September 30, 2025 • 23 mins
High-deductible health plans have created "functionally uninsured" people who have insurance cards but can't access care due to high out-of-pocket costs, creating barriers to necessary healthcare and driving up long-term expenses. We discuss a solution with Tom Policelli of Paymedix.
• Consumer confusion about benefits is the #1 issue, with affordability a close second
• 45% of insured people avoided necessary care last year due to cost concerns
• Nearly 30% of hospitals now require payment before scheduling services
• 25% of commercially insured people have no available credit
• Healthcare utilization by lower-income tiers mimics Medicaid patterns - delaying care until emergencies
• PayMedix's "Super EOB" consolidates billing and offers 0% interest financing
• Employers using PayMedix save 2-3% annually on healthcare trend
• Unlike consumer credit companies, PayMedix uses an insurance mindset to spread risk
• PayMedix maintains 95% employer retention versus the 30% industry average
• TempoPay acquisition provides a card-based solution for pharmacy costs
• Partnerships with companies like XO Health are expanding PayMedix's reach nationwide
Visit paymedix.com to learn more about implementing these solutions.
This episode is sponsored by Benepower, the platform of choice for a modern benefits experience. Benepower is an AI-powered benefits platform offering access to top products and services, enabling consultants and employers to create customized plans, optimize usage, and measure effectiveness. www.benepower.com
This episode is sponsored by Benepower, the platform of choice for a modern benefits experience. Benepower is an AI-powered benefits platform offering access to top products and services, enabling consultants and employers to create customized plans, optimize usage, and measure effectiveness. www.benepower.com
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
As we've discussed on previous episodes of the
podcast, high-deductible healthplans have created some people
and some families who are whatwe've been calling functionally
uninsured.
That is, they've got a card intheir wallet but they're not
able to access care because ofhigh personal responsibility
amounts in their plan design.
How can we overcome thosehurdles?
We'll find out in this episodeof Shift Shapers.
Speaker 2 (00:23):
This is the Shift Shapers podcast, connecting
benefits advisors with thoughtleaders and entrepreneurs who
are shaping the shifts in theindustry.
And now here's your host, davidSaltzman.
Speaker 1 (00:38):
And to help us answer that question, we've got an old
friend who last time he was onthe podcast was almost 10 years
ago it seems like not that longago, but 10 years ago Tom
Polichelli, who is CEO atPayMedix.
Hey, Tom, how are you today?
Speaker 3 (00:51):
I'm doing great and you know, we both look exactly
the same.
Speaker 1 (00:54):
We haven't changed a bit.
I actually think you're lookingyounger, but you know that's
how I flatter guests, I guess,so I'm glad you're here.
Anyway, your arc has toucheddown in a couple of places since
we last talked, but you're nowat PayMedix and what sparked
your vision for trying tosimplify healthcare payments?
Speaker 3 (01:12):
Well, I mean, it starts off as you just said.
People can't afford to usetheir benefits a lot of times
right now and that has a realfinancial impact to them and
really impacts their health.
But just to step back for asecond, even before we get to
the money, the number one issuewe found for all consumers with
(01:33):
commercial insurance is actuallynot money.
Money's number two, it's aclose number two, but number one
is confusion.
They don't understand a blessedthing.
Their benefits are justimpenetrable to them.
They get these EOBs that don'tmake sense, these bills from
providers that can't reconcileit.
So 100% of the people don'tunderstand what's going on and
then a lot of people can'tafford it.
But getting to theaffordability, what we've been
(01:54):
seeing is a whole bunch ofstudies and they all gravitate
towards about the same number.
About 45% of people last yearavoided getting necessary care.
People with insurance avoidedgetting necessary care because
they were worried about how theywere going to pay their part of
what they were going to owe atthe end of the day.
At the same time, we've seenhospitals increasingly concerned
(02:18):
that they're not going to getpaid what the consumers owe them
.
Just under 30% of thosehospitals are now requiring a
form of payment before they willschedule a service.
So you can still stumble intothe emergency room because
that's the law, but if you wantto schedule something, put down
your credit card.
And the last data point I knowI'll put out is for our own
(02:38):
membership.
What we know is that if weweren't there to help them, a
quarter of our members today allof whom have commercial
insurance and ID card from theiremployer a quarter of those
people have no availablecommercial credit.
If they have a credit card,it's maxed out or they can't get
one in the first place.
So when those hospitals say youneed to give me a form of
(03:00):
payment, they can't and some ofthose who can, who do have a
credit card, are scared.
That gets you to the 45% oravoiding necessary care.
You roll all this together andyou have a real access, a
financial access to care issuefor consumers.
That flows through to driveincreased costs for the
employers, because people simplyaccess care when they're a
(03:22):
train wreck and not earlier onin the process.
Speaker 1 (03:25):
Well, that's what I was going to ask you.
Do you guys have any stats onthat?
I mean, we've all seen it,those of us who've been in the
business more than two weeks.
Little Joey has a cold.
Mom and dad look at what theirout-of-pocket's going to be to
take him to a pediatrician andthey say, well, look, wait and
see if it resolves.
And you fast forward a coupleof weeks and the kid is in the
pediatric ICU with pneumonia.
Speaker 3 (03:47):
Yeah.
So, david, I'm not going tostartle you at all and I'm at
risk of making your audience,you know, had their foreheads
hit their desk.
I'm going to go straight attrend, and I've been playing in
this market for 30 years now,plus, and we've always been
looking at trend.
What's driving medical trend?
Is it specialty meds?
Is it behavioral health?
What's driving trend inwhatever time period.
(04:09):
We're looking at what I hadnever looked at until coming to
our company four years ago.
I'd never looked at trend byincome level, never even
occurred to me to look at itthat way, and what we found is
fascinating, and it's before anemployer comes to us when
they're just doing what theynormally do.
(04:29):
If you break down theutilization of medical services
by income tier we broke it intofive levels access care very
differently than the top three.
The bottom two income tiers areaccessing care in a fashion
similar to the way a Medicaidpatient does.
They delay, delay, delay, showup in the ER when everything's a
(04:52):
mess and that's reallyexpensive.
What you see after we step inis that all five income tiers
start consuming care verysimilarly.
They get care earlier, and sowhat that translates to at the
end of the day is, the use ofprofessional services for the
entire employer population goesup and the use of inpatient
(05:14):
services go down, but it'sreally disproportionately driven
by those bottom two tiers.
The bottom two tiers acts asfar more professional services
and use the ER and the inpatientoverall far less and that's
what brings down the overalltrend.
So our employers we've been inthe middle market and small into
the middle market for years.
(05:35):
We have 95% employer retention,which all of your listeners
will know.
That's very high retention ratefor this market segment.
Usually you lose 30 or clientsa year.
We keep them because we'resaving employers two to three
points on trend every singleyear.
So that's compounding.
So employers have been with usfor 10 years, even if they
didn't like us.
They have to stick around.
(05:55):
They can't afford to get rid ofus.
Thankfully they like us too.
But that's a long-winded way ofsaying that if you focus on
these people who are currentlyfinancially unable to use the
benefits that were given them bytheir employer, you can save
the employer a ton of money andhave much healthier people.
Speaker 1 (06:12):
And those are both the things that employers look
for At least most employers do,I think.
So you guys use this thingcalled a super EOB to
consolidate billing and offersguaranteeing financing out of
out-of-pocket costs at 0%interest.
First of all, what is a superEOB?
And then can you walk usthrough how that actually works
in a practical example?
Speaker 3 (06:32):
Sure, so what the super EOB does is it really
replaces both the EOBs that yourtypical insurance plan would
send out, that people don'tunderstand anyway typical
insurance plan would send outthat people don't understand
anyway and the bills that theyget from the providers that they
also don't understand and suredon't reconcile very well to the
EOB.
So our job, what our enginedoes, is to do all of that
(06:54):
matching and reconciling for theconsumer, as we do that we then
.
So the consumer gets a onemonthly statement, no longer all
this blizzard of paperwork.
They get one monthly statement,kind of like a cell phone bill
or a credit card bill orsomething like that, that
summarizes here's everywhere youwent, consumer.
Here's everything you did.
We've checked and it looks likeyou owed $712.09 or whatever to
(07:19):
all these various providers.
We've paid that on your behalf.
So if you think about it, that'sjust the same way an American
Express card statement wouldwork.
Now, we're not a credit card,to be clear.
We're very much not a creditcard, but it's the same idea.
Mx summarizes all of yourstatements, all of your charges,
that is, and it pays themerchant because it believes
these are correct, and then youget your statement and your job
(07:41):
is to then turn around and payAmerican Express back.
We do the same thing.
So we validated everything wepay with our money to that
provider and when consumers getthat monthly statement, what
they have for the first time isone source of truth.
We did the reconciliation forthem and the consumer knows that
.
We're really sure that we'reright.
We're so sure that we alreadypaid the provider with our own
(08:03):
money, which we obviously wouldnot have done if we thought
there was something wrong here.
Now, if the consumer has aquestion or anything, or maybe
there was an error, they call usand we fix it, just like a
credit card company would orsomeone else.
But it's not wrong very oftenright, because we do run these
checks.
We're very careful with it.
So that's what the consumergets out of this and the
provider is now out of theasking for money up front or
(08:26):
chasing people after care job.
Right now, providers spend anenormous amount of money to
irritate their patients andconfuse them and end up with
very low yield financially, andwe make that go away for the
provider and we make that goaway for the provider.
So the last part how do we dothis with no interest or fees or
(08:48):
anything to the consumer.
The way we do this is we havetwo sources of revenue.
One is the provider and thesecond is the plan sponsor, the
employer.
Okay, the bulk of our revenuecomes from the providers,
because we're getting them outof a business that they hate and
they're not good at doinganyway, and so they pay us a fee
(09:09):
for doing that, and to a lesserextent, it's on the employer
side.
Speaker 1 (09:14):
So it's also a compelling value proposition for
advisors.
Based on our conversationoffline under 5% client churn
versus 30% industry average.
We've already talked about thetrend savings and 90% consumer
satisfaction.
That's huge If you're anadvisor.
What's that conversation like?
(09:35):
That first conversation likewith an employer?
Speaker 3 (09:40):
It's funny I can give you two answers to that
question, because it dependswhere we are.
If we're new in a given market,then I'll be honest with you,
david, we're doing somethingdifferent and so at first people
are they want to like.
Then they become our greatest.
Our greatest salespeople arereally our existing clients.
(10:07):
Again, with with retention ratelike that.
So we find is that it kind ofwhat we migrate through.
So when we start off with, if agiven producer has a client who
signs on pretty quickly, moreand more of them start going
into it.
They start switching everybodyin because why wouldn't you
right?
It's working for them, they'resaving money and their people
are happier with their benefits.
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(11:33):
And now back to our conversationand we're back talking with Tom
Polichelli, ceo at Paymedics.
Tom, I want to get into thatkind of risk and financial model
a little bit more.
We touched on it earlier.
To get into that kind of riskand financial model a little bit
more.
We touched on it earlier.
So, if I understand correctly,you guys assume the consumer
debt and you embed the cost ofany bad debt into your product
pricing.
So how do you manage riskacross large employer or insurer
(11:54):
groups?
What are the mechanisms thatensure financial sustainability?
Speaker 3 (12:00):
It's a great question , and one of the keys is that
we're a bunch of insurance geeksand so we approach this with an
insurance mindset.
And what I mean by that is,again, we're not a consumer
credit company, and that's agood thing, because the way
consumer credit companies workit's their job is really to
narrow the scope of what it is,how far their product will reach
(12:23):
.
So if there's a givenpopulation, their job is say,
okay, I'm going to exclude thiswhole chunk of the people, Half
the people I'm not even going togive any credit to, and those
who I do give it to, I'm goingto set caps $1,000 for this
person, 2,000 for that person,whatever and then they also put
on a bunch of fees.
So their job is to make thepool very small and to really
tightly manage that small chunk,and that works for that
(12:46):
business.
I guess that's the bankingmindset.
The insurance mindset is I wantto have as broad a pool as
possible, I want to spread myrisk across everybody, Because
by doing that I'm greatlydecreasing the volatility,
Because that's what our wholejob as insurance is to decrease
volatility right and to managethe overall economics.
And so that's what we do whenwe go into an employer.
(13:08):
What we don't say is hey, let'sput this out there and see
which 5% of your't have to do ablessed thing.
All they know is that all thoseEOBs and bills that they never
understood went away and allthis the super review just
(13:29):
started happening and thiscredit just started happening
for them and they don't have todo a blessed thing.
So by doing that, it decreasesour administrative costs greatly
, spreads our risk across thatentire population and then we're
able to have very sustainableeconomics.
We've been doing this for 20years now as a company.
(13:50):
We've put over $7 billionthrough this.
We're really, really good atunderwriting.
Speaker 1 (13:57):
So how is adoption scaled for you guys?
Any numbers you'd like to share?
Speaker 3 (14:01):
It's changed a lot.
So a little bit of the historyof our company.
Historically, our wholePaymedics product, as we now
call it, wasn't even calledPaymedics.
It was baked into a PPO networkthat we also still own.
That is in Wisconsin only, andthe only way you could get
Paymedics is if you were aself-funded company.
That happened to rent ournetwork, which was only in
(14:23):
Wisconsin, and so four and ahalf years ago I came in with
some investors who could writemuch bigger checks than I could,
and we bought the company.
And what we did is we splitapart that PPO network and what
we now call Paymedics andretooled it.
So now Paymedics works inconjunction with any underlying
benefit plan using any networkanywhere in the United States of
(14:47):
America, and so, unsurprisingly, we've been growing a lot since
we did that, because now ourtotal addressable market is
America, not just the Westernshore of Lake Michigan.
Speaker 1 (15:02):
That does give you a lot bigger field to play in.
Now you have recently partneredwith XO Health.
What's that all about and whatdrove the collaboration and how
has it advanced what your guys'mission is?
Speaker 3 (15:13):
So XO is a great example.
We love these folks.
I mean they are really out todisrupt a lot of how care is
accessed and consumed bypatients, by consumers, into
(15:39):
these alternative benefitstructures.
What we have done, as they'vebeen rolling out, is we have
baked into their networkcontracting so that part of the
value proposition they can offera provider is that they're not
dealing with all that standardinsurance stuff, including
consumer.
You're chasing consumers orbilling them front or any of
that, or chasing consumers orbilling them front or any of
that.
So we've removed that issue forthe providers and that helps XO
(16:01):
Health get a much better dealout of the providers.
What we've seen in our own PPOnetwork back in Wisconsin is
we've only got 45,000 livesthere but our rates contracted
rates with our PPO are at, orbetter than, Anthem and United,
which each have a million livesin the state.
But providers so valuePaymedics that they give a lower
(16:21):
reimbursement rate to our PPOnetwork because they want to
drive more volume.
Xo is doing the same thing asthey're going off and doing
their network contracting.
So baking in with XO is moreefficient for us and more
effective for them so they canget better deals.
Speaker 1 (16:37):
Now last year you guys acquired TempoPay.
What does TempoPay bring to thetable?
Speaker 3 (16:43):
And again, how does that help your mission?
So TempoPay first is it'srelated to what Paymedics has
been doing, but a simplerversion.
So TempoPay is a card-basedruns Visa, mastercard, rails
debit card in effect.
It also charges no interest toconsumers or fees to consumers
(17:04):
and it runs off a PEPM from theemployer.
It is a cap dollar amount setby the employer, so, for example
, $2,000.
And the employer gets to saywhat those dollars are going to
be used for Could be dental, rx,pets, if they want medical,
(17:24):
whatever they want.
And it runs on the like, I said, the credit card rails.
As such, it is a bankingproduct so it has to be
activated by the consumer.
That's the rules.
What we're using it for isreally two things.
One is it is a fantastic kind ofbeachhead product for us, for
an employer or even a whole TPAor health plan to get the basic
(17:47):
of this consumer financialassistance into the hands of the
members before we've got thefull-blown Pamedics ready.
Ready and on a more focusedbasis, what we've been using it
for is we've rolled it out forfree to our clients in our test
kitchen of Wisconsin forpharmaceutical costs Everything
I described in Paymedics.
(18:07):
Historically we've done just onmedical and we did a phenomenal
job on the medical costs.
But if you walk into a pharmacytoday, what you're going to see
behind the counter is a wholeslew of these little bags, and
each little bag has a name on it.
And if you ask the personbehind the counter how many of
those bags don't get picked up,they're going to say something
between 20% and 30% are neverpicked up.
(18:28):
Which job on the medical Peoplearen't picking up their drugs?
And that's another area ofpotential savings.
And so we've rolled outTempoPayRx for all of our
clients at no additional costfor them, to say first $500,
everyone gets it.
(18:49):
Everyone can access and get thefirst few meds.
If the employer wants to buy upand say they want $1,500 or
whatever, then they can do that,but at least get out there for
that first $500.
Speaker 1 (19:00):
Very, very interesting.
So you know, I've known you fora while.
As I said, the last time youwere on the podcast was a few
years back as a thought leader.
In a recent podcast, you saidthat consumer engagement is the
key to affordability and betteroutcomes.
So how are you guys keepingconsumers engaged and
financially resilient, for lackof a better word?
So how are you guys keepingconsumers engaged and
financially resilient, for lackof a better word?
And what are the broaderpayment trends that you're
(19:21):
watching today?
Speaker 3 (19:24):
Well, the broader payment trends are all kind of
moving towards the need for whatit is we're doing.
In a way.
I wish they weren't.
They're moving at a reallyrapid pace.
I mean, look at the trendnumbers we're looking at in the
medical world right now arereally bad.
I mean, the latest studiescoming out are showing the worst
trends we've seen in a coupleof decades.
(19:45):
Really really terrible on theemployer side, on the provider
side, despite all the more moneyflowing in.
That's why trend is so high.
Shocking number of providers arein really bad financial shape
right now, and so big healthsystems right on down the line.
And so you look at that and say, wow, okay, you're both in
(20:08):
trouble.
That shouldn't really happen,but it is.
And so, since we're stepping inand really solving some of the
math problem for the providersright, they actually end up
making more money after payingour fee because we're taking rid
of all that inefficiency andfoolishness and we're saving on
the trend and the immediatecosts for the employers.
(20:29):
It's just helping grow ourmarket overall.
Again, we're here to solve aproblem.
I wish the problem weren'tgrowing at quite the pace it is,
but it is, and so I think we'rein the right place at the right
time.
Speaker 1 (20:42):
And the receivables that they're seeing are
primarily responsible for whythey're in such bad shape.
Speaker 3 (20:47):
I think there's a lot of reasons why providers are in
bad shape, but certainly it'sone of them.
And that's well.
I said at the beginning, we'reabout 30% of hospitals in the
country are requiring a form ofpayment before the schedule of
service.
Providers know this is not agood idea.
They don't want to do this.
They simply feel that there'sno alternative, that they're
(21:09):
spending so much money toirritate their patients and to
get such low financial yieldthat they have to do something
else.
No-transcript.
(21:41):
There's a third path and that'swhat we're here to provide.
Speaker 1 (21:44):
So we always like to ask a wrap-up question, which is
kind of the future question.
So are there new markets,technologies or partnerships
that you guys are exploring, andwhat do you see the healthcare
payment landscape looking likeover the next five years?
Speaker 3 (22:00):
So geographically we're looking at at very massive
expansion and really what we'vebeen doing in that is simply
following our customers.
What we do from a buildperspective is the opposite of
build it.
They will come, we findcustomers and we follow them,
and we follow wherever their,their members, are and we go in
that direction.
So in doing that we'reexpanding dramatically
(22:22):
geographically.
So for us the expansion isgoing to be with a lot of
partners and geography, bygeography largely.
So it's a big country and we'regoing to be covering it as
rapidly as we can, but not onour own.
We're only doing it bypartnering with people who have
the same vision we do.
(22:42):
We're trying to achieve thesame goals and where we can
leverage each other.
Speaker 1 (22:46):
Tom, if folks want to know more, what's the best way
for them to find out what youguys are up to and how they
might be able to talk to youabout building PayMedics into
what they're bringing toemployers?
Speaker 3 (22:55):
Well, thank you for asking.
They can go to our website,which is Paymedics, which is
P-E-M-E-D-I-Xcom.
Speaker 1 (23:07):
You didn't know there was going to be a spelling quiz
, so that wasn't for me.
No, I didn't Don.
Thanks so much for sharing yourexpertise with us.
Speaker 3 (23:14):
Yes, thank you very much, jerry.
I really appreciate it.
Not another long stretch, notanother 10 years.
We'll pare it down, all right.
Thank you, the.
Speaker 2 (23:22):
Shift Shapers Podcast is a production of Shift Shaper
Strategies and may not bereproduced or quoted in whole or
in part without our expresswritten permission.
Copyright 2020.
All rights reserved.
As we've discussed on previous episodes of the
podcast, high-deductible healthplans have created some people
and some families who are whatwe've been calling functionally
uninsured.
That is, they've got a card intheir wallet but they're not
able to access care because ofhigh personal responsibility
amounts in their plan design.
How can we overcome thosehurdles?
We'll find out in this episodeof Shift Shapers.
Speaker 2 (00:23):
This is the Shift Shapers podcast, connecting
benefits advisors with thoughtleaders and entrepreneurs who
are shaping the shifts in theindustry.
And now here's your host, davidSaltzman.
Speaker 1 (00:38):
And to help us answer that question, we've got an old
friend who last time he was onthe podcast was almost 10 years
ago it seems like not that longago, but 10 years ago Tom
Polichelli, who is CEO atPayMedix.
Hey, Tom, how are you today?
Speaker 3 (00:51):
I'm doing great and you know, we both look exactly
the same.
Speaker 1 (00:54):
We haven't changed a bit.
I actually think you're lookingyounger, but you know that's
how I flatter guests, I guess,so I'm glad you're here.
Anyway, your arc has toucheddown in a couple of places since
we last talked, but you're nowat PayMedix and what sparked
your vision for trying tosimplify healthcare payments?
Speaker 3 (01:12):
Well, I mean, it starts off as you just said.
People can't afford to usetheir benefits a lot of times
right now and that has a realfinancial impact to them and
really impacts their health.
But just to step back for asecond, even before we get to
the money, the number one issuewe found for all consumers with
(01:33):
commercial insurance is actuallynot money.
Money's number two, it's aclose number two, but number one
is confusion.
They don't understand a blessedthing.
Their benefits are justimpenetrable to them.
They get these EOBs that don'tmake sense, these bills from
providers that can't reconcileit.
So 100% of the people don'tunderstand what's going on and
then a lot of people can'tafford it.
But getting to theaffordability, what we've been
(01:54):
seeing is a whole bunch ofstudies and they all gravitate
towards about the same number.
About 45% of people last yearavoided getting necessary care.
People with insurance avoidedgetting necessary care because
they were worried about how theywere going to pay their part of
what they were going to owe atthe end of the day.
At the same time, we've seenhospitals increasingly concerned
(02:18):
that they're not going to getpaid what the consumers owe them
.
Just under 30% of thosehospitals are now requiring a
form of payment before they willschedule a service.
So you can still stumble intothe emergency room because
that's the law, but if you wantto schedule something, put down
your credit card.
And the last data point I knowI'll put out is for our own
(02:38):
membership.
What we know is that if weweren't there to help them, a
quarter of our members today allof whom have commercial
insurance and ID card from theiremployer a quarter of those
people have no availablecommercial credit.
If they have a credit card,it's maxed out or they can't get
one in the first place.
So when those hospitals say youneed to give me a form of
(03:00):
payment, they can't and some ofthose who can, who do have a
credit card, are scared.
That gets you to the 45% oravoiding necessary care.
You roll all this together andyou have a real access, a
financial access to care issuefor consumers.
That flows through to driveincreased costs for the
employers, because people simplyaccess care when they're a
(03:22):
train wreck and not earlier onin the process.
Speaker 1 (03:25):
Well, that's what I was going to ask you.
Do you guys have any stats onthat?
I mean, we've all seen it,those of us who've been in the
business more than two weeks.
Little Joey has a cold.
Mom and dad look at what theirout-of-pocket's going to be to
take him to a pediatrician andthey say, well, look, wait and
see if it resolves.
And you fast forward a coupleof weeks and the kid is in the
pediatric ICU with pneumonia.
Speaker 3 (03:47):
Yeah.
So, david, I'm not going tostartle you at all and I'm at
risk of making your audience,you know, had their foreheads
hit their desk.
I'm going to go straight attrend, and I've been playing in
this market for 30 years now,plus, and we've always been
looking at trend.
What's driving medical trend?
Is it specialty meds?
Is it behavioral health?
What's driving trend inwhatever time period.
(04:09):
We're looking at what I hadnever looked at until coming to
our company four years ago.
I'd never looked at trend byincome level, never even
occurred to me to look at itthat way, and what we found is
fascinating, and it's before anemployer comes to us when
they're just doing what theynormally do.
(04:29):
If you break down theutilization of medical services
by income tier we broke it intofive levels access care very
differently than the top three.
The bottom two income tiers areaccessing care in a fashion
similar to the way a Medicaidpatient does.
They delay, delay, delay, showup in the ER when everything's a
(04:52):
mess and that's reallyexpensive.
What you see after we step inis that all five income tiers
start consuming care verysimilarly.
They get care earlier, and sowhat that translates to at the
end of the day is, the use ofprofessional services for the
entire employer population goesup and the use of inpatient
(05:14):
services go down, but it'sreally disproportionately driven
by those bottom two tiers.
The bottom two tiers acts asfar more professional services
and use the ER and the inpatientoverall far less and that's
what brings down the overalltrend.
So our employers we've been inthe middle market and small into
the middle market for years.
(05:35):
We have 95% employer retention,which all of your listeners
will know.
That's very high retention ratefor this market segment.
Usually you lose 30 or clientsa year.
We keep them because we'resaving employers two to three
points on trend every singleyear.
So that's compounding.
So employers have been with usfor 10 years, even if they
didn't like us.
They have to stick around.
(05:55):
They can't afford to get rid ofus.
Thankfully they like us too.
But that's a long-winded way ofsaying that if you focus on
these people who are currentlyfinancially unable to use the
benefits that were given them bytheir employer, you can save
the employer a ton of money andhave much healthier people.
Speaker 1 (06:12):
And those are both the things that employers look
for At least most employers do,I think.
So you guys use this thingcalled a super EOB to
consolidate billing and offersguaranteeing financing out of
out-of-pocket costs at 0%interest.
First of all, what is a superEOB?
And then can you walk usthrough how that actually works
in a practical example?
Speaker 3 (06:32):
Sure, so what the super EOB does is it really
replaces both the EOBs that yourtypical insurance plan would
send out, that people don'tunderstand anyway typical
insurance plan would send outthat people don't understand
anyway and the bills that theyget from the providers that they
also don't understand and suredon't reconcile very well to the
EOB.
So our job, what our enginedoes, is to do all of that
(06:54):
matching and reconciling for theconsumer, as we do that we then
.
So the consumer gets a onemonthly statement, no longer all
this blizzard of paperwork.
They get one monthly statement,kind of like a cell phone bill
or a credit card bill orsomething like that, that
summarizes here's everywhere youwent, consumer.
Here's everything you did.
We've checked and it looks likeyou owed $712.09 or whatever to
(07:19):
all these various providers.
We've paid that on your behalf.
So if you think about it, that'sjust the same way an American
Express card statement wouldwork.
Now, we're not a credit card,to be clear.
We're very much not a creditcard, but it's the same idea.
Mx summarizes all of yourstatements, all of your charges,
that is, and it pays themerchant because it believes
these are correct, and then youget your statement and your job
(07:41):
is to then turn around and payAmerican Express back.
We do the same thing.
So we validated everything wepay with our money to that
provider and when consumers getthat monthly statement, what
they have for the first time isone source of truth.
We did the reconciliation forthem and the consumer knows that
.
We're really sure that we'reright.
We're so sure that we alreadypaid the provider with our own
(08:03):
money, which we obviously wouldnot have done if we thought
there was something wrong here.
Now, if the consumer has aquestion or anything, or maybe
there was an error, they call usand we fix it, just like a
credit card company would orsomeone else.
But it's not wrong very oftenright, because we do run these
checks.
We're very careful with it.
So that's what the consumergets out of this and the
provider is now out of theasking for money up front or
(08:26):
chasing people after care job.
Right now, providers spend anenormous amount of money to
irritate their patients andconfuse them and end up with
very low yield financially, andwe make that go away for the
provider and we make that goaway for the provider.
So the last part how do we dothis with no interest or fees or
(08:48):
anything to the consumer.
The way we do this is we havetwo sources of revenue.
One is the provider and thesecond is the plan sponsor, the
employer.
Okay, the bulk of our revenuecomes from the providers,
because we're getting them outof a business that they hate and
they're not good at doinganyway, and so they pay us a fee
(09:09):
for doing that, and to a lesserextent, it's on the employer
side.
Speaker 1 (09:14):
So it's also a compelling value proposition for
advisors.
Based on our conversationoffline under 5% client churn
versus 30% industry average.
We've already talked about thetrend savings and 90% consumer
satisfaction.
That's huge If you're anadvisor.
What's that conversation like?
(09:35):
That first conversation likewith an employer?
Speaker 3 (09:40):
It's funny I can give you two answers to that
question, because it dependswhere we are.
If we're new in a given market,then I'll be honest with you,
david, we're doing somethingdifferent and so at first people
are they want to like.
Then they become our greatest.
Our greatest salespeople arereally our existing clients.
(10:07):
Again, with with retention ratelike that.
So we find is that it kind ofwhat we migrate through.
So when we start off with, if agiven producer has a client who
signs on pretty quickly, moreand more of them start going
into it.
They start switching everybodyin because why wouldn't you
right?
It's working for them, they'resaving money and their people
are happier with their benefits.
Speaker 1 (10:29):
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(10:51):
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(11:33):
And now back to our conversationand we're back talking with Tom
Polichelli, ceo at Paymedics.
Tom, I want to get into thatkind of risk and financial model
a little bit more.
We touched on it earlier.
To get into that kind of riskand financial model a little bit
more.
We touched on it earlier.
So, if I understand correctly,you guys assume the consumer
debt and you embed the cost ofany bad debt into your product
pricing.
So how do you manage riskacross large employer or insurer
(11:54):
groups?
What are the mechanisms thatensure financial sustainability?
Speaker 3 (12:00):
It's a great question , and one of the keys is that
we're a bunch of insurance geeksand so we approach this with an
insurance mindset.
And what I mean by that is,again, we're not a consumer
credit company, and that's agood thing, because the way
consumer credit companies workit's their job is really to
narrow the scope of what it is,how far their product will reach
(12:23):
.
So if there's a givenpopulation, their job is say,
okay, I'm going to exclude thiswhole chunk of the people, Half
the people I'm not even going togive any credit to, and those
who I do give it to, I'm goingto set caps $1,000 for this
person, 2,000 for that person,whatever and then they also put
on a bunch of fees.
So their job is to make thepool very small and to really
tightly manage that small chunk,and that works for that
(12:46):
business.
I guess that's the bankingmindset.
The insurance mindset is I wantto have as broad a pool as
possible, I want to spread myrisk across everybody, Because
by doing that I'm greatlydecreasing the volatility,
Because that's what our wholejob as insurance is to decrease
volatility right and to managethe overall economics.
And so that's what we do whenwe go into an employer.
(13:08):
What we don't say is hey, let'sput this out there and see
which 5% of your't have to do ablessed thing.
All they know is that all thoseEOBs and bills that they never
understood went away and allthis the super review just
(13:29):
started happening and thiscredit just started happening
for them and they don't have todo a blessed thing.
So by doing that, it decreasesour administrative costs greatly
, spreads our risk across thatentire population and then we're
able to have very sustainableeconomics.
We've been doing this for 20years now as a company.
(13:50):
We've put over $7 billionthrough this.
We're really, really good atunderwriting.
Speaker 1 (13:57):
So how is adoption scaled for you guys?
Any numbers you'd like to share?
Speaker 3 (14:01):
It's changed a lot.
So a little bit of the historyof our company.
Historically, our wholePaymedics product, as we now
call it, wasn't even calledPaymedics.
It was baked into a PPO networkthat we also still own.
That is in Wisconsin only, andthe only way you could get
Paymedics is if you were aself-funded company.
That happened to rent ournetwork, which was only in
(14:23):
Wisconsin, and so four and ahalf years ago I came in with
some investors who could writemuch bigger checks than I could,
and we bought the company.
And what we did is we splitapart that PPO network and what
we now call Paymedics andretooled it.
So now Paymedics works inconjunction with any underlying
benefit plan using any networkanywhere in the United States of
(14:47):
America, and so, unsurprisingly, we've been growing a lot since
we did that, because now ourtotal addressable market is
America, not just the Westernshore of Lake Michigan.
Speaker 1 (15:02):
That does give you a lot bigger field to play in.
Now you have recently partneredwith XO Health.
What's that all about and whatdrove the collaboration and how
has it advanced what your guys'mission is?
Speaker 3 (15:13):
So XO is a great example.
We love these folks.
I mean they are really out todisrupt a lot of how care is
accessed and consumed bypatients, by consumers, into
(15:39):
these alternative benefitstructures.
What we have done, as they'vebeen rolling out, is we have
baked into their networkcontracting so that part of the
value proposition they can offera provider is that they're not
dealing with all that standardinsurance stuff, including
consumer.
You're chasing consumers orbilling them front or any of
that, or chasing consumers orbilling them front or any of
that.
So we've removed that issue forthe providers and that helps XO
(16:01):
Health get a much better dealout of the providers.
What we've seen in our own PPOnetwork back in Wisconsin is
we've only got 45,000 livesthere but our rates contracted
rates with our PPO are at, orbetter than, Anthem and United,
which each have a million livesin the state.
But providers so valuePaymedics that they give a lower
(16:21):
reimbursement rate to our PPOnetwork because they want to
drive more volume.
Xo is doing the same thing asthey're going off and doing
their network contracting.
So baking in with XO is moreefficient for us and more
effective for them so they canget better deals.
Speaker 1 (16:37):
Now last year you guys acquired TempoPay.
What does TempoPay bring to thetable?
Speaker 3 (16:43):
And again, how does that help your mission?
So TempoPay first is it'srelated to what Paymedics has
been doing, but a simplerversion.
So TempoPay is a card-basedruns Visa, mastercard, rails
debit card in effect.
It also charges no interest toconsumers or fees to consumers
(17:04):
and it runs off a PEPM from theemployer.
It is a cap dollar amount setby the employer, so, for example
, $2,000.
And the employer gets to saywhat those dollars are going to
be used for Could be dental, rx,pets, if they want medical,
(17:24):
whatever they want.
And it runs on the like, I said, the credit card rails.
As such, it is a bankingproduct so it has to be
activated by the consumer.
That's the rules.
What we're using it for isreally two things.
One is it is a fantastic kind ofbeachhead product for us, for
an employer or even a whole TPAor health plan to get the basic
(17:47):
of this consumer financialassistance into the hands of the
members before we've got thefull-blown Pamedics ready.
Ready and on a more focusedbasis, what we've been using it
for is we've rolled it out forfree to our clients in our test
kitchen of Wisconsin forpharmaceutical costs Everything
I described in Paymedics.
(18:07):
Historically we've done just onmedical and we did a phenomenal
job on the medical costs.
But if you walk into a pharmacytoday, what you're going to see
behind the counter is a wholeslew of these little bags, and
each little bag has a name on it.
And if you ask the personbehind the counter how many of
those bags don't get picked up,they're going to say something
between 20% and 30% are neverpicked up.
(18:28):
Which job on the medical Peoplearen't picking up their drugs?
And that's another area ofpotential savings.
And so we've rolled outTempoPayRx for all of our
clients at no additional costfor them, to say first $500,
everyone gets it.
(18:49):
Everyone can access and get thefirst few meds.
If the employer wants to buy upand say they want $1,500 or
whatever, then they can do that,but at least get out there for
that first $500.
Speaker 1 (19:00):
Very, very interesting.
So you know, I've known you fora while.
As I said, the last time youwere on the podcast was a few
years back as a thought leader.
In a recent podcast, you saidthat consumer engagement is the
key to affordability and betteroutcomes.
So how are you guys keepingconsumers engaged and
financially resilient, for lackof a better word?
So how are you guys keepingconsumers engaged and
financially resilient, for lackof a better word?
And what are the broaderpayment trends that you're
(19:21):
watching today?
Speaker 3 (19:24):
Well, the broader payment trends are all kind of
moving towards the need for whatit is we're doing.
In a way.
I wish they weren't.
They're moving at a reallyrapid pace.
I mean, look at the trendnumbers we're looking at in the
medical world right now arereally bad.
I mean, the latest studiescoming out are showing the worst
trends we've seen in a coupleof decades.
(19:45):
Really really terrible on theemployer side, on the provider
side, despite all the more moneyflowing in.
That's why trend is so high.
Shocking number of providers arein really bad financial shape
right now, and so big healthsystems right on down the line.
And so you look at that and say, wow, okay, you're both in
(20:08):
trouble.
That shouldn't really happen,but it is.
And so, since we're stepping inand really solving some of the
math problem for the providersright, they actually end up
making more money after payingour fee because we're taking rid
of all that inefficiency andfoolishness and we're saving on
the trend and the immediatecosts for the employers.
(20:29):
It's just helping grow ourmarket overall.
Again, we're here to solve aproblem.
I wish the problem weren'tgrowing at quite the pace it is,
but it is, and so I think we'rein the right place at the right
time.
Speaker 1 (20:42):
And the receivables that they're seeing are
primarily responsible for whythey're in such bad shape.
Speaker 3 (20:47):
I think there's a lot of reasons why providers are in
bad shape, but certainly it'sone of them.
And that's well.
I said at the beginning, we'reabout 30% of hospitals in the
country are requiring a form ofpayment before the schedule of
service.
Providers know this is not agood idea.
They don't want to do this.
They simply feel that there'sno alternative, that they're
(21:09):
spending so much money toirritate their patients and to
get such low financial yieldthat they have to do something
else.
No-transcript.
(21:41):
There's a third path and that'swhat we're here to provide.
Speaker 1 (21:44):
So we always like to ask a wrap-up question, which is
kind of the future question.
So are there new markets,technologies or partnerships
that you guys are exploring, andwhat do you see the healthcare
payment landscape looking likeover the next five years?
Speaker 3 (22:00):
So geographically we're looking at at very massive
expansion and really what we'vebeen doing in that is simply
following our customers.
What we do from a buildperspective is the opposite of
build it.
They will come, we findcustomers and we follow them,
and we follow wherever their,their members, are and we go in
that direction.
So in doing that we'reexpanding dramatically
(22:22):
geographically.
So for us the expansion isgoing to be with a lot of
partners and geography, bygeography largely.
So it's a big country and we'regoing to be covering it as
rapidly as we can, but not onour own.
We're only doing it bypartnering with people who have
the same vision we do.
(22:42):
We're trying to achieve thesame goals and where we can
leverage each other.
Speaker 1 (22:46):
Tom, if folks want to know more, what's the best way
for them to find out what youguys are up to and how they
might be able to talk to youabout building PayMedics into
what they're bringing toemployers?
Speaker 3 (22:55):
Well, thank you for asking.
They can go to our website,which is Paymedics, which is
P-E-M-E-D-I-Xcom.
Speaker 1 (23:07):
You didn't know there was going to be a spelling quiz
, so that wasn't for me.
No, I didn't Don.
Thanks so much for sharing yourexpertise with us.
Speaker 3 (23:14):
Yes, thank you very much, jerry.
I really appreciate it.
Not another long stretch, notanother 10 years.
We'll pare it down, all right.
Thank you, the.
Speaker 2 (23:22):
Shift Shapers Podcast is a production of Shift Shaper
Strategies and may not bereproduced or quoted in whole or
in part without our expresswritten permission.
Copyright 2020.
All rights reserved.
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