Latest / Becker’s Healthcare Podcast / Rising Employer Healthcare Costs and the AI Billing Debate with Jakob Emerson

Transcript

Rising Employer Healthcare Costs and the AI Billing Debate with Jakob Emerson · Becker’s Healthcare Podcast

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  This is Scott Becker with the Beckers Healthcare
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  Podcast.
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  We're thrilled today to visit with Jacob Emerson.
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  Jacob joins us regularly to talk about payer
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  issues and what's going on in the payer
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  world. Jacob, let me tee it up and
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  ask you to take it away. What are
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  a couple stories that you're watching currently in
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  the payer world?
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  Yeah. Hey, Scott. Good to talk with you.
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  So two stories that we could talk about.
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  One is a little bit more,
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  contextual in terms of what's going on in
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  the industry overall and then some some responses
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  to a specific problem.
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  And that's the the fact that, employer health
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  care costs have been skyrocketing
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  this year. They're at some of their highest
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  levels in at least a decade. And so
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  we're seeing some really interesting responses to that
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  creative solutions or possible solutions. One from Mark
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  Cuban, and then I talked to Anthem Indiana's
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  new president last week,
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  on another solution there from the insurance side.
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  And then the other story I thought we
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  could touch on is some new research put
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  out from, Blue Cross Blue Shield. Basically, it's
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  the first data, the first research we have
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  out about
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  how hospitals use of AI billing tools,
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  is affecting medical costs. And, you know, there's
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  been a lot of anecdotal claims and and
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  stories out there in terms of how insurers
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  and providers are using AI to to do
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  coding and billing. But now we've got some
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  new data first, concrete data out about this
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  specific issue.
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  Know us about that first if you don't
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  mind. Issue of hospitals using AI tools to
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  better bill, they would say to improve billing,
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  campuses things more fully. We know that sometimes
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  when that happens, it leads to overbilling. Sometimes,
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  the flip side is if you're a hospital
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  system, you would say that the insurers have
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  been killing you on the technology
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  03:00 denial game for years now,
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  and and trying to equal out this technology
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  arms race is necessary.
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  What's the take of this? What are you
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  seeing there? For sure.
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  So I just wanna, you know, preface by
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  saying not taking the side here. I think
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  the truth is probably somewhere in the middle.
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  Both sides are definitely using AI driven coding
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  tools, billing tools to ultimately
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  improve or pad margins because there are publicly
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  traded companies on both the hospital and insurance
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  sides of this. And up until now, you
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  know, when we're talking about this phrase, the
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  AI arms race between the two industries,
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  it's largely been, you know, anecdotal reports. It's
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  been,
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  just discussed by executives on earnings calls and
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  things like that. We haven't actually had any
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  research, any concrete data about what is going
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  on in the industry, how are these two
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  sides using AI,
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  and, ultimately,
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  how how is that
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  trickling down to affect health care costs. And
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  so Blue Cross Blue Shield Association, which is,
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  you know, the the group that represents the
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  34
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  plans around the country in each state,
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  basically, they did research where they analyze commercial
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  inpatient claims from a subset of their plans,
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  representing about 62,000,000
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  members,
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  covering a three year window ending,
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  last March in 2025. And they were looking
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  at a specific condition that happens,
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  with with pregnant women. And, basically, what they
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  found is that the diagnosis of that condition
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  surged at a certain subset of hospitals, but
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  the increase in that condition in in terms
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  of coding, it wasn't matched by a corresponding
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  rise in actual treatment.
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  And so among the it was among the
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  top 10%
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  of hospitals,
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  by growth in case complexity.
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  And,
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  basically, they that that that increase, it was
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  concentrated at large health systems. And they noted
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  in their study that those large health systems
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  have all been very public
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  about,
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  working with new AI
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  coding and billing vendors,
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  to basically, in their words,
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  better capture
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  the the sickness of the the patient population
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  they're taking care of or to just better
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  capture,
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  the the care that they are providing. So
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  that's basically the hospital argument that they need
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  these tools because,
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  they weren't as efficient as they could be
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  at coding and then billing for the care
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  that they were providing. And that's through, you
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  know, things like the ambient listening,
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  and stuff like that. And so
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  Blue Cross is basically saying that, you know,
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  their data that they show and that the
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  the care that's being provided through their claims,
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  that's not actually it's not matched in what
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  is being coded,
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  and specifically looking at some of these maternity,
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  these maternity treatments specifically.
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  And in terms of the actual numbers,
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  so they're saying if they project it nationally,
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  based off of some of these maternity related
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  hospital costs, they're putting potential excess inpatient spending
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  tied to hospital AI enabled coding at roughly
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  $663,000,000.
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  That's for inpatient and an outpatient exposure of
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  at least $1,700,000,000.
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  So Blue Cross is basically saying that, the
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  the use of these AI tools by hospitals
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  is driving up or or could be driving
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  up health care costs by billions of dollars
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  just in this short few year period.
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  Thank you very much. And fascinating. And and
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  there was another story you had mentioned to
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  the top of the hour
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  that that dealt with payers and Mark Cuban
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  and some other issues. Can you talk about
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  that for a second? Yep. So, basically,
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  this year, because of the the just the
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  rising utilization
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  we're seeing,
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  and then some of the, you know, the
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  rising cost of care overall with the rise
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  of things like GLP ones, specialty drugs,
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  and more specialty treatments and therapies.
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  Employer costs for for health care benefits are
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  just going up like crazy, and,
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  this year is probably the highest it's been
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  in ten to fifteen years.
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  We've seen anywhere from six to 10%,
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  on average across the country for for employers.
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  And so we're seeing different responses to this
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  creative ways to address this problem or at
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  least limit,
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  some of the, you know, pressures that employers
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  are facing. And so the first one I'll
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  mention is,
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  Cost Plus Wellness, which is from Mark Cuban.
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  And, you know, the you you you know
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  Cost Plus Drugs, which is the the generic
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  pharmacy,
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  that he has online, and you can get
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  generic drugs for for very cheap. So now
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  he has this new site,
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  called Cost Plus Wellness. It's it's in beta.
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  It's for self insured employers who basically wanna
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  bypass
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  the insurers entirely and contract directly
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  with, with the health care providers at publicly
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  posted rates. So this is basically the large
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  self insured employer,
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  going right to the large health system or
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  right to the large independent,
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  physician group in their market and saying, let's
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  just contract directly,
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  with these cash pay rates that you've posted,
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  and then you've posted that contract on Mark
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  Cuban's wellness site.
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  And then we can just you know, it's
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  transparent, and we don't have to go through
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  the opaqueness of the insurers who, you know,
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  who knows,
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  you know, how these how these rates have
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  been
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  negotiated
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  or,
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  you know, we can't access our claims data
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  in completeness when we want them from the
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  insurers. So that's basically Mark Cuban's,
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  solution to this is more transparency,
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  bypass the TPAs, the insurers directly,
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  and just contract with the providers, and then
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  use our site,
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  to to do that. And I was I
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  was emailing with him yesterday, and he said,
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  because I asked him, I I said, you
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  know,
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  is this is this very feasible for a
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  large self insured corporation with 20,000 employees across,
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  let's say, 10 states?
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  Because right now, he's got these contracts online
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  that are mostly focused
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  or mostly in the in the Dallas area
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  where, you know, he he's, been based.
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  And he did tell me that, you know,
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  there is plans for a larger national expansion
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  so that, you know, employers all over the
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  country can take advantage of this.
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  So I'll I'll turn it back to you,
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  Scott, for a sec, but I also had
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  a how Anthem is also responding to this
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  wider industry issue as well. Well well, let's
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  talk about how Anthem is responding. I'd love
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  to hear that. For sure. So they've got
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  a new president, in Indiana, which that's where
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  Elevance Health, the parent company, is is headquartered.
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  And I was talking to her last week,
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  and they've got this interesting new,
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  designated network, orthopedic network,
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  which is, you know, orthopedic can be some
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  of the highest cost claims,
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  for an insurer. And so in Indiana, they've
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  got this new designated network where basically they've
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  been working with orthopedic groups or the orthopedic,
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  pieces of health systems in Indiana
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  and
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  contracting with them on on a new network
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  where employers can can then,
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  they basically go to employers and say, this
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  is who we recommend,
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  to be a part of network wise for
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  orthopedic stuff because they've got the highest quality,
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  but they've also got the lowest cost. They've
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  worked with us on on rates,
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  that are more feasible than a wider orthopedic
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  network. So so it designated a network for
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  these for this specialty,
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  type of care. And, you know, I talk
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  like I said, I talked to the new
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  president there of of the health plan, and
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  she basically said, this is in direct response
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  to what to to the pressures we're seeing
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  among employers and then starting to see some
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  employers go down the direct contracting route. And
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  so she's basically saying this is the insurance
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  response to that, that we we have a
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  wide view of the, you know, the the
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  providers. We know who performs the best. We
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  know who has the lowest costs.
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  Employers, instead of going and, you know, doing
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  this yourself and going to contract with your
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  local health system, this is now how we're
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  gonna meet your issues.
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  You work with us, and we will set
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  up these new,
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  smaller networks, these designated networks,
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  that, we can guarantee
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  are lower cost, higher quality,
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  and get around some of these these pressures
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  that that you're seeing.
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  Thank you very, very much. No. Fasting to
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  see what's what's happening here.
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  It literally incredible.
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  And and so we'll see, like, this concept
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  of Anthem or EleVance
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  Blue Cross, what have you in Indiana,
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  going towards the neural networks,
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  this seems again like a return to the
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  past, return to the future, however you wanna
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  call it. So that's not a new strategy,
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  new concept. Maybe it's one that's being re
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  instigated to try and narrow things to a
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  a a group where the pediatric surgeons are
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  gonna work really closely with them,
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  and whatever they're trying to accomplish. But that's
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  that seems like to be a revisiting an
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  idea that's always been played through many times.
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  100%.
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  But I will say, you know,
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  they they told me this is not like,
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  they're gonna look at other specialties. This is
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  not the this is just the beginning of
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  of this strategy.
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  And, you know, that's just one arm of
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  Elevance
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  overall, second largest health insurance company in the
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  country. They have they're they're probably gonna do
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  this in other states. I I can't confirm
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  that, but, you know, if if they're doing
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  it in Indiana, it's probably gonna happen elsewhere.
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  It's gonna happen with other specialties. And I
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  also just think Indiana is a really interesting
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  state, believe it or not, in terms of
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  health care employer health care policy. And I
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  say that because, you know, they were they
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  were the first to create a tax credit
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  incentivizing
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  ICRA coverage for for small employers recently.
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  And then they last year, they passed a
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  law, or or a law into effect requiring
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  their largest nonprofit hospital systems,
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  to offer employers direct contracting rates that are
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  capped at 260%
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  of Medicare. So Indiana is just doing some
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  very interesting stuff with employer,
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  health care policy,
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  and I think
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  that that just gives us a good indication
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  of where other states could go, the rest
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  of the country could go, where other insurers
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  might go. Again, believe it or not, if
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  you watch Indiana, we might actually see we
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  might actually that that might be our first
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  look at what's gonna start happening in other
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  parts of the country.
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  No. That's bad thing to hear. I mean,
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  it certainly is a is an old strategy
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  revisited, but if it works, it works. I
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  know whenever people go to neural networks,
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  it ends up irritating those that are left
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  out of the network and some of the
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  patients as well. And certainly, a strategy has
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  been tried time and time again, so we'll
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  see how it plays out. It's it's fascinating.
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  Yeah. Definitely. And I think just overall, it's
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  Cuban is saying this this entire industry, the,
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  you know, the provider network that it basically
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  makes up this industry with between the insurers
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  and and the systems, that it needs to
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  be basically
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  busted up, that it needs to be transparent,
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  that it, you know, needs to be more
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  free market and capitalistic.
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  And the insurers are saying, no. We're the
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  only ones that really can you know, we
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  we are the ones that can see this
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  see the networks best, the providers best.
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  Employers, you need to work with us,
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  to to make to manage costs versus,
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  you know, directly contracting yourself. So we'll see
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  what happens. I think every market's gonna be
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  a little bit different. Every state's gonna be
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  a little bit different. But, there's definitely two
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  diverging strategies here, very clearly.
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  No. Thank you very much. Passing to watch.
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  Jacob, it's always great to visit with you
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  and hear what's going on in the peer
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  world. The very best in the business, Jacob
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  Emerson. Thank you for joining us.
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  Thank
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  you, Scott.