Ep #467: A Deep Dive into the World of Healthcare Costs - with Kelly McDevitt

David Saltzman: 0:05

If data is the key to employers and plans making intelligent decisions, how do they get clean, complete, comparative data? We'll find out on this episode of Shift Shapers.

Host: 0:19

This is the Shift Shapers podcast, Connecting benefits advisors with thought leaders and entrepreneurs who are shaping the shifts in the industry. Now here's your host, David Saltzman.

David Saltzman: 0:32

And to help us answer that question, we've invited Kelly McDevitt. Kelly is president of the Nonprofit Integrated Benefits Institute, or IBI, as we'll refer to as we go forward. Welcome, Kelly.

Kelly McDevitt: 0:43

Hi, David, thanks for having me.

David Saltzman: 0:45

It's my pleasure. It's my pleasure, so talk a little bit about your background. How'd you get to be doing what you're doing?

Kelly McDevitt: 0:50

Just lucky. I guess I actually spent. This is my 40th year in the industry. I spent 30 years of my career with Aetna and then retired for an entire two weeks, went to United for the next six years and then three years ago I actually got a call from Dr Tom Perry, who started IBI 29 years ago now, and he had a very interesting proposal because he was very passionate about helping employers understand the true cost of healthcare by including productivity data with their medical pharmacy behavioral that we usually look at to be able to see a more holistic picture of what healthcare was really costing an employer. And so I said yes to this opportunity and for the past three years IBI has been trying to create that really holistic approach to data. We do have the largest database in the United States of disability, std, ltd, fml and workers comp claims, so we have a very large benchmarking data set that we can use to help employers really understand that big view.

David Saltzman: 2:04

Well, you know it's interesting because, with the renewed interest in self-insured plans and the fact that folks are now finding ways to fit self-insured plans into groups that are not technically creditable, you know, there used to be 400 lives and up in order for an actuary to be able to relatively well predict what those claims were going to look like, and now we've got people doing self-funding down to 12 or 13 lives and whatnot. So data is now key. It's always been important, but it's key. So, in terms of plans, what's keeping employers up at night data-wise?

Kelly McDevitt: 2:41

Gosh. So I think we're at this really very different reflection point for employers right now. I don't think we've ever experienced the time at least in my 40 years in the industry that employers have so much downward pressure, you know, from the recession and cost mitigation layoffs again to the pandemic, to trying to control really trend and disease outcomes, as we always have. I think that the pressure on HR teams along with, by the way, that particular group of people being the highest stressed and burnt out group of employees themselves, has put them in a position where they have so many priorities and downward pressure at the same time and it's all coming together in this perfect storm and there's really, in my opinion, only one way out and that is to be able to determine the products and programs that quite frankly, kind of got put in willy-nilly over the last 36 months, what's working and what's not. Because the attitude of employers of the last 36 months has been one of necessity to put their arms around employees and really care for them. So during the pandemic it was infection mitigation, safety, onsite safety, then sending them all home, if that was the case, wrapping your arms around them socially to take care of them, and so that produced a whole lot of new vendors in the marketplace and point solutions.

Kelly McDevitt: 4:25

Employers availed themselves of those solutions and it was kind of the message in at least most of mid-market to national account size groups was just do what you need to do.

Kelly McDevitt: 4:35

We're kind of taking the price tag sticker off of everything. Just get them what they need, which was not wrong. But now, three years later, we've got CFOs saying OK, recession, inflation. You have a choice to make I need to save $10 million in the health plan or we're going to lay people off. And that leaves our HR people in this very precarious situation where you know how hard it is to take away benefits from employees, but they're not sure that all those solutions they just got slammed in the last 36 months are actually working. This is where the data comes in. I take exception to vendors who say we have more data than the Library of Congress. That's fantastic if you actually know what to do with it. So in my opinion, it's not just having the data in your hands, it's having someone either at your vendor or the point solution or within your organization who knows how to interpret the data into actionable items so that an employer can really use the data to make good strategic decisions.

David Saltzman: 5:42

It's funny. Years ago in the selling part of my career I was working in your state in Florida. I remember when the law changed that groups it used to be groups of 100 and up could get data from their carrier. Then it went down to 50. I was long out of the TPA business by them. But I was talking to a friend of mine who was a TPA outside of Orlando. She was all excited about it and I said that's really cool. How many of your brokers actually know what the hell they're looking at when they're looking at that data? She said two and one of them's me. So that begs another question. I've been thinking about it since you agreed to come on the podcast. That is, employers are getting their own data set. Let's assume they're getting data and they're getting clean data and actionable data, but that's in a vacuum. What they don't have is any benchmarking data. So is that something that you all provide?

Kelly McDevitt: 6:37

Yeah, yeah, and that's a good point. So I'm going to use an example. That sort of blew up during the pandemic and in talking to employers In my past life with both that and United, I sat down quarterly with my Super Jumbo accounts and you're going through all of their data. It's a full day meeting. You'd be well into deep discussions around disease progression and outcomes data, but it was all around medical and pharmacy. If you were lucky, you got maybe 10 minutes to talk about mental health and at the end of that 10 minutes the CHRO usually said, yeah, you can just move on, because that's pennies on the dollar, I don't really need to talk too much about that, it doesn't cost me anything.

Kelly McDevitt: 7:25

Three years into the pandemic now we realize that mental health, while still not probably not in your top 10 of your trend drivers in your data, is number one or number two in your disability data and there's no way to know how you're doing if you can't benchmark. Now, obviously, the larger clients almost all have either the big three consultants or other consultants, seconds or tier consultants, who are giving them those benchmarks from their own book of business. I always encourage to compare yourself against your at least your industry and your company size, your demographic makeup, at the very least. But our 50 group employers don't have that luxury, and so that's why IBI exists. So we are a nonprofit, as you said at the beginning of the podcast, but we are actually free to employers. So the way that we keep the lights on at IBI is our supplier members actually pay us a membership fee, but our employers don't, which is a very different business model than most of the business groups.

Kelly McDevitt: 8:33

We provide benchmarking data for an employer's industry every year and we provide it for all four products STD LTD, Workers' Comp and FMLA and this allows, especially in the disability side, where we are seeing a tripling of claims, on the mental health side, for example, where we never did before. It allows employers to say well, where am I falling in all of that? What is the incidence level for a group my size, or in my part of the country, or with my demographic makeup? And it allows employers to kind of go back to their vendors who are administering those plans and saying I'm seeing my industry has a 4.5 incidence rate. Are you telling me I'm at 10? What do I need to do? Is it my benefit design? Is it my return to work program. Is it my accommodations program? Whatever the case may be. But just having simple benchmarking of that nature allows an employer to say we're not keeping up and we need to figure out why.

David Saltzman: 9:41

Well, relative disability if you want to have a two age 65 benefit plan, that's going to come back and bite everybody because the tail and the expense of the tail on a DI plan is enormous I mean it elapses life insurance in most cases and most other benefits so that's something to really keep an eye on. You said something in our pre-interview that I thought was interesting and I'd like you to explain. You said IBI works as perpendicular to the benefit space. What do you mean by that?

Kelly McDevitt: 10:09

Yeah. So it's interesting because we are a nonprofit and we're considered the unbiased experts in the productivity world Because, quite frankly, we don't have anything to sell. Our company is made up of three pillars. One is we do PhD level research, academic research voted on by our members, with 1800 plus members most of those are employers. They tell us what's keeping them up at night and we do five research projects a year based on their votes.

Kelly McDevitt: 10:41

That research we then translate to layperson. Yes, we produce a very long, pretty dry research paper, as researchers do, but we also produce a very nice one pager with all the really highlights of the research which we found and we do a webinar and we produce an executive summary. We translate that so that employers can understand why that research is important and what they should take action on. We then go out to our employer board members. I have some of the very larger employers on my board and they give us advice about how they have approached the particular challenge and what their best practices are. We share that information with employers for free. So we sit in this space, that's over to the side of the consulting firms, and the payors etc. Really just are here to help educate employers. Then, of course, we have the benchmarking database around the productivity data, and then we have forums. Every year we have one big forum in September in Chicago that we invite all employers to, and then we do regional events with the business groups during the year.

David Saltzman: 11:47

If it isn't a proprietary question, where does your data come from?

Kelly McDevitt: 11:51

It's not and it's right on our landing page of our website available to the public. All of the payors who pay STD LTD and process FML and workers comp claims. They submit their data to us, much like, on the medical side, the large vendors submit their data for discount benchmarking.

David Saltzman: 12:11

What are the other implications? We talked about the eye and mental illness. What are the other indicators that, among the data sets that you guys are working on, that people should be keeping an eye on?

Kelly McDevitt: 12:24

So we're just processing the 21 data. I will tell you that the 2020 data year was the most anomalous data year I think I've ever seen, from a productivity perspective, I mean. But obviously employers are most interested in what COVID costs them as a company as a whole and, quite frankly, in order for them to make decisions going forward on how to be ready for the next wave, for the next, you know, mutation of the virus, et cetera, or some new virus, they really need to know what they spent on this. And it was very frustrating in 2020 because we didn't have an ICD-10 code for coronavirus and so trying to really dig in and slice and dice that claim information was frustrating because, you know, some doctors were just coding coronavirus as an upper respiratory infection and we were really trying to dig into that data. Now that we have the 2021 data, we're seeing that actually COVID from a medical claims perspective, although it was a lot in dollars, it still doesn't keep up with diabetes and cancer and MSK. So, you know, as an overall medical concern, in the scheme of things, not that expensive. However, on the disability side, just off the charts. And so when we're gathering data like that, we are still looking at the cost of someone, because even today, people are not just out of work like they would be with a flu for a day or two. They have to isolate and so you're off work for a week. You're out of work for a week minimum If you have no symptoms and you're fine, right Could go longer than that. Also, I'll say the effects of long-haul COVID are just showing and rearing their nasty head. We are seeing LTD claims and very expensive LTD claims for the cost of long COVID, and so I think employers want to really monitor that.

Kelly McDevitt: 14:24

Some of the other things that came out of the pandemic itself that probably weren't normal trends in disability were, believe it or not, gut health related diseases. At the beginning of the pandemic, we had a lot of hernias and such because of people who were on the front line lifting and doing much more hands-on patient care. So, and of course, then there was the stress of the pandemic itself. Certainly, in healthcare and service workers, we saw higher levels of gastrointestinal issues. Pregnancies were way, way, way down in 2020 and into 2021. Now we're expecting maybe another baby boom. So those things are things to watch.

Kelly McDevitt: 15:10

Certainly, this the probably biggest thing on my mind right now is delayed care. So we're in the middle of a research project right now to be published in the next probably 90 days publicly about delayed care, and when we did the research, we asked people if they were still now, in April of 2023, delaying care for any reason, and we thought we knew the answers. We thought that the biggest bucket would be the barrier to care issue, in that people don't have the money or they have to choose between getting groceries and their prescription filled, or they are in a care desert and they can't get to care. That is still the biggest bucket. But there are two other buckets that we expected results, but are much larger than we thought. The first is people who still have a fear of getting or giving COVID. I thought that was going to be tiny. It's not.

Kelly McDevitt: 16:04

It's a pretty big bucket. And then the last one is systematic issues within the healthcare system Can't get an appointment, the hospital has closed, don't have staff, so can't schedule surgery because we don't have enough anesthesiologists, etc. That bucket's still pretty big too. I thought we would have recovered more by now. So we still have people who are not getting care, some who haven't gotten care in three years. They're coming back into the system as high cost claimants. That I can tell you. Have we projected? Have the consulting firms actually included that in their projections for 2024 and what kind of a ratio are you using for an increase for delayed care coming back in? So I'm talking a lot to employers about really watching as they see care come back, and that includes preventive care and chronic care. You should be tracking that as well. As it comes back, are we at levels pre-pandemic and are we willing to accept those levels because they were pretty crappy to begin with? And then are the sick people coming in as high cost claimants right into the hospital?

David Saltzman: 17:11

Well, and that's something that we talked about all the way through COVID was this kind of bubble that? And trying to pinpoint where that bubble was and how big it was? It's almost like kind of a deferred IBNR. You know it's coming, you know it's there, yep, do you have any sense of how much of that bubble is actually starting to get into the data now?

Kelly McDevitt: 17:33

Yeah, I don't have a number for you yet I do. In the research. I will be able to tell you who falls in which bucket, like what the percentages are for the. I'm scared of getting or giving COVID. It's a barrier to care issue or it's a system issue. I will be able to tell you the monetary problem. I think I don't have the medical claims data to be able to do that, but I am joining with one of my board member partners to try and figure that out, because we find that our research is great.

Kelly McDevitt: 18:08

But in research, as usual, you're asking people employees about a point in time in their life, that day when they're answering the survey. What I like to do is have one of our large carriers, like Anthem or UHC, come in behind us and say, okay, but how's that playing out in the claims data in real life? Right, the trick here is, if you think about this from a data perspective, you have to have a continuously enrolled population for all three years. We really need to look at the pre-pandemic or early pandemic days and be able to risk score them. So we need a carrier that does that and does that. Well, there's probably only two of those, maybe three, so we need to actually track Joe Smith's risk, who maybe was prediabetic in January of 2020. Where is he now? Has he gotten the recommended care for a prediabetic? If he is now indeed a sick diabetic, how do we monetize that and say this is what Joe Smith is going to cost us when he comes back in through the emergency room and is admitted to the hospital?

David Saltzman: 19:12

Sounds like there's a lot of science and a little bit of art to what you do.

Kelly McDevitt: 19:17

There's definitely a lot of science and it is a lot of art, because, especially in this particular example of delayed care, we're looking for claims that don't exist. That's not how we usually do data.

David Saltzman: 19:30

Right, it's hard to go out and find it in the hall, right? Yeah, exactly right. Anyway, that's a great place to end our conversation. We hope, as the data rolls out, that you'll come back and share some more info with us. Kelly McDevitt, president of the aforementioned nonprofit Integrated Benefits Institute. Kelly, thanks so much for sharing your expertise with us.

Kelly McDevitt: 19:48

My pleasure. Thanks for having me David Thanks.