Scott Haas 00:08
The whole acquisition of physician practices that’s really accelerated since the advent of the ACA, I think has been very detrimental to the marketplace. And the reason being is that you know, hospital-centric health systems view primary care as a means to an end. And what that means is your goal as a primary care doctor is not really to create relationships and treat people, it’s to triage them into the appropriate specialty setting. And then that specialty setting puts heads and beds in it fulfills census, there are some health systems that are contrary to that.
Gregg Masters 00:46
PopHealth Week is brought to you by Health Innovation Media. Health Innovation Media brings your brand narrative alive by original or value-added digitally curated content for omnichannel distribution and engagement. Connect with us at www.popupstudio.productions and welcome everyone. I’m Gregg Masters, Managing Director of Health Innovation Media and the producer co-host of PopHealth Week. Joining me in the virtual studio today as always is my partner, colleague, and lead co-host Fred Goldstein, President of Accountable Health LLC. On today’s show, our guest is Scott Haas, Senior Vice President of integrated healthcare metrics. at Wells Fargo Insurance Services USA Inc. Scott earned a Bachelor of Science in Business Administration and economics from the University of Nebraska at Kearney. He holds the Chartered Life Underwriter CLU and Registered Health Underwriter RHU designations, Scott has over 30 years of Employee Benefits experience developing and validating acute and chronic care management programs, prescription benefit management solutions, provider network evaluation, valuation and negotiation, and underwriting Scott started and operationalized, a third-party administrator and a PBM platform from scratch and has worked in the arena of alternative funding for the majority of his career. He has held officer-level positions with Blues plans and TPAs as Vice President of Sales and Marketing, Vice President of underwriting, and president of America. So Fred, with that introduction over to you help us learn more about Scott’s work at Integrated Healthcare Metrics.
Fred Goldstein 02:36
Thanks so much, Greg. And Scott, welcome to PopHealth Week.
Scott Haas 02:38
Yes, thank you.
Fred Goldstein 02:40
Yeah, it’s really a pleasure to have you on the show. We’ve obviously known each other for quite a period of time, talked about health care, and all the little nuances in there. And really considering what you one of the experts in this area, especially look around analytics. And What plans do and employers do. So why don’t we start with a little bit of your background and the company you work for?
Scott Haas 02:56
Yeah, so I’ve been in the industry for over 37 years now. Having started my career out of college with Mutual of Omaha, which I’m going to age myself here especially is that, at the time, Mutual of Omaha was the third-largest health insurer in the industry behind Prudential and Aetna, of which only a form of that now actually still standing and Prudential a mutual are nowhere even on the radar screen. So it’s been a rather interesting adventure. From that point in time to where I am today, which is part of a national healthcare consulting practice that’s within USI insurance. And we’re rather unique in that. My two principal partners, we all three bring very unique skill sets to healthcare. One of my partners is a clinical pharmacist who was built to PBMs from the ground up, of which I was one of those initiatives and building a business plan for the Regroupgence skirt back in the mid-90s. Regence was is a holding company of Oregon, Washington, Idaho, Utah Blues, and myself and two of the medical directors from Oregon and Idaho got together and basically, we’re trying to figure out, you know how to come to consensus within the four states on the appropriate direction for you know, PBM strategy, and essentially hired who an individual who’s now my consulting business partner, hired him in 1995 gave him a blank slate, and he and I and a number of other people, basically built the first version of Regence Rx from the ground up. And so that was his second foray into that, he was actually one of the founders of what was once Value Health and then evolved into Express Scripts. So it was all part of that back in the 80s and 90s. And then my other partner is rather interesting background is a certified Risk Manager, both employee benefit and property-casualty licensed and comes out of the managed care industry. And within Wells Fargo and now within USI, we were the only business unit that did consultative underwriting and placement of HMO and provider access reinsurance, which is a very unique, narrow niche that is really what has enabled us to create risk management data analytics that we apply in the managed care space. So we work with any organization that is at risk for Medicaid, Medicare Advantage, or commercial health insurance risk, where we are actually looking at first dollar data, and creating risk transfer, risk management strategies for these new HMOs ACOs, however, you want to brand them. And then my role is really transcends the PBM in the managed care disciplines, but we take the skill sets that we’ve created, and we apply health care risk management techniques into the employer space. And that has really evolved into a lot of different directions because of the fact of, you know, the Affordable Care Act influence on on the marketplace, and then just the constant escalation of care and looking for different types of alternative delivery and alternative financing of healthcare within the employer space. So that’s a real significant opportunity in the market. And a lot of the work that we do is really around disintermediation of third parties and aligning the buyers of healthcare being plan sponsors with the service, the supply side of the ledger,
Fred Goldstein 06:56
that’s good to know, where you know, we’ve been watching costs go up forever. We’ve talked about that issue in terms of health care costs and things. And this past year has been a little bit difficult because of COVID. And I know a lot of employers and plans are sort of trying to figure out what does COVID mean for my employer-sponsored plan or my fully funded plan? What are you seeing in terms of impact from COVID?
Scott Haas 07:18
Yeah, I think that we’re seeing both direct and indirect costs is really hitting plans a lot harder now than I think we anticipated and that the market thought was going to occur. And we’re getting it in two sides. One, you know, we went into the shutdown that occurred in March of 2020, through April, May timeframe. And, you know, in my opinion, that created a very significant disruption on two fronts. One is just ripped the band-aid off of the scab that we call fee for service and really expose the shortcomings of fee for service as a financing way of paying for healthcare. But number two, which I think is even that is more disruptive in my mind, was it really challenged employer-sponsored health care, and that, you know, within a very short period of time, we had something like 40 million people become unemployed. And out of that 40 million depending upon which source you look at, as many as 12 to 15 (million) people became uninsured because of the attachment of their health care being attached to their employment. And you know, that’s a disruption that created a lot of opportunity that even the most formidable disruptors in healthcare couldn’t even imagined. But what’s been interesting to watch is the, what I call the deer in the headlight syndrome of the employers themselves, and actually, one responding to that opportunity. But number two, brokers and consultants that didn’t recognize the opportunity to begin talking to employers about what was potentially coming at them. And what we’re seeing today, which I’ll circle back to that then also opportunities to change the mindset on how do you begin going forward, and really address alternative delivery of healthcare and alternative financing of healthcare? Excuse me. And so to get back to your question, specifically, Fred, we’re beginning to see, double-digit trends begin to hit in this renewal cycle, in the form of direct cost attributable to COVID. This would be your testing, this would be all of the services that employees are seeking related to COVID. And, you know, across our retail book of business, we’re observing some pretty substantial claims. I mean, we have a group in Idaho for example, that has about 700 employees had a $1.2 million COVID inpatient claim. Fortunately, that person survived. You know, unfortunately, they were in a for-profit hospital, which, you know, created some difficulties, but that’s a separate issue. But But the key is that, you know, here’s an individual that went in and spent $1.2 million or better stated the reinsurer did, which I think then is another issue that’s starting to hit the market really hard is the level of contraction that we’re seeing. And the level of restrictive underwriting that is starting to happen in the stop-loss market that ultimately does have a profound impact on these employer plan sponsors. But you know, your testing of COVID, your vaccines of COVID, you know, basic claims related to COVID. That’s kind of the variable that we’re seeing a definite uptick in that level of claim activity.
Fred Goldstein 10:58
And you mentioned in the conversation we had earlier, the issue of reinsurance. And you also talked about lasering. And can you talk about some of that, and what you’re seeing and explain to the audience what that is?
Scott Haas 11:09
Yeah, so you know, when you look at stop loss, reinsurance, in the employer marketplace, you have known risk, and you have unknown risk. And I think the market is contracting, from a conservatism perspective on unknown risks. So for example, that $1.2 million claim, that was an unknown risk, you didn’t know it was going to hit until it hit. But it’s a legitimate purpose for why you have stop-loss insurances, you know, having that insurance in place before your house catches on fire, so to speak. But because of that, I believe that what we’re beginning to observe is a approach of conservatism on on that side of how the manual rates, and how these carriers are starting to load their rates for purposes of blending the experience of the group with their actual actuarial manual rates. But the second piece is in the known risk. And that’s an area where lasering is a technique that the stop-loss carriers will use to say that we can see within the data and information that’s provided that, you know, you have three cancer cases, or you have two specialty drug individuals. And because those are known risks, we are going to either exclude them from the stop loss, so then the plan ends up taking 100% of that exposure, or we’re going to put a different attachment point on those individuals, which, you know, we’re gonna more equitably share between the employer plan sponsor and the stop-loss carrier in that risk exposure. And the unfortunate part. And I think, then this goes back to that indirect impact of COVID is that we are observing a substantial increase in cancer claims in the marketplace than we’ve seen in the past. We have, you know, one account that we work with up in Montana, that’s about 600 employees where in this past plan year being the bridging from 2020, where we have, you know, three or four frequent fliers that are ongoing cancer, but we have new emerging cases that are about 10 times the national norm that have started hit some of our accounts. I think there’s some regionality to that. But the other part is, when we look inside of our managed care business, where we work, you know, to provide reinsurance solutions, we’re seeing a pretty significant uptick in cancer. And I think what our opinion is, is that that is the result of individuals who either did not get early, you know, diagnosis and get, you know, and have treatment start, you know, really quickly, as you would normally see in a non-COVID environment. And then I do think that there were some people that really delayed seeking care or the care that they were having for the cancers they already had was disrupted, and it was delayed, and I think now the magnitude of those cases, is much greater than what it would have been otherwise.
Fred Goldstein 14:31
You know, that’s fascinating. They really talked about this issue, you know, for a while we’re saying all these people are not being able to get in because of COVID or they can’t they’re they’re afraid to go to the clinic or maybe the clinics had to cancel services, etc, or the hospitals had to cancer, cancel these services, and that’s in effect what you’re talking about.
Scott Haas 14:52
Yeah, I mean, and and I believe we’re seeing it again right now where people are sick who do not want to go to the hospital. You know, this is anecdotal, but a recent client that we’ve worked with for years, called us last Sunday and essentially said, we had one of our employees pass away. And you know, we started looking, you know, to file a life claim and do that type of work. The individual had chest pains on Saturday. And his wife said, you know, let’s get you into the hospital. He said, No, no, no, I’m okay. And he passed away on Sunday have a massive coronary event. You know, again, anecdotal, but I have a feeling that that’s happening more times than not across the country right now. cynically, I guess, mortality is less expensive than morbidity in the health care system. But, you know, that, I think is something that we’re beginning to start to see happening more and more.
Fred Goldstein 15:53
So have you been talking with your various clients about? And is at is that sort of why you’re projecting these larger increases in premiums coming up, these double-digit increases, because of these issues of delayed care, higher costs for COVID, etc.
Gregg Masters 16:10
And if you’re just tuning in to PopHealth Week, our guest is Scott Haas, Senior Vice President of Integrated Healthcare Metrics at Wells Fargo Insurance Services USA Inc, for more information, or to follow Scott’s work, go to www.usi.com.
Scott Haas 16:26
Yeah, it’s those types of issues. We’re seeing an uptick in utilization across the board. But then the second factor that is just killing the entire employer marketplace right now, is specialty drugs, it’s just absolutely out of control. I mean, when you look at the fact that we have so many new entrants into the specialty marketplace, many of which are really marginal, in my opinion, in our opinion, I defer that back to my partner on his clinical expertise. But you know, you look at the Alzheimer drug in the process that just occurred with the FDA, and you’re beginning to see a real knee jerk reaction coming from I think grassroots organizations that are really starting to question, you know, the FDA is an institution whose primary funding sources pharma, which is a problem in and of itself, I mean, you know, let’s face it. But when you look at a number of the drugs that are being prescribed, you know, there’s beginning to be much more work, as typically it’s coming out of the entrepreneurial side of healthcare, where they’re looking at these drugs, and they’re basically saying, okay, it went through the prior auth process that seemed to have, you know, be validated. However, let’s start checking two weeks a month, 45 days, 90 days out? Is the drug actually working? is it doing what it was supposed to do? And, you know, should you not be continuing to pay for that? And that is a discussion that’s coming into the marketplace that I think is long overdue, but one that is very difficult, because a lot of these patients, you know, then you’re looking them, you know, square in the face and saying, you know, this didn’t work, sorry. And, and that’s tough. That’s not an easy place for an employer plan sponsor to me.
Fred Goldstein 18:19
Uh huh. And obviously, in the, in any of those cases, obviously, the physician who’s prescribing it has to, in essence, agree, or they’re going to continue to prescribe it, or the plan will just cancel it.
Scott Haas 18:29
Yeah. And I think that’s the challenge that’s going to really have to happen here is, you know, the entities that, you know, are clinically determining that the drug is or is not working, are now having to work with physicians who have to basically agree or disagree with that.
Fred Goldstein 18:49
Oh, and I know you brought up this issue of pharmacy and some of the things around trying to get that to a better state of care. And one of the areas I know we’ve talked about, and you’ve been very focused on this, is how do you create those, those plan approaches or those clinical approaches for employer groups to maximize the health of their employees and minimize the costs. And I don’t want to be as you’ve looked at is this issue of using primary care in a capitated model? Can you talk some about that and what you’re seeing and why you’ve done that?
Scott Haas 19:19
Yeah. So you know, as I said, you know, a lot of work that we’re doing now is creating alternative delivery and financing and having come out, you know, with our DNA being strongly embedded within managed care, we have observed in the Medicaid programs and the Medicare Advantage programs, that primary care medical homes work. That’s been a successful, you know, process of evolving, you know, the the governmentally funded programs, you know, using primary care as that point of contact between the member and the physician Then basically using value-based type techniques to enhance the relationship between the primary care doctor and the patient. And, you know, we’ve been working primarily with independent physician groups where, you know, one of our clients is about 1100 independent physicians who have been under contract with multiple ACOs, and a large metropolitan market where they’ve been taking risk for the management of 1.1 million, you know, commercial members. And what we’ve been able to do with them is to get the data and to take that data, but effectively convert them from fee for service to capitation. And then help them create a direct to employer strategy to go out into the marketplace. And and approach self-insured employers that, okay, you have to make an investment in primary care, because capitated primary care, pays the physicians quite a bit more than what they’re earning on fee for service. But going back to the analogy I used with, you know, COVID, in March of 2020, being you know, one of the scabs that, you know, band-aids ripped off a scab was that how many physicians in this country went from earning $1 to earning zero overnight? And then as that occurred, how many patients that lost their access to those physicians? And now, I think that is a direct correlation to what we talked about a moment or so ago about, you know, what are we seeing in increased trends, and I think there’s a direct correlation back to that. But the interesting part is that as we’re now rolling out, these you know, capitated primary care Now, mind you, we look at primary care as being good, whether it be on-site clinics, whether it be near site, clinic strategies, whether it be advanced primary care, or whether it be direct primary care, you know, there’s different attributes to those models that make it appropriate or effective. But it’s still a primary care medical home approach where you’re aligning the physician and the patient, and creating service support and value to that relationship that’s coming from the inside out. Meaning that the services that are then provided to those physicians to help make sure they’re managing their patients are coming from their organization, and helping augment the relationship between the physician and the patient. So for example, the example I was using of our clients on the primary care client, they actually have pharmacists on staff and the capability that when a patient is in a physician or having an encounter, that whether it’s virtual, or whether it’s face to face, that physician can basically bring an iPad right into the conversation on a face to face encounter, and introduce them to the pharmacist that is now going to basically work within that environment, and work with that patient and be assigned to that patient for the journey of the you know, medicine, medical therapy, that they’re basically going to subscribe. And the key to that is that it’s the pharmacist that’s ultimately making that clinical decision, not so much the physician. So it’s that resource and how do you basically, you know, bring those types of services, whether it be a pharmacist, a dietitian, and nurse practitioner, any of those ancillary providers from the inside out into the relationship. And this is contrary to what we’ve seen the last one, I’m going to go back to my 37 years in the business. You know, you know, these these medical management companies that essentially are third parties that are outside in applications, they’ve never worked. I mean, we’ve known that forever, but yet the industry just continues to compound it and employers continue to pay for it, then we scratch our head as to you know, why are you spending this money for services that don’t validate?
Fred Goldstein 24:16
Uh huh. And as you think about these primary care practices adding in, you’ve also so these are typically globally capitated primary care doctors?
Scott Haas 24:27
Yeah, yep. That’s our ultimate goal is to bring a you know, well, there’s two answers to that. One is capitated the primary care component so we have a set bundle of services that are within that capitated model, certain of that will fall out into a fee for service on you know, variable, low volume stuff, but for the most part, you know, it’s taking capitation and then ultimately, you know, we could move them into a global cap and into the, into the employer market?
Fred Goldstein 25:03
And are you getting a decent response from employers regarding interest in this as well as from primary care physicians on that side being interested in this model?
Scott Haas 25:12
Yeah, primary care physicians, absolutely. They’re a little shy, you know, I mean, you can model a capitation rate where you double what they’re gonna earn. And it’s guaranteed because they’re getting paid on a per patient per month basis, right. So you know, the physician themselves, you have to basically show them the math and make sure they’re comfortable. That you know, within a capitated model, if you’re earning, for example, 120% of Medicare allowed in fee for service, and that in this global environment, you know, you could earn up to 175%, you know, but you got to prove it, you’ve got to show them that. So the physicians are coming along, I think a little bit quicker, because they get the math, but the harder part is going to the employers and convincing them that you’re going to pay more for this primary care component that includes all of the services, but that also includes your wellness, your well care and your sick care. So let’s throw this useless wellness program out, you don’t need it anymore, let’s get rid of this disease management program, because you don’t need it anymore, we’re going to delegate all of the chronic care management to that primary care model. And then, you know, let’s, you know, take into consideration dollars you’re spending there that are unnecessary, because it’s all now embedded within this. And and you know, that’s a different mindset. And we’re finding that it’s, it’s typical of any early adopter type of of process, that you have to identify the employers that are willing to step up and take a bit of risk and make the investment. And ultimately, what we find is that, you know, if they’re willing to make the investment, they’re not taking any risk, because you start to see the claim trends banded about six, nine, twelve, and fifteen months out.
Fred Goldstein 27:08
Really, that’s that’s really great. And it kind of thinking back, we had Michael Abrams from Numerof and Associates on with a survey they do every year on the move to value-based care and population health. And it’s really been stuck. And I think I’m wondering if some of the reason it stuck is this survey essentially looks at major health care systems and SVPs of population health or those kinds of things. Whereas you’re down in the trenches working with primary care Doc’s who really are interested in doing this, and can make a difference when they’re doing it.
Scott Haas 27:40
And I would agree with that, and, again, this is my opinion. But the whole acquisition of physician practices that’s really accelerated since the advent of the ACA, I think has been very detrimental to the marketplace. And the reason being is that, you know, hospital-centric health systems view, primary care is a means to an end. And what that means is, is that your goal as a primary care doctor is not really to create relationships and treat people, it’s to triage them into the appropriate specialty setting. And then that specialty setting puts heads in beds in it fulfills census, there are some health systems that are contrary to that. But you know, the reality is, you know, a neurologist represents anywhere from three and a half to six and a half million dollars of revenue to a health system. And you can go through and look at each of those specialties, and the value of a referral from a primary care doc to any of the specialists. So in the advanced primary care environment that we are promoting, you know, one of the greatest attributes of that business model is that any referral that is occurring is basically more limited than what it is in fee for service. Because within the advanced primary care environment, we typically see the the primary care doctors begin practicing a top of license rather than, you know, let’s call it a temper or a quarter of license, because all they are is a gateway, not not a actual provider. And so we’re changing the dynamic from a seven to an 11-minute office visit to a point where these physicians and because of the fact that we’re augmenting them with these ancillary service providers when a physician actually has an encounter with the patient, you know, it’s 30 to 45 minutes, it’s meaningful.
Fred Goldstein 29:38
Right? That’s fantastic. I think I’d love to get you back on Scott and dig deeper into this issue. It’s really been a pleasure to have you on PopHealth Week.
Scott Haas 29:47
Great. I appreciate the opportunity. Thank you.
Fred Goldstein 29:50
And I’ll send it back to you, Gregg.
Gregg Masters 29:51
And thank you, Fred. That is the last word for today’s broadcast. I want to thank Scott Haas, Senior Vice President of integrated health care metrics for his time and insights today. For more information on Scott’s work, go to www.usi.com. And finally, if you’re enjoying our work here at PopHealth Week, please subscribe to our channel on the podcast platform of your choice and you can follow us on twitter via @PopHealthWeek. Bye now.