From Payment Design to Plan Innovation: Gravie’s Kevin Kickhaefer Joins the ShiftShapers Podcast
Earlier this summer, Gravie Chief Revenue Officer and President of Commercial Markets Kevin Kickhaefer sat down with David Saltzman on the ShiftShapers podcast during NABIP’s annual conference in New Orleans. The topic: How the benefits industry can shift its collective focus from payment design to plan innovation, allowing for a more sustainable model that gives employers more control over their healthcare costs and creates better outcomes for employees.
Stream the full episode below and continue scrolling for more highlights from the conversation.
SS: Let’s start by defining the problem we’re trying to solve and then we can talk all about the various pieces of it. What is the issue as you guys see it?
KK: Over time, employers, in trying to reduce the medical trend increases that they were managing, have shifted more and more of that burden on the backs of the employees. And you’re looking now at the average deductible, for small businesses, is somewhere close to $3,000. You could make an argument that, for most Americans, that’s not even having insurance.
“What we have seen is people are delaying care and putting off the care they need because they can’t afford it.”
What we have seen is people are delaying care and putting off the care they need because they can’t afford it. From our plan design, we’ve now flipped that 180 degrees. We looked at our book of business and said, “what if we remove those barriers?” What I mean by that is covering 100% – no deductible, no copay on what we say is 85% of the encounters most Americans use healthcare for. Examples of those are obviously primary care, specialty care labs, x-rays, including high-cost imaging, and generic drugs. We want that. We really are trying to encourage people to go in and see their physician when they need to.
SS: Do you have any data on what the cost is of people not feeling they can access to system?
KK: In the Gallup poll in 2021, they asked Americans to describe the healthcare system and the two words that came up the most were “expensive” and “broken.” And looking at the data that we’ve seen, it’s approaching over 35% of people are saying they can’t afford healthcare. When you ask people, you know, have they delayed care after COVID pandemic? It’s now approaching around 45%.
SS: So, how did we get here?
KK: I think it’s just increased that way over time, and you’re starting to see the employers getting more concerned about it. So I think the employers are saying, “wait a minute, I know my workforce can’t afford these high deductibles, and they certainly – because they’re using discretionary – don’t have the money that they can put in the HSA.” And I think that’s certainly playing out in our data.
The other thing I think that’s unique too is if you look at our renewals, because that I think is always a really good way to validate if we’re actually delivering on what we mean. So our last renewal season – and this is over a thousand employers – we had a 93.5% retention rate, which is extremely good for a small business. It’s generally about 10 points better than what the (major carriers) are running.
SS: How much employee education do you have to do before people realize, “Hey, this is not a scam, this is not bait-and-switch or Three Card Monte or any of those things. We actually have health insurance now that we can use.”
KK: Our account management team and implementation staff, once we onboard a client, are doing those open enrollment meetings. We’ll show up on site, send them communication material that explains what this is and work really closely with their HR department. And it’s an ongoing process, too. We don’t just do it one and done. We consistently give our employer clients access to materials that we create. That’s one. Two – you’ve got to make it easy for Americans, right? So we’re really pushing the app. Everything’s integrated, and what will be coming down the road, too, are more place solutions that we’ve curated on behalf of the member.
SS: Is any of the acceptance of this kind of thinking driven by the fact that during COVID people started realizing that they could pay less for meds using a good Rx card than they could if they went through their insurance? And all of a sudden the eyes kind of slammed open and said, “Wait, this doesn’t make sense to me, but yet it’s happening.”
KK: I think we’re at a tipping point. It’s getting so costly and we haven’t, as an industry, done a decent job in holding down the medical trend. Because the easy approach is to say, well, let’s just make the employees pay for it. We’ve gone too far now and the employees are looking for other ways to do this.
SS: So let’s go back to the 20,000-foot subject matter level. If this kind of plan design motif really starts taking off and we can go down to smaller groups, what’s that going to do to the more traditional carriers?
KK: As companies like ours and others that are bringing level funding down-market, it’s going to force the (major carriers) to do the same thing, because we are winning more than our fair share by converting fully-insured groups to level funding. They’re going to struggle. They don’t move quickly. They have antiquated systems. It’s harder for them to respond to the innovation, but they will move quickly if it starts hitting their pocketbook and they start losing more and more clients. They’ll have to figure out a way to do that.
SS: When you work on trying to integrate direct primary care, there are so many areas in this country that are deserts for DPC, and there are underserved communities. How do you bring a solution like this nationwide?
KK: That’s why we have a partnership with Teladoc. We try to push in those desert areas, providing those services through virtual visits. It’s not perfect but it does work. I’ve seen it work. My mother, before she passed, had struggled with mental health. She lived in Kansas and she couldn’t find a good mental health provider. But we worked on it and she got great treatment through virtual visits. So that’s an example. I think we do need more funding and support for more primary care visits. I think it’s going to be a combination of industry, because if you think about it, the employers are really providing most of the health care in the US today. I think we can push for legislation. I think we can push for better payment design for primary care. I’m a huge believer in that.