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Coverage With a Custom Fit

Nearly half of all Americans get their health insurance through an employer-sponsored plan. Despite each employee’s unique health challenges, most employers offer similar, one-size-fits-all plans and ancillary benefits that largely fail to address these needs.

Cedric Kovacs-Johnson of Flume7

Nearly half of all Americans get their health insurance through an employer-sponsored plan. Despite each employee’s unique health challenges, most employers offer similar, one-size-fits-all plans and ancillary benefits that largely fail to address these needs.

The result: rising health care prices and worsening care. One-half of Americans say they have avoided care due to high costs, and one-third of insured Americans say they cannot afford their deductible, according to the Kaiser Family Foundation.

Flume Health wants to help change that. Flume is empowering next-generation health care companies to design and launch powerful, personalized health plans in record time. Like Shopify did for e-commerce or Squarespace did for web development, Flume is working to create a health-plan-as-a-service platform that makes building health plans simple.

In turn, so-called challenger health plans can customize coverage that caters to different health care needs, demographics, cultural identities, and more. Dozens of new health care plans have launched in the past several years, with dozens—if not hundreds—more expected in the near future.

“The only hurdle for making this modern healthcare system a reality is operational complexity that is outsourced to third-party administrators (TPAs), leading to inefficiencies and cost leakage,”says Flume Founder and CEO Cedric Kovacs-Johnson. Kovacs-Johnson is the former co-founder of Spectrum 3D, since acquired by Makerbot.

Kovacs-Johnson explained that TPAs earn $30 to $50 per member per month and are getting crushed by the growing complexity of the fragmented health care system. The current TPA system is 30 years old and reliant on spreadsheets, pen, and paper.

“It’s unsustainable in today’s tech-forward health care disruption landscape,” he says. “A better solution is an operating platform that’s similar to an API, so employers can easily design a marketplace that offers specialty providers and incentives that can serve the needs of all employees and their dependents. This is why Flume has built a platform for every health plan.”

Kovacs-Johnson was inspired to change the health insurance landscape after watching his sister prepare for a major brain surgery. The family faced several unexpected costs.

“I started Flume in 2017 to empower a massive change in how health insurance operates and makes decisions, ushering in a wave of new health plans better aligned with patients,”Kovacs-Johnson says.

“You can see how the one-size-fits-all, middle-of-the-road plan design leaves a lot to be desired on the fringes,” says Grant Parker, head of sales and marketing at Flume Health.

On the Flume OS platform, innovative health care companies can build and bring to market highly configurable, personalized health plans based on demographics, health conditions, gender, and similar considerations.

Today, more than half of Americans who get their health insurance from their employer are on a plan administered by TPAs, according to the Society of Professional Benefit Administrators. But TPAs often lack the technological rigor needed to run a modern, customizable health plan that truly meets employees’ needs.

Flume aims to become a modern alternative to TPAs for self-insured employers. Its operating system functions similarly to an API, connecting disparate health care services with employees, and building more personalized experiences to improve care and lower costs.

According to Parker, health plans built on the Flume OS platform can take advantage of its unique features. The Flume Core, for example, provides an all-in-one managed platform for payments, claims, eligibility, contract management, compliance, and reporting. APIs, webhooks and EDI offer flexibility and customization, allowing for highly flexible, real-time trading with platform customers, vendors, and providers. Robust member and client services are also available to provide an outstanding member experience including turnkey customer-facing services, an in-house member app, and support integration.

For example, most self-insured employer plans consist of a health network and other benefits, such as telemedicine, fraud protection, mental health, disease management, claims, compliance, and more. Each of these benefits is managed by a separate vendor.

The health plan as a service was purpose-built to take on the difficulties of delivering and managing a next-generation health plan so that clients can focus on serving their members with a better overall experience.

With Flume OS, for example, a health plan could create a system to redirect a low-risk patient to telemedicine instead of the emergency department.

“We are the first embedded health plan administration platform, handling the entire payer backend, including claims, payments, compliance, and eligibility,” Parker says. “We are helping create a new generation of health plans that break down barriers between care modalities and care delivery while bringing down cost of care.”

Kovacs-Johnson envisions a world in which a national retail chain could offer a health plan focused on back and joint pain for its warehouse workers, with another plan focused on disease management for its employees with diabetes. Customized plans can include more local provider options, specific health conditions, or even coverage that addresses culture and identity.

“Consumers will soon pick from hundreds of health plans, each personalized to their unique health and preferences,” says Kovacs-Johnson. “We understood early on the complexities this would create and saw an opportunity to take on the role of an insurance company by adjudicating claims, storing sensitive data, initiating all payments—all guided by a proprietary rules engine that serves as the foundation of our TPA health plan as a service.”

Over the past 18 months, Flume launched and operated its own plan as part of the proof-of-concept phase. By all accounts, the launch was a success, proving the platform’s value in the modern marketplace.

Now, Flume is helping new challenger health plans get to market in less time. “We aim to keep that measure to between six and nine months,” Parker says. “A radical departure from the status quo.”

At the beginning of 2022, two health plans became the first to use Flume OS: virtual-first provider Firefly Health and medical stop-loss provider Radion Health.

“Flume has vastly accelerated our path to market. Without it, we couldn’t have launched our health plan in less than a year,” says Fay Rotenberg, Firefly Health CEO. “The rapid launch of the Firefly Health Plan has enabled our mission to deliver health care that’s twice as good at half the price.”

Flume Health is a venture capital-backed health technology company. The company has raised $10.1 million to date from Crosslink Capital, Primary VC, Accomplice, Founder Collective, Route66 Venturer, entrepreneurs, roundtables, accelerators, and various angels. At press time, Flume was wrapping up its Series A fundraising round.

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