How Healthcare Affordability Impacts Patient Outcomes with Dominick Pallone

JH: Well, I’m excited to talk today. For our listeners today, health plans are essential component to health care affordability and accessibility in the United States, but the cost of premiums as we know continue to climb. Dominick is here to provide insight in health care affordability right here in the state of Michigan. We’ll talk about upcoming legislation, payer hospital negotiations, those are always fun, and of course, what all this has to do with rural health.

So, let’s start with just some general questions. When we when we talk about the role that you play as the director, in relationship with the association itself, as a greater body, with all the competing interests around the table, let me just ask this what kind of legislative action does your association advocate for, and how have you been preparing for the implementation of some very dangerous, in my opinion, and concerning approaching legislation regarding health care plans, health care in general. Whether it’s our behavioral health plans, whether it’s Medicaid reduction, a lot of things on the table right now, Dominick, that are just absolutely crushing hospitals. Let’s talk about that in context of how you balance all of that within the legislature.

DP: I appreciate that question to kind of “T” things off here. A lot of our advocacy these days in Lansing, our focus is focused around Medicaid, as you alluded to, with the OB3 I’ll call it OB3 or HR1 enacted at the federal level. We are already starting to see those effects here in Lansing. I know rural hospitals already feeling it. Payers are feeling those effects within the Medicaid program, and we have more on the horizon that’s going to get worse. We are very concerned and we have this talk every day in Lansing with lawmakers about what the downstream tangible effects will be to people, whether it’s in rural communities or in urban communities. We expect in Michigan to lose about 200,000 people off of the Medicaid coverage. That will be over time. It won’t be immediate. No, but it will be fast. We will start to see that really. Notices will start to go out at the end of this year. Those first tranche of disenrollments unfortunately are likely to occur around March of next year, and that’s when you will start to see, and we will all start to see some sizable changes.

From a payer perspective, what that means is the remaining population is likely sicker. Which means, we call it acuity or relative risk, of that population is going to increase for state and for taxpayers. That means the per person cost of Medicaid will go up. So, we’re having that discussion right now with appropriations legislators as they’re working even today on moving budget bills in Lansing, just kind of letting them know that the initial numbers that are being discussed in the budget negotiations, and it’s early in the process, that those numbers are too low, that there needs to be additional recognition and actuarial engagement, like get the actuals, get the facts into this rather just the politicization of OB3 or HR1. Let’s talk about what the facts will lead to for member per month cost for Medicaid, and it’s going to go up. We know that. You can’t argue with the math.

Then the downstream effects on providers, and you know this better than I do if you, have less members with coverage, those other people that lost coverage, they’re not suddenly healthy. They’re not suddenly not seeing or needing services. They’re still going to show up at your E.R., they’re still going to show up at your outpatient, you’re inpatient. Now that becomes more uncompensated care. I don’t know, I worry about how rural providers are going to keep up with that.

JH: Well, they’re not going to. We’re already hearing across the state of hospitals, first of all, we know the national statistics are 734 hospitals are at risk of closing, half of those are at immediate risk of closing, 20 of those are identified in the state of Michigan. Very concerning, because we’re already seeing the divestiture of a lot of programs in hospitals that are smaller. Getting rid of essential programs, whether it’s obstetrics, inpatient psych services, you name it, they have to scale that back.

I’d be remiss if I didn’t ask this question while I’ve got you in the room, as you’re having those conversations about Medicaid, it’s heavy on everybody’s mind right now. Seems to be a little bit of a shift in Lansing right now, over the last couple of weeks about maybe preserving, protecting or enhancing Medicaid. So, it might not be a total abandonment under the one big beautiful bill, which we’ll get to in a minute, but what encouraging news can you provide us? Is there some headway, do you feel being made?

DP: I’m hopeful. I try to remain optimistic.  If you don’t in this job, especially in the Lansing advocacy world, you get ground down pretty quick. So, I try to remain optimistic. I think across political lines it does not seem to matter right now, and I think this is a very positive thing, Republicans, Democrats, they do want to protect and preserve Medicaid. I think there’s two terms that you mentioned are kind of a growing buzzword right now in a good way for all of us. It’s incumbent upon all of us, though, to educate those lawmakers as to what exactly that means. They know they’re hearing from their constituents that Medicaid is important to their community. It is important to them personally. The growing numbers of folks that are being served by the Medicaid program, especially the expansion population now, it touches everybody in all communities across Michigan, and I think lawmakers are well aware of that now and they’re also well aware of the need that they don’t want to just indiscriminately destroy the program, make indiscriminate cuts to the program, but they are struggling.

I do give lawmakers and appropriators a little bit of credit. They’ve got more than just health care to worry about. So, we’ve had some major investments in roads in recent years and I for one would like to see additional major investments in healthcare and especially the Medicaid program. So, a lot of our advocacy these days as we’re talking with lawmakers, is encouraging them that if they want to protect Medicaid, we want to protect Medicaid with them. We have plenty of ideas on how to do that. We should get folks together, hospitals, plans, other providers together and talk about the best ways to protect Medicaid and I, for one, believe one of the key fundamental ways to do that is to segregate state resources for the Medicaid program.

We have a Medicaid trust fund in our state. That trust fund has historically been raided for years. This is not something new this back decades.  You do see a lot of that trust fund being used for its original intended purpose, but it goes to everything like school scholarships and other programs that are out there. I would rather it stay in Medicaid and I would rather the state start to have conversations about what other dedicated revenue today can they designate for that Medicaid trust funds so that it can preserve and protect Medicaid.

JH: Absolutely agree with you. We all know that the, concern about increased taxes does not bode well with the community. So, you know, what existing tax credits, liabilities, whatever you look at, can be deployed in such a time as this because we do have to remember as health care officials that it’s more than just us in the state budget. You have education you have infrastructure and roads. So, great point. I guess a follow up question to you is are we going to have a budget soon? Do you think we’re going to go right up to October again like we normally do?

DP: I checked my magic eight ball before I got here it said reply hazy try again later. The budget is moving right now as we speak.

JH: Do you think it is? It is okay at a faster pace and cadence than last year.

DP: It is. Although last year’s cadence and pace was bad.

JH: Gridlock on both sides. So, you think you see a little of encouragement there?

DP: I do. In my time in Lansing, I was a part of a quote unquote state government shut down that lasted a few hours a bunch of years ago. This recent cycle right up to that line. So, I’m hopeful. I think there’s a good emphasis this year House and Senate to try to get the work done that needs to be done. A good commitment from folks. I think they heard from their communities when they waited until October last year.

JH: Do you think advocacy is higher and engagement is higher among groups and people this year than you’ve seen before? How would you characterize that?

DP: I think the at least in the health care world, it is higher. I think that the jeopardy of what we’re all facing now, because of the federal changes and the impact they’re now having down at the state level, it’s requiring us to be more engaged. Our colleagues at the Hospital Association are out active. We see them day in day out so it’s not just the usual suspects. We’re seeing more and more groups come to Lansing and for good reason to tell their story, communicate with their lawmakers and others, and to educate them as to what the actual tangible effects of these things are.

JH: Well, because there’s so many nuances to healthcare, right? There’s it’s not just about Medicaid, but it’s 340 be, it’s what are we going to do with provider tax? It’s looking at nurse staffing ratios. It’s about all of those things. It’s not just about one issue it’s so complex today. You’ve got your finger on the pulse. Brian Peters and MHA; phenomenal job. The work he does, but then his team Laura and the team are incredible as well. Let’s make a shift to something not popular. Healthcare premiums. They’re on the rise. You have a lot of people that didn’t get the tax credit extension and therefore either are not seeking healthcare anymore, can’t afford it, or, they’re looking at some pretty heavy plans with high premiums and high deductibles.

Let’s talk a little bit about what’s driving this. So, let’s talk about premiums in general. I guess what factors are most significant. If you were to look at that equation of healthcare premiums. What’s contributing to this rise right now? Because we often hear, on the other side of the aisle as you argue against health plans, is they’re making all this money, they get all this money during Covid, they made billions of dollars. I don’t think Covid can be our, case study here.

DP: I’m the first to say during Covid we’ve refunded money and I’ll use the Medicaid program in Michigan. Medicaid plans in Michigan gave back more than $800 million to the State of Michigan during Covid, and rightfully That is the program requirements working the way they were intended. They’re not intended for health insurance companies to make profits. Certainly not off of Medicaid and really not off of commercial.

JH: But there is a reason you gave it back, though, Dominick. It was because people weren’t using health care.

DP: They weren’t. They were deferring it.

JH: We were being told even at the government level don’t use your hospitals. We were told surgery centers were shut down. So, kind of did a little bit of that to ourselves. Then it looks like, well, the insurance plans are doing well that year, but then over time people get back to work, right?

DP: They come back and I’ll say, one step further, that that delayed care that occurred during the beginning part of covid it is now coming due. We’re seeing folks present. We see it in payer data. They’re sicker. So, the morbidity details that we see or the actuaries that our companies see, we’re seeing it in the state level increasing morbidity 8 to 11% higher than usual.  We have an aging population in our state as well. That has nothing to do with Covid. It’s just the demographic of our state. When you have an aging population, that means higher cost to care. That means more utilization care.

So, all of these things are combining right now. It’s almost this perfect storm or encountering unfortunately. Certainly, the rest of the nation is feeling it as well. The term we use as acuity, the relative risk of the population being sicker. That is not a Michigan specific. It’s a national problem but our state seems to be experiencing it worse than others. Our health is worse than others. So, we need good provider partners in rural areas and urban areas everywhere to be more engaged, continue to be engaged with the folks that they serve, and try to get that health care crisis that we’re seeing, like actual healthcare outcomes need to improve in order for us to get our hands around affordability.

In the meantime, the symptom that everybody is experiencing of all of this being sick or being older, higher unit per unit cost to care, labor costs are going off. Inflation is hitting everywhere. All of these things combined are leading, as you said, to higher premiums in Michigan in the individual market. We saw premiums this this plan year, this calendar year go up 17% in the individual market, 11% for small group, these are small employers, two people, two employees to 50 employees. Large group went up by I believe it was 9% on the year.

JH: So, Dominick those double digits 11 and 16. Have you seen numbers like that in the past?

DP: No, no we did see a little blip that I would say was an anomaly years ago when ACA changes were being debated by Congress. There was a big if you remember, the repeal and replace mantra from years ago. There was some close action at Congress at one point to actually repealing the ACA and the tax credits and the subsidies that exist entirely within the individual market at that point. That risk of that outcome ended up being priced in and we saw in the individual market, I think back then was about 14 or 15% increase, so on par with what we’re experiencing today, but today really has been that perfect storm. You mentioned it earlier as well. One component I didn’t add that specific to the individual market is those enhanced advanced premium. They were chosen not to extend.  We are very hopeful. We do a little bit of advocacy with our congressional delegation. We have other associations. We’re hopeful they revisit this. This is something that the affordability theme takes root nationally as well is certainly taking root here in Michigan.

Policymakers are starting to ask, what are the levers they can pull? That is a lever that is a clear it’s a clear level. And they did it previously. They know it works. They know it can drive down cost. It is an investment that’s needed. I think it’s the right investment to do. There are other levers that could be pulled, whether it’s at the state level or others as well. From a policy perspective, perhaps the biggest untapped policy lever to be pulled is reining in pharmaceutical costs. I know you see it in experience it with the 340 B program. I’ll be the first to say I’m maybe you might feel differently than me on this. I don’t know that a 340 B program would be needed if pharmaceutical drugs were priced reasonably.

JH: There has to be a mechanism in place to protect those patients and those institutions that provide those services.

DP: You look at the pharmaceutical costs. We have a graphic that we use quite often that’s a visual of a dollar. We say out of your premium that’s a $1 in premium. Where’s that dollar being spent today? 22% of that and growing is being spent on outpatient pharmacy. That’s going to your brick-and-mortar chain store independent pharmacist store and picking up your scripts like many Michiganders do. That’s now up to 22% and growing of our premium rate. Ten years ago, that was under 20%. 20 years ago, that was under 15%. It’s not because the other parts of the pie are getting are cheaper. I mean, inpatient and outpatient costs go up to but it just shows how much faster pharmacy costs are going up. Again, that doesn’t even account for the pharmacy costs that you experience at your hospital.

JH: So, for listeners listening today and says to themselves, when are my premiums going down? It’s not looking very promising though, is it? With all of these challenges, with the repeal of these provider taxes, you’re looking at all of the significant challenges that hospitals are facing, labor costs, all the things you just described is there is there any opportunity you think?

DP: I think we’re unfortunately, the path around right now we’re bracing for another double-digit year. All the disruption that will come into effect from work requirements and displacement of coverage and all the things we talked about earlier will have a downstream effect into the commercial market. For plans that are employed sponsored. I would expect unfortunately to see even more cost, more cost shifting.  You know co-pays, deductibles higher. If they haven’t gone up to their limits already.

JH: Many are. And what we hear is they’re at their limit. Their increasing the same time. Unfortunately pay equity is not. So, you’re not able to give cost of living adjustments that are adequate to meet that. It’s a significant problem we face. It’s not just in Michigan. It’s across the country. Talk a little bit about what specific to rural America, which is the higher incidence rate of government payers compared to commercial payers. 70% of my payer mix is Medicaid, Medicare. That is very, very consistent with what we see across the country in rural America, higher incident rate of government payers. As this payment model shifts in the state, takes more and more on, and we have less and less reimbursement. What advice would you give healthcare leaders today about how to navigate some of these storms? We need experts like you saying, all right, we’re looking at it from a plan design. We’re looking at from that model. But what advice would you give struggling hospitals about? Is there anything to look forward to? What can we do to partner and to be good partners?

DP: I think one is continued partnership really in Michigan. Obviously. But across the nation, partnership and advocacy message to policymakers at state level and the professional level. Undoubtedly that is something number one. Payers and providers have always been linked at the hip and I think should continue to do so in those payer provider specific conversations, though it is a lot of the stuff you just mentioned, I think just needs to be discussed in a in a friendly manner with the payers that negotiating payment. So, if I’m a payer serving this region of the state in Hillsdale County and it’s that time of year for contract negotiations, making sure that that payer understands what your payer mix is, that if I’m negotiating a commercial payment reimbursement level with you, that I understand that your payer mix is 75%, 80% mixed of government programs and the effects that you’re seeing on those government program space. At times in the commercial space plans may approach some of those provider relationships, almost narrow minded, very narrow minded. The leaders that I work with want to see the bigger picture. They just don’t always see it out of hand unless their partnership with them. So, I would definitely encourage that. I think, I hear that around my boardroom with the healthcare CEOs that I interact with, that they don’t want to see a rural access points to go out of business.

JH: Usually lower cost points for the insurance.

DP: So, that does not lead to more affordable premiums. That only exacerbates the problems that we find. We want to work with provider partners and then the other thing we’re kind of seeing emerge here is and need to do more of partnerships in order to facilitate this, is this gradual shift towards more value-based arrangements. That could be 51 flavors of what it could really be. I don’t have a favorite. A willingness by providers in rural communities to want to engage in sharing that risk, but also sharing the gain with services are provided and outcomes are achieved only through sharing data. Both ways health plans got to share with their rural providers as well to have an honest conversation, and at least the leaders I engage with in Michigan, they from the payer side, they truly want to have those conversations and they want to bring data to the table. They do want to build trust. They want to make value-based arrangements sooner rather than later. I think that hopefully is those throughout comes that can sustain rural providers as well.

JH: Let’s talk a little bit about something in the news recently. I’m not going to put you in too much of a position where you’re going to have to be in the hot seat, but I do want you to shed some light into this situation. We never name providers historically; we never name insurance companies. A lot of conversation right now about folks not accepting Blue Cross Blue Shield negotiations. Let’s not talk about that process, okay? We’ll let them deal with that. I won’t put you there, but let’s talk about the impact to the consumer, because if there is no parring, help us understand this, then the consumer who has insurance X, let’s just say whatever it is, right? If that respective health system, which may be big for the region and the only provider really of notable tertiary centers, doesn’t accept that insurance, what happens to the payer? Can you please talk a little bit about that?

DP: I will do my best. Full disclosure, as I said at the beginning, Blue Cross not a member of my association.

JH: We’re just looking at it from the perspective of the patient. So, they cannot use that product.

DP: Correct. They have some disruption. So, there are certain things as you know probably better than I do. There are certain things like emergency room visits. They have to. There’s no change whether their contract or not. Then in this case my understanding is this is commercial lines of business only. So, Medicaid, Medicare Advantage and duals programs I don’t believe those are part of this dispute right now. So, for those members there should not be any network, no interruption at all. For the commercial members, where there could be two sides were to walk away from one another and they my understanding is they’re still talking. They are hopeful they reach a resolution that’s mutually agreeable. I would worry about access issues of patient perspective. If I’m seeing an outpatient service provider, maybe a specialty care provider or a primary care provider affiliated and part of that system. If that person is no longer in the network for that health plan, you could still see that doctor, right? Maybe you have a relationship there and would make sense to still see them, but the costs will then be ultimately borne 100% correct. The health plan is still on the hook for what they would have reimbursed. So, it would be whatever that delta might be. Whatever that differential might be. Then it can complicate things.

Again, I don’t know enough specific in this case to know what would happen but in general, at times you can see sometimes where there has been a payment dispute, network dispute automatically, they’re no longer in the provider’s network, and the payer and provider no longer have a contract in place, if care is being provided there, and let’s say the cost of service is $100. Just make the math easy. If the plan was otherwise paying other providers $80 rather than $100, sure, that could be paid to the provider, or it could be paid to the individual. So, in some cases the individual may find themselves facing the full hundred dollars. They have to cover the difference after getting reimbursed and obviously there’s not a lot of health care costs that are only $100. So, when you get into more complex care, more expensive care, more services, the extent at which the that capital outlay, if you will, the patient have to occur first. That’s a problem. We don’t want people up more medical debt. It’s nobody’s in best interest, certainly not the patient’s best interest to go get another credit card to pay for it. That is not sustainable, right? So, again, I realize I’m speaking in generalities.

JH: But it’s a question on many people’s mind though. You know what happens if.

DP: And that’s why I’m very hopeful that the two sides will deal.

JH: In your decade of experience or 12 years of experience, have you encountered a situation where there’s not been a mutual agreement?

DP: Not of two groups that large. I do see that happen smaller.

JH: We do as well, but in terms of the big. I’m not here to advocate one way or the other. Your board does not take any type of negotiating strategies. Correct. So, you stay out of all that. It’s really just advocacy. We also have to take just a moment to pause and say, the insurance companies have been hit hard recently as well. We do have to give them, some understanding.

DP: In this case, I mean, what’s been out in the public, I’m not sharing anything that’s not already out there. I don’t have knowledge of what’s not out there. They have long said and the data and their financial support this that they have been running negative margins over the last several years and it’s not sustainable. All health plans have standards and statutes that they need to abide by. There are risk-based reserves that are required. These are required by law for good reason. You don’t want to see a health plan go under. The blues are not going under. Any payer can’t sustain losses over and over and over. No more than any provider.

JH: So, let’s transition then, because this is only going to be intensified, this relationship between payers and providers as a result of what just happened under H.R.1. As that shift begins, who’s going to make up the difference is the biggest question. So, again, let’s talk globally for the question here. As we look at provider tax cuts and reimbursement changes from the one big beautiful bill, talk to us about what you see is going to be the biggest challenges impacting the relationship between payers and rural. I want to talk about rural because rural is, the heart of the matter of what we talk about on this podcast. There are going to be some significant consequences from this.

DP: I don’t think I’m going to say anything that’s too alarming to you or to your listeners. The idea that the rural transformation process is suddenly going to make up the difference here.

JH: We cut a trillion. We give back 50 billion divided by, every state, not proportionately. Very little.

DP: I’m hopeful some good things can come.

JH: You’re an optimist. God bless you. I used to be president of the Optimist Club. Isn’t that hard to believe in Hillsdale County. Now I find myself going, I don’t see the value added. Especially when you. When you cut out a trillion and you give back 50 billion. The math doesn’t math.

DP: There’s quite a delta there. So, I worry. I think that means the relationship between payer and providers naturally gets a little more rocky. I think both sides are fighting for their survival. Certainly, world providers more than ever are fighting for survival. I am I’m hopeful, though, that together we can work that advocacy message, that approach obviously, whether it’s policymakers in Lansing or other states across the nation or congressional leaders as well, can understand that we need investments for these providers to stay open in rural America and rural Michigan and the people cannot do without them and activating those constituents, activating the patients is really the key. There really is, I hear from lawmakers at the Lansing level all the time that serve rural America. They may have a great relationship with their providers, but really, it’s about that, that voice of the people coming in and saying, hey, my provider is going to shut down if you don’t adequately fund Medicaid, if you don’t like this. So, for us, our hands are being tied right now. They are in Michigan especially.

We relied very heavily on direct payment, and the ability and health plans and hospitals are a part of this we’re willing participants to tax ourselves. There’s an insurance provider assessment. That’s a tax on the tax that we have. Our members gladly came to the table with policymakers years ago to create that tax, to say, yes, tax us because we recognize that money is needed for Medicaid. It became earmarked and targeted for Medicaid. Now Congress has taken away some of they have to do that and unfortunately, more importantly, they taken away our ability to find new taxes. So, for those of us in health care, we’ve long said there could be other areas that could see a greater benefit if they paid in an assessment fee or something and wanting to have those conversations.

Now, all of that, unfortunately, because of the action, it’s gone, is gone and cannot do it. I’m hopeful a future Congress will revisit that. We would like to engage with that congressional delegation in a joint manner. I don’t think that is just a rural issue, certainly, but funding for Medicaid hits harder in rural areas than it does elsewhere. We just want our funding sources. We want to work with those that are willing to fund the program. We want to dedicate the funding so that it doesn’t get stolen to pay for other priorities. I think that’s the path forward. I think rural communities across Michigan, across the United States can lead and champion that cause, and I appreciate what you do to tell your story. I would encourage that of everyone.

JH: I would agree with you. Get out in front and be present. I think we’re hearing a lot of discussion during the midterms about affordability, about preservation of Medicaid and I think that’s going to play a role I hope it does in some decision making. Maybe those who have been staunch on one side or the other will have an opportunity to see the value that rural communities, and trust in Medicaid programs. So, critically important. We hear, the unfortunate talking points of fraud, waste and abuse. We all want fraud, waste and abuse to go away. but that’s not the faces of Medicaid. The faces of Medicaid is the pastor at a church that I know the face of Medicaid is the, the nice lady that I know at Dollar General who’s got three children and she’s a great-hearted woman who’s utilizing the program for the right reasons. There are the challenges of redetermination, all those things that we can talk about. I think the midterms will bring about an understanding that Congress needs to align themselves with what the majority of the people want and all of the independent polling done before H.R.1 was passed, the majority of polling that was done, not on the left, not on the right we’re talking about independent polling, said 80% of the people said we do not want deep cuts to Medicaid, and it occurred, the deepest cuts in our history.

Secondary issue was when you look at it alright, who’s going to fund these programs? The public said, we want a priority to be on these programs, and we did not get that with H.R.1. That’s a very bad scenario for hospitals that were already struggling now to have that revocation of those funds and we know that that going back to the state, like Michigan and other states with limited budget, they’re not going to pick that up. Or if they do, it’s going to be at a fraction of what that reimbursement came in from the from the federal level. So, it’s always great to have a perspective like yours. Elections have consequences and decisions by Congressmen and women have consequences as well. Hopefully they hear the message from their constituents notwithstanding. What did 80% of the American people say that were pulled? What did the Office of Budget Management say historically and independent nonpartisan groups said this will be devastating for rural hospitals and we’re watching that unfold right now. Hospitals across the state and country who are already divesting obstetrics, psychiatric care, the two most needed in rural communities.

So, thank you for your advocacy. I do want to ask you one more question, because I think it’s important to talk about. If we’re going to try to drive down premiums, try to have some kind of equilibrium here in the market, we talk about value-based care. Insurance companies are working with providers now to create collaboratives to try to keep patients healthier. Where do you see that playing out in all of this, and I’m assuming you find value in those and talk about maybe some of those if you could.

DP: I think it’s we’re just kind of scratching the surface really, of what the future of value-based care holds. Certainly, there are more out there nationally that are well versed on this than I am, but what I see in Michigan are payers and providers engaging on are value based, outcome-based arrangements, shared risk and shared savings both. As I mentioned earlier, it only happens when it’s premised on trust and sharing. So, the better both sides gets at granular data of their populations, either that they’re insuring or that they’re serving, sharing that data, building that trust, picking targets that are realistic, picking targets that are achievable and compounding, and I think early phases of a lot of the value based. I think those things are evolving.

I also see some of I think what you were alluding to, more of a team-based approach as well. We like to see and partner with providers that are broader integration services. The ability where you know that they’re going to have a primary care contact, you know that they have specialty care as needed, and, they have emergency care sort of wrapped around that. A holistic approach. The more we can develop value-based payment arrangements with somebody that can serve that patient at every level, I think the better it will be for the providers, the better it will be for the payers, but more importantly, better outcomes for the patient.

JH: Now, do you find sitting around the table with your members that they’re all implementing some form of this?

DP: They were all moving towards this very aggressively I would say prior to Covid. Covid threw a lot of things off for very many reasons, but we had to focus in other areas. I think now they’re getting back to it. The biggest hurdle I see right now is actually pharmacy. So, as I talk about holistic care. None of us providers or payers have a good handle on the pharmacy costs. You can do everything in your world to manage the physical health of that individual and they could hit one pharmaceutical cost. We don’t have a payment model that is set up for that. That is what kind of scares is right for the future. As much progress as we’d like to have in value-based payment arrangements, I don’t know that we’ll ever be able to cross that Rubicon unless we can get our hand in control of pharmaceutical costs, and these drugs coming down the pipeline of FDA approval are amazing things. I certainly don’t want to stop the science of what’s going on and the progress that that science and breakthroughs in the making, but there has to be an upper bound on the limit. We track things.

You mentioned margins. Our industry in Medicaid has been under 0% over the last two years in commercial space and nationally we’re about 2.4% with the national average. Pharma’s national data that you can find, it’s out there for those that are publicly traded, more about 24%. So, to me that becomes the target area. We, and I mentioned our role as advocates, but certainly policymaker roles in DC and Lansing; they need to get a handle on pharmaceutical. It is crushing us already and it is stopping progress on value-based pain management.

JH: It’s a disproportionate relationship because rural hospitals have negative operating margins at times. When you look at a partner of ours supposed to be a partner, you look at pharmaceutical and they’re posting 25 to 30% margins, There’s something wrong there. That inequity is not very good. The other opportunity we know early detection is early prevention. So, having plans that support collaboratives, whether surgical collaboratives keeping the patient out of the most expensive part of healthcare, which is the E.R. You do that by making them healthy, incentivizing the payers, incentivize the providers to get that patient in. Ensuring that that patient gets their wellness checks. Those things are very, very critical. I think that is the only way right now that we’re going to drive those costs down. That has to be a relationship between payer and provider. I think that’s what you do so well is advocate for that relationship, when at times it can be very controversial, adversarial. Your job is to make sure that it’s really all of these players coming together for the good of what we know for our patients.

DP: We all have the patients in mind. I think we do. That is the thing that I’m a reminded critic of my board meetings. I just did a board meeting just the other day and sitting around with nine other health plan executives. Every topic, it didn’t matter what was on our agenda. We discussed every topic, came back to what is right for the patient? How is that patient getting the best outcome? How are they getting the best service? How are they happy at the end of the day? We recognize the patients are not happy. They’re not happy right now. Certainly not happy at our industry.  I can tell you firsthand, the executives I interact with in the industry have their heart in the right place, are focused on patient outcomes. They’re focused and trying to do better.

JH: And when we find that, when there’s that alignment, we all win. Payers win, the providers win, but the patients win. We do a segment called Rural Health Recommendations. And we have, leaders from across this country that are new to health care, that are asking us questions like, how do I do this and how do I do that? Very tumultuous time right now in health care, all the challenges. So, we have a veteran like you, decades of experience. What recommendation would you give to a new leader in health care specifically that’s challenged today? There’s a lot of headwinds, a lot of challenges, payers, providers, recruitment, retention, all of these challenges. What piece of advice would you give to a new leader today about sage advice? What would you give to them in today’s environment?

DP: It is a tough environment. It is it is a brutal environment out right there today. I would say I guess, it comes back to communication and it comes back to network and relationships. I really fundamentally believe that. It’s probably because of my line of work relies on it every day. So, I feel that same way for rural health care leaders. What does that mean tangibly to me, that means if you’re new leader in rural health, whether it’s hospital, whether it’s outpatient, it doesn’t matter what level of service. Reach out to your payers. The payers do want to engage with you. They want to get to know you. They want to build that trust. Don’t be afraid. Don’t view the payers as this evil, big evil empire, right? They all have leaders that are based in your state. They all want you to succeed, to want you to be in business too. To serve their members. So, that that would be the one thing I would. There’s going to be adversarial conversations at times, but communicating through that is the best, and reaching out on the front end to want to establish that and establish that line of communication so that even in difficult times, you can still have that communication going on. I think that’s partly important for today, especially in what we’re facing.

JH: Great advice. Thank you so much for joining us in the studio today. Dominick, it’s been great to have you here and I want to have you back. I’d love to maybe have a segment after the budget passes and talk a little bit about some ups and downs, because we have to address those. One way or the other. I mean, whether there’s victories or not, victories, someone on the other side has concessions. I want to talk about that. So, I’d like to get you back on maybe after we get through the budget process, if we could do that. It’s just been great to hear your perspective. Quite a unique perspective from what we normally here representing the plans that often get a black eye and payers who often are looked at as sometimes the bad guys, but all in it together, it works out for the good if we’re laser focused on our patients and what is best for them. So, a lot of great opportunities, a lot of great discussion today. Thank you for joining us.

DP: I appreciate it and I look forward to coming back.

JH: And thanks to our listeners for tuning in to Rural Health Today. Catch our next segment, Rural Health News, to stay up to date on the current state of rural health every Monday, wherever you get your podcast. Don’t forget to check out our latest updates and resources for Rural Health Today at ruralhealthtoday.com, and make sure you subscribe so you never miss an episode. Until next time, remember Rural Health Strong.