Episode Overview
Together, they unpack how payer strategies are shifting from broad network expansion to more selective, high-performing partnerships, with a growing emphasis on disciplined, data-driven decision-making. The discussion highlights the critical role of payer-provider collaboration in managing total cost of care, along with the increasing importance of data sharing, risk stratification, and more mature value-based arrangements. The episode offers practical insights into aligning incentives, strengthening partnerships, and building sustainable care models for the future.
LISTEN TO THE EPISODE:
Host:
Daniel J. Marino
Principal, ECG Management Consultants
Guest:
Joe Mangrum
Partner, ECG Management Consultants
Daniel Marino:
Welcome to Value-Based Care Insights. I am your host, Daniel Marino. In today's episode, we're going to dive into the state of our payer partners. Obviously the payers, big part of what we do in healthcare. It's created both opportunities for a lot of hospitals, health systems, and providers, but also a lot of challenges. I guess the same would hold true when you think about the impact on our patients as well. And it's interesting to consider where the payers are right now with regards to a lot of the activities within our industry. As I was kind of thinking about it. You know, the pressures that are being placed on the payers are really multidimensional. They're really struggling with costs. Combining the increase in costs of care with the… a lot of the inflationary pressures, there's a lot of regulatory disruption that's occurring, particularly with CMS, as we start to move forward with Medicare Advantage. Payers are wanting to shift the risk to the providers, and they're incorporating within their contracts different mechanisms to start to shift that risk. And lastly, there's a lot of changes related to the structure of our industry, and how we start to collaborate with our payers, with our providers, and mostly as it relates to value-based care, or maybe some of those value-based care programs, such as episode-based pricing models and so forth.
Well, I'm really excited today to have, a national expert, strong colleague of ours, Joe Mangrum. Joe is a partner in ECG Management Consultants. He leads the firm's payer services practice and works very closely with both the national and regional payers. Joe, welcome to the program.
Joe Mangrum:
Hey, thanks a lot, thanks for having me, looking forward to the discussion today.
Daniel Marino:
So, Joe, I know you do a lot of work with the payers, you know, we've all heard a lot of the challenges and the pressures that the payers are having these days. What are you seeing, or what are you hearing as you're having conversations with many of your payer clients?
Joe Mangrum:
What we're seeing right now, it's pretty broad-based margin pressure across all payers. So you mentioned the Nationals. I work with a lot of regional and provider-sponsored health plans. It's across the board medical cost trend is running a lot higher than my clients have expected, and I think it's especially true in inpatient. Outpatient and specialty pharmacy really elevated increased costs in pharmacy, and then I think at the same time, Medicare Advantage rates have tightened, right? So there's more scrutiny around risk adjustment, and revenue growth just is not keeping pace with the cost. I think when you put all of it together, what I'm seeing is that my clients have to be a lot more disciplined. So you used to think about growth for growth's sake, you know, let's just get more members. That's not happening anymore. I think I was talking to you the other day about one of my clients we did a very complex revenue analysis, and basically figured out that for every MA member that the plan was adding, they were losing money on a PMPM basis. That's a terrifying position to be in.
Daniel Marino:
It is, and it's… it's amazing to think that the payers are in this… in this sort of a predicament, if you will, because for years, many of us, myself included, have thought that the payers have done extremely well, right? You hear their quarterly reports, and how well that they're doing, and, you know, especially during COVID, right? I mean, that was an interesting anomaly, but they had some of the highest reported income that they've ever had in their history. So, to kind of think about them transitioning to where they are now, with really seeing them at quite the financial challenge, it's really an interesting predicament.
Joe Mangrum:
Yeah, it is, and there's a lot of scrambling that's happening on the payer side. I think it's obviously hard to change your business model as a larger plan. I think some of the smaller regional plans, they're a little bit more agile, so maybe they're going to fare a little bit better in the next few years, but I'm seeing so much more of a focus on total cost of care, right? A lot more tightening on benefit designs, especially in MA, being more selective about where they grow. I know we'll get into it, but I think there's a lot more doubling down on value-based arrangements from the payers. If you think about it, Dan, a few years ago, 4, 5, 6 years ago. The payers didn't really want to get into value-based care, and now it's the opposite. They're really trying to push it on providers, and I think that there's less acceptance from the providers right now, but it's something they're trying to push more into. And then, again, you know, I talked about risk adjustment and care management. A lot more investment, both in FTEs, resources, but also in technology in those areas. So, you know, a lot of different levers to be pulled, but it remains to be seen how it's all going to work out for them in the next few years.
Daniel Marino:
So let's dive a little bit into the cost of care component, because, you know, that's a big one. Both of us have done a lot of payer, contracting support, you know, I've done it on behalf of a lot of the providers, hospitals, health systems, medical groups, and you've supported a lot on the payer side. The thought around total cost of care is something that always comes up. And the perspective of the payers, from the providers at least, is that they want to start reducing cost of care, by really pushing down or placing pressure on utilization. And a lot of times, okay, you can make some strides there, but at the end of the day, if patients need the care, they're going to get the care. If they have to wait, an issue that they have may become exacerbated, and it might cost them more in the long run. So, oftentimes, what we try to push is care efficiency as a mechanism to really drive down cost of care. Where do you feel like the payers are on kind of that balance between putting pressure on utilization, or reducing utilization, versus trying to create care efficiencies within the new care models.
Joe Mangrum:
Yeah, I lately have seen a lot less focus on the utilization management, from my side, right? When I'm in the room with the payers, I think it was a lever that was pulled too hard and too often for many years, and the payers are getting a lot more scrutiny from regulators, from the public, right? And so they're pulling back on that. And so, I think what's great for listeners to think about is, what do the payers really want from the providers in these scenarios? And a lot of it is simple. They really want accurate coding and documentation, and so we're seeing a lot more of payers, be willing to move providers into sort of, like, a gold card scenario, right? Where they back off of the utilization a lot, as long as the providers are giving them that accurate coding and documentation, right? So we're seeing a lot more of that in negotiations.
Daniel Marino:
Is this… is the gold card, though, structure, is it wrapped around kind of like a high-performing or a higher-performing provider network, if you will? So, obviously, coding accuracy, documentation accuracy, is sort of, you know, it's important, but it's a means to an end from a payer standpoint, because you're able to then get better insights in terms of what's happening with the patients, and making sure that you're really driving the right level of care. But when you think about the gold card, are they creating, through that separate network arrangements that provide additional incentives to the providers who maybe are performing at a higher level?
Joe Mangrum:
Yeah, exactly right, Dan. I think, my clients have really been focused on and pushing narrow networks. Very, very, very narrow networks for high-performing providers. So I think it's a part of a lot of plant strategy is to move more into the narrow networks, and
Daniel Marino:
Yeah.
Joe Mangrum:
Provide those incentives to providers to give them exactly what you're talking about.
Daniel Marino:
Well, and that's interesting, because neural networks, for years, didn't really take off. The provider… the payers really kind of push them, and, you know, we thought… I always thought it was a good thing, you know, in developing clinically integrated networks, you get some providers, some physicians who report, you know, perform extremely well, understand the data, are able to kind of change their care models. Others don't. Right? And it's okay if they don't, as long as they meet the minimum threshold. But those that do, that really evolve into that higher-performing group, do have an opportunity to participate in these narrow networks, and probably assume a level of risk and financial performance that they otherwise wouldn't. So, so you're seeing the payers kind of adopting that methodology in their narrow network strategy?
Joe Mangrum:
Yeah, I am. I think that the payers, they're sort of running out of those levers that we're talking about, and so, you know, things have really flipped on their head and changed from even 5, 6 years ago, so it's something that I think is going to be more of a strategy going forward for the payers, especially the regional provider-sponsored smaller plans that we talked about earlier.
Daniel Marino:
Yeah, that's interesting. You know, and when we think about certainly in the value-based care world, managing populations in the contracted populations that are within, you know, a network or within a health system. Understanding the risk and sort of risk stratification of the populations is really important. Many providers are really focused on delivering care to the specific needs of the patients or to the population, so the elements of risk stratification are just really, really critical in terms of the care models and care management and so forth. How are you seeing payers responding to, risk stratifying their population, or understanding some of the risk drivers related to those populations? Do you feel like they're there yet, or maybe they've really moved forward in incorporating risk into their models?
Joe Mangrum:
They're not there yet, admittedly. They're starting to incorporate that risk stratification into the models, I think…It wasn't necessarily part of the standard practices of payers over the last few years, but they're realizing that it has to be now, and you know, it's… a lot of it is normalizing the risk to a PMPM. And so that… that allows, like, a comparison across the populations. It allows you to trend analysis over time. And then for us, as a consulting firm, a lot of what we do is we're able to benchmark the plan and do competitive positioning versus other plans or other providers, right? So, it's… frankly, it's something that they have to learn how to do, or they're going to continue to struggle and be underwater.
Daniel Marino:
If you're just tuning in, I am Daniel Marino, and you are listening to Value-Based Care Insights. I'm here talking today with Joe Mangrum. Joe is a partner with ECG and leads a lot of the payer-specific initiatives, working with payers all over the country. So, Joe, one of the areas I do want to dive into a little bit more is around, sort of, the sharing of data. Always been, I think, an interesting topic the payers, I think the perception is that the payers have all of this wonderful claims data and really understand what's occurring, and they're starting to use AI to really evaluate what's occurring with patients and so forth. Many of the providers, many of the physicians, the health systems, and so forth, feel like they're at a disadvantage to the payers because of all of this claims data and this knowledge that they have. Is that really the case, or do the payers kind of feel like they're at that disadvantage as well, because they don't have, maybe, the clinical data?
Joe Mangrum:
Yeah, I think that most payers would probably say that. I mean, there's a little bit of a frustration behind doors that payer executives they… we talked about the data and the coding earlier. Obviously, one of the big things is HTC capture, recapture, right? And so there's a frustration that they don't have quote-unquote control over those things. But I think the data is there, and it's just about getting to a point of sharing it. I think it makes sense that we're not there yet, because there was this divide for so long between payers and providers, but what I'm seeing more and more is that payers are realizing that that sharing has to happen, and that they have to provide incentives and opportunities for the providers to share it. One way I've seen it recently happen is that payers are now starting to use Epic in different ways. One example is Epic has a module called Tapestry, right? And it's a claims processing module. It wasn't… it didn't have a lot of market share for many years, but we're starting to see definitely my clients are starting to move more into it, and I think it's a great opportunity to start seeing that… the sharing of data happen more seamlessly.
Daniel Marino:
Well, and if it's on the same EPIC system, or at least the modules within Epic, it… it just helps to create a little bit more of that data aggregation, right, that typically has been missed. I know for a lot of the… a lot of the providers that I've worked with, I mean, one of the most difficult parts that they have is aggregating some of the data that's coming back from the payers into their own systems to have it make sense. So, yeah, I'm kind of happy to hear about Tapestry, and I've heard a little bit about it in the past. I've seen it work with a couple of our provider-sponsored health plans. But, as that becomes, I think, a little bit more, let's say, proficient within the industry, I could see that creating a lot of benefits.
Joe Mangrum:
Yeah, it's… it's interesting, too, with the payers, you know, probably similar to the providers, but I've seen it so many times on the payer side, where they've moved from system to system, and they don't necessarily sunset the system, and the systems don't talk to each other, and so they have all this data. I mean, really, a treasure trove of data, but sometimes it's hard for them to get their arms around it, and you know, you have to have IT be involved, you have to have medical economics, and all these different teams that don't normally talk to each other on a regular basis. It's hard. It's hard for them to unlock that treasure trove, right? But I think, they're trying to figure out how to do that, and to have more people focused on the data, and know how to run you know, large data queries, SQL, you have to have people who know SQL and,
Daniel Marino:
And become more proficient with a lot of the data to really begin to drive that. So, Joe, when you think about the direction of where the payers are going. And, you know, obviously, strategy becomes important, and… but, you know, they're responding to some of the economic challenges as well. When you think about the direction, you mentioned that they're more and more interested in value-based care. What are the top, sort of, two or three initiatives that you're seeing the payers really focusing on? Is it… is it predominantly around cost management? Is it around collaboration? Is it around care management? What would you say are kind of those top initiatives of the payers?
Joe Mangrum:
Yeah, I think, what's actually working, the successful plans are doing a couple things. They have strong alignment with a core set of providers, sort of what we talked about earlier with the very narrow networks. Second, they invest in data that providers can actually use. And then third. I would say that they treat value-based care as an enterprise strategy, and not just a pilot. So, when I think back to a couple years ago, there was this idea from the payers of, oh, we gotta get into value-based care, and let's just sign a bunch of value-based arrangements.
Daniel Marino:
You're right, all these pay-for-performance deals, it really was, you know, I guess it was the beginning of value-based care arrangements, but it really didn't really… it didn't really move the bar at all.
Joe Mangrum:
No, not at all. And so, I think now, they're looking at it as, like I said, an enterprise strategy. When I'm talking to executives at my clients, and they're starting to look at the next 5 years, and what's our enterprise strategy for 5-year plan going to be, that's one of the main tenets of that strategy, is we need to move more people into value-based care, more lives, but it can't just be these arrangements, and they can't be, you know, arrangements that are really just put on the table and not really.
Daniel Marino:
Well, they need to be meaningful. They need to be meaningful, right? And if, you know what I've said time and time again is that if the providers and the payers can come to the table. And really have a collaborative relationship, where they're each supporting each other on the sharing of data. Supporting each other on aspects of care management, and having the right financial incentives in place I think you're gonna really start to see cost of care going down. I mean, this kind of circles back to what we originally talked about. I think without that, you're going to continue to see a lot of redundancies, a lot of challenges that are going to occur, and I think at the end of the day, you're going to start to see these costs continue to increase unless efficiencies really kind of take over. Are you seeing that as kind of the mindset of the payers?
Joe Mangrum:
Definitely. So, a lot of what my team does, is we focus on managed care, we do contracting, right? We do negotiations, and it's something where, several years ago, I kept using the word contentious. It was this very contentious attitude from both the payers and the providers, take it or leave it. There were a lot of terminations. The past 12 to 18 months seems like a major shift of exactly what you're talking about. We have to figure out how to partner together, and it's sad that it took all the margin pressures on both sides for that to happen, but I'm optimistic about it, because I'm seeing some win-win scenarios happen, and I think over the next 12 to 24 months, you're gonna see that shift continue to happen.
Daniel Marino:
Well, and I hope so. I really do, because I feel like, without the full collaboration in place, you know, we're going to continue to see these challenges. So I want to hit one more topic before we end the episode, and that's around Medicare Advantage. You know, obviously there's a really big push from CMS to shift everybody into… into Medicare Advantage, or to get Medicare out of the management of… of… or managing beneficiaries. And, you know, we've talked that the goalpost really is around that 2030, target, moving folks into some type of a structured value-based care arrangement. But when you think about Medicare Advantage, it's hitting still a lot of headwinds, right? There's a lot of operational challenges with that. There's been a lot of issues with denials and so forth. Through some conversations that you're having with the payers, are they recognizing that these are the challenge? And if they are, are you seeing some of them really making some strides to change, sort of, that perspective of how they're integrating Medicare Advantage into their product structures?
Joe Mangrum:
Yes, and you mentioned the goalposts, right? So I think, that goalpost has moved several times. For some reason, the 2030 seems like it's sticking, though, and so CMS has said they want… I believe they said they want 100% of all lives in some sort of value-based, risk-based arrangement by 2030. And so, we know what happens in that scenario, is that when CMS pushes it, it goes down to the private commercial payers, right, and they start to really adopt it. And I'm seeing that more and more, right? That the CEOs, especially of the regional plans, they see it on the horizon, and they say, we need to start to have the infrastructure and the resources in place to make sure that we can do that, right? I think that with MA, as a line of business for payers, it's… it's scary right now.
Daniel Marino:
It is.
Joe Mangrum:
the risk adjustment V28, that is terrifying for a lot of my clients. We're seeing across the country that both payers and systems are pulling out of MA. I mean, Scripps the other day pull completely out of MA. You're seeing more health systems consider it. My clients are talking about it, too. I think if enough payers and providers pull out, CMS is going to have to really reconsider some of the policy changes that it's made, right?
Daniel Marino:
Well, and I agree with you. I mean, we've got to put some policy changes in place that provides the right level of incentives, the right level of support, you know, that's good for both the providers and the payers, because if not. I don't see Medicare Advantage advancing. I think if it does, it could be a really good thing for the industry. Well, Joe, I want to thank you for coming on. This has been… this has been great. Maybe real quick. 15, 30 seconds. Any advice you'd give to our listeners, as our provider community is working with the payers, or maybe as the payers are working with the providers?
Joe Mangrum:
Yeah, I think if you're a provider, just thinking about what it is that the payer needs to be successful to improve their margins, to get line of sight into total cost of care, which is what they want, and using that to your negotiating advantage, right? And by saying, we can not only promise you these three things that you're looking for. We have evidence that we can do it and do it very well. The payer, when they're sitting across from you at the table, is going to be very interested in that, and it's going to continue fostering that collaboration relationship that Dan and I both talked about. So, I know it's not something that providers really thought about for many years, but I think going forward, it can be a real tool in your toolbox as part of negotiations.
Daniel Marino:
Yeah, I agree. I think being honest and focused on what the performance opportunities have been, what organizations have achieved, and really where they are on their journey into value-based care and into risk. Well, Joe, thanks again, I really appreciate it. Lastly, if any of our listeners want to get in touch with you, or maybe have additional questions, can you share your contact information, email, or LinkedIn?
Joe Mangrum:
Yeah, anytime anyone wants to talk about payers, or managed care, or value-based care, happy, happy to chat. I'll give you my cell. My work cell is 917-625-8951. Always, always looking forward to hearing from people. So thanks a lot for having me, Dan.
Daniel Marino:
Oh, I appreciate it, Joe. Great conversation, and thanks again for coming on. And I want to thank our listeners for tuning in. If you're interested in this topic or any of our topics that we have on Value-Based Care Insights, please feel free to click on Lumina HP, Insights, you'll see all of our topics, as well as eCGMC.com. Until our next insight, I am Daniel Marino, bringing you 30 minutes of value to your day. Take care.
About Value-Based Care Insights Podcast
Value-Based Care Insights is a podcast that explores how to optimize the performance of programs to meet the demands of an increasingly value-based care payment environment. Hosted by Daniel J. Marino, the VBCI podcast highlights recognized experts in the field and within Lumina Health Partners
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