Rohan Kulkarni — Healthcare and Life Sciences Practice Leader, HFS Research[00:05]
Greetings. Welcome to this edition of the HFS Unfiltered Videocast. My name is Rohan Kulkarni and I head the Healthcare and Life Sciences practice at HFS Research. With me today is Ramesh Kumar. He is the CEO of Zakipoint Health. Ramesh has a history of entrepreneurship with multiple successes under his belt, including Zakipoint Health. Zakipoint Health has developed best-in-class platform, reporting, and engagement tools to empower employers, benefit consultants, and third-party administrators to bend the cost curve. That have resulted in companies actually reducing their healthcare risk by about 20% and healthcare costs by about 3%. Ramesh and I are going to be chatting about the journey health plans and self-insured employers have embarked upon since CMS’s price transparency rules became effective January 1st of 2022. We will dig into the types of solutions and services that are key to compliance and much more. Thanks for joining us, Ramesh.
Ramesh Kumar — CEO, Zakipoint Health[01:01]
Thank you, thank you very much.
Rohan Kulkarni — Healthcare and Life Sciences Practice Leader, HFS Research[01:01]
You bet. So, let’s talk unfiltered. In June of last year, HFS Research published a perspective titled “Price Transparency Gives Health Plans and Self-Insured Employers a Financial Win.” In that context, I’m not entirely sure if you agree with that hypothesis or not, but I’m curious: how are TPAs and health plans looking to use price transparency data to serve self-insured employers, and what approaches and tools are being used to address the need to be compliant?
Ramesh Kumar — CEO, Zakipoint Health[01:17]
Sure, sure. Well, first of all, thank you very much for the opportunity. Obviously it’s a big, transformative regulation—lots of anticipation, excitement, and hope for the future. But to your question directly, the initial response from the TPAs and health plans has been very much: let’s just be compliant, to make sure that the employer, the plan sponsor, is compliant. And what does that really entail? Okay, let’s just make sure the data, the machine-readable files, the cost-estimator tools are in place. And it’s a big lift. It’s a huge lift to get it accurately, to get it on time, to make sure that it’s being refreshed on an ongoing basis. I think that’s been pretty much the clear focus for now: let’s just be compliant. And really thinking about how they can use it in a more meaningful manner—these are the kinds of discussions TPAs and health plans have been having towards the end of last year and now. There are different ways, different ideas, and I can probably paint a picture of two or three big areas where they are thinking and working. But so far, it’s: let’s just be compliant. When you think about what exactly price transparency data is, it basically tells you very quickly what any network is contracting with a particular provider, at a location, for a particular procedure. And when you overlay that contract data from carrier A, B, C, D, all the way down the long tail of that, you have a very, very rich data set of price. So one big area is how health plans could actually use it for contracting purposes. Now I can very quickly know what my competitor is contracting with Dr. so-and-so for a particular procedure. Maybe I should be thinking about this at a lower cost or a different type of contract. So there’s a whole contracting area. There is also a second area where, aside from knowing the price, maybe I should be thinking about a higher-performing network or a value-based contract, or doing a bit more with my designing of the plans, designing of the contracts. Where should I be picking these five places and putting them into a plan design and offering a zero-deductible plan? So, really using that data in a more meaningful manner and adding more value. Some health plans are certainly doing that tiering, and TPAs are also thinking about direct contracts as well. The third area, where there’s a lot of interest and confusion and excitement at the same time, is: how do you actually, at the end of the day, use this data more meaningfully to help the member? Because there’s skepticism that people are not going to just log in and look for my knee surgery—it’s going to cost, it looks like, $58,000 to the plan over here and $54,000 here, oh, maybe I should go to the $54,000. Nobody’s going to do that. My mom is actually about to sign up for a knee surgery. I won’t be advising her to take that approach. So how do you meaningfully help members? And that’s where—can you use cost data? Can you use quality data? Can you use more of the plan design and navigation support, advocacy support? How can you bring this data to the forefront for the care navigators to be able to service this member in a more meaningful manner? There’s a lot of value to be delivered, a lot of support to be given to the member, and I think eventually, if you fast-forward several years out, it can have an impact across the industry for all those buckets leveraging and utilizing the data.
Rohan Kulkarni — Healthcare and Life Sciences Practice Leader, HFS Research[05:35]
Perfect. So I want to pull that thread a little more, if you don’t mind—the consumer angle. Given that the underlying reason for price transparency, at least from a government standpoint, was to empower consumers to help them understand what they’re buying and what it costs. Price transparency tools are part of what most health plans and health plan member portals have had for the last, I’d say, 10-plus years—ever since the Affordable Care Act came into existence—but the usage has been very anemic, right? I’ve had access to, I’ve had ownership of member portals in health plans in my past life, and I will tell you the usage was less than 2% of the overall plan membership. So I’m just wondering if these rules make a difference to consumers. Do you see the rules addressing that need, and are you seeing any change in consumer behaviors at all?
Ramesh Kumar — CEO, Zakipoint Health[06:17]
Yeah. Well, first of all, I want to clarify what was there 10 years ago when we talked about the Castlights of the world. Let’s be very clear—I’ve logged into those tools, my brother had access to it as well through his employer-sponsored plan. They were not telling you your out-of-pocket expense. I care, as a member, what my out-of-pocket is at the end of the day. I don’t care overall what the knee surgery costs; it’s a very theoretical question for me then. So the ability to calculate based on my real-time deductible position, my plan design, how much they are going to take, and what the cost is at that location under that plan—combining all of those three things is only happening now. It wasn’t happening before. To your question, well, 2% usage then to now—first of all, it’s a bit too early to know where the dust is going to settle, or where it is actually settling. I mean, literally, we’ve been out there 30 days and many, many plans have still not gotten this out yet into the hands of the members and promoting it, making sure it’s easy to log in and have the same username and password. So there are a lot of those little things that need to settle. But let’s say, looking out whether it’s four or five months, how will this change in a material way? First of all, you are going to see innovation—even at a very basic level, where a plan design change that promotes a certain place of care is going to make the member pay a bit more attention. My brother is a surgeon, and he was just telling me yesterday that people don’t care about the deductibles because they’ve met the max and do the surgeries, but when it comes to January, people are very thoughtful about this. And so when you provide that level of data, you provide that incentive if there’s a lower deductible, and you promote it and make it easy for people to see, people do start to think about this, pay attention to this, and hopefully it’ll make it into the decision-making. At least the curiosity and ability to know things beforehand would be useful. Now, the second area where this innovation can actually have a more meaningful impact in healthcare is: at the end of the day, these decisions are complex, particularly when we’re talking about surgeries. They’re going to mean they’ll consult somebody; it’s going to mean that they might call an advocacy provider, a solution provider that might be available. Many, many health plans and TPAs and employers are seeing this. Okay, well, why don’t we add a layer of care navigation or advocacy service on top that helps the member, and holds their hand, and helps them kind of—oh, okay, by the way, you have these two choices here, and it costs X on your plan here for you, and the quality of this place is also pretty good. Those conversations become far more meaningful and better help for the member, and that’s where you’re going to start to see more usage initially. And that’s where there’s a lot of investment and effort being put in place by the TPAs, the health plans, and also the employers.
Rohan Kulkarni — Healthcare and Life Sciences Practice Leader, HFS Research[09:45]
Got it, got it. Yeah, my general sense—and I think you’re spot on, especially innovation leading to the need for care navigators—because even though we may have price transparency, it is still going to be a bear to navigate the existing, the legacy systems, and I think it’ll be many, many moons before the innovation actually comes in and sticks for consumer behaviors to change in line with that. Let me switch gears on you, Ramesh, a little bit. Self-insured employers—this is an area of a lot of interest for us here at HFS Research, and our research indicates that enrollment in self-insured employer plans is now at about 25% of all coverage in the country, and is growing at about 3% CAGR through the end of the decade. Given the fact that you work with a lot of employers, are you seeing any material change in how employers are approaching and addressing their employees’ health and care needs? And if you are, it’ll be wonderful if you have some examples you can share.
Ramesh Kumar — CEO, Zakipoint Health[10:52]
Sure, sure. So, as you said, it’s growing, and there’s a lot of growth that has been going on, particularly in terms of the lower, smaller-sized employers—whether that’s because of different kinds of stop-loss coverage premiums, which allow them to take some of the risk away. The smaller employers can also become self-insured. There are all these models like captives coming in, which pool a number of employers together into one place to again defray some of that risk of being really small. So there’s a lot of that growth happening—employers becoming self-insured—and products and offerings and services are coming in to serve that market. On the larger end as well, they are putting in different kinds of programs and solutions. Because of the flexibility that the plan has of whatever they can put in place, that they can carve out different things, there’s an explosion of solutions that has been put in place. There’s been a lot of innovation around programs, whether they are digital health or other kinds of programs—carving out a diabetes program, this initiative, a musculoskeletal program, mental health, whatnot. So all of these programs and solutions are going straight to the self-insured employers, because these plan sponsors, look, they are frustrated. Overall costs and risks and access to healthcare are not improving. So they are open to these ideas, and hence these new solutions are being put in place. So we see in the larger employer world a couple of major trends: these solutions in the first place, the explosion of solutions, and how do you meaningfully put those solutions into a good member experience or ensure that they are being managed on the back end? So there’s a big trend around there to address specific risks, specific costs, specific areas of need at the employer level, whether that even goes beyond just the healthcare benefits—it goes into overall financial wellness, let’s call it, where employers are putting those programs and benefits in place. The other area that is quite interesting is the growth of things like direct primary care. How do we think about these alternative ways of helping the member navigate the overall healthcare system, and having a concierge program, care navigation, advocacy program, or maybe a direct primary care touch point where it really simplifies it for the patient member? It is overall better for managing the risks more proactively. You can have a different capitated payment model with a direct primary care provider, and frankly it’s a lot better experience and easier to help the member navigate to the right places of care from that touch point of a direct primary care. So there’s a lot of work happening. Employers are signing these kinds of contracts and programs, and so we do see an emergence of: can healthcare be delivered from this touch point of direct primary care? So those are a couple of big trends I see. The last one is certainly one that we are pulling on quite a bit, which is that employers are likely—given the fact that primary care is about 70 to 80% of the overall annual healthcare bill—we’re seeing some employers begin to look at a subscription-based model for primary care, where they just underwrite that $50, $100 per month for each employee or their family. And because a lot of these DPCs also come with a formulary of commonly used medications as well, and then for anything that’s acute, they will buy high-deductible health plans. A combination of this—the math that we’ve done suggests that employers could save as much as 40% of their annual healthcare bill. So I’m quite excited, just like you are, about the potential different alternate models that might be coming out in that space.
Rohan Kulkarni — Healthcare and Life Sciences Practice Leader, HFS Research[15:08]
Cool. All right, let’s look into the future. We have about two or three minutes left on the clock for me, so let me share with you a thesis, and then I’ll ask you to react to that. The triple aim of care—which is the cost of care, improving health outcomes, and enhancing the experience of care—across all of these dimensions, we’re heading south. Be it the cost of care: in the US right now, our per-capita expense is about $13,000 on healthcare, which is about three times the next highest in the world. Our life expectancy is declining, right? We have regressed back to 1996 in terms of our life expectancy. And the experience of care is quite suboptimal across access, follow-up, etc. As much as that picture might sound as doom and gloom, I think we might be at an inflection point where there might be something better coming up soon. So I’m just curious—you wander around the ecosystem quite a bit—what is your general sense for the future of healthcare in the US?
Ramesh Kumar — CEO, Zakipoint Health[16:17]
It’s obviously a very broad question, and it’s hard to just think of how the overall system might evolve—because it is a system, and we’re trying to move from this fee-for-service to all kinds of other models, so how the overall system might evolve is very difficult to predict. But the lens I see it through: self-insured employers, the health plans that are serving them, or the TPAs. I certainly see tremendous scope for, first of all, more transparency—not just price, but overall transparency of the system, whether that is because we are putting in better data, access to that data and insights, whether that is those solutions like digital health type of solutions or other kinds of programs that are more outcome-geared. The contracts are outcome-geared—you need to engage X number of people before you get paid PEPM or whatnot. So there’s a lot of that transparency that’s coming through. And frankly, I think there’s flexibility that the plan sponsor has and the ability for them to leverage a new kind of plan model, whether that’s through deductibles and centers of excellence and whatever innovation you can tie into that. And then, basically, you vote with your feet, where you’re diverting that patient population to those places of care that are higher quality and lower cost. I think that flexibility that the plan sponsors have now will allow for faster innovation, faster moving towards providers who are doing better-quality work at a lower cost. So we are going to see movement of those patients, again, through the direct primary care that we talked about or to those places of care. So I do see in that world a lot of—not just hope—scope for innovation, but I also see a lot of providers and vendors that are moving in and leveraging the data, leveraging the technology. And we see that in many cases. I think you mentioned reducing costs by 40%; we’ve seen case studies, employers as small as 250 employee lives, where they are reducing their costs by 20 to 30% because they are using a different way of paying those providers and incentivizing the members. So I definitely see an exciting future. I certainly see a future that is going to perhaps be painful to face the reality of, because now all of this will be pretty much exposed. The overall transparency and the flexibility in the system, I just think, is going to be tremendous.
Rohan Kulkarni — Healthcare and Life Sciences Practice Leader, HFS Research[19:21]
Absolutely, yep. I am as encouraged as you are. I think there’s been a lot of pain in the system—maybe there’s a little more pain—but overall, I’m hoping that we’re heading in the right direction. So, wonderful. Ramesh, this is brilliant. Thank you so much for your time. I really appreciate the conversation.
Ramesh Kumar — CEO, Zakipoint Health[19:38]
Thank you, Rohan. I really appreciate your time as well, and thank you for the great questions.
