What Washington Doesn't Understand About Employer Healthcare

Speaker A: Well, thanks, everyone, for joining us. Today we're joined with Katie Talento. She is the CEO of All Better Health and former White House health policy advisor and special assistant to the president. So a, um, big background in health care and I, uh, believe reform as well. She's left Washington. She was there, what, a couple of decades, quite some time, and now she's helping employers and people kind of navigate the healthcare maze. So thanks for joining us, Katie, and if you don't mind, tell us a little bit of your journey and kind of how. What brought you into healthcare and to Washington in general.

Speaker B: Yeah, so I was actually. I was born in Texas, but I mostly grew up outside of the D.C. swamp, if you will. So I was kind of around the suburbs my whole childhood, and I could not wait to get away, um, because I thought it was lame. And, uh, here I am back again. But so I went to school. Like, I wanted to be this epidemiologist that quarantined towns and, like, wore spacesuits and stuff. I went off to Africa in my youth and, like, you know, tried to negotiate with warlords and do human rights stuff. And then I came back and said, okay, I'm just gonna work on AIDS and malaria and tuberculosis and things that are not war zones here in America. And I was living on Capitol Hill. I had kind of moved. I thought it was a big move from the boring old suburbs to the inner city D.C. and I was, you know, living on Capitol Hill. I was going to church on Capitol Hill, which became relevant because there were a lot of Hill staffers in my church. And what happened was, you know, I was instantly minding my own business, working on aids. And I didn't really have any thoughts about ever being in government. I kind of thought government was stupid. I still think government is stupid, I guess. But what happened was there was this publican senator, and he switched parties. And what that did at the time, based on the composition of the Senate, is it flipped the entire party ownership of the Senate. And so then this new guy became the head of the ranking Republican on this committee that oversaw health. And little Republican children don't grow up wanting to be public health experts. So they couldn't find any public health experts to staff this new Republican senator on this committee. And so my friends at church were like, hey, don't you do public health? And, you know, are, uh, you a Republican? I'm like, I guess I kind of hate them all. And so that's how I got sucked in. And I. That was my first Hill job. It was Kind of a mid level job. And I oversaw Public Health Service act, which was my portfolio. So that's like cdc, nih, little bit of fda, you know, all the disease bills, things like that. It was my job to kill disease bills, actually, just to make sure they didn't go anywhere. And then I found that I really loved it. And it was kind of this combative, adversarial environment. I loved it and it was fun. And so I stayed there on and off for about 15 years on Capitol Hill. I tried to escape a couple times. I went out to rum malaria programs for ExxonMobil. And then I went off and joined a convent for two years.

Speaker A: I was like, wow, okay.

Speaker B: Yeah, I was constantly trying to escape. Eventually, you know, they suck you back in. And so the last senator I worked for, who was the fifth senator, and my friend who was the chief of staff for that guy, um, ran off to. It was 2016, and he ran off to join the Trump campaign to run policy for him. And the next time I saw him, like six weeks later, he was disheveled, chain smoking, sleep deprived. And I was like, dude, do you need help? My gosh. And so, um, he's like, yes. He kind of grabbed me like a drowning man is pulling me under. And that was the beginning of sort of my executive branch adventure. Um, so I worked on the campaign for that summer as a volunteer. Then they paid us in the fall, right before the election. Um, we were all up in Trump Tower in New York and, um, and then into the White House after that. So I was there for about three years until 2019, right before COVID So thank God I got out before that. But when I got out, I said, well, people with my resume basically just go shill for industry. That's what they do. Like, they're not qualified to do anything else. And so I looked out across the landscape of the opportunities for me, and it was all just apocalyptic things I couldn't do. Either morally apocalyptic or like just in other ways corrupt and gross. So I saw I had met this little organization called Health Rosetta while I was in the White House, and they were building insurgent, interesting health plans for employers. And it just seemed like the one and only bright spot in healthcare. And I just went there. I just gravitated toward it. And they helped. They kind of took me under their wing and helped teach me how to do this. And I glommed on to other benefits advisors to help learn this. And, um, now I have a good book of business and I'm building those plans for employers. Um, that's kind of one hat I wear. I also ran the trade group for Healthcare Sharing Ministries for six years. I just left that. Um, but I sit on the board of Healthcare Sharing Ministry. And ah, last fall I started my substack All Better with Katie Talento. And you can find that@katietolento.com but that's where I really write about all these things. I write about policy, I write about some, um, natural health issues. While during COVID I kind of got radicalized and became a naturopathic doctor. So, um, I do that as well. And a birth coach, so I do that as well. So I write about kind of natural health and all the systems out there that are trying to control our health and how to hack those systems and take the good where you can get it and gravitate toward the light in all these areas and really, um, take agency and ownership, whether you're an employer trying to run a health plan or whether you're a patient in the system, um, or whether you're not a patient and you want to not be one. So all those areas are areas I work on. I can't really decide for sure what I want to be when I grow up. So I do a lot of things.

Speaker A: You do, you do. Very interesting. Well, look, one thing you said that kind of caught my attention. So I'm curious when you were working with these senators, um, because I think a lot of people have the perception that, you know, you elect a politician or someone's appointed, and how do they know about everything that's going on in the world? Uh, did you find that. Was there a base knowledge of healthcare and the delivery system at all? Or is that where you came in? And I know you mentioned the guy went from a normal person to, uh, a degenerate, chain smoking. I mean, he just, you know, they probably get in over their heads pretty quickly, which is why they surround themselves with all these advisors. I mean, I'm curious, what did you see was the, the level of competence in Washington as far, as, you know, healthcare delivery and insurance and how that all works? Because these are ultimately the guys that are. They're killing the bills or signing them, right?

Speaker B: Yeah. And I wish I could say something inspiring here, but now, to be fair, I actually worked for pretty good people. And some of them were like exceptionally good people. They were morally good. They had great knowledge about things that they had done in their lives. Um, so, you know, they weren't all like career politicians, although a couple of them were, but, um, they were smart There was not one senator I worked for who was a dummy. They were all very smart, very engaged people. None of them, including probably my favorite boss. My favorite boss is the President. But my second favorite was the senator who, um, Dr. Tom Coburn from Oklahoma. He was a physician. He delivered babies on the weekend. Okay? And of course, the physicians most of all think that they know health care, right? But even he, like, they, they do not understand healthcare financing or delivery at all. Not any of them. Now the physicians, if they've been in practice, in independent practice, they, they do understand sort of the physician side of the experience, which is in no way the only side, but at least they have that. You know, there's a little bit of a structural flaw in Washington as to why Washington is so terrible at solving problems faced by employers, which of course ensure more than half the country, right? 160 million people. So, um, and yet it's, it's like all we ever argue about is the ACA, the 20 million on the ACA, right? Like, why does that suck all the oxygen out of the room when everyone else is getting raped and pillaged as well and. Or worse. And so the reason for that is the structural flaw. And the structural flaw is this little. Health policy stars don't grow up wanting to work on the labor subcommittee of the Health, Education, labor and Pension Committee in the Senate. They don't want to grow up wanting to work on the Education and Workforce Committee in the House. Those are the committees that oversee erisa. They want to work on the committees that are known as the health committees, like the Health subcommittee in the Senate or the, um, Finance Committee, which oversees cms. So Medicare, Medicaid, right? And similarly in the House side, Energy and Commerce and the Ways and Means Committees, those two committees oversee CMS and fda. And, you know, so then all the like, really smartest, most engaged, most interested people in health policy gravitate towards those other committees that really focus on government subsidized care, right? Aca, Medicaid, Medicare. And meanwhile, the people who work on the committees that oversee ERISA are like pension experts or labor wage union type experts, you know, that are focused on that. So that's like a huge, huge problem. Then we get into the executive branch. Where do we get all our political appointees from to run these agencies? From these committees on Capitol Hill, right? So you get a new Republican president, he's going to like scrape up all the committee staff from Ways of Means and Energy and Commerce and Finance and Health Subcommittee, and he's going to staff HHS with all those people who does he staff Department of Labor with no one. Right. It's pension people. It's like union busters. Right. It's not going to be, it's not going to be anyone who knows anything about erisa.

Speaker A: So they're just on the wrong teams is what it boils down to. Right?

Speaker B: Yeah. And so, and this is true for Democrats too. Like Democrats don't know anything about nothing. I mean even less potentially about um. And we don't even get lobbied on this issue because a lot of times you learn an issue because you have groups coming to you demanding things or wanting things or wanting to kill things or stop things, wanting help. And so you get all the swampy interest in the healthcare system, whether it's hospitals or drug manufacturers, PBMs. But you never ever get the businesses coming in to lobby you on healthcare. They're too busy running their car company. They wanna talk to the government about like tariffs or regulations about their car business. They don't ever, they don't even understand healthcare. They don't know what's going on with their healthcare plan. They have no idea why it's a disaster. Right. So they don't even know what to ask for from Washington. And so we do not get lobbied. Those like trade groups for businesses or never, almost never. And I can only think of really one group that is effective at lobbying for employer sponsored healthcare and they're kind of a recent addition to the to D.C. so that is why nobody in Washington is coming to save you employers. You're gonna have to save yourself.

Speaker A: Right, well. And um, that's what brokers are for. Right. Which I know you are a broker as well and I have read some of your stuff and I know you're one that's doing a lot of creative things that you know, we here at Morgan White work with a lot of brokers and there are a lot of things you're doing that a lot of brokers don't have the stomach to do. I know you deal a little bit with reference based pricing. Um, so you know, we've seen that be very successful. But you might also have to have the stomach to take your provider to court. Right. And to some hospitals. I mean, you know, so I'm curious a little bit of your experience with that. And actually to jump on the back of that, we're starting to see a lot of brokers going towards Ichra, which now you are talking about individual plans even though they're employer sponsored. I know in this last, the one big beautiful bill There was wording in Ichra around there that ended up getting struck out at the last minute. But back to your point where the policymakers are focused on this small group of subsidized people on individual insurance, when you know, maybe the benefit to that, maybe the silver lining is that employers start putting people into that bucket too. And that may be a win win for everyone. I don't know, Um, I guess time will tell, but we are seeing more brokers getting interested in this and I think it's admirable because it's difficult. Right? You're taking a employer, a group of 50 people and turning it into 50 individuals that could buy 150 different plans and somebody has to be the administrator for that. Which is where we see all these tech companies starting to come into the space too because somebody's got to put together all the pieces. So I know that's kind of long winded, but I am curious your experience with reference based pricing and I'm curious if you're doing anything with Ichra or what your thoughts are on that as well.

Speaker B: Yes, it's funny you should ask me this because I'm m literally writing my next paid article is going to be like a deep dive into RB GDP and its many travails. Um, and some other sort of solutions that we look at too. And there are many trade offs. Um, so this is top of mind for me. Um, I have only run one and it will be my last reference based pricing plan. I still run it. And it was my very first client, a little group of nuns. And those are the nuns that I had been with for two years and I had been one of them. And, and when I, you know, I, they were so lovely. I'm still obviously very close to them today. And um, they basically sang me down the aisle like Sound of Music style Married. They were like so wonderful. They were literally the choir at my wedding. Um, so they are the sweetest and. But they were desperate, right? They were absolutely getting completely raped and pillaged by Blue Cross and they had been getting double digit increases year over year. It's just like 120 of them. Right. This is not a lot of people. And you know, I finally. So I kind of like dipped my toe in health, Rosetta. And I'm like, all right, I, I think I have a solution for y'. All. And so I, you know, go to them and I explain this and I'm really excited about it because I don't know better. Anyway, so we, we launched this thing and I think I'VE probably replaced every single vendor on the plan like within the past six years of when we started every single vendor. I'm trying to think if there's one that has not been fired. Um, a couple of those have been mid year firings uh two of them actually. So uh, we fired repricers twice. I fired a DPC vendor mid year. We fired like it's been horrible um in that way but it's also for them cost is the most important thing. They raise money from donors and benefactors to pay their medical bills. And so for them cost was the most important at least at first right until they experience friction and the noise that comes with RBP.

Speaker A: Somebody gets the balance bill for $10,000

Speaker B: and you know I'll tell you the reference based pricing has two main problems. So the, there's the back end problem like after you get care the doctor never agreed to that price. They're not going to take it. They balance bill the patient. The balance bill problem I think can I have experienced can be solved for with a good vendor. So and so we have had good vendors that do that very well. Um and we've had vendors that I had fire that do it terribly. Once I replaced that sort of balance bill out of network negotiating vendor um with a good one we never really had a balance bill again. I mean I can count on one hand and um, so that is very important. But um, before that I mean it was awful, awful, awful. Like just you have to get a good vendor but you can and that can be solved. The real problem, the real friction uh point for RBP which at this point cannot be solved very easily but I'm going to write about how we're sort of doing it and how I hope it'll be done in the future is um, the access friction. So you don't have a carrier logo on the ID card. You walk into the doctor, we don't take that card. We don't know this plan. What do you mean they don't know what self funding means. They don't know what reference pricing means. It's like these front desk people or even the practice manager like they never heard of any of this. You're not in our dropdown menu. We can't take your plan. You're not going to have an appointment or we'll only see you if you are self pay. And so that is a huge problem. You have to have a navigation vendor on your plan either and I know some, a lot of advisors like us will just in house that they'll They've burned through navigation vendors that were subpar. That would not actually solve for this, which is what I just. I finally fired our navigation vendor because they're so terrible. It was just me doing all the navigation. Um, and so, yes, you can have good navigation, but still lots of, like, people, lots of members, they know where they want to go or that they need to go. And they come to you with like, I want to go to this doctor. This is the only doctor that's doing this thing. And if that's a no from that provider, like you just have friction or God forbid, like, they need to go to this hospital specialist and they need to right now because it's very acute. It's not an emergency room acute, but it's very acute. And you can't get them in in three days or, you know, this is a major, major problem. And what lots of RBP plans just end up doing is just say, okay, just self pay and we'll reimburse you. The plan will reimburse you, but then you're paying like whatever they say the cash price is, which often is lower than a carrier negotiated rate. But sometimes it's just bill charge. Right? Um, so sometimes you're overpaying if you do that. But also for me, these are nuns. They have no income. They have no bank account. They have like, so to. For them to cash pay is a big deal and it's a big pain. And, um, we have tried to figure out, well, how can our third party administrator who's administering the plan, how can they cash pay on their behalf? And I think, you know, what I'm writing about this week at, uh, Katie talento.com is actually like, how do we scale cash pay? Because no provider is competing on the basis of that cash price right now. Because very few people are paying that cash price. Right. It's just like uninsured moguls or people with an extremely high deductible, like $10,000 who have an HSA. Um, so maybe their cash pay, but not really, because even if you've got a plan, if you're using your hsa, then you're using your plans. Negotiate a rate, not some cash pay rate. So, um, very few. There's very little market out there for the cash price. And so providers aren't actually competing on that basis. And they won't until cash pay is scaled. And I will say, I think we're starting to see signs of that. I know it. Because we're starting to do.

Speaker A: Yeah, I think so as well. We're talking to some people that, that, that is their model moving.

Speaker B: That's right. And there are vendors out there that are higher and higher quality vendors are starting to look at this and TPAs themselves. So I know of two TPAs right now that are. One has already built the cash pay system and you know, they'll just pay. Their navigators will pay cash and they'll key in a claim and now there's a claim for it and everything's cool. And then there's another CPA that's working on this, that's building it as we speak. Um, and it's best when it's your TPA that can do it, right? Because then you have no like integration need. You don't have to pay an extra vendor and all that. But I, I do think there are some quality vendors out there that are really useful that do other things as well that you might want to pay for. And therefore the fact that they do this cash pay thing too is awesome. And so I am hopeful that this actually is the future. And to speak to your ICARA question like, this is the path to the post network world that I'm looking for. I'm, I dream of a post network world and um, but we're not going to just get there overnight. There's going to be this transition period where either you have like a bunch of direct contracts or you know, like nobody's going to have enough direct contracts to utterly replace a network unless your entire book of business is in one geographical location and you really have buttoned up a sort of custom network that you offer to all your clients and you have enough volume to support that network. And now you just have a network that's like on your plan, that's like a wrap for outside your market or, you know, so really most m of us cannot actually get away with not having a network. Most clients, employers are not my nuns. They will not put up with the access friction period. And so, um, we are in this weird limbo where we all kind of want to get to this place where we're able to pay cash quickly at scale, that cash price is competitive and we don't need stupid networks. But we can't get there yet. And one of the reasons we can't get there, and this is really where I think government may have to come in, either as enforcers like with Department of Justice and dol, or um, Congress will pass a law. But there's openness to all of this at those legislative uh, and executive branch agencies. Um, the reason why we can't do this. The reason why I call it the underground railroad, the cash pay underground railroad is because everyone's contracts with their networks, the providers have their contract with the network, the employer has a contract with the network, the TPA has a contract with the network. Um, and the employer often just has an access agreement to use that TPA's contract with their network. All those contracts have what I would argue is an illegal anti competitive provision that says carrier logo on the ID card. That's the rate you're paying. You submit that claim to the carrier, we will reprice that claim and if they're not in network, we'll let you know and you can bring your out of network vendor and on board. But um, we're going to pay what we say we're going to pay. And by the way, that's higher than the cash price which remember insurance's value proposition was supposed to get us rates and discounts that we couldn't get ourselves. Like, remember that, that is the plantation they have put us all on. And that is why I think there may be need for government intervention to come in and say those are anti competitive contract provisions. Or so that's like doj, Antitrust enforcement or DOL could come in and say those are prohibited transactions because they're conflicts of interest. And um, as fiduciaries you can't have that on your plan. So either fire the network or the network has to take those provisions out. And when that happens either. And DOJ is running around the country right now suing um, hospitals for anti competitive network contract provisions. And so they launched one in Ohio. They did the biggest bond villain of them all, New York Prez just last last week. And so they're starting to apply the Sherman Antitrust act to hospitals and network contracts. And so I'm like that's great. They're uh, they're taking on some anti provision, anti competitive contract provisions. I want them to take on these that I'm talking about. Like you can't bypass us, you can't bypass our network. You can't cut a deal with each other employers and providers, um, a better deal than you can get with us. Like you can't come together directly and cut us out. Those provisions are anti competitive. When DOJ starts taking that on. And so either the courts rule them anti competitive or DOL outlaws them or Congress outlaws them, which I have written legislation. Should any member of Congress be watching this and want to uh, do that bill, when that happens, networks won't be able to say you can't use your own price, you can't cut your own deal. You have to use our crappy price. And so when they do that, we'll all be able to have a network on board as the plan B and as kind of the wrap. And then we could go out and do direct contracts, we could do cash pay if we have the cash pay capability at our TPA or a vendor and uh, we can go wild and then use the network as the backup. But what's going to happen when that happens? Okay, well then when it comes time for hospitals to negotiate with carriers their rates, they're going to say you pay me more, I'm the hospital, you pay me more. Blue Cross then you've been paying me. Or else I'm just going to go out to my entire town here and I'm going to offer them a direct contract and those employers then aren't going to need you anymore. And that's great. They'll get a good temporary contract that pays them a ton and then the employers will be like why did my insurance rates just go up? Right? Because now m like okay, so because now they're insurance, insurance isn't keeping those costs down. I don't need this network. I'm going to fire Blue Cross and I'm going to build my custom network in town and this is the path to the post network world. And so that is where I'm trying to lead to the promised land of that. There are some transitions but I think government will have to help. And then I'm happy to talk about Ichras because I think government has a potentially an upcoming uh, improvements on that front.

Speaker A: Well, you know, to me the irony of the whole thing is uh, if they're accepting a Medicare price, it's lower than everything we just talked about, right? I mean if you're accepting Medicare, I mean your reference based pricing is higher than that, your cash price higher than that and they're going to say no to those. But it's because they want the 5x of the insurance pay, right? And I mean, yeah, the only, the

Speaker B: only reason that they're going to take, you know, an RBP price or a lower price like a direct contract, a lower price than Blue Crosses the or Blue Cross a bad example because theirs is usually lower. But like United or Cygnus, the only reason they're going to take that is if they're going to get all the volume. Right? So and that makes sense. But you're right that like today you're living on Medicare and Medicaid so what's the big deal? I was lobbied by these guys and they would come in and they would say, you know, their trade groups would come, the hospital association would come in and, and they would say, we're gonna die. We're losing money on every Medicare patient. We're gonna have to close our doors, you know, like, cry me a river. And then I would go to the national association ofstate health plans.org Nashp.org where Marilyn Bartlett rolled out her algorithm to show Marilyn Bartlett, who like beat back all the hospitals in Minnesota for the state health employees plan there and put them all on rbp, which was like uh, uh, a Christmas miracle that that ever happened. And, and then she saved the state like a gajillion dollars and she took that model and she took it to the national association of State Employee health plans. Right. Nashp.org and she created this cost interactive tool. And you can go on that, that tool and you can search up any hospital and it will go through, it will take all the public cost reports that they've filed to the government because remember, they're claiming they're losing money on all this Medicare rates, that they're taking all these Medicare patients and Medicaid patients and all their costs, you know, their, their, their costs exceed their um, payments and they're going to die. They actually have to file reports to the government every year saying actually this is what our costs really are. They also have their like, uh, this tool incorporates their payer mix. So if they truly are like rural or community or critical access hospitals and they're seeing a bunch of indigenous patients, which none of them really are, they all pretend they are. But uh, if that's happening then you know, they've got a ton of Medicaid patients and they really are losing on each of those patients probably then that the tool takes that into account. It takes into account labor costs like a nurse in California we hire nurse navigators and it costs like 50% more to do it in California than it, to do it in Ohio or wherever. So their labor costs are factored in there. All their debts are factored in. Their bad debt community um, assessment where they do the charity care, all of that is factored in. And at the end of that process the tool will show you what is the break even rate. What is the rate they have to charge commercial insurers just to break even. And you can see, oh look, it's 140% of Medicare. That's weird because you're complaining that you're not going to you're going to go under and die if you get paid 170 that I'm offering you. Right. And so you can know, like, actually what it is that the rate that you can offer them, that is fair. And I think that's appropriate because it's not the same for every hospital. And some hospitals are actually above 150, but very few.

Speaker A: But. And you're saying all the hospitals in Minnesota adhered to this and they're all playing night. Wow. That's quite the accomplishment.

Speaker B: Well, they did for a few years. None of them liked it. They did for a few. And one of the reasons is because she went to the unions and she educated them and she. She was hired by the state to, like, save them from their costs. And she's a cpa. And she was like, you could fire me. I don't care. I'm over 65. I'm packing a Medicare card. Like, I don't care if you fire me. But she was basically played chicken with all the hospitals in Montana. And, um, and they. I mean, it was bad. They were like, really, really, really. They were lobbying the state legislature. They were crying, threatening to shut their doors, threatening to keep all the state employees out of the systems. And so she was like in this horrible game of chicken. And then she peeled off the unions and she started educating them and showing them how they were getting totally screwed and how if they had these savings, what better benefits they could have. And so, um, she won them over, and so she won the state legislatures over. And. And it was really impressive. But literally, like, the government changed five years later and they went back to Blue Cross. So it's shocking. Like, the price of vigilance. You must always be vigilant every year.

Speaker A: Well, you know, I've always been confused.

Speaker B: Ah.

Speaker A: And correct me if I'm wrong, but if the no Surprises act that passed a few years back, lots of great wording in it, but there was a back door where you could just pay a fine and not have to adhere to the law. And I'm sitting here thinking, like, that doesn't really sound right to me. And from what I've heard through the grapevine, lots of major hospitals and providers did the math and paying the fine was worth more to them than being transparent on their pricing. Right.

Speaker B: Yeah. You're talking about the price transparency.

Speaker A: Price transparency. Right.

Speaker B: Yes. The no Surprises act is like the IDR and out of network.

Speaker A: That's right. Right.

Speaker B: So kind of a doctor not in

Speaker A: your network when the hospital is.

Speaker B: Right.

Speaker A: Okay.

Speaker B: Yeah.

Speaker A: I always. I Thought it was odd that you can pass a law, but there is a get out of jail free card on the back end of it.

Speaker B: Well, it's not really. So, um, I worked on that regulation, um, spearheaded that regulation for both hospitals and insurers. And we made a calculated choice in that first year because, remember, this was completely radical policy. Like.

Speaker A: Right, right.

Speaker B: And not very Republican policy. I had, I had to fight all the economists and all the free market libertarian, you know, anti government types inside the. To get this regulation out the door. And so regulating, like showing private contract prices and having a Republican force you to do that, like, was almost impossible. And so we made this like, calculated, um, decision that, okay, for the first couple of years, like, we're not going to have the penalties be crazy. We're just going to like, see how it goes and, you know, see if we can name and shame them. Like, because there was a patient organization that was like ready to do so and they were gonna be like buying billboards and hiring celebrities to do like super bowl ads and whatever to like shame, which they have done.

Speaker A: Like, these guys aren't, they're not playing nice. They paid the fine.

Speaker B: And so we thought, like, let's see how this goes at first and then we'll see. But then President Trump lost. And um, so I was like terrified that the industries would come into the Biden administration and, and get them to back off, which the PBMs did. But so the net drug pricing transparency has not happened yet. We had to pass a law just recently to make that happen. But interestingly, the Biden administration totally doubled down and they actually like gajillion toppled the enforcement, so they like 10 times the enforcement penalties. Now remember, it's not exactly a get out of jail card because yes, you have to pay the enforcement penalties, but you also are ruled that like, you have to do it. Um, and if you don't, like, yes, you can get civil penalties, but also you can be barred from, like, if you're a bad actor, you can be barred from participating in Medicare, you can be barred from participating. So there are other levers, but they're not awesome at all. And so now I think, um, some of the regs that have come out and the laws actually Congress and DOL basically enacted the same law just like two months ago that, and it was primarily appearing on the surface to be about PBM price transparency and PBM compensation disclosures and conflicts of interest. But at the end of both of them, at the end of the law that Congress passed, at the end of the reg the DOL proposed. Um, it's basically like, yeah, and TPAs, too. And so I was like, I just read, like, 100 pages, and I'm super excited about the PBM stuff. And I'm like, this would be great if it were, like, the carriers do. And then I saw that, and I'm like, oh, my gosh. So if you are prohibiting a bunch of conflicts of interest and you're requiring absolute 100% transparency about all revenue streams, all indirect revenue, all business arrangements, like that is major. And they put it into erisa. So this is not just this, like, freestanding price transparency, regardless. It's also like, if you do any of this, it's a prohibited transaction under erisa. Uh, and you, as a fiduciary, not just the plan sponsor, they're also saying, any of y' all out there, you PBMs, you vendors, you brokers, any of y' all who are making any decisions about the plan, like what's prior, authorized, what, how the appeals process works, what drugs are on the formulary, you know, anything like that, what the plan design is, any decisions that you're making on that plan, you're a fiduciary. And so all you vendors out there, you're fiduciaries, too. And by the way, if you have all these, like, conflicts of interest and, you know, crappy business models that are screwing over the plan beneficiaries, you're a bad fiduciary. And all of that are prohibited transactions, and you could go to jail and face criminal and civil penalties. So, um, it's very interesting that they're getting real serious about this.

Speaker A: That is very interesting. Well, and I know it's probably for another conversation, but that pharmaceutical lobby is probably the biggest one out there, right? They don't want anyone messing with what they're doing.

Speaker B: Yes. Um, people will ask me, like, who are the biggest bond villains in the whole swamp? You know, and usually my first answer is not the drug makers. Usually it's PBMs and fake charity hospitals. But that's not to diminish the pharmaceutical industry, because they are the biggest lobbying spenders. So, you know, you have to report your lobbying spending every year, and they spend, like, they have four to five lobbyists for every member of Congress. So that's 535 members of Congress, and they have four or five lobbyists for each of them. And, um, they don't actually, like, assign them to each one, but it's like that's how many lobbyists they have. And, um. And they are the number one industry on lobbying spending above and beyond, like, like the second, third and fourth, like bigger than them combined. And um, but more important than lobbying spending because I actually think Congress and the executive branch have really started to like, not really listen to their lobbyists. I mean, like, they're actually willing to screw over drug makers in a way that I had not seen growing up as a little Republican staffer in the Senate all those years ago. And you know, back then we would just not knee jerk whatever the drug industry wanted because we were fighting against like Hillary care, like total government takeover. We don't want to set the prices on drugs, we don't want to like eliminate the private market. And we had this like knee jerk defense of these industries even as under our watch those industries were becoming less and less defensible and we still like knee jerk defended them. So I think that now like starting with the, basically the Trump administration, because he was so populist and that changed and that started to change and Republicans started voting against the pharma industry interests, um, for the first time. And now they're doing it all the time. Then the Biden administration came in and like outright fixed prices in Medicare for the first time. So things are changing. Like they actually don't have the influence they used to have, even for all that spending that they invest to try to get that influence. And so I would love to like take them off the pedestal as like the number one Bond villain. But I'll also tell you this. So I'm friends with the FDA commissioner and when he was first being considered, um, and was potentially going to be nominated, I said to him, buddy, you better get right with God because you're going to be taking on like the powers and principalities in the spiritual forces of evil. Like, you're like, they're no joke. And I say that because when I was in the first Trump administration, we had a guy who we had brought in from the PBM industry to help us develop the President's drug pricing plan because he was like very jacked up about like trying to get drug prices lower. Still is, um, God bless him. And we, you know, needed to put together a plan and the HHS secretary brought this guy in, brilliant, wonderful guy, really committed, developed a very subversive, awesome, like, first of its kind to take on these industries plan. And it would have, like, if enacted, would have really shook things up and, you know, threatened the revenue and business models of these industries. Well, he plummeted to his death off a high balcony, um, in the middle of the administration, and it was ruled a suicide. He had a wife and two, and I think two young kids. He was happy, as m. Happy as any of us could be. Like, in the middle of that, like, stressful jobs. And, you know, we were always, like, stressed, but. But he was not, as far as I know, like, depressed or suicidal. Maybe I just didn't know him well enough.

Speaker A: Yeah.

Speaker B: Or maybe not. And so I'd like to say that the drug makers are kind of losing their edge, and they're not the biggest Bond villains, but, like, also, there's that. And I see them attacking the FDA commissioner, all his deputies, trying to get them all fired every time they do something that threatens in any way the status quo. So it's really bad.

Speaker A: I mean, that's, uh, a interesting perspective, for sure. Well, Katie, I appreciate you joining us. I think you gave our audience, uh, an inside perspective that we don't really see a whole lot. And, you know, we're working with a lot of brokers that, you know, these are the companies and the policies that they have to learn and the companies they're interacting with. But, you know, I don't know that we've had a guest before that's been able to kind of take us behind the curtain. So I really appreciate that, and thanks for your knowledge and thanks for joining us today, Katie.

Speaker B: It's my absolute pleasure. Thank you so much for having me.