Is it for bad quality? Is it clinically integrated? What are the outcomes? And to have a legal responsibility for how they buy things and account for things relative to the health plan.  

So the answer is pretty simple. We've suddenly seen the supply side of healthcare come forward to meet new demands and different demands in the marketplace. So most of my work is where those two things come together, aligning supply and demand, and it's kind of a new space.

[04:29] Justin Venneri: That's interesting. So I remember vividly the focus on telehealth and remote patient monitoring and everything else. Are there any particular areas that you find plan sponsors interested in? Is mental health still at the top of the list? Is there something else?

[04:43] Jeff Hogan: Yeah. I think the first important response is, for the most part, employers really don't know what's most important to their own populations. That in the past, the way that health care has been purchased has really kept employers in the dark around what they pay for things, what they should pay or could pay, and, even more important, the priority of things in their health plans. What does that mean? Rarely have employers got what we would call intuitive or actionable data and analytics around what matters most in their populations. Is it cancer, cardiometabolic, MSK, or specialty drugs, or even med pharmacy?

And now, with CAA, a big part of it is saying, okay, fiduciary, you are required to get all of your data and analytics and to know what you're paying for things and what's most important. Why? Because you must not can. You must act only in the best interests of your plan beneficiaries. You can only contract for services that are in their interests, not anybody else's interests, but in the interests of the people who are covered under your plan and contribute to your plan as well. So we've suddenly seen this huge move to get data analytics and figure out what those things are and to create accountability in the plans as well.  

So, some of those things include advanced primary care organizations that take risk on the population and create accountability to the plan. Also includes, obviously, pharma, [which] tends to be this cost category that has been traditionally out of control for most employers. It's really hard to control double-digit inflation in the cost category with really tremendous opacity, misunderstanding how things are priced and efficacy, and a whole range of issues around the black box that has been pharma in the past. So employers are really, really interested in that category, not only because of the black box, but because so many drugs now create catastrophic claims that breach their stop loss. So there's a financial impact as well. And employers are also really interested when it comes to pharma about medical pharmacy, the pharmacy that's on the hospital side because that constitutes upwards of 51% of specialty in their group. So these are just some of the things that we're very focused on and calling attention to employers that they can start to work on right away and see immediate effect.

[07:43] Justin Venneri: That makes sense. And you've been talking about the CAA and its implications for some time. I guess a question is, when do you expect plan fiduciaries and the market to see something meaningful from the government's review of the reporting that's ongoing. Do you expect to see how the data is being used or any output from that?

[08:03] Jeff Hogan: So this isn't about the government receiving data and analytics, except for there's some pharma requirements and things like that. And I don't expect a lot of inputs or insight to come from what the government is doing. You know, the inference here is the data and analytics that has been emancipated from payers by the requirement in CAA that every employer, small, medium, large, fully insured, self funded, had to attest by December 31 of this past year that they had removed gag clause language. What does that mean? It means language that was in their contracts with health plans that kept them from their own data and analytics. So the gag clause attestation says you must have, you must own your own data and analytics, and you must use it to make decisions about how you buy stuff, how you buy health services, how you account for the contracts that you have as well. So curiously, I don't expect a lot of insight and intuition to come from the government. Why? Because they're looking for macro trends on costs and things like this.  

The employer has fiduciary duty. Why is this so important? Because each employer's population health data is unique to that population. And the analytics that comes out of it says, hey, look, these are the things that are most important to your group. You have a polychronic population of this size, and your population perhaps needs a diabetes digital point solution, an MSK point solution, a hospital at home, or an urgent care. We need someone. Let's talk about GLP-1s for a second that can help to see if persons on these GLP drugs are actually taking them and filling the prescription or if they're abandoning them. So really, the insights that are most important, particularly coming out of CAA, are insights that come to the fiduciary of the plan that says, you need this stuff, you need to contract for these services, be it at risk or otherwise, and these are the things that are most relevant to your population.

[10:32] Justin Venneri: Got it? Okay. And then one thing that occurred to me, as you were speaking, is it's interesting, with the plan sponsor, the fiduciary, and all the point solutions out there that you were referring to, that there's a lot of overlap in the services they provide. How do you help people go through, once they have their data and can see what they're paying for, what the claims are, and what their populations look like… do you kind of help them go through and filter that list and look at what they then need to address the issues within their populations?

[11:06] Jeff Hogan: Yeah, this is a really important question. So think about it. Traditionally, in the past, how has an employer purchased their health plan? The duty or responsibility, typically for the second largest expenditure in most employers, after wages, which is the health plan, has been conveyed often to the HR person. And what does the HR person do? They go out to a broker or consultant who goes out with an RFP process and puts the group's information out to a number of different carriers. This is changing the world of, hey, here's our network. Wherever you want, whenever you want, in an unaccountable way, is being shown to really be costly and inefficient, and perhaps the fiduciary duty is not being fulfilled in that way. Why? Because if you think about it, most networks just perpetuate the huge variability in cost and quality between and among health systems in geographic areas.  

So what does this mean with a named fiduciary? And often, it's now somebody in the C suite; often, the CFO, or it could be a chief revenue officer. These folks are now personally liable for acting in a fiduciary capacity over the health plan, and often they know nothing about the health plan at all. The other part of CAA is that the procurement process, meaning how you buy your health services, has to be unbiased. That means you can't be paying people to place services or business with the place that the broker gets paid the most, gets contingency compensation, and what have you. This again falls back to the employer as well. So what do they need? To your questions, specifically, every employer needs a really good health analytics vendor who can take their data, can take two or three or five or ten years of retrospective data, and look at how they've been spending and the prevalence and acuity of disease process and a whole bunch of different things, and say to the employer, here's your problems (e.g., you do not have enough primary care; it's not clinically integrated; your people are going to hospitals, and you're paying for bad quality more than you're paying for underlying conditions like arthroplasty and things like that).  

Even think about, from a PBM point of view, having a data and analytics platform like you guys do with Judi®, that gives them insights into their spending. Are these folks even using the correct drugs for the diagnosis? So my comment is, having a really great data and analytics partner gives direction to the employer, particularly the fiduciary about the things they need to fix and also the things that they either have or don't have that are a waste of money or even the contractual terms. If you have ten or 20 point solutions off the side of the plan that aren't integrated into the data analytics, there's no ROI if they're not integrated into the providers that are providing services. The analytics vendor really helps to give the employer direction on what matters most. What do you need to act on first, and what are the things to concentrate on, whether it's vendors or otherwise, to create accountability? Those first steps, stake in the ground.

[14:58] Justin Venneri: Got it. So on that note, what advice are you providing to plan sponsors for more long-term planning and strategy around their benefits program? Assuming the first tactical step is get your data and see who you can work with to really understand your data.

[15:15] Jeff Hogan: I would say most of the steps right now are short-term because a lot of the processes that employers are having to go through right now are alien. For decades, they've been following a similar process, which is having their HR person be in control and responsible for anything associated with procurement and relying on an agent or broker. Well, these things are changing fairly dramatically, so the small steps are the most important here to show proof of concept. I'm going to respond to the question with long term is not the tactical solution right now. It's short-term steps to show proof of concept and some of those short-term steps. Obviously, getting the appropriate analytics vendor is one thing. Another short-term step is learning what your fiduciary duties actually are, getting trained on the fiduciary duties, and most named fiduciaries are actually creating fiduciary committees. It might be with the CHRO and chief revenue officer, might be with union leads in the organization to share discussions around what is most relevant to the needs of the beneficiaries. And then it's a couple of small steps. It is picking a couple of cost categories to focus on. For most employers, pharmacy is the big one to start with.  

Why? Because it generally has the largest trend factor of any cost category. Really working to find out exactly what you're paying with the existing player and to go and find an organization that can do it better in a more predictable fashion. So this is a big one to reverse that trend, that big double-digit trend, and maybe even have deflationary trend in your PBM spend. And it's such a big factor for most employers that it's a big concentration. The other one is advanced primary care. We know, and if you look around the country at all the money that's going into what we would call tech-enabled advanced primary care, this is a big deal for large companies, middle market and small groups because it creates accountability in the plan for the member. From soup to nuts, an advanced primary care organization that will take risk on your plan, will actually de-risk your plan, will take that risk away from your plan by charging you sept fees to manage the needs of that population. And most of these new advanced primary care models are pretty cool. They utilize an integrated practice unit which includes a doctor, APRNs, a ParmD, a behaviorist, and health coaches to engage the population. And most importantly, back to the beginning of our discussion: today they have really high net promoter scores. Meaning that members actually like the way they are treated. Imagine that finally having a benefit where people like the way that they're treated. So these are starting points for most employers, but they're very common starting points at this point.

[18:41] Justin Venneri: That makes sense. What kind of quote-unquote benchmark would you say an employer, just your average employer, should target? What percentage of members would end up using the primary care? The advanced primary care practice do they want to need to get to 80%? What do they need to target to see the benefit?

[19:00] Jeff Hogan: You'll see huge benefit, measurable financial benefit, with 60 or 70% of the population utilizing advanced primary care, there's many organizations now that are mandating it as part of their primary incentivized plan. But the bottom line is anytime that you bring in advanced primary care that can coordinate full longitudinal care by design, this removes that huge variation in cost and quality for the big downstream specialists as well. The other cool thing about advanced primary care, and this is really important, back to the consumer again, is that most of these organizations are capable of integrating any of those digital health point solutions into their care path.

So instead of an employer having to manage ten or 15 or 20 of the point solutions off the side of the plan without ROI, integrating these digital health solutions into the care path again becomes consumer friendly and helps in the care coordination, ultimately in optimized outcomes. What does that mean? Optimized outcomes mean predictable access, predictable cost, and predictable quality. And that's really what an employer wants and needs when they're financing their health plan, is predictability. For the majority of employers out there who self fund and carries stop loss, getting that predictability keeps them from hitting their stop loss corridors and costing them a lot more with increases on their stop loss as well, because that just.

[20:41] Justin Venneri: Drives up cost across the whole plan, right?

[20:44] Jeff Hogan: You got it. Exactly.

[20:45] Justin Venneri: Okay. All right. Well, Jeff has been really great so far. Thank you for sharing all that. What's my last question for you here? I know you've been in the industry for over 30 years, and I'm sure you've seen a whole lot. What's the most astonishing thing that you can share, of course, safely, that you've seen that relates to our industry and the discussion we've been having here today? Give us a good story.

[21:07] Jeff Hogan: Yeah, I've seen just some incredible things over the years that are anecdotal, I guess. I give a story that I found really funny and interesting. We have worked with a lot of agents and brokers and consultants over the years and help them on the financial aspects of plans and analytics and what have you. And I remember being out with a broker who was a really nice guy. He was a quirky character, and we were going to a meeting with the C suite of a large employer - I had prepared all the analytics in very detailed fashion, but he was very nervous that the information wouldn't be taken in well because they weren't trending well. And some of the recommendations were heard recommendations.  

And we went into the meeting and he was basically shaking, even though he wasn't going to deliver the message. And we got, I would say, five minutes into it, and he abruptly stood up as we were going through the analytics and announced that he was having “severe digestive issues” and ran out of the room and never returned. We all got a good laugh out of it. I don't know if it was staged on his part, but it got us through some bad news, and I will never forget that story.

[22:37] Justin Venneri: That sounds unforgettable. That's amazing. All right, well, Jeff, thanks so much for joining us today. And how about if you want to let people know how they can find you or get in touch with you if they'd like to?

[22:49] Jeff Hogan: Sure. The best way to get in touch with me is on LinkedIn; Jeff Hogan, Upside Health Advisors, and glad to interact with folks, especially on these topics.

[23:01] Justin Venneri: Awesome, Jeff, thanks so much. Have a great rest of your day.

[23:04] Jeff Hogan: Thanks so much for having me on.

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‍Outro: Thank you for listening to Astonishing Healthcare by Capital Rx. Head over to www.cap-rx.com/insights and visit the podcast section for show notes and other relevant content.  

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