Stop Paying. Start Leading: Taking Control of Healthcare Strategy (Feat: Paul Dumas)

Speaker A: And so the first thing I did is I called my broker who had been our broker for ten years. Right. Uh, m. One of the top brokers everybody would know. And um, I said, look, we, Houston, we have a problem. We need to, we need to get on this. I'll never forget this was like the second week in February. And I said, we need to curtail this coverage mid year. That's not typically something you do, right? I mean you don't usually pull back or make a change on a formulary or coverage. Uh, but this was pretty critical.

Speaker B: Welcome to Broken Benefits. I'm your host, Lee Lewis and this is a podcast where we learn from top employer experts on how to fix our broken benefits to save lives, save dollars and save your talent.

Speaker C: Welcome back everyone. So excited about today's guest. I'm joined by Paul Dumas. He is uh, I like to think of Paul a little bit as a unicorn. He is one of the most engaged chros in the country in health and benefits. He also works for a group of progressive providers who are among the, quote, good ones working really hard to try and realign the incentives of American health care and advance the triple aim, actually the quadruple aim, including also provider, uh, satisfaction. Really excited to get into it today to learn about the ways that he is taking their health plan and making it far better for their employees while also, uh, staying true to the principles of them also being a provider group. Really excited to have you on. Welcome, uh, welcome Paul.

Speaker A: Great, thanks Lee. It's a pleasure to be here today.

Speaker C: Yeah, so just kind of leading out. Would love to get a little bit of your background and have you share a little bit of your story of how you entered in as more of a traditional chro with a million other priorities and how that transitioned to where you sort of caught the healthcare bug and have become like a pretty sophisticated expert in, in the area of healthcare.

Speaker A: Yeah, I'm happy to share a little bit of, you know, my experience and then kind of the, you know, inflection point where things really kind of change for me both professionally and then in the realization of where we are from an industry standpoint around healthcare and the healthcare system. Right. So for me professionally, I've been a chro for well over 20 years. Had the opportunity to work for both private equity backed and publicly traded organizations. Um, in every role as a chro, I've had responsibility for, uh, total rewards and providing benefits to, to, you know, the, the team members and associates that, that I support. Um, and you know, I think I've I've been operating like most of my peers. Right. You know, you kind of go through your process every year and it was kind of interesting where you'd work with your benefits broker and you would see how your experience was progressing at the year, and then you'd get presented, usually around mid year, about what your trend was looking like. And let's say for the sake of argument, trend was looking at 7, 8%. And so you'd start doing your strategy, developing, um, you know, what you're going to do for the upcoming year. And the goal really was to just beat trend. Right? So year after year, if I was being candid, you know, our focus, you know, internally and working with external partners was if trend was 8%, that if we came in at 5%, then we were feeling pretty good, that we were doing right by the employer and right by our employees. Um, that kind of progressed into, you know, you know, after 2000 post Covid, and that trend is now 10%, 12%, um, and a staggering. Last year, our trend was 19 and a half percent. Okay. So it was January 24th was the inflection point for me professionally, because we had already set our budget. You know, so typically, you know, it's January and you know, you expect to be significantly under budget when you get your January cost results. Because, you know, if you have a high deductible plan or people on hsa, you know, they haven't satisfied their deductible. So your, your claim exposure is in the first quarter is usually, uh, light. The lightest quarter.

Speaker C: Totally.

Speaker A: Well, we were stunned to realize that we were at 105% of budget after January. Um, the driving force of this was the GLP1s, right? So, um, you know, we're a provider group, but that, that aside, um, you know, anyone with a prescription pad was issuing GLP1s, um, and, you know, it just basically blew up our budget in January. We were looking at a $15 million, you know, increase to budget that was not planned for. So it was a significant wake up call for me. And so the first thing I did is I called my broker who had been our broker for 10 years, right? Um, one of the top, you know, brokers. Everybody would know. And, um, I said, look, we, Houston, we have a problem. We need to get on this. I'll never forget this was like the second week in February. And I said, we need to curtail this coverage mid year. Right. That's not, that's typically something you do, right? I mean, you don't usually pull back or make A change on a formulary or coverage. Uh, but this was pretty critical.

Speaker C: You were breaking glass and pulling levers here.

Speaker A: This, this is, this was, this was really a real critical issue for a business. And the amount of resistance I received from the broker was really caught me off guard. Right. Um, I was getting a lot of pushback, a lot of challenges, like, you know, you really don't want to do this. You really need to think about this. And I really didn't understand the pushback. And then the follow up was to our pbm and again, a lot of pushback from the pbm. Right. So the short version of the story is we work diligently to curtail this for weight management. We're still covering GLP1s for diabetes and people that were at a diabetes diagnosis. But for general weight management, we were pulling back coverage on, uh, on, on the GLP1s. And it took us until August 1st to be able to make that plan change because we were pushing up against the profit chain of the broker and the, the pbm. So this is really, it's, uh, important that this was the inflection point and the reality for me. After doing this for decades, I then followed up with our broker and I said, I really need the, you know, fee disclosure, you know, um, you know, your commission. Yeah, I was new in my role with this particular organization and, you know, it was that time of the year to get the prior year, you know, commission report. Like, basically, you know, like, what's our arrangement? How, how are you being compensated? Um, that took four months to get them to disclose, uh, what they were actually earning as a result of being our broker partner. And the most telling piece is that when they finally shared it with me, I was on a call thinking it was with my broker. And I had three senior members from that firm, including their general counsel, on the call to walk me through exactly what they were earning and why they deserved it. Oh. So to put it in context, um,

Speaker C: I'm guessing there was a surprise.

Speaker A: There typically spend the 3 to 400,000 a year for a broker relationship. And we were paying them, um, about $1.5 million.

Speaker C: Wow.

Speaker A: And so this was the big wake up call for me. Um, you know, from this perspective of the misaligned incentives that exist within the system, the broker was very much aligned with the pbm. The PBM was pushing back with us on rebates. They said, oh, if you, if you curtail this, you're going to give up rebates. What I've learned in the process is for an employer, a self insured employer. Rebates are bad. Anytime you're receiving a rebate, that is your first indication that you're overpaying for care, full stop. So if you have money coming back, then you have to assume that you're overpaying for what you're being charged.

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Speaker A: Oh, I heard you got off social media. Yeah, actually I, uh,

Speaker C: It was just kind of depressing.

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Speaker C: I want to pause on that for a second because so many people don't understand this point and look at and agonize over maximizing rebates. What I'm hearing here is, no, that's the wrong, that's the totally the wrong approach. You should be looking to eliminate rebates.

Speaker A: That's our perspective. Right? And again, because when you look at the cost of care and if you look at the service profit chain with the broker, the PBM and the manufacturer, your PBM is supposed to be serving you as the employer and they really are serving the manufacturers. Right? So they have an arrangement with the manufacturer that if you pass through their particular manufactured drug, um, and you sell it at this rate, then you'll receive commission, the broker receives commission and the employer receives a rebate. Right. So we get a rebate versus commission. So basically the manufacturer is paying everyone off in the supply chain to ensure that they can charge like for GLP1s, $1,200 for a drug that we now know cost one 99.

Speaker C: Did you have to do some education internally? Occasionally we'll hear from people, well, you know, gee, Lee, I'd love to not be agonizing over rebates, but internally there's an expectation that these come in and they're, they're already almost a shadow budget. Even though, yeah, we're just getting our own money back after an interest free loan, but people sort of allocate responsibilities to that money. How did you navigate any of that and did you run any into any of that resistance?

Speaker A: Uh, it's a great point, which it just kind of reinforces. You know, we have the system that's been created. Right. And unfortunately, self insured employers, you know, are financing the healthcare system. Right. And we play a pretty critical part that the PBMs, the manufacturers, the brokers are expecting us to play. And so to Your point? What they've done is they've created this dynamic where you set your budget and, and then you're going to get provided a rebate. And you articulated it perfectly, which is you're getting your own money back. Right. But you're spending more money than you should have to spend in the first place. But when you think of P L management, our uh, finance and accounting partners internally are like, hey, the budget's the budget, we've already set the budget. So they have a high expectation if you're going to get a million, 3 million, 5 million, $10 million back, they're planning on that. So internally we really had to set realistic expectations on, yes, this is the budget, but we shouldn't be relying on rebates. As a, uh, as a financial good guy in our P and L, what we should really be focused on is reducing the total cost of care. Right. And reducing that total cost of care for every member or every employee in the plan. Right. And if you're getting rebates, that money is not going back to the employee. That money is just going back to offset the high cost that the employer is already paying.

Speaker C: That's a great way to approach it. Uh, how did you reallocate your time to become more expert in healthcare? I mean you had a burning platform, you had to get in and find a solution to this. But if other chros were listening and thinking, oh my gosh, I get like 2 to 3% of my time I'm able to spend on health care, how did you, uh, how did you work, uh, through that, that kind of, I guess, scheduling and prioritizing challenge.

Speaker A: Yeah. So when I think of all the priorities, uh, that I'm responsible for, you know, health care is, um, and I've other guests in your podcast have shared, uh, what their total cost of care is. Uh, ours is $100 million. Yeah. For us it's the second biggest line item on our P and L after salary and wages. Right. So from a, you know, uh, fiscal standpoint, um, I have to prioritize healthcare. But number two is even more importantly because it's not a controllable expense, it has vastly become an uncontrollable expense with double digit increases year over year. Um, and it'd be different if you were making an investment in healthcare and getting better outcomes and improving the health of your population. So then you're making an investment here. We're just, you know, our uh, costs are increasing and there's no foreseeable, you know, containment of those costs that you can see so fiscally we just have to prioritize it and get those costs under control.

Speaker C: I want to pause on this point because this is really important. CFOs across the country also see that health care is in many cases it is their second largest expense, uh, in the whole organization. And that's true for the Fortune 10, as it is for the Fortune, and certainly smaller employers. Yet very few CFOs, CEOs, and CHROs really delve into that category. They might, they might agonize over the fifth or the eighth largest category. I've seen CFOs who are fanatical about the hotel and dinner expense of salespeople, for instance, and will deploy huge resources managing that, but completely overlook this category. Why do you think that is the key? Like what you're saying is so logical. Why is it that so few do it?

Speaker A: I do believe in most cases they view it as a fixed expense.

Speaker C: Yeah.

Speaker A: And unless at that, if that expense, in our case, the expense was going up in double digits. So it was really had the focus of our CFO and CEO and then ultimately our leadership team. Um, but in most cases it's kind of like they, if finance asks HR or benefits, you know, what's the trend? What are we looking for? And if they think that's a reasonable increase, they put that in the budget and it becomes viewed as a fixed cost. It's when it goes above the fixed cost or if you're above budget, that's when the CFO you get their attention. M. Right. So again, not intentionally, but by not raising a concern on the rising cost of health care as a P and L item, they as well are participating in supporting the inefficient system.

Speaker C: Yeah, it makes sense. They believe that it's fixed because logically they often believe that it can't really be changed, that it's not, um, an expense. I know if I get after my salespeople, I can reduce how much they spend on dinner so they, they think, okay, I can make an impact there.

Speaker A: Fix versus controllable. Exactly.

Speaker C: Yeah. It doesn't feel like it's controllable. Like, like you're saying it's like a fixed plug figure kind of approach. And what, what changed for you so that you said, okay, no, maybe it has. Maybe I have thought of this as a fixed cost. But now I've got to figure out how to make this variable. I've got to figure out how to make a change here. And how did, how did, how did you work through that, that process? That change in your mindset.

Speaker A: Yeah. So the I uh, shared the GLP1 which you know, kind of captured the broker relationship, the pbm. Right. But then expanded into our carrier and tpa which in our case at that time was the same. Right. So both our insurance carrier uh, and our TPA were, was the same organization. Um and what we found was on this new fixed versus controllable at 19 and a half percent that know we couldn't accept that. And so we started looking at the whole ecosystem.

Speaker C: Okay.

Speaker A: And then we, we realized even more, more significantly what the issues were with the relationship with our carrier. Right. So again we could spend an entire session on, on just this topic. So I'll, I'll be brief but you know self insured employers sign up with the, the Bukas, you know the, the Blue Cross Cigna United, you know that not um, they control over 50% of the market in some cases depending on if you're in an urban location. Uh, Blue Cross Washioka, 84% of the market. So they have a dominant market share and employers go to them for their networks and for their, for their pricing. Right. So and they offer highly discounted pricing on healthcare.

Speaker C: Right.

Speaker A: You know the big you know um, grift in all of this is that um, they set the pricing for healthcare. Right. And they're overcharging employers and they're overcharging directly employees in that process. Right. So you know, you, you sign up with your contract and I'll use an example where a standard mri, so you know, you see your doctor or doctor says hey we could do a follow up need to have this MRI. MRI costs $4,000.

Speaker C: Mhm.

Speaker A: Really fairly standard price for an MRI. Um, you know then you look at your, your EOB, your explanation of benefits and it says okay, cost of the MRI is $4,000. Uh the plan will, you know, has a contracted rate and so that charge is going to be 800.

Speaker C: Okay.

Speaker A: You just got an 80% discount on that 4,000. So you're thinking hey this is great, I have an 80% discount. My carrier is, we use Blue Cross Blue Shield in this example. Isn't that great? Blue Crosswalk Shield. What a great insurer. Because they're giving me an 80% discount.

Speaker C: Yeah.

Speaker A: In reality that MRI actually cost $500. Mm M. You're now paying $800 for a procedure that costs 500. You're feeling really good about it and you're paying 60% more, both the employer and the employee for then what that procedure actually cost in the Market. Yeah, that's one diagnostic example. If you were in a, uh, in a hospital or facility, people are looking at bills that are 70, 80, 90, $100,000 in some, your treatments for oncology or cancer. Uh, you know, you're talking hundreds of thousands of dollars to millions of dollars. So, you know, I'm just trying to put it in context with one diagnostic procedure. The amount of overcharging that everyone is very comfortable paying because they've been, you know, kind of snowed of thinking, you know, 80% or high network discounts are good for me in my consumption of health care. And all it's good for is driving up revenue and profitability for the carriers.

Speaker C: So copying back, you now had a, uh, you came into this system, you said, okay, this can't be a fixed expense anymore, we're too far above budget. And you began unpacking, you looked at your broker and started to understand misaligned incentives and massive undisclosed compensation. You then looked at your medical carrier and found that there were significant,

Speaker A: you

Speaker C: know, anomalies within pricing and that there's. Like you, you sort of had been lulled in a complacency around. Good discount means good price, which it doesn't. And now you needed to take the next step. What were the steps that you took to begin unwinding this and getting better financial controls in place?

Speaker A: Yeah, um, once we had the epiphany, we realized that our only goal was to regain full control of our healthcare cost. So we started with the broker relationship. You know, we RFP'd every part of the ecosystem. We started with the broker and, you know, moved to a new broker with a very straightforward fee for service arrangement. So, you know, there was not gonna be any commissions. That was a requirement. It was all upfront. So we knew exactly what they were being paid and for what services we were receiving. Perfect. We immediately moved to a transparent pbm. So with the edict to say, and it was interesting, similar to the GOP one, it's not easy to go to 100% to zero rebates. Um, but we are doing that over a two year time period. Right. So reduced rebates by 75% in year one and then moving to zero in year two. But the whole point of moving, you know, the transparent pbm, which now a lot of employers are on that bandwagon, it's fascinating to see how the PBM market has shifted in a very positive way. Um, I would even make the point that I'm now questioning, what do you even need a PBM for?

Speaker C: Yes, yes, 100%.

Speaker A: When you really get into it and look at the supply chain and follow the money. Right. And then as an employer, again, I don't want to be running a pbm, but the question is, is why do you even need the pbm? Right. So, you know, they're just providing a markup. Right. And again, they're largely in bed with the manufacturers. Right. But they don't manage any of the distribution channel. You're still going to a third party to distribute the medications to your employees. So why wouldn't we just go directly to the distribution channel? Right. You know, the PBM is just another part of the inefficient system that is taking more cost or driving up more cost for the employees. And the employers couldn't agree more.

Speaker C: As a thought experiment, I often ask the question, why don't we have an IBM or an lbm, an imaging benefit manager and a lab benefit manager? The characteristics are very similar. Both of those require that your doctor issue a script. You can't just walk into a lab place and get whatever lab you want, just like I can't walk into a pharmacy and get any drug I want. So a doctor needs to issue a script for me to be able to obtain the product. Second, once I go in to make that purchase, uh, there's a formulary that we have within drugs. That also is the case within imaging and labs. I can't just go in and get a CT scan. I have to get, you know, an MRI or a particular type of MRI or which lab. Some places are going to cover, like Cologuard. Others only cover sort of the generic equivalent of cologuard, which is about 80 or 90% lower cost, but is the exact same lab. That's formulary. And so that's similar. And then the way the claim is paid, you know, you. We run a claim and we pay it through our medical plan. There's. And then the last thing is the freestanding. You might say, oh, well, pharmacies are like their own freestanding centers. That's different from, like, you know, an urgent care or something like that, which is why we need a PBM. It's like, wait, no. LabCorp and Quest manage their own freestanding centers, just like pharmacies, and you must go to that place to get that lab. It's not just done in your doctor's office. There's freestanding facilities, just like a pharmacy. And so why don't we have an LBM or an IBM? We just run it all as medical claims, even though they are functionally extremely similar to the pharmacy chain. I just. Anyway, I love where you're coming from on this and I've just violently agreeing that there's.

Speaker A: It.

Speaker C: It doesn't make sense that we have to have it in, in this particular fashion. That, that it's kind of an artifact that's there. But what, what uh, did you do in terms of like with the rebates? A lot of people will say how in the world do you get it to zero? And aren't you losing a lot there? Is it kind of going to lowest net cost or are you doing point of sale rebates?

Speaker D: Maybe.

Speaker C: Maybe unpack that a little bit for us.

Speaker A: Yeah. So again, um, if we could reduce the total cost of care. So taking that 100 million down to 90 million right now, taking rebates to the side for a second, um, we always look for opportunities to reinvest that, you know, those savings back to the employee population and in enhancing or improving the total benefits that we offer.

Speaker C: Yeah.

Speaker A: The issue is over years we've been hamstrung at making those additional investments because we've just been dealing with significant cost increases and not being able to identify any particular savings. Right. Uh, and I said earlier, when those rebates come in, those are going directly to offset the P L or the budget. Right. M. They're not going back into the benefits department. Right. When those re payments come in, they go to our finance team. They don't go to the benefits department to be reinvested. So that money does not come back because that's not real savings. Right. Again, if you think of that's on top of what you're already paying.

Speaker C: Yeah.

Speaker A: It feels as you're getting it money back, but it's basically the surcharge that you're already paying. So to have money to invest, you have to be talking about real, actual savings of the cost of care.

Speaker C: Right.

Speaker A: And so, so that's where you have to look at the ecosystem, your, your pbm. Um, one of the key pieces that wanted to highlight is we're big proponents of care navigation. So sitting in the middle is. Or at the, at the forefront is care navigation. Right. So we put care navigation in, in place. Um, and then very strong foundation in primary care.

Speaker C: Terrific.

Speaker A: So for when we talk about the total cost of care and we kind of, you know, measure, you know, pmpm. Um, because if you're, if you're not managing the total cost cost of medical and pharmacy, um, then you know, the other stuff is on the fringes. It doesn't really matter. Right?

Speaker C: That's right. And by that you mean like you know, vision and dental and ancillary life. Things like that is just, it's window dressing.

Speaker A: Right. So it's, it's important that you know, there, that's where you're reducing the total cost of care. And then that's when you have the opportunity to take some portion of your savings and reinvest it back into benefit plan design.

Speaker C: I, I love that. And so echoing back the, the in thinking specifically about kind of rebates, it's that rebates are not savings. Rebates are just you getting your money back after issuing an interest free loan. And because they are, those dollars are commingled dollars from your employees and the health plan that are, that are just being given back to you. They're ERISA dollars. And so obviously you can't reinvest that in the business. You can't go buy you know, new printers and copiers and things like that or, or you know, pay legal fees or whatever. Those must go back towards the employees. But real savings, if we're able to lower the total cost of care, those create real savings. You, you free, you reduce the cost burden on the business which increases actual ebitda. Uh, that can be reinvested in people but also reinvested in the organization. But that creates real value for the whole organization. Not just sort of a financial mechanics. That is, that's locked within the ERISA budget.

Speaker A: So in year one we were in hard savings. After doing the RFPs across the ecosystem, we m were able to identify 8 and a half million dollars in savings. So we reinvested 50% of that into um, our total rewards. So we made improvements in our 401k. We um, offered company paid short term disability which we had not offered previously.

Speaker C: Wow.

Speaker A: Um, in year two, um, the total savings was closer to $24 million.

Speaker C: Holy smokes.

Speaker A: But that I, can I can you talk about how we got there? Um, that was a fairly significant transformation. We regained control and with that we reinvested enhancing our mental health benefits which is a significant precursor to a lot of the um, chronic disease health issues that a lot of employees were facing. Mental health was a particular area that we were significantly under invested in and we felt like this was an area we really needed to make uh, an investment. So it was not just with our eap, but it was all the way through the coverage that we offer and the benefits that we provide, uh, in mental health for the employees.

Speaker C: I want to pause on this point because this is really important. A lot of people see, hey, I just had 19% trend, I need to slash and burn everything. But part of what causes the 19% trend isn't just overpaying on everything in a couple categories. It might also be driven by under investing in some areas. You, I think just mentioned two, you just taught us two things. One is, if I'm getting this right, we need to reinvest more in primary care. And second is we need to reinvest more in mental health. Are there any other categories where we ought to look at investing a little bit more? And could you maybe talk us through how investments in primary care and mental health helped to reduce cost even though you're spending a little bit more in those?

Speaker A: Yeah. So, um, I think this again applies broadly, um, particularly on a national basis. If you think of cardiometabolic disease issues, so diabetes, of course, um, but all the related weight, um, A1C, hypertension, um, these derived 70 to 80% of the cost. And then you typically progress into multiple disease or chronic condition issues for individuals that they're facing so many times. If you have these health challenges, it's not just one or two things you're working through. It could be three, four or five. Right. So this goes back to where primary care is so critical, Right. Uh, that you want to have, you know, longer primary care visits, not shorter. Right. You want to be spending more time with your primary care physician. You want to be working with an integrated care team. Right. So, you know, it's, it's, we need to invest more time at that point of care and then rely on them really, to do the steerage for your specialty care.

Speaker C: Yes, yes.

Speaker A: And what we're doing is we're, we're making primary care optional. Right. So, and what's interesting is none of this is new, right. So, I mean, I'm really dating myself, but I can remember when the focus on managed care and primary care and everyone had to have a primary care physician.

Speaker C: Right.

Speaker A: Was introduced in the 90s. Right, right. But you, ah, now fast forward to 2026 and we're in the land of choice. Right. We've over, we've significantly over commercialized health care. Right. Um, everyone's participating in it. You know, all the statistics. I think in the US we're going to eclipse $5 trillion. It's the, you know, the GDP of, you know, bigger than 85% of the countries around the world. Right. So we've just over commercialized it to a point where we promoted choice. Choice, choice, choice. I believe Employees mostly find the system complex and difficult to navigate. And what they're really looking for is an easy pathway and clarity on, um, where to go for their care. So this brings you right back to the anchor of primary care, how critical it is and really relying on that qualified provider to help the employee navigate and steer to the right chronic disease management and seeing the specialist that they need to through an integrated care team model.

Speaker C: I love this concept that I've never, I've never heard it or thought about it like this before, but something you just mentioned was, hey, when you are really sick and using the system a lot, you are comorbid. You're going to have not everybody. But as a general rule, people will accumulate chronic illnesses and you might have 2, 3, 5 plus different complex interrelated chronic illnesses over time. And certainly if you're a chronic heavy consumer of healthcare, which drives most of the cost, those are the profiles of those patients. And it's then the logical question is, well, is there any, if I spend money on a cardiologist, am I treating one or five or six of those conditions? You're only treating one, but every dollar I spend in primary care treats all five or six conditions. And so I want to put, it's like a 401k with a 6x match on it. Like you want to put as much money into that bucket as possible because every dollar invested there is being multiplied m many times over to treat all these different conditions versus if I'm paying a specialist, I'm only treating one condition. I talk about primary care every day for a decade, but I've never thought about it in those kind of financial terms as you've just sort of illustrated. I love that framing.

Speaker A: Well, but primary care is the highest ROI investment that you can make in healthcare, without question. And it's the most underutilized. Right, right. Because again, I referenced it in many cases and many plans, it's optional. And you referenced the cardiologist. The worst thing you can do, one from an experience standpoint for the employee is leaving them out there in the sea of healthcare to navigate a chronic condition. Or they have a diagnosis, right. And then they have to go and then go track down a specialist. Right. Um, and they don't know where to go, how to go. Most people, you know, we call it steerage for a reason. Right. You want to stare people to the high quality providers, but you also want to have predictability on, on the cost. Right. So if you invest in an advanced primary care model, then you know you're going to have, you know, greater ease of care. Right. You want to make the pathway to the care the easiest pathway. Right. Um, ah, we refer to it as the front door. Front door to care should be through your primary care physician.

Speaker C: Right.

Speaker A: And then I work with an integrated care team so that as you have questions. Right. Whether you're seeing your primary care, your np. Right. Um, you know, as you have questions or have other referrals, it get refers back in. So you have one provider that's helping you navigate across your various different challenges.

Speaker C: Oh, this is awesome. Now I want to think a little bit organizationally you're a chro. Even on your best month, you're probably going to get 10% of your time that you can spend on healthcare. You're relying on a team to do a lot of the lifting to make these big things happen. How does a chro, uh, motivate and manage and create vision for a team so that everybody believes that they can manage what otherwise we would think of as a plug figure. And we need in some cases to take some calculated risk because if we do the same thing we've always done, we're going to get that 19% trend. We have to do something different and different is scary and different involves risk and we don't always have the most risk tolerant people within these roles.

Speaker A: So uh, two pieces I'll share about this. One is how we, or how I manage. Uh, um, you kind of the, the healthcare expense. Right. So I highlighted. It's the second largest P and L item that we have. So I manage it appropriately in that context. Meaning. So you know, we have weekly calls with uh, every provider that touches our ecosystem. We have monthly operating reviews, you know, with our broker and our partner with our pbm. Right. So we have, we basically are managing it just like we manage the P and L. Right, Right. So it's not a cost center. Right. It's. We're, we're viewing it as if we manage this effectively. It has an impact of whether we make or break our year. Right, Right. So uh, from a governance standpoint, it's. We're running it like an operating model. Number one.

Speaker C: Okay.

Speaker A: Number two, specific to the team. I think oftentimes benefit get benefits. Benefits gets put in a, um, back of house or support function, you know, position in the organization. Right. Yes. Now I think maybe we're different because we're a provider group and you know, we're in the ecosystem. But I think particularly what we do is we put benefits in the forefront as an enabler as opposed to In a support position. Right. So that's a, uh, key shift. Right. For us, is that it touches everyone. It's, it's the most high, you know, your, your benefits, any server that you do, employees are going to say with their employer that they may, that they value most is their benefits. Right. So we are positioning that appropriately for how it's valued by the employees and then how we, we kind of position the benefits function, um, as a partner and as an enabler as opposed to in a support role.

Speaker C: Mhm. And no, you're not different because you're a provider, because many providers actually manage benefits very similar to any other employer. You're different because you're approaching it differently. Like your mindset shift is what is definitely making you different. Just to reinforce that, uh, I love the concept of I prioritize my time according to where the, where the biggest dollars, where the biggest impact is occurring. Right. Like staff first, because that's my payroll, healthcare kind of second, because that's the second largest area. And I, I love that, that, that framing. Did you have any resistance in managing both your team who reports to you that, hey, we're going to do a lot of new things, we're going to do new RFPs, we're going to shake up these relationships. And also, did you have any resistance with the other, uh, your, your comrades in the C suite?

Speaker A: Yeah, I'm very fortunate. Um, you know, call out, you know. Diana Chin is my executive director of benefits. She's been with the organization for going to her ninth year. And so, um, anyone who's worked in these roles appreciates that every year is a challenging year. Right. Every year you're looking at benefit plan design, you're dealing with costs, you're trying to, you know, rob Peter to pay politics to uh, you know, not do cost shifting and cost sharing. Right. It's a challenge every year. It's a real grind. Um, but the last two years here have been transformational. Right. So yeah. And as hard as it has been and the amount of resistance you asked about resistance, we receive resistance in every corner. Right. Every, everywhere in the process that we tried to affect change, we ran into resistance and we just had to have conviction. And I had full C suite support with our CEO. Um, but specifically back to the benefits team, um, I believe they've been thrilled that the work has been hard and difficult. A lot of communication, a lot of change management. Um, but it speaks to their mission to deliver high quality care to the employees and ensure that they're getting it. So they're very mission focused and very invested. You don't do that work if you're not committed to providing total rewards. That's a differentiator for individuals. Right, Right. So, um, as a result, I think they have a new lease on life and feel like they were making an impact before, but now they're seeing the reinvestment, they're seeing how we're actually reducing the cost but also improving um, the offering, um, and the quality of the benefits. Um, but most importantly, we're starting to drive to better outcomes.

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Speaker C: Oh, I love that. So copying back the, the rewards you get when you see the hard work pay off that you see that you can actually steer the fixed expense. You can create real savings, meaningful change and that that change actually improves the lives of everybody. That, that's as, as motivating a thing as you can give to anybody.

Speaker A: It's about as fulfilling as, as you could have in your work. For sure.

Speaker C: I love that so much. How did you. I guess going back to the playbook here because now I'm, I'm sure a lot of people listening are saying, okay, that's all awesome. Tell me step by step how, how I can do some of this. Uh, I think so far you've covered step one, get compensation from your broker. Step two, go out to RFP for your broker and get everything off of commissions on fixed fee schedule. So far so good there. Okay. Step two, take your uh, your medical out to RFP and look to look at, I guess TPA options as not just, you know, go straight to a carrier for everything but uh, to split

Speaker A: that out just, just like your pbm. Right. There's been a big shift to move to transparent PBMs. Well, there are transparent TPAs. And what you want is a TPA that is not a, a subset of your carrier.

Speaker C: Okay.

Speaker A: You want an independent tpa.

Speaker C: Okay. And so for those who are listening, who haven't heard of this concept before, it is your regular carrier is both your network. They're the logo on the ID card and they're your accountant. They make payments to the doctors and hospitals. And what we're discussing here is that you separate out the network that is still the logo on your ID card from the accountant, the administrator who makes the payments. And that by separating those duties, there is now less opportunity to conflate the people negotiating the contracts of how the hospitals are paid with the people holding the checkbook to make those payments.

Speaker A: Yeah, it's the classic fox guarding the hen house. Right. So in all of the, the bucas, the major carriers, they all have their own TPAs and typically you sign up and they're, they operate under a different name and they're um, largely at a different company, but they're still tied to the broader carrier. Right, right. And so what ends up happening is the employer confidently engages with their, their partner, their carrier, and then they agree to have their TPA or do do an ASO with them and they're processing claims for the carrier against the carrier's pricing. Right. The employer doesn't have any say because you already agreed, I'm joining the network and I get the, the benefit of the, the network pricing and the high discounts that we talked about earlier. So once you agree to that, you're just, you're on the side. And then the tpa, which is basically a, uh, division of the broader carrier, is processing the claims directly to the carrier against the pricing and network discounts that they have established. So after doing some research, uh, back at this point we were working with Blue Cross Blue Shield and we understood that, you know, there was about 40% of fraud, waste and abuse and claims. So I did what any fiduciary would do is I said, well, we need to run a, uh, claims audit. And then went to my contract and found out that I had the, you know, the pleasure of being able to audit 300 claims out of 120,000 per year. So the reality was the contract was structured and set up in a manner that they really don't want you to be auditing them. Yeah, right. And what I found was our 300 claims limit is kind of standard. Right. So if you go to another employer, you're going to find out that, you know, they set this all up and for the most part people just agree to it and they don't ever really audit, you know, these claims. You're spending, in our case, $100 million a year.

Speaker C: Mhm.

Speaker A: You don't have the ability to audit their processing and administration and adjudication of those claims.

Speaker C: Huge challenge. So I'm guessing that factored pretty heavily

Speaker A: in your RFP of back to having to be independent. Right. And really se breaking that, you know, kind of relationship so that your TPA Your administ administrator that's administering your claims is fully independent from the carrier.

Speaker C: Right on. Okay, so now we've got an independent transparent administrator that's separate from my carrier, my network. And then on pbm, you already mentioned moving to a pass through, fully pass through transparent pbm, a no spread PBM that is helping you to get to the lowest net cost of drugs and to net rebates out, I guess, at point of sale. Are you doing rebates out at point of sale or is it, uh, some other mechanism there?

Speaker A: No.

Speaker C: Okay.

Speaker A: Nothing at port of sale.

Speaker C: Okay, and then so a transparent PBM and then, uh, what comes next?

Speaker A: So, uh, we, we did a fairly transformational move, uh, from the carrier. You know, we did a full RFP with all the big players. Yep. Um, and we ended up, you know, moving to reference based pricing.

Speaker C: Oh, okay. So really exiting the network altogether for the most part. I mean, not for physicians, you probably still have like a first health or something like that, but for facilities, you went to rbp?

Speaker A: Yeah, we went to rbp. And again, uh, I think everyone has different views around RBP. RBP has been in place for 30 years. Yeah, I think when it first came out it was, you know, kind of negatively received. And again, it's the anti carrier model. Right. So of course it gets a lot of, um, lobbying and a lot of pushback and a lot of challenges.

Speaker C: Yeah.

Speaker A: But what we found was, you know, if you think about where the cost is delivered, um, where people get their care and the, in the cost of that care is significant. On the cost to the employer.

Speaker C: Yes.

Speaker A: So when we said we wanted to regain control of our healthcare spend, we had to regain control of where the care was delivered. Okay. So in reference based pricing, you know, basically the short way that works is you're starting from a, uh, CMS reference point of what is that cost of care? What is that cost of that procedure? Basically, what is the market price for that care. And then you apply a premium based on that particular procedure. Right. Where you're applying a reasonable premium as opposed to, in both health systems, you could be looking at 200, 400, 600, 800% of Medicare. Yeah, Those are not, I'm not, Those are not dramatic numbers that I'm quoting. Like if you get a hospital charge, you know, you could easily be paying 600% of Medicare for a particular procedure.

Speaker C: Totally. And so this equalized that.

Speaker A: Correct. Um, and what was fascinating was the education that we had to do with our employees and our provider group because a lot of people still perceive the carriers as the insurer. We are a self insured employer. We are the insurer. Right. We had to educate them that you talked about the label you have on your card. And you know, the carriers spend a lot of marketing dollars, you know, to make sure that every knows that, hey, if I have that, this logo on my card, I have good insurance.

Speaker C: Right.

Speaker A: Okay. In reality, the employer sets the um, plan. The employer sets the formulary. The employer, you know, we define the full benefit plan and what's covered and then the carrier administers it within their system, in their network.

Speaker C: That's right.

Speaker A: But most people don't appreciate or realize that they think their insurance is being provided by the carrier.

Speaker C: That's right. Certainly employees do 100%. So you have that control. You're now able to make those payments and get control over what prices you're paying. Have you had a, ah, significant amount of pushback or balance billing? I know that that's, that startles a lot of people. Maybe tell us a little bit about any of the challenges, uh, to watch out for.

Speaker A: Yeah, so when we did a lot of research before we made, we recognized there was a significant shift, um, and there was a lot of negativity around it, but the numbers are pretty consistent. So what we understood going into the arrangement is that, you know, 98% of claims are administered without any issue. And then you're now dealing with a 2% pushback rate. And that 2% pushback rate then becomes 1% pushback rate. And the process really is, is that, you know, you can, it really is an education issue. Uh, if you go into a major health system and you give them your insurance card, whoever you're dealing with, a front desk, a scheduler, whoever it is, they're going to pull up their system and see, oh, do we have Blue Cross Blue Shield? Yes, of course. So, yeah, we take that coverage. Right, right. So if you've got one of the big carriers, right, and oftentimes they'll say, no, we don't take Aetna because they're having a contract issue with Aetna. Right. You're in and out of network. We all know those dynamics. But the big issue for us was simply if they hadn't taken it before, they don't know it. So the knee jerk reaction is, well, we don't take that. But in reality, going back to the education that needs to be done is that we're the employer, we are the insurer, we're paying for the benefits. We have a legitimate, you know, insurance offering you're the provider. So we just need to arrange a relationship with the provider and the employer to get paid.

Speaker C: Right.

Speaker A: Once we have that conversation, then that resolves the issue. So that's where the 2% pushback stands. Right. And then it comes down to. It's like.003, so 1/3 of 1%, where we have to steer, uh, an employee to a different provider because they actually won't participate with us or with the, uh, uh, tpa.

Speaker C: Oh, wow, that's fascinating.

Speaker A: So do you want to stipulate when it's noisy? It's really noisy. Right. So, you know, if you're. If you're scheduled for surgery and if you think everything's good to go, and then the day of or the day before, you get a call and say, we're not going forward with the procedure because. Because you don't. We don't take your insurance. Right. Like, that's a bad. That's a bad experience. Right, Right. So I'm acknowledging, like, that, you know, that plays out and you want to minimize that, but it really is in less than 1% of the cases, and we have 10. We have 10,000 lives. Right. So, um, you know, for the 99.7%, it's not an issue.

Speaker C: Wow. Wow. So I appreciate the clarity and the way that you've walked through that. This has been absolutely delightful. If people want to reach out to you or get to know you a little better, uh, learn more about your role. And also at Dooley Health, uh, are they okay to reach out through LinkedIn or is there some other channel that you'd prefer?

Speaker A: No, people can reach out on LinkedIn or they can email me directly. Paul Dumas, duly.com and happy to engage with anyone that has any questions.

Speaker C: No, this has been absolutely wonderful. Thank you so much for your time today.

Speaker A: My distinct pleasure. Thank you.

Speaker B: Lee, thanks for joining us on Broken Benefits. If you enjoyed today's episode, please subscribe

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