AH057 - How First-Movers are Taking Control of their Health Plans in 2025, with Jeff Hogan

Transcript

Lightly edited for clarity.

[00:27] Justin Venneri: Hello and thank you for joining us for this episode of the Astonishing Healthcare Podcast. This is Justin Venneri, your host and Director of Communications at Capital Rx, and I'm excited to welcome Jeff Hogan, President of Upside Health Advisors, back to the show. I can't believe it's 2025 and I'm in the second year of this podcast. It's kind of amazing. I've known Jeff for what, 15 years now?

[00:47] Jeff Hogan: Probably more than that at this point.

[00:49] Justin Venneri: Jeff was one of our first guests here, so this is kind of cool for me like a year and change later to do an update with you.  

But before we get into that, I also want to remind everyone that Jeff was on with us for episode 30 - Plan Sponsors Need a Source of Truth; Get Your Data Now & Find It, with Jeff Hogan - toward the end of last summer and that was a pretty timely, informative episode in that we were discussing how plan sponsors can get their data and what to do with it once they have it. And I think that remains a challenge for many people in the industry right now. Jeff, thanks for coming on the show again.

[01:17] Jeff Hogan: Yeah, it's my pleasure. It's always fun being on a podcast with you, Justin.

[01:20] Justin Venneri: Thanks. And for those of you that might not know Jeff or have heard of Upside Health Advisors, can you give us a quick overview of what you're up to?

[01:28] Jeff Hogan: Sure. I've been in healthcare for, this year, 40 years -- four decades. And so, I've experienced pretty much every area of the healthcare ecosystem.  

For 30 years, I ran New England, New York, and New Jersey for a private benefits marketing firm and consultancy. We managed mostly self-funded groups in this marketplace. And for 25 years I've owned and run this national healthcare advisory firm, mostly focused on the supply side of healthcare -- care delivery, provider groups, health systems, moving into risk arrangements, and Medicare and commercial as well.

Most of the work that I've done in recent years has been in the value based space, working with health systems, moving to risk, doing direct to employer, and also working with very large employer groups that include Fortune 500 companies, state employee health plans, any large populations that are really trying to align supply and demand.

And particularly my focus in the last three years has been on the Consolidated Appropriations Act (CAA), which puts that fiduciary duty in the hands of a specific person at each employer group and requires all kinds of responsibilities, if you will, for that person to act in the best interests of their plan members.

So that has created some not only buzz in the marketplace, but has created also a marketplace for health services that we're very involved in.

[03:12] Justin Venneri: Got it. And so how did 2024 shape up for you? And how is 2025 going thus far?

[03:19] Jeff Hogan: 2024 was a year that we've seen a lot of action. Vizient came out with a report - Vizient - 2025 Trends Report: Strategy is (finally) back in the driver’s seat - that talked specifically about what health systems need to think about to be relevant going into this year and their focus and what have you.

So 2024 saw a change in the business. Whereas we've traditionally been dependent upon BUCAH health systems to service our needs, we're suddenly seeing all over the country health systems, ACOs, clinically integrated networks, I would even say advanced primary care organizations, ambulatory surgical centers that are trying to provide or convey their services directly into purchasers.  

So it's really the first time that I've seen a change. You know, I would call it a mind shift, whereas both supply and demand are requiring better accountability. Think about it, in the past, most purchasers of healthcare, even on the Medicare side, have simply assumed that BUCAH networks could satisfy their needs.

[04:33] Justin Venneri: And by BUCAH, just for those that might not know, it's Blues, United, Cigna --

[04:37] Jeff Hogan: And H, Humana, is silent. So there you go.

[04:42] Justin Venneri: So Aetna and Humana. Got it.

[04:44] Jeff Hogan: Most have assumed that the things that were being managed by the networks and the BUCAH providers were both adequate and appropriate for the needs of every group. CAA has really said to employers, hey, look, if you don't get your data, have access to it real time, understand specifically what your populations, your unique populations, need and have the prevalence and acuity of disease process, the locations people are located in, the demographics, you have unique needs. And if you are not purchasing in the best interests of those plan members, and if you're not spending your money appropriately, you're in breach; you are breaching fiduciary duty.  

And it's really curious too, on the supply side, we're now seeing providers, care delivery organizations, who can say, if you have your data and we can look at it, we can take some of that risk away from you. Or we can provide you with unique services that your people need, want, desire based upon that data and furnish you with those needs.

Back to the Vizient report that I was describing think about it,he Vizient report said that typically a health system in any geography is the largest employer in that particular geography, but that most health Systems only capture 50% of an individual person's healthcare. What if they could capture 100% of it in a way that was relevant, the right cost, the right access, the right outcome and measure patient reported outcomes that were appropriate? That were, hey, that's what we want!

This is kind of the vision that we're seeing right now. And also the use of specific technologies like AI to manage to standard of care to the things that people want and need: the alignment of supply and demand.

[06:52] Justin Venneri: So it sounds like a busy start to 2025 building on the change that occurred in 2024.

[06:57] Jeff Hogan: Yeah. So our work, Upside, we've had a variety of clients over the years that we still have that we work with in this space to try and make them more relevant in the space. And one of our customers was a company called Homa Health out of Dallas, Texas. The founder of that company was the Chief Technology Officer for PepsiCo. He created a health analytics platform that is really designed to help facilitate employers' knowledge and intuition into the data that they're finally receiving.

So think about it. You've got a fiduciary duty to have access to your data and make decisions about it. But you know, most CFOs or named fiduciaries have no idea what a knee or a hip or a baby or a shoulder or a cabbage or any of these things should cost, could cost, and what the priority was, site of care items, site of care optimization, what are the biggest priorities in your data, etc. And this analytics platform was designed to service that fiduciary directly, to give them insight.

It also does analytics on the contracts that these organizations have had with the BUCAH carriers – administrative services agreements and things like that – to show them the relevance of their contracts to their own population. These contracts have been written in the interests of the BUCAHs, not in the interest of the purchaser.  

So we're spending a lot more time with this particular customer. We've invested more to further this because we think it furthers the interests of value-based healthcare, that alignment of supply and demand.

[08:45] Justin Venneri: That makes sense. And you kind of stole a little bit from my next question to you. And that was kind of where your focus for the year. Because last year when we had you on the show, we were talking about the top couple of few things that you were helping employer plan sponsors and other stakeholders with. And it was definitely, as you mentioned, Consolidated Appropriations Act, compliance, Advanced Primary Care, you touched on quickly there. And we spent a lot of time talking about data.

So, whether it's Homa Health or another provider or a consultant -- recently also, Nick Welle talked about this, hiring, you know, potentially an ERISA lawyer as a consultant or something.  

So it seems like plan sponsors need outside resources for the most part to help with a lot of these things that you're focused on. What would you kind of rank order, 1, 2, 3, the areas of focus for 2025 based on how the year started?

[09:35] Jeff Hogan: It's a really good question. Most employers don't know about CAA or its liability or the first followers in this space formulaically follow a process. So, think about it. Most employer health plans are managed by HR resources in those organizations. But now the liability falls on, often, a C-Suite member -- CFO, Chief Revenue Officer, an individual who has liability, individual liability for doing things appropriately.  

So usually the first thing that these organizations are doing are hiring someone to help them to comprehend what this fiduciary duty means, what the requirement is, to create a committee, a charter that talks about what their responsibilities are. Why? Because these liabilities also extend to the Board of Directors for organizations that have them, there is usually some fiduciary liability. There's an insurance aspect to it.  

So most companies start out with hiring a firm to help them to comprehend the structure and how to manage this fiduciary duty and the committee structure and things like that.

The second thing is, right out of the gate, understanding that they must remove their gag clauses from their contracts. So, there is a process for finding those gag clauses and removing them appropriately. And then the firm every year must attest that they've removed gag clause language from their contracts. Why? Because compliance requires you to have access to your data to make decisions around procurement.

So that's the next big thing. What's the next one? And this is a really hard one for most employers. So, they remove their gag clauses, but they make demands on their carrier for data access, and they get ignored or pushed off or whatever the case might be. So what do they do? They go back to their broker. A requirement of the fiduciary is to do compensation disclosure on their broker.  

And this isn't just what they're making for commission. This is full disclosure, including on bonuses, pharmacy, stop loss, point solution, group insurance, voluntary benefits. And usually that's another big sticking point for fiduciaries. They get stonewalled, often by agents or brokers.

So you asked me a very specific question. I'm going to give you a very specific answer. The first follower organizations that are having the most success in this space, when they get to their RFP process, which is typically where the pedal hits the metal, the broker has typically run that RFP in the past. And now what we're finding that employers are having the most success with is pushing forward their expectations as part of the RFP.  

So if they found gag clauses in their contract, they're removing them and making it clear in the RFP process that this gag clause language will be removed. They're putting in their access to data requirements, if it's real-time, what their expectations are in being furnished with that data, they're putting in their broker compensation requirements in writing as well. And most of them, as part of their gag clause analysis, have also done contractual analysis on other provisions of the TPA or the BUCAH, whether it's on care coordination or whatever the case might be, expectations around receiving all of the rebates, not just offsets for those things.  

This cleaning up your RFP and going to the marketplace with an RFP that is in your interests, not the interests of third parties that aren't aligned with you, this is 1.0 for employers that are getting it done.

Related Content:

• Replay - Strategic Well-Being: Rethinking Health Benefits to Empower Employees and Drive Impact
• Best of '24! AH041 - ERISA Litigation Outlook and Meeting CAA Requirements, What Can Plan Fiduciaries Do?
• Signs it is time to change your PBM vendor, and how to overcome common hesitations

[13:49] Justin Venneri: Got it. As you were just talking there, I was thinking about so many potential next questions to ask you. The potential for like state-level versus federal-level PBM reform. I had planned on just asking you what you think because it's a new administration, there's a lot of news flow around what's going to happen. There's still bipartisan interest in PBM reform. But what you're saying, and what you said last year, is that this RFP process and the purchaser can be very powerful.  

So are we kind of letting the market correct itself more or is it kind of like a perfect storm of regulatory tailwinds plus market forces? I'd love your thoughts on that.

[14:25] Jeff Hogan: It's a really good question. So we just start with we're seeing first follower organizations relative to CAA are typically publicly traded companies, first, are making moves. What do we see second? Taft Hartley groups are first movers as well. Why? It's their members money and they want it spent appropriately.  

We're also seeing first movers, private equity portfolio companies, curiously and ironically because they want to see that second largest spend item fixed and appropriate and seeing great opportunity to do things very quickly as well. So those are, you know, three things.  

For publicly traded companies and for Taft Hartley groups, they immediately focus on the greatest area of opacity in their spend, and that's the PBM. We call it the black box. We've called it other things. But these organizations are spending a great deal of time, energy and resources in doing appropriate PBM procurement.

And the contract is critical. We're actually seeing many organizations, health analytics companies and others out there, focusing on a best practice PBM contract that shows much of the opacity as part of it. The dual ledgers, the rebate games, all these things are part of PBM procurement. That is literally where most of the organizations will start their process.  

So your question very specifically was around health policy. We've seen fits and starts on the Federal level around PBM procurement. I think there are seven pharma lobbyists per elected official in Washington. So, there's been a lot of talk about things but not a lot of action.

But we have seen around the country, per your question, some movement on the part of the states -- I'd say Florida is probably the most advanced on this, demanding certain types of reforms: anti-steering, anti-tiering, anti-most favored nation -- around making money on drugs. There is all kinds of language around that.  

I will tell you the problem with a lot of PBM-related initiatives at the state level is ERISA preemption, the ability to make it stick on self-funded groups. And in many states now self-funding is 80% of a commercial market or more. So it's been a little bit difficult.

But I'd say most of the effective directional health policy has been at the state level and we're even seeing that, by the way, extending it not just to PBM but into health services in general. Both Texas and Connecticut were two of the first states that had anti-tiering, anti-steering, anti-most favored nation language. And they actually put in gag clause elimination requirements that were even more robust than CAA but enforceable locally as well.

So I'd say it's, you know, you use the perfect storm thing. I don't know if it's the perfect storm yet, but it is a storm. It's on different fronts that we're seeing activity.  

The most important thing I would say Justin, is that your question back to 2024 and into 2025, we are seeing bonafide changes in the health services marketplace, meaning organizations positioning themselves to be able to deliver services directly into purchasers without having this thing moderated by middlemen. And that's a big deal.

[18:24] Justin Venneri: That's interesting. Like point solution fatigue, that phrase, we heard that a lot a few years ago as the emergence of all these digital health companies became clearer. And I remember one benefits director said -- you might have been on the phone with me when they said this -- they were like, I feel like I've gotten more pitch decks than the average VC like in the past week.

[18:44] Jeff Hogan: Yep.

[18:45] Justin Venneri: Is that still an issue or is that is the HR department becoming more efficient with, because they kind of understand their unique population, they know what they need, can they like better filter that coming in and figure out what they need to contract for in the coming year?

[18:58] Jeff Hogan: Yeah. This is a huge issue for pretty much every employer around the country. I was in Washington D.C. last week, in Delaware speaking at a conference. And every HR person that I talked to -- I talked to one HR person last week that has 36 point solutions off the side of their plan that doesn't provide data into their data and analytics platform to show ROI.

So think about the problem -- I've said this before, I probably said it on one of our first podcasts --that coming out of COVID, and again, having the experience of being in healthcare for 40 years, coming out of COVID that was the first time ever that we birthed a bona fide healthcare consumer.

Before that, the healthcare consumer was an oxymoron. They literally were not able to express their needs, wants, and desires. But during COVID when they couldn't see a doctor or couldn't get to the hospital or whatever the case might be, there was suddenly this expression of needs, wants and desires.

That's why these billions of dollars came into point solutions for MSK, for infertility, for whatever in God's name it happened to be. Think about it. The HR people said, hey, I think my people want this or need this or are expressing a need for it, and brought on these point solutions.

And now it's become a burden for them, especially now with CAA. Hey, do you actually need point solution for prediabetes, diabetes and GLP -- three different point solutions for the same comorbid population? Probably not.  

So what can we do about it? And the Peterson foundation did a series of reports last year that I think have really pushed on what is best practice to solve this point solution fatigue. Basically, if in fact an employer shows in their data that they need a specific point solution, it gets put forth as part of the RFP process that they must -- not can, they must -- integrate in queue care delivery in some way, that they become an extender of care delivery for the primary care, or the OB, or the pediatrician, or whomever is becoming responsible for the longitudinal care of that patient.

And we're seeing more and more of that in the RFP process, demanding that these digital health solutions be integrated, and that they're able to demonstrate their value can even be directly through the MR and HR and into the analytics for the employer to prove.

[21:35] Justin Venneri: We'll link the Vizient report, and I'd love to link those in the show notes if you've got the Peterson reports handy too.

Of course, there's like the J&J situation, Wells Fargo, those lawsuits. And I know there's a partial dismissal of the J&J suit and I haven't noticed an update there yet. But have those helped accelerate behavior change? You know, to be fair, I feel like we were seeing, as you've described, more receptivity to change and awareness of the issues.

So is it kind of like waiting for the next shoe to drop, seeing how those unfold before anything different than what's currently happening, change wise, occurs?  

[22:10] Jeff Hogan: Sure. Both of those lawsuits certainly increase the visibility of these issues. Quite frankly, I wasn't surprised. This is nascent state for health fiduciaries at this point. Think about it, 20+ years ago, when the fiduciary duty was imposed on retirement plans, it took three or four or five years for the plaintiffs' attorneys to learn exactly how to prosecute these cases. And I think these are examples of that.  

There isn't case law around this at this point. It's being developed, and even some of the insights that came from the courts I thought were poor. Not being a lawyer, but being an observer of the marketplace, there is not a fundamental understanding of how care delivery has existed under BUCAHs in the past. And quite frankly, you know what due diligence should look like for employer fiduciaries as well.

I'm quite confident, having spoken with a large handful of the predominant health care breach plaintiff attorneys around the country, that there's a whole lot more set up in the chute to come in very short order. So if people think this isn't going to affect them, it is. And they're getting much more focused what these things look like.  

So I mean it doesn't take much for an employer to become compliant and to start to make moves to become compliant so that they're not in the crosshairs of these lawsuits and much more to come. But it didn't surprise me on these first two.

[23:46] Justin Venneri: Okay. And I'm curious, I've got only got two more questions for you. They're kind of fun ones. Knowing what you know now, what advice would you give your younger self starting out in the industry?

[23:56] Jeff Hogan: I'll tell you that I started working on the demand side of healthcare and I did for many, many years. But as I became older, I realized how poorly care delivery gets aligned with specific needs out there.

We really haven't cared in the past what the consumer thought about healthcare, and therefore we haven't built the tools to help them to become educated and what have you. I think that I probably would have spent more time earlier in my career focused on the care delivery side. Would it have made a difference? Maybe, maybe not. But I'm obsessed right now with that type of alignment of care delivery.  

And if you think about it, I said this to some very large brokerages that operate nationally, I think the blind spot for brokers in this space is really having no knowledge at all of the predominant care delivery organizations that are in their marketplace and completely relying on the insurance company to interpret that back to their customers.

And I think that's a warning to brokers and advisors in the marketplace, that they very well may become dinosaurs if they don't embrace what in fact their employer populations actually need and become fluent in data and analytics, and even AI, to assure those alignments.

[25:26] Justin Venneri: And my last question for you. What would be the most astonishing or surprising thing that you've seen or are tracking right now that's safe to share, of course? And before you answer, I'm shocked – 36 point solutions is probably a record. It's gotta be.

[25:42] Jeff Hogan: It’s not. I heard from a Fortune 50 company, 39 point solutions. So it doesn't surprise me at this point.

[25:49] Justin Venneri: Wow. Okay.

[25:50] Jeff Hogan: It's, you know, these are these big groups.  

So the most astonishing things we've seen in the last year, again, Fortune 500 companies where broker comp disclosed was three to four times as much as what was told to the customer, number one.  

Number two, prominent groups who went through this discovery process that I described to you, having their contracts analyzed -- prominent groups, large groups -- where the broker is charging $1.00 or $1.50 per script -- prominent groups where there is no admin fee for the TPA and the broker and the BUCAH are taking all of the rebates. These are just examples of the abuses that are occurring out there that with very simple contractual analysis, discover the abuses and repatriate money back to the employer and their beneficiaries as well. It's all over the place. It's embarrassing. It's with some of the most prominent organizations in the country.

[26:55] Justin Venneri: Jeff, thank you so much for taking the time today. Always appreciate hearing your thoughts, and it's always great to catch up with you.

[27:00] Jeff Hogan: My pleasure. Thanks for having me.

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To learn more about Upside Health Advisors, click here, or you can find Jeff on LinkedIn.

Additional Health Benefit Manager Resources:

• Peterson Health Tech Institute - Virtual Musculoskeletal Solutions (June 2024)
• ICER - Peterson Health Tech Institute: Assessment Framework for Digital Health Technologies (Sept. 2023)
• Peterson Health Tech Institute - Digital Diabetes Management Solutions (March 2024)

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If you would like to learn more about Capital Rx’s full-service benefit administration solutions, including our clinical programs, CLICK HERE to get in touch with our team.

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