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The Exec: L.A. Care Health Plan CFO Afzal Shah on Working to Pay Claims Faster

Analysis  |  By Jay Asser  
   August 17, 2023

The publicly operated health plan has seen an increase in requests for resolving claims and requests for potential advances coming out of the pandemic.

Months into taking over the reins as CFO of L.A. Care Health Plan, Afzal Shah understands the financial challenges facing not only his organization, but also his counterparts at hospitals.

"They want their claims paid faster," Shah says.

During a time in healthcare when payers and providers have little choice but to work together to ensure mutual success, it's critical both sides recognize what the other needs.

Shah knows that better than most, having previously served as deputy CFO at L.A. Care, senior vice president at Alignment Healthcare, and vice president for Actuarial Services at Health Net and Centene.

In an exclusive interview with HealthLeaders, Shah shared how he's collaborating with hospital CFOs, addressing claims disputes, scaling back expenses while eying growth, and more.

This transcript has been lightly edited for clarity and brevity.

HealthLeaders: What has the experience been like in the first few months as a CFO in the current financial climate?

Shah: After the pandemic, there have been quite a lot of changes, impacts to our providers and our partners, including our IPAs [Independent Physician Associations] and especially the hospital community and the nursing facility community. We've definitely seen an increase in requests for paying claims faster, requests for potential advances, and loans. We officially don't give out loans, but we can give an advance related to directed payment that usually the state gives us to pass on to hospitals and we have offered millions and millions of dollars in those advances to hospitals to provide financial relief to them.

And then separately for L.A. Care, we are certainly looking at our team, our resources, our admin, our vendor spend, contracting spend. Our goal and my goal for the company is I want to see a sustainable company for many, many years to come, long after I'm gone. So we are reviewing all of our departments and our spend internally to see how we can manage to live within the revenue. We are heavily, heavily dependent on the revenue we get from the state of California, so how we can live within the revenue that the state gives us for both our admin costs, as well as our healthcare costs spent.

HL: Healthcare organizations everywhere are trying to cut costs, but how do you grow while keeping expenses low?

Shah: We are doing both, looking at our healthcare dollars and where we want to spend the right amount of dollars for the right price, in terms of purchasing services. We are looking at our network. Where do we need to add providers in the market? We are also looking at, in the individual market, people who may fall off of Medi-Cal due to redetermination. We have a home for them in Covered California and we continue to be the lowest price plan for that. We are also reviewing all of our admin spend and looking at each and every department. There are areas where we are looking to add staff where it's needed and then at the same time there are areas where we are looking to make changes.

Afzal Shah, CFO, L.A. Care Health Plan.

HL: What are the areas of focus for investment right now?

Shah: Security is a big one for us. Our IT team is very focused on security. That's very, very important to us. We have made some investments in the health services team. We heard from many of our hospital partners, they wanted more focus, they wanted more regular meetings, updates. And as we know, there are multiple changes on the state side in terms of the Medi-Cal program with CalAIM, Enhanced Care Management, community support. So we are also making investments to ensure that we can comply with all of the requirements of the state and the new benefits and programs that are impacting the Medi-Cal population, which of course is the majority of our population.

HL: How do you view the current payer-provider relationship and what can you do to improve it? Putting yourself in the shoes of a hospital CFO, how do you see it from their side?

Shah: I talk to hospital CFOs on a weekly basis. The leadership team is very committed to making sure we are listening to the issues that hospitals are facing and we are responding. We've had some very positive meetings with the CFOs. We are figuring out ways to address the issues. I think a lot of what we certainly hear is they want their claims paid faster than even before the pandemic, at times. That's what I hear a lot. If there are claims disputes, how do we address them in a timely manner. I've been working all summer with many of the CFOs to address some of those issues and there's still a long way to go, but we have been working with them collaboratively and listening to them.

There's definitely, in terms of medical inflation and changes in the healthcare industry, we've heard of certain hospital closures. So I do want to recognize that the economic environment is a fairly challenging one for hospitals and we are doing everything we can to help, such as with advances that we've made to hospitals for the ones that need it, for example.

HL: How can you tailor payment and care models to gain a win-win with providers, whether it's with fee-for-service, fee-for-value, or capitation?

Shah: We currently have a very diverse model of care, in the sense that we have three plan partners: Anthem Blue Cross, Promise, and Kaiser. We delegate membership to those plan partners, which we believe is a good thing because certainly that way our members have a choice of not just L.A. Care, but also the plan partners. But we also delegate risk to hospitals and IPAs, and because of that, sometimes there are timing issues. If a provider sees an L.A. Care member, oftentimes they may send us the claim, but the claim may not belong to us. It may belong to a delegated party. It may belong to a plan partner that we have delegated risk to, for example. While this very complicated payment methodology structure we believe is providing good service to our members, it can create some delays and we are working collaboratively with our hospitals, as well as our plan partners and delegated payers to really see how we can address the root causes of those delays.

There are also delays sometimes with Medicare, Medi-Cal claims where there's coordination of benefits—a provider has sent us a claim but we don't have the amount that Medicare would pay. So we also are working on addressing how we can, on a more timely basis, address those types of claims where there's a different party that's the primary payer versus the secondary payer.

Jay Asser is the contributing editor for strategy at HealthLeaders. 


L.A. Care Health Plan CFO Afzal Shah has been working with hospital CFOs to improve the partnership since stepping into his role in April.

With the Los Angeles-based health plan dependent on the revenue received from the state, Shah is also reviewing internal spend to keep the company sustainable for the long haul.

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