Speaker 1: 0:00

What would happen if ambulatory care moved to a direct pay model? We'll find out on this episode of Shift Shapers.

Speaker 2: 0:11

Change either energizes or paralyzes. The choice is yours. This is the Shift Shapers podcast, bringing the employee benefits industry interviews with individuals and companies who are shaping the industry's shifts. And now here's your host, david Saltzman.

Speaker 1: 0:31

And to help us answer that question, we've invited Jawad Arshad, who's CEO of WOW Health W-O-W, just the way it sounds, he's one of a growing number of physicians, using their experience and their perspective to try to solve some of the challenges that patients face in today's really siloed and crazy marketplace, and we'll talk more about that. Welcome, jawad.

Speaker 3: 0:52

Thank you so much, David, for having me.

Speaker 1: 0:54

It's our pleasure A little bit about your background, because you know, nobody ever ends up in this business. Nobody ever ends up doing what they set out to do. So how do you get to be doing what you're doing today?

Speaker 3: 1:03

Yeah, no, absolutely. So I'm an ER physician by training right After residency. I was really lucky. I worked for a large health system and ended up working for corporate, so to speak, was the director of my department and really held almost every job there is in the emergency department along the way. But about gosh, about six, seven years ago, you know, I had an opportunity, really didn't feel that we were making a difference when it comes to delivery of care in our communities and decided to leave sort of employed position right and in that process, started a clinic here in Southeast Michigan. That, of course, made me an employer. I was buying healthcare benefits for my employees and for the very first time gosh 15 years into my career, I became a provider who was directly interfacing with our payer system. Neither of these is an enviable position to be in, right, as everyone knows, and that really started the journey right. Thinking about what is it that we are doing wrong when we are providing care in our communities and to our members?

Speaker 1: 2:15

So let's level set a little bit for the audience. First of all, I think everybody knows what ambulatory care is, but I'm not sure that everybody really understands a direct pay model, except for people who are fossils, such as myself, who remember when that's the way the system was before we improved it. So talk about what is a direct pay model? How does it work?

Speaker 3: 2:34

Yeah, so ambulatory model, right, is essentially anything outside the four walls of the hospital. So if you think of, you know of hospitalizations, er visits, surgeries, that kind of stuff we're going to put it to the side. But when you look at everything else outside office visits, medications, imaging tests, ultrasound, mri, your routine labs, even going to the dentist, maybe getting your eyes checked, and so on all of these services are sort of in the ambulatory bucket. What we find is that, because of the quote-unquote improvement, as you refer to the healthcare payment model, what we find is that the consumer, the patient, ends up paying the same, if not actually usually more, out of pocket if they are using the traditional insurance paradigm. What that means is between your co-pay when you show up at the doctor and then getting a bill, usually four to six weeks later, because you haven't met your deductible or you have a co-insurance with your plan and so on. When you add all of those up, you know you may end up paying $150, $200 for an office visit. If you just pay directly to the doctor at the time of service, they'd probably charge you about $150 anyways, right? So then what is the point of having all of this opaqueness and not really having any control as a consumer, if I can call the office, make an appointment, pay them at the point of service, at the time of care, and that's the end of that financial transaction and relationship. So that's what direct pay is right.

Speaker 3: 4:17

Direct pay is basically paying the medical provider for the service they're providing you at the time of service, so you, the consumer, has full visibility and control and of course the provider doesn't have to jump through the hoops of documentation, unnecessarily submitting claims and paperwork and so on, right?

Speaker 3: 4:40

I mean, we find, for example, that you know there are many statistics out there, but probably I would say you know the ones that say about 70 to 80 percent of a clinician's time is spent in clerical activity, not in taking care of you as a patient. That's about accurate. Many times you go in to see the doctor and they're actually looking at their computer the whole time, right, because they're too busy documenting to make sure that they've, you know, crossed all the T's and checked all the I's and so that you know they can submit a proper bill, right for that visit. So that's the idea of direct pay, right? Is that you're going to know what you're going to pay. The medical provider will get paid at the time of service and they can really focus on you instead of the paperwork of service, and they can really focus on you instead of the paperwork.

Speaker 1: 5:24

This goes to, I think, a larger issue and I'd like your thoughts about it. We've gotten people conditioned over all these years to say well, yeah, but yeah, but if I do that I'll never meet my deductible and then if something serious happens I'll have to come out of pocket my entire deductible. Is this, in part, the opportunity, perhaps for a conversation with those patients to say your insurance policy was never really meant to pay for all of these low dollar items. It's there in case you have a catastrophic event and, trust me, if you have a catastrophic event in this country, $5,000 is pocket change. How do you have that conversation and get past that? We've kind of taught people how to do that. Now we have to unteach them.

Speaker 3: 6:09

Yeah, and I think, as you know, change is difficult, even when it's a good change, right, it's really hard to get people to kind of break away from habits. So you're absolutely right, it isudgingly, literally one conversation at a time that the providers need to have with their patients, right. That employers need to have HR needs to have with their employees and really benefit advisors need to have with their clients, with the employers, with the employers, right. So it falls on a lot of us to sort of bring that message down to the consumer, so that they're hearing it from different venues and when they're hearing the same point, it's going to hopefully drive that change To your point.

Speaker 3: 6:57

Yes, I understand that. I mean, if you think about it, how many times in the past 10 years did you actually meet your deductible? It is exceedingly rare, unless you had a major medical event, unless you had some surgery, unless you ended up in the hospital for some reason or what have you right? But really, I mean, especially when you're looking at age 65 and under, those numbers are even more sort of alarming, right, in a way that you know a tiny, tiny percentage is hitting your deductible and everyone else is just sort of kind of moving along sort of in that herd mentality.

Speaker 1: 7:33

You know, I had a direct primary care physician that I was speaking to at a meeting that you and I recently attended in Miami and one of the things that he said that just floored me was that 85% of direct primary care claims over the course of a 12-month period never hit $5,000. And you know, given that that's kind of the out-of-pockets that a lot of people have, it's an interesting tale to tell In Wow Health. Do you help the benefits advisors learn how to tell that story?

Speaker 3: 8:03

We do. That's one of the many things that we do right. So our goal is to not only educate the benefit advisors but, more importantly, give them tools, give them solutions that they can put in front of their clients, and then that is going to allow them to have that conversation more meaningfully right. Not just philosophically this is how we should do it right, but practically this is how we would execute it. We do the same thing with our members.

Speaker 3: 8:30

Once you, for example, a benefit advisor, an employer, does decide to move with our solution, we are going to make it, make a full effort in reaching out to the members. We text messages, we send emails, right, really getting the member to understand that, hey, you know, this is the better way for you to get your care. And I have to say that, you know, it's really heartening because we do see so many of our members who come in with accepting that this new paradigm right, and I think it's wonderful to kind of see that change taking place. We're probably not quite at that tipping point, but I feel that there are so many good people in the industry providers and benefit advisors and employers and even individuals right, who are saying this is not quite right, we need to do something about this and kind of really taking it on, and I feel like that we're getting close to that tipping point.

Speaker 1: 9:33

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Speaker 3: 11:39

I think that it requires you to pull up a spreadsheet and put those numbers in. Unfortunately, the transparency laws really meant well but have not been executed well. So we see, for example, large systems and not necessarily entirely their own fault, but at times I feel that they could definitely make a better effort. Just put out this reams of data, which is not really something that's digestible and understandable by the average person. So I think it can be a bit of a challenge, but I think having something like Vow Health having and then really thinking it through, you know OK.

Speaker 3: 12:21

So if I'm going to pay a premium with an insurance, then let's say I'm going to go see the doctor three times in a year, maybe once for a wellness, a couple of times because I've got the sniffles or I'm sick, and then I am going to have my labs done.

Speaker 3: 12:35

What else did I have done in the last five years? Right, average speaking, and put those numbers down and then come to our website, which is myvalhealthcom, m-y-w-a-w-a-g-l-t-hcom, and you know, and then my labs are going to be about 65 to 70 dollars. Maybe my blood pressure medication that I take is going to be two to three dollars. Right, and add all of those numbers up and then see where am I sitting. Well, what am I missing? That I don't get with Wow Health, that I do get with a one card no good card versus how much money am I going to end up putting back in my pocket, which really is going to help me decide when and if I need to use those funds? And I honestly, david, I've done this numerous times right, and we have never found a scenario where a member came ahead in the traditional insurance paradigm.

Speaker 1: 13:44

It's a burden, though Not a burden, but it's an obligation. I think that a benefits advisor would have to undertake either to come up with some case studies to give to folks, because, it's as you know, human behavior is the hardest thing to change, and we're also in this. Well, my insurance doesn't cover it, so I can't get it. And then people get sicker instead of saying, okay, you know, can I afford this? How do I pay for it? I think it's going to be an interesting conversation for benefits advisors to have, whether it's at open enrollment or at you know some other time, to say look, you have to change your thinking. And do you think that maybe the ground has been plowed a little bit by some of these RX discount cards? Not how they work on the back end, because that's a whole other story. But you know, wait, you mean, if I use this card, I can get the prescription for less than my insurance company's copay. You bet I'm in. Is that? Did that crack the door open some?

Speaker 3: 14:40

It sure did. And I think you know we don't want to hold out. You know, as they say, don't let better be the enemy of good, right, and I think that these discount cards companies, like maybe GoodRx, what have you right? They've done a great job at at least changing the conversation right and opening up the mind.

Speaker 3: 15:00

And this is where I mean I've always told our advisors look, you guys play an incredibly outsized role in the lives of people, right, which we I don't know if everyone appreciates that right, because if you think about it, by the time you are going to present a plan in front of an employer, right, the employer is going to be paying a decent percentage of that plan, and then the employee is going to be paying a decent percentage of that plan, and then the employee is going to be paying some of that as well, and then, when that employee gets sick, and you know, they are going to be financially taxed, right?

Speaker 3: 15:34

So I think that the fingerprints, so to speak, of the advisor, and how much they have thought through and provided something that's actually meaningful to the employee, go all the way into the pocket of the individual, right, and their family. And then what are they going to have to cut out because someone got sick in the family, and what vacation? Or maybe you know, what are they going to have to put off till next year because they have to pay for that expense. So I think that you know, taking that sort of really larger than what perhaps the job appears role, I think you know advisors are in that position to really make a big difference.

Speaker 1: 16:17

Let's go in the Wayback Machine for a minute. For a minute. Is there any reason why, if I go and I use this kind of a direct pay model and I pay my $150 rather than the $200 and a quarter that it would be if I'd used my insurance card, is there any reason why I know this is an old-fashioned concept, but is there any reason why I can't still file that $150 that I've spent with my insurance company and let that accumulate toward my deductible?

Speaker 3: 16:41

You certainly can, however from and I don't know this definitively, I guess it may depend on carriers and you know, and perhaps the person who's kind of looking at this submission and adjudicating it.

Speaker 3: 16:54

But you know many of them will say, oh no, you know you have, we need to have a claim on file to have that counted against it. That's just my gut feeling, because of course the insurance companies are going to feel that they are losing the value proposition. Because if you say that, yeah, you know what, 95% of the time I don't really need this card that I'm carrying around because I can just take care of it and I'm only going to pull it out if I end up in the hospital, if I end up in the ER, right, right, you may start looking at the cost of that and saying, is there another way for me to take care of those what ifs of life at a much better price point? So I think that you know there is some fear and some misconceptions that are thrown out there at times maybe innocently, but I think certainly at times purposely, to make sure that the consumer doesn't really start to become fully engaged and aware.

Speaker 1: 17:57

Well, we want consumers, but we don't want real consumers, we just want kind of consumers, the way we define them. Jawad, we've got about a minute and a half or so left. How do you see the next five years in terms of the progression of this kind of a model and maybe other things that you guys are maybe working on down the road? What are you seeing?

Speaker 3: 18:15

Yeah, I think the biggest thing that we will continue to see because of the financial pressures on employers, because of the inflationary stress on people's wages, right, we know, for example, that health systems have, across the board, raised salaries by about 15 to 20 percent at the beginning of 2023. We know that, as the federal emergency statute expires in May for the COVID relief, the CMS is talking about cutting hospital reimbursements by 20 percent. So now you have this dilemma as a hospital, you're losing reimbursement on one hand and you've raised salaries on the other. Where are you going to get the money from? Certainly not from CMS, right, because they'll do what they do. So it's going to come down to commercials, right? And then is that going to cause, come 2024, renewals to be up 30, 40% from where they are. They're already fairly untenable for most employers, right? Is that something that's really just going to break the dam, so to speak? Right?

Speaker 3: 19:19

So I think those stressors in the market are going to cause more people to look at alternate arrangements for more employees, to look at more meaningful benefits, right? You know? Where can I get something for 20 bucks a month? You know, one of our plans is $20 a month, which just gives you access to our whole discount network. Yeah, you know, if I need to go see the doctor, I'll know who to go see and then I'll pay for it at that time of service. And 20 bucks a month is a lot different than a premium of maybe $400 a month. So I think that it just is going to come down to these market stressors more so, in my opinion, than legislation, because we know that the gridlock in DC isn't really going to allow any meaningful change, at least in my opinion, in the near future, and the best we can hope from the government is not necessarily to come up with new legislation.

Speaker 3: 20:15

But how about just enforcing what you have already passed? Right, if it is about transparency, then really forcing those transparent pricing to be available, but in something that's digestible by the individual right, not in some nonsense. You know 10,000 lines of code and CPT codes and what have you. So I think that that, to me, is what's really going to hopefully tilt the market in the direction of this direct pay models and come up with even more creative solutions.

Speaker 1: 20:45

And that's a great place to end our conversation for today. Jawad Arshad, ceo of Wow Health. Jawad. Thanks so much for sharing your insight with us. Thank you so much, david, for havingad. Ceo of Wow Health. Jawad. Thanks so much for sharing your insight with us.

Speaker 3: 20:53

Thank you so much, David, for having me. It's a pleasure.

Speaker 1: 21:01

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Speaker 2: 21:19

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