Chris Shoffner, CEO of Your Community Health Plan, sits down with Leigh and Sally to discuss the lack of data transparency available to those designing health plans. Along with guests Adam Russo, CEO of Phia Group and Rob Gelb, CEO of Valenz we cover how to define transparency and the key context points to focus on, including why it’s important and how to use it.
Here is the full transcript for this episode:
Welcome to another episode of The Granite List Live. Navigating a sea of benefits solution is daunting at best and new vendors emerge every week. Hosts Leigh Dill and Sally Pace bring brokers and employers a solid resource when it comes to uncovering what's new, what's needed, and what is happening now, to allow for the best plan design possible. By staying on top of trends, brokers and employers can in turn stay on top of spending while improving employee engagement and outcomes. Listen in to this episode.
Chris Shoffner, CEO of Your Community Health Plan, sits down with Leigh and Sally to discuss the lack of data transparency available to those design in health plans. Along with guest, Adam Russo, CEO of Phia Group, and Rob Gelb, CEO of Vālenz, we cover how to define transparency and the key context points to focus on, including why it's important and how to use it.
Speaker 2 (01:02):
Let's kick off today's session. Chris, you have a very interesting story to tell and I'd love for you to share with the audience what your why is. How did you come to even building Your Community Health Plan?
Chris Shoffner (01:16):
Well, it started really in 2008 when I was chosen by our Commissioner of Insurance to sit on a Blue Ribbon Task Force on our state employees health plan. 700,000 lives, almost a $3.4 billion spend. That two-year process really was enlightening for me because I started my career at Merrill Lynch in the retirement plan business, transitioned early 2000 into the health and welfare space. 2008, we had the ACA going on. Barack Obama just got elected. There's a lot of stuff happening in healthcare. So, I said, "Well, gosh, if I can sit in on this two-year Blue Ribbon Task Force on our state health plan, I'm bound to learn a lot and meet a lot of great folks." Really, what that all boiled down to was that at that level, we found out beyond any reasonable doubt, there was no structured oversight over that $3.4 billion spend of taxpayer money, which I thought was amazing, right?
Chris Shoffner (02:16):
You've got the biggest plan in the state blindly paying claims for everybody. It was just a matter of Blue Cross sending them a bill on a quarterly basis to draw money out of the account. And then, settling up 30 days later, and pulling more money, right, because they would always say they never have enough. So, when you see a plan of that size, that has no structured oversight, you start to wonder, "Well, how many other companies out there are in the same predicament?" Right? That's when our State Treasurer then became the resting place for this. At that point in time, that was a $24 billion unfunded liability in 2010. Today, it's $38 billion unfunded liability. Our current State Treasurer, Dale Folwell, sat right next to me the whole two years when he was in the House of Representatives on that same task force.
Chris Shoffner (03:13):
So, when I look at things, I see that and I see a big problem, right, because ERISA is the same law, whether it's a retirement plan or it's a health and welfare plan. On the retirement plan side, there is so much audit structure, detailed data in place that you can review everything, but on the health plan side, you don't have the same structured oversight. There's no enforcement. I hate to call it stealing, but in many cases, that's exactly what it is. So, that's where my path brought me to, the realization that, "Well, if we're going to really change this, it's got to start from the bottom up and the bottom up in healthcare are small businesses." So, from a size standpoint, 50% of all people that get a W-2 paycheck in our country are receiving that from a business that has fewer than 50 employees. These are the people that are getting hurt the worst by this health care system, if you want to call it that, that we have.
Chris Shoffner (04:17):
So, fast forward to 2017, I start working with two North Carolina networks, one in primary care, one in pharmacy, to deliver them a solution. We really laid down some key points or key items that we wanted our plan for these providers to have. Number one, it had to be transparent. Number two, we had to do something different with the PBM and the drug structure that is quickly becoming 20%, 25% of total plan spend in some cases. We're getting new drugs that are hyper-expensive being approved every day, may or may not show any clinical efficacy. It's difficult. And then, you've got the data piece. I'm not talking about just paid claims data, which even our treasurer to this day can't get paid claims information out of the plan because he is statutorily denied access to it. He's not allowed to have it, not allowed to share it. That's a little bit crazy, right?
Chris Shoffner (05:24):
And then, the last point is we need to use a consistent rule-based law and ERISA is there. And through a level-funding structure, which is what we've designed... ERISA is the same in every state, so we don't have to go through state departments of insurance to check and make sure that something's up to their codes. We don't have to worry about any state regulator or association plans or anything like that. We can do the exact same thing for anyone that wants to participate anywhere in the country. So, that's kind of where we got to, and that has led me to great relationships with folks like Rob Gelb and Adam Russo, experts in their field.
Chris Shoffner (06:07):
Again, that's me being the collaborator and the fiduciary to the plan saying, "Let's do this. Let's use best of breed. Everybody doesn't need to make the same decision multiple times." Right? It can be put in a nice package for them, which is what we believe that we've done at Your Community Health Plan and continue to monitor everything and report out to those employers because at the end of the day, it's their money and it's their employee's money that they are choosing to defer into the plan in lieu of getting W-2 wage. Right? That's the key trade-off that most people really don't think about. "Oh, it's my employer's money." Well, at the end of the day, if we do our jobs as fiduciaries and partners to the plan, 75% of all the savings that are derived revert back to the employer group. So, that is something that also makes us unique because I don't know of any other level-funded product across the country that will do more than 50% and the transparency that those have maybe a little bit less than the transparency that we offer.
Speaker 4 (07:15):
Elevator pitch. Talk to us about what Your Community Health Plan is and what audience you're intending to reach with it?
Chris Shoffner (07:23):
Your Community Health Plan is a level-funded, self-insured plan for groups with as few as five employees, up to really a hundred in the level-funded scenario. But then we can take that same platform, the same chassis and go up to several thousand employee lives with our PBM and our TPA partner.
Speaker 4 (07:45):
You talked about transparency and now you have two people with you that also believe in transparency from very different angles. Chris, you talked about what you're seeing in the marketplace and what has led to a need for transparency. What do you see going forward? How will you operate differently? And why do these partners matter to you?
Chris Shoffner (08:10):
Well, transparency is a tricky thing, right, because it's not just transparency into the dollars being spent in your plan, it's transparency into the quality of the providers that you're sending your plan participants to. I think that's really Rob's key point is... What we used to think as just plan data, there are now so many external data points that we can pull from to help engage our participants because giving someone a list of in-network providers is not really doing much for them, but having them have a resource like Vālenz that they can call and say, "Hey, my doctor said I might need this procedure done," or, "I might need this extra test done." We want to make sure that, that participant goes to the right place at the right time and gets the best quality for whatever procedure or information we're trying to gain from this next step in the process.
Speaker 2 (09:11):
Chris, just so I understand how your two platforms work together, will Your Community Health Plan put together a narrow network within the region that the employer is in, or do they engage Vālenz to do that for them, or is that an additional service that has pooled into work together?
Chris Shoffner (09:30):
Well, it's really work together. Your Community Health Plan are using, what I'll call, direct private payments. Some people might refer to it as reference-based pricing, but we are not creating narrow networks. We are utilizing Rob and his team at Vālenz. If there is a narrow network that we can benefit from in an area, yes, we will use them, but at the end of the day, we want our people not to be bound by anything that might be an artificial barrier in what we call, a traditional network.
Speaker 4 (10:02):
Rob, do you mind telling us why you've stepped out on a limb? I mean, Chris is... Yeah. You're a trailblazer in this space as well, Chris. So, Rob, what has attracted you to work [crosstalk 00:10:13] what Chris is doing?
Rob Gelb (10:14):
First of all, thanks for having us. And Chris, thanks for inviting us in. I know that I speak proud when I say, we're honored and flattered to be a part of the conversation with you because it's an important topic. I think what attracted us to Chris is there... Healthcare is kind of like a river right now. It just keeps flowing and it's evolving. If you go to the bank of a river at one o'clock in the afternoon, it looks one way, and you'd see it at two o'clock and it's completely different. It's changed. That's kind of what's happening in our healthcare environment today.
Rob Gelb (10:38):
So, as we've been building an ecosystem, since I joined and took over our organization, we've been putting in the pieces of what has to work together to make fundamentally our customer who's really the self-insured employer and their member. We always have to remember who our endgame customer is. It doesn't matter if we work through a TP or stop-loss carrier or whoever the stakeholder is. That's really what we're looking at. There is an opportunity to incorporate his model into our ecosystem design and plug it in where it makes sense. So, while we're building high-performance narrow networks, while we're engaging concierge medical, and building out and understanding what quality providers look like, communicating and educating the consumer or the member about that, there's a piece of direct primary care that really is emerging as critically important, more efficient, more cost-effective, more improving outcomes at the front end. That's really what attracted us to Chris in what he's kind of championing in this space.
Chris Shoffner (11:39):
I think that's great. I mean, fundamentally, when you look at building a house, you start with the foundation. And when you start with a health plan, the foundation of that health plan is the plan document. So, you need to make sure that you are very intentional about how you put your plan document in place and that everything else around the plan understands how you structured the plan document. Right? I think that no one can speak any better to this than Adam Russo. Adam?
Adam Russo (12:17):
Here we go. Let the games begin. Go ahead.
Speaker 2 (12:21):
We've had some issues with some clients really having a hard time getting data and we all know that the providers want to hold onto it as close as possible, especially the PBMs. So, as you are building these plan documents and looking for transparency, do you have any tips or pointers to our listeners who are brokers and employers and other vendors even, how to get access to that data? What is really needed as you're building that foundation?
Adam Russo (12:48):
First, I just want to say thank you for having me today. I appreciate the opportunity. Again, I'm Adam Russo, co-founder, and CEO of the Phia Group. Getting to your question first, the first thing I would advise every employer, every broker, every CFO, every CEO is actually read your contracts. Nobody reads them. So, you hear all these stories of people complaining that they don't have access to data, or they can't get this, they can't get that. Well, they signed off on that in many situations. So, what I tell people is work with partners. Work with vendors. Work with administrators that actually give you access to your claims data. They exist. For every organization, every carrier that won't give you data, there's another administrator that will give you all the raw data that you want based on your own plan.
Adam Russo (13:40):
Here's what I tell people about designing a plan document. You cannot design a plan document that's going to meet the needs of your own population at your own organization, unless you actually know what the risk are. The only way you actually know what your risks are from a healthcare standpoint, from a cost standpoint is by having access to that claims data. So, you get access to that claims data. Identify what the actual risk are. Where do you people are going? Where aren't they going? What type of needs do they have? What type of specialists did they go to? What are the PBM issues or the pharmacy issues, all that stuff. And then, you designed a health plan to meet those needs. How do you design that plan? What we believe is you actually empower the employees and the family members to actually care about the cost of healthcare. That is the fundamental problem that we have in this country.
Adam Russo (14:30):
I'm going to give you a very simple example. People believe, all of you, everyone listening, that when you go see a specialist at a hospital, what is the actual bill? An employee believes the bill is their copay, their out-of-pocket, their deductible. What does the employer think? The employer looks at it almost the same way. What is their out-of-pocket up to the stop-loss specific deductible? Right? Up to the stop loss aspect. They're looking at it as well. "It's a $200,000 bill, but I'm only on the hook for the first $50,000." So, if you really look at it, the only entity in this whole ecosystem that actually cares currently about the entire bill is a stop-loss carrier or a reinsurer. The funny part is they're not looked upon as health insurers. Okay? They're not health insurers. That's the key issue.
Adam Russo (15:28):
You brought up a question earlier about the why. At my company, when we started this company back in 2000, it was really simple and it's been simple ever since. Healthcare is too expensive. Prices go up all the time. And what we're seeing is employers are forced to offset all those costs onto their employees and their dependents. How do they do that? Higher copays. Higher deductibles. We see that year after year. As we build these plan documents, that's all we see consistently. We don't see people trying to innovate. We don't see people trying to empower their plans. All we see is, "All right, we'll make deductible higher. We'll make the copays higher."
Adam Russo (16:12):
So, what we have as the purpose for our organization is to make health benefits affordable for all the employers, for the employees, and their family members. Why? Because every single person deserves access to, not only low cost, but high-quality care as well. And the only way you can do that, having the data, analyzing that data, and then designing a plan that meets the needs of that population. Because what I can't believe is right now, you'll have a carrier, let's say in Oregon, the plan design for a 10,000-person teachers' union is the exact plan design for a 500-life truckers' union or a 300-life yoga instructor plan. They have different needs. They have different risks, yet every plan design is exactly the same and that is what I-
Rob Gelb (17:05):
I'd like to comment on some because Adam went back to the why. The funny story is we actually went through an exercise organizationally last year, using Simon Sinek as the backbone of what is your why? We went through an exercise organization of the why, what, how in getting to that Golden Circle and really think things through. Our why is actually in every presentation we do. It's very, very simple. We exist to live our brand promise to engage early and often using data as a source of that to drive smarter, better, faster healthcare decisions. And we live the translation of our brand, which is to be strong, vigorous, and healthy as a company, as a partner, and collaborate to drive membership.
Rob Gelb (17:45):
It's very, very simple. So, that's our why. That's our purpose. It's the why we exist. It's why 94.5% Of our employees wake up every morning, because we just did an engagement survey and they said, they totally understand what their role is in response to what we're trying to accomplish as a business. That's what we're rolling forward with. Data is critical. Data is the fuel that drives all this.
Rob Gelb (18:09):
One last point, I'll let Adam go because if you know anything about Adam and I presenting, we will play off each other now back and forth. Transparency has to be defined because transparency is more than just what. It's, why is it important and how do you use it? If you don't get those second and third dimensions into the transparency discussion with members or anybody that's looking at the quality metric, and say, "Well, this provider had 85 episodes of a similar service and they scored 97.5..." If you don't understand what that means, why it's important, how to use it, transparency by itself is just a data point. That's a key thing that we try to make sure we do in what we build with partners like Chris and partners like Adam said let's all make sure that whoever's looking at this has context around what it is they're looking at and why it's important for them to evaluate and use it wisely.
Adam Russo (19:01):
I know we're talking about transparency, but I really think that, that's just one step. I mean, even if you have all the data out there, here's the problem. Okay? We see it on a daily basis. Most CFOs still believe that healthcare expenses are not part of their realm. It's like, "All right, the broker's handling that, right? That's not something that I could control. That's not something I can change [crosstalk 00:19:25].
Rob Gelb (19:24):
It is what it is. It is what it is. I mean, we have this mentality. It is what it is. This is going to be.
Adam Russo (19:29):
Right. That's why when you look at my company, it's all about empowering plans. It's getting those CFOs to look at their healthcare dollar spend no different than all the other stuff on their expense side on the P&L. Here's what we say all the time. Let's say you have an employee making $50,000 a year. Think about what an employee has to... You guys know what an employee has to go through to get a raise. Peer review, self-assessment, via annual reviews, training, blah, blah, blah. All of these things, and then maybe they'll get a 5% raise. Yet, with healthcare spend, that same employee could go see a specialist for knee replacement surgery, and then spend $100,000 when they could've spent $20,000 at a higher quality provider. Nothing is being done by employers to actually get their employees to care about the cost of care. They care so much about wages, all this other stuff, but when it comes to healthcare, "It's out of our control." That's fundamentally what's wrong with our healthcare system. We need the C-suite to realize they can do something about-
Chris Shoffner (20:40):
Well, I think that's a key point you made about plan design. Right? And your company, Adam, I know that if they go through the chosen path, all the cost-share has been eliminated, right? Company's paying it a hundred percent. That was fundamentally one of the things we did. We said, "Okay, we don't like high-deductible plans because there are so many wrong things that happen when everybody gets stuck in high-deductible plans." People avoid care. People don't go and do anything that they should be doing normally.
Chris Shoffner (21:08):
So, that's why we have, primary care, no cost share to the member. You go to your primary care doctor, plan's paying a hundred percent. You go to your community pharmacy for $100 to $350 or so generic meds that we've got on our preventive formulary, there's no cost to the member. Right? That's great access versus where they might have been in a high-deductible plan today. And then, as we get into the procedural-driven stuff, we've done the same thing. We have eliminated cost-share, if they go through and choose one of the providers or a few of the providers that Rob and his group have laid out that are high quality, low-cost, deductible way. No cost-share to participants.
Chris Shoffner (21:53):
These are things that we can do because we started with a clean sheet of paper. We didn't have any legacy, bad contracts that we were involved in before we started down this road. That's, I think, where a lot of much larger employers are today. They've got the CFO that's, "It is what it is. I don't have any control of spend." They've got legacy partners with a broker or a PBM that they really can't get out of. And, "Too much disruption for my employees." So, I think that's good for us that we could start with that blank sheet of paper and get to a place that any employer today of any size should be doing these exact same things.
Adam Russo (22:38):
You have a CFO first. "You have to see if I were you." But here's the problem, it's human resources too, right? Because all this stuff that we're talking about, it's not easy. It takes work. So, if you have an HR department that says, "Well, I'm just picking one, right? Well, we have Blue Cross. We don't want to disrupt anything. There's a lot of training involved, a lot of education involved." It's more work for people to make all these things successful. To lower the cost... Let me just share a simple story. You mentioned deductibles, right? We represent 15 million lives nationwide. We write plan documents for about 5 million lives and we get the schedule of benefits that we see year over year what happens. So, all we're seeing is less benefits, more higher deductibles, higher out-of-pockets consistently. And then, when it comes to deductibles, people aren't even educated as to when they should use that deductible and when they shouldn't.
Adam Russo (23:36):
For example, urgent care. Many times, you're better off paying cash walking into an urgent care than showing your ID card and then paying the deductible price for your network. People don't realize that. So, the lack of education, the lack of transparency, the lack of actually knowing... Forget about the hospital because every hospital has a great surgeon and a bad surgeon. We don't want to go down to the actual specialist level, understanding of the quality metrics of every specialist within a facility and their costs.
Adam Russo (24:09):
I mean, that's why we've been able to, in our organization... I think there are 10 other companies in the country, healthcare is free. There is no cost to the employee or their family members. Was it easy to do? No. It took five years, but changing the behavior of the employee population to get them incentivized, to care about the cost of care, it's a great way then to recruit new employees, retain employees where they see that the employer has buy-in for their actual care, their well-being, the well-being of their families. It changes that mindset versus an organization that says, "Oh, yeah. [Joe 00:24:49] in accounting, his kid needs a specific prog."
Adam Russo (24:53):
Do you guys understand? The number one most requested inquiry to my company from brokers isn't how to lower the cost, isn't, "Are there alternatives?" The number one question we get is, "This is expensive. How does the plan not cover it?" Think about that. They actually ask how not to cover something that can make a family member or an employee healthier. It's sad, but that's what we've come to as an industry. That's what we're trying to change and that's what we've been successful of changing over the past 20 years.
Speaker 4 (25:29):
I would say, you've probably never met an employee who wouldn't prefer to have make more money and spend less on healthcare. It's just a lot of it centers around quality education, healthcare education.
Adam Russo (25:44):
We believe in mandatory workshops. People don't do it. I mean, you have these annual enrollments. "Here's your network. Here's how you sign up." Mandatory workshops talking about all the different cost between the metrics, all the different measures, things they can do to make their healthcare spend lower. Mandatory. No different than when you have HIPAA training at a company or any type of training that you might do. These are mandatory things that we're doing that we just don't see at a-
Chris Shoffner (26:14):
I think, it [inaudible 00:26:16] me. I think that goes to, again, the absolute split in ERISA covering retirement plans, right, which under 404(c) says, you have to do participant education. You have to deliver them the tools and everything to make sure that they can manage their own risk tolerances, that they become self-aware of what they're investing in, that the investments are broad enough in spectrum that they can be diversified. Right? All of that is required by ERISA. None of it makes it over into the healthcare world and it's the same law.
Be sure to listen to part two of this episode. Transparency has to be defined as Leigh and Sally continue their conversations with Chris, Adam, and Rob. Thank you for listening to this episode of The Granite List Live. Access our entire library by visiting your favorite podcast venue or subscribe in our site, thegranitelist.live.