Introduction to the Episode
[00:00:00] Stacey Richter: Episode 491. "Incumbent TPAs and Consultants Getting Called to Jumbo Employer Client HQ to Answer Awkward Questions". Today I speak with Elizabeth Mitchell about the PBGH Transparency Demonstration Project.
[00:00:31] Stacey Richter: Today, back on the pod we have Elizabeth Mitchell, CEO of PBGH, the Purchaser Business Group on Health.
Why the PBGH Transparency Demonstration Project?
[00:00:38] Stacey Richter: Elizabeth Mitchell is talking about the why, as in why did PBGH embark on a big cost and quality safety transparency data demonstration project that they just finished up. They did said project, by the way, with Milliman, Embold, and it was funded by Peterson.
This episode is a little longer than usual, and I did consider breaking it into two. But the thoughts that Elizabeth Mitchell shares are so vitally intertwined and the impact of all of this is big enough that, yeah, if you don't get through this whole show in one sitting, do come back and listen to the rest of it later on. Make your own part 2.
Okay, so on the show today, first of all, we start out by diving right into the why. Why do this demonstration project, and why do I call it a game changer? Well, simple, really. The second I saw the data showing the real price of any given healthcare service, along with its quality and safety scores for clinical organizations, and down to the individual NPIs actually, I had eyebrows glued to my hairline.
Turns out ruining the suspense I guess, those big brand health systems with the flashiest billboards and sports sponsorships, not always the highest quality. This isn't speculation. It's right in the scores. There is zero correlation between price and quality. Zero.
So look, this insight and ability to see prices, quality and safety altogether now done by PBGH for its large employer members, who spend by the way, over 350 billion, that's with a B, dollars a year on healthcare. Thus representing a very, very profitable gang of customers for many in the healthcare industry.
This whole thing has big game changing energy for these employers themselves. But also game changing ripples that extend into the businesses of other stakeholders as well. Again, let's consider a few of these.
Impact on TPAs and Consultants
[00:02:25] Stacey Richter: What's the game changing impact on consultants and TPAs? I'd say this project opens up opportunities for good unconflicted consultants and indie TPAs who know their stuff inside and out.
Because now employers have the wherewithal to deduce who the good consultants and TPAs are, which has been hard heretofore a link to a post by Bryce Platt. That's great news.
Still speaking of the impact on TPAs and consultants, but this time ones probably not listening right now, in the middle of the episode, Elizabeth Mitchell talks about TPAs, third party administrators and consultants getting called into their client's corporate boardroom to explain themselves after some of the results from this demo project were released to PBGH members. Awkward.
When the client knows more about the prices they're paying and the quality and safety they're getting, then they're a longtime consultant or TPA or ASO which means administrative services only vendor, all of whom are supposed to be the experts.
It becomes real clear, real fast that discounts are irrelevant and anybody selling discounts is gonna not look so good, even if they buy everyone in the HR department box seats to see Disney on Ice. Which is just another point to ponder.
Speaking of getting called onto the carpet, Elizabeth Mitchell, again, my guest today says, during the early part of the conversation that follows, she says, “One of the other things that our PBGH Transparency Project demonstrated was that for these jumbo employers, the directly contracted arrangements, the direct contracts, were higher value than anything negotiated by the TPAs.” Oh, snap!
Elizabeth said that right after I said that I've been hearing more and more that TPAs, ie, third party administrators, hired by self-insured employers to administer their health plan benefits. I've heard multiple times in the past several weeks that maybe TPAs should maybe just stick to administrating, administrative services only as they say, let someone else do the negotiating.
For example, let employers just direct contract themselves. There's only so many times you can hear that the cash price is cheaper than the TPA or carrier negotiated rate before this occurs to someone.
I'll link to a crazy Instagram that Kurt Christie sent me on this topic that just highlights the ludicrousness of how a single patient with no insurance somehow is a better negotiator than the largest corporate entities in this country for whom this is their day job.
And you know what else game changing can happen when employers have access to cost, quality, and safety information? They can create their own so-called high value networks of the best docs and care teams. They can design their own specialist networks.
And again, as far as game changing impact goes, that's probably good news for the great docs and care teams out there, especially if the way the quality and safety results are tabulated are transparent, which is something I was talking about with Siva, otherwise known as Dr. Ahilan Sivaganesan, the other day. It's a mystery to the docs as much as the employers, how value is calculated in some of these carrier so-called high value networks. Elizabeth talks about this.
Okay, so call this whole now there's transparent cost, quality, and safety data that is being used by big self-insured employers, call it one mighty insight of many actionable actions for many folks, TPAs, consultants, health systems, even down to the clinician level that you will hear about on the show today.
And again, it's great news for those in our Relentless Health Value Tribe doing the right thing by the CAA, the Consolidated Appropriations Act, and their patients and their members.
And not so great news, honestly, for those who are likely not listening anyway, again, which leads me to self-insured employers and the impact of this project on them specifically and for them, and Elizabeth says this in so many words.
Self-Insured Employers and Fiduciary Duty
[00:06:03] Stacey Richter: She says, as a self-insured employer, not using this new transparency, data is irresponsible period. It's not just a compliance thing, which it is. It's a basic fiduciary duty smart business, and also your edge in attracting and retaining talent with real high value health benefits that are actually affordable.
And here's my conversation with Elizabeth Mitchell. My name is Stacey Richter. This podcast is sponsored by Aventria Health Group.
Conversation With Elizabeth Mitchell Begins
[00:06:31] Stacey Richter: Elizabeth Mitchell, welcome to Relentless Health Value.
[00:06:34] Elizabeth Mitchell: So glad to be back.
[00:06:35] Stacey Richter: You have just completed a really interesting pilot, transparency initiative, data demonstration project. Before we get into what those words mean, let me ask you this first, a teaser, if you will. How did this whole thing start?
[00:06:52] Elizabeth Mitchell: We can go way back and talk about the affordability crisis generally and the fact that self-insured employers can't get transparent information. So it kind of started, you know, decades ago.
But more precisely, I would start at the passage of the CAA, the Consolidated Appropriations Act in 2021, where there were some tweaks to ERISA that made it very clear that self-insured employers are accountable as fiduciaries for essentially spending their employees money on healthcare to make sure that they were only paying a fair price for quality service.
[[00:07:33] Stacey Richter: And anyone who wants to deep dive on that, do listen to the shows [EP428 and EP408]. With Julie Selesnick and Chris Deacon.]]
[00:07:39] Elizabeth Mitchell: We understood the changes to the CAA, mean, heightened risk for self-insured employers. And the changes also make it a hundred percent clear that this is not something you can outsource. You can't say, well, my consultant told me to do this, or my health plan thought this was a good idea. The risk is owned by the employer and individuals within the company.
So an individual like CHRO or an SVP or someone in the C-Suite, they are actually accountable for being effective fiduciaries of these resources buying healthcare.
[00:08:22] Stacey Richter: The CAA, the Consolidated Appropriation Act, very clearly specifies wherein the fiduciary responsibility lies, ie, with individuals in companies, within the companies themselves.
And you alluded to this, a number of entities who have been sort of stonewalling for many years when people try to get information. So like you've got all that kind of going on, which I mean and throw no shade here, it has made it a path of least resistance to delegate to consultants. Many have grown very, very used to, you know, just the whole healthcare is super complicated.
But now just given this really clear delineation of who's accountable here, smart, risk averse folks might be thinking to themselves, I should at least look into this.
[00:09:09] Elizabeth Mitchell: Well, you can't outsource the risk. That's the bottom line. You can't. So you're gonna have to build the internal processes, teams, data sources, that you can manage it.
And what we are seeing is a lot of our leading employers are doing that. They're building out the data teams, they're hiring people who really can dig into this information because it's on them. And it's also their money, so it makes sense to really track it.
Challenges and Solutions in Data Transparency
[00:09:36] Elizabeth Mitchell: But one of the things that was an enabler that came with the CAA, and this was entirely intentional, you can't make an informed decision without information. Right? So there was also a major change in clarifying self-insured employers are entitled to their data. Their transparency data was a combination package with the new accountability. If you've got the accountability, you've gotta have the tools to be successful.
So it was absolutely intentional.
[00:10:07] Stacey Richter: And when you say data, you're talking about cost data, you're talking about quality data.
[00:10:12] Elizabeth Mitchell: The transparency and coverage data and the hospital price transparency data. So it's two data sets. One requires hospitals to publish their rates. The other requires health plans to publish their negotiated rates, and I can guarantee you from scars that those have always been very closely guarded secrets.
Going back to this whole industry that doesn't think anyone needs prices, you know, unlike any other industry where you're buying anything, whether it's a car or groceries, the healthcare industry has not made it easy to get pricing information.
[00:10:47] Stacey Richter: Well, you're, you'll ruin the surprise on the backend with what the bill is, right?
[00:10:52] Elizabeth Mitchell: It's so exciting. Wow. Is it gonna cost $10 or $10 million? Who knows?
[00:10:56] Stacey Richter: Come on, Elizabeth.
[00:10:58] Elizabeth Mitchell: But it's just absurd, right? It's a four plus trillion dollar industry who can't get their act together to provide prices. And it's not like they don't have the resources to do it, it just hasn't been in their interest.
So we did need federal action and we actually are working closely with the feds right now on strengthening those rules because one of the takeaways from our work was that not everybody is really compliant here. We think a lot of them are trying, and there are pockets where the data's really, really good, but there are also a lot of pockets where it's pretty unusable.
And that goes back to creating fiduciary risk for self-insured employers because the employer is accountable for the reporting by their plan. And they're not even gonna know if their plan is compliant if they're not participating in something like this.
[00:11:50] Stacey Richter: So a few spoiler alerts there, which I'm not gonna call you out on. But you know, a couple of things that you just said also establishes kind of the why. You know, like the, why did we do this? And I think you summed it up really nicely at the end there, you said, because the employers are accountable, right?
Like it is the employers that have the risk. I love how you put it. You can't outsource risk. So if you are an employer who is a little unwilling to just be sued or to do everything possible to make sure that one is not sued over preventable, avoidable things.
Then yeah, the way that you teed it up is really interesting that because of the CAA, this transparency data for cost, etc, is now available, which creates this compliance situation because if the data is available and you choose not to use it, that actually makes the liability even greater if I'm just playing a lawyer on TV.
[00:12:52] Elizabeth Mitchell: Our board chair, I think, said it very clearly but it frankly, if you're a self-insured employer, it is irresponsible to not use this data.
You have it, it is available, and if you don't use it, you A, have a compliance risk. So there's basic compliance. But B, how do you tackle affordability? How do you know where the money's going?
And one of the things that we've really encountered in this project is, you know, the application of pretty basic procurement logic.
So procurement teams are getting involved and they're like, well, how much does it cost? Well, sorry, you know, up until now you weren't able to know that. And then the next question is, how much should it cost? Well, again, in the commercial market, that has not been clear.
What this project does is first of all, tells you how much something costs. Second of all, it tells you how much the range is, so are you paying a fair price or not? If you know you go to one facility and it's literally five times more than the one across the street with the same quality, that is really important information if you are trying to effectively manage your plan, reduce costs, and improve access to high quality providers.
So there's the sort of defensive compliance piece, but then there's also the really proactive strategy work where you can say, I want to design a high quality network. I wanna design a COE network based on quality and price, or I just want to actually manage my plan and make sure I am not overpaying.
All of that is possible with this data.
[00:14:28] Stacey Richter: And what did you do with it? And that is a bit of a loaded question here for a couple of different reasons. A big one is just how many times you hear: “Ugh, well now we have this transparency data, but it's unusable. I can't use it.” So you take all these factors under advisement, and what did PBGH do?
Combining Data for Better Insights
[00:14:46] Elizabeth Mitchell: Well, it's not for the faint of heart, but it is absolutely usable if you put in the effort. So I wanna just disabuse that right now because this was a demonstration project. We didn't know if this was technically feasible. We heard all those things. Oh, you can't do it. Don't even try. Well, that sort of made me wanna try more.
[00:15:04] Stacey Richter: Those are fighting words.
[00:15:05] Elizabeth Mitchell: So what we did though, is we picked a very sophisticated partner in Milliman to actually apply really rigorous analysis. We had actuaries. We dug into the data in a robust way and we were able to combine, and I think this is the secret to the utility and reliability of this information, is combining the transparency data, the MRF files with claims data.
So we got our, the employers who participated to share their data. So we had employer data claims data. And the transparency data and combined, that gives you a really reliable understanding of cost. And then because we know that employers are equally interested in quality and safety, we also brought in quality data from Embold and safety data from Leapfrog.
So it is the combination that is giving, participating employers the information they need to redesign networks or to evaluate overspending. And again, if you're a jumbo employer, you're not gonna take some off the shelf report. You need to know that the methodological rigor is there, that this is actuarily sound.
So we put a lot of work and I huge shout out to Milliman. There's tens of thousands of hours that went into making this usable.
But it's absolutely doable and you know, if a small nonprofit like us can make this happen, I don't know why it was so hard for everybody else, but if you are interested in serving self-insured employers, this is a tool that otherwise doesn't exist on the market, and we heard that from our employers over and over.
They cannot get this information anywhere else, and once they have it, they are integrating it into their business processes. Whether it's a, you know, medical RFP, or as I said, a COE network design, this has high utility for purchasers.
[00:17:04] Stacey Richter: So let me just kind of recap my version of the chain of events here. And I think that as this conversation continues, it's gonna be very clear, the answer to your question, why the status quo didn't do this themselves. But let's just start out here.
So there is incumbents in the, you know, we've got a traditional industry, everybody hates disruption. Again, throwing no shade, like if you are doing just fine, thank you very much, and your shareholders are happy, like disruption is not something that you're looking to see happen if you can prevent it. So no one was necessarily willing to share, Where there's mystery, there's margin, as Anthony Ciaccia has said and applies to so many different circumstances.
So like nobody wants to share there, it's just like, just show me your underlying prices if you don't have to, why would you like as a good capitalist where with lots of middle people involved in the transactions, etc, like you could call 'em trade secrets.
[00:18:01] Elizabeth Mitchell: Well, they still do try to claim it's proprietary. Just think about this.
So you have jumbo self-insured employers who are spending their money and their employees money. Spending billions of dollars a year on healthcare. They hire a TPA to administer, and then the TPA says all the underlying contracts and prices are proprietary. So you're acting on the employer's behalf, but they can't get the information they need to evaluate it.
[00:18:30] Stacey Richter: Yes, all the things, which is why, and this is not the topic of this conversation, but it is a whole other conversation, which I think is great. I'm hearing more and more TPAs shouldn't actually negotiate the contracts. They should administer administer in the name, let 'em just administer and somebody else should negotiate the contracts.
Direct Contracting vs TPA Negotiations
[00:18:46] Elizabeth Mitchell: On that point, specifically, one of the other things that this project demonstrated was that the directly contracted arrangements were higher value than anything negotiated by the TPAs.
Now we've had that information for a decade because so many PBGH members have been pioneers of direct contracting. But this project also confirmed that in the data. So when the employer is negotiating, they tend to do better.
[[00:19:17] Stacey Richter: Anyone who's interested in direct contracting, please do go back and listen to the shows [EP485, EP486, and EP488] with Dr. Cristin Dickerson, Dr. Stan Schwartz, and Mark Cuban, Cora Opsahl.]]
So, okay, we've got a situation where the industry is, I'm not gonna share my data if I don't have to. Why would I? All the reasons.
[00:19:34] Elizabeth Mitchell: A law.
[00:19:36] Stacey Richter: Then there's a law that comes out that says you have to share the data.
But they're still kind of feeling safe behind their wall of opacity because anyone who's going to give this a go, they're like, sure, you could want to do this and maybe you have to share it. But operationally, there's a lot of challenges. So good luck to you.
The data's unusable. There's lots of gaps. There's lots of compliance challenges. So operationally, that's kind of the point of time we were at when PBGH was like, Hmm, things that make you go, Hmm.
So what PBGH did then was say, all right, well let's just give this a shot, like. You tell me I can't use it. I'm gonna try to.
So what you did to combat the holes that might be evident in any given data set. You're like, let's just collect the data sets. You have PBGH members who spend more than $350 billion a year, I think on healthcare.
[00:20:28] Elizabeth Mitchell: Well, that was a true a few years ago. I'm sure it's higher now given prices.
[00:20:33] Stacey Richter: So you've got more than $350 billion dollars, some subset of that worth of claims data that you can throw into this mix. You've got the available transparency data. Then, as you said, quality is really important here. Like nobody necessarily wants to go to the cheapest place for their total knee replacement, right?
Like you wanna go to the highest quality place or the place with the highest value.
[00:20:54] Elizabeth Mitchell: Well on that point exactly, Leapfrog said this and our members have repeated it, there is no good price for unsafe care. And I will tell you, anyone who thinks employers aren't focused on quality and safety, aren't talking to employers, because they are.
[00:21:08] Stacey Richter: Yeah. And you hear so many times, there's no good price for unsafe care because there's just been study after study. If you start digging into it, just how expensive unsafe care is. Like yeah, the initial operation cost, whatever it costs, it doesn't even matter because then there was eight subsequent operations to get rid of the sepsis and the C. Diff. and the sponge somebody left like, you know, just …
[00:21:31] Elizabeth Mitchell: They're paid every time, over and over. Every addition, every fix, they're paid again.
[00:21:36] Stacey Richter: So you gather all these data sets, including Leapfrog for safety. So you've got the quality, you've got the safety.
You've got a bunch of different cost data sets that you can fold together. You bring in Milliman onto the scene here and you're like, you know, maybe this will work. Maybe it won't. What'd you find? Did it work?
Feasibility and Results of the Project
[00:21:54] Elizabeth Mitchell: Well, our finding was that it worked even better than we had expected. It was entirely feasible to do this. Again, it's a heavy lift. It's not easy. You're not gonna go print this off the shelf right now, but it is doable.
As I said, we found it was a complete unmet need from employers. They cannot get this information anywhere else, and I will say it really challenged the advice they were getting from some of their advisors who are using discount analyses instead of actual prices.
Like, who cares if you got a discount if the price was too high? A 30% discount off of a ridiculous price isn't helpful to actually understand the prices, what you should be paying, and whether or not there is quality care coming from this provider or system. That's the information they want. So we were able to get that.
[00:22:49] Stacey Richter: Yeah. So you were thinking about these, if I'm gonna just sum this up in three dimensions. You've got the affordability dimension that's really important. You've got the compliance dimension, which we talked about, which is really important. But then also a, let's get my members quality, safe care perspective. Also very important.
And that was the goal. And you just said that the results were even better than it expected. What do you mean by that?
[00:23:15] Elizabeth Mitchell: We were able to give self-insured employers tools that they cannot get anywhere else to A, meet their fiduciary goals. You know, making sure that they are using information, they're identifying overspending, they're finding the highest quality partners. So compliance was one.
The other though is really strategic because I don't know any PBGH members who are terribly happy with the status quo. I understand that the industry is, but self-insured employers and frankly their employees are not.
So if they want to design sort of high value networks, this gives them the information to do that. If they want to understand, are they really overspending. So you know, claims show what you paid their receipts. And an APCD, all-payer claims database, that's just a collection of receipts. It's interesting, but it doesn't tell you what you should have paid or what the cost actually was.
So, you know, APCDs were innovative about 20 years ago when you didn't have this data. But now that you have the actual cost data, you wanna be able to compare cost to what you paid. And typically there turns out to be a pretty big discrepancy. So where is that money going?
Understanding the Impact of Discounts on Healthcare Costs
[00:24:22] Stacey Richter: I had the pleasure of attending a session where employers were talking about what they have done with the data. And two incidents, case studies, anecdotes, I'm not sure what you call them, really stand out in my mind.
One of them was, one of the employers figured out and while there was shock and dismay in her voice, that she was paying about 30% more than her peers for the same healthcare services, despite, and you mentioned this assurances from, you know, her trusted vendors, her consultants, and her carriers that she was paying what she should have been paying.
Which goes back to the whole discount thing and listen to the show with Jonathan Baran because we talk at great length about how discounts are, you know, it's just like if I bought a blouse that was 90% off, how much did I pay? Like $400, $2, $18. Like you don't know. All you know is that somebody decided it was 90% off, so I think that's the point that you're making.
Employers Leveraging Data for Network Design
[00:25:25] Stacey Richter: But using this information, you have employers who are now looking at it, who are like, holy cow. Now I am seeing the actual prices.
[00:25:32] Elizabeth Mitchell: I do think the market will evolve there for the first time they have the data to actually design the networks that they want. We do have members who are planning to do that, who are planning to use this data to identify, let's say, the top specialists in a market and design their own COE network around it.
Because the evidence shows that sending employees to the highest quality providers not only is better for them, but it also reduced total cost. They're also exploring how to do claims audits and repricing, and understanding, you know, the potential savings when they know what the prices could and should be.
Site of Service Cost Variation
[00:26:09] Elizabeth Mitchell: One of the other things that we saw was that site of service cost variation is dramatic. So if you could have the exact same service from a high quality provider and pay literally half by going to one location, people want to know that because that is a way to save money without compromising care or access or any of the benefits that people want.
Creating High-Value Networks
[00:26:33] Elizabeth Mitchell: So I think this is going to create a market for high-value providers. Frankly, there has been no competition to be low cost and high quality because people didn't know. So if you have the information and employers are more actively designing the networks because remember, they're paying for care, then I think this is going to create a huge opportunity, not just for direct contracting, which there is demand for, but also just for designing networks that really reward and support the highest value provider partners.
[00:27:09] Stacey Richter: If I'm thinking about this, so you listed a number of things that employers are and will increasingly be doing. Because a lot of things, like once the toothpaste is out of the tube, you can't jam it back in. So if you start having some big employers using this information, now all of a sudden, and I'm not even just talking about from a cost and quality perspective or just the advantages competitively, right?
Like if you've won you, you just start thinking about this from the macroeconomic effect. If I'm one large employer in an area and my second biggest line item after payroll is healthcare costs, and I figure out a way to continue to attract and retain talent while at the same time substantially reducing that line item, all of a sudden I have market advantage.
So if you're just thinking about this from a business competitive standpoint, there's certainly implications here.
So, you've got employers, as you said, who are looking into, for example, site of care variation. And I've heard this a lot. There's a show with Keith Hartman. There's a show with Autumn Yongchu and Erik Davis, where they're, you know, one site of care for some infusion or something like that. It's like $1.2 million and if you go across the street it's 600,000 or, you know what I mean?
Like that is a lot of money to save by walking across the street.
[00:28:20] Elizabeth Mitchell: And that matters to employees too.
[00:28:23] Stacey Richter: Oh yeah. If they're paying a percentage. Steering navigation now becomes, not only can you steer on cost, but you also can steer on quality.
That kind of ups the stakes to actually have navigation. But the last thing that you said is really interesting, which is create your own networks.
[00:28:39] Elizabeth Mitchell: Yeah. One of the things we saw was that these so-called like high value networks or whatever, they're branded aren't. And PBGH led a Centers of Excellence program, I don't know, a decade ago with jumbo employer members, and the results were phenomenal. This was led by Walmart and others.
[[00:28:59] Stacey Richter: Listen to the show with Olivia Ross from 2019 about this exact COE, Center of Excellence program and how it was down to the individual clinician, MPI level. It was a really sophisticated endeavor. This is episode 240.]
[00:29:15] Elizabeth Mitchell: But it was because the Centers of Excellence were actually excellent and they were held to extremely high quality standards.
I think employers want networks based on really high quality standards, and it is simply unclear what quality metrics the health plans are using. They're saying something, oh, this is a high value, high quality network. Based on what? Based on what metrics? So we really work with employers to understand what their quality priorities are and then how to evaluate that.
And once they can do that and apply it to this data, they can take a much larger role in actually designing the networks of the highest quality, lowest cost providers.
Implications for Employee Benefit Consultants (EBCs)
[00:29:55] Stacey Richter: I wanna talk about, how this impacts, let's talk about first consultants, employee benefit consultants, and then I wanna talk about clinical organizations. And then lastly, carriers.
We do have a number of EBCs, employee benefit consultants that listen to this show. So I kind of just wanna spend a little bit of time thinking through the implications here. And I think one of them is, and you said this in so many words. That some of the EBCs in this mix, where you had the employers that were part of this demonstration project, went to their EBCs who were really caught off guard.
And you said this when you were talking about discounts, you know, because the advisors themselves actually didn't know what the prices were. All they were saying was, well, this has the biggest discount. And then their employer customers like, except great, they've got a huge discount, but their list price is also 18 times as much.
So the price is ridiculously high. Like so you've got this caught off guard, shocked, surprised, not looking so good implication if the employer, the customer gets ahead of their advisor. Who at that juncture, it's the employer that's advising the advisor. And I could see that would be a really, really uncomfortable situation with potentially some ramifications.
[00:31:07] Elizabeth Mitchell: Definitely awkward.
[00:31:08] Stacey Richter: Yeah, awk, for sure. Was there any very specific examples there, or do you wanna overlay anything additional? If you are a consultant and you see this going on, like what would you be doing?
Challenges and Opportunities for Consultants
[00:31:20] Elizabeth Mitchell: Well, a couple things. First of all, if you don't have access to this data, why not, right? It's not like consultants lack resources or you know, like smart people. There's plenty of them.
So why aren't you looking for the best tools to advise your customers who are paying you a whole lot of money? So I think there's just sort of an opening for any innovative consultant who wants to do this. Remember, these are public files. They are in the public domain. You can use them.
Again, it's a matter of, will they? Because frankly, standard business practices are just not that, right? There is just this huge industry that has done the same thing for a really long time, and it has worked for them.
Obviously, it hasn't worked for employers because if you saw the Wall Street Journal, prices are going up, rates are going up another 9% this year. We are on this unbelievable, unstoppable sort of increase, you know, path where I don't understand why the consultants aren't working harder to do something about affordability, but that's me.
So I think the other challenge here, and it's just sort of fundamental, is incentives. And if you are unconflicted and your sole objective is to help self-insured employers and employees reduce cost, you've got a lot more flexibility than if you have to protect the interest of others.
And you know, there's just a whole lot of conflicts in this industry, and if you are conflicted, you know, you don't have a lot of incentive to do this.
So I think there are two things, and I wanna be really clear. We couldn't have done this if we did not find a funding partner with total incentive just to help us achieve affordability. And it was the Peterson Center on Healthcare who are independent, who are progressive, and really just phenomenal thought partners, but they don't have any conflicts.
So it requires an unconflicted partner to do this.
[00:33:25] Stacey Richter: I think everything that you just said and kudos for Peterson for stepping up and funding this whole thing, I, I say with about three underlines, and to a certain extent, it's a sad state of affairs that you had to go to a philanthropy organization. I mean, that in and of itself speaks volumes.
[00:33:42] Elizabeth Mitchell: Because it's not like there's not a lot of money in healthcare.
[00:33:45] Stacey Richter: Say it isn't so.
[00:33:45] Elizabeth Mitchell: It's not applied to reducing healthcare costs.
[00:33:49] Stacey Richter: I think everything that you said spells to me actually good news for good unconflicted, very knowledgeable consultants, many of whom listen to this show. So, you know, I do just wanna say like, this is actually really good news if you're a consultant and you're listening to this.
Because probably for the first time ever, there are clients and customers who are now able to see and check themselves who is conflicted and unconflicted. Which could be a, an important competitive advantage because, you know, in the past it might have been just like, oh, you know, there was no way really for employers and there wasn't a leading edge of employers who were checking this stuff.
There's probably going to be, to your point, a lot of consultants who have been very deeply trusted by their clients for a very long time, and now all of a sudden that consultant's gonna get called into HQ and get asked a bunch of really, really hard questions.
[00:34:53] Elizabeth Mitchell: Yeah, and I think those are the right questions.
If you are a fiduciary, you have to be holding your partners to account. And I think your point about the opportunity is so important. I mean, this data is usable. It's not like we are not looking to partner. We are, you know, no individual entity or group can change this four point whatever, trillion dollar system. It's gonna take everybody.
But if consultants want to start using this data, we would love that. We'd love to partner with them. And we know that employers, to your point, continue to trust and rely on their advisors and consultants. So let's make sure they have the tools needed to actually hold the industry to account.
Transparency and Accountability in Healthcare
[00:35:35] Elizabeth Mitchell: Now if they have conflicts, if they're, you know, paid on the backend by the plans that are, or the providers who are then going to be challenged, that's their issue that I can't really address.
But if you are an unconflicted advisor, really looking to sort of give needed information to employers, this is a great resource.
[00:35:53] Stacey Richter: Yeah. It's becoming increasingly difficult to hide behind the complexity is kind of what I'm hearing. That, you know, always in the past is like, you know, pat on the head like, this is, this is too complicated for you. Don't worry about it. We've got it.
Like that, we have reached the point where affordability renewals had a conversation with Kevin Lyons. The renewal for the state workers in New Jersey is 37%. I mean, we have reached the point where you have the clients, the customers themselves, in most cases, doubling down and trying to figure this out themselves.
And you know, again, if we're just looking for macro themes that sort of speaks to the state of consultancy in this, that, as you said, a nonprofit with a funding partner did this when the industry did not. And in and of itself, that that speaks volumes. That's the, I love how Al Lewis puts it. That's the dog that didn't bark in the night.
So consultants here. What about if I'm a TPA, if I'm a third party administrator. Maybe if I'm an ASO working for any of these jumbo employers who are now looking around. I mean, it's a lot easier also, let me just say this, to be a fast follower for stuff like this than to be the innovator. We have the out of the gate happening right now, so you might see a bunch of fast followers for all the reasons that we talked about at the top of the show.
If I'm a TPA, what's your advice for me, Elizabeth?
[00:37:12] Elizabeth Mitchell: Well, let's start at the beginning, which is make sure your data is usable. And one of the things that we encountered is, this is just not a strategic priority within several TPAs. The reporting capabilities are really mixed, and without the resources to really develop the reporting capabilities, it's gonna be stalled.
So it's really incumbent upon the TPAs and the plans to make this usable. And we encountered one that just says, “Well, we just dump all the rates into the file.” So the employer was like, how does that help me? I need to know what I, you know my rates. And they said, Well, we're just trying to be compliant with the federal rules, and that is technically compliant, even if it isn't usable.
So, you know, we're working with the feds to make sure the rules align with customer needs, but at the same time, hopefully this becomes a business imperative for the plan where if they're serving, you know, jumbo employers, they're making the information highly useful, right? Because that's what their customers need.
So one thing is just get your data systems in order. Because, (A) self-assured employers are accountable for that, and they will start making business decisions based on that. But (B), like transparency isn't going away. It isn't optional. We just heard from the feds they are doubling down on this. This is one of the only bipartisan things in the country right now is transparency. So just set yourselves up for success.
I think if you're also a plan, I would really start looking at hidden fees, like how do you justify if the published price of a service is X and the claim is X times, you know, three, you're gonna have to start being accountable for that spend. You're gonna have to be able to explain where the money is going, and you're gonna have to get comfortable with that, because that is going to be sort of the new standard.
I will tell you, and this was shared publicly, so I'm not speaking outta school, but one of our members who participated, and they're a public entity, right? It's not even a private employer, a public entity where everything has to be public. It took them 10 months to get their carrier to send them their data, 10 months.
And we had to bring in an attorney because they're like, Nope, it's proprietary. Nope, it's we're not gonna do it. Anything that is in our system is ours. And that's just not true. That is not what the law says.
So I think you need to just prepare yourselves as an industry for transparency and accountability, and that will become the new normal. And frankly, that is a good thing because let's start competing on quality, on service, on things that actually matter and not hide in opacity and you know, not even be able to explain if you're charging a fair price or that it's a high quality provider partner.
The whole industry needs to change, and this is a tool for that.
[00:40:20] Stacey Richter: Note to self and everybody else, maybe we all should read the Innovator's Dilemma, including anyone who may consider themselves more in the status quo, because we are hitting that moment where the customers have the insight.
[[This is the seminal work by Clay Christensen that explained why like Kodak and Xerox went out of business after being some of the biggest, strongest businesses for decades.
Short version is that when someone doubles down for too long on their existing business model, they wind up getting swarmed by agile other innovators who take easy advantage of a gap in the marketplace when there's enough demand.]]
The Role of Data in Healthcare Market Dynamics
[00:41:01] Stacey Richter: It's like data is a weapon. If clients have data. They can clearly see what is going on. Then the mystery that created the margin isn't a mystery anymore, and now all of a sudden we have people getting, and I keep hearing stories about this getting called into HQ, standing in front of a table, filled up with executives at a company who are like, what are you doing with my money? I see what you did there.
So knowing that, again, this is not the first time this has ever happened. Clay Christensen wrote a book about it 20 years ago, but like we are in that moment at this time.
[00:41:37] Elizabeth Mitchell: If the affordability crisis wasn't what it was, people probably would've been okay with the status quo. They don't love it, but whatever, we'll live with it.
The industry has not self-regulated for affordability, for quality, for service. So, the entire premise of the CAA was to make self-insured employers accountable for change. They are accountable for the industry, paying fair prices for quality services.
That is going to trickle down to all of the players in the industry.
[00:42:12] Stacey Richter: The sleeping giant is waking up?
[00:42:13] Elizabeth Mitchell: I would say so.
[00:42:14] Stacey Richter: When you were on the show last time, we just did a take two of your earlier episode, Elizabeth Mitchell, where you were saying like, look, employers, inertia, sleeping giant, not waking up. Sleep at the wheel, right?
Like you hear all this about employers and the point that you made was there's also a ton of inertia in the industry. So you could be the most activist employer possible, but if you don't have entities that you can work with who are equally activated and engaged, then that certainly can slow anybody's role.
And I think the point that you're making now is, okay, there has been so much inertia, for so long, and employers are the ones who are left holding the bag for all kinds of reasons that we talked about.
[00:42:51] Elizabeth Mitchell: Legally and financially.
[00:42:52] Stacey Richter: Legally and financially, that they're just like, okay, well I can do this with you or without you. And I'm now proceeding and now I've got this data that I can use to hold you to account and get you to do what I need you to do.
And the law is with me. So here we are.
[00:43:07] Elizabeth Mitchell: That was the entire intent. It was to create a competitive market with pricing information. And I wanna go back to something that you said about using the data and weaponizing it. This exact same data is also being used by hospitals and others to raise prices.
They see, oh wow, we're priced below our neighbor. Let's jack our prices up because apparently we can. So it is the same data used for a very different purpose. It is about getting the data into the hands of those with an incentive to reduce costs, and that is the role of self-insured employers because they are paying for care.
[00:43:48] Stacey Richter: Right? For 160 million Americans or whatever that number is, which is an astonishing number.
The other good news I heard here is actually for good providers, good clinical organizations, and you said this and you alluded to a couple of things just to kind of summarize what we've talked about earlier.
If you're a good provider now, first of all, everybody's gonna know it. And that was something Dr. John Rodis was on the pod a bit ago, who he became the CEO of a hospital when he joined. I forget what their Leapfrog score was. It was low. It was like if you're a D or something like that, you, the patient has twice as likely, is twice as likely to die of an avoidable medical error. Like this is really material stuff.
So he worked really hard as a CEO to improve the safety, improve the quality. He thought, I'll get tons of volume now. I will be able to go to my board and say, this was a worthwhile thing to do. And guess what? Crickets. No plan sponsors in his area did anything to drive patients. Now his hospital is actually safer and higher quality, and it had no market result at all.
So if there's no incentive to improve safety or quality, then if you're a health system, you know, show me an incentive, I'll show you an outcome, or whatever that crazy Charlie Munger quote is, which I really don't like as applied to healthcare for a lot of very obvious reasons. But like that is the case here.
So what I'm hearing is that now all of a sudden you have self-insured employers who have the information to know who's the safest and the highest quality. Like you actually have quality and cost data. And that becomes a magnified impact if you start thinking about direct contracts, for example, or you start thinking about creating our own networks.
What I'm really seeing is that right now there may be a great incentive to be a really good clinician.
[00:45:28] Elizabeth Mitchell: Yeah. I think that is such an important point because there are so many good clinicians out there. And our members want to work with them. They're not trying to harm their clinical partners. They want to partner with them, understand their barriers to providing better care, pay them more and differently.
Like there is a readiness from a lot of employers to partner with high quality, fairly priced provider groups. This allows them to identify them. To your point, it allows incentives, but historically, even if they were the highest value provider, it was really hard to know that and employers didn't get that information necessarily.
And about billboards, one of the things that we found is there is almost no correlation. I know this has been proven over and over, but we saw it again in the data. Price and quality are not correlated. We found, many cases, the highest price providers had the lowest quality, and those were some of the big brand names. The marquee providers, their quality was not what you would expect.
But that's really important for a buyer to know. And now they have that information and maybe they start having a partnership with the, you know, system next door that actually does have the highest quality.
So this information, it is what will enable competition on the right things.
[00:46:49] Stacey Richter: And that is probably a great place to sum this all up. I had a conversation with Shane Cerone and Dr. Sam Flanders, and I think Shane said something really impactful. He's like, “In so many parts of the country, we don't have a broken healthcare market. We don't have a healthcare market.”
And I think that the work that you are doing, empowering the customer here is fundamental to have an actual market which is required to challenge the affordability crisis that we have.
[00:47:20] Elizabeth Mitchell: I think that's really important and we've sort of lived with this for so long and anyone who tries to use the system will tell you it isn't working. Whether it's the ridiculous prices or growing access crises, and we're gonna have to have a whole another conversation about that. Rural care, maternity care, primary care, like all of those are under threat. This is a step towards making a more rational market.
But also helping the employers identify money they're overspending, that they may be able to reinvest in primary care or reinvest in maternity or mental health care. Things that they really value, where the needs are unmet. But you've gotta start with just knowing where the money's going and where is an opportunity to spend better.
Scaling the Initiative for Broader Impact
[00:48:12] Stacey Richter: So call this a shot across the bow.
[00:48:14] Elizabeth Mitchell: Well, the good news, we were able to (A), prove that this is entirely doable. We were also able to prove that there is demand from self-insured employers. And we have had a really stellar partnership with the Peterson Center on Healthcare, which we, as I said, are so grateful for.
So we are going to scale this because it needs to happen. The demand is there. We can't even keep up with it. And this is going to enable dramatic change in US healthcare.
So we will be scaling this in 2026. And this is not just for PBGH members. We wanna be really clear. Any employer can participate in this, but it is about helping the employers hold the industry accountable and to be effective fiduciaries.
[00:48:59] Stacey Richter: And if someone is interested in learning more about the work that you've done here, we can put links in the show notes, but is there any anywhere specific that you would direct them?
[00:49:06] Elizabeth Mitchell: Email, PBGH. You can email me. You can email my team.
We will be making it very clear how to participate in the coming months. Again, we were so gratified by the success of this project and as I said, this is, I believe, you know, the start of something big.
The information is now available and there is demand to use the data, so we are excited to partner with any self-insured employer who wants to do that.
[00:49:34] Stacey Richter: Kudos to you and your team Elizabeth Mitchell. Thank you so much for being on Relentless Health Value Today.
[00:49:40] Elizabeth Mitchell: Thank you.