Incentivizing Better Care with Former AHIP Head Matt Eyles

Melanie Marcus: How do we pay for healthcare?

Even better: How do we improve how we pay for healthcare?

It’s all about the incentives, as our guest says on today’s episode, and that guest is Matt Eyles, immediate past president and CEO of America’s Health Insurance Plans, otherwise known as AHIP.

In a distinguished career that has ranged from the Congressional Budget Office to pharmaceutical and life sciences to the helm of a national trade association for the health insurance industry, Matt is well-equipped to walk us through the role of payers in today’s healthcare landscape.

Yes, payers—and that means a conversation about our healthcare system’s stubborn fragmentation, about rising healthcare costs, and of course, about prior authorization and patient access.

It’s also a rather hopeful conversation about unlocking the potential of healthcare by turning it from a cost to an asset.

Are there novel and innovative ways we can address what’s happening in healthcare today? Matt’s answer to that question is yes.

Today we're talking about the role of health insurance in U.S. healthcare. And when it comes to health plans, there is a certain perception. And we can't escape the fact that it tends to be negative.

Members are mad according to a Press Ganey webinar in May, which illustrates my point. It's not just about cost, but the overall experience that's fueling this perception.

But there are other ways of looking at it. And what I want to focus on today is the incredible role that health plans play by virtue of how they pay for health services in helping to manage costs, care quality and patient access. And I can't think of a better person to ask about this than Matt Eyles, former president of AHIP, the national trade association for health insurers.

Matt, as head of AHIP, you worked to expand access to coverage for patients across the nation. I'd love to start out with a view from the top. Why is how we pay for healthcare such a major driver in helping healthcare heal itself?

Matt Eyles: Well, that is such an important question. I mean, you have to start with the fact that I think incentives matter when you get down to it, and especially financial incentives.

When we think about our healthcare system today, we're spending roughly $5 trillion as a nation, right? That's a lot of money we're spending on healthcare. Almost 20%. One in $5 in our economy is going towards healthcare in some shape, manner or fashion.

And these incentives matter, right? It drives provider behavior. It helps to shape the way that our system is designed and the investments we make. It determines what patients get access to, right? What types of products, services, treatments that they're getting access to.

From a macro perspective, we know it impacts the way we think about cost and affordability. And I know we're going to get into more of the details, but affordability remains the top issue in our country around healthcare. I mean, there's lots of other issues that surround it, but affordability is the top issue when people think about healthcare and whether or not they're going to be able to afford the care and treatment that they need for themselves or for the families, or that maybe an employer is providing to their employees.

And I think maybe the final point I'll make about this is the financial incentives and system really influence the culture, the systems, and the markets that we set up. And culture trumps just about anything in terms of how you're going to implement different systems. And so from a macro perspective the incentives matter and we've gotten the system that we've designed and the one that we're paying for. And if we want to do something different, we're going to have to think about those issues a bit differently.

Marcus: Before we dig into that, let's back up. We always like to do this on our show and just give a sense of where our guests come from.

So, where did you grow up? Where'd you go to school?

Eyles: Born and raised in the Garden State, New Jersey. But I lived in a relatively small town, about an hour outside of New York City.

I really wanted to go to college in an urban environment, to be like in a city. And George Washington University, it is in the city. Like it's hard to distinguish Washington, D.C., the city from the campus.

I was always interested in in politics and did a poli-sci degree and a history degree, but I would've never imagined where that would take me. Gives you good analytical skills, a way to think about the past and apply some of those lessons to the present and maybe to the future.

But then I went to graduate school after that. It was the early ‘90s, and that's really what set me on my trajectory. I went to the University of Rochester. I went from being a sort of a poli-sci nerd to being a hardcore quantitative analyst.

And from there it really did sort of set my career path. Had I not gone to the University of Rochester and done the work I did there, I would never have started my career at the Congressional Budget Office as a number cruncher.

Marcus: So how did you go to healthcare?

Eyles: Within the health policy area, that was something that always interested me.

My first internship, or my graduate school internship was at Health and Human Services in the Office for Civil Rights doing HIV policy. That's what got me at least professionally on the track of focusing more on healthcare.

But when I was at the Congressional Budget Office, healthcare always kept pulling me and I just really loved it. I think both for its complexity and just because there's so many different issues it touched on.

Marcus: Now I'm making the connection of the quant background, the Congressional Budget Office to healthcare payers. But maybe you can make that leap for us. I mean, what did you learn at the Congressional Budget Office that you took into healthcare?

Eyles: Yeah. The CBO is a real remarkable place. Because everything that goes through Congress needs a CBO score. And so I spent a lot of time really just learning both the ins and outs of Washington, how healthcare was so embedded across so many different sectors of the economy. And interestingly, the very first paper I worked on at CBO was called “The Budgetary Treatment of an Individual Mandate to Buy Health Insurance.”

The lessons I really learned was to be very thorough, complete and objective in your assessments of different policies. The CBO I think does a terrific job of trying to really look at all sides of an issue objectively and just lays out the fact and that's really sort of guided me, at least in my approach to how I worked with different companies across healthcare issues.

Marcus: Right. That makes sense. And fully data-driven, right?

Eyles: Yes. And I will say when you're a 26-year-old, you really don't have any clue how much power you have as an analyst at CBO. I mean, the amount of impact and influence that a relatively young analyst can have on policy debates.

It wasn't clear to me at the time, but it really was a big deal being able to be part of those conversations.

Marcus: That is something I've noticed living here in D.C. for the past few years is how young people have such a major impact on policy.

So your early direct healthcare experience was in the life sciences business. What are some of the biggest public policy issues that face the life sciences?

Eyles: First and foremost, coming back to the theme of affordability. We know all of the issues with respect to the prices that U.S. consumers and payers pay versus the rest of the world and it’s a significant difference, and there's lots of reasons why.

That is a top issue as we saw in the first Trump administration, certainly with the Biden administration with the Inflation Reduction Act, and now again in the second Trump administration. Drug pricing and affordability I think is probably the top.

But there's lots of other important issues like how we continue to incentivize innovation and balancing that against access, especially as we see treatments that are now curative potentially, coming online with gene therapies with price tags in seven figures.

There's issues at the Food and Drug Administration and how do we make sure that we have a modernized regulatory framework to approve drugs in the United States while making sure that we are still focused on safety and effectiveness?

Issues with manufacturing. Right now, again, with what's happening with the Trump administration and potential tariffs and where facilities are located.

And then I think final issues, things like intellectual property, patent reform, health equity. There's so many different issues.

Marcus: What's interesting though, and why I wanted to ask it, is that I think it's really important that leaders like yourself have this vast experience in different segments in healthcare. Because the words that you're using are the same words that a health plan uses. They're the same words that a provider organization [uses]. I mean, we're an interconnected healthcare space and each part of the marketplace has the same issues, just facing it from different perspectives.

Eyles: Absolutely. I think that's very well said. And the perspective of each different stakeholder group, whether it be pharmaceutical companies, health insurance providers, hospitals, health systems, physicians—each one has an important perspective and is interacting with each segment in a very different way.

And that also is driving a lot of the behavior and outcomes that we see, right? Because if you're a pharmaceutical company, pretty much you wake up every single day and think about who's paying for your medicines that you're manufacturing. Like who's going to pay for these? Whether it be the government, whether it be a private payer, whether it be a consumer at some level. I mean, you're thinking about that every single day.

But the converse isn't always true. I realized when I finally moved over to health insurance, which is pharmaceuticals are very, very important to health insurance providers. But they're only about 20–30% of their total medical spend. And it's been a growing number and we know it's been increasing faster than other segments. So there's a lot of attention.

But that doesn't mean that you're singularly focused on what's happening with pharmaceuticals. And then when you think about the diversity of pharmaceutical manufacturers. That you have manufacturers that have multiple different products versus we have comparatively fewer health insurance plans. Well, it's still a good number, but it's very different.

And then you have thousands of hospitals across the United States. So each of these interactions is sort of colored by your own sort of business goals and perspectives and the customers that you're serving, but it's not always symmetrical.

Marcus: Right. Well, it's something we spend a lot of time here at Surescripts thinking about and working on. Because running a network where we interact with all of these different segments, the key every day is to find the problem that everybody shares—maybe from a different point of view—but they share it enough to want to solve it together.

So then you went into health plans. Coventry, Aetna. Talk about that. What did the transition look like?

Eyles: Fascinating time for me. A challenging time in many ways.

I thought coming from the pharmaceutical industry, I understood health insurance. I had no clue. I joined Coventry in November of 2009, so this was right as the Affordable Care Act was working its way through the Congress, right? And they were a diversified health insurance company, so they had interest across all of these different sectors in each of the business lines. So it was a fascinating time to have my exposure to a new sector at the same time that the policy environment was shifting so rapidly.

Because really when you get down to the ACA, it was mostly about coverage. It wasn't about cost. It was really, how we were going to expand coverage and what reforms we were going to make to the insurance markets, first and foremost.

Marcus: I was working with the health insurance market at that time and on the technology side, and just even making sure the technology could accommodate some of the massive changes that were happening, it was complex.

So, how do those two industries—just to go back—so you moved from the life sciences, pharmaceutical industry to health plans. Like, what do you think about the differences in how they collaborate?

Eyles: Yeah, I mean the differences I think are really in terms of, if you're a health insurance company, you are constantly in the process of essentially creating your new insurance product, getting that approved, getting it out to the market, and then starting a new benefit plan year. And that all happens in pretty rapid succession.

So as soon as you're done with, for example, the plans right now are well along the path for their 2026 product years, whether it be Affordable Care Act Marketplace, Medicare Advantage, the commercial marketplace. As soon as you're done, you need to start over and think about, “What are we going to be doing next year?” And that cycle is so quick and rapid, at least in the turnaround. And trying to incorporate all the information that you have from this year and thinking about next year.

Versus a pharmaceutical company, which operates on a much longer time horizon. Because if you're a pharmaceutical company, it takes ballpark seven to 10 to 12 years to get a new product, a new molecular entity out to market by the time you go from phase one through ultimate FDA approval. So you have years to think about this product and who's the customer and who's going to pay for it.

And a truly successful year for a pharmaceutical company, especially an established one, you get one or two new products approved and maybe a handful of new indications on existing products. And you've been thinking about that work over a much longer period of time. So you have, I don't want to say the luxury of time, but the ability to think about these products from every single different angle.

Marcus: Yeah, that's a really interesting perspective. Then you moved to AHIP, so you were there for eight years starting in public policy and regulatory affairs. You took on the role of Chief Operating Officer and then Chief Executive Officer. How has your perspective on public policy changed or evolved over that time?

Eyles: It has changed a lot, and so by the time I joined AHIP, it was a couple of years into the ACA implementation and it was an intense time. The health insurance marketplaces had just been stood up facing significant challenges and it really made you think about like, “OK, what's it gonna take to make a new market succeed?”

I hadn't really thought about—I mean, I was able to take some of the lessons from Medicare Part D and think about [how] that was pretty successful from the beginning. It was a much bigger shift to create an entirely new individual market that was consumer driven and operated with similarities across 50 different states.

But each one was a little bit different. Because healthcare is local, health insurance is really local versus pharmaceutical where, I mean there are differences, but from an economic perspective, right? The price of drugs in Alabama is generally what the price of drugs are in New York City. There's not the differences in terms of how the markets sort of function and operate. But each state one was definitely different in that regard.

Marcus: I want to go deeper on health plans. Can you help dispel any of the myths or misconceptions about payers and the value they bring to healthcare?

Eyles: Yeah, I think one of the biggest misconceptions is there’s not really an interest in managing cost effectively because health insurance companies essentially get a margin based on the premiums that they collect. And so there's some skepticism about whether or not there's truly an interest in affordability and managing costs.

And let me assure your audience that there is. MLR, medical loss ratio, is essentially a way of looking at the amount of medical care and the costs that are covered by health insurance plans relative to the total premiums that they collect. And the Affordable Care Act put in place a minimum medical loss ratio in different market segments.

So, essentially now in the commercial ACA market, there's a minimum medical loss ratio of either 80% for individual market plans and small group plans, 85% for large plans. So that means if a health insurance company, let's make it simple, collects a million dollars in premium, they need to pay at least $850,000 out in terms of medical costs to the people that have that coverage or they will be required to essentially pay back a portion of those premiums to their customers.

There are other rules that are in place for Medicare and Medicaid often closer to 90%, but it's essentially a standard way of measuring the amount of medical costs that health insurance plans cover based on the premiums that they collect, right?

No one wants to pay more for healthcare, and so the incentives and the intensity of focus on cost and affordability is definitely there, but there are a lot of issues that sort of get in the way of affordability that aren't always visible to patients, consumers, and others within the healthcare system.

Marcus: And that was an important thing too, right?

Eyles: It was to make sure that the customers were getting value. And I think much of it was driven by what was happening in the individual market before the ACA was implemented.

So right before the ACA was created, you might recall that you could be denied coverage for preexisting medical conditions. You would have, if you were trying to get coverage on your own, that you could be subject to medical underwriting. That could mean if you had certain medical conditions, your premiums would be much higher than someone who is healthier. And the Affordable Care Act made reforms in different ways, but the medical loss ratios in those pre-ACA plans were on the order of, in most states, like 60–65%.

So there was a sense that people were paying premiums, but they weren't necessarily getting value because the medical loss ratios were [low]. So, again, there are lots of different factors that were driving that, but I think that was clearly a sense that we wanted to make sure that if you were paying a premium that enough medical care was being covered and those costs were being covered.

Marcus: Well, thanks for that description. I think it's important for everyone listening to understand.

So in general, let's talk about payer innovation. How are they expanding access to affordable healthcare coverage?

Eyles: Yeah, I think there's all sorts of interesting, innovative efforts, whether it be through expanding virtual care, an intense focus on mental healthcare and, for example, embedding mental health professionals with primary care so that it's at the point where patients are being seen by primary care. Certainly within the benefit design in terms of trying to incentivize use of different types of high value care.

In the way that networks are developed and trying to make sure that you're getting high quality, affordable providers that deliver good outcomes, there's lots of different ways. I'd say one challenge with the health insurance sector is that the product that is developed isn't tangible the same way that a pharmaceutical is, right? Like, you know that you are taking a prescription drug.

And so you have an insurance card and even insurance cards now are disappearing. But that's sort of the manifestation of your health insurance company: a plastic card or a digital card. And it's supposed to ensure that you're getting access to the care that you need at an affordable price. But it's not something that you can tangibly touch in that way. And so a lot of the innovations are just harder, I think, for customers to grasp in that way.

Within one other area that's been, I think, a growing area and incredibly important, has been in non-traditional benefits. And expanding into areas with respect to nutrition, transportation—really addressing social challenges that patients and consumers face. And whether it's to bridge gaps in health equity or just to make sure that a senior who had a medical procedure and got discharged to home has access to healthy, nutritious food to help them recover more quickly.

There's lots of different ways that this is happening. Not all of it is very public and visible though in the same way that it is with other types of entities.

Marcus: So as long as we're talking about innovation in health plans, we have to go straight to value-based care and value-based reimbursement.

You wrote a blog post called “What's Next in Healthcare?”, in which you argued for the need to shift from fee-for-service model to value-based care. But as you wrote, we need a better name for it.

Can you describe your view of value-based care for our listeners?

Eyles: Yeah. I think for me, value-based care is paying for health, not just paying for healthcare.

It’s really a different mindset in terms of, again, moving from a system that treats acute and chronic episodes to trying to move upstream and keep patients healthier and populations healthier. And changing the way that we pay for healthcare—coming back to the opening conversation—to change the incentives in that regard. And it's a concept, I think, that everyone gets. Saying, “Well, we want to stop paying for volume and paying for more procedures to [instead,] paying for value or keeping people from needing those procedures.”

It sounds sort of simple, but it's super complicated to do both. I think in terms of designing the right programs, in terms of making the shift, especially for providers who have traditionally been paid on a sort of piecemeal basis for the healthcare that they deliver. It requires different infrastructure, technology, incentives.

And I think from a patient and consumer perspective, that value doesn't have a positive connotation for consumers in most ways. They think about it as cheap, right? We have, and not to denigrate anybody, “Value City Furniture” or “Super Value Grocery.” I mean, they're thinking about, “Is this about just getting cheaper healthcare?” And we need to make sure people realize, no, this is about keeping you and your family healthy. About trying to make sure that you as an individual have the best possible health outcomes for yourself.

But how do we essentially incentivize and pay for health? And I do think a better way to describe it to consumers [is] about how we focus on the whole person, how we're trying to get better outcomes, but doing it in a way that really connects back to the consumer.

Marcus: Right. That's a great point, and it seems like such a great idea. It is incredibly complicated and we've been tracking it for at least 15 years. What's it going to take to make the change?

Eyles: One, I think we can continue to have better data and infrastructure and interoperability within our system. I think that's been a huge barrier for making progress. But still, I mean, we don't have a truly interoperable healthcare system the way that, for example, the financial services sector does, right?

I mean, there's other sectors that have made important decisions and investments and say, “Hey, we want to fix certain issues that we know are either creating complexity within our business, making things more difficult for our customers, [or] making it harder for us to transact business.” And the healthcare system is still so fragmented, to get to those kinds of outcomes in healthcare and to have a much more seamless experience—I think it's going to take us [a lot] to get to that. And we're making progress. I mean, there's still a lot of work that needs to be done to get to that sort of seamless, integrated experience. And so much of the architecture and infrastructure of healthcare is still on technology that's decades old.

And we haven't evolved. And I think that's what it's going to finally take.

Marcus: Yeah, it sounds so obvious and easy, and I know working here at Surescripts and interoperability—it is none of that. It takes a lot of work. Just talking about prior authorization, talking about interoperability. I mean, that is an interoperability function at the end of the day, at least from the perspective that we have. We've been talking a lot about it on the podcast this year, and we even did some work on prior auth with AHIP a few years ago.

Speaking of getting a bad rap, prior authorization gets a bad rap. So, what's your view on it and what's working well and where can we improve?

Eyles: Prior authorization does get a bad rap. Lots of news around prior authorization, even this week, big announcement with the administration and the health insurance industry, both through AHIP and Blue Cross Blue Shield Association around improving, streamlining prior authorization.

Let's just start with the term. And I'd say this is one of the challenges with health insurance more broadly is the language of health insurance is highly negative, right? When you have prior authorization denials, I mean, it's very negative.

And prior authorization at its core is about ensuring access to safe, evidence-based, affordable care at its core. And I think that's a hard principle to argue with, right? I think everyone wants to make sure that the healthcare that they're getting is safe, effective and affordable. But the process that has been put in place—coming back to our antiquated system—so much of prior authorization still relies on manual, paper-based systems.

It's not very visible and transparent to the patient and the consumer. So there's all these different ways, I think, both from a process perspective and from a technology perspective, that we can address it. And what we see that is working is things like electronic prior authorization. And I know Surescripts is sort of at the vanguard of that in terms of trying to get fast approvals for prescription medications. And prescriptions are an area where, you know, a patient really feels it and sees it. So technology I think is going to be a critical enabler.

I think artificial intelligence will also be an enabler for good. I don't want to say it should ever replace human clinical judgment at the end, but I do think that we are on the cusp of being able to use technology in a fundamentally different way to ensure that patients get access in a much more timely, less abrasive way, and hopefully that also reduces the burden that physicians face. We know it's highly burdensome for physicians and their offices that are going through the process. And if we can move to a truly real-time system that's able to do it electronically, I think it will go a very long way.

But it's also important to remember that prior authorization is just one step in the patient journey, right? So it's one thing to get a prior authorization approved, but then there's still, “All right, how much is this actually gonna cost me? I don't know what this is gonna cost me.”

So prior authorization, I think is a piece of a bigger puzzle that we need to address if we're thinking holistically about the types of care that patients need and the journey that they face. Starting with, first, “Do I have insurance coverage?” And then, “What kind of care and treatments do I need throughout my patient experience?”

Marcus: It's time for my favorite part of the podcast. It's when we look at the world through rose-colored glasses and we leave with inspiration. For this one, you can zero in on something specific or zoom out and look at the whole big picture.

But if you could snap your fingers and have one major issue in healthcare solved, what would it be?

Eyles: Wow. That is a big, important question. And I think it would truly be to have patients be empowered and at the center of the system with the tools that they need to work collaboratively with their clinicians and their health insurance companies to truly understand what it is that they need as a patient and how it's going to impact both them from a health perspective and from a financial perspective. Because there's still way too much mystery in our system right now for patients.

So if we could solve that issue and give them a seamless, integrated, simple experience, the way that they experience much of other parts of their lives, I think that would be an enormous unlock in victory for our healthcare system.

Marcus: Oh, that sounds great. I would love that. And I can see how that would improve our lives.

Well, what gives you the most hope and inspiration that healthcare can truly heal itself?

Eyles: Everyone who I've met that works in healthcare as a profession—I've never met someone who doesn't truly want to make a difference and improve health and have an impact on patients, consumers and the overall system. And so I'm encouraged that there are ways that we'll be able to work collaboratively together. I mean, there is so much fighting within our healthcare system between different sectors. It does concern me [how there are] different groups just retreating to their corners and trying to cast blame on each other.

But I think we know that the system works better when we're connected with one another. When we're collaborating to find solutions. And being able to realize the promise of all the amazing innovation that is happening in our healthcare system, both from a research perspective at a life sciences company or from a technology perspective.

Marcus: Absolutely. Collaboration is the key.

So, what's next for you?

Eyles: I'm going to continue to work on areas that I think I can make a difference. To make healthcare simpler, more accessible, more affordable. To eliminate pain points that we face. I'm able to hopefully bridge differences across different groups and understand perspectives and hopefully find common ground, whether it's working with companies that are developing new products and services. Or working on policy related issues that we know will bring different areas together.

And one final area is really thinking differently, to come back to the opening question about finance in our system, and thinking about are there novel and innovative ways that we can address what's happening in healthcare by using financial markets differently than we do today? So healthcare is one sector that doesn't truly take advantage of financial market and capital market tools to address issues with different inputs into the system. And I think that there's a huge unlock potential there if we can think differently and turn healthcare from a cost into an asset. And thinking about it a little bit differently so that we can address some of these underlying financial challenges within our healthcare system.

Marcus: Oh, that's great. Turn healthcare from a cost to an asset. Very good. Well, this has been a really wonderful conversation. Thanks so much for spending time with us today, Matt.

Eyles: Thank you so much for having me here. It's been great.

Marcus: It doesn’t get more personal than it does in healthcare. But for too many people, the experience of healthcare—how we understand healthcare and how we pay for it—can sometimes feel impersonal, uncaring, maybe even cold.

Our guest Matt Eyles warmed things up for us. Matt has spent 30-plus years in healthcare, and what he sees is a system that’s still too fragmented for the seamless and integrated experience he envisions.

Data doesn’t flow. Our tech platforms often don’t communicate with each other. Even the language we use, like the words “prior authorization” and “denial,” can feel too negative.

But, despite all that, the message we heard today was one of hope. This includes the quieter, less obvious, less tangible innovation that's happening to improve how we pay for healthcare. Like value-based care models that focus on health rather than just on healthcare, and align incentives accordingly.

Matt also helps us imagine a future for patients, one where they’re at the very center of the healthcare system. One that truly empowers the patient.

So, what does that future look like? If Matt could snap his fingers and help healthcare heal itself, here’s what would happen: Patients would be equipped with the right tools and support to understand healthcare, from the care to the costs. Patients would benefit from a seamless and integrated experience that responds in near real-time to their needs and concerns. And this experience would also belong to our providers and care teams, and to organizations across healthcare.

A deep thank you, Matt, for the great conversation.