EP452: Fiduciary Duty vs the Healthcare Status Quo, With Cora Opsahl

[00:00:01] Episode 452, Fiduciary Duty vs the Healthcare Status Quo. Cora Opsahl from 32BJ has lessons.

[00:00:19] American healthcare entrepreneurs and executives you want to know, talking, relentlessly seeking value.

[00:00:28] Last time Cora Opsahl was on the show, Michelle Burnaby wrote a comment on LinkedIn I thought encapsulated the gist of it all so well.

[00:00:36] She wrote Cora first became a mentor slash ally through Relentless Health Value Episode 372.

[00:00:43] It opened a doorway to a whole group of very relentless people.

[00:00:47] I want to start there because it's a nice comment, but it's also a call to action.

[00:00:53] Think about this and think about it not in the context of being a, in air quotes, stakeholder,

[00:00:59] and not in the context of being an organization, but in the context of humans who work at these various organizations who combined,

[00:01:08] comprise the bucket of companies that we lumped together using the old stakeholder word.

[00:01:13] All of these individuals are making choices every day and all of these choices, they could be made with integrity and with the patient or member in mind or not.

[00:01:22] In real life right now, the overwhelming majority of members slash patients in this country get their clinical care and the pleasure of paying for that care or drugs within the current ecosystem we have here in the USA.

[00:01:34] For any of us or all of us who work within that traditional ecosystem, it is up to us to choose our own legacy here.

[00:01:41] It's probably why you listen to the show in the first place.

[00:01:44] Actually, there are so many RHV Relentless Health Value listeners who are pushing for patients against the riptide that is the profit motives of the organization that they work for.

[00:01:54] It's hard.

[00:02:24] Meanwhile, the CAA, the Consolidated Appropriations Act from 2021, holds employer plan sponsors accountable and responsible to ensure that plan assets are spent prudently,

[00:02:35] that costs paid are reasonable, and that there's no conflict of interest.

[00:02:39] This is the definition of what a fiduciary is supposed to do, by the way, prudent, reasonable, and no COI.

[00:02:45] Anti-competitive contracts between a carrier and a hospital are the very definition of COI.

[00:02:49] And when that COI results in higher, maybe unreasonable prices and non-prudent spend, well, plan sponsors are put between a rock and a hard place if they stick with their existing vendors.

[00:03:01] Rosa Nova from Miami-Dade County Public Schools put this really succinctly on a panel at a 32BJ event recently.

[00:03:08] She said, what amounts to?

[00:03:09] I have no choice but to actually do the right thing here for many reasons, but one of them is I do not look good in orange.

[00:03:16] She said, my personal butt is on the line here.

[00:03:19] And furthermore, who do class action lawsuits make look bad when their company or CEO or CFO are personally sued over conflicted benefits?

[00:03:30] See the Wells Fargo lawsuit, J&J lawsuit, etc.

[00:03:33] It sucks that employers or plan sponsors get put into this pickle by their own vendors.

[00:03:40] And that's what we're talking about today.

[00:03:41] This is a conversation that starts out talking about rates, i.e. prices, edges into rights, i.e. plan sponsor rights, and ends up all about power.

[00:03:50] And by the way, if you're a plan sponsor, especially in New York City, maybe doing the right thing here means hatching a plan to steer and tier in your benefit design, figuring out how to for reals help support the efforts of 32BJ to advantage pretty much every patient near and far.

[00:04:05] The pushback I often hear to doing something like this often involves the perception that plan members are too rich to care about reasonable prices, prudent plan spending, and COI.

[00:04:16] And yeah, to state the obvious, these same people are also sophisticated enough to smell a fine opportunity for a class action lawsuit.

[00:04:23] And also, they probably do care, as more and more studies suggest.

[00:04:28] Sorry if I just stumbled onto a sacred cow.

[00:04:31] Cora Opsal, my guest today, is the director of the 32BJ Health Fund, serving over 200,000 folks.

[00:04:38] Their ability to kick New York Presbyterian, a big, consolidated, very expensive hospital, out of their network in 2018, enabled them to offer maternity benefits for 40 bucks in total out of pocket for members.

[00:04:50] And also, employees got their biggest raise ever.

[00:04:53] Employers got a premium holiday and 3% rate increase for a bunch of years after that.

[00:04:58] And yeah, this is where we start the conversation today.

[00:05:01] And yeah, it's a freaking tangled web we weave.

[00:05:04] And this tale is a perfect case study of it.

[00:05:07] It makes me even more invested in remembering my own manifesto.

[00:05:10] That was episode 400.

[00:05:12] To ensure that I can feel good about what I personally have accomplished and what I have been a part of and the net impact of my own personal actions.

[00:05:20] Since I, too, very often work in the belly of the beast.

[00:05:22] Lastly, may I point out that there are links in the show notes to all episodes aforementioned, as well as a transcript of this introduction.

[00:05:30] Furthermore, you will find links to a template health savings calculator for plan sponsors and also a template contract, again, for plan sponsors, that 32BJ has made available.

[00:05:41] More on that in the show that follows.

[00:05:43] My name is Stacey Richter.

[00:05:44] This podcast is sponsored by Aventria Health Group.

[00:05:47] Cora Opsal, welcome back to Relentless Health Value.

[00:05:50] Thanks, Stacey.

[00:05:50] I'm glad to be back.

[00:05:51] Everybody listening to this show knows there is a center of gravity.

[00:05:55] Like, there is a status quo that is very hard to resist.

[00:05:59] I mean, read the New York Times, read the Wall Street Journal.

[00:06:01] Like, there's a lot of quantitative proof that's really coming out that employers or Taft-Hartley plans, plan sponsors have a self-interest to find the will to push back against the center of gravity in this industry.

[00:06:13] You know, Stacey, I think it is one of those things that we know health care is hard.

[00:06:18] And as you just said, we know it's complex.

[00:06:20] It's not simple and it's not easy.

[00:06:23] But I do think it becomes an imperative for employers to do something differently.

[00:06:29] And really, if you think about the 32BJ Health Fund story, it goes back almost 15 years, quickly creeping up on 20 years.

[00:06:37] And so, we were in a position where we had more money going out in claims than we had coming in premium contributions.

[00:06:47] And at the time, the employers and the unions looked at each other and said, we have a problem.

[00:06:53] We cannot have a sustainable benefit if this is how it's going to go, if we're going to be spending more on health care than we're getting in premiums.

[00:07:02] And so, the union and the employers sat across the table from one another and said, if we fight health care costs together rather than at the bargaining table, we believe we'll be in a much better place.

[00:07:14] And that's really what started this.

[00:07:16] It started because we had a fiscal crisis, which I'm sure a lot of employers listening have been in similar situations where their health care costs seem untenable.

[00:07:26] But instead of saying, okay, we're going to put this on the union membership, the union employers said, we need to figure out how to do this together.

[00:07:35] And we did that by hiring our very first data analyst, claims analyst.

[00:07:40] We got our claims data.

[00:07:42] And let's be clear, it is not easy to do.

[00:07:44] It took going out to RFP almost 20 years ago to do it.

[00:07:48] But we got our claims data and we started to control our own destiny and said, if we're the ones ultimately responsible for these dollars as a self-funded health plan and a self-funded employer, then we need to know how we're spending our money.

[00:08:03] And that's what started it.

[00:08:05] And again, it's been a long journey to where we are today, but that's really what started it is that we said, we need to be able to know what we're spending our money on.

[00:08:14] And the only way to do that is to get our claims data and hire someone to look at it.

[00:08:18] And I kind of maybe want to just point out that it takes a certain, I don't know, scrappy sort of collaboration where the union and the employers looked at each other and said, you know what, let's lock hands.

[00:08:30] We have a common foe in a way.

[00:08:32] So we're a lot stronger together than we are apart.

[00:08:37] And that is a very practical.

[00:08:40] It's a ruthlessly practical way to go about it, to join forces against an industry that has a lot of power, which is a perfect segue.

[00:08:49] Because you've talked a lot about how if you want to get good rates, you have to have rights.

[00:08:54] And to get rights, you have to have power in the dynamic of buying things from the healthcare industry.

[00:09:03] So let's go back to 2018.

[00:09:07] You've had that claims data.

[00:09:08] You've had that data analyst now for at least a decade.

[00:09:11] What was going on then that kind of led you to this whole rates, right, power understanding?

[00:09:18] We'd had our, as you mentioned, we'd had our claims data for 10 years.

[00:09:21] As we started to look at where we were spending our money, we started to notice the prices or the rates that we're paying.

[00:09:29] It was very clear.

[00:09:30] The data became very clear.

[00:09:31] We were paying wildly different prices for the same procedure depending on what our hospitals, our members went to.

[00:09:38] For example, in 2018-ish, we were paying $10,000 for a colonoscopy at New York Presbyterian System versus $4,000 at Mount Sinai Hospital System.

[00:09:48] Now, both of these hospital systems are high-quality academic medical centers, yet we were paying two times more to go to one of those systems.

[00:09:58] And we also noticed this was true across the board at other high-priced hospitals.

[00:10:04] And so it really got us to say, you know, look, I'm not a clinician, but a colonoscopy.

[00:10:09] Some of these healthcare procedures that are roughly the same regardless of where you go, we were paying wildly different prices.

[00:10:16] We looked at our data, we were able to look at cesarean sections versus vaginal births.

[00:10:21] We've been looking at joint replacement.

[00:10:24] And all of this led us to say, all things being equal, what if we start to look at our benefit design differently based on this data?

[00:10:33] And so in 2019, we tiered our benefit strictly on price.

[00:10:39] We took the high-priced hospitals and we charged a higher copay to our members and then the lower-priced hospitals.

[00:10:45] And again, I recognize we're really fortunate here in New York City.

[00:10:49] We have, you know, a plethora of healthcare that we can, our members have access to.

[00:10:54] And it maybe doesn't work for where all of the employers listening today are, but we had five academic medical centers, plus a city hospital system, plus a safety net system.

[00:11:05] And we knew that we could tier this and have, our members could still have access to high-quality care, but at a more affordable price.

[00:11:13] That came strictly because we have our data.

[00:11:15] And just emphasizing this point, and it's interesting because I was speaking with Marilyn Bartlett, who everybody probably knows from Montana, and also Cynthia Fisher.

[00:11:23] Marilyn is an accountant.

[00:11:25] Cynthia is a very finance-savvy executive and currently philanthropist.

[00:11:30] And both of them kind of said something that struck me.

[00:11:35] They said, you know what?

[00:11:36] It's really not that complicated.

[00:11:38] If you look at the numbers, like if you actually have the data and you simply follow the dollar, like an accountant can do, or like a CFO can do and does all day, the story is very, very clear.

[00:11:51] Exactly like you just said.

[00:11:53] In other words, you've got one academic medical center charging wildly higher prices for the exact same quality service as other ones in the same geographic area.

[00:12:03] So that is actually actionable information, potentially.

[00:12:07] I guess that's a foreshadowing.

[00:12:09] So you decide to tier, you decide to change the benefit design so that you're encouraging members of the plan to save $7,000 on every single colonoscopy that's done.

[00:12:22] What could go wrong?

[00:12:23] Seems simple enough.

[00:12:24] And this was where we ran into the first challenge of rights.

[00:12:31] So we talked about rates.

[00:12:32] We knew what we were paying.

[00:12:33] Now we started to understand what are some of the rights that we maybe don't have or what are the anti-competitive contracting terms that exist between carriers and providers that limit our ability to manage our benefit.

[00:12:48] Originally, we were told we could not tier New York Presbyterian up, making them a non-preferred hospital because of their contract with our third party administrator.

[00:13:01] Wait, okay.

[00:13:01] We have one particular hospital that you can follow the dollar pretty clearly here is more expensive than its competition in the same market.

[00:13:11] You have nothing, you have no contracts with this particular institution, but your vendor has a contract with them.

[00:13:18] And you are told that you can't do something that you want to do because someone you're working with has another contract that you had nothing to do with, with that particular entity.

[00:13:28] The short answer, yes.

[00:13:29] That's exactly what happened.

[00:13:31] But it's also worth noting, Stacey, that every employer who uses a third party administrator or an ASO carrier is subject to the rules in the networks in which they're playing.

[00:13:43] And these rules are dictated by the contract between the provider system, the providers or the healthcare or hospital system, and that TPA or ASO.

[00:13:53] But you don't have visibility into those contracts.

[00:13:55] You don't know what they say.

[00:13:57] And we never would have realized this until we decided to make a change to our self-funded benefit and bumped into these anti-competitive contracting terms.

[00:14:08] One such term is what is being referred to as the all products clause.

[00:14:12] There are hospital systems out here.

[00:14:14] And for us, it was New York Presbyterian, but it's not just them.

[00:14:18] There are hospital systems in New York City, in I'm sure all major metropolitan areas that have these all product clauses in them,

[00:14:25] which says if they are in network, they must be in all networks, they must be preferred, anti-steerage, anti-tiering provisions.

[00:14:35] These are all types of contract clauses that exist between carriers and providers that limit the ability of a self-funded employer to make benefit decisions for their membership.

[00:14:45] This has not only cost implications, but I just really also want to point out quality implications.

[00:14:50] Because these consolidated entities, they may have a top tier cardiology something or other, right?

[00:15:00] And be quantitatively not great in something else.

[00:15:05] Orthopedics, I don't know.

[00:15:06] You know, I'm just making stuff up.

[00:15:07] But because of these all product clauses and this anti-steerage, anti-competitive kinds of stuff,

[00:15:14] then that not only limits the power and the rights of a union or employer plan sponsor to get members to lower cost places,

[00:15:26] but it also limits their ability to drive to higher quality places,

[00:15:31] especially given, like I said, just the kind of the consolidation and not everybody's good at everything.

[00:15:36] You're absolutely correct.

[00:15:38] So then what happened?

[00:15:39] So being a health fund for a union, to no one in the audience is surprised,

[00:15:44] unions don't do well when they're told no from outside forces.

[00:15:49] And so the union was not comfortable with a hospital dictating what our benefits could look like.

[00:15:53] And so they took to the streets.

[00:15:55] And after a very public campaign, New York Presbyterian said,

[00:15:59] okay, we can tier them.

[00:16:01] Now, this isn't for 2019.

[00:16:03] We can make New York Presbyterian non-preferred in Manhattan only.

[00:16:08] But any hospital they existed in either the Bronx, Queens, Brooklyn, or Staten Island,

[00:16:13] if they have any facilities there, they would have to be considered preferred.

[00:16:17] And that was the resolution we were able to make at that time,

[00:16:21] which is fine because most of our members went to the Manhattan facilities.

[00:16:24] But it did go to say we had to get permission or our carrier at the time, which is Anthem,

[00:16:31] had to get permission from New York Presbyterian in order to allow us to do this.

[00:16:35] I can definitely see a union or honestly, anybody.

[00:16:40] It's unpalatable.

[00:16:42] You know, it reminds me of...

[00:16:43] I was just talking yesterday to someone who was trying to do something kind of creative

[00:16:46] with their GLP-1 spend.

[00:16:49] This is someone from a large jumbo employer.

[00:16:51] And literally his vendor called up and yelled at him.

[00:16:54] Like you have the PBM vendor yelling at the customer because the customer is trying to do

[00:17:00] something creative to lower their own spend, which I think just underscores this whole,

[00:17:05] are we on the same side?

[00:17:07] Like, is this vendor actually trying to help their customer lower costs here?

[00:17:12] We spent a couple of years to realize what you're getting to, Stacey.

[00:17:16] We recognized there is a fundamental component to this piece.

[00:17:20] We talked about rates.

[00:17:21] We used our data to work on driving members to more affordable rates or prices.

[00:17:26] And then we ran into these problems of rights.

[00:17:28] Fast forward to 2021.

[00:17:30] We were informed that New York Presbyterian wanted to leverage their all products clause

[00:17:37] and were no longer going to allow us to tier our networks.

[00:17:41] They were no longer going to allow us to have centers of excellence.

[00:17:44] And what we also have is a high value maternity network where moms in our plan can have a baby

[00:17:49] for no more than their first prenatal copay of $40.

[00:17:54] And so for the moms and parents out there listening,

[00:17:56] I don't know how many folks are having a baby for their first prenatal copay of $40.

[00:18:01] Yeah, that's not $3,000, which I think is the average.

[00:18:05] I just want to underscore that even getting this far is far.

[00:18:09] So like you cut the big, highly expensive hospital out of your network in one borough,

[00:18:17] but there was a lot of member benefits to do so.

[00:18:19] And you start to really understand, you know, everybody says that hospital spend is like 55 or 58,

[00:18:24] 65, I've heard different numbers, percentage of total spend for any given plan sponsor.

[00:18:29] And you start to see that math from the eyes of the patient when you start to see some of the

[00:18:34] things that 32BJ Health Fund was able to do with the money that they wound up recouping from not overpaying.

[00:18:41] So, all right, then what happens?

[00:18:43] And so what happened is we essentially got told, hey, I know in 2019, we were allowed you this exception,

[00:18:50] but starting in 2022, we, New York Presbyterian, are going to no longer allow this exception.

[00:18:56] So again, the union is not a fan of letting a hospital dictate what the benefits should look like.

[00:19:02] And so after yet another public campaign, New York Presbyterian granted the 32BJ Health Fund permission

[00:19:10] to remove them from our network in 2022.

[00:19:14] We have estimated that we have saved $30 million a year in 2022, 2023, and now halfway through 2024

[00:19:24] by moving care to lower price facilities, the same care at lower price facilities.

[00:19:30] Which is underscoring that price and quality in healthcare are not related at all.

[00:19:35] Like in most other sectors of the economy, you'd think that the more you pay, the higher

[00:19:39] the quality of the service.

[00:19:40] In healthcare, a lot of times it's actually the inverse, but at a minimum, it's usually

[00:19:45] pretty uncorrelated.

[00:19:46] What this $30 million allowed the union and the employers to do is in their most recent

[00:19:52] contract negotiations, this healthcare savings allowed them to grant the union members a

[00:19:58] one-time bonus, the largest wage increase in contract histories, and increase their pension.

[00:20:04] And then on the employer side, it limited employer premium contribution increases to less than

[00:20:11] 3% every year through 2027.

[00:20:15] I really just want to pause and let that sink in.

[00:20:19] These are millions and millions of dollars and just the benefit to the members and the

[00:20:25] employers themselves, right?

[00:20:27] Like there was a lot of upside to the union and the employers working together, understanding

[00:20:34] what the rates were, and then fighting for their rights, getting them to some degree.

[00:20:40] And yeah, you have a $40 copay for maternity.

[00:20:43] You have all the things that you're just talking about here.

[00:20:46] And I also just want to remind everybody of that recent study.

[00:20:49] Zach Cooper and his team of authors just did a study which showed...

[00:20:52] And I'm going to forget the exact specifics here, but for every percentage rise in hospital

[00:20:57] costs, wages and employment go down in the local community.

[00:21:01] And I think what you're just...

[00:21:02] You're showing is the converse of that really is also true.

[00:21:06] That if you can lower hospital prices, just how much can be gained?

[00:21:11] And congrats to the 32BJ Health Fund team for being able to find the will and then also

[00:21:18] operationalize the way to make that happen.

[00:21:21] However, that's not the end of the story.

[00:21:23] So let's continue.

[00:21:24] No, that is not the end of the story.

[00:21:26] As I kind of walk through this, it's important to see that while we have continued to do more,

[00:21:32] in part because I can tell you over the last 10 years that healthcare as a percentage of

[00:21:37] total compensation has gone from 17% of total compensation to 37% of total compensation.

[00:21:43] Wow.

[00:21:44] I can tell you that the percentage that we're paying in comparison to Medicare has gone from

[00:21:49] roughly 220% of Medicare to 270% of Medicare over a very similar time period.

[00:21:57] And so what I can say is that we see our costs continuing to go up.

[00:22:02] And so we knew that tiering has been great.

[00:22:05] Removing a hospital system has provided a lot of financial benefits, but we recognized

[00:22:10] that there's only so much you can do on benefit design.

[00:22:14] And where we really wanted to move forward was in doing a competitive RFP and procurement

[00:22:21] process to really solidify the rights that we get in our contract versus the rates.

[00:22:28] Because I will say, spoiler alert for anyone who's gone to RFP or thinking about going into

[00:22:33] RFP, all of these rates, these major carriers, they're regressing to the mean.

[00:22:37] You're roughly going to pay the same across the board.

[00:22:40] And so if rates don't matter as much as maybe they have in years past, the only way for you

[00:22:47] to be able to extract additional value in your contract comes from rights.

[00:22:52] And so we went out to RFP and we did that with what we believe was a contract first mentality.

[00:23:00] And I know you're going to be speaking with Claire Brockbank from 32BJ Health Fund on this

[00:23:05] specifically, but we did this in part because we wanted to ensure that we were able to have

[00:23:11] some power in the process of navigating our healthcare benefits.

[00:23:16] Reiterating the point you're making, you've got ASOs out there.

[00:23:20] And as you said, rates are regressing to the mean.

[00:23:23] Those ASOs are if you look at one network, preferred networks prices, and you compare it

[00:23:30] to another of the ASOs preferred networks prices, like there's not going to be these wild swings.

[00:23:37] So changing carriers is not necessarily going to net you any huge cost savings if you're

[00:23:44] moving from kind of like one like entity to another like entity.

[00:23:49] So how you're looking at this is, you know what, we need to get more rights.

[00:23:54] We need to be able to control more of our own destiny here.

[00:23:59] And how we're going to do that is we are going to control the contracting process to extract

[00:24:05] more rights so that we can get even better rates.

[00:24:09] Is that, was that the point that you're making?

[00:24:11] Yes.

[00:24:11] The short answer to that is yes, but I think it's more specifically, I would say we want

[00:24:16] to control the contracting process with the ASO vendor.

[00:24:21] So we have visibility into the contract.

[00:24:23] So we don't run into some of these anti-competitive contracting terms.

[00:24:27] So we know which hospitals and provider systems out there have things that impact our ability

[00:24:33] to do business.

[00:24:33] And we've learned a lot of that.

[00:24:35] But we also recognize that there is financial incentives in the contract terms that we wanted

[00:24:44] to be able to extract the value from.

[00:24:46] Rather than just pay an admin fee and have no idea what you're paying for, we want to know

[00:24:50] what are we getting out of this?

[00:24:52] Where is there an opportunity to leverage our contract with the carriers to better extract

[00:24:58] value out of the healthcare system?

[00:25:00] And I don't mean value in the way of value-based contracting.

[00:25:03] I mean real dollars and cents.

[00:25:05] For example, we know we spend about $10 million a year in claims where the contracted amount

[00:25:13] with the provider is greater than the billed amount by the provider.

[00:25:17] In the instance of doctor says this procedure costs $100, so they charge $100 to the plan.

[00:25:25] The plan says, okay, but my contract for you is $200, so here's $200.

[00:25:29] Why am I paying the contracted amount if the doctor is saying it only costs them $100 to

[00:25:37] do the procedure?

[00:25:37] So this is this whole upside down billing?

[00:25:39] Upside down billing.

[00:25:41] Lesser of.

[00:25:41] In the lesser of logic.

[00:25:43] So it's $10 million that we were able to identify that if we had the right to do that,

[00:25:49] we could have immediate savings in our plan that has nothing to do with price.

[00:25:53] Yeah, and nothing to do with member care either.

[00:25:55] I mean, we're not talking about diminishing volume or really doing anything here.

[00:25:59] We're just talking about...

[00:26:00] I often talk about the financial...

[00:26:02] That healthcare has become financialized.

[00:26:04] That there's this financial layer that's like...

[00:26:06] Andreas Mang talks a lot about this in the show that I did with him.

[00:26:10] There's so many dollars that are just kind of like amorphously drifting around above the

[00:26:16] care layer.

[00:26:17] And you're identifying $10 million plus that, hey, we could recoup these because somebody

[00:26:26] else is getting them.

[00:26:27] This is a wealth transfer from our members to somebody else.

[00:26:31] And why?

[00:26:32] So we can get these if we had the rights.

[00:26:34] Exactly.

[00:26:34] I think that's where we attempted.

[00:26:37] And I say attempted because we got a lot of things in our contract.

[00:26:41] But this is really where the story takes a bit of a downer.

[00:26:45] I try not to be too much of a downer here today, Stacey, but the story takes a bit of a turn.

[00:26:49] So I've talked to you about the wins that we've had.

[00:26:52] What we came to truly understand is the power that exists between hospital systems and carriers

[00:27:02] with these anti-competitive contracting terms really impacted our ability to run a competitive

[00:27:08] RFP process.

[00:27:10] So I'm going to tell you a little bit of a story.

[00:27:12] We spent 18 months running an RFP.

[00:27:15] A lot of time and energy and frankly money.

[00:27:18] But we spent 18 months in this process running a competitive RFP process.

[00:27:22] And we had really four non-negotiables.

[00:27:25] One claims data is ours.

[00:27:27] It's receipt for payment.

[00:27:28] And I like how you put it as receipt for payment.

[00:27:31] I mean, Chris Deacon was just appearing before Congress and she basically said most employers,

[00:27:35] it's like paying your credit card bill where the credit card vendor just gives you one

[00:27:38] number and you're like, okay, I'll pay it.

[00:27:41] So you're taking each claim and using that as kind of a line item receipt, which just if

[00:27:48] you think about it in those terms, it's like, yeah, you can start seeing why people are talking

[00:27:53] about fiduciary responsibility.

[00:27:55] And that always comes up in conversations like this.

[00:27:57] But okay, you had four things.

[00:27:58] That was one.

[00:27:58] What's two?

[00:27:59] Two, New York Presbyterian needs to continue to be out of network.

[00:28:03] They're out of network today.

[00:28:04] We want them to be out of network tomorrow.

[00:28:06] We want to ensure that our benefit design is the same way today as it will be tomorrow.

[00:28:11] Not an unreasonable request.

[00:28:12] And three, that we have the right to direct contract and carve out different delegated services

[00:28:20] in all of our service areas.

[00:28:22] So while most of our members are here in the New York, New Jersey area, we do have members

[00:28:26] up and down the Eastern Seaboard.

[00:28:27] So that's three.

[00:28:28] And then four, any bidders in this process have to submit a redlined contract with their

[00:28:37] RFP responses.

[00:28:38] Those were the non-negotiables.

[00:28:40] Sounds reasonable.

[00:28:41] We went through this process.

[00:28:43] Well, first we discovered with having these four non-negotiables, it really did separate

[00:28:48] in there were carriers and TPAs and ASO carriers, the traditional larger ones and the smaller

[00:28:55] independent TPAs that chose not to bid because they couldn't meet our four non-negotiables.

[00:29:00] In the end, there were only two national carriers, Anthem and Aetna, who told us they could remove

[00:29:07] New York Presbyterian from the network because of these terms and their contracts.

[00:29:11] Which, I mean, I just would just, again, pause and just let that sink in, just the power

[00:29:18] dynamics of this industry.

[00:29:21] But I also just want to point out, and I know the story is going to take a dark turn,

[00:29:26] but as so many have discovered, this is a slog.

[00:29:30] It takes a lot of grit.

[00:29:31] It takes a lot of relentlessness.

[00:29:32] So despite the fact that this is not going to necessarily go as planned, I do, again, just

[00:29:38] want to offer kudos to this whole team.

[00:29:41] The sunlight is a great disinfectant.

[00:29:43] A lot of what was discovered here was the first time that in such a quantitative way,

[00:29:50] these power dynamics were exposed to the sunlight.

[00:29:53] So despite the fact that, I guess this is a huge spoiler alert, this does not, again,

[00:29:58] end in the most ideal fashion.

[00:30:01] On a national stage, these dynamics are seeing the light of day.

[00:30:05] So with that spoiler alert, let's continue.

[00:30:08] Well, thank you, Stacey.

[00:30:10] Heading into the 2025 plan year, no matter what happens, we're in a better place today.

[00:30:16] In January, we granted Aetna the contract for a January 2025 start, and we were very excited,

[00:30:23] and we were about ready to kick it off.

[00:30:26] So yay, you went through this 18-month process, and the winner was selected.

[00:30:30] It was Aetna for the win.

[00:30:32] We felt like we really got a lot of transparency.

[00:30:36] We've got visibility and a partner that we can move forward with that was able to give us

[00:30:41] our claims data, allow us to direct contract and carve things out.

[00:30:44] They redlined our contract, provided us with much more control and visibility.

[00:30:50] And they, at the time, had said that New York Presbyterian could remain out of network.

[00:30:54] I wish that's where I was ending the story.

[00:30:56] But the next step is a Wall Street Journal headline that says,

[00:31:01] Hospital to Union, pay up or you're stuck with us in your health plan.

[00:31:06] Pay up or you're stuck with us in your health plan.

[00:31:09] That's the Wall Street Journal headline.

[00:31:11] Yes.

[00:31:11] What was going on there?

[00:31:12] The really short answer to this is approximately two weeks before we were going to sign our contract

[00:31:19] with Aetna.

[00:31:21] We had a redlined version.

[00:31:22] We were ready to sign, but we were holding.

[00:31:24] And the reason we were holding is that Aetna was in contract negotiations with New York Presbyterian.

[00:31:30] And folks who listen know all too well of the very public challenges that have existed between

[00:31:38] hospitals and insurance carriers and their contracting process.

[00:31:42] Just this year, United removed Mount Sinai.

[00:31:46] They're back in now.

[00:31:48] Yeah.

[00:31:48] There was also the one with Memorial Sloan Kettering and United, which also wound up getting resolved.

[00:31:54] So yeah, lots of very public contract disputes between carriers and hospitals.

[00:31:59] In parallel, you had New York Presbyterian and Aetna.

[00:32:03] And so we, the board of trustees just wanted to make sure that when the contract with Aetna

[00:32:08] and New York Presbyterian gets signed for going forward, that we truly get to be out of network.

[00:32:15] Call us cautious over the last 20 years of things that we have learned.

[00:32:19] Call it not your first day at the rodeo.

[00:32:21] We expected to sign the contract.

[00:32:24] And at the end of March, Aetna and New York Presbyterian publicly announced that they had

[00:32:30] resolved their contracts and they were going to be staying in network.

[00:32:33] And I thought this is great until I got a phone call.

[00:32:37] Aetna called me and said, we have not resolved having 32 BJB out of network with New York

[00:32:42] Presbyterian.

[00:32:43] New York Presbyterian came at the 11th hour of the 11th hour and told Aetna, the only way

[00:32:50] that we could have New York Presbyterian out of network is if we paid them $25 million

[00:32:57] in what they believe is underpaid claims from 2023 with under Anthem, their current TPA.

[00:33:06] Which is in that Wall Street Journal article.

[00:33:08] So they want you to pay them 25 mil in order for you to sign your contract with Aetna.

[00:33:14] Yes, that is essentially, and I encourage everyone to read the Wall Street Journal article.

[00:33:19] I have no doubt that you'll have it linked in the show notes because you're very thorough like that.

[00:33:24] But yeah, that was it.

[00:33:26] New York Presbyterian had the power to derail our contract with Aetna.

[00:33:33] Not our contract with New York Presbyterian, our contract with Aetna because of what they

[00:33:38] believed to be were underpaid claims in 2023.

[00:33:40] For the record, Stacey, we have paid every claim that New York Presbyterian has submitted

[00:33:46] to Anthem and we have paid them following our out of network rules and benefits.

[00:33:51] And since this time, since 2022, there has been the federal no surprises act where when

[00:33:58] out of network providers believe they are being underpaid, there is a federal independent dispute

[00:34:04] resolution process in which they can follow.

[00:34:06] Since 2022, we've paid over 6,000 claims for New York Presbyterian.

[00:34:12] And of those, they have submitted about 44 of those claims to this independent dispute resolution

[00:34:21] process.

[00:34:22] So I only want to say, I just want to say that because it's really important to say it wasn't

[00:34:26] $25 million we hadn't paid.

[00:34:28] It's $25 million they believe they were underpaid, but there was a process in which they could have

[00:34:33] requested additional payment.

[00:34:34] And this demand or this calculation comes to light coincidentally in the middle of this

[00:34:43] whole, yeah, I'm a little bit speechless, I guess.

[00:34:47] So did you pay the $25 million?

[00:34:50] No, the Board of Trustees politely declined.

[00:34:53] And again, if through research there's ever a determination that a claim is underpaid,

[00:34:59] and then of course we will obviously pay claims according to the contract between us and Anthem,

[00:35:06] as is our requirement.

[00:35:08] We will obviously do that.

[00:35:09] But based on everything we've seen, we've not underpaid.

[00:35:11] And, you know, but no, we did not pay them this money.

[00:35:16] Instead, in about 72 hours, pivoted to renew our contract with Anthem, who could keep New

[00:35:24] York Presbyterian out of network.

[00:35:26] And that's a story for another day about how we were able to do that so quickly.

[00:35:30] And I highly recommend that you listen to the podcast that Stacey, the conversation that you're

[00:35:36] going to be having with Claire Progbank, because she can tell you specifically how we were able

[00:35:40] to do that.

[00:35:41] But I think what is more important here is that, again, a hospital system had the power

[00:35:48] to disrupt a competitive procurement process of a self-funded payer.

[00:35:54] During this process, I called Aetna and they said to me, well, Cora, what do you want us

[00:36:00] to do when, insert a very large and influential financial company name here, calls me and tells

[00:36:07] me to settle with New York Presbyterian?

[00:36:09] What am I supposed to do?

[00:36:10] At the time I said, you don't settle with New York Presbyterian and you fight against

[00:36:15] increasing hospital prices and you don't allow all products clauses to derail your commercial

[00:36:22] business.

[00:36:22] But that's fundamentally the challenge that exists in our current healthcare environment.

[00:36:28] It's just funny stuff going on all over the place, especially even if you think about this

[00:36:33] from a shareholder perspective.

[00:36:35] Okay, so there's a large financial institution that tells Aetna, I mean, what does this large

[00:36:39] financial institution have to do with Aetna?

[00:36:41] Who knows?

[00:36:42] You know, but like if I'm thinking about this, just putting on my large financial institution

[00:36:47] hat and let's just say I have interest in the shares of Aetna, like your 32BJ admin fee is

[00:36:55] hundreds of thousands of dollars over three years.

[00:36:57] Why couldn't Aetna have stepped in and just paid the 25 mil on your behalf?

[00:37:03] Like your rich uncle and just made sure their big deal didn't get killed over this.

[00:37:08] It could have been a huge feather in their cap to be seen as standing up against the hospital

[00:37:13] and siding with their customer instead of, you know, caving and cowing and siding with

[00:37:18] the hospital system that they're supposed to be helping their client deal with.

[00:37:21] It's just like it doesn't even make any sense.

[00:37:24] You'd think it'd be a weird thing for a financial institution to be telling a publicly traded

[00:37:28] company to in essence screw their shareholders.

[00:37:30] It's just strange.

[00:37:33] It's just, I don't know what I'm talking about.

[00:37:35] It's just so odd.

[00:37:37] I don't think there's a question there.

[00:37:38] I was just an excellent point.

[00:37:41] It was just my brain is exploding.

[00:37:43] What's your advice for others out there who are trying to work on behalf of patients who

[00:37:47] are trying to work on behalf of plan sponsors who are trying to figure out how to get high

[00:37:51] quality health care at an affordable price?

[00:37:53] I think I'm going to say is have a little hope.

[00:37:55] And we have to start doing this together to do this collectively.

[00:38:00] Whether it's through employer purchasing coalitions, you just had Elizabeth Mitchell and PBGH talking

[00:38:07] through the things that they're doing for their employers, like through collective action and

[00:38:12] more and more employers standing together to say enough is enough.

[00:38:16] We really will have the ability to change these power dynamics.

[00:38:21] The other thing I would say is don't be afraid to try.

[00:38:24] You don't have to remove a hospital.

[00:38:27] Start by getting your data.

[00:38:28] Start by figuring out where you're spending your money.

[00:38:31] Tear your networks.

[00:38:33] Change your co-pay incentives.

[00:38:35] Tearing your networks through a co-pay incentive is an easy way to start to help your members

[00:38:41] understand what their care is.

[00:38:44] Use the federal transparency data to see how you're competing, how your plan looks in comparison

[00:38:49] to others.

[00:38:51] Educate and inform yourself and then start to make some different decisions.

[00:38:55] The reality is united we stand, divided we fall.

[00:38:59] And it's time that we all really do come together.

[00:39:02] And so I will challenge other employers, reach out, find the partners in this industry that

[00:39:08] will help you make different decisions.

[00:39:10] It's, it's, there's that saying that says, do the same thing, get the same results.

[00:39:16] Time for us to start to challenge to do things differently.

[00:39:19] The other thing I would say is employers get involved in the policy space.

[00:39:22] Policy and benefits are a full circle, not a Venn diagram.

[00:39:26] Cora Upsall, thank you so much for being on Relentless Health Value today.

[00:39:29] Thank you, Stacey.

[00:39:30] It's a pleasure.

[00:39:31] Hi, this is Cora Upsall with the 32BJ Health Fund.

[00:39:34] If you love Relentless Health Value, just like I do, then I would encourage you, please

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