Navigating Healthcare's Future: An Insider's View on Network Strategy, Employer Innovation and Policy Challenges

Christoph Dankert, CFO of Carrum Health, recently sat down with Managed Healthcare Executive to discuss the impact of federal healthcare spending on network strategy, emphasizing the reimbursement rate disparity between commercial and government sectors. He highlighted concerns about providers compensating for reduced government reimbursements by increasing commercial rates, potentially leading to higher premiums for employers.

This interview has been edited for length and clarity.

Christoph Dankert

MHE: The Congressional Budget Office has put federal healthcare spending in the spotlight. Do you see this as a turning point for network strategy, and what signals are most concerning from your perspective as a network leader?

Dankert: Carrum Health is in the commercial space, and historically, there has been a bit of a dichotomy in terms of the reimbursement rates between the commercial space and the government space, like Medicare and Medicaid. When I say commercial, I mean employer-sponsored insurance, the ACA marketplace insurance.

The RAND Corporation has been doing studies for years that showed that, on average, on the employer side, the reimbursement rate is about two and a half times what it is on the Medicare side.

Medicaid reimbursement is even lower than the Medicare reimbursement. When you look at what is being discussed at the federal level, anytime there are changes to the Medicare or Medicaid reimbursement or the number of individuals covered, for example, in the Medicaid program.

The way we think about this on the commercial side is, if I'm a provider and there are challenges to my government reimbursement, those people who used to be covered before, they might move into the uninsured pool. That effectively reduces the reimbursement I'm getting on that segment of the population.

If Medicaid eligibility is tightened up, where do these people then go? Will they buy a policy on the ACA marketplaces, which means then they'll effectively become commercially insured? Then this isn't a worry. Or will they go uninsured? Then, the aggregate reimbursement to the providers goes down.

MHE: Would you say that healthcare networks are currently built to withstand what's coming, whether that's payment reform, political gridlock or higher uninsured rates?

Dankert: Other than the potential pressure on reimbursement rates, they're pretty insulated from those discussions because those discussions focus on Medicaid. I know there's some talk on the Hill about adding auto-inflators to the Medicare position fee schedule. Those are things that will potentially have some inflationary pressure on the commercial side, but there isn't any talk about changing the way employer-sponsored insurance works.

MHE: Would you say that large employers are voicing concerns that federal underfunding could translate into higher premiums or cost shifting on the commercial side?

Dankert: That is definitely a concern. If you're taking funding for providers away, they have to make up for that somewhere, and they can't ask for more from Medicare. Commercial is the one place providers can go to and ask for more. It's a possibility that this will have an upward effect on the trend.

I think there is a concern overall that if you take it out of one place, it's going to have to come from another place. That certainly would hit the bottom line of the employers.

MHE: If Congress or CMS asked for your advice today, what's one policy lever you'd recommend to stabilize the healthcare system for employers, providers and patients alike?

Dankert: As a company, what we have seen work is harnessing the power of the market’s competition. We find providers who are cost-effective and very high quality and then they get rewarded with more business. If that provider isn't cost-effective anymore, then we'll go out and take another look at the market. We believe that if there is more competition between providers, that can lead to more efficiencies. This idea to use competition to drive efficiencies is a very powerful one, and I don't think we've seen enough of that on the health policy side.