One of the most interesting follows on Linkedin is Warris Bokhari from Claimable. He’s a British MD, who has had stints not only as a doc in the UK, but also as a health tech and health insurance exec in the US. But now he’s at war with the system, in particular working for patients to overturn denials from insurers using AI. But what exactly is the big picture aim, and how does Warris think that he’s going to fix American health care? We had quite the discussion and we sort of agree, but also don’t. Great discussion and transcript is below the video–Matthew Holt

This was such a great discussion I wanted to publish the transcript. The way I do that is to copy the Youtube generated transcript and drop it into Claude to smooth it over. I then read it and if I think it’s made an error, dip back into the video and listen to what actually happened and make a correction. This is all code therefore for me saying I think this transcript is pretty accurate but it might have a bunch of AI and human generated mistakes.

THCB Spotlight: Warris Bokhari, CEO of Claimable

Matthew: Matthew Holt here with The Health Care Blog. Another THCB Spotlight and I’m thrilled to be talking with Warris Bokhari. Warris is the CEO of Claimable and not so very long ago I had his co-founder Alicia Graham on a panel at ViVE, where she was faced up with at least one senior executive of a big health plan — although the other one didn’t show up because apparently my questions weren’t going to be nice or something like that. [laughter] So if you’ve seen Warris around on LinkedIn, you know that Claimable has certain loud points of view. But Warris, why don’t we start with what Claimable does. We’ll get into a little bit about what you’ve been doing before that and then we’ll probably — the most of this conversation is how do we fix American healthcare, because that’s what two British guys, as we both are, should be discussing. 

Warris: I also — much to the annoyance of Anthem’s PR person — would like to talk about that panel as well. I don’t know if that’s off limits, but we’re [laughter] happy to talk about it. The good news is I remember what actually happened on it. [laughter]

Matthew: And I think the only person who’s ever found a recording of it was you,

Warris: Why don’t we start with — as you suggested — what Claimable is and does. The broad problem is: we’ve in this country — and you and I, by the way, are not from here, but we live here, and I think that makes us…. 

Matthew:I’m old, so I’ve lived here more than I lived in England; I’ve lived essentially my entire adult life here — 

Warris : depending on when you consider me to have become an adult the same could be said for me. [laughter] So the broad problem is that every year in the US there are about a billion denied claims across the entire healthcare system. That’s when you think about Medicare Advantage, when you think about commercial — which includes self-insured and fully insured plans — the ACA exchange, which we’ve been busy trying to kill (which is ill-advised), and Medicare, Medicaid, etc. So across all of those plans there’s a billion denials out of the 5 billion claims filed every year, and really only about 1 million appeals ever get filed. Now when you think about how many humans this affects — obviously there aren’t a billion humans in the United States, there are 300 million insured people — if you look at the latest data from the Commonwealth Fund, it backs into like a 1-in-5 denial rate, but that’s as high as 1 in 3 if you have a chronic disease. So a third of America — quite a lot of Americans — have a chronic disease and they’re battling denials. 50% of these denials are medication denials. And if you think about the few modes of health care — there’s the stay-well mode, which is manage chronic disease well, and then there’s get-care, which is normally when someone’s acutely decompensated and needs to end up in a clinic or an emergency room — we’re biasing toward people needing more expensive care because we’re restricting access to things that keep them healthy, and those are medications that keep chronic diseases controlled. So we built a TurboTax of appeals, basically, for medications. So far –  it will be expanding to include investigations like MRIs and PET scans specifically for oncology pretty soon. And we’re going to keep moving down the field. We beat around 80% of denials — I think the exact number across our entire platform is closer to 74%. But when you look in biologics, which are the expensive medications that are often restricted, we’re beating well over 80% of those cases. There are a number of ways that patients can use us. First of all there’s a direct-to-consumer door which will never go away, and that’s particularly because most providers give up and don’t appeal. And then there’s also a door where we work with manufacturers and we support their patient assistance programs — where effectively we’ve transferred the economic loss from the insurer (who’s getting the premiums and should be paying for the care) to the patient, who then has to seek subsidy from a pharma company. But effectively the payer should be paying for it at least 80% of the time. And then we’re increasingly starting to work with health systems. So those are the ways in which we work today.

Matthew: And then for the actual consumer experience — I have a problem, I don’t have anybody else to help me. I’ve seen you appealing for people on LinkedIn on behalf of people and I know Mark Cuban is an investor and he joins sometimes. But let’s say it’s all normal. I come to the Claimable website and what do I do?

Warris: Yeah, so there’s a finite number of things that we support today, just to be very clear. We get people who come to us looking for all sorts of things which we don’t cover. We cover a lot of therapeutics. Sometimes — like last week I had a mom reach out whose kid has osteosarcoma, which is a terrible bone cancer effectively, and the insurer’s answer was: hey, amputate the leg versus get surgery at Memorial Sloan Kettering. And that was one which I did on the side. So we run a for-profit AI-forward SaaS company effectively on one side, and on the other side I run a pretty much 24/7 advocacy business where I figure out how to help as many people as I can in the background whilst we’re closing the gap on all the things we can automate responsibly. But say for example you’re denied — a common example would be Zepbound, right? We get a lot of patients who are denied GLP-1s. They’re extremely helpful drugs and they’ve now been approved for more and more indications, including MASH — metabolic-associated steatohepatitis — which my dad died from. So the idea that there’s a medication that actually could have prevented cirrhotic liver through that would have been very useful say 10 years ago. But like here we are. So you could appeal for that. We take you through a very simple Q&A of what you’ve tried before — lifestyle measures, etc. — and then we’ll ask you questions about how your disease affects you.

 Because Matthew, the dirty secret is that insurers don’t think of you as a person. They think of you as a membership card and a membership ID number. You’re really a passive premium payer to them. But when you have a problem, there’s no way that you can reach them. They sure as hell don’t want you to appeal, because they never actually want to know what it’s like for a patient to suffer from a disease. So we capture the information about — for example — ‘I have severe rheumatoid arthritis. I used to be the person who did the cooking for my family on a Sunday and now I don’t see my family because my disease has decompensated so much that I’m in so much pain I can’t sleep. I sleep upright in a chair in my living room every night.’ And so patients become progressively socially isolated. We narrate that story in the patient’s words back to the insurer, and then we combine it with the clinical evidence — the peer-reviewed studies, the clinical practice guidelines, and also cases where the insurer has been beaten before — to show them: hey, your decisions seem inconsistent with these other decisions that have been made for cases just like mine. Oh, and by the way, here are all the laws that mean that what you’re doing to me is probably illegal. And we’re going to send this to the CEO of a self-funded plan, because they’re actually the fiduciary and they probably have no idea what you’re doing. We’re going to send it to the Department of Labor. We’re going to send it to the C-suite of this plan to make it extremely clear that this is a real person with real needs.

Matthew: So they are coming on board, they’re getting some AI assistance. I mean — let me ask the scalability question. How are they — I know there are very few appeals — that very few denials that get appealed. I don’t know how many are being appealed now and how many are you responsible for? Are you a significant part of the market now?

Warris: Not yet.

Matthew: As you said, the numbers globally — denials that get overturned on appeal is actually pretty high.So I don’t know how good 80% is or 75% is compared to the average.

Warris: The average from the Kaiser Family Foundation data is 44%. So across all — yeah. We’re significantly better than that. I think currently —

Matthew: I assume these are coming from providers doing appeals or is it direct?

Warris: If you look across the country, around 75% of appeals today come from the provider. The issue is — and this is the thing that people don’t understand — the provider actually has no statutory rights to appeal. They actually borrow their rights from the patient. So providers have contractual rights with United and whoever, but the patient has federally protected rights under ERISA, which was the 1974 law that was set up to make sure that employers couldn’t gamble away pension funds and things, but got extended into health benefits. And ERISA was built on top of — and this is probably more Chris Deacon’s area — but was built on top of, for the Affordable Care Act in 2010, which basically stood on those provisions and extended them to include consistent rights of independent review, which basically every state other than Alabama follows. 

And I’ve had significant arguments with the state of Alabama over their lack of compliance, as you might imagine. And so what we believe is that your first appeal is your best appeal. We try to put as much forward in the patient appeals as possible. The first battle was convincing anyone that this problem mattered. No one believed — three years ago, when I posited that this was a problem, no one believed me at all. And it wasn’t until after Brian Thompson died that suddenly the Overton window shifted. And initially it shifted in a really unhealthy way, which was a kind of morbid fascination about Luigi and other things. And then it shifted into like solutions — and I’m here for that, right? How do we get patients’ rights upheld? How do we get them access to care and not have them become progressively disabled? We’ve certainly had cases where we’ve intervened but it’s been too late. And pretty much nothing is more painful to us as a team than winning for a patient but it being a completely Pyrrhic victory — the patient dies or comes to significant harm. It’s probably happened four or five times this year.

Matthew: Yeah. So the majority of cases — you mentioned GLP-1s, but the majority of cases that you’re facing — how much of this is: people either change health plans or their health plan gets changed on them by their employer, and a new one has a PBM which doesn’t cover the drug that they spent years figuring out actually works for them? Or in some cases the PBM changed the formulary on the drug. And a lot of this is not necessarily massively expensive — not the hundreds-of-thousands-of-dollar biologics — but some of them are serious. And obviously because one drug can work for one patient and another drug may not work for that patient, that’s a big issue. We know the reasons why the PBMs are changing different brands for another, and even changing different generics for another. But give me a sense — how much of what you’re seeing is that? The other one that has raised a lot of hackles recently — a lot of news — is obviously the nursing home/SNF denials, rehab denials, especially in Medicare Advantage. How much of that are you seeing? Do you do that? Give me a sense of what’s going on out there in the wide world of denials and which ones you’re mostly picking up at Claimable.

Warris: Yeah, so in pretty much all therapeutics. I have done rehab denials, just FYI, and the provider can be as much to blame as the insurer in some of the cases I’ve seen. Some of that’s about DRGs — disease-related groups — and not wanting to split them. In fact, the first case we appealed was a stroke rehab patient, come to think of it, and the provider was afraid to appeal because they were worried about retaliation from the insurer. And we got that one overturned. And then there’ve been other ones. A friend of mine — her dad became quadriplegic after a fall and I had to intercede there because she was having a lot of issues getting his rehab paid for. But it was actually the hospital that didn’t want to fight, and that actually ended up getting escalated to Kathy Hochul as in the Governor of New York to tell off the hospital, and that got overturned. Those ones aren’t ones that we see commonly, but I see them and we’ll try and help where I can. On the therapeutic side, we see a lot of formulary changes — a lot of ‘if not Dupixent, then swallow this pack of steroids, good luck.’ We see a lot of ‘please don’t take this biologic, take this biosimilar,’ and the patient’s been stable on the branded biologic for 20 years, then they get switched to a biosimilar and they start to decompensate and now need a way back onto the originator compound. Now in England, the way I was taught — we never learned brand names in medical school, we were always taught the systematic name — you think of it as a drug, not a brand. The issue here is that not all of the biosimilars are exactly the same. Patients may respond to them quite differently, and if they’ve been stable. So there was a UC patient who was switched and ended up basically unable to eat, got admitted to the emergency room, needed feeding, needed a way back. There was another patient — a North Carolina patient, as I recall — a rheumatology patient who got switched from an originator to a biosimilar and developed rheumatoid lung, which is a really serious sign of not having control. I’ve got to caveat all of this by saying that we see a biased selection of patients who have been denied and have problems.

Matthew: just to interrupt — you are saying that some ‘generic’ biosimilar is not actually all that similar in some patients, right? 

Warris: for some patients — there’s a really good argument for saying that if you’re starting someone on a therapy you should start them on a biosimilar because it’s cheaper. Then the question becomes: cheaper for whom?

And it becomes cheaper for the plan, not for the patient, because they end up routing the patient through either a white bag — which is more expensive for them, because then it goes from a medical benefit to a pharmacy benefit, they pay more — or it could be that their infusion center won’t accept it because the infusion center’s buying it differently, and then they lose continuity of care. Maybe a hospital accepts it, then it moves from being a clinic visit to a hospital visit, so it goes from a $50 co-pay to a $2,000 hospital visit. The patient then abandons care. So ‘cheaper for whom’ is the first question. But if all things were equal and there wasn’t all of this chicanery, yes, it would be much easier to have patients on biosimilars to begin with.

Matthew: Yeah. And I think that’s one of the main ones. But there’s also a lot — you mentioned changing PBMs and formularies. I know that for instance Jen Horonjeff used to be Savvy Patient; now it’s Real Patients – she’s just gone through this where even though she’s as well known a patient as her, they changed a drug on her, formulary-changed, and she couldn’t get in, has to go through all the denial process, can’t get access, can’t get a human being to call her — only robocalls and that kind of stuff. You see way too much of that. And there’s now — a couple of things. One is that a lot of this is: who is to blame for the fact that these things cost so damn much money? [laughter] So let’s talk a bit about that, especially on the biologic side. There have clearly been a lot of biologics invented which do great stuff and change people’s lives, and there’s been a lot of biologics invented — especially in the oncology space, a lot of cancer drugs — that extend life a little bit for a huge amount of money. And then wrapped up in this is the fact that somehow Novo Nordisk can sell Ozempic for 80 bucks a month in Denmark and seem to make a decent amount of money on it, and why they have to sell it for 1,200 or 800 or 700 or 500 — whatever the number is — here. So how much of this is a problem with pricing of those drugs? How much of this is a fight between the PBMs and the drug companies over who gets what slice of the margin for the drugs? And then I guess the last question is: how do we get to your ideal — what’s the overall cost to the person who’s paying in the end?

Warris: Yeah. I mean there are way too many middlemen. If this business is ultimately successful, there’s no need for us. And that’s the future that we’re actually quite happy with as a business. If we can get to the utopia — it’s that the insurers realize that they can’t deny via AI because it becomes so ludicrously expensive for them to have all of these appeals reflected back at them. Now, the reason why they deny is because they’re looking for the more profitable route, which is either they don’t pay out, or they route it through their verticalized infrastructure — they own everything. Their own specialty pharmacy, their own PBM, their own retail pharmacy. They literally own it all. And then there’s an insurance company on the back of it that’s issuing the denial and collecting the premiums. So the vertical integration is for sure a big part of it, and a big part of the waste and inefficiency. The other issue is that you’ve got issues with how much the actual drug costs. Now, if you look at the dynamic — and I’m sure if you got David Joyner (note–CEO of CVS Health)  to put his hand on a Bible, he might tell you what’s really going on — I’ve had pharma manufacturers say to me that they would charge 5x less for a medication if the PBMs weren’t rate-setting a rebate. Whether that’s true or not, I couldn’t tell you. But the rebate determines market access because it determines the formulary position. And if you’re not on that list, your drug doesn’t exist, because there is no other way of accessing the market in an organized manner than through your insurance mechanism today. 

Matthew: Your argument is that it doesn’t really matter what the list price is — there has to be a big chunk rebated back by the manufacturer to the PBM, or else they won’t get on the formulary. 

Warris: It’s a mafia, right? They’re paying a vig to the PBM to basically be considered. ‘Nice drug you’ve got there. Be a shame if something happened to its formulary position.’ But ultimately the price does matter. And then your question also went to marginal benefit.

 Now in England — 

Matthew: before we leave that — I kind of joke that the biggest pharma innovation these days is in the legal department, trying to figure out how to extend patents.

Warris: Oh 100%, and the patent went on way way longer than it should have done because of all kinds of games played with formulation. I mean my inhaler — which is Symbicort — I think it was coming off patent and don’t quote me on this, but I think they did something to keep it on patent by changing the delivery mechanism. I can’t remember what it was, but it gave them another number of years. I mean there are generics for it, to be honest, but there are also FAERS reports with the FDA that say that Breo, for example, is ineffective — and that’s Aetna’s drug of choice for asthmatics like me, and they’ll continually try to steer me to it even though there are reports that say it doesn’t work, which is amazing.

So the price ultimately does matter. And all of these companies are ultimately answerable to their shareholders — that’s exactly what they’re solving for. It’s either volume of drug or unit cost. Now I think we can solve some of the toxicity if we actually were to clip the ability for these PBMs to earn rebates. There was a debate that went pretty viral between Mark Cuban and Patrick Conway — our neighborhood-friendly pediatrician as he describes himself — 

Matthew: who is I believe is the head of Optum altogether.

Warris:  I’ve had some pleasant emails with him where I’ve interceded for patients and he’s promised to look at things, and that’s been actually better than most, to give credit where credit is due. In that conversation you could see that Mark was visibly getting quite frustrated with the obfuscation of the answer to the question: what other charges are you not telling us about that you’re billing for? Because there are a lot of bundled charges and a lot of things that employers are buying that they probably don’t need, that are buried in the costs — including, you know, payers are starting to charge providers for challenging prior auth denials. So that gets passed on to the employer. There’s a lot of buried costs in there. It’s still non-transparent. And then there’s gross-to-net as well.

Matthew: Yeah. No, I think — AJ Loicano, who these days is at Capital Rx — I think Judi is the name of his PBM. He said to me at one point there were 27 or 25 different fee types attached by the PBM beyond the basics. And I think if you get rid of the rebate but you don’t fix the contracts — and this is what you mentioned Chris Deacon has a lot to say about contracts that don’t allow you to assess or audit the activity of the plan– f you put these people in the middle, they are going to figure out ways to charge you. 

It’s like buying a ticket for the World Cup and then the water costs you $19 or whatever. So where I’m going with this: I think the only way you get to fix this is essentially what the Brits have done — you do some kind of NICE (note: the UK’s National Institute for Clinical Excellence) thing and say yes, this is a clinically acceptable cost, this is not a clinically acceptable cost. And then you say we’re going to do price controls on all the drugs.

I think if you did that, you would do two things. One is you would get a lot of unnecessary cost out of the pharma business — they are still spending more money on non-R&D than on R&D, if you add in stock buybacks and the vast amount they pay their executives. It’s still an excessively lucrative business and they’ve spent a lot of time and effort funding people atTufts & elsewhere to persuade people that drugs really do cost $3 billion to get to the FDA. I’m not sure much of that is true. I think you can get prices down that way without impacting R&D. 

And I think we also need to figure out how to make R&D better because we’re spending more and more on R&D and getting essentially less and less valuable drugs out of it.

Warris: There are a couple of interesting things there. I think it’s easy to make a health economic argument for an expensive drug when the cost of all of the downstream care is even more expensive. And that’s also the problem, because then everything’s just really inflated. I was living in LA until quite recently and I remember getting into a punch-up with Cedars-Sinai for my neighbor who had been billed $70,000 as the total cost of an appendectomy — in a young, healthy person, uncomplicated basically appendectomy. The comparable cost was $10,000. So the question is: okay, they’re charging 7x, and then the percentage of that is being passed on to the patient. That starts adding up. It’s basically like having one gas station in a town — the price of gas is whatever they say it is. You have these monopoly providers, you’ve got monopoly insurers, the prices go up in step. And then when you look at what NICE does — when they start looking at does this drug truly extend life, is this drug truly different to other things on the market, is the evidence solid, is the study actually rigorous — those things have to matter and they don’t matter enough here.

We look at that. So if we’re going to work with a manufacturer — by the way we say no to people a lot — we actually look at the studies and whether they’ve been rigorously conducted and whether there’s a basis for this drug being on the market. We had a manufacturer with an absurdly inflated price — it was effectively a marginal benefit over a traditional steroid and only in one circumstance would it be considered actually appropriate — and we told them to pound sand. We’re not going to help ramp healthcare costs on the basis of this. It’s just too marginal. We see this from time to time and just say not for us. But where you get to biologics — take a rheumatology patient: I remember when Cosentyx was first coming out, there was a patient in Chicago who needed to be on it because she tried and failed everything else and had incredibly poorly controlled rheumatoid disease. For that kind of patient, yeah, it’s appropriate. And you know, that’s not where it is on the label anymore — it’s now approved earlier than that. The point is that yes, an expensive therapy could be justified if a patient’s gone through the requisite number of cheaper drugs. We saw this this morning on a new patient. A patient who had failed a medication previously, had been stable on another medication for 7 years, was then directed by CVS to go try the medication they had previously failed — again — and was now on six medications to control all of the side effects of the medication they’d been put on. At what point are we now doing more systematic harm?

Matthew: That’s exactly the point. I mean there are two things going on. One is the issue we’ve talked about: how much damage do you cause by changing somebody’s medication? Not to mention the bureaucratic fight they’re having back and forth with CVS. You look at Jen Horonjeff and her attempt to get a human being to call her. And then the issue is: what’s the cost downstream? Now as you raised, the problem with the cost downstream is no one knows what the hell the cost downstream is, because it varies so much. And I’ve looked at my bills and said, you know, Blue Shield’s been paying a huge amount more for some providers than others. I’ve seen UC versus some private guy for the same thing. And you’ve got a lot of just not knowing. And I’m now at the point — policy-wise, not everyone’s agreeing with me — that you give a bunch of money to primary care doctors, tell them to look after people, and then everyone else gets a global budget and gets told to figure it out, or else a fixed price.

Warris: Look, I can give you a window into this. There’s a guy in Missouri, his name’s Ed Stratton, and we put his story on the front page of the Wall Street Journal — which I’m sure Anthem really loved, especially as I used to be an executive there, but oh well.

Matthew: You’re probably not going to be invited back.

Warris: Probably not. I actually had this idea of just applying for some really low-level role at Anthem — just doing it for a laugh. Like I wonder if I could get hired as a call center worker, or someone in med policy who just approves everything. But anyway — there’s this patient called Ed Stratton who had been denied a liver transplant. We’ve talked about this one quite a lot. But what was interesting is that we have his EOBs for all of the care he was getting whilst being denied his transplant, and it added up to hundreds of thousands of dollars over I think about 6 months, which his employer was paying for. Now if you think about the transplant, it probably costs a million dollars all in. If you were to just say, ‘Ed, you can’t have a transplant, you’re going to keep being admitted in and out of hospital for infections to your necrotic liver, and we’re going to keep having to drain this using CT-guided drainage, and he’s just going to continue to get worse’ — the employer’s on the hook for all of that. They’re going to pay way more over the odds than if he just had a transplant. Which he has now had, and to my knowledge he’s doing great. So that to me is where it starts becoming a false economy. Because palliative care in America — dying in America — is an extremely expensive proposition. It’s also not cheap. So if you’re going to die slowly from cancer in America, someone’s picking up that tab — either the family or the employer — and when you withhold treatment, that’s the only path you leave open.

Matthew: Yeah. And actually you go down that path —my favorite fact about American healthcare is that the biggest palliative care/hospice company is owned by the same company that owns Roto-Rooter.

Warris: [laughter] Right. Right. Right.

Matthew: And you know there’s been a lot of exposés about the hospice industry — poor care but also very expensive care out of that. Similar things are happening now in the home care industry. I’ve just run into this lately where there’s been an expansion in what home care should be paying for under Medicare, but in fact companies are not delivering that.

Everywhere you look there is some kind of — whether it’s for-profit or nonprofit — highly incented bad behavior. And I think the only way we get rid of that is to put a combination of patients and physicians back in charge.

Warris: I would agree.

Matthew:  I don’t think value-based care the way we do it works. Capitation — 

Warris: no, it’s nonsense.

Matthew:  I think Jeff Goldsmith, on The Health Care Blog, has said that we spent 40-50 years putting these controls in based on the fact that we thought physicians were cheating people, and the way you get rid of that is you get rid of fee-for-service and pay physicians a salary — and pay them a damn good salary, because they’re very expensive people who learned a lot, and by the way you’ve made them pay well over $300,000 to get through medical school and be bankrupted during residency and all that stuff. But that’s where I think you fix it.

Doesn’t get over some of these problems, right? What do you do about very expensive people? So let me slightly shift the conversation. At some point — we mentioned palliative care, we mentioned hospice — the argument about the denial is that if you get over the bit which is clearly ‘we put this other drug on formulary and we make more money if we steer it this way,’ which is BS — and if you get over the fact the drug costs too much — how often do you run into something where it looks like somebody is trying to do too much rather than letting patients die 

Warris: a quaternary prevention type situation? 

Matthew: I mean historically there’s a lot of ICU care of people who are going to die anyway. How much of that sort of comes into the claims?

Warris: I think most of it’s in hospitals. I rarely see it. On the therapeutic side, the patients who are appealing are really hurting. I’ve seen a couple of cases where families reached out looking for compassionate access to medications where there was no basis in science for the use of that medication in the therapeutic mechanism that would be understood for treating that cancer. And that’s one where you have to draw the line and say: I’m not sure you actually have a chance of getting this approved, and also you should probably talk to your physician because it sounds like there might be a misunderstanding and it would be good for you to understand what your options really are.

I’ve run into that maybe twice. And I’ve run into cases where physicians are adapting to step edits in maybe an overzealous way — trying to figure out the easiest way to get something approved by using a vague code, but then the patient doesn’t fit the criteria of that vague code, and that creates a problem for us because then we can’t support it. 

A vague code — like, we see this with PANS/PANDAS, which is a rare disease. The treatment is IVIG. It’s off-label. The American Academy of Pediatrics don’t believe in it, but there’s a lot of politics in how that clinical report got written, it’s a shit show –  and in the interim a lot of kids are in bad shape because they become acutely psychiatrically unwell and the insurers use the AAP report — which says it’s not a clinical guideline — to deny these patients. Every now and again what we see is providers who sometimes put the patient in as autoimmune encephalitis. And the problem is the patient often hasn’t had an EEG, hasn’t had an MRI or a lumbar puncture or the other things that would qualify them as actually having autoimmune encephalitis. And so then we can’t help them, because it’s not a true appeal. We only want to support cases where the evidence is really on the side of the patient.

Matthew: So yeah. It seems to me that what you’re saying though is: overall, if the doctor and the patient have followed the right protocol, most of the denials you’re seeing are not about end of life where the patient will die anyway. Most of them are about: can we pay once upfront for something which will save money later? Which by the way will save money for probably another insurance company later,

Warris: Yeah, totally. But there’s no collective action solution in this country. United is going to look 18 months into the future, which is the average time they’ll have a patient, and that’s how they set their actuarial payback. When we’re talking about whether GLP-1s are worth it and David Joyner is saying it’s not, that’s based on the price of a GLP-1 and then probably the downstream occurrence of an avoided cardiovascular event, which probably wouldn’t happen in 18 months but might happen in 5 years or 10 years depending on the average age of the person taking it. So you’re never going to see it. We’ve moved into a risk-shifting business, and people change employers regularly and change plans regularly.

Matthew: Absolutely. And even now in Medicare, right? You go into Medicare Advantage and people start to change plans. 

Warris:  And you know, the way I thought about this — I did Eisman’s podcast in December and I actually haven’t been back to rewatch that one because — 

Matthew: I saw it the other day, it was actually pretty interesting. This was Steve Eisman, the guy who was played by Steve Carell in The Big Short.

Warris: Yeah. I was super bummed because I had an Anthem patient who died a few days before — a transplant patient. The daughter of a liver patient reached out and said her mom needs help, she needs a transplant, and no one would accept Anthem’s Medicare Advantage contract in LA. This was a patient in a hospital in Orange County. I managed to get her accepted into a bed at UCSF, but by the time I got her accepted, she died. She had been languishing on that ward for about 10 days, and days really matter when you’re that sick. I was bummed. So if you watch it and I seem really depressed, that’s why — because I was really bothered and I hadn’t slept in about 3 days. And a lot of it was also just preparing to go up against Eisman because he’s so smart that you have to actually know your numbers.

Matthew: You don’t need to on this podcast!

Warris: Well you prepped me to be fair, so that’s helpful. But Steve has the recursive ‘why.’ And you have to have really thought about what you’re about to lay out.

And I put together a thesis of where this goes — I think these insurers are vulnerable, and they’re vulnerable in their insurance business. All of the other stuff, all of the unregulated revenue and that kind of thing, is going to start looking really attractive to split away from the insurance business over a period of time. Because if you look at the long history of conglomerates, it doesn’t end well. They will naturally want to unlock more value for shareholders by breaking them up. And so our incentive is to drive that narrative for activist investors to go into the boardrooms of these companies and actually break them apart. And then you’ve actually got a shot at free market behavior, if that’s actually the answer. Beyond that, what you need is a risk transfer mechanism from insurer to insurer, which solves this 18-month problem, which then allows people to actually take the bet on paying for more expensive care earlier — so then it isn’t futile. The other mechanism I’ve seen is manufacturer warranties for very expensive medications, which are starting to become a thing — where manufacturers say we’ll warranty some of the cost of this medication if survival isn’t XYZ months minimum. 

Matthew: Which is interesting, and it kind of goes against 200 years of drug company history. 

Warris: They’re taking bets on riskier disease, and if you go off those narrower indications, you have to be able to underwrite your benefit. I kind of like them having skin in the game there as well. And then the final thing is you just need an insurer of last resort, which is the federal government, who can take a longer horizon across everybody. Because ultimately we pay for this anyway. You stop working — guess who pays? The taxpayer pays.

Matthew: I mean, so you’re getting to where I’ve been for a little while. I used to think — you know, it’s America, you could figure out some kind of free market solution. I sat in front of Alain Enthoven in the early 90s figuring out how could you create five competitive Kaiser-type organizations and then have people buy into the more expensive plan if they wanted — with their own cash, therefore you drive the market down to a level, and then everyone does a sort of Kaiser-type thing where they figure the money internally. All sort of privatized British NHS.

Warris: Yeah.

Matthew: And great. My problem is that when you actually look at what happens in healthcare in America, there’s always some open field where someone can get away with something for a while. And then if you try to fix an individual thing — like out-of-network surprise billing — now there are people who’ve figured out how to game the arbitration system. If you put in a massive fee and choose the right arbitrators — I don’t know how the arbitrators have figured out that something should be $1,400 but they’re going to pay $28,000 or whatever — and now half the insurers are not paying up and there’s generalized chaos. Someone was complaining that Blue Cross of Texas wasn’t paying their arbitration bills and I said, ‘Well, is Blue Cross the only organization in Texas that has to obey the law?’ I didn’t understand.

Warris: [laughter] I mean they have the biggest penetration in Texas, I believe.Yeah, they’re the largest payer there

Matthew:. Anyway, just to finish my point: if you look at what the big players do — the pharma companies benefit from unregulated pricing. There’s some attempt at drug negotiation for Medicare, and there’s Medicaid and VA, but in general they can charge what they like here and charge way more than they do abroad. You could argue Europe should be paying more, but that’s a different argument. 

The hospitals have all consolidated and they’re all sitting on massive reserves and charging as much as they can. Dave Chase will go on about this — a big hospital system gets somewhere between 65 and 80% of its money from the government anyway. It might as well be a public utility. I don’t know why we’re paying the top 200 people at UPMC $500,000 a year plus, you know, $12 million to the CEO and $12 million to the former CEO who was still getting paid even though he left three years ago. 

The last group are insurers. A lot of their business comes direct from commercial employers, who are theoretically out of the tax base other than those employers are not paying tax on the benefits they’re giving their employees — that’s a massive subsidy from people who don’t get taxpayer-funded insurance to people who do. And then number two: their profits in recent years have all come from either Medicare or Medicaid. Some plans are entirely Medicare. That’s the taxpayer as well. So essentially this is all a wealth transfer to private healthcare companies. We should be able to do something about it.

Warris: But we’re seeing more and more of this. With ICHRs we’re basically shifting the risk back to individuals — ‘the employer’s going to give you a stipend, go buy a plan, but you probably can’t buy a plan that’s worth a damn for $500 or $300 a month.’ The president has mentioned getting rid of the ACA and is doing a good job of defunding it effectively.

And that is leading to patients going bare. I’ve had two patients in the last 2 weeks reach out. One is in a catastrophic amount of medical debt because they ended up uninsured and then got very sick. And then the other one did a health ministry, and the health ministry does not cover cancer within the first year of being in the plan — and unfortunately this person got cancer. So we’re going to see a lot more of this. 

And the other sort of wealth transfer is high-deductible plans, which also shifts the risk onto the patient. You’re covered but not covered. 

Matthew: And to give you a personal example: I’m about to have my knee surgery, as I think I mentioned the other day, and had I stayed on the exchange plan — and if my wife didn’t actually go out and get a job, which has its own problems, because she went out and got a job and was covered by Cigna, which is about to break up with UCSF.. So I had to have the date moved up so I’m in the coverage window, which is nuts, but there we go.

With Cigna the out-of-pocket max is going to be like $4,000 as opposed to I think it was going to be $14K or $12K on the exchange plan. And how many Americans who, by the way, are scraping together to get on the exchange in the first place, can afford $14,000 additional out of pocket? There’s no reason. We had this massive underinsured class, and the ACA was never supposed to be like that.

And don’t forget the ACA came from a huge amount of stories exactly like the ones we’re talking about — people who couldn’t get coverage, people who bought shoddy insurance that went away, people who couldn’t get insurance because they had pre-existing conditions or had their insurance taken away. All that was going on in California back in the 2000s. There was a term called rescission, where in fact Blue Shield was one of the worst offenders — ‘You didn’t check that box in the form and you did have this condition and therefore we’re taking it back.’ 

Warris: I’ve seen a rescission case in the last year where the patient was stuck with like a million dollars in retrospective claims. I mean, look — this system is a catastrophic mess. It is not fit for purpose. 

The problem is that everybody’s pretty much on the take. And as a result there’s low incentive to fix it. Right now we’re celebrating deregulation like it’s going out of business — you see whichever wearable executive posing with RFK and Marty Makary because they’ve decided they’re not going to weigh in on algorithms. But who bears the cost? The health systems do, when there’s all of this utilization full of false positives. It’s not going to be Oura or whoever else. Everybody’s just in it for themselves right now and nobody’s really thinking about the collective action problem we need to solve to make this system more sane. This is going to have some very negative effects in the coming years. I’m hoping for 2028 to restore some sanity. But who knows if that’s possible. And I really hope whoever runs actually understands that empowering Blue Cross or United or Cigna to go solve a problem on their own isn’t going to happen — unless there are real penalties that are enforced. They will never arrive at a solution themselves.

I very much doubt this solution is political. I really feel it’s going to be economic before it’s ever political. 

Matthew: Say one more thing about what you mean by that, because I actually think I’m about to disagree with you. What do you mean by economic?

Warris: Well, feel free to disagree. For the 2024 election, we decided to make an explorer for OpenSecrets to see who was actually taking money from PBMs and it was basically everyone — and it was really in local races. This had been on the back of a punch-up I was having with Blue Cross Blue Shield of Alabama over recovering a woman’s breast reconstruction, which they have a mandate to do on the state that this patient was on a union plan. And we actually ended up paying for it ourselves, because we were not going to let this woman suffer — it was before Christmas and we were feeling like we should. But the fact of the matter is everyone’s on the take. And when you look at how long it’s going to take to get beyond performative sessions in Congress where we sit all the executives up and make them answer awkward questions, followed by no change, no enforcement, no bills passed — that’s an extremely long arc.

Matthew: I don’t know if there’s an economic reform. People have talked for years — my friend Brian Klepper told me 25 years ago, ‘Don’t worry, employers are going to sort this out. They won’t put up with this much longer.’

Warris: That’s actually not what I mean. I mean that we are the economic reform. If we can get enough patients to appeal, we actually change the economics of these insurers. If we can stimulate this enough, it really impacts their bottom line, which actually impacts their top line. The revenue replacement is a real problem for them at that level. And then more patients get care and their model of denying by AI effectively becomes completely untenable because you start having investors really paying attention to the line item that’s failing.

Matthew: So that happens and the insurance companies get sort of sliced off by outside activist investors or hedge funds or whatever. Doesn’t that mean essentially — what’s left just becomes more expensive, more people become uninsured?

Warris: Not necessarily. I think what you do is you actually break up the verticalization. You allow more companies with a genuine value proposition into the market. The products are expensive because they have no idea how to price anything because there’s no collective action solution. But you allow new models to exist. And the other thing is you remove their bargaining power with the federal government to some extent because they’re far less powerful. They’d be diminished.

Matthew: Maybe. I have so many things I’m depressed about. One of them is I met with Natalie Davis from United States of Care, which is kind of supposed to be the moderate but sensible pressure group that Andy Slavitt set up some years ago. I talked to her about:, what are you pushing for in 2028? She told me  ‘I don’t think we can get anything done by 2028, but in 2032 we might be able to get — we’re going to be launching something which is going to help, hoping for more transparency in the system in general.’ I’m thinking: 2032 means it’ll get passed in 2033,which means something will happen in 2034. I’ll almost be dead by the time this problem gets addressed. 

And the other thing I see is: People are mad, but I don’t know how mad people are. I think we need a total revolution. Because if you do something that’s not a total revolution, you end up with somebody figuring out a way to make money out of every little piece. And the only way you can do it is to essentially abolish the insurance function.

Warris: Hey man, I’m there for it. Well, the point is the second you make these guys vulnerable, I think new solutions start presenting themselves. Some of it might be that it’s just cheaper to actually have the federal government pay for it — you actually shift the Overton window in that direction. Because it’s kind of what they’re doing in England. There’s a really great book by Walt Bogdanich called When McKinsey Comes to Town, and it is completely horrifying. It explains a lot of the crap I lived through when I was actually in the NHS — McKinsey were around like messing with the dials of how the NHS was running, and you’re like, ‘Oh, this is why it was all getting worse.’ And the idea has been to intentionally break the NHS and make it so unpalatable that people say, well, we would accept anything other than this model. Little do they know that a model like we have is unbearably worse. [laughter] 

I think people in England think it’s bad there, but until they’ve come here and had the pleasure of paying for private insurance that then denigrates you through denials, they haven’t lived it.

Matthew: You’re right. And by the way, that is an argument that gets used here all the time — how terrible it is in the NHS — whereas if you actually go to Japan, Germany, Holland, Spain, France, there are a bunch of perfectly acceptable healthcare systems out there which don’t tend to involve massive delays to get care or massive prices. I was talking to a shoulder surgeon in Japan last year and said, ‘If I hurt my shoulder, how long would it be before I got on your operating table?’ And he said four to six weeks — not so bad — and it would cost me essentially nothing. 

There are clearly American-specific issues: the level of violence, the level of addiction, maybe mental health. There’s a bunch of stuff going on here that’s different from other countries. But I think we could get to somewhere that’s rational and American — but it would require a kind of FDR-level New Deal hit. Unless you get — I don’t know — an AOC or whoever the guy from Maine is now called — you need a president who’s got the Donald Trump level of ‘I don’t give a damn’ but actually wants to enforce something good.

Warris: I know one guy but he says he’s not running.

Matthew: Who’s the guy that’s not running?

Warris: Mark Cuban said he’s not running.

Matthew: Oh, yeah, he would be great. Still — scratch him hard —he believes in a free market. He thinks if we got rid of all these conglomerates and got to real pricing and transparency, we would fix it.

Warris: I think it would certainly be more functional. 

Matthew: But the question — my point is that there are so many places you can’t see where somebody will pop up and start making a fortune in two years and then be gone. 

Warris: But the NHS — when I was in the NHS, blood services were privatized, so that was spun out. Hospitals used to manage their own transfusion services, that got spun out. Diagnostic testing used to be done in-house, that got subcontracted. Ambulance transfers, MRIs were all run by private companies and then leased back to the hospital, which is why the hospitals were in such a dire financial mess. You couldn’t get an MRI in daytime hours, you had  to transfer your patient across town. There were a lot of dreams of free market within the socialized model which actually broke the efficiency of that socialized model entirely. And then the constant pressure for ward closures as well, which endangered patients. I was there during Cameron but before that it was Gordon Brown. The same shit from prime minister to prime minister. So the idea made sense in the abstract — where it is today I don’t think necessarily makes sense because they’re trying to intentionally break it. And you’ve got people waiting in the wings like Optum and Cigna who are in the UK probably looking to pick up some type of contract somewhere. No doubt. But read the book — When McKinsey Comes to Town. It is interesting.

I would be remiss if we didn’t briefly touch on the panel.

Matthew:  All right. I’ve forgotten about the panel. Actually, I forgot about it three months ago. I’ve forgotten about it from the start of this hour.  OK, your complaint about it. I thought Alicia did a great job. Bunch of different issues and, to be fair, she did not get a lot of reply back.

Warris: No, she was basically like dealing with a mannequin who was preloaded with three PR-approved statements. Anthem’s chief digital officer — no matter what the question, he had to say one of three PR-approved talking points. And then the CVS person didn’t show up because I guess they were worried that anything they said could be used as evidence against them in a court of law.

Matthew: . The excuse they gave me was — and I’ll show you the correspondence, I may never be invited back to HLTH or ViVE again — I had a pre-chat with everyone’s PR agencies. They said to me, could you write up some questions? So I banged out a bunch. Normally I wouldn’t write out questions, or I’d use them and realize they were the stupid questions. But I banged out some questions and the CVS PR people — it wasn’t even CVS, it was their separate PR firm. And I forget who was the chief officer of Cigna — Michelle Gordine.I don’t know if she ever saw this, I don’t think it got as far as her.

Warris: Oh, I tagged her into my post-review of her non-performance.

Matthew: Well, what happened was that I wrote out these questions, which I thought were sensible real questions. I also said: ‘We’ve had a fee-for-service system forever in America and we can’t just do everything because we know what happens to medical inflation.’ And they came back to me and I said — if she doesn’t like that question, tell me and I won’t ask it — and they wrote back to HLTH and said ‘No, we don’t accept this, we are out.’ No discussion

Warris:  It’s because they can’t say anything real. If you’re in a large company, it’s actually quite hard to say anything that deviates from the company line and speak extemporaneously. They really don’t like you doing that. Which is why I was probably not allowed to speak on behalf of large companies for that reason. But it’s interesting. I would welcome a debate with them, because I think there’s a really good argument — for example, I spoke to one of the insurance execs afterwards and said: please stop denying cancer and transplant, and you guys will be heroes. Just remove prior auth in oncology and in transplant — things where patients really could come to harm or die. You’ll have far fewer angry patients and I guarantee you’ll save money. You’ll save money on the admin side and I think over time you’ll save money on the cost of care side. And the answer I got back was: ‘Who would pay for all of the additional care?’ And I’m like: there’s an inbuilt presumption there that the care is medically unnecessary. But if you think about what it takes to get approved for a transplant — these patients have been seen by a transplant ethics board, rigorously assessed, there’s a ton of imaging — on the oncology side, these patients are often desperate and increasingly they have curable disease if you get them early enough. The question is what care do you want to pay for versus are you going to pay for it? Because you are going to pay for it. Do you want to pay for something curative or something palliative? I would love to have that debate with them — genuinely in good faith, all day. And I would encourage them to ask the Wizard of Oz for some courage. 

Matthew: But they can’t do it, because by the time it gets to the court of public opinion via the Luigi situation and whatever’s happening — the answer is you’re cutting somebody off, you’re going to kill them. We had this with death panels back when the ACA debate was happening.

I think you were just arriving in the States at that point. Sarah Palin talked about death panels, and the US Preventive Services Task Force — USPSTF — was putting together at the time some completely apolitical thing about mammograms and got completely railroaded. ‘These are the death panels we’re going to have.’ And they’re now being shut down — I think RFK Jr. fired everybody on the panel and closed it down when it was trying to be an apolitical scientific body doing guideline treatments. It seems to me that as soon as you put the big insurers in that bucket, they cannot win in the court of public opinion 

Warris: because they’ve become the death panels. 

Matthew: Well, they’ve become the death panels and people are now noticing. And the reason I think there might be a big political shift in 2028 — I put it at maybe 2-3% probability that somebody would come along and say ‘I have a better way of doing this in healthcare.’ I mean 2028 is going to be so hard because it’s going to mean recovering from all the crap that Trump’s pulled. But at some point we’re going to have to get to healthcare and say this is an amazing show that we have to fix. And I think it has to be a radical fix. The ACA dont forget — massively fought over, a complete war about extending insurance to not very many people really — got us from like 84% to 93% insured, for 10% of the population. And we went to death wars about that forever. If you’re going to do something, you might as well do something big — say I’m here to take out the big four insurers, reconstitute how the big health systems behave, and price-control the drugs.

Warris: And I’d love to pour energy into helping whoever comes up with that plan.

Matthew:  Right. Because I came up with this plan. I wrote it up. I’m very happy for AOC to plagiarize it with my name.

Give everyone fantastic primary care, give the primary care doctors a lot of money, and figure out a way to take it out of everybody else. We’re already spending 18% of GDP — 6% more than the Germans, the Japanese — 

Matthew: in England they had quality outcome frameworks, the QOF points. You might remember: docs were paid for asking about smoking cessation, blood pressure, etc. They actually improved outcomes. The problem was they made primary care relatively so well paid that people went into it for the wrong reasons. In my cohort, the people who went into it really didn’t go into it for the love of patients. They went into it because they didn’t want to be in a hospital doing on-calls for 72 hours across a weekend. You have to find a way of finding people who genuinely love working with patients and have a genuine sense of empathy. I don’t know how you select for that, but that’s really what you need. When I was practicing, 20 years ago — I was an ICU doctor, attracted to the fast-paced part of medicine. And now I spend all my time talking to patients; it’s basically like being in primary care. And I often do the thought experiment of: if I was to go back, would I go back to ICU? And I think the answer is I’d be a primary care doc, actually, because I care very much about that.

Matthew: You have to do some measurement but I don’t think you have to do the pay-for-performance measurement that the Brits introduced or that people tried to do here. I think you have to trust the doctors more. And in this country, the pediatricians and the primary care doctors, the family doctors — they make a pittance compared to the surgeons and the radiologists. And that’s why you don’t have enough people going into those residency programs. That’s also why all the prestige and money goes the other way.  You could fix that with money — just pay the primary care doctors more. You’d have to pay the other people less, but that’s not a big drain on the system. Where you’re going to save the money is on hospitals that are now incented to have primary care doctors referring people in for stuff that may be of marginal value.

It’s usually orthopedic surgery. [laughter] Speaking of the guy getting his knee replacement — If they have an incentive to fill hospital beds — and that’s why hospital systems across America have bought so many primary care docs. And you’ll see these big fights now and again with primary care groups that got bought by a hospital trying to get themselves out of it. 

Warris:  I just moved to Miami and two of our friends who are primary care docs quit taking insurance and now they are either concierge or DPC. 

Matthew: I’m fine with people going concierge and DPC. I think the government should pay for it. I think if you managed everyone through that — if you paid the concierge docs very well for 600 patients to manage their chronically ill patients — I would force everyone to go into it. I wouldn’t let people not have a primary care doc.

Warris: I would agree with that too.

Matthew: And then I think it would save so much money on the back end. 

Warris:  If you have a competent, incentivized primary care doctor it goes a long way. DPC can really work. Concierge — I have mixed opinions on, for reasons. There’s some quackery that gets stuck into high-price concierge 

Matthew:  It doesn’t have to be $20,000 or $50,000 or whatever private medical insurance is charging. You could do it because you could have a government-paid voucher which would be pretty decent — not that much. I was spending about 7-10% of the healthcare — the $15,000 per person — where I would spend 20%. It’ll be fine. 

Warris: Where I would have gone with that — I actually thought about this prior to starting this company — was to take a DPC chassis and power it with claims data. Then you’d know which services to put into DPC, and could pull clinic-based specialties that otherwise live in hospitals into kind of a multi-specialty clinic effectively. It’s really per-capita based on where you live. And you’d effectively have far less care going to hospitals because all of those specialties could manage things at the primary care level. 

Matthew:  There are bits I hadn’t figured out. I don’t quite know how you get mental health there. I don’t know what you do about dental — which seems to be a weird thing that’s excluded in most countries for no particular reason.Apparently your teeth are not part of your body.

Your brain and your teeth have nothing to do with your body, which is fine. But in the end you’ve got to say: how do I reliably manage the chronic disease of the massive population? That’s half of it. The other half is what do I do with very expensive people — which is what we’ve been discussing the whole time. And with both of them we are doing terribly. I don’t see any reason why not have a revolution.

Warris: Yeah, god-awful — I mean absolutely. I’m here for it. I want to see it happen. I want to have enough data on the bad behavior that we can drive that change. Maybe start working with some analysts to actually help them change their ratings on various insurers. I would love to be able to do that.

Matthew: Well, that maybe is where they end up. All right, so we’ve had a great chat. I’ve been talking with Warris Bohkari  He is the CEO of Claimable — Somewhere if you go back to the start of this conversation, we’re discussing what Claimable actually does in terms of helping people who are denied by insurers.And you can go to getclaimable.com. I assume, on the internet, if you have any issues with claims denials. And there is a policy where — is there a consumer fee? There is, right?

Warris: Yes, it’s $50. It’s getclaimable.com. And it’s $50 whether you win or lose. The idea was to charge a low flat fee — we’re not incentivized by what the care costs. It’s purely to allow anybody who has a denial the ability to come and appeal. 

Matthew: And then you’re making it up — hopefully — on the back end in work you’re doing with the patient access programs and others with the pharma companies.

 Check it out if you have any issues. And otherwise if it’s something urgent, reach out to Warris — turns out he’s very contactable. And you will find Warris on LinkedIn, almost all the time, lighting into some innocent insurance executive who’s giving their opinion about oncology in a bit.

Warris: [laughter] I was lighting into the SpaceX IPO yesterday. I’ll leave it there. 

Matthew: But I’m looking forward to almost all of my index fund being put in there. [laughter] And zero. But speaking of wealth transfer — as long as Elon Musk can get a bit richer off all our backs, I’m much happier.

Warris: It’s good to see you, man. All right. 

Matthew: Thank you, Warris. Great to catch up with you. Great discussion. I look forward to doing this again. And we will figure out how the two Brits are going to fix American healthcare eventually.

Warris: I love it. Take care.