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.

Over 48,000 clinicians polled say payers are manipulating the surprise billing law.

Health insurers are acting in bad faith in a multitude of ways when it comes to the No Surprises Act, a survey by Americans for Fair Health Care (AFHC) reveals.

The coalition of clinical and advocacy organizations polled 48,005 physicians in 45 states to investigate concerns over insurer abuse in the surprise billing law. The survey results suggest that providers are often on the wrong end of power dynamics, which includes payers withholding payments, limiting patients access to in-network care, and ignoring mechanisms of the independent dispute resolution (IDR) process.

The No Surprises Act is meant to protect patients from unexpected bills when they receive services from out-of-network providers at in-network facilities. When there is a dispute between providers and payers over price, the two sides can enter an IDR arbitration.

However, according to the surveyed clinicians, 52% of payments determined by independent dispute resolution entities were not made at all, while 49% were not made in the required 30-day timeframe, and 33% were made in an incorrect amount.

Since going into effect on January 1, 2022, the No Surprises Act has run into a litany of problems. Providers have challenged the law several times in court, with the latest resulting in a federal court suspending the IDR process once again by striking down an increase in administrative fees for arbitration and restrictions on batching related claims.

The IDR process has also been inundated with a massive influx of disputes. A recent status update by CMS revealed a total of 334,828 billing disputes had been filed, nearly 14 times more than initially expected.

Litigation challenges and surveys such as the one conducted by AFHC have illustrated how providers feel about the balance of power within the law. Without the necessary cooperation from insurers, the No Surprises Act will continue to impose financial challenges that will fall on the shoulders of providers.

New findings reflect the differences in negotiating dynamics and financial incentives in the two markets.

Hospital prices for commercial health plans are, on average, two to three times higher than Medicare Advantage (MA) plans prices in the same location for the same service when negotiated by the same insurer, according to a new study published in Health Affairs.

With the cost of health insurance in the commercial insurance market increasing over the past decade, the research highlights how the commercial and MA markets face different financial incentives and regulations.

Using 2022 price information given by hospitals in compliance with the price transparency rule, the researchers examined the ratio of commercial-to-MA prices negotiated by the same insurer, in the same hospital, and for the same services.

The results showed that median commercial prices ranged between 1.8 and 2.7 times more expensive than MA prices across all services. In dollar terms, commercial prices were between $660 and $707 more expensive than MA prices, on average.

Within the same hospital, the median commercial-to-MA price ratio varied, from 1.8 for surgery and medicine services, to 2.2 for laboratory tests and emergency departments visits, and 2.4 for imaging services.

The price ratio is higher at larger, teaching, and system-affiliated hospitals, and is higher for larger national payers with a major presence in both the MA and commercial markets.

"High commercial prices are ultimately passed on to employees and their dependents in the form of lower wages, higher premiums, and higher out-of-pocket expenditures," the authors wrote. "The large price gap between commercial and MA prices within an insurer reveals the pricing consequences of differing incentives across markets."

Why would insurers knowingly negotiate commercial prices so much higher than MA? The study highlights that out-of-network prices for MA plans are set at 100% of Medicare fee-for-service rates, which means that hospitals receive Medicare fee-for-service prices from MA insurers if they don't join their network. This allows insurers more negotiating power for their MA plans.

Another explanation the authors posit is that insurers bear more risk for their MA plans than for their commercial plans.

"All else being equal, insurers may accept higher prices for their commercial plans if it allows them to remain competitive in the MA market, where gross margins are nearly twice as high per enrollee," researchers wrote. 

The study's findings have implications for policymakers and stakeholders interested in containing commercial hospital prices, the authors said.

"Because insurers respond to differing incentives by negotiating substantially different prices across markets, policy and practice efforts that alter incentives for insurers may have the potential to lower commercial pricing."

Seniors especially are slipping through the cracks without guidance on maintaining their coverage and benefits.

Many Medicaid members are being left in the dark during the redetermination process, according to a survey conducted by The Harris Poll on behalf of digital health platform Icario.

Millions are expected to lose Medicaid coverage during the unwinding of the continuous enrollment provision, which is why it's necessary for health plans to reach out to their members to assist with enrollment or guide those who are no longer eligible to other sources of coverage.

Yet, the Harris Poll/Icario survey, which polled 957 adults covered by Medicaid from July 18-20, found that 35% of members said their health plan didn't reach out about renewing their coverage.

"It's on health plans to engage with members and educate them on what needs to happen to avoid being disenrolled, and the survey results indicate a significant number of plans aren’t doing so sufficiently," Icario chief commercial officer Troy Jelinek said in the release.

Senior members have experienced the least outreach, the survey revealed. Over half (55%) of respondents aged 65 and older said their health plan hasn't contacted them to help with their coverage options.

"This means that plans can do a better job of tracking down their older members, who also tend to be a part of higher-risk populations, and educating themselves about communication preferences across age groups," Jelinek said.

When health plans have gotten in touch with members, 93% of respondents who were contacted said their health plan provided the appropriate information and resources to complete the renewal process.

The affects of Medicaid redetermination on payers are now being seen with insurers recently releasing their second quarter earnings report.

Elevance Health reported a loss of 135,000 Medicaid members in the second quarter but still experienced 13.2% net income increase year-over-year, while Centene CEO Sarah London said the company's Medicaid performance was "running slightly ahead of expectation."

Still, payers need to continue outreach efforts to ensure they can maintain as much of their membership as possible to help the bottom line during a time when many are focusing on cutting costs.