David 0:00

The last time we talked with today's guest was back in episode 247, which was back in 2018, which in insurance years is a lifetime. Since then, there's been a resurgence of interest, as most of you know, in self-funded plans. So the question is: what's new? What do you need to know? And how can you make these plans operate properly and more importantly, within the law for your clients? We'll find out on this episode of Shift Shapers.

Announcer 0:25

Change either paralyzes or energizes. The choice is yours. You're listening to the Shift Shapers Podcast. You're about to learn firsthand from businesses and entrepreneurs who have successfully shaped the shifts in their industries. Get ready to become the change you want to see. This episode is brought to you by Shift Shaper Strategies. In sales, if you confuse, you lose. Clarify your message so you win more clients, crush your sales goals, and build your practice. Learn more at ShiftShaperStrategies.com. And now, here's your host, Story Brand Certified Guide and Chief Transformation Strategist at Shift Shaper Strategies, David Saltzman.

David 1:16

And we're happy to welcome back one of our favorite guests, a true authority on all things Arissa and a bunch of other stuff that we probably won't get to. Co-founder and president of the Theatre Group and partner in the law office of Russo and Minchoff, our friend Adam Russo. Hey Adam, how are you doing?

SPEAKER_02 1:30

How am I doing? How are you doing? I feel great. I'm doing great. Happy to be here.

David 1:34

At my age, every day above the grass is a great day, so I'm happy. So here's a softball question for you to start with.

SPEAKER_02 1:40

Softball question.

David 1:42

What's new? ERISA-wise, plans-wise. What's new? What are you seeing?

SPEAKER_02 1:46

Wait, I thought you said this could be a softball question. That's like the hardest question to answer, possibly. Everything's going on. What's not happening?

David 1:53

Premier Mortals, not for you.

SPEAKER_02 1:55

Here's the bottom line, folks. Every year, it seems like healthcare, health plans change, have to change. Regulatory changes. I mean, we could go to the Supreme Court, right, on the abortion issue. Plan document changes are obviously being made, affected, et cetera, because of that. The NSA, compliance, regulatory work. It seems that almost every section of a plan document needs to be updated and revised just to keep compliant. Never mind innovations, never mind new technology. Just to be compliant, there are so many things that you have to do under your fiduciary duty as a plan sponsor. So is it good for me? Sure. It's business, right? There's more work to do, etc. But I just don't know how a normal, a typical plan, a typical employer who's self-funded or their broker can keep up with all these things without having some legal expertise behind them because there's so much going on and it's not always easy to do. So it's funny, when I interview people for jobs, I'll have an attorney apply and say, I have 30 years of healthcare experience. I go, all you need is one. All you need to know is what happened last year. I don't care what happened 30 years ago. So from that standpoint, that's what's new. But I can get into technology, all these other things. But from a compliance standpoint, a regulatory standpoint, and what's happening in DC with pharmaceutical drugs, right? The ability to for the government to be able to negotiate pricing. There's so dialysis. We saw the Supreme Court case, which finally allows, thankfully, a plan to carve out dialysis and have that reimbursement amount be tied to, let's say, a Medicare reimbursement plus 30%, etc. So, and that might change as well. There's more to come on that. But from the Supreme Court to just Congress, forget about your own state and what laws they may have or not have. A lot's happening when it comes to self-funding.

David 3:53

Well, and you know, what I worry about is the fact that all of that turmoil, which, you know, for those of us who've been in the ERISA universe for a long time, it's always been changing. But it seems to have amped up. And now we've got a whole bunch of advisors who are starting to dip their toe into self-funding who really don't have the depth of knowledge that they ought to have, or certainly that they want to have, and they're working with smaller and smaller groups. Are you finding that you're doing a lot of a lot of teaching, a lot of hand holding more than you maybe were five years ago?

SPEAKER_02 4:23

There's always hand holding, right? But now more than ever, because of what I just brought up. So what people hear, and again, one of the things I didn't bring up, and I want to make sure I mention right now, really quickly, is mental health parity. You know, making sure that if you cover mental health, which is a growing issue in this country because of the pandemic, had a big thing that had a lot to do with it, you have to have mental health with on parity with your other health benefits. Most plans fail. And I can tell you the DOL has now has more auditors out there checking to make sure that your mental health benefits are up to stuff. So during COVID, what we saw is more people drinking, more people getting on prescription drugs, higher illegal drug utilization. So now what we're noticing is more treatment center claims, way more. People going to detox, California, Florida, you've all seen the commercials. Those claims are out of network. But also during COVID, what happened was people did not go to their doctor. People did not have those surgeries that were elective. So if you're a broker, if you're an employer, even if you had 50 people, what would you say? Wow, this self-funding thing is great. Look how look how much money you save. Well, the reason why plans did really well in 2020 is because no one was able to see their doctors. Now we're feeling it. So what we're noticing in the stop loss market, as an example, is people did not get checked or screened for cancer. Now you have stage four, stage three that those stop loss carriers are now paying those particular claims. So we're noticing finally the effects of not going to the hospital, not seeing our doctors, not seeing our specialists. But claims were low. And I can tell you this, they weren't low because of some innovation. They were low because of the pandemic. So more and more of these brokers, more of these so-called experts are coming into fray, and they're saying, well, become self-funded. Why? It's a cool thing. Most of these folks, I would say, don't really know what they're getting themselves into, either from a cost standpoint, what vendors to use, what administrators to use, ASO, TPA, whether or not they truly don't understand their fiduciary duty. I can tell you that right now, that actual the actual plan makes those claim decisions. So yeah, it's getting, put it this way, it's getting more complicated. More people are entering the market. Those people that are entering the market don't necessarily know what they need to know in order to be a successful self-funded plan. So what happens? Those same entities, after one year, go, man, this self-funded thing is horrible. I don't want to be self-funded anymore. And that broker now looks at self-funding in a negative light versus engaging more and more of their plans and clients to a self-funding platform. So there's good to it that there's more people, there's more interest, but the negatives I feel outweigh the benefits, especially when it comes to stop loss policies. Look at the stop loss industry. People assume they're all the same, it's a commodity. It's not the same. I can tell you this. When I grow up, I think I'm maybe I've mentioned this to you before. I know that if I wanted to, I could start via stop loss, and I will charge the lowest premium in the country. No one will even be close to my price, David. Nobody. Except one thing. There'll be a one-page policy. And on that first page, it's gonna say, We will never reimburse a claim. I'll have it highlighted. Glitter, huge fonts. No one reads them. So what happens so many times, especially now, plans are being put, are being placed with stop loss carriers or MGUs, where they have not read their policy and don't realize there's so many circumstances where they would have to pay a claim and that carrier would not have to reimburse. And as claims get bigger and bigger and bigger, more money out of the pocket of that particular employer that they did not expect to have to pay, that they thought they were protected for. So much going on, and I would hope, and what we're doing a lot of, obviously, is educating these folks as to what they need to do if they're even thinking about creating a self-funded plan.

David 8:47

Well, and that was the question that I was going to ask you is okay, so I I want to be a diligent broker, I want to do things right, I want to understand things. Years ago, we had Prue School and we had, I mean, remember when I started with State Mutual Yield Worcester Mass Company, they sent me to Worcester for four weeks for training before they'd stick me on a client. How do you learn today? Because it's so complex and there's so many moving parts to the machine that we simply call self-funding. How does a broker learn? Where do you go to get that knowledge?

SPEAKER_02 9:16

Hey, I want to plug my own company, but obviously, my company has great resources online that are available. The industry has great information, whether it's SIA, whether it's HCAA, SPBA, there's so much out there from a standpoint of self-funding with third-party administrators. But I think what we're we have to do, we're missing one point. And the point that we're missing goes back to what type of self-funding do they want to do? And that's going to be based on what is that company doing today? What are they doing currently? Let me give you an example if you don't mind. If you have a plan, if I'm a broker and I have a client that is fully insured with Blue Cross Blue Shield in Massachusetts, it's probably not the best thing to put them on a reference-based pricing plan as your first option. But if you're a broker and you happen to listen to a reference-based pricing webinar, you might not even know that there are other options out there. So I think first you have to actually look at the client. Where are they located? Where is their employee population? What are the risks of that population? Now that's hard to do because you actually need the claims data. And one of the benefits of being a self-funded plan with the TPA is that you actually get claims data to analyze. When you're coming from a fully insured market, they don't have that data. But you can still do a census, a polling based on the population they have to figure out all right, where are my risks? If the company that I'm representing has a hundred employees and two of them are hemophiliacs, you're probably not a good idea to have that be a self-funded plan. So that's the first thing you got to do. Look at the demographics, understand the plan, and also understand what the benefits are that the employees are currently getting to see what makes sense going forward.

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David 12:09

As we record this, which is August 2022, I suspect that you're fielding a lot of questions about Dobbs. What's happened so far? Is it going to be unsettled forever in six days? How do you keep track of all the different state regulations and state variations, etc.?

SPEAKER_02 12:26

Great question. We have 28 attorneys. We have a team of attorneys who do nothing but literally follow the laws. And like you said, it's not just federal, it's individual states. So what I can tell you is it's a daily issue. Every I mean, we had a webinar yesterday where we talked about Dobbs in detail. When Dobbs came up, the audience peaked. They were all listening. No one was, you know, watching TV or doing something else. They were all paying attention. Why? Because every single plan has to do something. Right? So, for example, if you're an employer and you're in a state, let's say that restricts or has a lot of restrictions in regards to a women's right to an abortion, and you feel strongly that you want them to have the right, well, what do you do? Medical tourism, pay for an Uber to bring it to another state. There are so many different complications and things you have to look at that we could obviously assist with, and we do assist with. But the problem you got is you also have to look at the surrounding areas, right? So if I'm in Texas and I say, all right, you know what, we're close to Oklahoma. Maybe we have our people give them the right to go to Oklahoma. Well, what are the laws there? What are the restrictions? It is by far, as you all know, as people know, every plan document has amendments. We do amendments for everything. I mean, you name it, COVID had a bunch of amendments. Dobbs by far has the most requested amendments that we've ever had for any type of plan provision, whether it's regulatory on a state or federal level. It's insane how much work there is.

David 14:04

And it's not going to stop anytime soon. I mean, there are a lot of states that are still uncertain that haven't codified what it is that they want to do, et cetera. So I suspect, don't you, that that's going to be going on for some time yet.

SPEAKER_02 14:14

Exactly. And I mean, obviously it's causing HR nightmares, right? It's causing a lot of issues for a lot of employers. I mean, again, it's causing issues for people, families, you know, what they want to do, what they're going to do. So because there's so much, you know, gray area when it comes to this, it makes it hard. But at the same time, what it does as well, though, is it creates opportunity. Because when we look at a particular plan and we're looking to see what we could do in order to accommodate a particular client, at the same time, we're telling them, hey, you missed this. Hey, you're not compliant when it comes to this area of the law either. I would say that probably half of the plan documents that we receive in a review aren't compliant in some fashion. Meaning, I'm not talking about some little thing. I'm talking about mental health parity is a big one. The COVID pieces, coverage of COVID-related illnesses. And now Dobbs just brings it to a whole new level when it comes to compliance.

David 15:10

Is mental health still the biggest thing that you're finding where you find compliance errors? I mean, you mentioned plan documents. I don't even think that a lot of people are schooled on a properly constructed plan document. Are you seeing mental health? Like give us an example of a plan that might be out of compliance relative to mental health parity.

SPEAKER_02 15:25

Okay. So before I want to take a step back first, you mentioned people aren't sure about their plan documents, etc. Well, here's why. If you're a fully assured plan, there's one plan document and the carrier wrote it and that's it. You don't get to make any changes. All you basically could do is maybe change the deductible levels, co-pay levels. That's all. Same thing primarily in the ASO environment, same thing. You could probably change the deductible level and the um co-pay level. In the TPA world, there's a lot more flexibility. So when this all first came out, the NQTLs last year, I would advise that most employers, even though we told them, we told all the clients, all the plans, all the brokers, you have to be in compliance as of 2021. Okay, I'm gonna explain what that means in a minute, but compliant. You nothing, no one did anything. Everyone said, Well, they're not gonna go after me, I won't get audited. And they were right. There were only 50 auditors, I believe, in the country in last year, and I think 130-something plans were actually audited, not one passed. All of them failed. Okay. This year, there are 500 auditors, 10 times more, and people are realizing there's a bigger risk in non-compliance. So, for example, last year we would proactively reach out to our clients and tell them why it's important to make sure they have mental health parity with all the other benefits. This year, we're not calling anybody, they're calling us, asking us to ensure that they're being compliant. And to make it simple, what does compliance mean? If you cover mental health benefits at all, right? At all, you can't treat it differently than if I had if I needed a chiropractor. Okay? So let's say mental health is a chiropractor for the brain versus a chiropractor for your knee. If your plan document says you have 20 visits to your chiropractor, you can't only have five visits to your mental health professional. That's non-compliant. So there's a lot more to it, obviously. Feel free to reach out to anyone in my organization to talk about it. But it it is a growing concern. I would argue 80 to 90% of plans aren't compliant when it comes to that.

David 17:43

Do they have contradictory language in their plan or do they just not speak to it?

SPEAKER_02 17:48

If you don't cover it at all, it's a mood point. But pretty much everyone covers some aspect of it. So when you say contradictory, it's more about limitations on utilization. That's the key. And that's where a major problem lies, is because of the issue we have across the country with heroin usage, illegal drug utilization, more and more people becoming addicted. What's happening is those rehabilitation facilities are popping up all over the country. It's almost like remember back in instead of like prisons. Instead of finding a way to have less people go to prison, you build more prisons. That's what's happening right now when it comes to drug use. Instead of trying to figure out ways to get people from taking those drugs, we're just building more facilities. A lot more. And those facilities are all out of network and they can charge whatever they want. Now I want you, David, to imagine, knock on wood, you know, a friend of yours has a daughter who's on the plan and she's needs drug rehabilitation. You submit the claim and your employer says, Nope, not covered. For a variety of reasons. Maybe they're charging way too much money. It's not the same thing as being denied a claim for a knee replacement, right? You're saying to yourself, my child will die if they don't get help. So you see a lot more complaints, a lot more calls to the DOL as it relates to drug rehabilitation facilities. And when the DOL gets those phone calls, guess what happens? They audit. So there's more and more pressure for plans to agree to pay those claims. The problem is they're egregious on many occasions.

David 19:31

Well, there's also a personal issue to this that some folks don't realize as well, and that is there's a difference between a quote-unquote big bad carrier denying something and the plan sponsor denying something. Because these are people you know, you love, you work with, it's their kids, it's their spouses, it's their families, et cetera. And what they also don't understand is that under an ERISA plan, once you make an exception, that's the plan.

SPEAKER_02 19:54

You have to make it for everybody.

David 19:55

Yep. So there's so many pitfalls and things. I mean, Adam, you and I could talk about, we're out of time, but we could talk about this forever and six days and not cover everything. But I urge everybody, if if you're not calling Adam's firm, call somebody. If you're in the self-funded universe, please make sure that you know these things, that you learn what you need to learn, and that you're doing not only the right thing for your client, but you're doing things right. Adam Russo, president of FIA Group, partner in the law offices of Russo and Minchoff, and as I repeat, one of our favorite guests. Adam, thanks so much for spending some time, and we look forward to chatting again soon.

SPEAKER_02 20:29

I'll be honest, I'm honored to have been invited. I appreciate the opportunity, and uh have a great day. Thanks.

Announcer 20:36

The Shift Shapers Podcast is a production of Shift Shaper strategies and may not be reproduced or quoted in whole or in part without our express written permission. Copyright 2020, all rights reserved.