Relentless Health Value™

For a full transcript of this episode, click here. This conversation I am having with Dan Mendelson, my guest today, all started with a post that he had written on LinkedIn considering how pharmacy benefits can or should be optimized within the broader context of value-based care. Total cost of care, value-based medical care, and pharmacy benefits—these worlds have to collide. There is just so much intertwined into all of this, which is why I pretty much immediately invited him to come back on the pod to discuss in greater detail. A few years ago, I heard a doctor say that practicing medicine without considering pharmacy is like getting to the 90 yard line, putting down the ball, and walking off the field. And, yeah … when a patient gets to a certain point in a whole lot of disease progressions, optimal medical therapy includes pharmacy. It’s a thing. Adherence is a thing. In fact, I saw a stat the other day that patients not taking their meds costs an estimated $3874 PEPY (per employee per year). Also, half of all hospital admits are caused by nonadherence. Those two stats, by the way, are from a post on LinkedIn by Brian Bellware, who was recapping a video from Eric Bricker, MD. But also, as Barbara Wachsman (EP430) said on the show, half, I think she said, of all ER visits are due to patients not taking their meds right. Olivia Webb (EP337) was on the pod, if you want to go back and listen to that one, talking about how she spends hours every month trying to figure out how to navigate access issues to manage to get her Crohn’s disease drug. So, yeah … one underlying reason why a lot of this stuff happens is that pharmacy benefits are purchased and siloed a lot of times. In fact, I have yet to see, really, any mainstream contract wherein a PBM (pharmacy benefit manager) is held accountable in any way for downstream medical costs, which may be incurred because of suboptimal pharmacy benefit design, right? And there are so many examples of bad downstream medical impacts. I really like how Mark Fendrick, MD, put it in episode 308. He said benefits, including pharmacy benefits, are like peanut butter and jelly relative to enabling high-quality care. You gotta have both working in concert, like CMS or a plan sponsor just paid a ton of money to get a patient an organ transplant, and then the patient can’t afford their transplant meds, which aren’t on formulary and are really expensive, and therefore there’s organ rejection. This happens. Or a patient with uncontrolled diabetes with a huge co-pay for insulin. Doctor says, “Hey, you gotta take your insulin.” Patient says, “Can’t afford it.” Right? This makes no sense, and it’s shockingly common. I’m thinking right now of that young man who died in the Midwest because he could not get his asthma inhaler. It wasn’t on formulary. So, here’s the game plan. I talk with Dan about the five kind of vital considerations he had brought up in that aforementioned LinkedIn post when considering how pharmacy benefits can or should be optimized within the broader context of value-based care. Dan’s advice for the pharma industry is woven in here as much as his advice for EBCs (employee benefit consultants) and employers. I am sure that most of our listeners are going to be very familiar with Dan Mendelson, my guest today, and his work; but the quick background here is that he runs Morgan Health. The mission over there at Morgan Health is to drive innovation in employer-sponsored healthcare, and they do that by investing and working with their portfolio companies in the context of the 300,000 or so employees over at JPMorgan Chase. At the same time, Morgan Health also engages in policy discussions because, as Dan says, no one employer is going to control public policy. As a footnote here, I just will say that I actively seek out opportunities to listen to Dan Mendelson’s thoughts. He has spoken a lot and really eloquently and with great insight about setting up the economic models for...

For a full transcript of this episode, click here. I’ve been in a couple of meetings lately. In one case, a healthcare company came up with a strategy and deployed it; and the strategy didn’t go as planned. The other one, it did go as planned—it worked great. Of course, I’m coming in on the back end like a Monday morning quarterback here; but the plan that failed, I have to say, I wasn’t surprised. Had they asked me ahead of time, I would have told them to save their money because the plan was never gonna work, even though the strategy looked like kind of a straight line from here to there. Nor was I shocked by the success of the other plan, even though this one that triumphed had what looked like five extra steps and was slightly counterintuitive if you looked at it cold, without understanding the way the healthcare industry actually works. Here’s my point: It might feel like the healthcare industry is chaos monkey central and impossible to predict actions and reactions—and, for sure, there’s always unknowns and intersecting variables—but it’s not a complete black box. The trick is, as you know and I know, you gotta understand what other stakeholders are up to. You gotta get a bead on what they’re doing and what their incentives are because then you can better predict actions and potentially reactions. So, let me state the obvious (that’s why listeners tune in to this show as I just said, and it’s what we aim to shine a light on here at Relentless Health Value): the pushes and the pulls and the forces. What’s going on outside of the organizations or the silos that we work within day-to-day. Because if you’re looking to sell to, partner with, not be obstructed by [insert some stakeholder here], then it’s very vital to be keyed in on what they’re doing or what their customers are doing or what their customers’ vendors are doing. This show should feel like it gives you a measure of control (or at least that’s my hope) or a method to find the measure of control. And I hope you succeed. That’s why I continue to put out these shows. The RHV tribe members want the same thing I want—to fix the healthcare industry for patients and for members—so, thanks for being here and for making actionable the insights that you might find here. I have been so looking forward to doing a show with Ben Schwartz, MD, MBA, orthopedic surgeon and prolific writer of deeply thoughtful and insightful posts on LinkedIn. In this healthcare podcast, we are talking about bundled payments. And today’s your lucky day if you think you know a lot about bundles, because most people who listen to this show at least know enough to be dangerous. So, that’s our starting point, which is why I asked Dr. Schwartz to talk to me about what most people find surprising about bundles and bundled payments. There are four surprises that we go through in the show today. Listen to the show or read the transcript to find out exactly what they are. So, no spoiler alert alert. But relative to these surprises, we get into the four types of bundles that may or may not be available. And those four types of bundles are: 1. CMS bundles such as the BPCI (Bundled Payments for Care Improvement) and the CJR (Comprehensive Care for Joint Replacement) bundles, and we talk about the current state of said BPCI bundles, which are being sunsetted probably because so many efficient clinical teams are being penalized for getting too efficient. They become victims of their own success the way the program is currently designed, wherein the goalposts keep shifting. 2. Commercial bundles—ie, a bundle that is offered by a commercial carrier such as a BUCA (ie, Blue Cross Blue Shield/UnitedHealthcare/Cigna/Aetna/Anthem) carrier 3. Direct bundle—a bundle that is paid for directly by a plan sponsor such as a self-insured employer 4. Condition- or diagnosis-specific bundle. These types of bundles do not spiral around a surgical intervention at their core, which most of the current bundles do. This...

For a full transcript of this episode, click here. On the show today, I am going to use the term TPA (third-party administrator) and ASO (administrative services only) vendor kind of interchangeably here. But these are the entities that a plan sponsor—for example, a self-insured employer is a plan sponsor—but these plan sponsors will use to administer their plan. And one of the things that TPAs and ASOs administer is this so-called weekly claims wire. Every week, self-funded employers get a weekly claims run charge so they can pay expenses related to their plan in weekly increments. The claims run usually comes with a register or an invoice. This invoice might be just kind of a total (“Hey, plan. Pay this amount.”). Or there might be a breakdown like, “Here’s your medical claims, and here’s your pharmacy claims.” Maybe there’s another level down from that of detail if the plan or their advisor is sophisticated enough and/or concerned enough about the fiduciary risk to dig in hard about what the charges are actually for. I was talking about this topic earlier with Dana Erdfarb, who happens to be executive director of HR at a large financial services organization. Dana I’m definitely gonna credit for inspiring this conversation that I’m having today with Justin Leader. Dana was the first one to really bring to my attention just the level of hidden fees that are buried (many times) in these claims wires … because when I say buried in the claims wire, I mean not charged for via an administrative invoice. These hidden fees are also not called out in the ASO finance exhibit in the contract, by the way. So, yeah … hidden. I don’t know … if you have to hide your charges, in my mind that’s a pretty big tell that your charges are worth hiding. Now the one thing I will point out is that just because the charges are worth hiding doesn’t necessarily mean that the services those charges are for are unwarranted. Some of these services are actually pretty worthwhile to do. There’s just a really big difference from a plan sponsor knowingly contracting at a known rate with a third party to do something versus paying for a service knowingly or unknowingly via fees hidden in a claims wire wherein the amount paid is not in the control of the one paying the bill. Anyway, I was talking about all of this earlier, as I mentioned, with Dana Erdfarb. That conversation was exactly the framework that I needed to snag Justin Leader, my guest today, to come on the pod and really dig into the detail level of what’s going on with this claims wire. So, in this healthcare podcast, we’re gonna talk about the five fees that tend to be tucked in to many claims wires. We also talk about one bonus—not sure if it’s a fee—one bonus way that plan sponsors give money to vendors in ways the plan sponsor might be unaware of. Here are the five hidden fees that we talk about at length in the show today, and then I’ll cover the bonus: 1. Shared Savings Fees. This is where a member of a plan goes out of network, and the TPA/ASO goes and negotiates a discount from the out-of-network provider and then shares the savings. Get it? Shared savings? This category also might include BlueCard Access fees, which we talk about in the show. But there also could be overpayment recoupment fees lumped in here. This is where the TPA messes up, overpays, and then charges the plan sponsor a percentage of the money they just got back when they corrected their own mistake. I’m just gonna pause here while everyone contemplates how we’ve all gone so wrong in life to not have figured out a way to charge others when we correct our own mistakes. Here’s a link to a great LinkedIn post by Chris Deacon and a deep dive article on this topic. 2. Prior Auth Fees. Lots to unpack with this one, which Justin does in the pod. 3. Prepayment Integrity Fees. This is evaluation of the claim before it’s being paid. Listen to the show for how this may (or may not) differ from what the TPA/ASO is supposed to...

For a full transcript of this episode, click here. Here’s a great musing that I read on LinkedIn: How will alternative primary care models fare when growth mode gets balanced with profitability and VC-supported burn rate is transformed to Big Retail bottom-line expectations? Mission v. margin. I’m gonna add to this: How will alternative primary care models, or even just doing good primary care, fare when it encounters the current system rife with perverse incentives of all kinds, including, yeah, for sure, Big Retail bottom-line expectations but also Big Health System and Big Payer bottom-line expectations and current business models? This show from last year was wildly popular—maybe one of our most popular shows—and relisten to it in the current context of what’s going on right now in the primary care and MSO (Managed Services Only) space. Coming up, I’m gonna probably do a whole show on this if I can get my act together; but this encore is really relevant right now. One piece of podcast business before we get into the episode: Please sign up for our weekly email if you haven’t already, especially if you consider yourself part of the Relentless Health Tribe. I am mentioning this not only because it’s a great way to keep track of our shows because you can do an email search to remember where you heard something, since a good deal of the show intros are in the emails, but also, there’s a plan afoot to hold some Zoom meetings to talk about different topics etc—and you won’t be notified of such goings-on unless you’re subscribed. You can unsubscribe whenever you want, by the way; and I am way too busy to send more than one email a week or spam if that was a concern. On Relentless Health Value, I don’t often get into our guests’ personal histories. There are a bunch of reasons for this, which, if you buy me beer, we can talk podcast philosophy and I will tell you all about my personal, very arguable opinion here. Nevertheless, in this healthcare podcast, we are going rogue; and I am talking with Scott Conard, MD, who shares his personal story. You may ask why I decided to go this route for this particular episode, and I will tell you point-blank that Dr. Conard’s experience, his narrative, is like the perfect analogue (Is analogue the right word [allegory, composite example]?). His story just sums up in a nutshell what happens when a PCP (primary care provider) does the right thing, manages to improve patient care for real, and then at some point gets sucked into the intrigue and gambits and maneuvering that is, sadly, the business of healthcare in the United States today. Before we kick in, I just want to highlight a statement that Scott Conard makes toward the end of the show. He says: So, this isn’t about punishing or blaming aspects of care that are being overrewarded today. It’s really about what’s the path forward for corporations, for middle-class Americans, and for primary care doctors who don’t choose to be part of a big system. We have to figure out how to solve this problem. I hope people don’t hear this and think that there are horrible people at some not-for-profit hospital systems, for example. There are some great people at not-for-profit health systems, but they have some really screwed-up incentives. A few notable notes from Dr. Scott Conard’s journey and words of wisdom that I will just highlight up front here: He says that as a PCP, you actually can produce high-value care in a fee-for-service model … if you think differently and you change practice patterns. I have heard this from others as well, including most recently David Muhlestein, PhD, JD, who says this in an episode (EP393). As Dr. Scott Conard says later in this episode, healthcare organizations must embrace the art of medical leadership. So, I guess that’s a spoiler alert there. Another point that Dr. Conard makes very crisply toward the end of the show is that doctors can kinda get pushed and pulled around in this mix. You have docs...

For a full transcript of this episode, click here. This show has implications for provider organizations of all stripes, especially those looking to succeed in value-based care or those who need patient trust and relationships for any other reason, including just patient volume. This episode also is for provider organizations who are trying to prevent clinician burnout better. It’s also for practices trying to get themselves into narrow networks where patient satisfaction is surveyed at some point in the process, and this includes Centers of Excellence networks. You know what the rate critical is that I talk about on the show today with Jerry Durham that rarely, if ever, gets talked about in any of these contexts? It’s not some fancy data artificial intelligence thing or something else the doctor needs to be clicking on or nurses need to step up and handle. Nope. I’m talking about the front desk. What an overlooked secret to success or a clinician and clinical failure point! Consider that what goes on on or about the front desk is either gonna set up the doctor or other provider for success or make it really really hard for them. This is what I talk about today with Jerry Durham in this encore episode from a couple of years ago that is still so incredibly relevant because the insights that Jerry shares are so often overlooked and they impact both patients but also doctors and other clinicians in ways we don’t often think about but, in this era of staff shortages and burnout, I’d suggest maybe we should. Here’s something I never really understood: how physicians and nurses more often than not get to be responsible for the entire patient journey, including, start to finish, patient satisfaction. But if you just take one look at any random poorly rated physician’s reviews, they’re usually littered with complaints about the front desk in the practice. Negative reviews, of course, are not limited to front desk diatribes; but there’s often a lot of front desk commentary in them. It has always seemed to me to be a common and strange phenomenon in healthcare provider practices where the front desk is like a totally separate little fiefdom with a different mission statement and goals from the healthcare providers in the same exact office. Isn’t that odd when you think about it? I mean, first, the front desk is literally physically separated from everybody else. No matter which direction you approach from, there’s at a minimum a half-wall barrier surrounding them. Sometimes, in directions most likely to receive an attack, I suppose, there’s been added a big glass barrier. Liliana Petrova pointed this out in episode 236 of the Relentless Health Value podcast, and it was really the first time that I had thought about it at all and also thought about the implicit message this sends not only to patients but also to clinicians. That whole physicality of the setup, it just screams, “We over here have nothing to do with the mission or vision of anyone else in this place. We have our own thing going on over here, and to do it, we need to be protected from you all and all of your chicanery and untoward goings-on, you doctors and nurses and patients!” So, I was really inspired the first time I heard Jerry Durham from The Client Experience Company talking. His message, as I understood it, was that a practice really on board with helping patients achieve the best patient outcomes and, nothing for nothing, erode clinician burnout includes the front desk in their thinking. Jerry has said that there’s four phases in the patient life cycle, as he calls it, which is sort of a synonym for the patient journey: 1. Marketing 2. The moment that a patient/person engages with the clinic or office 3. Provider interactions 4. The post course of care So, all of these phases—all four of them—are critical to both patient outcomes and experience but also, really, to business success. So, you kind of almost have to do well by doing good. The front...

For a full transcript of this episode, click here. First of all, I just want to start out this pod and really thank everyone listening and for showing up for a show like this one. You do it and you are here because you care about patients/members. It’s just so easy to feel like we’ll never be able to do enough, and that’s a rough, rough feeling. Please take a moment to truly hear how grateful I am for you being here and for doing all that you do and that you try to do. I saw on the interwebs the other day a Marcus Aurelius quote. What he said was, “Be satisfied with even the smallest progress.” And I think this is really important to remember because nobody working in the healthcare industry, especially today, is ever probably gonna get anything close to a perfect solution. So instead, just aim for progress—even the smallest amount—and feel good about that, please. This show is an important one for anybody either in the business of healthcare delivery or buying healthcare delivery services. It’s an exploration of what works and what doesn’t work and how what works can easily become what doesn’t work in the face of the real world. This peril of cutting clinical “waste” perilousness all starts with the whole “Hey, let’s make some money, so we gotta scale and be efficient. We gotta do our thing at as low as possible a cost and maybe grow as fast as possible. We gotta keep our investors happy or pay off the debt we got saddled with or pay that giant management fee we’re being charged or compensate the C-suite at the level they’ve grown accustomed to.” So again, the “let’s be efficient and get everything repeatable” has entered the building. The first point my guest today, Kate Wolin, ScD, makes about all of this—and this is exactly the same point that Rik Renard made in episode 427—efficient to what endgame? Now, it turns out, surveys show, only a small, small percentage of healthcare delivery solution providers are measuring outcomes of pretty much any kind. So, how do we even know if cutting so-called waste is actually waste at all? I mean, in the absence of any actual measures—here’s a hypothetical for you—someone could look around: “Hey, I see these nurses. They’re all just sitting around chatting with patients and, I don’t know, talking about throw rugs? What is this? An episode of HGTV? Who cares if a patient with diabetic neuropathy has throw rugs in their hallway? Let’s tell these nurses chop-chop, get them on the computer using AI to be efficient, right? Let’s get rid of that clinical waste.” I just made a point in the most sarcastic way possible, but the bottom line is this: It’s actually really efficient to not engage patients in these ways, right? Patients, they talk slow, they ask questions that seem irrelevant, and they’re time-consuming. It’s very efficient to not build relationships or foster trust or, I don’t know, assess fall risks … but whatever is going on is also going to fail in that model—from a patient outcome standpoint at least. Here’s a quote from Sergei Polevikov, with some light edits. He wrote on LinkedIn: Primary care is not scalable in the same way as Scrub Daddy or Bombas Socks. That’s something not taught in MBA and CFA programs. Someone should have told Walgreens, CVS, Amazon, and Walmart. They also probably should tell a whole bunch of point solutions and payers. Also, some health system execs or pharmacy leaders might also want to get that memo. What I really liked about the conversation with Kate Wolin in this healthcare podcast is that she retains optimism in the face of all of this. She offers advice for how to navigate the balance between mission and margin in a way that’s better for patients and also sustainable financially. She talks about three points: 1. Founders and investors being in alignment and the essential nature of that 2. The importance of having clinical leadership and a team dynamic that enables innovation but in a clinically sound way 3. How you gotta measure...

For a full transcript of this episode, click here. There’s this meme that’s going around on the interwebs with the caption, “Sometimes the shortest distance in between two places isn’t a straight line.” What? Yeah, because actually there’s three dimensions in the real world. So, when we all consider the real world, understanding the contours of reality and aligning with them is the only way to devise a winning strategy—not only if you’re timing rubber balls getting dropped off straight or curved slopes. I’m saying this because I’ve seen (and you’ve seen) a whole lot of great ideas fail because someone draws a very elegant straight line on a whiteboard, calls it the fastest and most efficient way to get from here to a desired outcome … and then the plan ultimately fails. What contours am I talking about taking into account right now? Oh, pretty much the entirety of US healthcare. If you combine the complexities and perverse incentives of the industry itself plus the art and science of medicine plus epidemiology and social determinants and I’m probably forgetting other dimensions, you have contours that are mountain ranges. Not considering the reality of those elevations and just thinking there’s some kind of straight line here to be found is really a kind of delusion. Now, investors and C-suites may like these delusions, but let’s just get real: It’s not gonna actually work out as written. One case study that I am talking about is digital health solutions or pharma companies even or pretty much anyone who thinks that the fastest way to increase sales is to talk about the product, let’s just say as one example. That’s the straight line to growth: Talk about the product. Another one is stripping away things that feel like they’re a waste of time in the name of efficiency without actually checking if you’re cutting into essential stuff. I talk about this at length with Kate Wolin, ScD, in an episode coming up. Jodilyn Owen has a thing or two to say on this point in episode 421 also. But let me be clear: I’m not talking about anyone listening to the show today making this mistake, at least wholesale. We all make it incrementally; it’s hard to avoid. But you get this. That’s why you’re here. You get that the fastest path anywhere is truly understanding the problems faced by customers. And then it’s showing how the product or whatever you’re doing helps solve those problems. No one cares how efficient or safe your thing is if it’s accomplishing something that no one cares about, no one gets paid for, and/or can figure out how to deploy or use. This is what the entire episode last week, episode 430 with Barbara Wachsman, was about. Why is all of this relevant? It’s actually what makes Relentless Health Value relevant, frankly. Many listeners—and shout-outs to Nate Walker and MaryCarol Evans—say that this is why they listen to Relentless Health Value and what Relentless Health Value helps them with: finding those contours, understanding reality so that it can be aligned with. And on the show today, Kenny Cole, MD, I gotta say, could be really impactful in this regard as well as in others. Nate Walker wrote, “[Relentless Health Value] inspires me every day to stay true to my desire to make a difference in healthcare for patients by adding transparency and helping to connect the dots within this fragmented system.” MaryCarol Evans has alluded to the same thing multiple times as well and often highlights that Relentless Health Value helps her think through and identify the small things that are possible—she says there’s plenty of them—that have a huge impact on the lives of plan members. Dr. Kenny Cole is from Ochsner Health System, and I love this conversation today because it has lessons for anybody working in a clinic or managing a clinic who wants to learn from a master. But it also is really interesting for anyone who’s trying to work with, alongside of, or sell to a clinical practice or health system that is pulling away...

For a full transcript of this episode, click here. We have been spending a bunch of time here on Relentless Health Value talking about PBMs (pharmacy benefit managers) lately and pharmacy benefits, but we are moving into a new topic area. It sort of kicked off three weeks ago with the pod with Rik Renard (EP427) on the importance of care flows if you are a digital health vendor trying to get consistent outcomes. But then I actually went back to the PBM/pharmacy benefits topic to talk with Luke Slindee, PharmD (EP429) and Julie Selesnick (EP428) because, you know, the J&J lawsuit. But now we’re back on the “let’s talk about digital health and point solutions” bus. I wanted to talk today about the trend to sell to employers and advice for digital health solutions who want to sell to employers, but there’s a little bit of advice here for employers themselves. At a minimum, this conversation affords a little bit of transparency to employers about what’s going on on the other side of the table. So, as I just said, in this healthcare podcast we talk about selling to employers. Why sell to employers is probably a first question. Well, one reason Barb offers is because that’s where the money is. It’s like that Willie Sutton quote. Someone asked him why he robbed banks, and he replied, “Because that’s where the money is.” I mean, hospitals know this. Have you seen their commercial rates and their multiples over Medicare? Payers know this, too. Payers who use their ability to raise commercial rates as leverage to get lower MA (Medicare Advantage) rates for themselves … they know this. So, yeah. Why wouldn’t a point solution entrepreneur take a page out of that business model? It’s saying the quiet part out loud, but … yeah, I guess it’s good to know when you’re the numero uno healthcare industry sugar daddy (or sugar mommy, as the case may be). Every employer listening right now has already opened up their phone and started an email to me. Barb gets into four pieces of advice for entrepreneurs looking to sell to employers: 1. There has to be a market that has a need for what you are selling, and there won’t be a market with a need unless the problem you’re solving for is big enough—and right now, I am recapping things that Barb says on the show—because when she talks about whether the problem is big enough, she means as per the employer and maybe because the fallout from that big problem accrues to the employer in a way that the employer fully appreciates. As I say in the pod that follows, the ground is littered with entrepreneurs, often really smart people who oftentimes I truly admire. These are individuals who found a problem for patients (or sometimes even clinicians) and solved for it and then discovered that no one will pay them for whatever they’ve done, because we can’t forget that, in the healthcare industry, one person’s waste is somebody else’s profit. There is show after show here at Relentless Health Value that showcases the sacred honeypots where these perverse incentives lie, so if you are an entrepreneur, please follow the dollar and see where it leads before getting too far. That would be my advice. I’d recommend the show with Rob Andrews (EP415) and the one with Jodilyn Owen (EP421) as a great place to start. One comment about the whole “it’s gotta be a need that employers appreciate” point that Barb makes which caught my ear, she rhetorically asks, “Should HR purchasers be buying solutions that improve health and well-being?” And the short answer is no. Barb says none of that should be the primary driver. The primary driver, Barb mentions, should be about optimization of human capital to drive business outcomes. She says every decision a business makes should be about maximizing business outcomes. Now, I could take this a bunch of different ways; and viscerally it has, again, kind of a “quiet part out loud” vibe. But in certain ways, it also means buying decisions should be bigger than just cutting costs....

For a full transcript of this episode, click here. In this healthcare podcast we’re talking about pharmacy acronyms or terms like AWP and WAC, and, not really an acronym, but we’ll also talk pharmacy list prices, rebates, discounts. We also have NADAC, but that’s slightly off to the side for reasons we’ll get to in a sec. Most of these acronyms refer to a number with a dollar sign in front of it, and it’s hell on wheels to figure out if and/or to what extent that number reflects what is going on in the real world, especially if you are a patient or a plan sponsor and all you see is the list price that Pharma puts out on one side of the storyboard, and then what the patient pays or (if you’re lucky) what the plan pays for the drug on the way other side of the whole chain of events. What’s a black box a lot of times for patients and plan sponsors is what goes on in the middle, wherein many middle people get their mitts on the transaction. Real quick here, let’s run through the Mister Rogers’ neighborhood of all of these middle people right now; and we’re gonna do this really briefly. Most of you are already going to know most of this, but I just want to remind you so that when my guest today, Luke Slindee, and I kick into the conversation about the acronyms and the terms and we try to follow the dollar … yeah, you can put a name to a face. Alright, so first we have pharma manufacturers. The pharma manufacturer—and this is largely gonna be true whether it’s a branded drug or a generic pharma manufacturer—but the manufacturer sets a list price. This list price is gonna be called an AWP or a WAC price, and we’re gonna get into the differences and what those terms actually mean in the show that follows. But Pharma decides their price point. They go to wholesalers with that price. Wholesalers say they want a discount to purchase the product. Some kind of rebate or discount is negotiated. Now the wholesalers have the drug, and they get calls from pharmacies. Pharmacies have patients who have scripts for that, so the pharmacies need to buy the drug. What price does the pharmacy now pay the wholesaler for the drug? Short answer: It’s nuts. It’s nuts how the wholesalers decide what to charge the pharmacies for the drug. We talk about that in the interview that follows, but suffice to say that now we have the list price turning into whatever price the pharmacies wound up paying to get the drug from the wholesalers for. Any way you cut it, the wholesalers are making some money. Okay … now we get to the part where we’re figuring out how much the patient or the plan sponsor will pay to pick up that drug that started at the pharma manufacturers and went to the wholesalers and now is at the pharmacy. How much are the patients gonna pay? How much are the plan sponsors gonna pay? If you spend any time in the real world (not the drug supply chain world), what you’d expect to happen next is that the patient would go into the pharmacy and the pharmacist would charge a markup and/or a dispensing fee on the price that they bought the drug from the wholesaler for. That’d be normal. And this can be the case when patients pay cash. Listen to the show with Mark Cuban (EP418, along with Ferrin Williams, PharmD, MBA), who started a pharmacy called Cost Plus Drugs. Get it? Their prices are cost plus. You have had other pharmacies for years doing similar things, like Blueberry in Pittsburgh. They get the drug. They buy it from a wholesaler or etc. But they buy the drug for some price, and then they sell it to their customers (ie, patients) at their cost plus. But most of the time in pharmacy supply chain world, things don’t work that way because many patients have insurance. When a patient walks into the pharmacy, someone has to figure out how much the patient owes and how much their insurance will cover, right? So, enter PBMs (pharmacy benefit managers). They originally started out doing this math (ie, adjudicating claims), figuring out what the...

For a full transcript of this episode, click here. This show is different, so if you’ve already listened to or read all about the gory details of the J&J and/or the DOL v BCBS lawsuits, this is not gonna be a repeat of that information. Julie Selesnick, my guest today, does cover the very, very top line about these two cases. But after that, we move on fast—because what I wanted to get to today was not the potential landslide of legal action that may or may not be confronting plan sponsors or payers or even brokers today. I did not want to really even talk about the CAA (Consolidated Appropriations Act) and its inarguable adjacency here. I just feel like there’s been a lot of talk about these topics already. What I wanted to get to, and fast, is … now what? If I’m a plan sponsor or actually, again, an EBC (employee benefit consultant) or broker, now what? What should I be doing and thinking about right now? To that end, I could not have been more thrilled to get a chance to talk to Julie Selesnick, who is an attorney deeply entrenched in helping plan sponsors and others understand and comply with fiduciary responsibilities. I want to get to this interview quickly (the conversation with Julie), so this intro is gonna be on the short side; but let me just summarize a few of the points that Julie makes during the interview that follows. First, we talk about the first step for pretty much everybody: Get your data, plan sponsors. But once you have that data, you also kinda have to use it. You can use it to ensure that you’re paying claims right, which is what most do. As a result of these two lawsuits, it’s also increasingly clear that you also have to use that data to ensure that the prices you’re paying for things (like generic specialty meds, for example) are fair and reasonable. To get the data now, you may have to renegotiate administrative services agreements; and you might need to take a closer look at the disclosure agreements you’re getting as a result of the CAA. And, by the way, it’s not just brokers or EBCs who have to complete these disclosures. It’s all covered entities that you, plan sponsors, paid more than $1000 to. Then we get into … okay, once you have the data and you’ve analyzed it, what are some in general things that could very well need to happen? And if the reason that they don’t happen is because they weren’t even considered, then plan sponsors have some risk exposure; and the brokers/EBCs who serve them might have some conflicts of interest. And it would be very interesting what would or could happen if a plan sponsor was able to back into those conflicts of interest, because if data clearly shows that something should be happening and it is not—and it is not even on the docket to be considered—if I’m a plan sponsor, I’m for sure gonna be wondering why. And maybe I’m gonna look into that and fast. Listen to the show with AJ Loiacono (EP379) from two weeks ago for more on some of the more egregious broker/EBC conflicts of interest, which could explain, potentially, the J&J lawsuit as well as definitely explains the earlier one in Osceola. And also, by the way, if you’re sitting there wondering to yourself how exactly J&J managed to pay upwards of $10,000 for a drug that can be purchased for cash for something like $50, listen to the show next week with Luke Slindee, PharmD. We run through the exact pharmacy supply chain machinations that make all of this (and more) possible. But I got off track. What I was talking about is the things that could easily wind up being called for when the data is analyzed: 1. Carving out specialty generics, especially drugs or infusions, from the larger pharmacy benefit manager 2. Your payment integrity vendor should not be the same vendor who is processing claims. Talk about a conflict of interest. I do not need to be an attorney—and I need to know absolutely nothing about anybody’s data—to tell anybody who’s listening that if you have the same vendor or two...

For a full transcript of this episode, click here. Hey, Relentless Health Value Tribe, thanks so much for being here this week. I gotta say, I really appreciate all of you who write and tell me that you kick off your Thursdays by listening to this show every week. You just pop open your app and you listen to the show. Because yeah, we’re a pretty sure thing over here. If the guest was boring or if the guest was talking about stuff that I already know and probably you already know, the guest would not be on the show. So, listening to Relentless Health Value every week is a hugely easy way to just keep up with what’s going on and, at the same time, get a pretty holistic deep dive into how all of the various parts of the industry fit together and how they ultimately impact patients and anybody who is at risk to pay for their care. One thing that you’ll notice about the guests who we invite to come on Relentless Health Value, they are usually not the ones who are merely going to recite a very well-curated point of view that is fully in line with some marketing pitch. It would be easy enough, honestly—it would be so much easier—to just invite all of the bigwigs who we get pitched. I get 50 pitches a day from PR teams who want to get their executives to come on the show because they want to get their message out to you, Relentless Health Value Tribe. You, for sure, have a reputation of being industry movers and shakers. Although it would be super easy for me to phone it in and let them have their way with you, I’ve never been one to take the easy way. I want to find those individuals to be guests who are willing to share actionable insights to actually tell the truth. I’m really not into someone hijacking this platform for their own self-interest when that self-interest is not aligned with anything that I would consider a win-win for patients. You’ll probably find more actionable insights here than listening to talk tracks, even if you’re just listening to figure out what to include in your pitch to some of these industry insiders. I’m gonna tell you that repeating their marketing spin or their party line isn’t probably gonna sell much. What they will say in public and what they really want to do are so very often sadly at counterpoint. So, come here for the real story. Alright, so let’s get to the conversation that we’re gonna have today, which is about and for digital health vendors’ or virtual care providers’ point solutions (they go by many names) and also for anybody who is a customer of said solutions. If we’re taking it from the top here, let me just make a Captain Obvious point. These digital health vendors, they kind of have to perform better than the traditional community health providers. Otherwise, they have no reason to exist, really, right? Purchasers would just go with the local gang of care providers. So then, what does “perform better” actually mean? Let’s discuss. I’d say perform better means to offer better measurable patient outcomes probably, both clinically and patient reported. I’d also say it means to offer more affordability. Also, better engagement, accessibility, and maybe all of this at a better cost profile for purchasers such as employers or health plans that are taking on actual risk. So, if all things are equal, again, why the heck would an employer or other purchaser even bother? It couldn’t even be considered, honestly, a member benefit from a regular benefit perspective if the local standard of care is superior or just as good. Now, if any clinical entity is looking to actually achieve better performance in any or all of the ways that I just mentioned with any level of consistency and in a way that is profitable for them and their investors, you got to do a few things. And one of them is to design and implement care flows, care processes, pathways—again, you can pick a name and define it how you like. But bottom line, there needs to be a standardized way to deliver high-quality care...

For a full transcript of this episode, click here. Here on Relentless Health Value, we have done a bunch of shows lately on how some weird PBM (pharmacy benefit manager) and pharmacy goings-on impact plan members, patients, and also independent pharmacies. During the conversation with Benjamin Jolley, PharmD (EP422), for example, Benjamin mentioned that he thinks some of these contract terms that really hurt independent pharmacies are signed by employers at the urging of their brokers or employee benefit consultants (EBCs). Think about this. You have these huge vertically integrated PBMs who own their own retail pharmacies and/or mail order. You have EBCs that work with employers who, a lot of times, do not understand the contracts that they are signing. This is a recipe for what AJ Loiacono talks about on the podcast encore today: just how much those EBCs and brokers are, in some cases, being compensated to get employers to sign contracts that allow PBMs to corner the market and take all the profit. Even if you listened to this encore in 2022, you might want to revisit it and consider what AJ says in the context of these recent shows with Ge Bai, PhD, CPA (EP420); Joey Dizenhouse (EP423); Mark Cuban and Ferrin Williams, PharmD, MBA (EP418); and Benjamin Jolley, PharmD (EP422), as I just mentioned. Also keep in mind the shows with Scott Haas (EP365) and Paul Holmes (EP397) from earlier … Olivia Webb (EP337) as well. This show with AJ Loiacono is different than others you may have heard with him because in this healthcare podcast, we are not talking about PBMs. We’re talking about brokers and EBCs. So, say I’m a self-insured employer. Here’s the big question: Is my broker or EBC helping me make the right decisions, or is he or she helping me make decisions that will make them the most money? While there are some amazing and totally above-board EBCs and brokers out there, unfortunately, caveat emptor is a thing. Buyer beware, that is. Too many self-serving and I’m sure very charming sharks are out there circling plan sponsors. It is currently a fact that some EBCs and brokers and even TPAs (third-party administrators) or PBMs or others take hidden kickbacks or fees or percentages. They make a lot of money, maybe the most money, in these secret ways. All this money, money paid in secret backroom deals—let’s not lose track, these dollars increase the total prices paid by plan sponsors and employees. Now, I say this to say that my guest today, AJ Loiacono, calls 2022, right now, a “magical moment” for plan sponsors—and for straight-shooting EBCs and PBMs and all the others who are actually doing the right thing by their clients also. It’s because of the Consolidated Appropriations Act (CAA), which states quite clearly that plan sponsors can ask their healthcare and benefits service providers to disclose the money that they are making off of the plan—all of the money, not just the direct fees. The CAA went into effect December 2021, and contrary to what some people have said or may believe, it is in force right now. The field memo went out on 12/31/2021. So, the CAA is the rule right now. And in fact, the CAA makes it imperative under ERISA (Employee Retirement Income Security Act) to do what I just said: Plan sponsors must disclose the monies that they are paying out on behalf of employees and ensure that those fees are reasonable and free from conflict. If you’re the fiduciary of the plan, you gotta disclose all these indirect and direct compensations of the people that you are paying or the people that you are paying who may be kicking back dollars to other people you are working with, unbeknownst to you. The Department of Labor is putting as much emphasis right now on healthcare as they put on 401(k) plans in the early 2000s, so this is a big deal—or it should be—for plan sponsors. So obviously, in order to comply with the CAA, self-insured employers should be requesting from their EBCs and brokers or others that...

For a full transcript of this episode, click here. Here’s something Randy Vogenberg, PhD, wrote the other day; and I made some light edits: Research has documented the unintended impacts of poor pharmacy benefit strategy. Examples include increasing costs of care, bankruptcies, and member satisfaction declines. And, yeah … agreed. Also, probably health problems if we’re talking about a member unable to access a drug they really need. I heard the other day about how so many patients who have had organ transplants have a hard time getting their transplant rejection meds. What?! I just can’t even with that one. On the other hand, you could have a plan that pays for all manner of drugs, cost-effective or not, appropriate or not. And now we have premiums that no one can afford, and everybody loses for the exact opposite reason. These are the downsides that happen when pharmacy purchasing gets itself into a suboptimal place. And this can happen for many reasons, but one of them is when there is not a concerted effort to buy pharmaceuticals in a value-based way. Now, here’s some reasons why employers may have a rough time paying for value (ie, paying a fair price for drugs that work). Here’s one reason: Most employers do not have the power to influence the price of a medication. So, any given employer could decide, based on some cost-effectiveness analysis, that the price of a drug is too high. But it’s not like they can march into Pharma HQ and haggle. It’s more of a take-it-or-leave-it kind of thing. Here’s a number two reason why value-based pharmacy purchasing can be tough: Pharmacy spend is siloed a lot of times from medical spend. So, the pharmacy vendor is only concerned about cost and denies access to even drugs that are proven to reduce medical spend. Why wouldn’t they do that? The PBM (pharmacy benefit manager) was hired to reduce pharmacy spend. The end. Who cares how many ER visits or disease exacerbations transpired? That’s the medical director’s problem, not theirs. Here’s the number three reason why value-based purchasing is rough: The time horizon an employee is with an employer, which is not one day—and it’s not a lifetime. Why did I say one day? I have heard more than once that the actuarial time horizon that some pharmacy plans use to determine if a drug is cost-effective is one day. If the drug doesn’t accrue any benefits in one day, well then, it’s a cost. It’s not effective. On the other hand (and also problematic in the real world), sometimes cost-effectiveness analyses are done with a timeframe of the patient’s lifetime. And, yeah … there aren’t many employers who have employees for a lifetime—like, they’re 85 years old and still on the employer’s dime—so the time horizon can’t be too short. But if it’s a really expensive med that will, at most, prevent something that’s not gonna happen anytime soon (heart failure, kidney failure, a stroke), these are things that an employer may pay for but likely is never gonna see the cost benefit of because that benefit will happen 30 years from now when the patient is on Medicare. And here’s a fourth reason why value-based purchasing is tough: The FDA is approving drugs based on evidence from one study (ie, not a ton of evidence). And these drugs are also really expensive. So, some of the above issues are solvable; some are less solvable. With this in mind, let’s tick through some advice that my guest today, Nina Lathia, suggests if you want to offer members a value-based formulary. 1. Have a stated goal. And maybe that stated goal is to meaningfully improve health of plan members while maintaining access, satisfaction, and affordability for said plan members and the plan. 2. Think holistically about healthcare spend, not just pharmacy spend. 3. Know what the value-based price of a drug has been calculated to be. I talked about this at length in the show with Anna Kaltenboeck (EP303). Also, Bryce Platt, PharmD, has written about this a lot. 4. Look into...

For a full transcript of this episode, click here. This show today is for physicians or other clinicians or providers who are still taking insurance—those who are going about their day being pretty normal ... but at the same time, they’re noticing one and/or two things potentially going on. Here’s thing one: They may be seeing patients struggling to afford care, especially patients with commercial insurance and huge deductibles. And/Or thing two: They may have patients actually coming in and asking to pay cash. It’s definitely becoming known in some circles that about half the time the cash price for something is actually cheaper than the “negotiated” rate with an insurance carrier. And this has really become an actionable insight for patients who haven’t yet met their deductible, and some high percentage of patients—maybe upwards of 90% of patients—won’t meet their deductible in any given plan year. So, all of this is probably some pretty obvious foreshadowing, but let’s run through two maybe quick reasons why a practice might want to contemplate ways to make it easier for patients to pay cash when it is, in fact, cheaper for that patient to pay cash than it is for them to go through their insurance. Now, a clarifying point here: We are not talking here about that patient always paying cash heretofore … like, never using their insurance ever again, even if they get hit by a bus. No. We’re talking about the patient coming in for some office visit or service, and today, they want to pay with a wad of money they take out of their wallet and hand you. That is the end of the transaction that we’re talking about here. So, here’s the first of let’s just say two reasons that a practice might want to entertain taking cash from insured (technically, at least) patients. First reason: We have a situation in this country where 48% of insured commercial patients say that they are delaying or forgoing care due to cost or fear of cost. Sometimes I say this 48% number to a clinician, and they will reply, “Well, that’s not in my practice or in my hospital; our patients show up.” To which I reply, “Yeah, because the patients abandoning care are not the patients that are coming in. They are abandoning care.” Now, the second reason a “normie” practice might want to be thinking about how to help patients get the best possible price here is maybe less intuitive, but it’s a financial motivation for the practice. I just saw Eric Vanderhoef. He wrote on a Listserv recently, and this is what he wrote: Patient no-shows and cancellations cost healthcare providers as much as $7500 per month. That’s a loss of $375 per patient. Hmmm … okay. Keep this in mind: The whole cancellations costing providers upwards of $7500 a month would help reduce this. Coincidentally, I was talking to Paula Muto, MD (she’s the founder of UBERDOC) about this exact same topic the other day—just the crazy no-show rates that many practices experience—and she made some really good points, which are exactly in line with the Tebra report Eric Vanderhoef referenced above. She said that if a patient knows exactly how much a physician visit is going to cost—because they’re paying cash and the price is set between the doctor and the patient, so the price is the price, the end—no-shows will go down, and this is especially true when the appointment is tomorrow and not six months from now when appointments are booking these days. It’s kind of not normal for anybody to know what’s gonna be happening in lives six months from now, so no wonder patients fail to show. Dr. Muto is recommending maybe having a couple of slots open every day for patients who want to pay cash. Doing this could help improve some—not all, for sure, but some—practice cash flow issues which are caused by the no-show thing or the getting paid by the insurance carrier net whatever months later after a billing fight kind of thing. And it’s also a win-win for patients with high-deductible plans, especially those...

For a full transcript of this episode, click here. This inbetweenisode is me geeking out, so if that’s not your thing, you’ve been warned. There’s a term I’d like to encourage anyone interested to look up. It’s the narcissism of small differences. It explains a lot. The narcissism of small differences is the idea that those who, maybe in theory, should be friends/BFFs working side by side toward the same major goal are not. We divide ourselves into these micro-camps. Why? It’s a thing to get really narcissistic about small differences. Consider vegans and vegetarians who are so often all up in each other’s business in really nasty ways. Who knew whether or not someone decides to eat cheese could create such enmity? Or there’s subreddits on Reddit dedicated to people fighting about fantasy football. You would think that everyone who plays fantasy football would be friends, except … not. There are apparently major schisms in the fantasy football world. Or consider branches of the same religion who are at war with one another. Consider people in the same political party fracturing over who is the very most whatever … pick something. So, now let’s talk about the narcissism of small differences and how it’s relevant when we’re thinking about helping patients in the United States get better healthcare for an affordable price. We have these gigantic corporate entities right now very industriously vertically integrating to control supply chains and cornering markets buying up physician practices and using every trick in the book to extract maximum profitability from patients and taxpayers and employers. Achieving some kind of tipping point where these incredibly well-orchestrated and well-funded profit machines are driven back will only happen when enough people, individuals, amass behind that tipping point. It will take more than a village. And my ardent request here is to—I don’t know—we quit it with the narcissism of small differences. Do not succumb. “When you cling to ‘my way’ you preclude your ability to synthesize, cooperate, support, or even—in [some] extreme cases—peacefully co-exist with other members of your tribe. You destroy a fundamental reason for belonging in the first place: community.” That last bit was a quote from a blog post by Frances Cole Jones. I love the community who I interact with most on LinkedIn, and there’s also some Listservs and some Slack groups that I love. Even X and Threads, for the most part, are lovely nests of great people trying to understand one another and further a common cause. I guess when you get into the kind of wonky stuff that you and I get into, there’s a finite group of us who are even reading these Tweets or posts or whatever they are. It’s a “small junior high school,” as one of my clients used to call it a long time ago. But there’s also often enough that somebody who swoops down and in the name of ... something … slams a 95% aligned cause. It’s like two people agreeing on the restaurant to go to lunch, but one wants to go there and get a rice dish or because it’s closer to their house and the other wants to go there because the restaurant serves a great tortilla—and the two of them fight over what’s the right reason to go to that restaurant or what the best item is on the menu. This is literally a metaphor that describes some of the sniping that I have seen, that you have seen amongst mostly aligned folks trying to figure out how to put patients over profits. I mean, guys, go to the restaurant. Once you’re there, you can place separate orders. Work together to just get to the restaurant. It's certainly easier to say than do, but if we’re aware of this and we focus on the points of agreement and maybe just think a little bit about whether the points of difference really even matter—in real life, not theoretical philosophy life—because a lot of times, they don’t. And then divided we fall. I think a lot about small difference narcissism-ing when someone comments...

For a full transcript of this episode, click here. Here’s a quote from Ann M. Richardson, MBA. She wrote it on LinkedIn, and I love it: Quiet the noise that doesn’t add value. Surround yourself with intelligent and respectful people who can deliver endless opportunities. Celebrate brilliance and new beginnings. Together, we’ve got this. Thanks for this beautifully stated call to action (I wish I would have written it myself) because it is also precisely the goal of Relentless Health Value and my hope for the Relentless Health Value Tribe—those of you who have connected with each other by way of this podcast vis-à-vis LinkedIn, or maybe you’ve met each other at an online or live event. For sure, subscribe to the weekly email to get notified of such goings-on. Now, this aspirational vision doesn’t mean putting the onus on just any given individual to fix the systemic failings that get talked about on the podcast, but we can start somewhere. We can sit with ourselves; we can ask ourselves some big questions. We can decide the legacies we want to leave and what we want our life’s work to add up to. That is what this show should, I hope, help you accomplish. And, yeah … together, we’ve got this. In this healthcare podcast, I am speaking with Peter Hayes; and we talk about five realities of 2024 for hospital chains, integrated delivery networks, health systems. Now, to make one thing very clear, as I have said many times on many Relentless Health Value shows: Not all hospital chains or hospitals are the same. There are large, consolidated, extremely rich, extremely politically and economically powerful organizations who are called health systems. And then there are rural or urban institutions that are barely scraping by and serving huge vulnerable patient populations. And despite the many aforementioned names for hospital chains and their associated outpatient facilities and owned physician groups and urgent care centers, all these names for these big care delivery entities are flabbergastingly meaningless because they do not separate the consolidated rich ones from the very desperately not rich ones. Today on the show, we’re talking about the first kind of health systems: the big rich consolidated ones which are taking over every geography where there’s money to be made. These are the ones where you read about their bad behavior in the New York Times or hear about them in YouTube videos like this one. Peter Hayes talks about the five things that these behemoth entities may really need to start thinking hard about, even in the face of their fierce and often-unrelenting market power and the political hold that they have over many local communities and all the regulatory capture that goes along with that. So, here’s Peter’s list in a nutshell—the five things to get real about: 1. Health systems need to get real about the CAA (Consolidated Appropriations Act) and its implications that plan sponsors only pay “fair and reasonable” prices for medical services. Now, before I dig in on this, jargon alert: When we say plan sponsors, that means entities such as self-insured employers—sponsors of health plans, if you will (the purchasers, the ones who are actually paying the bills). Peter explains the quick version of what the Consolidated Appropriations Act is in the show that follows, so do listen. But for more info on this really, really meaningful bit of legislation that is the law as of 2021, go back and listen to the episodes with Chris Deacon (EP342 and EP408) or check out the myriad of LinkedIn posts from Jeff Hogan. Also, others like Darren Fogarty, Justin Leader, Jamie Greenleaf, and others have some great words of wisdom that you will be able to find that really explain what the point is of the CAA, the Consolidated Appropriations Act, and its sprawling implications. 2. To survive on reduced commercial reimbursements, health systems need to get real about becoming ruthlessly aggressive in driving administrative and...

For a full transcript of this episode, click here. For a deep dive into the way back backstory here, listen to the show with Dea Belazi, PharmD, MPH. That’s episode 293, and it’s entitled “Game Theory Gone Wild,” because gone wild is what has happened with pharma manufacturer co-pay assistance programs. Don’t forget that the original intent of the first chess move here was by pharma manufacturers to circumvent basically PBM (pharmacy benefit manager) formulary restrictions, because the leverage PBMs have is access and patient out-of-pocket costs—and let’s focus on the out-of-pocket costs right now. If a drug is on formulary, patients can get said drug for a lower relative price. Drugs not on formulary are abandoned at the pharmacy counter quite often because patients cannot afford them, and this is by design. This patient abandonment of their prescriptions is what gives the PBM leverage when negotiating with Pharma. If Pharma doesn’t play by PBM rules, they get kicked off the formulary; and then patients can no longer afford to get their meds and pharma market share tanks. So, the original intent of co-pay cards was for Pharma to say, “Ha ha, talk to the hand, you PBMs. You can not put us on formulary if you want, but I’m gonna lower the out-of-pocket costs all by meself with me co-pay cards. If you, PBM, force a $300 co-pay or whatever, which is way too high for most patients, I, Pharma, will pay $275 of that (or maybe all $300) a month on the patient’s behalf with my co-pay card program. So, patients are now left with a reasonable amount that they should be able to afford, and my pharma drug’s market share is unhindered.” I think one thing to keep in mind here as we evaluate the net impact is that not all situations are the same. Let’s say there’s two main scenarios—and keep both of these in mind during the conversation that follows with Joey Dizenhouse as you consider the impact on plan sponsors and patients vis-à-vis their premiums and also on patients/members in the short term. Scenario #1: Let’s say there’s one drug out there for a particular condition. One drug. And on some plan, that one drug has a ridiculously expensive out-of-pocket cost, say, $8000 or something like this, whatever their deductible or the max out-of-pocket is for that particular member on that particular plan. And this is $8000 every year if this is a chronic condition, which makes it different than someone hitting their deductible this year because they had a knee replacement or whatever. In this first scenario, we’re talking about patients or their kids who in perpetuity need a drug and who effectively just had their salary reduced year over year by $8000 or whatever. If they want the med, they have no other option than this huge out of pocket. That’s one situation. Scenario #2: Let’s say there’s another really expensive drug, but in this scenario, there’s a generic equivalent or there’s some other brand that costs $70 and works for most patients. So, yeah … now we have patients who get a co-pay card and are thus incented by their low or no out of pocket to get a drug that is effectively a rip-off. So, now the plan is paying something upwards of $8000 instead of $70. And it’s not like the patient got a better product. It’s upwards of 8000 wasted plan dollars that really don’t accrue any better health. And so, this is really where our story begins. A couple of definitions here: Maximizer refers to the entity running a maximizer program. It’s a noun. It’s a who. Oftentimes the maximizer is the PBM, but not always. Joey talks about two kinds of maximizer programs: One is what Joey calls a spread model, and then there’s also the transparent model. We also in the podcast that follows talk about a scheme which is often pitched to plan sponsors that I’m going to call the “the drug’s not covered” approach. At the end of the show, we come up with three bits of advice. And here they are, spoiler alert: 1. Buyer beware. If you are a self-insured...

For a full transcript of this episode, click here. Listen to this show as either a follow-on or a prequel to the shows with Mark Cuban and Ferrin Williams, PharmD, MBA (EP418) and Ge Bai, PhD, CPA (EP420). And if you’re interested in this “what’s going on in the world of PBMs, pharmacies, and employers” topic, also listen to the show with Joey Dizenhouse coming out on January 11, 2024. If you need the 101 on what’s going on out there for indie pharmacies in your community, I’d recommend the show with Vinay Patel (EP241). What would you do if you owned an independent pharmacy and you discovered that most of your profit was coming from dispensing 10% of prescriptions? That if you just stopped filling 90% of the drugs; fired all your staff except, like, one person; and just filled the drugs that you made money on? If you did this, you would actually make more money in the pharmacy than you’re currently making filling every single prescription. What would you do? This is the math that Benjamin Jolley, PharmD, my guest in this healthcare podcast and a multigenerational pharmacy leader and consultant to other pharmacies, discovered and wrestles with on the show today. And oh, by the way, a pharmacy is not gonna make it up in extra toilet paper sales or chewing gum sales when patients come into the pharmacy to pick up their meds. I asked Benjamin this, and he basically laughed at me. [What are the 10% of drugs that an indie pharmacy can make money on? You’re going to find this to be a shocking coincidence. It’s the same drugs that many of the consolidated PBM/pharmacies mandate are filled at their own pharmacies or mail order. And many self-insured employers maybe unwittingly sign contracts enabling this to go down, which, in effect, enables these consolidated PBM/pharmacies to essentially corner the market on profits from commercial purchasers.] So, turning our attention now to how to lose money in the pharmacy business, there’s two ways to lose money: either outright losing money because the acquisition costs of the meds are actually more than the PBM (pharmacy benefit manager) mandates the indie pharmacy can charge its insured members. So, that’s one way to lose money. A second way to lose money as an indie pharmacy is because generics are so cheap. The cost of providing the pill bottle might exceed the profits on a 47-cent generic, even if the profit margin is 100%—again, because the PBM sets the price. Now, you might be thinking the same thing I was thinking when Benjamin Jolley talked about this: Okay, well maybe … ugh! We want the patient to save money here, so … ? Here’s the really big point that Benjamin Jolley knows because he sees this every day: What the patient pays and what the pharmacy gets paid has no relationship to each other or to what an employer plan may or may not pay. So, if the patient/member pays more and the independent community pharmacy gets paid less, that doesn’t mean it will be a better deal for the employer. It doesn’t mean it will be a better deal for the patient. Why? Because there’s a PBM in the middle. Ge Bai talks about this in episode 420. For every $100 that is spent on generic drugs, $41 goes to the PBM. Seventy-nine percent of the time, if a plan member is in their deductible phase, it’s cheaper to pay cash than to use the insurance that member is paying for. As someone said on LinkedIn the other day talking about patients paying premiums and paying more for generics than if they’d just gone in and paid cash, here’s the quote: “You can pay more to pay more.” With so many deductibles as high as they are and with so many people who never reach their deductibles, as Benjmain Jolley says during the show today, we’re giving this third party a lot of control over a transaction that they literally have nothing to do with something like three out of four times that any given patient picks up their generic med. How’d we get here as a society? It’s weird. If you’ve listened to most of the...

For a full transcript of this episode, click here. I thought I would encore this show after coming back from the 2023 NODE Conference held in the Microsoft building in New York City, which I always enjoy. NODE stands for Network of Digital Evidence. Why is evidence so important? Here’s the NODE answer to this question: It is so smart purchasing decisions can be made by consumers, health systems, and payers so devices and software that improve patient experience, provide actionable insights, and save time and money become part of care delivery so trust is built between industry and healthcare. No matter what direction you come at this from, evidence for care delivery endeavors is sorely needed. What’s always interesting to me is kind of the context of this said evidence, however the “who said” evidence is evaluated by and to what end. It was a really interesting juxtaposition, frankly, to hit up the NODE conference—which is attended mainly by digital health entrepreneurs and health system execs—right on the heels of me going to multiple events with self-insured employer types like the PBGH (Pittsburgh Business Group on Health) summit in early December, for example. What Emily Kagan Trenchard, my guest on this encore, talks about today is very much not a nice-to-have from the employer/purchaser point of view. It’s a must-have from their perspective because all of these care delivery, technological, and organizational inefficiencies that Emily alludes to … yeah, it’s all defined as expensive waste from the standpoint of the employers or other self-insured entities. These self-insured entities are the ones paying for fragmented and unsupported patient journeys with their escalating commercial rates, after all. In sum, I like how Joseph Wu, MD, PhD, who is the current president of the AHA (American Heart Association), put it at the recent AHA Scientific Sessions in Philadelphia last month, which I was honored to attend. Dr. Wu said during his presidential address, “Work hard, work smart, work together.” Emphasis on all of the above, especially the work together. That’s what the Relentless Health Value Tribe is all about, after all; so thanks so much for being a part of it. So, a few things to remind everybody. First of all, don’t forget EHRs (electronic health records) were purpose built originally for billing. This is no secret. People quite openly have called EHR systems glorified cash registers. If I want to be generous, maybe I would restate this to say that EHRs were designed to document patient interactions. This is what their core architecture was built to achieve. But today, there’s a lot that goes on that isn’t a traditional patient interaction. First of all, me even calling it, frankly, a patient interaction should give longtime listeners a clue where this is headed. I mean, say you’re sitting at home on your couch. I don’t know. You’re probably not considering yourself a patient. You’re considering yourself a person sitting on your couch. However, say you’re sitting on your couch and you haven’t taken your COPD maintenance therapy. Potentially that is something of clinical significance that maybe should get figured out and noted somewhere—potentially prior to the acute event going down. Or, still talking about things that are relevant to patient health but which don’t naturally tuck into an EHR system’s native architecture, maybe we have social workers and nutritionists and all kinds of people who are not doctors or nurses or PAs (physician assistants) in this mix. Most of the time, these people don’t even have access to the EHR. In sum, what is happening between codes getting written in patient health records? Where’s all that information going? My guest in this healthcare podcast, Emily Kagan Trenchard, makes a super point about all of this that I haven’t heard made so succinctly or so eloquently. She talks about identifying the core functionalities, the centers of gravity that are needed to bring...

For a full transcript of this episode, click here. Why did I decide to encore this episode where Cora Opsahl from 32BJ spends 29 minutes talking about the importance of getting your data if you are an employer or a union health fund? Let me quote Jeff Hogan with some light edits here. Jeff wrote about the “outsized role” that employer data and intentional analytics can and will play. This is emerging and a must-have. The show with Andreas Mang (EP419) from three weeks ago, the show with Dan Mendelson (EP385), the one with Mark Cuban and Ferrin Williams (EP418) … everything that has been talked about in all of these shows and more is gonna be hard to do without having the data so you know what’s going on. But I will let Cora Opsahl explain far more succinctly than I can here. One more note before we dive in here: After you listen to this show, you might want to go back and listen to episode 373 with Cora—and that one is entitled “How to Kick a Big Hospital Out of Your Network”—because this is one of the things that 32BJ did when it got its data. 32BJ realized that if it kicked out the really expensive hospital from their network, it would (and did!) save $35 million. Kicking this one hospital out of its network enabled the union to get its biggest wage hike in however many years, and also the employers employing union members got a premium holiday and did not have to pay into the health fund for a few months. Imagine if they didn’t have this data and realized the millions and millions of dollars being siphoned out of the plan by this one hospital charging way too much. It’s just crazy how many employers or unions wind up becoming imprudent fiduciaries because they just don’t have the data to know better. But I’ll tell you who is realizing it: class action attorneys. In this healthcare podcast, I am speaking with Cora Opsahl, who directs the 32BJ Health Fund. Important to know about Cora’s background is this: In previous roles, she’s worked deep in the inner workings of the healthcare industry. So, she came to 32BJ armed with a BS meter that is finely tuned, which is, unfortunately, an essential skill for anyone trying to help the patients and members relying on them to successfully navigate the healthcare industry. This conversation gets into everything that the 32BJ Health Fund does with their data. They have lots of data. They demand it. So, besides kicking out overly expensive health systems from their network, here’s other things that 32BJ is currently doing with their data and which other employers and unions may get a few ideas from. If you have the data, you (like 32BJ) can use it to: notepisode 368EP285 All of these things roll into basically three categories: 1. Cutting wasteful spending and finding fraud 2. Making smart benefit decisions 3. Being able to see trends and forecast the future, which is really helpful for financial solvency etc As Cora Opsahl says, “I think we [all can] recognize [that] you [cannot] make smart … decisions and be a fiduciary of [a] fund without having [data].” This whole conversation has been really a big bright spot for me and will provide hope, I think, for any employer/union who is seeking ways to protect their members and patients, the ones on their plans and therefore under their aegis and whom they have a fiduciary responsibility to look out for. 32BJ represents about 200,000 members. They are mostly in residential and commercial real estate—so, for example, your doormen, your maintenance workers, your security, your cleaners, amongst others. Members are in about 11 states, but a lot of them are in the New York City metro area. These union members who are in the fund work for over 5000 different employers. The 32BJ Health Fund has zero-dollar premiums. Wowza on that point—that’s a huge benefit. Also mentioned in this episode are Jeff Hogan; Andreas Mang; Dan Mendelson; Mark Cuban; Ferrin Williams, PharmD, MBA; Ashleigh Gunter; Dawn Cornelis; and Wayne Jenkins,...