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Where we share our weekly news debriefs and discussions with industry experts. These are lo-fi recordings aimed at giving our readers more opportunities to engage with our analysis and a view into some of the conversations that shape it.
Martin: Morning, Kevin.
Kevin: Happy Monday, Martin.
Martin: Would you say that you're
having a hot peptide summer this summer?
Kevin: We're off to a good start.
I don't know I'm quite there yet,
but we are off to a good start.
I really enjoyed that piece from Neil
on, um- Yeah ⦠that, that invoked
the hot peptide summer, uh, concept.
It's an interesting, it's an interesting
mindset shift if you're thinking about
how people, what they want out of
healthcare and what they are seeking.
Yeah.
It's a lot of that p- s-
sort of stuff, you know?
Yeah.
This idea that, like, traditional
primary care isn't serving that, Iâ¦
Makes a lot of sense, as
we'll get into in a bit.
We- we're gonna be talking about longevity
clinics in New York City today, and all
the things that they're offering, and
it's a different kind of experience.
Martin: This, to me, is the flip side
of the consumerization of healthcare.
Like, you're gonna, like, the,
the pitch when someone says, like,
"We're gonna make healthcare more
consumer-driven," is like you think
that, like, okay, people are gonna
be better consumers with their money.
They're gonna take, like, you know, do
their own research and stuff like that.
And I think, like, in theory,
that sounds really nice.
I wonder how much in practice you
end up with, like, huge marketing
budgets for Chinese research
chemicals, uh, that are drop-shipped.
And Mediterra's, which areâ¦
I don't know.
Do, do you think an HSA or a
Mediterra's HSA an HSA-approved expense?
Kevin: No.
Okay.
Martin: Okay.
The doctor's visit might be, butâ¦
The doctor's visit at, at, at Atria.
We've got a fun show for you all today.
It is Monday, June 8th, 12:00 PM
Eastern, 11:00 AM Central Time.
We are chatting with Zeke
Emmanuel later on in the show.
We're chatting with Seth Cohen from,
um, from Cedar later in the show.
But before that we're talking about
fraud and the optimal amount of it
that we should have in healthcare.
We're talking about Mediterra's and
what the very rich in New York areâ¦
How they're spending their
HSA and real estate dollars.
Uh, and we're gonna talk a
little bit about ABA, a classic
in, in the sort of fraud genre.
And finally, we're gonna talk about some
$3 million claims that are coming through.
Um, so it's an exciting, exciting
episode we've got for you.
But at the top, of course,
wanna thank our sponsor.
Today's show is brought
to you by Ursa Health.
If you're exploring or operating in
specialty value-based care, Health Tech
Nerds is hosting a sponsored learning
event on Wednesday, June 24th at 12:00 PM
Eastern, and we think you should attend.
We're bringing together Atlas Oncology
Partners and Ursa Health to go deep on
developing, negotiating, and managing
multi-state, multi-payer contracts.
You can learn more and register
at luma.com/htn-ursa-atlas,
A-T-L-A-S.
Again, that's luma.com/htn-ursa-atlas.
Kevin
You had an exciting, uh, exciting
take in the newsletter this weekend.
You talked about the optimal amount of
fraud, and I-- you, you gave me a little
bit of a preview on the, uh, on what you
were writing about in the newsletter.
And so I read this NBER study that
got published last week on fraud
in Medicare Home Health Agencies.
It's been a topic of conversation
lately, and this map, you know, is
kind of a heat map, but the punchline
of the paper was, back in 2008, 3.5%
of all Medicare Home Health Agency
spending was, was fraudulent.
Seems like a lot.
Uh, seems like a lot.
So I'd be curious to hear, you
know, what's kind of top of mind
for you right now when it comes
to fraud in, in healthcare.
Kevin: Yeah.
Obviously big topic these days.
What spurred the, the newsletter
musing this week was everything
going on in Minnesota.
As folks know, Minnesota
has been, uh, uhâ¦
How do I put this?
A hot topic for fraud, particularly
in the Medicaid market over the
past few months, uh, in the country.
Um, and over the weekend, it must've been
over the weekend, I think, providers in
the state of Minnesota started getting
notified on this recertification process
that the state had to go through as
part of i- If you remember a few months
ago, the federal government said,
"Hey, we're gonna withhold," I think
it was, like, $2 billion of payments
that the state needs for Medicaid.
Um, and so as part of getting that
fund, those funds flowing again,
they had to recertify providers.
And so the state looked at, I think
it was f- like 5,000 plus high-risk
providers, high-risk defined by the
set of services that were deemed
high risk, as I understand it.
Yeah, 5,583.
And they revalidated only
2,061 of those providers.
So 34, 3,411 providers
were disem- disenrolled.
2,491
of them were disenrolled for
incomplete documentation.
Now, I started picking up on this 'cause
on LinkedIn, one of the startups here
in Minnesota called YourPath, which has
raised some funding from local VCs to
provide substance use disorder treatment
for folks in the community, um, was
posting on LinkedIn about how they were
one of the providers who was disenrolled.
And it sounds like the documentation,
which maybe shouldn't be surprising, is
it's pretty basic dotting T's, dotting
I's, crossing T's type stuff, right?
Like, you accidentally have your
maiden name on a document when you
shouldn't have that, and therefore
you're getting disenrolled.
And understandably, providers who
are being disenrolled because of
that don't seem entirely thrilled.
To me, it's a really good example of
this broader conversation around fraud
that we are having at the moment,
and to your point, how much fraud
is actually acceptable societally.
I brought up, there was this, uh,
really interesting blog post from Bits
About Money that I, I thought it did
a really good job framing how fraud
actually has some societal utility.
Like, when it is at the right amount,
um, we, we benefit from trusting each
other and allowing for fraud to get
through because we are assuming that we
are good actors and we trust each other.
And it was talking about in the world of
finance, e-commerce, et cetera, like you,
you probably couldn't have e-commerce
as a construct if you weren't willing
to tolerate some level of thrau- fraud
because you've got buyers you don't know
on the other end, and so you've gotta work
through how you structure all of that.
But in general, it has some utility,
and as you try to root out more and more
fraud and get fraud to zero, the marginal
returns from eliminating it diminish
and I think eventually go negative.
And that's kind of what we're
seeing here in the state of
Minnesota as this plays out, right?
Like, YourPath is not the company I
would've guessed that would be kicked
out of the state for fraud concerns.
I don't think that they
are acting fraudulently.
I don't think that they are bad actors.
I don't think that was the intent of this
model, but it is a byproduct of it and
something that we all collectively have
to grapple with as a relatively pred-
predictable side effect of all of this.
What I find fascinating Uh, is
it, it seems like societally we
are moving further and further
in this direction, right?
When any example of fraud can show up
on social media and become a frenzy,
I, I think we are moving closer and
closer to a zero fraud environment.
And I think the implications if you
are trying to build in the Medicaid
environment, if you're an investor looking
at a startup, if you are somebody building
a startup in the Medicaid environment,
what was already a hard space to build
in, it seems like only gets harder
and harder as a result of this, right?
Like, if I'm looking at putting capital
to work in a variety of industries or
even sub-sectors within an industry
like healthcare services, Iâ¦
Like, if states are ha- like, if there's
a risk of this that is non-zero, Iâ¦
It becomes really hard to
think about for me, you know?
Martin: I
Kevin: struggle
Martin: with it.
Yeah.
I think, you know, that
a couple of things.
So number one, um, the net
effect of stuff like this is it
reduces competition in Medicaid.
Mm-hmm.
The reason why only 2,000 people made
it through the, the sort of this first
pass is that they're better at paperwork,
and the skill set of better at paperwork
versus better at providing substance use
disorder therapy are separate, right?
And the universe of people who are
good at, at, at completing their
paperwork are, you know, tend to be
better scaled, better financed actors.
And so there's a tension here, right?
Like, we're going to sort of
increase the, and, and tighten
the net on the fraud piece.
Mm-hmm.
And in so doing, like, the, the sort of
startups and the people challenging the
incumbents, like the, the, the effect here
is you're gonna end up with more scaled
operators with less, less competition.
Hmm.
And that is one of the mechanisms
when you talk about this like, you
know, there is sort of diminishing
returns to fraud prevention.
That's one of the mechanisms, right?
Is that like the market gets less
efficient if the only people who
can sort of clear the regulations
are the scaled operators.
The other thing I'll say is that,
you know, we talk about this a lot
in the context of credit cards.
Credit cards, like the networks
like Visa and MasterCard have gotten
very good at fraud prevention.
And so it is kind of crazy that you
can take your credit card and go lots
of places in the world and, you know,
tap it- Mm-hmm ⦠and they'll give
you stuff in exchange for just, uh,
a signature on a receipt if you're in
the US or, um, knowing your PIN number.
And so one of those returns to
living in a high-trust society
is like your GDP is higher.
There's more transactions.
You're selling more stuff more
often because it is super convenient
to be able to just walk in,
uh, anywhere and, and pay it.
And in the cr- pre-credit card world,
like the thing that we did was, was
kind of give a g- vendors extended
credit and that's crazy if you're
like a gas station in Des Moines.
Um, so yeah.
So I, I don't know.
I think that the fraud conversation has
been on my mind a lot lately, and it gets
at there's like some real tensions here.
One of the things- Mm ⦠that I've
been thinking about a lot lately is,
you know, Minnesota's been singled out
and a lot of these cases that, that
the, have, you know, been discussed in
Minnesota, we're, we're looking at them
because they're getting prosecuted.
The lag between when the case is brought
and when the people are prosecuted is
very long because the justice system
in the United States moves slowly.
And so stuff that was originally
prosecuted in 2022 is like now finally
coming through, and we're holding
this up as evidence that there's
all of this fraud in Minnesota.
What do the numbers say?
The numbers say that, you know, in,
in Minnesota Medicaid, the improper
payment rate is relatively low.
The average across the
country is about 6%.
Minnesota is like 2.6.
Kevin: Is that what your- is that
what we had up on screen earlier?
Is that that data?
No, no, no.
That was, uh- This is Medicaid data
just in the NDR here.
That was Medicare.
That was on
Martin: home health-
Yeah ⦠um, for Medicare.
But yeah, so improper payment rates.
Um, so Minnesota's very good relatively.
2.6%
is still, I think some people would
say, very high for improper payments.
An improper payment is a payment
that was made incorrectly.
It was a payment that didn't have
the right amount of documentation.
Is any sort of payment that wasn't
supposed to go out the door.
A lot of these are just improper
documentation, same thing that got,
uh, that caught YourPath Having
a low improper payment rate means
that you are very good at catching
the sort of obvious fraud, right?
Yeah.
An improper payment, if I billed
Medicaid, Minnesota Medicaid, for
like $100,000, I'm not a licensed
provider at all, but also in Minnesota.
So like, I would probably get
rejected in, in, in Minnesota.
But if you're a sophisticated
fraudster, like you're really good
at the paperwork, there are returns
to scale on that side of it as well.
Mm-hmm.
The, the sort of highly sophisticated
fraud schemes have a easier time sort of
passing through because they meet the, the
sort of the paperwork, um, requirements.
And so Iâ¦
Where I land on this
is like, fraud is bad.
We should prosecute it more, and that
will require us spending some money
because the way you prosecute these
things is by hiring people who are
as creative or more creative than
the people trying to do the fraud.
My experience working for our state
Medicaid agency is we had like six
underpaid, overworked lawyers in a
dark, uh, dark cubicle who were doing
that and contracting, and it was just
like inadequate for the, the problem.
Um, and you gotta, you, you, youâ¦
We, we have to develop either some
tolerance for the justice system
working on the cycle that it works,
where there are like three or four
or five years before a jury delivers
a, um, a, a, a guilty verdict.
Mm-hmm.
Or we need to get a lot better at
doing the sort of things that people
hate, which are prior authorizations.
Like Medicaid managed care
organizations, there's less fraud
in Medicaid managed care states than
there are in fee-for-service states.
That shouldn't surprise anyone, but
the way that they do it is prior
authorizations, which makes everyone
crazy and people get really upset.
So I don't know.
I think it's like such a tough thing, and
I think you're right that we're, we're
headed towards this lower tolerance for
fraud future, but I think that's bad.
Mm-hmm.
And I think that we, uh, we just need
to calibrate a little bit more on it.
Kevin: Yeah.
I would agree.
It feels like a suboptimal outcome.
And interestingly, it feels like the
path forward, there's some legislative
energy right now in the state of
Minnesota to move away from managed
Medicaid, as I understand it, towards
the state just doing it itself.
And what you said about Medicaid
org- organizations rings true to me.
Like, I, I don't know how the state
is going to resource it themselves
any better than private entities.
And so I actually think that the
path forward is more scaled partners
helping implement these programs with
sophisticated abilities to understand
what's going on, to track fraud, and
to intervene, and to let them do so.
That to me feels like the path
towards getting to the better outcome.
It feels like we are, we are quickly
moving to the lowest common denominator
because of, you know, the various
fights and budget issues we have
between state, federal, between
political parties, all that kind of
stuff at the moment, which is tough.
Martin: It is tough.
I think that you also surfaced a Wall
Street Journal article, um, sort of their,
their latest salvo in the, uh, in the sort
of war against fraud in the ADA space.
And I thought this graphic
was, was pretty interesting.
Can you walk me through the,
uh, what's going on here?
Kevin: Yeah.
We've covered the ADA space for a bit.
Costs have been ballooning for a while.
We've heard about this from public payers.
So in general, I don't think the
concept is, uh, new to most of
this audience of health tech nerds.
But what caught my attention about
this chart in the Wall Street Journal
article was it looks specifically
at the number of people working
in the autism therapy market.
Uh, the number of behavior analysts
has grown over the past six years.
It's roughly doubled from 60K to 120K.
The number of behavioral technicians
has increased 5X from 100K to 540,000
behavioral technicians Martin, do you
trust that all of these people are
employed by organizations that are
good actors and that there is no fraud
going on in the autism therapy market?
Martin: I would say that, that, you
know, sort of saying that there's-
⦠no fraud going on in any w- that,
that would be a dumb thing to say.
Here's what Iâ¦
My sort of gentle pushback
on this is a couple of facts.
Number one, the incidence
of autism diagnosis has gone
up quite a bit recently.
Kevin: Mm-hmm.
Martin: Um, and so definitely not the
same orders of magnitude from 2019
to 2025 that we're looking at here.
Mm-hmm.
But a lot more people are getting
diagnosed with autism spectrum
disorder, and there's not necessarily
anything nefarious about that.
Like, a doctor is saying that
the, this person has autism.
Well, number one, sort of
acceptance of, of autism and
stigmatization has gone down.
That, I think, is a good thing.
Mm-hmm.
Number two is that, uh, states are
required to pay for autism therapy
if, if, uh, someone's on Medicaid,
and so there's, like, there's
supply available for treatment.
And so some of this is just, um, you
know, uh, supply of, of therapists or, or
behavior analysts catching up with demand.
Mm-hmm.
The third thing I'll say is I was
listening to LifeStr- uh, LifeStance.
Mm-hmm.
They're a behavioral health, um, a
publicly traded behavioral health company.
They were talking about their sort of
neuropsych testing as this, like, they're
the number one neuropsych testing.
Um, and so that, that's like if you, if
you were trying to get a, um, ABA covered
for your child, you, they need a test.
They need a psychologist to say it.
And they were saying- They hire a,
a psychologist to do this testing.
Six to 12 month wait list.
Like, that provider is hired
onto a six to 12 month wait list.
And so there are realâ¦
And this, by the way, every ABA or
autism spectrum disorder operator
that I talk to says biggest bottleneck
is getting people diagnosed.
Yep.
And then there's a huge
wait list for people.
Mm-hmm.
I think it is entirely possible
that we need to trade and spend even
more money on behavior analysts and
techs than we're spending today.
And so, uh, because that
wait list is, like, crazy.
Six to 12 months, like,
that, that's, that's a lot.
And so- For sure
I think that there, it is likely the
case that there is some fraud here.
There's, it is also likely the case that
there is some, um, you know, you look
at the ratio change of techs to analysts
and we're, we're doing what we've done
in other places in healthcare, which is
we're putting more work on people who are,
uh, have lower levels of training, 'cause
that can help us save some, some money.
Yep.
Um, but yeah, I don't know.
This, the, the, to me this doesn't scream
fraudulent as much as I think the, the
Wall Street Journal says, says that it is.
Kevin: Yeah.
I, I think the interesting exercise
to do here is to play out the, what we
were just talking about in Minnesota
Medicaid in the autism market.
I, I would be willing to assume
that the autism market looks like
a lot of other markets, right?
So you had Medicare home
health, that was what, 5%?
You had Medicaid, that was 3%.
Let's say it's a 3% fraud rate that's
happening in this autism therapy market.
There are some bad actors taking
advantage of the situation theoretically.
If the, the policy agenda is let's
move fraud to zero in this autism
therapy market as well, presumably
what will happen is what happened in,
in Minnesota, where you are making
it harder for organizations to get
through the audits, so on and so forth.
And what's gonna end up happening is
these jobs that have come into existence
over the last six years are going to
start to contract as part of getting
rid of some of these organizations.
I mean, Minnesota Medicaid, it's
what, half of, it's 2,000 out of
5,000 providers that they looked
at that are coming out of that?
These are potentially big job cuts that
come as part of these changes, and I think
it's interesting to work through If, if
healthcare, part of the newsletter this
week was talking about how healthcare
fundamentally is a jobs program.
And to your point, all of this
increase in services that we are
providing provides employment
opportunities for coming, for people
to come in and work in the industry.
Which, this is what this shows, right?
This is 600,000 jobs that were created
in the last six years as part of
this autism therapy market boom.
We talk about the other side of this a
lot, which is costs are going up, it's
harder on payers, it's hard on state
budgets that are already challenged.
It's a really hard trade-off.
Like, I don't know how we, how we solve
this, but it's a set of policy decisions
that somebody's gonna be upset about.
We're either going to be cutting off
access on the front end and having long
wait lists for services, um, or we're
gonna be reining in costs, and we're gonna
bring fraud down to zero, and there's
gonna be fewer of these folks doing this.
Which, I, I, I think I know
what will happen to wait lists
when that happens, right?
Martin: Yeah.
It's, it's, it's, I think, like,
a pretty natural sort of dynamic,
and states are looking at, okay,
do we do prior authorization?
Do weâ¦
And, and there are absolutely
things, like when we're out talking
to folks who are operating in this
space, there are absolutely things.
So the pri- uh, that you
could do to save money.
Private equity firms tend to
prefer 40 hour a week patients.
That ties up one behavior analyst
and, and one, you know, and a
handful of techs on one patient
when maybe you could do fourâ¦
The- there's four patients
who need 10 hours, right?
Like, there is, there is ways to
unlock some, some more supply here.
But it is the case that this is like
a classic services business dilemma.
You need aâ¦
Like, th- there's no amount of
techn- technological progress that
makes, uh, you more efficient at
seeing more of these patients.
I mean, maybe at the margin, right?
Like a scribe and an EHR and some
of these things might help you
see a little bit of movement.
But there's nothing that sort of
shifts the, the, the, the supply,
uh, the supply curve over in a way
that makes you spend less money.
I don't know.
Kevin: I don't either.
I, should we shift from talking
about fraud as it exists in autism
and, uh, Minnesota Medicaid to a
market that certainly has no fraud
within it, wealthy New Yorkers?
Martin: Yes.
Uh, well, it's, it's very timely
'cause, you know, I was just working
on fi- closing on my Mediterre in New
Kevin: York.
Martin: Ooh,
Kevin: fancy Martin.
So Wall Street Journal, Wall Street
Journal highlighted two articles
that I thought were fascinating
developments in the healthcare world.
One was about this concept of Mediterres,
which included this quote, um, uh, I
think it was, yeah, real estate broker
serving the market, talking about how
people are relocating out of New York
for lifestyle or tax reasons, but they
didn't leave because they wanted less
access to world-class specialist care,
and they're now solving for both.
So what the article describes is
all these folks who are, um, uh,
you know, they're moving to Florida.
They're buying a nice home in
Florida that's becoming their
primary residence, and they are still
purchasing a second home that they're
calling a Mediterre, uh, in New York
for access to these specialists.
And the examples are kind of crazy.
I think there was one who was,
um, uh, buying a $5 million house.
I think they live somewhere outside
the United States, but they're buying
a $5 million house in New York for two
visits a year, uh, where they wanna
go get a checkup from their preferred
specialist at a New York City hospital.
Kind of wild in concept to me.
Like, I don't know why the hotel
down the street isn't a better
option for a twice-a-year visit
to New York City, but hey.
I, uh, I'm, I'm not thinking about
the world in the same way those folks
are, I think, at this point in life.
Um- But the Wall Street Journal's
talking about it as a trend.
So that was article one.
Article two was about how longevity
services are the new, the new in trend
in luxury condo buildings, focusing on
there was one example they were given
of a new development going up, and they
were talking about, uh, how Atria Health
and Research Institute is building a
50,000, 52,000 square foot facility in
this condo building that offers MRI,
imaging suites, movement studios, which
I think means a y- room for yoga, patient
rooms, and a longevity cafe filled with
your favorite, uh, smoothie of choice.
And perhaps- Probably get some
peptides ⦠perhaps some BPC-157.
Is that the peptide?
Is that the Wolverine peptide?
The Wolverine serum.
Um, yeah, no, and this isâ¦
I, I, I love this f- If you go on
Atria's website, it is beautiful
architecture all over the website, Martin.
Like, the, the images of these
clinics are, are stunning.
This is the staircase, I think, in
their, in their New York City clinic.
And it, to me, is an example, again,
Wall Street Journal's highlighting this
in their retail section, of how people
at the, at the top end of the income
bracket are thinking about accessing
healthcare services and what they
want out of their healthcare services.
And weâ¦
I, I feel like I hear often about the,
the idea of the diffusion of innovations
in, um, technology world, and that, like,
you know, the iPhone starts out and it's
really high priced and nobody can afford
it, and then over time, because of the
cost of technology, it becomes more
affordable, becomes mass market product.
And people tend to apply that theory
to healthcare, thinking about, like,
what is the, what is the thing that
starts off high-end and then becomes
cheaper and cheaper over time as
the thing that people wanna access?
And I think if I think about what
that is and, like, what really wealthy
people are paying for here, they're
not paying for technology per se.
They are paying for access to
their people who they trust as
the world-class specialists.
Like, if you go on Atria's website,
the core pitch is you get your own
chief medical officer, and that chief
medical officer has access to all the
technology and bells and whistles, and
you can get your MRI in the facility.
But, like, you're not paying for
access to an AI chatbot that's going
to automate interactions with you.
And I Man, if I'm running a care
delivery organization and I'm, like,
thinking about my AI strategy, I
think that is very telling for what
people want from their AI strategy.
It is enabling human interactions.
It is not the automated text
messages, calls, et cetera.
So I thought it was fascinating to
see the, the general narrative there.
Martin: I'm, like, a little bit, uhâ¦
You know, I'm a-- I live in a condo, and
I'm, like, very sensitive to HOA fees.
I cannot imag- And so for that reason,
I live in a third floor walk-up
even though I have a one-year-old.
I cannot imagine the sort of
surprise HOA special assessment
when your MRI machine breaks down.
Kevin: I, I, I, I'm actually very curious.
I assume something like this is part
of your HOA, like you are paying for
access to it as part of your HOA fees.
I don't actually know if that's,
if that's how they're doing it.
But yeah, if you need, you know, uh,
you want a surgical robot installed
in the, in the building, that'sâ¦
It'd be quite the assessment
for, uh, for the HOA.
That I don't know everybody's, uh,
wanting to, to sign up for, you know?
Martin: If one has the means.
I mean, I, the, there are sort
of two paths, I guess, if you
are a, a wealthy New Yorker.
One is to have a Meditare and to fly
in, and the other is to have an Atria
just, uh, you know, in your building.
You just take the elevator up.
Kevin: For sure.
And if I look at Atria, it kind
of goes back to that Hot Peptide
Summer, uh, article and what
people want out of primary care.
You can, you can see what people want
for their primary care services, right?
It's access to the testing.
It's access to these providers.
It's a wellness longevity type
model that helps you keep aging in
the way you want to, and, um, it's
not what I hear from, like, the
traditional pitch of primary care.
And I think it'sâ¦
I don't know.
It's gonna be really interesting
to watch this model emerge.
I-- The other note that I, I was looking
at, uh, primary care clinician salaries.
Do you wanna guess what the average Atria
doc's salary was per, per Indeed data?
I think it was Indeed.
Yes.
Martin: I, I, I can tell you as
a, a baseline, 'cause we've been
talking about primary care at MGB
a lot lately- Mm-hmm ⦠that the
MGB docs are making, like, 250-ish.
What's a, what's an
Atria primary care doc?
What's a chief medical officer
for an individual, uh, make?
Kevin: They're at like 450.
Uh, which, good for them.
But I, you know, you think about,
you think about all the workforce
considerations on the back end of
that, and y- you, you, I, I would
be willing to guess Atria does not
have the same issues MGB has with
pay for its primary care providers.
Why?
They're paying 450 because they've
got wealthy clients who are
willing to pay through the nose
for access to this sort of stuff.
And that i- like, it's the fundamentally
the trade-off in, in healthcare, right?
You, you can have models like this
if you are willing to pay for them.
And it's actually, if you get docs
who wanna work in these models, and
I know, like over the years I've had
enough conversations with primary
care docs who, you know, Mayo's
always had their executive program.
And There's a contingent of docs who are
like, "I would never go do that 'cause
I don't just wanna go provide services
for the worried well who can pay for it.
You know?
I wanna, like, r- really get into
primary care," which I totally get.
But also, if you wanna make $450,000 a
year for providing those services, this
seems like a pretty good option to me.
Martin: Yeah, it turns out you
can buy stuff for money, and so
sometimes more of it is, is better.
Like, if you ever want your own
Mediterra, I think you're working
for, for Atria and not, uh, MGB.
So, um, our n- first guest is Dr.
Ezekiel Emanuel.
He needs no introduction, but
it's a great resume so I'll share
a couple quick highlights here
before bringing him forward.
Vice Provost for Global Initiatives and
University Professor at UPenn, Special
Advisor to the Director General of the
WHO, Senior Fellow at the Center for
American Progress, and a member of the
Council on Foreign Relations, Founding
Chair of the Department of Bioethics at
NIH, helped write the Affordable Care Act,
Biden-Harris Transition COVID Advisory
Board, and he recently published a book
called Eat Your Ice Cream, which is
advice that I sincerely take to heart-
including this weekend, uh,
at Red Hen when I told my wife
that it was doctor's orders.
Um-
Zeke: Love that restaurant.
Martin: Yeah.
Uh, we were celebrating my one-year-old's
birthday, and he also- ⦠took
your advice and ate his ice cream.
Zeke: Great.
Martin: Uh, welcome to the show.
Thank you so much for, for being here.
How are you doing today?
Wonderful.
I'm doing great.
Soâ¦
So where we were hoping to start is
you wrote an article a couple weeks
ago, uh, maybe a month ago, in The
Bulwark called What Would You Give Up
to Make American Healthcare Better?
And it was a great piece.
It caused a lot of conversation
in our, our Slack community.
It feels like everyone's had their moment.
You know, pharma, and hospitals,
and insurance companies have all
had their moment in the hot seat
recently in front of Congress and,
and sort of getting admonished.
I'm curious to hear from you if you're
seeing any sort of areas of optimism
or green shoots where you're hearing
any willingness to accept some of
that collective coordinated sacrifice
that you, you outlined in the piece.
Zeke: Not sure I'm seeing that, but
you wouldn't see that until the end.
So what I am seeing is, I think,
uh ⦠Let me back up for a second, okay?
To get real change in a healthcare system,
um, the f- uh, late professor John Kingdon
from the University of Michigan said,
uh, you know, to get major legislation,
and therefore any change, you need
clear public recognition that there's
a problem, you need a vetted policy
alternative that addresses the problem,
and you need a political opportunity.
We have a clear, and I think this is
actually pretty important, we have a
clear recognition there's a problem.
Um, and I think the dimensions of the
problem almost everyone agrees to.
The public is pissed off.
You know, uh, uh, over 60% of the public
thinks we have a, either a crisis or
that the system needs major reform.
You get people, as I quoted in
that article, like Steve Helmsley
of United, uh, saying, "The
system needs to be disrupted."
No one's happy with it, so I think there's
a clear understanding of the problem.
You know, no universal access.
You have, uh, uh, a, a cost that are
just way too high, uneven, uh, and poor
quality in many areas, um, disparities.
Uh, so I think, I think we're,
we're clear on the problem.
I think what we're lacking at the moment
is a clear solution, and I, I go this
long route because I wanna make clear,
you know, you can't just ask the insurance
companies to give up something or the
hospitals to give up something or, um, you
⦠Th- all are gonna have to jump at once.
Everyone's gonna have to give up
something, and in return they're gonna
have to see that they gain something
somewhere else in the system, and that
can only happen if you've got m- multiple
reforms happening at the same time.
And what we lack at the moment,
to go back, i- is we lack a
clear plan that does that.
I, I'm literally, what did I just
stop doing before getting on with you?
I'm working on that plan, and I'm,
I'm trying to think of multiple
ways of getting people on the
same ⦠Or beginning to think
about what the outlines and, and
details of that plan would look like.
Um, but that people are ready for
disruption, uh, that an insurance
company's ready for disruption, um,
that, you know, drug companies are
talking MFN and really beginning to
realize there's gonna be some big change.
I think all of that is, is serious
progress in, you know, more
flexibility and more being open
in the initial reaction to any
ideas that, "No, can't do it."
So.
Martin: It feels like there's always
a lot of special pleading as soon
as you write an article like this.
We had people in our Slack group being
like, "Well, actually, if you wait longer
for surgeries, it'll, like, it increases
costs on here," and this is coming
from, you know, a, an orthopedic doctor.
And yeah, I, I- Attacking.
Yeah.
Kevin: Kevin, uh, I'll
pass it over to you.
Yeah.
Zeke, one of the things Martin and I
banter back and forth on a bit is it
feels like the easy button option is
to say, "Well, can we just increase
spending on healthcare and try to
make things better that way," right?
Like, it's 19, 20% of GDP today.
It, you know, it's always been going up.
Why, why is 19 too high, and what gets
better at 12 versus, you know, 22 or 25?
Like, how do you, how do you think
about that general topic of what is
the right amount of GDP to be spending
on healthcare, and how do we know
when we've gotten to the right answer?
Zeke: Okay.
Uh, lots of answers, or lots
of things that need to be,
uh, put into that calculation.
The first thing I should say
is we all need to be clear, the
more we spend on healthcare, the
less we spend on other things.
It's an opportunity cost.
It's, so getting to 22 or 25% of GDP
on healthcare is an opportunity cost
that we can't spend on education,
we can't spend on environment,
we can't spend on long-term care,
which is separate from healthcare.
Um, we can't spend on,
uh, military defense.
So there's this big opportunity
cost, and we shouldn't hide that.
The second thing is, how would
you think about what's the right,
quote unquote, right number?
Well, you guys are well aware
because you're health nerds that
there is this graph where the X
axis is how much you spend per
capita on healthcare, and the Yâ¦
I mean, that's the Y axis.
Mm-hmm.
The X axis is GDP per person, and it's
a pretty s- it's a pretty straight line,
slight upward curve as the richer you
get, the more you spend on healthcare.
And almost all the countries
fit pretty closely to that line.
The R squared is, uh, over .8.
Um, so my argument to everyone who
says, "What's the right number?"
I said, "You know, you have to give
me a good reason we're not on the line
or pretty damn close to that line."
We are, you know, over a trillion
dollars, I think, uh, over 1.5
trillion, 1.25
trillion, uh, last I
looked, over that line.
To give you round numbers, it's about
$5,000 per person between, depending
on how you calculate it, between 3,500
and $5,000 per person off the line.
Um, higher than Germany, which
is the next highest country,
uh, higher than Switzerland.
Um, so that's what I would say.
We don't need more money, okay?
We simply don't need more money, and I
think that's a pretty definitive, uh,
comment, and I'm willing to defend it.
Um, you know, Germany, Switzerland,
Netherlands, Norway all have universal
coverage, all have, uh, pretty high
quality care, certainly comparable
to the United States, um, and spends
considerably less than we do, okay?
So we don't even get universal coverage,
and we have quality that's no better.
I mean, in some areas it'll be better.
Many areas, like infant mortality
or hypertension control, it's worse.
Um, so you would have to tell me why
we can't cut $3,500, forget adding
money, to where we're spending now.
That would be my main argument.
And I think our target should be
we're staying exactly at 18% of
GDP, and it should go down, be able
to go down to something like 15%.
Is the problem money?
No.
The problem is how we organize the system,
and that's where the reform has to be.
Martin: Can you give us a bit of a
preview on what your, like, top, you know-
as, as you're, you're
penciling in this plan.
Like, it, it seems to me like, you
know, you're author of the ACA.
Uh, uh, you helped, you're
instrumental in writing it.
We, we, we did this exercise back
then, and we had every- we asked
everyone to sort of give, give up
some stuff, and it made everyone
really angry, and the president lost
a bunch of seats in- Oh, wait, wait,
Zeke: wait, wait, wait, wait, Martin.
Let me- Let me, let me take issue.
It made a segment of the population
angry, the Tea Party, and it wasn't
what we were asking them to give up so
much as what we were making them do,
which was you gotta have insurance,
and you have to have insurance that
meets a certain minimum requirement.
And why do you wanna
have that requirement?
Because otherwise you're a free rider.
Let's just be serious.
Everyone, unless you die as
a hermit in Alaska, everyone
will use the healthcare system.
It's virtually impossible, frankly, to
die in America, even acutely, without
using the healthcare system and spending
a whole lot of money doing that.
Um, and so, you know, if you say, "I don't
want insurance," or a young man says,
"Look, I, I, I'm not gonna have a baby,
why should I pay for maternity care?"
No, this is, like, nonsense.
You will use the system.
You may not plan to, it comes out
of the blue, or you plan to and
you have a chronic di- whatever
it is, or you father a child.
Whatever it is, you use
the healthcare system.
And the Tea Party objected to the
government saying you have to have
insurance be- but we guarantee
that you can get emergency care.
Why should we not say you have to
contribute to a system that's ready
to take you for emergency care?
That, I think, was the s-
the sum total of the problem.
What we've seen Since then is, um, that,
uh, everyone, including Republicans,
think that healthcare is a right.
How can I firmly say that?
First of all, support for the ACA
after 2018 went up and has stayed up.
It's now over 60% of the population.
That's the first point.
The second point is every time expansion
of Medicaid has been on a state ballot
in a red state, every time it has passed.
Um, Florida, y- you wanna say, "Oh,
it didn't pass because it didn't
get the two-thirds necessary to
actually implement it," but it got
a majority of people in Florida.
But Iowa, I mean, not Iowa, Idaho,
Utah, Missouri, um, lots of other state,
North Carolina, uh, uh, the legislature
eventually caved and, and adopted it.
Lots of states, the populace
has said, "We want that."
So I think that tells you there's a
recognition healthcare is a right,
universal coverage is the right way to go.
Um, so the question is how.
I will ⦠Maybe I'll
answer that question now.
So, um, I don't, I'm working on the
full-blown thing, but I've written
in Bulwark, um, look, getting
healthcare is too complicated.
Um, we have literally, um, hundreds
of thousand ⦠We have thousands
of insurance companies and hundreds
of thousands of different offerings.
We have to radically simplify.
So my proposal is- People who
get employer-sponsored insurance,
like myself, you stay there and
the employers figure it out.
Everyone else, Medicare, Medicaid,
the exchange, the uninsured, vets,
Indian Health Service, just everyone
else, that's 175 million Americans,
go into a separate exchange.
That separate exchange, the, I call it the
American Exchange, uh, limited choices.
We know too many choices, you guys
are experts in behavioral economics.
Too many choices paralyze people, and
they make bad choices where they're paying
too much for the product they're getting.
Limited choices of six options,
where one of the options is
a modernized Medicare option.
So people on the left who want a
Medicare buy-in or a public option,
they get that public option.
Other people who don't want a public
option, want private insurance,
can get private insurance.
But then you also have to
standardize across them.
The same benefits, the
same, uh, uh, out-of-pocket
co-pays and things like that.
The same payment for surgical and other
procedures, so you can have bundled
payments and drive more efficiency.
You need toâ¦
A lot more standardization.
One of the things that we're reas- One
of the reasons we're paying 18% of GDP
and others aren't, is we don't have
standardization, which dramatically
increases administrative costs.
The last element that I would add
to that is, um, uh, not one year
annual re-enrollment contracts.
That is a terrible idea.
First of all, most people think it's
onerous and just a distraction, and
second of all, it leads to lots of
churn, and churn is bad for, uh,
persuading insurers to do long-term
investments in prevention, in chronic
disease management, and other things.
So those are the elements of it.
One exchange, limited number of
choices, standardization of choices,
and I should also say, um, constrain
the, uh, uh, payment of deductibles
and co-pays no more than 2%.
This idea that you're, got high deductible
where you're paying 5, $7,000 before
insurance kicks in, that's not insurance.
That isn't.
Um, so those are the kind of elements
I would have, uh, in a reform system.
Kevin: Zeke, I'm curious to bridge, you
talked earlier in this conversation about
you need the problem clearly identified.
We've got that.
You need the solution.
Sounds like you're working
on an option for that.
I was reading an article over the
weekend about a, a gentleman who may
or may not share the same last name
as you, who was biking across New
Hampshire, uh, potentially to, to show
that he is physically fit enough for
a, a run for a certain office in 2028.
Do you- Actually, I don't think
Zeke: that'sâ¦
I don't actually think
that's why he's doing that.
I, I mean, I think people just
screwed up the psychology.
Kevin: Fair enough.
Um, that was the Wall Street
Journal's take, I think- Yeah, I
know, I know ⦠on, on the scenario.
Um, I, I think- If
Zeke: you have any doubts, I can assure
you, having ridden with him and run
with him and horsed around with him,
he's plenty fit and plenty there.
For sure.
Kevin: Um- I, I'd be curious how you
think about the 2028 presidential
campaign and, and the moment.
It, it feels like we are, we are
building up to a ACA-like moment in
time for another really meaningful
policy shift in this country.
And if you were advising a presidential
candidate, somebody thinking about what
that election looks like, how big do
you think this topic's going to be?
How do you think this, this
builds up to that conversation?
Zeke: You've anticipated exactly my
thinking about it, which is, look, I don't
know if it's 2028, and the main reason I
don't know, while I think the pressure is
gonna build up, I don't know whether it's,
you know, healthcare's gonna be t- one
of the top two issues, which it has to be
if you're gonna embark on a big reform,
or whether we're gonna have to wait till
2032 where multiple other things are
gonna happen, including we're gonna be,
you know, looking down at the, uh, trust,
the Medicare trust fund being bankrupt.
My suspicion it's a little later
for that reason, and the second
reason, uh, well, three reasons.
The second reason being that,
um, affordability of everything
else, uh, food, energy,
housing, is gonna dominate 2028.
Um, and so I think it, it, while
healthcare's part of that, you know,
the public says they're worried about
healthcare, I suspect the worries of
other things, just getting f- literally
getting food on the tables might dominate.
And then the, the last thing is what
I mentioned at the start, which is we
don't have a plan that enough of the
health policy experts have agreed on that
politicians can then adopt and adapt.
And, um, I, so I think in
the absence of that policyâ¦
Now, maybe we will over the next two
years get a policy that, you know,
my policy or some other policy that
people will agree on, but I suspect
we're gonna need a little more debate.
And that suspicion is because, you
know, I, I think people forget,
um, uh, to get to Medicare, what
Medicare was first proposed in 1957
and adopted in, uh, 1965, okay?
Hmm.
That gives you the, that's a sort
of eight-year window that it took.
Um, now it could have
been adopted in 1960.
There, you know, um, uh, there were
some debates that actually came to a
vote and, and didn't pass the Senate.
I think, uh, similarly, you know, it was
2005 when Romney- uh, care, uh, came in,
uh, 2009, '10 when the ACA was passed.
That's a five-year win- I think
you need those kind of windows.
Anyway, that's my, you know, suspicion.
Once you have a plan or the outlines
of a plan, you still, you know, you
need to begin vetting it, having the
country debate it, and things like that.
Yep.
So.
But I think you're right.
I think the pressure's gonna
build and people areâ¦
I mean, it's amazing.
People are pissed off.
And when we did the ACA, it was,
you know, the middle class, the
upper middle class was still pretty
confident in their sy- their plans.
Now they are pissed.
I was just at a friend's house
and he's like, "You know, these GI
doctors, all they wanna do is scope me.
They don't wanna talk to me
about, you know, my problem."
And it's like, uh, and
th- they're, you knowâ¦
A- and by the way, it took four
months for me to get a scoping date
because they're scoping everyone.
Mm-hmm.
And so he, you know, this is a
guy who's got plenty of resources.
Um, so it, it, I think that kind
of anger at the system is now
infiltrated the upper middle class.
And when that happens, then,
then there's a lot of pressure on
elected officials to do something.
Martin: We are at time,
and so I'm- Oh, what?
Are you kidding?
If you have a couple more minutes, we
would love- I have a couple more minutes.
Great.
So you, we've been talking a lot
about AI recently in the HTN Slack,
and just generally, obviously,
you, you, you can't go two feet
without running into an, an AI.
You wrote a JAMA article, co-authored
a JAMA article with this framework.
I'm curious, where are we at in terms
of this being a technical problem that
we need to solve versus this being an
adoption problem in terms of, like,
what's your, what's your view on w-
where the, the clinical AI is at at this
Zeke: moment?
I, I, I think it's both.
It, it's not so much technical.
We, what we need is to get a lot of the
models that have, you know, there's a lot
of work been done i- into more real-life
clinical scenarios where we're not testing
them on patient actors or by, via, uh, a
text chat box, but where you're actually
got a voice and people are interacting
with it, and they're also interacting
with, uh, the messiness of the real world.
Now, some of the bots have
been tested in that scenario.
Um, more need to be tested,
and they obviously tested.
They need to be tested in a supervised
sense that there's someone overseeing when
they're interacting with real patients.
I th- and, and they are gonna
be constantly improving.
It's not like this is a plateau.
Um, I think by 2030 you're gonna have
plenty of, uh, of AI, clinical AI
that really can diagnose patients,
establish a differential, order tests,
diagnose patients, and establish a
guideline concordant care pathway,
and even autonomously manage patients.
S- uh, um, I, and then you are
gonna have this regulatory issue of
what, mainly what's the liability,
but also what's the compensation.
I think once we have some of those,
um, AI tools, you're gonna have aâ¦
Actually, that's gonna, in my opinion,
be a big push towards getting more
value-based payment because you don't
want someone to ka-ching, ka-ching,
ka-ching for every time AI's involved.
That would just drive
costs through the ceiling.
On the other hand, if, uh, healthcare
providers have an incentive to implement,
uh, AI because it'll drive costs down,
I think that would be, uh, the right
way, uh, to get it really adopted
because then, then the providers, the
doctors and hospitals see it in their
interest to actually implement it.
So I think that's, that's
the way we're going, frankly.
Kevin: Zeke, I'd be curious,
healthcare seems toâ¦
I, I hear this, this talk track
from CMS leadership currently.
Healthcare has a tendency to incentivize
the adoption of new technologies that
ends up driving up costs rather than
driving them down over, over time.
I'd be curious how you think about
that from a policy perspective,
perhaps in what you're thinking about,
um, uh, in the, in the years ahead.
But how do you- W- w- what's your
thought on how we actually make sure
AI is deflationary versus continuing,
um, the historical trend of inflating
costs with new technologies?
Zeke: Again, I think so as I said,
I think you have to give it to the
providers to use and not have a fee
for service arrangement under, or that
reimburses for the implementation of AI.
I think that's absolutely critical if
you're gonna make sure it doesn't explode.
And similarly, on the administrative
side, you know, you can't have the
providers just adding more codes and
the insurers just doing more denials
and, and, and, and a race there.
That's one of the advantages, in my
humble opinion, of moving towards more
value-based payment, but also, um,
uh, standardizing a lot of the bills,
reducing the number of codes you can
use so a lot of this gaming goes away.
So that, that's the way I would
see it as, as really important.
Martin: I think where I wanna end is,
so I mentioned earlier, but you wrote
a book called Eat Your Ice Cream.
Yes.
We're in this weird cultural moment
where the very affluent are spending
lots of money on research chemical
peptides- ⦠stack transfusion stuff.
And I'm curious what you make of
this, you know, sort of moment
where people are, there's vaccine
hesitancy, but then there's also people
injecting themselves with Chinese
research chemicals, and then- Yeah
you know, you come out with this
book saying basically like, "Don't
do stupid stuff," and, uh- ⦠don't,
you know, and, and you can live
a long, health, uh, healthy life.
Zeke: Uh, well, of
course, I think I'm right.
Um, uh, but I do, it, so, you know,
there's a long historical tradition about
focus on wellness, and it's not constant.
Uh, between about 1880 and 1914, the
start of World War I, there was a big
burst of interest in, uh, wellness, um,
and much the same vaccine hesitancy.
Then it was about smallpox vaccines.
There was a big interest
in vegetarianism then.
There was a big interest
in exercise back then.
Spas like Baden-Baden in Germany and,
uh, Saratoga Springs in the United
States, uh, uh, flourished at that time.
It's almost identical to the
current moment- Mm ⦠um, in
terms of wellness interest.
My hyp- underlying hypothesis, a lot
of this is driven by, um, uh, you
know, the fact that the world seems
like it's spinning out of control.
You know, you've got, then in 1880s,
you had an industrial revolution.
Now we have AI.
Uh, you have people
worried about the future.
We had a lot of immigration then.
We have a lot of immigration now.
Similar moment.
You also had income inequality,
and people wanna hold onto
something they can control.
And it turns out wellness is, you
know, I can control what I eat, I
can control my exercise, et cetera.
Um, and, you know, damn the
state if they're gonna tell me
what vaccines I need to take.
Um, uh, so I think that's a large
part of what's driving this.
Um, by the way, you can also
find way back then in 1909,
I've got a quote out of the St.
Louis Post-Dispatch, "Researcher says
that with scientific advances, humans
are gonna be able to live to 150 years."
Could have been written yesterday.
Um, so I think, I think that's actually
what's going on, and I think, you
know, this idea that we're gonna
live ever longer is a delusion of
people like Bryan Johnson and others.
Why do I say that?
You know, we've got more people living
into their 90s than ever before.
We've got more centenarians
than ever before.
But it turns out the top 120,
roughly, um, hasn't budged.
You haven't had people living to 130.
You think you would get that
sport of nature, just the, uh,
odd person who can get there.
Hasn't changed.
Um, a- as Jay Olshansky out of, uh,
University of Illinois in Chicago says,
and I think quite persuasively, um, w-
we may get more people into their 90s
and 100s, but we're not gonna get past
that, and I think that's pretty true.
And I would just note that, um, recently,
unfortunately, uh, Craig Venter, who, uh,
helped, uh, sequence the genome, um, and
was a big believer in, like, whole, you
know, sequence your genome, whole body
MRIs, and all of these tests, um, died at
79 of a complication of treating cancer.
He didn't detectâ¦
Or maybe he did detect his cancer.
I don't know the ins and outs of it.
But he, he couldn't prevent his cancer,
and he couldn't prevent an unfortunate
outcome of the treatment of his cancer.
So, you know- Yeah ⦠all these guys
who are sure in their 40s and 50s
they're gonna live to 150, um, I've
already made a bet with Bryan Johnson
it ain't gonna happen, uh, for him, so.
Martin: Will be interesting
to follow up with that.
And thank you so much for your time today.
This was, was really great.
I lo- I love
Zeke: interviewing with you guys.
Martin: Yeah.
We'll have you back- This was fun.
We'll do it again ⦠a- anytime you want.
Anytime you want, uh, we'd love to chat
about your policy plan and ice cream.
Great.
Have a great rest of your day.
Take care, guys.
See you, guys.
Nice chatting.
Bye.
I think that the, this idea that the
employer-sponsored segment is gonna
get more or less, less left alone,
and then we're going to have, uh, I
think we heard Bertolini, uh, from
Oscar talking about this, this earlier,
that the, the, the, the government
plans are gonna need to come onto the
same market and, and, and rationalize
Kevin: a little bit.
I find it really compelling.
For sure.
Iâ¦
We are going to be talking more and more
over the coming years about this idea
of a single risk pool for all of these
government plans and the benefits of that.
And like you s- it makes complete sense to
me that, that we head in that direction.
We've heard it from Bertolini.
It makes sense when he talks about it.
He's mentioned it for
both red and blue states.
Uh, we hear something
similar from Zeke there.
I, I get the logic behind it, and the
logic of you're gonna have this kind ofâ¦
Nobody's gonna wanna call it a two-tier
system politically, but you've got,
you know, for folks who stay in their
employer coverage and for folks who,
um, receive government coverage,
you've got that single risk pool.
And I, I do think it is, if you're
thinking about how the coming decade
of healthcare plays out, thinking
about, we are, we are fully on track
to have a major piece of legislation
come through, ACA-esque in nature,
that's gonna change the industry, and
it's, it's really a question of what,
what year it comes through, right?
Is it gonna be in the 2028 cycle?
Is it gonna be in the 2032 cycle?
I think Zeke makes a logical
case for why it's not gonna show
up in 2028, but could in 2022.
That's, that's gonna dictate a lot
of American healthcare over the
next com- upcoming decades, right?
Similar to ACA.
Yep.
Martin: Yeah.
Crazy
Kevin: to think about.
Martin: And interestingly, I
think about the businesses that
will get built as a result.
One of the things you and I have
been tracking is the impact of the
expiration of the Affordable Care
Act enhanced premium tax credits and,
and what that means for hospitals.
So HCA has been talking about it, UHS,
Tenet, they've all talked about this
as a, a headwind for hospital finances.
At the same time, we've got Medicaid
dis-enrollments sort of coming in hot
'cause of the, the OBDA, and like Zeke
talked about, these, like, increasingly
higher and higher and higher deductibles.
Mm-hmm.
And so to talk about what that
means for, um, provider finances, we
have Seth Cohen, president at Cedar
Health, the financial experience
and healthcare payments platform.
Seth,
Seth: welcome.
Hello.
Thank you.
Hey, Seth.
Great to be here.
How
Martin: are you today?
Seth: I'm great.
Great.
Martin: Um, thanks so much for having me.
I'm a big fan of what you guys produce.
Oh, that's very nice of you.
So we really enjoyed your LinkedIn
post from a few weeks back on-
Mm-hmm ⦠ACA grace periods.
You have this very interesting, I
think, perspective, given the business
that Cedar's in, on provider finances.
There's a very evocative line, "Your
commercial accounts receivable just
became your self-pay AR without warning."
Yeah.
We're in June now.
Curious if you can give us a, the
little bit of a sense for what
the, the, the Cedar folks are
seeing from, uh, on the ACA front.
Seth: Yeah.
So on the ACA front, we are see- You
know, it's interesting, we started the
year not seeing as much softness in ACA
enrollment as we maybe had assumed, but
one of the things I think was hard to
recall is that, uh, when people don't pay
their premiums, it doesn't hit right away.
It takes a couple months
for folks to churn off.
And so in fact, we did see some
significant churn, I think in states like
Arizona, Minnesota, where you did see
after a couple months, people not paying
those premium bills, you know, suddenly
stopped getting coverage, and that was
a real pain point for providers, right?
Because they hadâ¦
many of them had given care or had
enrolled or scheduled care with
the expectation that they had that
insurance, and then they were sort of
surprised and caught off guard that,
wait, now, now they convert to self-pay,
and what happened to that insurance?
And, and so it's, it's just there's
so much administrative pain around
that, um, for the providers.
But of course now these, quote-unquote,
"commercially insured folks"
are, are now truly self-pay.
And so we've definitely seen some
volatility there, and I think it's
just, it continues to go up and
down, and you see folks kind of
churn on and off ACA, uh, much more.
But I think overall we're
seeing enrollment down.
Kevin: Seth, can you walk me
through the mechanics ofâ¦
I think it's non-intuitive
for folks who haven't been-
Yeah ⦠in ACA insurance coverage.
So- Yeah ⦠if I'm a patient, I go in
January to get, to get a treatment at
a health system- Yeah ⦠and then I
churn out of my ACA coverage in March.
Right.
It retroactively makes me s- I, I
don't have coverage as of January.
Like, what happens mechanically in,
in all of that for a health system?
Seth: Yeah, I mean, the, the way an
ACA plan, like most insurance plans,
is to work is that you, you have
coverage if you pay the premiums.
And so your underwriter, um, your insurer,
is going to, is com- is obligated to cover
the cost of your care as long as you are
an active enrollee, which means- Mm-hmm
defined as you're paying premiums.
And so these insurers, y- you know,
understandably, are tracking very
closely when premiums are paid
or not, and if you haven't paid
your premiums, you're no longer
obligated to be covered by the plan.
So to your point, Kevin, in January, if
you go in and you have scheduled your
care and you've presented a card saying
that I'm an enrollee in this ACA plan,
right, this marketplace plan, and yet
you haven't paid your premium, maybe even
for December or January, then yeah, there
is some delay, but you ultimately are a
churned member of that plan, and so y-
there's no obligation to cover your care.
Kevin: Yep.
Seth: And so I would say it's interesting,
when I talk to some of our provider
friends in non-expansion states, so
when I say non-expansion, I mean states
that didn't expand Medicaid coverage
over the last few years, who have
been generally less worried about the
impact of the Medicaid redeterminations
that are coming this fall.
What they're more concerned about,
especially in states like Texas, is
this ACA impact because they have
relied so much on ACA enrollment
over the last few years, right?
That's where that
Medicaid-eligible population
from other states would've gone.
And so there, they're seeing real impact
from some of this ACA, um, volatility.
Martin: That's a perfect transition
because I think what we're hearing from
provider groups is a lot of anxiety
about the upcoming OBVA implementation.
Yeah.
Work requirement interim final rule
just dropped earlier or last week.
Are, are, are folks sort of, you
know, the, the folks that are using
Cedar and that you're talking to,
are they sort of feeling similar
distress around the last round of
redeterminations, like post-pandemic?
Like what does it, what does it look
like and, and what are folks doing
to get ready for, for- Yes ⦠this,
this next round January 1st?
Seth: So like any good
answer, it depends, right?
And so it depends on the state.
Depends, again, those non-expansion
Medicaid states, so a lot of the states
in the South, you know, are less sensitive
to these Medicaid redeterminations.
They're more sensitive to the
ACA enrollment fluctuations,
but less sensitive to Medicaid.
And then so you take, that's
one kind of lens to it.
Now, in the states where there
has been meaningful Medicaid
enrollment and redeterminations,
even there, it depends a little bit.
So you've got some folks, again,
I'm gonna talk about our friends in
Minnesota or Oregon, where you've seen
state p- uh, state bills pass in recent
years, I should say, where there's
been presumptive eligibility checks.
Like in other words, states have passed
laws saying, "You must screen everyone
who's showing up who is self-pay for
financial assistance before giving care."
So in states like that, providers
are already sort of bracing for um,
the work impact of needing to manage
self-pay populations because now
if Medicaid people churn off and
become self-pay, these are just more
people that now need to be screened,
and there's laws now around this.
It's like if you don'tâ¦
If Martin, if you show up and you're
self-pay and you aren't screened for
charity care before that care, there
are penalties attached to this, right?
Hmm.
So, so, so you have some, some folks
who are sort of primed, uh, and pr-
and providers that are primed for
this or are thinking about it a lot,
and then there are others, and I'll
be honest, who are a little bit more
of a head-in-the-sand mentality here,
um, where it might be, oh, I expectâ¦
I'm not saying I believe
this, I'm saying I hear this.
I expect that something's gonna change.
Congress is gonna come together and
they're gonna pass some last-minute bill
that's going to delay the impact of this.
I think that train has left the station.
We didn't see that happen with
the ACA subsidy expiration.
A lot of people were hoping that Congress
was gonna act, and it never happened.
Uh, or they tried, but it didn't happen.
And then I think there's
still some of that.
Or, or, or my state's gonna come
through with some additional funding or
subsidy that's gonna soften the impact.
I'm a critical access provider.
I can't affordâ¦
So, so it's a little bit of this,
like, deer in headlights situation
that, you know, we're trying to
encourage people to get over.
But then, yeah, a lot of, a
lot of providers are saying,
"We have to do something."
And, and i- in a world where you're
gonna now have an increase of patients
who have not just $100 bills, $1,000
bills, but, like, 15 to $20,000 bills,
you need a different way of sending,
of supporting those patients, right?
It's not just about sending
them a billing communication.
Like, you need to support those
affil- affordability challenges.
And I'm not saying that the provider
was, needed to take that responsibility
or that it's, it's their duty.
It's just now this is where it's
landed, and, and we're certainly
trying our best to help them.
But that's, that's, I
think, where things are at.
Kevin: We hear a lot in the, in the
community, in the news cycle, higher
deductibles, more out-of-pocket
payments required for patients.
Uh- Yeah ⦠Mark Cuban has this memorable
phrase about making hospitals subprime
lenders in the market- Yeah ⦠uh, as
we, um, pass more and more onto patients.
Can youâ¦
Like, how is this impacting
hospital financials?
What's the financial impact
you're seeing- Yeah ⦠seeing?
How does that change over time
as we're seeing more and more
of these higher deductible type
plans- Yeah ⦠hit the market?
Okay.
So
Seth: don't let me go too
far on my soapbox here.
So you can always rein me
in- No, get right up on it.
Get right up on it, Seth.
You can always- 'Cause I, I
do have a soapbox on this.
Let's hear it.
So here's the thing.
All right.
Certainly you two don't need to be
educated on medical inflation in
this country and how out of whack it
is vis-a-vis the rest of the world.
We all know that.
What is sometimes less well understood is
that over the past 15 years, out-of-pocket
costs have been disproportionately
higher than medical inflation.
So if there's US inflation, and
medical inflation's above that, the
US out-of-pocket growth, like, from
consumers, is higher than that.
So in other words, patients
have been disproportionately
absorbing our medical trend in this
country- Mm ⦠the past 15 years.
And you see that things like high
deductibles were an experiment.
Back in 2005, I think 2 to 3% of
Americans were on a high deductible plan.
2023, the first time ever, the majority
of Americans are on a high deductible.
So I'm starting here because, to answer
your question, because- Out-of-pocket
costs have not always been how they
are today, and I think a lot of
health systems in particular are, have
been struggling to keep up with what
has been a relatively silent trend.
Like, we talk about medical trend and
claim denials and payer reimbursement
dynamics a lot more than the steady uptick
of patient out-of-pocket year after year.
And so I think a lot of hospitals in
particular are sort of still remembering
the days when everyone showed up with a
co-pay, and now almost no one does, right?
And, and you, you made the point around
my comment on commercial versus self-pay.
I mean, most providers still classify
patients into three insurance classes,
which is commercial, government, self-pay,
and that's a total anachronism, right?
Because, you know, again, you
can have someone on a commercial
ACA plan, good luck tracking
that as a commercial patient.
So my point is, number one is,
things have changed a lot, and
it's been hard for providers to
keep up with this new reality.
And then I think then second, the
numbers are significant, right?
So if you take a typical $5 billion,
you know, what they call NPR, net
patient revenue system, right?
Um, it used to be the
patient out-of-pocket would
be 1 to 2% of that NPR.
Now it's 5 to 12%.
Wow.
So let's just assume, yeah, right.
So if you take 10% of 5 billion, that's
$500 million that your patients owe you,
and if you're only collecting around
40% of that, which is more or less the
average we see across hospitals, right?
Like, let's pause on that for a second.
The majority of patient
bills are not paid.
Yeah, I mean, Martin, you're notâ¦
I, I love to remind people of this.
Like, if you've paid your bill
as a patient in this country,
you likely are in the minority,
uh, when it comes to healthcare.
So if you're writing off 60% of
$500 million, you know, remember,
that's income, not revenue.
So what could $250 million of
net income provide to a hospital?
Again, these are, these
are massive numbers,
Kevin: right?
Yeah.
Seth: Um, and the last thing I'll say on
that, and I will then step off soapbox,
but is even within that out-of-pocket
growth, the fastest sub-segment of patient
out-of-pocket cost has been self-pay.
So even before we get to the full
impact of Medicaid and some of this
ACA churn, m- the uninsured patient
doll- dollars have grown the fastest.
In fact, for most of our clients,
40% of patient AR, 40% of patient
account receivables, is from
patients with no insurance coverage.
Martin: You know, it's funny
that you bring up that stat.
No, it's not funny.
It'sâ¦
This is a very serious topic.
But it is, uh, because my next question
is I was listening to a investor call
with UnitedHealthcare executives,
like management, and the guy who,
one of the m- the, the executives
said something like, "Oh, like,
only 40% of co-pays are collected."
And I was gonna ask you about
that stat, but I had reversed it-
Mm-hmm ⦠because I didn't believe him.
I, like, I, in my head, I was
like, "Oh, it must be 60%."
But you're saying 40% is the
collectability rate for, for
patient responsibility-ish.
Y- y- yes.
Like order of magnitude.
Yeah.
And it, and it varies, right?
It varies a
Seth: lot, right?
And a lot of it is demographics, right?
Like I, you know, we have our
friends at Hoag Hospital in
Newport Beach, California.
I think they're closer to 80 to
90% because, like, look at the
patient communities they serve.
And then you've got, like, safety
net hospitals in, you know, inner
city Chicago or New York where, where
it's even lower than that, right?
We've, we've met many hospital
health systems that are 15,
20 cents on the dollar, right?
And by the way, we're
talking about hospitals.
You look at physician groups, so
ambulance companies like air and, you
know, ground ambulance companies or
emergency medicine staffing groups that
work inside hospitals but aren't known
to the consumer, they have no br- you
know, they're sending bills and people
are like, "Who is this bill from?
I, I, I went to Allegheny Health.
I don't know who Envision
is or Team Health."
They're collecting sometimes
five to 10 cents on the dollar.
So yes, so I think on average is
around 40 in our book, but massive
distribution around those medians.
Kevin: Seth, I'd be curious your take
We hear a lot about AI technology,
how it's changing the industry.
I would imagine that this space is
ripe for, you know, thinking about
how you reach out to patients, how you
engage with them, interact with them to
increase that collect- collectability,
um, while also providing good experience
around that, uh, for the individual.
H- how are you guys thinking
about AI technology as part of the
conversation inside of Cedar in
terms of driving, driving performance
moving forward and thinking about that
conversation across the enterprise?
Seth: Yeah.
Um, yeah, we can't get through a, we
can't through a con- conversation these
days without talking about AI, so we
should- For sure ⦠let's go there.
I, I think, but before I just dive
into all the wonderfulness of AI or
opportunity, like first, like anchoring
on what's the problem to solve, right?
Yeah.
And I don't mean that
in a, in a cheeky way.
I think that that's important
because I think sometimes
there's not clarity on that.
So the problem to solve used to
be, how do I just create a modern
and easy billing experience?
Like remember when we all used
to like have to write checks, and
like you'd have to call in and like
you know your statement number.
I think generally we've done a good
job of moving beyond that world, right?
Where we're now in a bit moreâ¦
I mean, there's some exceptions of
course, but it used to be any way
that we needed to create just a more
consumer friendly billing experience.
Now though, when we see 40% of our
book of business owed from patients
who have no coverage, right?
And that's just gonna go up.
That's a very different problem to solve.
This is now how do we help people
manage af- an affordability challenge
that they never intended, right?
Nowhere, no one budgets for healthcare.
Like I've never met anyone who
says like, "Next year I'm gonna
plan for breaking my leg, and so
I'm gonna put aside this money."
That never happens, right?
So with that in mind, the problem to
solve is this one around affordability.
And I think where technology and
particularly AI can help is affordability
is a very personal question.
Affordability means things
to different people.
Like you, Kevin, might say that this
bill is not affordable, not because
you can't actually pay it, but you
sort of, you don't believe it, right?
Mm-hmm.
It's like my Blue Cross insurance does
not say that I owe the same amount,
or I already paid the facility bill.
I don't know what this bill is, and it's
really the physician bill that you justâ¦
So when people say, "I can't,"
or, "I don't want to pay this,"
that could mean different things.
Whereas Martin, you might look
at this and be like, "I stumbled
into the ED, I have no coverage.
I literally cannot pay this $35,000 bill.
This is bananas," right?
So I do think given how personal
some of these situations are and
the resolution paths, I think this
is where technology is a front.
Because what we are thinking a lot
about is how do we deliver an experience
that is really in segments of one,
and saying, "Okay, Kevin, for you,
we need to make sure that we can use
agentic AI to check your Blue Cross EOB.
See, oh, there's a line item denial.
Let's make a phone call,
figure out what that line item
denial is about, reconcile it.
This is why you owe something different.
The plan does not cover
this, but it checks out.
Here's your green check mark.
You go ahead."
With Martin, it might be you have
financial assistance, community resources.
Or by the way, you have
a health savings account.
Let's make sure to use the
banking balances that we have.
We connect to the major HSA banks in
this country, like HealthEquity, right?
Or Optum.
Let's make sure we are aware of that.
And that, I'll tell you, in and
of itself is an interesting thing.
Two-thirds of people with HSA
accounts in this country have
never opened their account.
Never activated.
They're just dormant.
I know.
Wow.
It's, it's, it's just like
this is the stuff, right?
It's like, you know, we created
consumer-driven health plans.
Remember when we called them that?
I do.
They were CDHPs.
And we did that and we said, "No,
don't worry, we're gonna give everyone
an HSA account because then they're
gonna be empowered consumers."
Well, like what happens, right?
Like, what always happens in
healthcare is like consumers don't
really engage, and so they get these
accounts from their employers, and
they're hard to get into, and they're
clunky, and I don't remember that it
was communicated in open enrollment
'cause I didn't care at that moment.
And so they just sit dormant,
not invested, justâ¦
So, so the point is, is technology
can help us connect people to
resources that they need and
not just bill them is the key.
Kevin: Right.
Makes total sense.
I recall reading, uh, going back, you
know, Definity when that was acquired
by United, when it was starting to take
off back in, you know, late '90s, early
2000s, and it was consumer-directed
healthcare and it was gonna revolutionize
the way people interacted with healthcare.
Yeah.
And you know, here we are 26 years
later talking about the, the,
the blight of, of high deductible
health plans in this country.
Yeah.
To your point, I, you know,
unintended consequences of this stuff.
But we think,
Seth: but, you know, some of
this stuff comes down to, like
just-in-time communications, right?
Mm-hmm.
Like there, there's a whole arc of
communications in healthcare that are
so indifferent to the consumer and then
we wonder why consumers don't engage.
It's like why, and not, not that we wanna
go too far in this direction, but you
know, we have this arbitrary period in the
middle of the year or the third quarter
of the year called open enrollment, and
that's, that's for whatever reason, the,
the correct time to then like just, you
know, throw up a bunch of information on a
bunch of employees who may or may not have
any interest in healthcare in that moment.
And so I, I think that part of this is
a function of we communicate to patients
in a way, and consumers in a way that's
totally indifferent to their needs.
I think what we're able to do
here at Cedar since we're in
the bill pay workflow is to say,
"Okay, we're sending you a bill.
Like this is a moment where you're
clearly gonna pay attention.
So how do we in that moment connect
you to the resources that you're
otherwise not gonna pay attention to?"
I think for instance, like connecting
to these health saving accounts and like
telling you, "You have these dollars in
this HSA," or, "You have this account
where you can put dollars in and giveâ¦"
Like that's the moment and, and I
think that's where we can help, you
know, reduce some of the blight.
Kevin: Yeah, for sure.
Martin: It's a great, it's a great
vision, and we're really appreciate
you spending some time with us-
Yeah ⦠uh, this, this, this day.
I, I, I think you're on the West
Coast, so I was gonna say this morning.
Yeah.
But yeah, uh, appreciate you
spending your morning with us.
Uh, where can folks find you if they,
they, they wanna chat, uh- Yeah.
Uh, seth@cedar.com.
Awesome.
So, yeah.
Thanks so much for your time today, Seth.
Yeah.
Thank you.
Appreciate you, Seth.
Nice meeting you.
Seth: See you.
Take care.
Martin: Oh, man.
Everything is, uh, old is new again
in, in, in healthcare policy, and
we're, we're going back to HSAs,
we're going back to a public option.
It's like a, a, a, a
around and around we go.
Kevin: The fun part is, Martin, I
think if you listen to it, what folks
are experiencing on the Cedar side of
the world, what the Zekes are thinking
about from a policy perspective, and
look back historically over the past
decades, y- you can, you can actually
start to predict pretty closely how,
like, the specifics are gonna change.
But, um, I saw Andrew comment on here
about 2032 being a US election year.
Iâ¦
You can start to predict these
things with, I think, a reasonable
sense of confidence, which is
interesting moving forward.
Martin: If you want to argue whether
2028 or 2032 will be the healthcare
election year, you can come join us at
healthcare, or at healthtechnerds.com.
We'll be arguing about it in the
Slack later today with Andrew.
Thanks for your time today, Kevin.
See you, Martin.
Kevin: Bye.