I recently had the opportunity to chat with Kevin Schlotman, who joined Flume Health in the summer of 2018 after a decade in the insurance industry. He joined the founder of the company, Cédric Kovacs-Johnson, and they decided to work together to design a TPA from scratch to create a system that would provide physicians prompt cash payments for services in return for discounts. The first client went live with Flume July 1, 2018.
Still a young company, today Flume has about 14 clients and 5000 covered employees. Their average group size has doubled from about 100 to 200 in the past 3 months.
I asked Kevin what makes Flume different. He said, “We were the first TPA to be built from the ground up focused on 3 core principles: technology, transparency, and finally, and most importantly, we built our program to take all the independent, disparate, and very effective cost containment programs that can be bolted onto a self-funded health plan, and turned it back into something that’s easy for people to understand and navigate. There is 1 phone number on our card – it goes to the Flume Concierge, which is our customer service team that answers questions quickly and gets patients where they’re supposed to go.”
“All of the other TPAs are pulling these programs in, but the utilization is never what it should be because no one is guiding the patient. We direct the patient to the best place to get the care they need.”
Kevin went on to explain how this is helpful for employers. “Employers pay less when there are fewer re-dos of surgeries, and employers pay less when there are less infections and the outcomes are good, even if they pay slightly more than they would’ve paid a different provider.”
Through direct contracting with providers and facilities and bundled services for things like surgeries, the health plans are designed to provide financial incentives for members to get care that will result in better outcomes for a lower cost. “So, the patient has a better outcome, they pay less, the employer pays less, and the provider gets paid quickly.”
To find the doctors and facilities that provide lower costs and quality outcomes, Flume is “tightly integrated” with Ault International Medical Management (AIMM). “AIMM is the keeper of all things clinical.” In addition, they establish direct contracts with providers and facilities, making them part of the “Flume Community.”
Employers design their plan documents to charge employees lower co-payments and deductibles when a covered member gets care at Flume Community provider. For example, if it’s a deductible expense, the deductible is usually waived. “The provider doesn’t have to chase the patient for money, and they get paid quickly in exchange for the absence of balance billing.”
Flume is looking for clients that have at least 100 enrolled employees, primarily because employers of that size can get access to some claims data. Their target market is employers with 100 to 1000 employees, and they’ve had more success with industries like hospitality or those with blue collar employees. Kevin thinks these employers have had to be more creative with their cost control initiatives.
Flume has saved their clients about $5,600 per employee per year on average, and their average renewal increase was 2.2% last year. “A big part of that is reference based pricing, network optimization, and medical management with steerage.”
Reference based pricing (RBP) plans pay providers based on a benchmark, not fees negotiated by a PPO. A common benchmark is Medicare. With these plans, the RBP plan will reimburse providers a percentage (25% to 75% for example) over what the provider is already accepting from Medicare. PPO reimbursements are often much higher than this, so RBP plans cost less than those run with a PPO network.
One example he shared is a client in the health care industry with 130 employees. Insurance premiums were going through the roof. Flume set up an RBP plan and added a transparent pharmacy benefits manager, bill auditing, and medical management. The employer saved over $1MM compared to their fully insured plan in the first year.
Flume is definitely doing things differently, and they’ve had a lot of success in a short period of time. If you’d like to discuss creative ways to control the cost of your health plan, give us a call at (866) 724-0008 or click the link below.