Latest / Becker’s Payer Issues Podcast / Navigating Rising Health Costs and Alternative Coverage Models

Transcript

Navigating Rising Health Costs and Alternative Coverage Models · Becker’s Payer Issues Podcast

• 0:00
  Hello, everyone. This is Jacob Emerson with the
• 0:02
  Becker's Payer Issues podcast.
• 0:04
  Thrilled today to be joined by Scott Burton,
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  who is the market president for Providence Health
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  Plans commercial business.
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  Scott, thanks so much for taking the time
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  to be with me on the podcast today.
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  Yeah, Jacob. It's great to join you. Thank
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  you for inviting me. Absolutely. And before we
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  dive into everything we wanna talk with you
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  about, a few timely trends going on in
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  the industry, can you tell us a little
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  bit more about yourself, your background in health
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  care, and what it is that you do
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  today at Providence Health Plan?
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  Sure. I've been in in health care now
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  about fifteen years.
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  This is actually my second career. I made
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  the intentional choice to join health care and
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  and certainly health insurance in in particular
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  after my daughter was born. I would say
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  it wasn't the best of experiences for our
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  family. And as I was looking to change
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  careers, I was questioning what would be my
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  next calling.
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  And, ultimately,
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  I wanted to make health care better for
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  my daughter's generation.
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  What could I do to have an active
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  seat at the table to make health care,
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  a different experience when she has a child
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  of her own?
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  Over the years, I've added improving the health
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  care experience of my parents' generation as well
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  as they get older.
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  And so as I transitioned into health care,
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  I came from a media background, and so
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  so I started through communications,
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  but,
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  ultimately worked my way over to the business
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  side. I was with a blues organization in
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  the Pacific Northwest for about thirteen years,
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  before transitioning to Providence Health Plan. My charge
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  here at Providence Health Plan is overseeing our
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  commercial,
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  business across all of our operating states.
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  That includes p and l accountability,
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  sales, account management,
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  working with our chief product officer on product
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  innovation,
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  and ultimately with all of our executive team
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  on the sustainable growth of our business.
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  I've been here a a little over three
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  and a half years and, just a a
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  wonderful organization, mission oriented,
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  and, committed to growth, across the Pacific Northwest.
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  Fantastic. Well, like I said, we appreciate you
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  taking the time to chat with us. So
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  you've been in the industry for a while
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  now. You've seen a lot of trends and
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  changes and evolutions over the years.
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  And one thing, Scott, that we've been hearing
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  a lot about recently, especially these last few
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  years, from employers
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  and certainly from carriers as well, is a
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  lot more interest
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  in individual coverage health reimbursement arrangements or ICRA's,
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  as an alternative to the traditional group model
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  that everybody knows and is familiar with. So
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  talk to us about this from your perspective.
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  Where is demand for this new model coming
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  from? How do you see it reshaping the
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  employer sponsored markets in the years to come?
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  Yeah. I've been been studying ICRS for some
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  time now. There's a a lot of interest
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  in them. And, you know, I I I
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  think if I step back from the product
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  itself and say, why is the product even
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  being discussed?
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  You know, we look at, affordability and the
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  percentage of an operating budget that health care
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  represents for employers, and it continues to grow.
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  It's you know, historically, we've thought about it
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  as amongst the top three expenses
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  for most employers.
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  You know, I think right now, it's it's,
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  you know, it's sitting at number two for
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  many employers,
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  taking up sometimes as upwards of 25%
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  of a company's operating budget.
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  There was a, a pretty stark,
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  Kaiser Family Foundation
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  study that was done. I I think it
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  was in 2024,
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  if I remember correctly,
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  where they surveyed,
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  financial and other executive level,
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  staff across employers across the nation.
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  And nine out of 10 said at the
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  time that they weren't sure if they'd be
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  able to afford to offer employer sponsored benefits
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  by 2030.
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  And, yeah, I think just a a bellwether
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  moment for the industry to say, you know,
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  what does that tell us about the path
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  that we're on, relative to sustainable costs and
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  and access to health care, through employers?
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  I spent some time at AHIP this year,
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  and ICRAs were a big part of the
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  conversation
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  relative to, you know, A lever, one of
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  many that were being discussed, but A lever
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  to try to create affordability
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  for some of those employers.
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  I think there's a second dynamic to it
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  as well.
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  Particularly, you know, on the smaller end, this
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  is where ICRA's, you know, tend to to
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  have most interest, small to midsize employers.
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  Just this notion of, you know, is is
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  managing benefits
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  really part of what I want to,
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  focus on as a business leader? Do I
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  wanna focus more on running my business, or
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  do I wanna focus on being in in,
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  you know, the benefits,
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  arena? And I've heard from a a lot
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  of folks that, you know, I'd like to
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  to provide some sort of funding to my
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  employees so that they can, you know, receive
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  benefits. I understand it's part of talent attraction
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  and retention, but I don't wanna manage a
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  benefits program. And so then I think there's
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  two paradigms depending on, how the executive leader
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  sees their role in benefits and their ability
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  to afford benefits.
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  And, Scott, just to give our listeners a
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  sense of where ICRA stands right now, what
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  some of the latest trends and data points,
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  are are showing. Can you give us a
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  sense of what you're seeing,
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  across across the marketplace there?
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  Jacob, there's a lot of interest in ICRA
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  right now for sure. A lot of folks
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  talking about them. I think context is important
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  as we think of, adoption first.
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  So while
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  the ICRA is a a big focus of
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  conversation right now, if we look at the
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  data, there are about 500,000
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  ICRA employees on plans right now across the
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  country.
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  In contrast,
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  we've got got about a 150 to a
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  160,000,000
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  employees
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  on those traditional group plans that we've been
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  operating on historically. So ICRA is point o
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  o 3%
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  right now of the nation's population. Now with
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  that said, that's not meant to discount
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  the traction and the inertia that's centered around
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  it. Bailey and Company, that's a Nashville,
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  merchant bank that's kind of focused on growth
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  in late stage, health care and health tech
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  companies,
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  they did an estimate recently looking at how
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  fast is the IPRA market growing. It's about
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  60% year over year. So there's a lot
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  of focus and attention on it, but I
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  think context is important.
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  I'm also hearing as I'm talking with,
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  CFOs, with IPRA vendors, with HR VPs,
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  There are emerging some clear pros and cons.
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  Yeah. I think the pros from kind of
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  the ICRA advocates,
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  they point to federal and state policies that
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  they feel advantage, ICRA expansion and growth. They
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  point to carrier and ICRA collaboration
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  that's increasing
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  specifically around technology integration
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  of those ICRA vendor platforms.
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  And then they also point to ICRA vendors
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  working together
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  to actually market and raise awareness.
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  Some of the cons that, let's call them
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  maybe skeptics are raising,
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  employees,
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  may have limited individual plan options compared to
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  what's available to them in small group and
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  large group plan offerings.
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  How the small group and large group rates
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  from, you know, the small group environment to
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  the indie environment
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  isn't always positive for employees. Take Command Health
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  has a great heat map tool that allows
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  you to look at the pricing relativities in
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  every state and even down to a county
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  level.
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  And then simply health plan risk. Is this
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  arbitrage? Are you moving revenue going from a
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  small group line of business or a large
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  group line of business
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  over to your individual line? And is that
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  financially advantageous to the business or not?
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  And then I think finally, the last piece
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  is just investment trends. Where is the money
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  flowing? We see venture capital and private equity
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  leaning into this space heavily.
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  Remodel Health, for example, announcing recently they've raised
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  more than a $100,000,000.
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  Fatch has raised more than $40,000,000.
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  But what we haven't seen yet is the
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  ecosystem go through any sort of consolidation
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  event. So a lot of companies starting up,
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  a lot of investment dollars coming in, At
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  some point, there's likely needed to be a
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  consolidation event
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  where mergers and acquisitions sunsetting of unsuccessful vendors
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  occurs.
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  That's really interesting to hear you say all
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  of that, Scott. It's really good context. Definitely
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  some cons compared to the traditional small and
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  and large group models.
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  Big inertia in this market, a lot of
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  money flowing in, but in the grand context
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  of things, still a very, very small
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  segment of of the overall health insurance industry.
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  So it's great context for our for our
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  listeners to have. And to your point, going
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  back to that KFF,
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  study that you cited
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  in terms of the unsustainability
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  of rising care costs for employers,
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  some of the most recent estimates we've seen
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  on our side of things is that from
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  employer groups,
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  estimating that health cost could rise as much
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  as 10%
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  next year alone. So employers see this coming
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  down the pipeline.
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  How is Provenance specifically approaching,
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  alternative arrangements, perhaps not even just ICRA,
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  to help your employer customers control these costs
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  while still continue to deliver that value that
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  the employees are going to continue to expect?
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  Yeah. We're we're looking at it, I think,
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  in in four paradigms.
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  We see it as an ecosystem. I don't
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  know that product design alone
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  is is going to be sufficient to address
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  those affordability challenges for employers.
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  The first arena that we're looking at is
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  provider contracting.
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  And can we
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  negotiate collaboratively with our provider partners, but also
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  firmly with our provider partners?
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  And that includes our own system. We're part
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  of an integrated delivery system as well.
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  Providers need to be fairly compensated for the
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  care that they deliver, but at the same
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  time, we need to advocate on behalf of
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  our members and our employers in the face
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  of these rising health care costs. And so
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  that's area one of focus.
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  Area two for us is really care claims
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  and payment effectiveness.
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  You know, our entire organization is focused on
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  a portfolio of work designed to ensure that
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  our members are getting the right care and
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  the right care setting at the right price,
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  that classic triple aim. But we're also trying
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  to optimize,
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  all of our claims and payment processes
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  that can lead ultimately to tens of millions
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  of dollars of annual savings. We're looking at
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  our own administrative efficiency. Are we operating as
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  efficiently and as lean as we can to
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  ensure that we're doing our own part to
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  to control costs and expenses?
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  And then finally, product innovation, determining what are
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  the current and future products and plan designs
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  that our customers could benefit from. And, you
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  know, I think we're seeing work being done
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  in all four of those areas simultaneously
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  to try to address these, these cost challenges
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  facing
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  employers. Got it. So a four pillar strategy
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  for PHP to really tackle,
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  what continues to be these rising costs.
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  Scott, if we're staying on the topic of
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  of rising costs and and the ACA marketplace
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  more broadly,
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  As you know, going into next year, the
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  the marketplace is facing some real crisis issues
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  in terms of affordability,
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  market stability. We're already seeing, major increases being
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  approved in states all over the country.
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  So how do you think that this issue
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  is is affecting
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  the health your health plan strategy as you
• 10:55
  balance that growth and sustainability you just detailed?
• 10:59
  Yeah. You know, as we look ahead into
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  2026, I don't think there's any question that
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  the ACA marketplace is under significant pressure. We're
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  seeing rising premiums, the potential exploration of those
• 11:08
  enhanced subsidies, regulatory uncertainty.
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  So for PHP, you know, our focus and
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  strategy is about balance. We remain committed to
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  serving ACA members
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  where we can deliver value, but we're also
• 11:20
  trying to be thoughtful about sustainability,
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  focusing on markets where offerings are competitive,
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  where, members have meaningful support. And then, certainly,
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  at the same time, we're preparing for growth
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  and we're having conversations around ICRA and and
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  other options.
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  I think we would say that we are
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  advocates,
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  for policies that preserve affordability,
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  that enhance product design, that, you know, expand
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  into models that can meet members where they
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  are.
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  But, ultimately, I think it's making sure that
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  we're positioned for longs, long term stability
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  while keeping coverage,
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  accessible to our members and and to the
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  communities that we serve.
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  Absolutely.
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  Well, Scott, before we go, you know, we've
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  touched on we've touched on ICRA, we've touched
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  on rising health costs going into next year,
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  and and we've touched on the instability of
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  the marketplace next year as well. So is
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  is there anything else we're missing there or
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  any final bits of advice you wanna offer
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  all the other health plan leaders that are
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  listening in?
• 12:17
  Yeah. Yeah. I I think there's three things
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  that I'd probably leave with. One, you know,
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  we have to, as as an industry and
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  as individual companies,
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  always look at where we can be the
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  best stewards of of health care dollars. I
• 12:29
  I think PHP has always tried to do
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  that, and I know we're doubling down on
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  that effort now.
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  Yeah. The the second piece is there are
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  pros and cons of of all of these,
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  you know, alternative health plans. Right? We've talked
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  about ICRA's.
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  Some have have viewed it simply as arbitrage
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  of moving membership from small group in in
• 12:46
  the lower end of large group over to
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  the individual business.
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  Is that the right financial move for,
• 12:52
  for carriers? Right? You need to to evaluate
• 12:54
  that as well.
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  And I think it's also the the third
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  piece maybe,
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  really easy for any of us right now
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  to,
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  fall victim to fads,
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  heavy investments in marketing. You know, I I'm
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  approached regularly by vendors of all sorts of
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  different products.
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  And it'd be really easy to say, well,
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  maybe that's the silver bullet or maybe this
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  is the silver bullet. The bottom line right
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  now, there is no silver bullet. We have
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  to work on multiple fronts and do the
• 13:20
  hard work right now that's required
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  to, help this industry and help all of
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  those whom we serve get to the other
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  side of this crisis that we face.
• 13:29
  Fantastic. That's some great last pieces of advice
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  for our listeners. So, Scott, I wanna thank
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  you for taking the time to chat with
• 13:35
  us and for sharing your insights with our
• 13:37
  listeners. We really appreciate it. Absolutely. Thank you
• 13:39
  again for the time. Yeah. And to our
• 13:42
  listeners, if you'd like to listen to more
• 13:43
  podcasts from Becker's, you can visit beckershospitalreview.com.