Healthcare myths debunked: How to design better self-funded plans

Debunking myths about designing better self-funded health plans

Transcription:

Deanna Cuadra (00:13):

All right, well good morning and welcome to our first conversation of the day Healthcare Myths Debunked, how to Design Better Self-Funded Plans. Well, if you guys didn't hear me, good morning and welcome to Health Myth Healthcare Myths Debunked, how to Design Better Self-Funded Plans. We have a wonderful conversation for you today. We're not going to only discuss the best practices of self-funded plans, but how to really take agency back when it comes to healthcare. We're joined by two wonderful speakers here. We have David Smith vice President of ebe, and Doug Layman, president of Commercial Prescriptive Health. And I'll give them a chance both to introduce themselves and tell you a little bit more about their companies.

David C Smith (00:58):

David Smith senior Vice President eBen, which is a benefits consulting firm headquartered in North Carolina, but we mainly have benefits clients from Maryland to Florida to Texas. I work predominantly with large employers, a hundred to 2000 working on strategies to help them find both the right way to balance and fund their benefits, but also how to maintain those costs, particularly below the spec deductible.

Doug Layman (01:24):

Good morning and thank you all for being here. My name is Doug Layman, I'm president of Commercial for Prescryptive Health. We are a full service transparent PBM and hold off on that word transparent cuz we'll talk a little bit about what we think transparency means, but we approach the business from a technology perspective. So we believe that pharmacy starts at the point of care and giving members really good information by bringing all the stakeholders together to make good decisions at the point of care via mobile experience. And so we'll talk a little bit about our technology and how that impacts pharmacy spend. So glad to be here. Thank you.

Deanna Cuadra (02:02):

All right. Well to start, before we get into the nitty gritty, I wanna first ask why are self-funded plans becoming so prominent now?

David C Smith (02:11):

I mean, I would say more than anything else because of control. The idea that employers have greater control over their plans and greater control over the data related to their plans. I think the biggest problem and the biggest gap between being fully insured and self-funded is the lack of real actionable information that a plan can make decisions from, can make underwriting decisions about and ultimately do design approach approaches from. But ultimately I think it's also because it's becoming the preferred way to really control your vendors. There are so many people out there who can administer claims, who can bring different point solutions, who can do the pharmacy benefit management side that with self-funding you have so much more control over who your vendors are and what they can do. So I think it's basically about empowerment and the reason why employers are looking at it more and more.

Doug Layman (03:05):

Yeah, boy, excellent points. And the question really should be what's taken so long for self-funded plans to be more popular. David said the word control, I'm going to add three more 3 Cs to that. It would be customization, creativity and cost. I look at employers and so often they're the victim of a process when they're fully insured, they have little to no control. They're basically told what they're going to do with a little plan design options. Well thank you for those. But the reality is they're hoping they have a good year. And we all know hope is not a strategy it is not. And I'm just excited to get employers to step back cuz I sit and look at, sometimes you run across a 5,000, 10,000 life group that is fully insured and you just wanna pass out, don't you? Yeah. You're making that health insurance carrier a ton of money, a ton, and you don't have control of driving your plan forward. Keeping people healthy and engaged. And the same thing on the PBM side. Impatience have been victims for a long time. They have absolutely no control over anything. They go to the pharmacy and they're, they're like, what's it cost? You've gotta be kidding me. I have health insurance. That kind of thing. So I think it's those four C's. Control, creativity, customization and cost.

David C Smith (04:23):

And I'll just add one more thing, which is I think a group above 2000 that is self-funded is probably criminal because I think they've gotten bad advice, they've been led down the wrong path and they've never been told what the right thing to do is they're wasting money.

Deanna Cuadra (04:37):

And I makes me wanna jump to this next question then. Employers definitely had a incredibly unpredictable, if not even traumatic last two years and we could possibly assume that they might find it easier just to work with a big player as you mentioned. But why should employers choose self funded?

David C Smith (05:02):

I mean ultimately I would tell you the last two years of great interest is that the last two years have been actually reasonable spend years. And so what I've seen on the fully insured side, particularly in under a hundred segment when you're in all but three states fully insured but not in small group, between 15 a hundred, those groups are being risk rated. And so they're getting told the last two years that their rates went up because of covid. When actuarily covid cost across the board are probably less than a half a percent of spend in the last couple years. And so what we actually saw in 2020 was that spend overall did this. And so what you saw in self-funded plans was that their claims reserves and their claims spend went like this, but fully insured groups did this. And so to me it was just covid became a convenient way for underwriters justify increases. And now I think as we're getting out of that era and people are going back to the doctor and going back and using healthcare, you're seeing this tilt up, but you're seeing the tilt up, particularly on large group, be perceived to be greater than it actually is when you look at the self-funded data. So I think Covid has highlighted why being self-funded is giving you more of the right opportunity to spend the right money on your benefits.

Doug Layman (06:29):

Boy, that is all true. And there are so many creative self-funded products out there right now that your max risk is basically going to be what it would be on the fully insured side anyway. So you're giving 20% to the carrier for their profit. Why do that? The other because, so people are scared of self-funded sometimes cause they're thinking, oh I gotta make all these decisions now I have to do X, Y and Z and I'm not sure how to do that. And oh, I'm putting my company at risk and that's really not true. So when they meet with people, David and David Kotor who used to was going to be on the panel too. And by the way, he and his wife have Covid, so that's why he's not here with us today. But there's no reason for the fear if you have a good consultant that you can sit down and really talk through things. And the other thing is that I kind of feel bad for HR people right now because look at the generations that they're trying to manage. I mean, think about that. I mean, wow the needs of somebody that's 21 years old and the needs of somebody 64 could not be further apart in. It's unbelievable. So that goes back to that customization piece, designing something that fits everybody's needs and actually positions yourself for the future. So it's not about, because you mentioned coming into Covid a good point. It's about what's going to happen tomorrow, isn't it? Not what happened today. And so you can also take some really unique strategies on how you manage your prescription jug program, but also how you manage overall population health, the carriers and no offense to the buka but they're not managing the health of the population. And when you are self-funded and unbundled and you go with a TPA or a PBM, oh there are so many amazing, unique strategies to manage health both technologically and one-on-one coaches, all kinds of things that actually change the lives of people and their families. And that's what people need right now.

Deanna Cuadra (08:21):

And then I think it's perfect time then to really jump into what approaches, what strategies really make a successful self-funded plan.

David C Smith (08:31):

I'll let you go. Go ahead.

Doug Layman (08:32):

Yeah, let me approach this on the PBM side. Yeah, real quick. So the prescription drugs are so incredibly important making sure people get their medication, adhere to their medications. I mean the reality of our industry right now is 81 billion of medications are never picked up in a year. 81 billion. I mean that, that's a lot. It's a lot. And then when it comes to adherence, we have a huge problem there. And it's all about affordability. It really is. People cannot afford the medications. And so you have to, when you're looking at unbundling and going with a PBM, the first thing you need to look at, because people use the word transparency, which mean, which means pass through, right? They're not adding money to your drug cost, that kind of thing, giving most of your rebates back. But we think of it as conflict of interest. I don't ever want to profit from the selection or sale of a drug. If I do, I have a conflict of interest. It's about me now and not, I want us to work for the employer and their employee conflict free, meaning don't own a mail order facility. So I'm going to force you to get your 90 day fill at a mail order because I own it and I'm going to make a lot of money from it or force you to use my specialty pharmacy because I own it and I'm going to make money there. Because what that does is it starts changing your formulary. Our formulary is based on efficacy, safety, and cost. Those three things. And in that order. So we're not chasing rebates, meaning I'm not chasing after a brand drug because I get a big, get a big rebate on it. Rebates are important. If that employee needs that specific drug and there's no alternative, then of course you want a rebate on it. But chasing rebates, again, that's not about you that's about them. So manage to the lowest net cost, that's really, really important in plan design. The lowest net cost, not the best rebate. That's most important. The other thing is patient engagement. I'm kind of tired of the word engagement. I am transparency. Those are two words that are used way too often. But engagement meaning 47% of employees have a deductible of a thousand dollars or more in this country. So that means there's accountability, which I think we would agree is a good thing. You want a consumer experience. But accountability without transparency and tools to manage it is a nightmare that creates, I'm not picking up my drug, I am not going to adhere to it. So that's when I said we absolutely believe it starts at the point of care, a mobile experience that within seconds tells you you are just prescribed drug X. If you and your plan's paying X and you're plan paying Y, right? Educate them that the plan is paying. If you switch to this drug, you're going to pay $300 less. And then here's the closest pharmacy, which by the way, isn't Walgreens cause it's too expensive there. You should go here and now you have a digital experience that you're in control of and can have conversations with your doctor. So, in designing plans, don't be told what to do. Talk about what you want to do and pick somebody that's going to actually make that happen for you anyway.

David C Smith (11:41):

And I would say, and I'm, because everything Doug just said, I agree with on the pharmacy side, I mean ultimately pharmacy has gotta be truly transparent. I mean eliminating the conflicts every bit of that's true. And to be honest, the big three PBMs don't have their clients in mind at heart. They don't have the patient's mind at heart. And I don't say that lightly, I say it just because the data's there. But when it comes to health plan, my experience is this. You have really in my out there, you have three classes of people like me. You have big consulting houses who are focused on trying to get you into whatever their programs are, which actually help them. You've got a lot of mom and pops who mean well, but don't really have the technical expertise. And then I'll put myself in that middle ground because I mean, I'm on the stage so I get to brag a little bit, right? But ultimately you need people who understand that clients don't all need the same thing who look at your data and make a plan design that reflects what your needs are. Whether that's being very conscious of risk. Doug's point about the fact that there are a lot of large groups that are scared of self-funded, who've never been explained to what stop loss is and how stop loss protects them. Never been taught how to take care of the actual financing of healthcare part of it by setting up their own reserves, by actually treating their plan. It's a regular business rather than just a place where they spend money and then recognize that it is organic organization. You don't do the same thing every year. I have a client that when I first started working for them, had a $250 deductible and they'd had it for 15 years and they were wondering why their healthcare costs were growing up. And I'm like, dude, $250, 15 years ago it was like $85 today. You've not changed your plan design at all. You've gotta kind of get it to evolve. But that also means you gotta start adding the right fixes in here. And so I think ultimately the biggest mistake people in my business make is telling clients what to do rather than listening what they have and what they want to do and what the data says. And I think when you get into that kind of plan design and you start building out the elements, building in the right kind of PBM relationship building in the right TPA, the right networks, or a David would say, a non-network approach, then ultimately you get something that reflects who you are rather than what everybody else has.

Doug Layman (14:05):

A couple, boy, gosh, that's so true. A couple follow ups on that. When people wait to move their deductible, then they've gotta make such a big change. It's a shift happens, right? You know, shifted all to the employee and now they've got an enormous deductible and now you have a retention problem. And so it is really, really important to move that each year. The other thing I wanted to mention on misaligned incentives, the kind of things that David Smith does not do I have to tell a quick story. So we had an RFP sent to us and our revenue on that case would've been $130,000. Okay, we charge $4 and 50 cents PMPM all in, don't make money anywhere else. So that's clinical programs, everything. Well the consultant on this deal wanted us to build in $268,000 for them, not disclosed to the cut to the client. So we're a transparent pass through 100% as we've talked about. So where am I going to get $268,000? Now when they're dealing with the traditional PBMs, it's all over the place with them. They can get it from spread, they can get it from rebates, they can get it from specialty, they can get it from. So, guess who does business most of the time with that big huge national firm? Cuz there's money to hide. Yeah. My attitude is pull that money out of the system, pull it out, and as a broker and consultant, be transparent as these guys are and say, Hey, I trust my work. It's valuable. I know what I'm going to charge for it. And here it is. And boy you getting a deal. And so that stuff has to stop. It just has to stop.

David C Smith (15:45):

And I'm just going to add on to that. It is horrific what you see out there. We had an AOR for a group that had 300 lives, took 'em over. The very first question the carrier asked us was, do you still want to get the dollar 50 per script fee that the current broker was getting? I'm like, what? It's like, yeah, yeah. They were getting their commission but they were also making a dollar 50 on every script that was filled. And we're like, has the group ever known this? No, no. That's just a deal we have with that particular brokerage. Like no, we don't want that. We charge a consulting fee. This is what we make. We don't put commissions into stop loss insurance. Every vendor that I talk to, a lot of these people in the room next door are used to having people like me come and say, Hey, I need you to add a dollar so I can make a dollar on this. So when I say I don't wanna make a dollar, they're like, what the hell's the matter with you? But again, I think transparency for brokers is equally important. One of the things that we did as a business decision years ago was we start billing our clients directly. We never let a carrier do it. We never let anything else happen. And to me it is one of those things where we have more accountability to our clients because of that. And you raising that point really obviously gets me pissed off because it's just one of those offensive things that happens in our business.

Doug Layman (17:05):

there is something that happens in the PBM space that I will never understand ever. And you've experienced it, everybody's experienced it. So you're bidding on a case, they're unbundling the PBM, I wanna put it with you. And you show $600,000 savings to this client. Okay, wow, great, we love you. So the current PBM comes back and says, I found 800 grand for next year. Where did you find the 800 grand? Did you dig it up in the backyard? Where is the 800 grand coming from? But what the problem is, is the client says because of they're adverse to change because they're worried about things. Oh that, okay, well we'll take the eight, sorry, our current PBM said they're going to give us $800,000. So they stole for you from four years. So 800 times four, right? But because now they have 800, you're okay with that? What other part in your life are you okay with something like that ever? You're not. And it happens every single day, every day. So people have to have, and this is a big word because for David Smith to do what he does and David Can and all the other good consultants that are out there and be as transparent as they're going to be, you have to have courage. It's a huge word in our industry. You have to have courage as an employer. You have to have courage as a vendor and you have to have courage as a consultant cuz then you're going to change and get this ridiculous money and games out of our system. And until you have the courage to do it get used to the same, just get used to it.

Deanna Cuadra (18:38):

And I wanna ask this to build a self-funded plan, it definitely takes a lot of players from the consultants to of course non-traditional PBMs vendors. I'm curious, and we really have discussed the importance of transparency here. But beyond transparency, even our, or maybe examples of where that is being kind of tossed aside, what are some consulting red flags, PBM red flags or generally vendor red flags that employers really need to watch out for?

David C Smith (19:09):

I mean, I think their inability to provide full compensation disclosure. Now most of you may know that Congress passed a law in the end of 2020 requiring brokers and consultants to do full compensation disclosure. That law was regrettably limited to brokers and consultants and doesn't include all the other vendors who are in the system, which is totally different than the way it is on the financial product side. But I think what we're starting to suggest to our clients is when you go out and ask for bids, you're going out and ask for companies to come and bid on your business. What you do is you demand it as a contractual provision. You have to provide full disclosure of all your compensation. And I think when that happens, all of a sudden they have to start adding it. I'll give you a great example where a lot of dealing with the blue plan in a particular place where we had a pharmacy consultant come in and look at it and they came back and said that for this broker, for this particular carrier, they're making 40 cents of their money off of pharmacy. So you think they're only making money off of admin fees, but they're making another well in that situation almost another 45% on top of that, off of the fact that they're getting money off of the pharmacy spend part of it. And I think when we start demanding transparency from the vendors, we're going to get better and better answers. I think that's one of those areas where for me the, it's not a moral high ground thing, it's just a responsibility thing. You should spend your money well and I think you have to hold the vendors accountable. And I think that's a piece that not a lot of people in my business really ever want to do.

Doug Layman (20:59):

A few things on the PBM side and there's a lot, there's a lot of lawsuits going on by the way. You Google PBM lawsuits and get some coffee and read while it, it's something. And they've been doing this for years and one of the things that employers miss, and you mentioned contracts, the PBM contract, I don't care what they tell you, if it's not in that contract, it doesn't matter. Their contract is long and it's complex and one word changes everything. And so I would just highly suggest to get a contract that somebody audits for you like a David Smith, someone like this, because that is really, really critically important because they're making money all over the place and they'll still say they're transparent. The other thing to watch out for are guarantees. And I'll tell you why it's really interesting. We were involved in a scenario with a very, very large health system a couple hundred thousand members at this health system and they were going to send us data so we could do a savings analysis because then we can really dive in and say, okay, what can we do here to help this employer who's profoundly unhappy with their current PBM? Because in health systems there's a huge conflict of interest. Health systems want to keep their prescriptions within in-house, they want their specialty to be filled and they're fighting with their PBM who wants that business. So why they do business with PBMs like that? Have no idea. But they called us and said, we have bad news. I said, what is it? We are contractually not allowed to send you our data. Contractually not allowed. Now, I mean is this the mafia or what's what's going on here? But they will not because you don't own that data as far as they're concerned it's theirs. So we have this outrageously crazy philosophy that your data is your data. And when you want it, you can have it and you can have it timely and you can have it in the form that you want it in. Gee, isn't that weird that that's a crazy philosophy. I mean it's yours so why not? We also have a policy that the client owns the rebate. We word it in our contract, it's your property that rebate. Well the big three will tell you that's not true. It's their property. They negotiated it with pharma and they got that rebate. So it's their property and they are kindly sharing some of it with the client. Completely different philosophy I believe who's paying for it, owns it. That's what I believe. So when that employee goes and buys that drug and gets a rebate on it, that employer's paying for that, isn't it? So that's all theirs. We're just there to be a conduit to get the money back to them quickly. So be careful on all of those things cuz they're critically important. The last one I'll mention is fiduciary liability. We take fiduciary liability, so we legally have to act in the best interest of that plan every day and then give credit so they can audit us to make sure that we're doing that. And there's a reason for that. It's called not having anything to hide. It's called not making money anywhere throughout the continuum being truly conflict free. So, and by the way, there's a couple other PBMs out there that are taking contrary liability, which is great. We're not the only ones but that's a question that you should always ask and their willingness to do so and don't be worried about asking, ask it and demand it out of them.

Deanna Cuadra (24:39):

And the next question I want to ask, of course here, because I think especially the last two years employers have been really trying, struggling with making sure the healthcare they have actually works for the employees they have. And you mentioned the big generational divide. Of course there's a lot of different needs and every workforce is different. And I wanna ask when it comes to a self-funded plan, and although when we think it would be obvious, how does an employer know that their healthcare is working for everyone down to the lowest paid employee?

David C Smith (25:11):

I mean part of the answer to that question is data and what's the data actually showing you in terms of outcomes? I think a part of that is also I think you gotta regularly ask your employees how they think the plan's going. The hard reality is most of you know this, when you do a survey of your employees, you have two classes, people who respond the first to which are people who respond to every survey. So they're going to give you their honest opinion. And then the biggest group of people who respond are the people who hate whatever you're doing. And so they're going to tell you why they hate it. But I think getting some of that feedback also identifies areas that are getting ignored or skipped. Then I think it's also looking at comparative data about different disease classes and saying, are people in these disease classes getting better or worse care based on what I'm spending but also based on outcomes and how do I change that? And so for us, one of the things that we've done is start looking at every one of our diabetics and saying, all right, we're doing nothing right? Because you throw them into a chainsaw, 'em do whatever that system says. And most of 'em leave. The biggest period of time that any diabetic loses weight is the first year officers diagnosis of diabetic. And most of them are losing weight in part because they're being more mindful of what they're eating, but also because they're giving a bunch of drugs that are making them so sick they don't want to eat. So they've got a poor lifestyle, they don't have anybody helping them, the doctor's doing the exact same thing they do for everybody. So how do you change that? And I think diabetics are a great example of where you have to really look at a different approach, a different solution, because the outcome isn't even necessarily spending be less money. It's about spending better money and also about giving those people better quality of life. And that means you've gotta be really cognizant of all those different pieces.

Doug Layman (27:05):

Part of it is defining success before you go into it, right? No, we have to step back and say, okay, what are we trying to accomplish here? What does this mean? And there should be some metrics involved. Let's say first financial, which is obvious outcomes clinical outcomes is really important. Inclusion, what are you trying to accomplish from an an inclusion perspective? One that's missed real often is perceived value, not value. Remember, employees feel very, very entitled to a health plan. So, they don't give you a whole lot of credit for offering one that's supposed to come with the gig, right? So you've gotta develop and really help with perceived value of that program. And then lastly, engagement I think. And so metrics around all of those to measure. And when you look at engagement for example, there's really simple things that employers have been making mistakes doing for a very long time. The old phrase, the squeaky wheel gets the oil. And so 20% of a population I don't call them engaged, I call them enraged. Those are the enraged people that they always complain. They're probably lined up at HR right now asking a question. And if somebody's here, they're mad that you're not there to answer it. There's always a problem if somebody gets just handed a bonus out of the blue, they get handed a bonus of a thousand for no reason. They're like, wait, what did John get? Did he get three? So they're always upset and we tend to build communication strategies around those people. Biggest mistake you ever make cuz they're not going to change. You have 20% that love you that are on every committee that bleeds your colors and think you're the best employer alive, but there's that 60% in the middle that can be affected and can be changed. And by the way, they get frustrated that you focus on the 20% at the bottom. So, from an engagement perspective, it's important. It really is about really connection, quite frankly, I like that word better than engagement is really connecting with people and understanding where they are in the process so you can help them to change. But really defining those things are really important on the front end. And then building word dashboard, but actually building the metrics so you have a way of measuring them so you can sell up in the organization to show what you're doing is right.

Deanna Cuadra (29:24):

I can't really discuss healthcare without discussing technology. A lot of it has changed, especially in the last two years with telehealth becoming more and more prominent. And of course just being at this conference, I think it's living proof right next door of how technology has really entered the healthcare space. And I wanna ask from both of your ends, how has technology changed the delivery of healthcare benefits and a pharmacy benefits?

Doug Layman (29:55):

Yeah Prescryptive health is actually a health tech company by the way. We are a pbm, but we were built by some senior level Microsoft executives that spun off from Microsoft because they saw quite frankly, how criminal and misaligned the pharmacy world is. And we built something called a health. And this isn't about prescryptive, but it's an example of technology. So let me we built a health intelligence platform that brings prescribers and doctors and benefit plan design and pharma and everybody together. So that can serve all those different stakeholders throughout the process in a way that actually impacts cost and puts a member back in the driver's seat of their care. And this is done via mobile experience. And there's a couple reasons. There are so many apps, I don't now, my phone can't hold 'em all now. And as soon as you get an app, you turn off notifications. So we can't communicate to that member when you turn off notifications plus someone not, they might get one prescription drug in a year or two and so surely aren't going to have an updated app when it's time to have that experience. So the reason we do a mobile experience, it feels like an app, but when they're in the doctor's office and they get prescribed something and they say, okay, where do I send this? You would usually say something like, send it to Walgreens or send it to Costco or wherever you're going to get your drug. That takes you completely out of the process, no idea what it costs, you're just going to go pick it up and be surprised. So in our scenario with the tech we developed, it's built on blockchain is send it to prescriptive. So we're listed as a pharmacy in there. And the reason they do that is so as soon as they send it to prescriptive, we automatically send you boom, you click on and there's a little code you punch in cuz of hipaa and right away you're going to see you were prescribed median er and it's going to cost you four or $500 but it's going to cost you a hundred dollars, it's going to cost your employer 600 let's say. But there's an alter alternative medication on this formulary. So imagine doctors don't know all your formularies, are you kidding me? There's no stretch of the imagination. And they say if you switch to this drug, it is going to cost you $40 and cost your employer 200. And you can have that conversation right there in the doctor's office and if they switch it, it automatically switches, it tells you now what you're going to cost and it turns into a digital prescription that you now own. So, if you're traveling, let's say, and you land in New York and you're from South Carolina and you land and need to pick up that medication, that mobile experience will pull up every pharmacy and what with your co-insurance is going to cost exactly at every one of those pharmacies. As soon as you click on that pharmacy, we're digitally sending it to them right away. So it's just about having tools in your hand to actually control something rather than being a victim of it. You may not always use it, but what you'll find is, wow, this is really, really good information. I finally feel educated and I feel like I actually know what the heck's going on here. Especially when you've got, and then when you want a, let's say you want a refill it's time for a refill, you get a notification let's say you're in a family that there's people taking multiple drugs in the family, you don't even know what refill this is, that's ready. It tells you exactly what it is, where to go. And by the way, it's now cheaper at this pharmacy. Just click the button and we'll shoot it there. So it shows how technology can keep advancing. Everybody has that mobile phone in their hand every day using it for things they shouldn't be using it for. So let's use it for something that makes sense. So, communicating to that mobile device, the same thing is happening in enrollment and benefit education. And you know, wish when consumer-driven plans came out, we had the technology now that's available to help educate people on value. Now we're in a situation, if you read the latest I think it was Mercer Survey or something that said, my goodness, people, now we're back, we're flipping around again. It's tough to hold onto employees now we're trying to retain them and pay for more things. And they're talking about lifestyle accounts and giving money for those types of things. But controlling all of that digitally, digital health companies are impressive. There's many of them. And one of the problems that I see in HR these days, or how do you manage all those digital health companies because they're all good, but they all solve a little niche. So how do you aggregate that stuff and make it better? And so now you see aggregators out there that are helping you do that. So that technology is really changing. The industry went too long. Sorry David.

David C Smith (34:16):

Oh, you're good. I mean I would say that there's a lot of great technology out there and I think that how it's applied and how people actually use it is very diverse. I think that the four generation problem not surprisingly, gen Z, gen Y, get to it, use it pretty good at it. People in my generation, particularly if you had kids who kind of beat you, beat it into you, you're pretty good at it. Try and get to my parents and talk to them about it, good luck. Trying to get them to use that in the workplace is almost impossible. I think there's a little bit of the concern that there's too much disparate solutions and I think the aggregation issue is something that really has to be addressed. There are a lot of great products out there, but nobody wants 18 apps on their phone. You've gotta be able to find some way to better manage that for people to use it. I also think about technology and how it's affecting things on the backside. And here here's a great example. Right now, probably 99.8% of claims in America are auto adjudicated. What that means is when the doctor completes a medical record and they push a button that their system automatically knows based on who that payer is, how to submit it to get the most money outta that transaction. And there's nothing in the carrier based systems that's going through and tracking those or double checking them. And so when you go to that high of an auto adjudication number, what you wind up doing is probably overspending on claims to the tune of three to 5%. And so there's an aspect of which technology and the lack of people touching the process is undermining the effectiveness. And I think the affordability of healthcare, we've tried to make things very efficient but by doing so what we've done is basically empowered providers to find ways to beat the system and therefore get paid more money from one payer versus another. Where I think that's an area where we're starting to come back and say, all right, we're going to start auditing all these claims in this range because when we're overpaying for anything by 5 or 10%, then we need to re-look at it. So I think technology's a great solution. I'm not a Luddite, I've had a Mac since I was 16 years old, but I'm also mindful of the fact that there's a way that technology becomes another profit center where people are looking for ways to make money and we need to make sure it's the right fit for the right client.

Doug Layman (36:51):

Man. David, your point on auto adjudication is so spot on. We used to tell clients when I was always in the self-funded space, they say, what's your odd adjudication rate? And I used to say, what would you like it to be? Well I mean if you want 90% we're going to pay five to 7%. We shouldn't have paid maybe more but we'll pay it faster if you want 65, 55, 70 won't everything, we will catch everything. Nothing will be paid but it shouldn't be paid and it might take a little longer. What do you want? But that whole idea of auto adjudication rate's a good thing. I couldn't agree with you more. Yeah, it's a great point.

Deanna Cuadra (37:29):

Alright, well I do have a final question here, but I do wanna give a chance if there's anyone in the audience that has a question for these two gentlemen. Yes sir.

(Audience Member 1) (37:38):

Yeah, just curious. So part of self-funded funded plans, what are the risks of course are shock claims and of those shock claims, one thing that comes into the picture now are biologics and various expensive drugs. And so I was just curious about how you're talking to your customers about those as risks relative to going self.

David C Smith (38:01):

I mean I'll speak to the degree to which we've done stuff. One of those is we're starting to go to reinsurance markets to look for specialty offload products and adding that to underlying cost. Right now, if you look at biologics aren't honestly as big a deal because you can do re-importation on a bunch of those that solve the problem. The real issue's going to be some of the gene therapy drugs in the next three years. And so what we're actually going to our stop loss markets and saying is let's go ahead and start building up reserves. Let's go ahead and bump cost on stop loss. Now they're projecting it at $6 PE PM which really means it's probably like three and a half, but you've never met an aggressive underwriter in your life, so let's just do the set aside and start building it. I think you're going to see a lot of plan design around it.I think lasers remain the four letter word. And I think ultimately most lasers are just misunderstood risk mechanisms. If you don't want a laser, pay more in stop loss insurance. Find an aggravating specific that gets you there in a different way. Find out if what that person's going on with them is actually as bad as what the underwriter thinks it is. And so what I find is a lot of people lazily take a laser or an aggregating specific and they say that's price of doing business. When in reality you can get in and actually do something with it and find a solution. What's very interesting is I think the reinsurance markets more than the stop loss markets are way ahead of anybody else on this. And so we do a lot of work with access. They wind up telling us a lot of what's coming far better than even our actuaries do. And I think that's an area where you've gotta be very mindful of the spike in claims. 2.1 million to solve hemophilia is a great spend versus 10 years with the Hemophilia drugs, but it's still 2.1 million. And so how do you best finance that? How does it solve the problem long term? And I think that's an area where you gotta be a hell of a lot more mindful about what's coming than what you're doing.

Doug Layman (40:11):

Boy dead-on. Correct. And it is a stop loss reinsurance issue. It really is. But in specialty, of course there's a lot of unique strategies going around to really decrease the cost there through patient assistance and couponing and all kinds of different things. But I was just at an event right before I came here and it was a stop loss carry M G U and that was the whole specialty panel. Spent an hour on this topic, by the way, David, I think that's that you David. And it's big. And gene therapy is a big one coming for sure. But it absolutely is about stop loss design and returns for sure.

Deanna Cuadra (40:47):

Alright, we do have time. I think for another question if someone wants to Yes sir. Right there.

(Audience Member 2) (40:54):

I think one of the fun parts about being on this side and doing things differently is the impact it has to the actual member. I think the reason we all get out of bed should be impacting lives. I'd love to, for everybody's benefit, for you guys to share a great story of when you do it the right way, when you do it the transparent way, how that impacts the person who's paying that premium going into the go to the do, et Cetera?

Doug Layman (41:18):

Yeah. How you doing Lester? Good morning. Hey, I, I'll tell you it's the reason our company started. So I mentioned it was from a senior exec at Microsoft and he had a really good friend in his family, to make a long story short, in the interest of time so David could get, she died cuz she couldn't afford her medication, period. She died. And the amount of, it's like so billions and hundreds of billions of dollars from not adherence from people that don't take their medications that they can't. And then the impact on the healthcare system, what happens to those people is unbelievable. It's unbelievable. And at the end of it all, we're here to impact lives. We are I know it and David feels this way too, but the people that we have at our company, the number one thing we talk about is being mission-driven. Does it matter what you do? Has to matter how we impact people. Every single day matters. We want people to feel better, be better, live better lives. And we work every day to do that. And those types of stories, it's how our company started. But those types of stories happen every day. And we actually send them out throughout the company when somebody was impacted and they're thankful that they thought they could never even take this drug. So they just said, you know what, I guess I'm going to ride this out. And they find out, actually you can, that's the wrong drug and this one's going to cost you $4 by the way. And we got it in their hands. But David, go ahead.

David C Smith (42:43):

Well I, I'll share two stories, one of which came from David Contorno who couldn't be here, but he was telling the story last week about one of the plant designs that he had put in place, they'd gone from a $2,500 deductible to a $0 deductible. And that a woman had come up to him during an open enrollment crying, hugging him, thanking him. And he is like, what did I do? And she said, I've needed back surgery for years. I've not been able to afford it because I couldn't afford a $2,500 deductible. And now because of this plan design, what you were able to help me do, I've had the back surgery, I've recovered, I'm living a better life, my children are built living a better life. I'm a better employee, everything else. And you've changed how I live my life. And those are the stories I think we all live for. I think I'll go back to Doug, which is, I mean one of the things that we started with years ago was saying to every one of our groups, maintenance meds should be zero cost. You should have no cost sharing to get your maintenance meds. And because to your point, people don't take their maintenance meds die because they don't take their maintenance meds. And so what do you do? You just make that a zero cost and when you make it a zero cost, all of a sudden people will take them every day regardless because it does fundamentally change people's lives. I think every one of us have a thousand stories of where we've done something and it's the reason why we do it. The true difference is between people who are good in this business like you, luster, and people who are not is. They can't tell you that story and they can tell you a specific story. The good people in this business do this mainly out of servant's heart, not outta money. Money's kind of the thank you Jesus part of this. But ultimately we're all trying to make people's lives better. Making them live better lives is a hell of a lot more important than anything else.

Doug Layman (44:34):

There's a statement that employers say often employees are our greatest asset are they invest in them. And that doesn't mean I have a health plan of a 401k, but invest in them, understand them, and invest in them.

Deanna Cuadra (44:54):

Alright. Oh we are down to just 40 seconds, but if we can maybe make it quick we can answer this last question.

(Audience Member 1) (45:03):

Yeah. We're seeing a lot from Washington Congress taking a stance, trying to attack the PBMs. As far as changes that happen, do you all see that really taking effect or this is going to have to happen at the grassroots level of keep employers? Doug, you said that perfect.

Doug Layman (45:21):

Yeah what I'll say there is don't wait on legislation. You can be waiting a long time. They have been big PBMs have been taking advantage for how long and now they've affected some people real negatively. So there will be some change there. And we hope that there is. But don't wait. You don't have to wait on that cuz if you wait on that, you're assuming that's your only solution, the people that are doing those things and that isn't your only solution. So have the courage to find others. Yeah,

David C Smith (45:50):

The market works and I think the market works in that. When people start expecting better, they get better. I agree that legislation will not change this. The most laughable thing of all time, the most laughable thing of all time about this issue is that the FTC received a letter from AHIP complaining about how PBMs operate when the four of the six PBMs that were being investigated are now being investigated by the ftc, are owned by four of the largest members of AHIP. So it's like, I don't like my right leg, so I think I should cut it off cuz I think it's doing bad things for the rest of my body. And so it is a joke. Yeah, the only way you change it is by actually changing it at the market level and saying, I'm not going to go with one of those big PBMs. It's the only reason they change is because they fill market pressure from doing it. And the only reason they change is when people in my business stop having a investment secondary level of income coming from perpetuating the current. So I get preachy. I apologize.

Deanna Cuadra (47:03):

All right. Well I wanna thank everyone for joining us. I wanna thank our two wonderful speakers, David and Doug here, and I hope you guys have a good rest of your day and enjoy the conference. Thank you.