EP369: What’s Up With Specialty Pharmacy Bagging? With Keith Hartman, RPh

For a full transcript of this episode, click here. On the show today, I am going to use the term TPA (third-party administrator) and ASO (administrative services only) vendor kind of interchangeably here. But these are the entities that a plan sponsor—for example, a self-insured employer is a plan sponsor—but these plan sponsors will use to administer their plan. And one of the things that TPAs and ASOs administer is this so-called weekly claims wire. Every week, self-funded employers get a weekly claims run charge so they can pay expenses related to their plan in weekly increments. The claims run usually comes with a register or an invoice. This invoice might be just kind of a total (“Hey, plan. Pay this amount.”). Or there might be a breakdown like, “Here’s your medical claims, and here’s your pharmacy claims.” Maybe there’s another level down from that of detail if the plan or their advisor is sophisticated enough and/or concerned enough about the fiduciary risk to dig in hard about what the charges are actually for. I was talking about this topic earlier with Dana Erdfarb, who happens to be executive director of HR at a large financial services organization. Dana I’m definitely gonna credit for inspiring this conversation that I’m having today with Justin Leader. Dana was the first one to really bring to my attention just the level of hidden fees that are buried (many times) in these claims wires … because when I say buried in the claims wire, I mean not charged for via an administrative invoice. These hidden fees are also not called out in the ASO finance exhibit in the contract, by the way. So, yeah … hidden. I don’t know … if you have to hide your charges, in my mind that’s a pretty big tell that your charges are worth hiding. Now the one thing I will point out is that just because the charges are worth hiding doesn’t necessarily mean that the services those charges are for are unwarranted. Some of these services are actually pretty worthwhile to do. There’s just a really big difference from a plan sponsor knowingly contracting at a known rate with a third party to do something versus paying for a service knowingly or unknowingly via fees hidden in a claims wire wherein the amount paid is not in the control of the one paying the bill. Anyway, I was talking about all of this earlier, as I mentioned, with Dana Erdfarb. That conversation was exactly the framework that I needed to snag Justin Leader, my guest today, to come on the pod and really dig into the detail level of what’s going on with this claims wire. So, in this healthcare podcast, we’re gonna talk about the five fees that tend to be tucked in to many claims wires. We also talk about one bonus—not sure if it’s a fee—one bonus way that plan sponsors give money to vendors in ways the plan sponsor might be unaware of. Here are the five hidden fees that we talk about at length in the show today, and then I’ll cover the bonus: 1. Shared Savings Fees. This is where a member of a plan goes out of network, and the TPA/ASO goes and negotiates a discount from the out-of-network provider and then shares the savings. Get it? Shared savings? This category also might include BlueCard Access fees, which we talk about in the show. But there also could be overpayment recoupment fees lumped in here. This is where the TPA messes up, overpays, and then charges the plan sponsor a percentage of the money they just got back when they corrected their own mistake. I’m just gonna pause here while everyone contemplates how we’ve all gone so wrong in life to not have figured out a way to charge others when we correct our own mistakes. Here’s a link to a great LinkedIn post by Chris Deacon and a deep dive article on this topic. 2. Prior Auth Fees. Lots to unpack with this one, which Justin does in the pod. 3. Prepayment Integrity Fees. This is evaluation of the claim before it’s being paid. Listen to the show for how this may (or may not) differ from what the TPA/ASO is supposed to be doing (ie, it’s the TPA that’s supposed to be [yeah, right] adjudicating and paying claims). 4. Pay and Chase Fees. This is where a bill was paid wrong, and it’s not immediately the TPA/ASO’s mistake. This is where something like a provider double billed or overcharged or something, and the TPA/ASO later figures this out and then chases the pay to get the money back. 5. TPA Claims Review Fees. Sort of self-explanatory but also not. Again, please listen to the show for more. When I’d been talking about all of this with Dana Erdfarb, as I mentioned earlier, just about this whole thing, she said something that Justin Leader echoes today: Many of these fees are structured as a percentage of savings. This is challenging for a plan sponsor because the savings is vendor reported and not validated. But it also means that if the savings increase annually with trend (as they, generally speaking, do), then the fees will increase with that trend as well—and that is something to keep in mind. Okay … so, here’s the bonus thing that didn’t get a number in the show today, but it is certainly a way that plan sponsors pay money to vendors. And this is medical claims spread pricing. This is buried in the claims wire and inside the dollar amounts the plan sponsor thinks they are paying a provider for a service. It turns out that it can turn out that the amount the plan sponsor is paying is more than the check that’s being written to the provider for the service being delivered. Or the amount the plan sponsor is paying the provider for a service is more than for simply that service that has been rendered, right? The plan sponsor is paying the provider for other stuff as well, as is alleged in the DOL v BCBS of Minnesota lawsuit, which Justin brings up in the show today. It drives me nuts, honestly, when there are people who tout their transparency. But then it turns out if the equation is A plus B equals C, only like one of the numbers is transparent. Sorry, functionally, that doesn’t count as transparency except in marketing copy. This is all to say—and here’s Dana Erdfarb’s actionable advice which sums up points Justin also made—when employers review their medical plan vendor contracts, they should make sure to identify, review, and document all fees being paid to their vendors and incorporate this knowledge into their renewal/RFP (request for proposal) discussions and negotiations. Jeff Hogan echoed this advice on LinkedIn the other day when he commented on this show: “Such a great opportunity for employers to have their administrative services agreements and other documents examined to discover these schemes. It’s not hard to do. Also, a great advertisement for the value of having retrospective audits performed. It is eye opening to see not only the amount of arbitrage but often how payers don’t even pay according to their contracts. Justin Leader is the perfect guest.” As mentioned a myriad of times already, my guest today is Justin Leader, who is president and CEO of BenefitsDNA. Justin works with plan sponsors, both commercial plans as well as Taft-Hartley plans, across the United States. Before we kick into the show today, I just want to thank By the 49ers for the really nice review on iTunes. By the 49ers calls Relentless Health Value a “leading voice in healthcare” and says he or she always leaves “with intrigue, a new idea or a new approach to problem solving.” Really appreciate that. That is certainly one of our goals around here. So, thank you so much. Oh, also, please subscribe to the weekly email that goes out. You can do that by going over to our Web site and signing up. There are a lot of advantages to doing so, which I’ve talked about before, so I’m not gonna do so again; but it is a great way to make sure that if you’re a member of the Relentless Health Value Tribe, you are aware of the current goings-on. Also mentioned in this episode are Dana Erdfarb, Chris Deacon, Jeffrey Hogan, BenefitsDNA, Rik Renard, Cora Opsahl, Al Lewis, Julie Selesnick, Mark Davenport, Karen Handorf, Dawn Cornelis, AJ Loiacono, and Mike Miele. You can learn more at benefitsdna.com or wefixyourhealthcare.com. You can also follow Justin on LinkedIn.     Justin Leader began his career in the pharmaceutical and financial services industries. By 2011, Justin entered into the group benefits field consulting for many notable Fortune 500 clients. In 2014, he established BenefitsDNA, an objective, independent health and welfare benefit plan consulting firm providing compliance oversight, actuarial services, cost mitigation, and traditional broker services to Group Health Plan Sponsors. As a Certified Health Rosetta Chartered Advisor (eighth advisor to join), he’s acknowledged for contributing to healthcare solutions in the United States both in policy as well as practice and is an avid supporter of Patient Rights Advocate. Throughout his career, Justin has been instrumental in introducing successful healthcare benefit solutions to the market, which have been pivotal in solving critical issues and saving millions for employers and their employees. As a mission-driven leader, he and his team are passionate about fixing healthcare one client, one member, and one partnership at a time. Having trademarked We Fix Your Healthcare™, their mission is one that his team takes seriously. Justin, a native of Bedford, Pennsylvania, holds a pre-medicine degree and a master’s degree in exercise science from California University of Pennsylvania. His dedication extends to servant leadership, volunteering in the local community including serving on the PA State Council of SHRM (Society for Human Resource Management) since 2016. Justin is a public speaker and owner of Leaders Never Quit, where he dedicates his time to inspiring others with a message of hope, humor, and resilience.   07:55 How is the claims wire typically explained to a plan sponsor? 11:18 What is the whole point of self-funding? 11:27 Why is it so vital to understand what you’re paying for? 12:38 What are the five “buried” items that wind up in these claims wires? 13:03 What is a shared savings fee? 17:10 “Rates are important, but so are your rights.” 21:01 What’s going on with prior auth fees? 23:35 What is prepayment integrity? 28:16 What is pay and chase? 31:54 What is a TPA claim review? 35:47 Is there medical claim spread pricing?   You can learn more at benefitsdna.com or wefixyourhealthcare.com. You can also follow Justin on LinkedIn.   @JustinDLeader discusses #plansponsor #payments on our #healthcarepodcast. #healthcare #podcast #digitalhealth #healthcareleadership #healthcaretransformation #healthcareinnovation   Recent past interviews: Click a guest’s name for their latest RHV episode! Dr Scott Conard (Encore! EP391), Jerry Durham (Encore! EP297), Kate Wolin, Dr Kenny Cole, Barbara Wachsman, Luke Slindee, Julie Selesnick, Rik Renard, AJ Loiacono (Encore! EP379), Nina Lathia  

For a full transcript of this episode, click here. Here’s a great musing that I read on LinkedIn: How will alternative primary care models fare when growth mode gets balanced with profitability and VC-supported burn rate is transformed to Big Retail bottom-line expectations? Mission v. margin. I’m gonna add to this: How will alternative primary care models, or even just doing good primary care, fare when it encounters the current system rife with perverse incentives of all kinds, including, yeah, for sure, Big Retail bottom-line expectations but also Big Health System and Big Payer bottom-line expectations and current business models? This show from last year was wildly popular—maybe one of our most popular shows—and relisten to it in the current context of what’s going on right now in the primary care and MSO (Managed Services Only) space. Coming up, I’m gonna probably do a whole show on this if I can get my act together; but this encore is really relevant right now. One piece of podcast business before we get into the episode: Please sign up for our weekly email if you haven’t already, especially if you consider yourself part of the Relentless Health Tribe. I am mentioning this not only because it’s a great way to keep track of our shows because you can do an email search to remember where you heard something, since a good deal of the show intros are in the emails, but also, there’s a plan afoot to hold some Zoom meetings to talk about different topics etc—and you won’t be notified of such goings-on unless you’re subscribed. You can unsubscribe whenever you want, by the way; and I am way too busy to send more than one email a week or spam if that was a concern. On Relentless Health Value, I don’t often get into our guests’ personal histories. There are a bunch of reasons for this, which, if you buy me beer, we can talk podcast philosophy and I will tell you all about my personal, very arguable opinion here. Nevertheless, in this healthcare podcast, we are going rogue; and I am talking with Scott Conard, MD, who shares his personal story. You may ask why I decided to go this route for this particular episode, and I will tell you point-blank that Dr. Conard’s experience, his narrative, is like the perfect analogue (Is analogue the right word [allegory, composite example]?). His story just sums up in a nutshell what happens when a PCP (primary care provider) does the right thing, manages to improve patient care for real, and then at some point gets sucked into the intrigue and gambits and maneuvering that is, sadly, the business of healthcare in the United States today. Before we kick in, I just want to highlight a statement that Scott Conard makes toward the end of the show. He says: So, this isn’t about punishing or blaming aspects of care that are being overrewarded today. It’s really about what’s the path forward for corporations, for middle-class Americans, and for primary care doctors who don’t choose to be part of a big system. We have to figure out how to solve this problem. I hope people don’t hear this and think that there are horrible people at some not-for-profit hospital systems, for example. There are some great people at not-for-profit health systems, but they have some really screwed-up incentives. A few notable notes from Dr. Scott Conard’s journey and words of wisdom that I will just highlight up front here: He says that as a PCP, you actually can produce high-value care in a fee-for-service model … if you think differently and you change practice patterns. I have heard this from others as well, including most recently David Muhlestein, PhD, JD, who says this in an episode (EP393). As Dr. Scott Conard says later in this episode, healthcare organizations must embrace the art of medical leadership. So, I guess that’s a spoiler alert there. Another point that Dr. Conard makes very crisply toward the end of the show is that doctors can kinda get pushed and pulled around in this mix. You have docs just trying to provide good care, and they work for one entity that gets bought and now it’s some other entity … and what’s happening upstairs and the prices being charged or somebody somewhere deciding not to make prices transparent, or deciding to sue low-income patients for unpaid medical bills or what charity care to offer or not to offer. These are not doctors in clinics making these calls, and we need to be careful here not to homogenize what some of these health systems are choosing to do like some kind of democratic vote was taken by everybody who works there. Health systems, hospitals, are many-celled complex entities. And a third takeaway—there are a bunch of takeaways in this show, but a third one I’ll highlight here from Dr. Conard’s story—is the old fiduciary responsibility code word being used by health system administrators as a euphemism for strategies that might need a euphemistic code word because the strategy has questionable community benefit. In the case study that we talk about today, the local health system managed to raise healthcare spend in North Texas by $100 million year over year. Employers and employees in North Texas communities wound up paying $100 million more year over year in healthcare one particular year. This was prices going up. It also was removing a big systemic initiative to keep heads out of hospital beds. Reiterating here, we are not talking about doctors here particularly because, of course, the vast majority of doctors are trying to prevent avoidable hospitalizations. But suddenly in North Texas, physicians did not have the population health efforts and the team really standing behind them helping to prevent avoidable hospitalizations. That sucks for everybody trying to do the right thing, and, as has been said, burnout is moral injury in a cheap Halloween costume. Moral injury happens when you have good people, clinicians, doctors, and others who realize that what is going on, at best, is not helping the patient. Also mentioned in this episode are Benjamin Schwartz, MD, MBA; David Muhlestein, PhD, JD; Brian Klepper, PhD; Al Lewis; Robert Pearl, MD; Karen Root, MBA, CCXP; and Wendell Potter.   You can learn more by emailing Dr. Conard at [email protected].   Scott Conard, MD, DABFP, FAAFM, is board certified in family and integrative medicine and has been seeing patients for more than 35 years. He was an associate clinical professor at the University of Texas Health Science Center at Dallas for 21 years. He has been the principal investigator in more than 60 clinical trials, written many articles, and published five books on health, well-being, leadership, and empowerment. Starting as a solo practitioner, he grew his medical practice to more than 510 clinicians over the next 20 years. In its final form, the practice was a value-based integrated delivery network that reduced the cost of care dramatically through prevention and proactive engagement. When this was acquired by a hospital system, he became the chief medical officer for a brokerage/consulting firm and an innovation lab for effective health risk–reducing interventions. Today, he is co-founder of Converging Health, LLC, a technology-empowered consulting and services company working with at-risk entities like self-insured corporations, medical groups and accountable care organizations taking financial risk, and insurance captives to improve well-being, reduce costs, and improve the members’ experience. Through Dr. Conard’s work with a variety of organizations and companies, he understands that every organization has a unique culture and needs. It is his ability to find opportunities and customize solutions that delivers success through improved health and lower costs for his clients.   06:54 What triggered Scott’s career journey? 07:31 What caused Scott to rethink what is good primary care? 08:11 Why did Scott realize that he is actually a risk-management expert as a primary care doctor rather than someone who treats symptoms? 09:25 EP335 with Brian Klepper, PhD. 09:53 How did Scott’s practice change after this realization? 10:04 What is a “Whole-Person Risk Score”? 11:08 Scott’s book, The Seven Numbers (That Will Save Your Life). 13:05 “You start to move from a transactional model to a relationship model.” 15:31 Did Scott have any risk-based contracts? 16:08 Why is it so important to look at total cost of care and not just primary care cost? 21:08 Scott’s book, The Art of Medical Leadership. 22:13 EP381 with Karen Root. 30:43 Why did Scott move over to help corporations? 33:10 EP364 with David Muhlestein, PhD, JD. 33:51 “Everybody thought they were honoring their fiduciary responsibility, and the incentives are completely misaligned.” 34:31 EP384 with Wendell Potter. 34:43 “It’s the system that’s broken; it’s not bad people.”   You can learn more by emailing Dr. Conard at [email protected].   @ScottConardMD discusses #primarycare #marginvsmission on our #healthcarepodcast. #healthcare #podcast #digitalhealth #healthcareleadership #healthcaretransformation #healthcareinnovation   Recent past interviews: Click a guest’s name for their latest RHV episode! Jerry Durham, Kate Wolin, Dr Kenny Cole, Barbara Wachsman, Luke Slindee, Julie Selesnick, Rik Renard, AJ Loiacono (Encore! EP379), Nina Lathia, Marshall Allen

For a full transcript of this episode, click here. This show has implications for provider organizations of all stripes, especially those looking to succeed in value-based care or those who need patient trust and relationships for any other reason, including just patient volume. This episode also is for provider organizations who are trying to prevent clinician burnout better. It’s also for practices trying to get themselves into narrow networks where patient satisfaction is surveyed at some point in the process, and this includes Centers of Excellence networks. You know what the rate critical is that I talk about on the show today with Jerry Durham that rarely, if ever, gets talked about in any of these contexts? It’s not some fancy data artificial intelligence thing or something else the doctor needs to be clicking on or nurses need to step up and handle. Nope. I’m talking about the front desk. What an overlooked secret to success or a clinician and clinical failure point! Consider that what goes on on or about the front desk is either gonna set up the doctor or other provider for success or make it really really hard for them. This is what I talk about today with Jerry Durham in this encore episode from a couple of years ago that is still so incredibly relevant because the insights that Jerry shares are so often overlooked and they impact both patients but also doctors and other clinicians in ways we don’t often think about but, in this era of staff shortages and burnout, I’d suggest maybe we should. Here’s something I never really understood: how physicians and nurses more often than not get to be responsible for the entire patient journey, including, start to finish, patient satisfaction. But if you just take one look at any random poorly rated physician’s reviews, they’re usually littered with complaints about the front desk in the practice. Negative reviews, of course, are not limited to front desk diatribes; but there’s often a lot of front desk commentary in them. It has always seemed to me to be a common and strange phenomenon in healthcare provider practices where the front desk is like a totally separate little fiefdom with a different mission statement and goals from the healthcare providers in the same exact office. Isn’t that odd when you think about it? I mean, first, the front desk is literally physically separated from everybody else. No matter which direction you approach from, there’s at a minimum a half-wall barrier surrounding them. Sometimes, in directions most likely to receive an attack, I suppose, there’s been added a big glass barrier. Liliana Petrova pointed this out in episode 236 of the Relentless Health Value podcast, and it was really the first time that I had thought about it at all and also thought about the implicit message this sends not only to patients but also to clinicians. That whole physicality of the setup, it just screams, “We over here have nothing to do with the mission or vision of anyone else in this place. We have our own thing going on over here, and to do it, we need to be protected from you all and all of your chicanery and untoward goings-on, you doctors and nurses and patients!” So, I was really inspired the first time I heard Jerry Durham from The Client Experience Company talking. His message, as I understood it, was that a practice really on board with helping patients achieve the best patient outcomes and, nothing for nothing, erode clinician burnout includes the front desk in their thinking. Jerry has said that there’s four phases in the patient life cycle, as he calls it, which is sort of a synonym for the patient journey: 1. Marketing 2. The moment that a patient/person engages with the clinic or office 3. Provider interactions 4. The post course of care So, all of these phases—all four of them—are critical to both patient outcomes and experience but also, really, to business success. So, you kind of almost have to do well by doing good. The front desk is mostly responsible for that phase two: what happens when that person/patient engages with your office or clinic. In this healthcare podcast, as mentioned, I’m talking with Jerry Durham. He’s a former physical therapist and practice owner who has worked with a whole lot of PT (physical therapy) practices and also other MSK (musculoskeletal) specialties among other clients. His message transcends the specialty, however. In this healthcare podcast, we get into a lot of aspects in terms of how a front desk can work for or against patient experience and outcomes. One of them is how a front desk can help secure a patient’s relationship with a practice. Without a relationship and trust, patient outcomes are meh at best. But a lack of trust is a big hairy factor behind disparities in outcomes among different ethnic groups, for example, as one point to ponder. Also mentioned in this episode are Liliana Petrova and Julie Rish, PhD. You can learn more at clientexperiencecompany.com or by emailing Jerry at [email protected].   Jerry Durham is a healthcare consultant and physiotherapist with a singular passion for leveraging the entire healthcare practice team toward improved patient outcomes while increasing the practice bottom line. Jerry has 30+ years’ experience as a physiotherapist, including 20+ years of business ownership, including practice ownership, business consulting, and a virtual front desk sales solutions for healthcare practices. Jerry has spent a lot of time on the front line of physio practices answering calls and learning why patients think and act the way they do when interacting with the front desk team. He has learned how to leverage the information at first contact carried all the way through to a completed plan of care, and these are the systems that lead to greater patient outcomes and greater practice success. Jerry defines these systems as “the rules of client engagement.”   05:49 What is the patient life cycle? 06:48 What are the milestones of the patient life cycle? When does it start? 10:05 “This isn’t a business solution; this is a patient-driven solution.” 10:21 “What is best for the patient is best for business.” 13:25 “The takeaway there is that your team members are all driving toward the same goal.” 14:34 How does the front desk impact health outcomes? 16:41 What is the objective of a front desk to reduce provider burden? 20:03 EP236 with Liliana Petrova. 21:18 “There’s actually three roles at the front desk.” 30:37 EP228 with Julie Rish, PhD.   You can learn more at clientexperiencecompany.com or by emailing Jerry at [email protected].   @Jerry_DurhamPT discusses #patientengagement and #clinicianteam success on our #healthcarepodcast. #healthcare #podcast #digitalhealth #healthcareleadership #healthcaretransformation #healthcareinnovation   Recent past interviews: Click a guest’s name for their latest RHV episode! Kate Wolin, Dr Kenny Cole, Barbara Wachsman, Luke Slindee, Julie Selesnick, Rik Renard, AJ Loiacono (Encore! EP379), Nina Lathia, Marshall Allen, Stacey Richter (INBW39)  

For a full transcript of this episode, click here. First of all, I just want to start out this pod and really thank everyone listening and for showing up for a show like this one. You do it and you are here because you care about patients/members. It’s just so easy to feel like we’ll never be able to do enough, and that’s a rough, rough feeling. Please take a moment to truly hear how grateful I am for you being here and for doing all that you do and that you try to do. I saw on the interwebs the other day a Marcus Aurelius quote. What he said was, “Be satisfied with even the smallest progress.” And I think this is really important to remember because nobody working in the healthcare industry, especially today, is ever probably gonna get anything close to a perfect solution. So instead, just aim for progress—even the smallest amount—and feel good about that, please. This show is an important one for anybody either in the business of healthcare delivery or buying healthcare delivery services. It’s an exploration of what works and what doesn’t work and how what works can easily become what doesn’t work in the face of the real world. This peril of cutting clinical “waste” perilousness all starts with the whole “Hey, let’s make some money, so we gotta scale and be efficient. We gotta do our thing at as low as possible a cost and maybe grow as fast as possible. We gotta keep our investors happy or pay off the debt we got saddled with or pay that giant management fee we’re being charged or compensate the C-suite at the level they’ve grown accustomed to.” So again, the “let’s be efficient and get everything repeatable” has entered the building. The first point my guest today, Kate Wolin, ScD, makes about all of this—and this is exactly the same point that Rik Renard made in episode 427—efficient to what endgame? Now, it turns out, surveys show, only a small, small percentage of healthcare delivery solution providers are measuring outcomes of pretty much any kind. So, how do we even know if cutting so-called waste is actually waste at all? I mean, in the absence of any actual measures—here’s a hypothetical for you—someone could look around: “Hey, I see these nurses. They’re all just sitting around chatting with patients and, I don’t know, talking about throw rugs? What is this? An episode of HGTV? Who cares if a patient with diabetic neuropathy has throw rugs in their hallway? Let’s tell these nurses chop-chop, get them on the computer using AI to be efficient, right? Let’s get rid of that clinical waste.” I just made a point in the most sarcastic way possible, but the bottom line is this: It’s actually really efficient to not engage patients in these ways, right? Patients, they talk slow, they ask questions that seem irrelevant, and they’re time-consuming. It’s very efficient to not build relationships or foster trust or, I don’t know, assess fall risks … but whatever is going on is also going to fail in that model—from a patient outcome standpoint at least. Here’s a quote from Sergei Polevikov, with some light edits. He wrote on LinkedIn: Primary care is not scalable in the same way as Scrub Daddy or Bombas Socks. That’s something not taught in MBA and CFA programs. Someone should have told Walgreens, CVS, Amazon, and Walmart. They also probably should tell a whole bunch of point solutions and payers. Also, some health system execs or pharmacy leaders might also want to get that memo. What I really liked about the conversation with Kate Wolin in this healthcare podcast is that she retains optimism in the face of all of this. She offers advice for how to navigate the balance between mission and margin in a way that’s better for patients and also sustainable financially. She talks about three points: 1. Founders and investors being in alignment and the essential nature of that 2. The importance of having clinical leadership and a team dynamic that enables innovation but in a clinically sound way 3. How you gotta measure what matters and do it in a way that inspires a mission-driven culture If we’re talking about relevant shows to listen to next after you listen to this one, please do not forget episode 331. This is where Al Lewis teaches us how to evaluate wellness vendors and health solutions, but it also teaches us how to be a good wellness vendor or health solution. Also, do come back and listen to the encore with Jerry Durham next week about front desks and the total care experience. Lots of really bad avoidable things happen if the front desk isn’t considered—and it isn’t often considered. For sure, also listen to the show with Kenny Cole, MD (EP431); that’s a must-listen. Then again, the show with Rik Renard (EP427) came up several times in this episode. The show with Jodilyn Owen (EP421) also gets brought up; that’s a great cautionary tale there to keep in mind for mission-driven entrepreneurs and investors. And then, I also recommend J. Michael Connors, MD. He writes a lot of stuff in a newsletter along these lines. Last, last, last … Please go to our Web site and subscribe to the weekly email. I am planning on doing a few invite-only sessions for email subscribers. Plus, the weekly email is a really very convenient way to get the episode transcripts and stuff. And if you don’t get it, you’re making your life less efficient. So, go fix that. Kate Wolin, my guest today, trained as a behavioral epidemiologist and has done research in chronic disease prevention and management. She launched and led a digital health start-up and sold it to Anthem. She’s been in the digital health start-up space largely at the intersection of science and product strategy ever since. Also mentioned in this episode are Rik Renard; Sergei Polevikov; Walgreens; Amazon; Walmart; Al Lewis; Jerry Durham; Kenny Cole, MD; Jodilyn Owen; J. Michael Connors, MD; Carly Eckert, MD; and Mike Pykosz. You can learn more by following Dr. Wolin on LinkedIn.   Kate Wolin, ScD, is a behavioral epidemiologist who left academic medicine to launch and lead a digital health start-up, which she bootstrapped to profitability before selling to Anthem. She has since been a C-suite leader, investor, and advisor to digital health start-ups and enterprise organizations on bridging clinical and behavioral science with product strategy and execution. She has been named as a Forbes Healthcare Innovator That You Should Know and a Notable Woman in STEM by Crains. Dr. Wolin is a Fellow of the Society of Behavioral Medicine and the American College of Sports Medicine and teaches entrepreneurship at Kellogg.   06:24 Irrespective of money, what works in clinical care and population healthcare? 09:51 EP361 with Carly Eckert, MD, PhD(c), MPH. 10:26 Why is creating a gathering place and sense of community important in clinical care? 12:46 “Sometimes, we make this about the clinical provider. It always makes me think about the rest of the people in an ecosystem that create trust.” 13:49 EP297 with Jerry Durham. 14:11 Where can things go wrong when we start to think about the margin in respect to the clinical care that works? 16:47 EP427 with Rik Renard. 19:35 “We’re actually very unspecific in what we’re trying to achieve a lot of times in these digital health programs.” 24:00 “Are you aligned as a founder, as a business with your investors on the pace of growth and what is feasible … ?” 25:30 Why is Dr. Wolin optimistic about achieving growth and still providing value? 28:17 Why is it important to ask why something is being done? 30:39 EP421 with Jodilyn Owen. 34:35 How are people motivated, and how can you use that to reduce turnover? 35:21 Why measuring what matters and communicating that is important.   You can learn more by following Dr. Wolin on LinkedIn.   Kate Wolin, ScD, discusses #clinicalwaste on our #healthcarepodcast. #healthcare #podcast #digitalhealth #healthcareleadership #healthcaretransformation #healthcareinnovation   Recent past interviews: Click a guest’s name for their latest RHV episode! Dr Kenny Cole, Barbara Wachsman, Luke Slindee, Julie Selesnick, Rik Renard, AJ Loiacono (Encore! EP379), Nina Lathia, Marshall Allen, Stacey Richter (INBW39), Peter Hayes  

For a full transcript of this episode, click here. There’s this meme that’s going around on the interwebs with the caption, “Sometimes the shortest distance in between two places isn’t a straight line.” What? Yeah, because actually there’s three dimensions in the real world. So, when we all consider the real world, understanding the contours of reality and aligning with them is the only way to devise a winning strategy—not only if you’re timing rubber balls getting dropped off straight or curved slopes. I’m saying this because I’ve seen (and you’ve seen) a whole lot of great ideas fail because someone draws a very elegant straight line on a whiteboard, calls it the fastest and most efficient way to get from here to a desired outcome … and then the plan ultimately fails. What contours am I talking about taking into account right now? Oh, pretty much the entirety of US healthcare. If you combine the complexities and perverse incentives of the industry itself plus the art and science of medicine plus epidemiology and social determinants and I’m probably forgetting other dimensions, you have contours that are mountain ranges. Not considering the reality of those elevations and just thinking there’s some kind of straight line here to be found is really a kind of delusion. Now, investors and C-suites may like these delusions, but let’s just get real: It’s not gonna actually work out as written. One case study that I am talking about is digital health solutions or pharma companies even or pretty much anyone who thinks that the fastest way to increase sales is to talk about the product, let’s just say as one example. That’s the straight line to growth: Talk about the product. Another one is stripping away things that feel like they’re a waste of time in the name of efficiency without actually checking if you’re cutting into essential stuff. I talk about this at length with Kate Wolin, ScD, in an episode coming up. Jodilyn Owen has a thing or two to say on this point in episode 421 also. But let me be clear: I’m not talking about anyone listening to the show today making this mistake, at least wholesale. We all make it incrementally; it’s hard to avoid. But you get this. That’s why you’re here. You get that the fastest path anywhere is truly understanding the problems faced by customers. And then it’s showing how the product or whatever you’re doing helps solve those problems. No one cares how efficient or safe your thing is if it’s accomplishing something that no one cares about, no one gets paid for, and/or can figure out how to deploy or use. This is what the entire episode last week, episode 430 with Barbara Wachsman, was about. Why is all of this relevant? It’s actually what makes Relentless Health Value relevant, frankly. Many listeners—and shout-outs to Nate Walker and MaryCarol Evans—say that this is why they listen to Relentless Health Value and what Relentless Health Value helps them with: finding those contours, understanding reality so that it can be aligned with. And on the show today, Kenny Cole, MD, I gotta say, could be really impactful in this regard as well as in others. Nate Walker wrote, “[Relentless Health Value] inspires me every day to stay true to my desire to make a difference in healthcare for patients by adding transparency and helping to connect the dots within this fragmented system.” MaryCarol Evans has alluded to the same thing multiple times as well and often highlights that Relentless Health Value helps her think through and identify the small things that are possible—she says there’s plenty of them—that have a huge impact on the lives of plan members. Dr. Kenny Cole is from Ochsner Health System, and I love this conversation today because it has lessons for anybody working in a clinic or managing a clinic who wants to learn from a master. But it also is really interesting for anyone who’s trying to work with, alongside of, or sell to a clinical practice or health system that is pulling away from the status quo, that is standardizing care and working as a team, one that is earning the trust of its patients, and also one that is figuring out how to reinvent the business model of healthcare such that clinical pathways and care flows are aligned with financial viability. That’s really, obviously, the holy grail here. We talk today about how to achieve clinical and financial success, even if the financial models are all over the map. We talk about how to create a practice model or a clinical model that might appeal to clinicians and keep them from being burnt out while, at the same time, ensure that patients are getting the kind of outcomes everyone can be proud of and the place doesn’t go bankrupt either. This episode reminded me a lot of the conversation with Scott Conard, MD (EP391)—there’s lots of complementary points. The shows with David Carmouche, MD (EP316, AEE15, EP343) from when he was at Ochsner are also pretty relevant here. Some of the points that Dr. Kenny Cole makes today also align very much with what Rik Renard (EP427) was talking about a few weeks ago. But regardless of where you sit or what you’re trying to do, this show is a great one to really get a bead on the lay of the land to find the actual shortest path between here and there, which is not gonna be (most likely) an obviously straight line. Dr. Kenny Cole makes, I’m gonna say, four main points by my counting; and they are as follows: 1. Clinical teams have to deliver care wherein outcomes are measurable, and it has to be done in such a way that those clinical teams are accountable for the outcomes that are generated. 2. Clinical teams need to really see with their own two eyes and believe that a clinical goal that they’ve been given is possible. 3. Care flows are critical here, which means getting everyone on the same page about what best-practice care looks like and operationalizing how that clinical excellence will be achieved. 4. Building trust with patients and connecting with patients cannot be underestimated, and care flows need to not only standardize care so that it can be delivered quicker and easier but also facilitate patient relationships. Dr. Kenny Cole is a primary care internist. He sees patients one day a week. The other days, he serves as a system vice president for Ochsner Health, which is a large integrated delivery system. In this role, he designs and develops new care models. If I’m making recommendations for what to listen to next, I’d go with episode 412 with Robert Pearl, MD—he talks about a model to lead healthcare transformation and clinical excellence. Then episode 391 with Dr. Scott Conard gets into what happens in the real world when the financial model is misaligned with excellent care. Lastly, episode 343 with Dr. David Carmouche. Oh, two last things and new topics: First, thanks to Santos-L-Halper, Nina Lathia, and KC64789 for some really nice reviews this month. I read them. They make me happy. Thanks so much for leaving them. And lastly, heads up that Rule of Three (ro3) has an annual March Healthcare Classic that is currently ongoing. It’s pretty cool what they do. They have a very august panel that debates which trends will reign supreme in their impact on healthcare in 2024. The committee includes: ·      Dr. David Carmouche, SVP Healthcare Delivery, Walmart Health ·      Eric Gallagher, CEO, Ochsner Health Network ·      Leah Binder, CEO, The Leapfrog Group ·      Anisha Sood, Chief Financial & Strategy Officer, First Choice Health Follow along with the experts through the ro3 March Healthcare Classic at https://ro3.com/healthcare-classic/. Also mentioned in this episode are Jodilyn Owen; Barbara Wachsman; Nate Walker; MaryCarol Evans; Scott Conard, MD; David Carmouche, MD; Rik Renard; Robert Pearl, MD; Nina Lathia, RPh, MSc, PhD; Josh M. Berlin; Rule of Three, LLC; Eric Gallagher; Leah Binder; Anisha Sood; John Rodis, MD, MBA, FACHE, CPHQ; Bob Matthews; Marty Makary, MD, MPH; Sanat Dixit, MD, MBA, FACS; and Rob Andrews. You can learn more at Ochsner Health. You can also follow Dr. Cole on LinkedIn.   Kenny Cole, MD, began his role as System VP, Clinical Improvement, for Ochsner Health in New Orleans in September 2019. He is a practicing primary care internist with advanced degrees from LSU Health Sciences Center and Dartmouth, as well as executive training from Harvard Business School. Prior to joining Ochsner Health, Dr. Cole was the chief clinical transformation officer for Baton Rouge General Medical Center, where he designed, developed, and implemented a completely reimagined multidisciplinary team-based model of primary care that focused on aligning clinical with financial outcomes. His current work at Ochsner Health built on that prior foundation to design and help develop Ochsner 65 Plus, a group of redesigned primary care clinics focused on the needs of older adults.   07:38 Is there an optimal care pathway where there might be a lot of treatment variability? 11:01 Why doesn’t Dr. Cole like the terms “noncompliant” and “nonadherent”? 11:45 EP412 with Robert Pearl, MD. 13:50 Why is it important to start with the end in mind? 17:20 How do you scale clinical excellence? 20:21 EP315 with Bob Matthews. 21:15 EP242 with Marty Makary, MD. 23:49 Why is it important simply to demonstrate what’s possible for better health outcomes? 24:58 EP427 with Rik Renard. 26:10 How do we reinvent the business model of healthcare? 27:50 EP415 with Rob Andrews. 30:06 EP391 with Scott Conard, MD. 38:37 Dr. Cole is published in various healthcare journals; check out his most recent article.   You can learn more at Ochsner Health. You can also follow Dr. Cole on LinkedIn.   Kenny Cole, MD, discusses #accountability for #healthoutcomes on our #healthcarepodcast. #healthcare #podcast #digitalhealth #healthcareleadership #healthcaretransformation #healthcareinnovation   Recent past interviews: Click a guest’s name for their latest RHV episode! Barbara Wachsman, Luke Slindee, Julie Selesnick, Rik Renard, AJ Loiacono (Encore! EP379), Nina Lathia, Marshall Allen, Stacey Richter (INBW39), Peter Hayes, Joey Dizenhouse  

For a full transcript of this episode, click here. We have been spending a bunch of time here on Relentless Health Value talking about PBMs (pharmacy benefit managers) lately and pharmacy benefits, but we are moving into a new topic area. It sort of kicked off three weeks ago with the pod with Rik Renard (EP427) on the importance of care flows if you are a digital health vendor trying to get consistent outcomes. But then I actually went back to the PBM/pharmacy benefits topic to talk with Luke Slindee, PharmD (EP429) and Julie Selesnick (EP428) because, you know, the J&J lawsuit. But now we’re back on the “let’s talk about digital health and point solutions” bus. I wanted to talk today about the trend to sell to employers and advice for digital health solutions who want to sell to employers, but there’s a little bit of advice here for employers themselves. At a minimum, this conversation affords a little bit of transparency to employers about what’s going on on the other side of the table. So, as I just said, in this healthcare podcast we talk about selling to employers. Why sell to employers is probably a first question. Well, one reason Barb offers is because that’s where the money is. It’s like that Willie Sutton quote. Someone asked him why he robbed banks, and he replied, “Because that’s where the money is.” I mean, hospitals know this. Have you seen their commercial rates and their multiples over Medicare? Payers know this, too. Payers who use their ability to raise commercial rates as leverage to get lower MA (Medicare Advantage) rates for themselves … they know this. So, yeah. Why wouldn’t a point solution entrepreneur take a page out of that business model? It’s saying the quiet part out loud, but … yeah, I guess it’s good to know when you’re the numero uno healthcare industry sugar daddy (or sugar mommy, as the case may be). Every employer listening right now has already opened up their phone and started an email to me. Barb gets into four pieces of advice for entrepreneurs looking to sell to employers: 1. There has to be a market that has a need for what you are selling, and there won’t be a market with a need unless the problem you’re solving for is big enough—and right now, I am recapping things that Barb says on the show—because when she talks about whether the problem is big enough, she means as per the employer and maybe because the fallout from that big problem accrues to the employer in a way that the employer fully appreciates. As I say in the pod that follows, the ground is littered with entrepreneurs, often really smart people who oftentimes I truly admire. These are individuals who found a problem for patients (or sometimes even clinicians) and solved for it and then discovered that no one will pay them for whatever they’ve done, because we can’t forget that, in the healthcare industry, one person’s waste is somebody else’s profit. There is show after show here at Relentless Health Value that showcases the sacred honeypots where these perverse incentives lie, so if you are an entrepreneur, please follow the dollar and see where it leads before getting too far. That would be my advice. I’d recommend the show with Rob Andrews (EP415) and the one with Jodilyn Owen (EP421) as a great place to start. One comment about the whole “it’s gotta be a need that employers appreciate” point that Barb makes which caught my ear, she rhetorically asks, “Should HR purchasers be buying solutions that improve health and well-being?” And the short answer is no. Barb says none of that should be the primary driver. The primary driver, Barb mentions, should be about optimization of human capital to drive business outcomes. She says every decision a business makes should be about maximizing business outcomes. Now, I could take this a bunch of different ways; and viscerally it has, again, kind of a “quiet part out loud” vibe. But in certain ways, it also means buying decisions should be bigger than just cutting costs. First of all, no one is arguing here that cutting wasteful spending isn’t always a good thing; but neither are cost-containment strategies that undermine employee health to the extent that they can’t complete their work role or their job. Listen to the show with Nina Lathia, RPh, MSc, PhD (EP426) for more on this cost containment versus value-based purchasing, specifically in the pharmacy benefit space, but same rules apply pretty much everywhere. 2. Be truly differentiated in terms of what you’re trying to sell. Barb gives a bunch of examples of “secret sauces” she thinks are kind of compelling right now. 3. Navigate the internal politics of the employer. And this is kind of Selling 101, but find a champion and help them navigate their own organization. We talk at length about how long the sell process can take, especially in some of these jumbo employers. 4. Manage your investors as closely as you manage your possible clients. And this is an interesting point that also comes up in the conversation with Kate Wolin, ScD, that’s coming up in a few weeks. Also in this conversation, we have a sidebar about PMPM (per member per month) and performance guarantees and just some nuances about how to get paid. Oh, and one last point here: If you are an entrepreneur who is thinking about selling to brokers, employee benefit consultants, or practice leads, do listen to the show with AJ Loiacono (EP379), which I encored a couple of weeks ago. My guest today, Barbara Wachsman, has had experience in every single element of the healthcare ecosystem. She has worked in public health. She’s worked for an HMO. She’s worked for a hospital system. She’s run benefit consulting practices and also spent the last dozen or so years at Disney running strategy and benefits. Today she is a limited partner in several private equity funds at Frazier Healthcare Partners. Oh, and hey, you might want to subscribe to our weekly email, which includes this introduction transcribed as well as links to the full episode transcribed. We also sometimes send out invitations to Zoom meetups and other ways to get involved or support us in our quest to get Americans better healthcare. So, go to relentlesshealthvalue.com and get yourself on that list Also mentioned in this episode are Rik Renard; Luke Slindee, PharmD; Julie Selesnick; Rob Andrews; Jodilyn Owen; Nina Lathia, RPh, MSc, PhD; Kate Wolin; AJ Loiacono; Elizabeth Mitchell; David Claud, MD, PhD; Al Lewis; Kenny Cole, MD; and Cora Opsahl.   You can learn more at Frazier Healthcare Partners. You can also follow Barbara on LinkedIn.   Barbara E. Wachsman, MPH, is the former director of strategy and engagement for enterprise benefits for the Walt Disney Company. In this position, she led the strategic initiatives and designed the programs that addressed Disney’s long-term healthcare and goals and objectives, headed operations of large on-site clinics and full-risk physician partnerships, and was the creator of the Strategy Lab, the home for innovation in healthcare delivery. She is a speaker on the national stage regarding direct contracting and the value of primary care. Barbara currently serves as a senior advisor to an $8 billion growth-buyout private equity firm specializing in healthcare and as head of employer strategy for a virtual primary care company with a unique medical practice model. She sits on the Boards of the Duke-Margolis Center for Health Policy Institute and the QueensCare Foundation, serving the low-income and underserved population of Los Angeles. She remains a senior advisor and founding member of the Employer Healthcare Innovation Roundtable (EHIR) and is a faculty member of the EHIR Academy. Barbara serves on the Executive Committee of the American Board of Medical Specialties and on the Advisory Boards of several healthcare start-ups as well as the corporate board of a large metabolic health company. She is also an advisor to the Purchaser Business Group on Health and to the Silicon Valley Employers Forum. Barbara received her Master of Public Health and Master of City Planning/Architecture degrees from the University of California, Berkeley, and is a Phi Beta Kappa graduate of Scripps College, where she received her bachelor of arts degree.   06:55 Why have people cottoned on to selling to employers, and is it a good direction to focus? 07:28 What are the three ways healthcare gets paid for in America? 07:46 Where is the profit in the healthcare system? 08:32 What does an entrepreneur really need to understand in order to sell to employers? 13:05 “It really is about producing a productive employee.” 17:49 Why it’s not enough to understand the market but you must also differentiate. 21:01 What’s the biggest misunderstanding entrepreneurs have about per member per month? 24:10 What companies are standing out right now as differentiators? 28:02 Why is it important to also show that you are improving quality? 28:51 EP331 with Al Lewis. 28:55 EP427 with Rik Renard. 29:33 EP372 with Cora Opsahl. 30:07 Why is it important to find a strong champion who will advocate for you as a partner? 35:05 Why is it important to manage your investors and set appropriate expectations around the timeline of a sale? 36:21 What’s the lesson to be learned behind Livongo?   You can learn more at Frazier Healthcare Partners. You can also follow Barbara on LinkedIn.   Barbara Wachsman discusses #digitalhealthvendors selling to #employers on our #healthcarepodcast. #healthcare #podcast #digitalhealth #healthcareleadership #healthcaretransformation #healthcareinnovation   Recent past interviews: Click a guest’s name for their latest RHV episode! Luke Slindee, Julie Selesnick, Rik Renard, AJ Loiacono (Encore! EP379), Nina Lathia, Marshall Allen, Stacey Richter (INBW39), Peter Hayes, Joey Dizenhouse, Benjamin Jolley

For a full transcript of this episode, click here. In this healthcare podcast we’re talking about pharmacy acronyms or terms like AWP and WAC, and, not really an acronym, but we’ll also talk pharmacy list prices, rebates, discounts. We also have NADAC, but that’s slightly off to the side for reasons we’ll get to in a sec. Most of these acronyms refer to a number with a dollar sign in front of it, and it’s hell on wheels to figure out if and/or to what extent that number reflects what is going on in the real world, especially if you are a patient or a plan sponsor and all you see is the list price that Pharma puts out on one side of the storyboard, and then what the patient pays or (if you’re lucky) what the plan pays for the drug on the way other side of the whole chain of events. What’s a black box a lot of times for patients and plan sponsors is what goes on in the middle, wherein many middle people get their mitts on the transaction. Real quick here, let’s run through the Mister Rogers’ neighborhood of all of these middle people right now; and we’re gonna do this really briefly. Most of you are already going to know most of this, but I just want to remind you so that when my guest today, Luke Slindee, and I kick into the conversation about the acronyms and the terms and we try to follow the dollar … yeah, you can put a name to a face. Alright, so first we have pharma manufacturers. The pharma manufacturer—and this is largely gonna be true whether it’s a branded drug or a generic pharma manufacturer—but the manufacturer sets a list price. This list price is gonna be called an AWP or a WAC price, and we’re gonna get into the differences and what those terms actually mean in the show that follows. But Pharma decides their price point. They go to wholesalers with that price. Wholesalers say they want a discount to purchase the product. Some kind of rebate or discount is negotiated. Now the wholesalers have the drug, and they get calls from pharmacies. Pharmacies have patients who have scripts for that, so the pharmacies need to buy the drug. What price does the pharmacy now pay the wholesaler for the drug? Short answer: It’s nuts. It’s nuts how the wholesalers decide what to charge the pharmacies for the drug. We talk about that in the interview that follows, but suffice to say that now we have the list price turning into whatever price the pharmacies wound up paying to get the drug from the wholesalers for. Any way you cut it, the wholesalers are making some money. Okay … now we get to the part where we’re figuring out how much the patient or the plan sponsor will pay to pick up that drug that started at the pharma manufacturers and went to the wholesalers and now is at the pharmacy. How much are the patients gonna pay? How much are the plan sponsors gonna pay? If you spend any time in the real world (not the drug supply chain world), what you’d expect to happen next is that the patient would go into the pharmacy and the pharmacist would charge a markup and/or a dispensing fee on the price that they bought the drug from the wholesaler for. That’d be normal. And this can be the case when patients pay cash. Listen to the show with Mark Cuban (EP418, along with Ferrin Williams, PharmD, MBA), who started a pharmacy called Cost Plus Drugs. Get it? Their prices are cost plus. You have had other pharmacies for years doing similar things, like Blueberry in Pittsburgh. They get the drug. They buy it from a wholesaler or etc. But they buy the drug for some price, and then they sell it to their customers (ie, patients) at their cost plus. But most of the time in pharmacy supply chain world, things don’t work that way because many patients have insurance. When a patient walks into the pharmacy, someone has to figure out how much the patient owes and how much their insurance will cover, right? So, enter PBMs (pharmacy benefit managers). They originally started out doing this math (ie, adjudicating claims), figuring out what the out-of-pocket will be for the patient and then what the insurance will cover. Then drugs started to get really expensive and a few other developments, and then, all of a sudden, we have PBMs negotiating with Pharma for how much of a rebate the PBM is going to demand for the PBM to put the manufacturer drug on formulary. The PBM also is determining how much they will pay the pharmacy for said drug on behalf of plan sponsors, in addition to doing the math for how much the patient will pay. So, let me say that again because it kind of begs a “what now?” with eyebrows sky-high as the appropriate response to what I just said, especially if you think through the ramifications here, ramifications which I discuss at length with Vinay Patel (EP241); Benjamin Jolley, PharmD (EP422); Scott Haas (EP365); Paul Holmes (EP397); and others. So, again, the PBM is not just adjudicating claims. They are also negotiating rebates from Pharma so plan sponsors do not have to pay the full amount that the wholesalers paid Pharma and that the pharmacies paid the wholesalers, which maybe is a lot of money. The PBMs are like, “Hey, Pharma. You need to give me a piece of your action because we, the PBM, have big market power. I serve 100 million patients or something. So, if you want access to my 100 million lives, you gotta shell it out. You gotta shell me out some rebates.” So, fine, Pharma gives the PBM some amount of money in the form of a rebate. And it has to work that way, if you think about it, because the drug was originally sold to the wholesaler. You see what I’m saying? So, the pharma company has to give the PBMs a separate rebate amount. This is in addition to how much the PBM told the plan sponsor the plan sponsor owes for the drug, which is also paid to the PBM. But now, PBM is also still in charge of adjudicating the claim. So, they’re telling the pharmacy how much to charge the patient. Somehow or another also, the PBM also got itself in charge of deciding how much money the pharmacy itself would be reimbursed by that PBM. In the rest of the world, the pharmacy might tell the PBM, “Hey, this is the price.” But not in pharmacy supply chain world. In pharmacy supply chain world, the PBM tells the pharmacy how much it’s gonna pay. The end. And this, my friends, is how so often pharmacies get themselves in the pickle of having to pay the wholesaler one price to get the drug while they get reimbursed a totally different price to dispense the drug. And because independents have very little negotiating leverage on actually either side of that equation, they so very often buy high and sell low. Please listen to the shows with Benjamin Jolley (EP422) and Vinay Patel (EP241), where we get into this in a lot of detail. But I just want to emphasize this point: All of that whole drug supply chain I just went through, where the manufacturer sells to the wholesaler who sells to the pharmacy and the PBM pays the pharmacy and the patient is paying something and the plan sponsor is paying something—many of the middleman transactions in there happen under the cover of darkness a lot of times. If I’m a plan sponsor, do I have any idea how much the PBM paid the pharmacy for any particular drug? Unless you’re good at looking at the NADAC numbers (more on this coming up), no. I do not have any idea what a fair price for that drug actually is and how much people are making on the back of that drug as it goes through the supply chain. And this, my friends, is how come spread pricing can exist. Because spread pricing is when the PBM charges the plan sponsor more than they are paying the pharmacy, pocketing the difference, and then calling what they pocket a trade secret—even if it’s the plan sponsor whose butt is on the line to make sure that what the PBM is pocketing is fair and reasonable compensation. I mean, if only J&J had listened to this show (EP428). Here’s a link to the lawsuit, which is about J&J paying ridiculous amounts in spread pricing. If what I just said is really confusing, I’m gonna validate that and say, “Yeah, it is really confusing.” And to a certain extent, that might be the main point. Where there’s mystery, there’s margin and all of that. Here’s what Dawn Cornelis said on LinkedIn in response to an article about the lawsuit: “Data accessibility lies at the heart of mitigating a fiduciary lawsuit. It all begins with gaining access to your data. But let’s be clear—it’s not an easy feat. The major hurdle? Procuring accurate data from your TPA [third-party administrator]. And that’s just the first step. The subsequent challenge involves analyzing this data, a task best handled by a skilled healthcare data analyst—yet another formidable undertaking.” The one acronym in this whole stew that is not questionable at all is the NADAC. So, let’s talk about the NADAC for a moment, the National Average Drug Acquisition Cost Price Benchmark. I was really thrilled to get Luke Slindee to be my guest today—or one reason I was so thrilled—is because Luke works for the accounting firm who, on behalf of CMS (Centers for Medicare & Medicaid Services) and the federal government, administers this NADAC, the National Average Drug Acquisition Cost. (Here’s a good NADAC explainer if you’re interested.) In brief, NADAC was jointly developed by the Centers for Medicare & Medicaid Services, and it calculates the average price that pharmacies pay for prescription drugs. NADAC is based on a retail price survey. My guest today, as aforementioned, is Luke Slindee. He is a second-generation pharmacist. His family owned a pharmacy in Minnesota when he was growing up. Now he is a senior pharmacy consultant for Myers and Stauffer, which is the accounting firm that calculates the NADAC Price Benchmark on behalf of CMS and the federal government. Also mentioned in this episode are Mark Cuban; Ferrin Williams, PharmD, MBA; Blueberry Pharmacy; Vinay Patel; Benjamin Jolley, PharmD; Scott Haas; Paul Holmes; Dawn Cornelis; Capital Rx; Myers and Stauffer LC; Adam Fein; Joey Dizenhouse; Steven Quimby, MD; and Antonio Ciaccia.   For additional information, go to data.medicaid.gov. You can also follow Luke on LinkedIn.   Luke Slindee, PharmD, is a second-generation pharmacist with a background in independent pharmacy, chain pharmacy, data analytics, and prescription drug pricing. He currently supports public drug pricing transparency benchmarks and is an advocate for pharmacy reimbursement reform and antitrust enforcement in healthcare.   09:52 Why is it important for plan sponsors to understand the going rate for every point in the supply chain? 10:21 How do manufacturers come up with a list price? 10:40 What does AWP stand for? 10:59 What does WAC stand for? 11:06 How are AWP and WAC numbers chosen by the manufacturer? 13:22 What is the difference between AWP and WAC? 14:54 How much are wholesalers paying to manufacturers? 16:43 How much is the pharmacy paying for branded drugs from a wholesaler? 17:34 Why might pharmacies be buying drugs for less than what wholesalers are paying? 18:17 Substack article by Benjamin Jolley, PharmD, on this topic. 19:22 EP423 with Joey Dizenhouse. 20:33 Why do things get weird when a PBM gets involved? 21:58 How does all of this work for generic manufacturers? 25:20 EP344 with Steven Quimby, MD. 26:15 How did Civica Rx come about? 32:21 What’s the difference between the NADAC and the AWP value? 36:04 Luke discusses the downstream effects to pharmacies.   For additional information, go to data.medicaid.gov. You can also follow Luke on LinkedIn.   Luke Slindee discusses #followingthedollar through #WAC, #AWP & #NADAC on our #healthcarepodcast. #healthcare #podcast #digitalhealth #healthcareleadership #healthcaretransformation #healthcareinnovation   Recent past interviews: Click a guest’s name for their latest RHV episode! Julie Selesnick, Rik Renard, AJ Loiacono (Encore! EP379), Nina Lathia, Marshall Allen, Stacey Richter (INBW39), Peter Hayes, Joey Dizenhouse, Benjamin Jolley, Emily Kagan Trenchard (Encore! EP392)

For a full transcript of this episode, click here. This show is different, so if you’ve already listened to or read all about the gory details of the J&J and/or the DOL v BCBS lawsuits, this is not gonna be a repeat of that information. Julie Selesnick, my guest today, does cover the very, very top line about these two cases. But after that, we move on fast—because what I wanted to get to today was not the potential landslide of legal action that may or may not be confronting plan sponsors or payers or even brokers today. I did not want to really even talk about the CAA (Consolidated Appropriations Act) and its inarguable adjacency here. I just feel like there’s been a lot of talk about these topics already. What I wanted to get to, and fast, is … now what? If I’m a plan sponsor or actually, again, an EBC (employee benefit consultant) or broker, now what? What should I be doing and thinking about right now? To that end, I could not have been more thrilled to get a chance to talk to Julie Selesnick, who is an attorney deeply entrenched in helping plan sponsors and others understand and comply with fiduciary responsibilities. I want to get to this interview quickly (the conversation with Julie), so this intro is gonna be on the short side; but let me just summarize a few of the points that Julie makes during the interview that follows. First, we talk about the first step for pretty much everybody: Get your data, plan sponsors. But once you have that data, you also kinda have to use it. You can use it to ensure that you’re paying claims right, which is what most do. As a result of these two lawsuits, it’s also increasingly clear that you also have to use that data to ensure that the prices you’re paying for things (like generic specialty meds, for example) are fair and reasonable. To get the data now, you may have to renegotiate administrative services agreements; and you might need to take a closer look at the disclosure agreements you’re getting as a result of the CAA. And, by the way, it’s not just brokers or EBCs who have to complete these disclosures. It’s all covered entities that you, plan sponsors, paid more than $1000 to. Then we get into … okay, once you have the data and you’ve analyzed it, what are some in general things that could very well need to happen? And if the reason that they don’t happen is because they weren’t even considered, then plan sponsors have some risk exposure; and the brokers/EBCs who serve them might have some conflicts of interest. And it would be very interesting what would or could happen if a plan sponsor was able to back into those conflicts of interest, because if data clearly shows that something should be happening and it is not—and it is not even on the docket to be considered—if I’m a plan sponsor, I’m for sure gonna be wondering why. And maybe I’m gonna look into that and fast. Listen to the show with AJ Loiacono (EP379) from two weeks ago for more on some of the more egregious broker/EBC conflicts of interest, which could explain, potentially, the J&J lawsuit as well as definitely explains the earlier one in Osceola. And also, by the way, if you’re sitting there wondering to yourself how exactly J&J managed to pay upwards of $10,000 for a drug that can be purchased for cash for something like $50, listen to the show next week with Luke Slindee, PharmD. We run through the exact pharmacy supply chain machinations that make all of this (and more) possible. But I got off track. What I was talking about is the things that could easily wind up being called for when the data is analyzed: 1. Carving out specialty generics, especially drugs or infusions, from the larger pharmacy benefit manager 2. Your payment integrity vendor should not be the same vendor who is processing claims. Talk about a conflict of interest. I do not need to be an attorney—and I need to know absolutely nothing about anybody’s data—to tell anybody who’s listening that if you have the same vendor or two vendors with the same parent company who are both processing your claims and then auditing their own work … yeah, fix that. 3. Shut down any cross-plan offsetting. And we get to this in the show if you don’t know what cross-plan offsetting means. Lastly, we get into a bunch of stuff that plan sponsors might want to consider as they consider how to administer their plan, like, for example, setting up a health and welfare committee that has an independent fiduciary expert on said committee. I’m gonna say that’s a good idea! As I have mentioned, my guest today is Julie Selesnick. Julie is senior counsel over at Berger Montague’s Employee Benefits and ERISA group. Also mentioned in this episode are AJ Loiacono; Luke Slindee, PharmD; Justin Leader; Chris Deacon; Bridget Mulvenna; Mark Cuban; Olivia Webb; and Dawn Cornelis. You can learn more at Berger Montague. You can also follow Julie on LinkedIn.     Julie Selesnick has been practicing law since 2001 and has over 20 years of experience in complex dispute resolution forums representing plaintiffs and defendants. Julie has a wide variety of litigation, arbitration, and mediation practice, including first-chair jury and bench trial experience, representing some of the largest companies in the United States as well as small companies, labor unions, individuals, and classes of plaintiffs. Julie’s current practice is a mix of class litigation on behalf of individuals, union funds, and employers, and a legal consulting practice advising self-funded health plans and service providers to self-funded health plans on minimizing litigation and regulatory risk, issues arising under ERISA, fiduciary obligations and best practices, and CAA compliance, including negotiating service provider contracts and business associate agreements, drafting plan documents and advising on plan design; helping health plans gain access to participant claims data, helping service providers draft and plan fiduciaries obtain § 408(b)(2)(B) compensation disclosures, assisting plans with ensuring their prescription drug data collection and reporting is properly conducted and copies are provided to plan fiduciaries, and ensuring proper review, MHPAEA Comparative Analysis reports on nonquantitative treatment limitations.   05:48 What’s happening with the J&J lawsuit? 07:38 What’s going on with the DOL v BCBS case? 08:49 What do these cases mean for plan sponsors? 09:21 Why is engaging with claims data critical? 12:30 EP408 with Chris Deacon. 14:20 EP379 with AJ Loiacono. 16:58 What’s one solution to avoiding a conflict of interest? 18:02 Why there’s still not a total understanding about what to do with claims data once acquired. 20:58 NADAC (National Average Drug Acquisition Cost) to check pharmacy prices. 21:31 What advice do plan sponsors need to know that never gets recommended to them when dealing with conflicting interests? 27:02 EP337 with Olivia Webb. 28:41 EP285 with Dawn Cornelis. 30:24 “As a fiduciary, your money should only go to pay your plan’s benefits, not to other plan benefits.” 30:59 What’s Julie’s advice to advisors? 33:17 “Giving nonconflicted advice … is something you really can only do if you have no conflicts.” 35:57 What’s Julie’s advice for administering whole plans?   You can learn more at Berger Montague. You can also follow Julie on LinkedIn.   Julie Selesnick discusses advice based on the J&J and DOL v BCBS lawsuits on our #healthcarepodcast. #healthcare #podcast #digitalhealth #healthcareleadership #healthcaretransformation #healthcareinnovation   Recent past interviews: Click a guest’s name for their latest RHV episode! Rik Renard, AJ Loiacono (Encore! EP379), Nina Lathia, Marshall Allen, Stacey Richter (INBW39), Peter Hayes, Joey Dizenhouse, Benjamin Jolley, Emily Kagan Trenchard (Encore! EP392), Cora Opsahl (Encore! EP372)  

For a full transcript of this episode, click here. Hey, Relentless Health Value Tribe, thanks so much for being here this week. I gotta say, I really appreciate all of you who write and tell me that you kick off your Thursdays by listening to this show every week. You just pop open your app and you listen to the show. Because yeah, we’re a pretty sure thing over here. If the guest was boring or if the guest was talking about stuff that I already know and probably you already know, the guest would not be on the show. So, listening to Relentless Health Value every week is a hugely easy way to just keep up with what’s going on and, at the same time, get a pretty holistic deep dive into how all of the various parts of the industry fit together and how they ultimately impact patients and anybody who is at risk to pay for their care. One thing that you’ll notice about the guests who we invite to come on Relentless Health Value, they are usually not the ones who are merely going to recite a very well-curated point of view that is fully in line with some marketing pitch. It would be easy enough, honestly—it would be so much easier—to just invite all of the bigwigs who we get pitched. I get 50 pitches a day from PR teams who want to get their executives to come on the show because they want to get their message out to you, Relentless Health Value Tribe. You, for sure, have a reputation of being industry movers and shakers. Although it would be super easy for me to phone it in and let them have their way with you, I’ve never been one to take the easy way. I want to find those individuals to be guests who are willing to share actionable insights to actually tell the truth. I’m really not into someone hijacking this platform for their own self-interest when that self-interest is not aligned with anything that I would consider a win-win for patients. You’ll probably find more actionable insights here than listening to talk tracks, even if you’re just listening to figure out what to include in your pitch to some of these industry insiders. I’m gonna tell you that repeating their marketing spin or their party line isn’t probably gonna sell much. What they will say in public and what they really want to do are so very often sadly at counterpoint. So, come here for the real story. Alright, so let’s get to the conversation that we’re gonna have today, which is about and for digital health vendors’ or virtual care providers’ point solutions (they go by many names) and also for anybody who is a customer of said solutions. If we’re taking it from the top here, let me just make a Captain Obvious point. These digital health vendors, they kind of have to perform better than the traditional community health providers. Otherwise, they have no reason to exist, really, right? Purchasers would just go with the local gang of care providers. So then, what does “perform better” actually mean? Let’s discuss. I’d say perform better means to offer better measurable patient outcomes probably, both clinically and patient reported. I’d also say it means to offer more affordability. Also, better engagement, accessibility, and maybe all of this at a better cost profile for purchasers such as employers or health plans that are taking on actual risk. So, if all things are equal, again, why the heck would an employer or other purchaser even bother? It couldn’t even be considered, honestly, a member benefit from a regular benefit perspective if the local standard of care is superior or just as good. Now, if any clinical entity is looking to actually achieve better performance in any or all of the ways that I just mentioned with any level of consistency and in a way that is profitable for them and their investors, you got to do a few things. And one of them is to design and implement care flows, care processes, pathways—again, you can pick a name and define it how you like. But bottom line, there needs to be a standardized way to deliver high-quality care that is measurable. Here’s Ali Khan, MD, MPP, who is chief medical officer over at Oak Street Health, talking about this. He says: “At Oak Street Health we think about standardization as a 70/30 split. It is important that the largest aspects of what your care team does are standardized. (...) The bulk of the work that we do is to make sure not only that we set standards, but that we also disseminate standards, coach standards, review standards, and then update and iterate those based on the things we learned. Our standards are constantly evolving and improving.” Okay, so said another way, gotta have and use care flows. This doesn’t seem like rocket science, but yeah, that is a blue’s clue for what’s coming up here. So, how are most digital health vendors doing when it comes to care flows performing better? Rik Renard and Thomas Vande Casteele from Awell have done a survey with a group called Health Tech Nerds and have dug into the usage of care flows among, specifically, digital health vendors. Given everything aforementioned, I wasn’t surprised to hear that 84% of digital health vendors use care flows in 2023 … 84%. But it was kind of shocking, to be honest, to hear that in 2023, only 16% use care flows that they feel are based on evidence and the science of medicine. If you don’t follow the latest science, then outcomes, both clinically as well as probably patient-reported outcomes, won’t be of the “perform better” variety. Oh, boy. Also, only 7% of respondents have the ingredients to build a 360-degree picture of how their flows impact finances and quality of care. And I say that because only 7% can and do measure four things. And here’s the four things: 1. Performance metrics such as patient engagement and compliance rates 2. Financial metrics such as revenue per patient/per member 3. Clinician-reported outcomes 4. Patient-reported outcomes, or PROMs Seven percent. That is less than one out of ten of these digital health vendors. There are other higher, but still pretty sad, percentages that measure combinations of the above four factors; but only 7% measure all of them. And if you don’t or can’t measure what you’re doing, then you wind up with what my guest Rik Renard calls black box care, which is another way of saying if you don’t measure it, you can’t manage it. Because think about it, if you have black box care, well, the solutions to perform better are also a black box. If you don’t know the problem, good luck finding the solution to it. A few things as we contemplate all of this. First of all, as Stacy Mays pointed out to me, if that digital health vendor is working for different payers or different purchasers, those different payers or purchasers might demand different care flows; and those different care flows might ladder up to different ultimate goals. The hard part about being a digital health vendor employed by a payer or a purchaser is that your customer is the boss of you. So, complication. The other relevant conversation I had is with David Claud, MD, PhD, who told me that many employers/customers evaluating healthcare vendors, like on-site clinics, do not have the clinical expertise to meaningfully evaluate the quality of care; so, they tend to focus more on cost and service. When this happens, you kinda wind up with a race to the bottom, where being really nice and being cheap are more important than actually delivering high-quality care that no one can measure anyway. And the last point that I’ll bring up is what Sanat Dixit, MD, MBA, FACS, brought up the other day; and I love how he put it. He said doctors don’t tend to caucus well. And coming up with care standards and best practice care flows means getting everybody to walk the same pathways. Bottom line, it’s really pretty hard to be a digital health entrepreneur these days. Coming up here, I have a conversation with Barbara Wachsman. Barbara was the managing director over at Disney. She’s worked for PE (private equity) as well as being executive director over at PBGH, the Purchaser Business Group on Health. So, that’s upcoming in a couple of weeks. But the point that Barbara makes, which I think is really apropos here, she said that, in the United States, we desperately need really talented and great digital health vendors, great entrepreneurs, ones who actually can deliver real results and do it at a fair price. So, my hope is that we get better at these care flows. Now, I say all this to say, let’s take the conversation today as an opportunity for both entrepreneurs, vendors, as well as customers like employers and other purchasers or payers. It’s an opportunity to recognize and work together where there’s room for improvement and also place value on achieving that headroom. As I mentioned earlier, in this healthcare podcast I am speaking with Rik Renard from Awell. Rik has a background in nursing and healthcare management. He joined Awell four years ago and now manages strategic accounts. For more on this topic, listen to the show with George Mathew, MD, MBA, FACP (EP253).   Also mentioned in this episode are Ali Khan, MD, MPP; Oak Street Health; Thomas Vande Casteele; Stacy Mays; David Claud, MD, PhD; Sanat Dixit, MD, MBA, FACS; Barbara Wachsman; George T. Mathew, MD, MBA, FACP; Yubin Park, PhD; Jessica H. Green, MPH; Thyme Care; Better Health; Wellinks; Bob Matthews; Emily Kagan Trenchard; Robert Pearl, MD; and J. Michael Connors, MD.   You can learn more at Awell and CareOps. You can also follow Rik on LinkedIn and X (formerly Twitter).   Rik Renard transitioned from a nurse practitioner to a start-up operator. Currently leading strategic accounts at Awell, Rik focuses on helping large care organizations make their care flows work harder than their care teams. As the coauthor and driving force behind CareOps, a vibrant community of over 4000 healthcare professionals focused on enhancing care flows, he imparts insights on designing and improving care flows. His expertise is grounded in over five years of hands-on experience, during which he has successfully implemented over 50 care flows in various medical areas, including oncology, musculoskeletal disorders, and cardiovascular care. These efforts have significantly improved patient outcomes and efficiently freed up time for healthcare teams. Holding a master’s degree in health care management and policy from Ghent University, Rik combines his educational background with real-world experience to make a tangible impact in healthcare.   09:26 Why should clinicians care about care processes and care flows? 12:05 Why do care flows and care processes have a bad reputation? 12:31 What components does a good pathway include? 14:51 Why pathways need to be looked at as a process of continuous reconfiguration. 17:15 Who did Awell survey about care processes and flows? 18:42 How many clinicians were using care flows, and what did those care flows look like? 25:45 EP315 with Bob Matthews. 26:44 EP392 with Emily Kagan Trenchard. 28:21 EP412 with Robert Pearl, MD. 30:01 “Just document something.” 30:14 What was a shocking find from this care process survey? 31:06 Is AI the answer? 34:13 Why is it important to get the foundation of data correct before introducing AI? 34:51 How should employers use this information to vet vendors?   You can learn more at Awell and CareOps. You can also follow Rik on LinkedIn and X (formerly Twitter).   @rikrenard discusses #digitalhealthvendors and #patientoutcomes on our #healthcarepodcast. #healthcare #podcast #digitalhealth #healthcareleadership #healthcaretransformation #healthcareinnovation   Recent past interviews: Click a guest’s name for their latest RHV episode! AJ Loiacono (Encore! EP379), Nina Lathia, Marshall Allen, Stacey Richter (INBW39), Peter Hayes, Joey Dizenhouse, Benjamin Jolley, Emily Kagan Trenchard (Encore! EP392), Cora Opsahl (Encore! EP372), Jodilyn Owen    

For a full transcript of this episode, click here. Here on Relentless Health Value, we have done a bunch of shows lately on how some weird PBM (pharmacy benefit manager) and pharmacy goings-on impact plan members, patients, and also independent pharmacies. During the conversation with Benjamin Jolley, PharmD (EP422), for example, Benjamin mentioned that he thinks some of these contract terms that really hurt independent pharmacies are signed by employers at the urging of their brokers or employee benefit consultants (EBCs). Think about this. You have these huge vertically integrated PBMs who own their own retail pharmacies and/or mail order. You have EBCs that work with employers who, a lot of times, do not understand the contracts that they are signing. This is a recipe for what AJ Loiacono talks about on the podcast encore today: just how much those EBCs and brokers are, in some cases, being compensated to get employers to sign contracts that allow PBMs to corner the market and take all the profit. Even if you listened to this encore in 2022, you might want to revisit it and consider what AJ says in the context of these recent shows with Ge Bai, PhD, CPA (EP420); Joey Dizenhouse (EP423); Mark Cuban and Ferrin Williams, PharmD, MBA (EP418); and Benjamin Jolley, PharmD (EP422), as I just mentioned. Also keep in mind the shows with Scott Haas (EP365) and Paul Holmes (EP397) from earlier … Olivia Webb (EP337) as well. This show with AJ Loiacono is different than others you may have heard with him because in this healthcare podcast, we are not talking about PBMs. We’re talking about brokers and EBCs. So, say I’m a self-insured employer. Here’s the big question: Is my broker or EBC helping me make the right decisions, or is he or she helping me make decisions that will make them the most money? While there are some amazing and totally above-board EBCs and brokers out there, unfortunately, caveat emptor is a thing. Buyer beware, that is. Too many self-serving and I’m sure very charming sharks are out there circling plan sponsors. It is currently a fact that some EBCs and brokers and even TPAs (third-party administrators) or PBMs or others take hidden kickbacks or fees or percentages. They make a lot of money, maybe the most money, in these secret ways. All this money, money paid in secret backroom deals—let’s not lose track, these dollars increase the total prices paid by plan sponsors and employees. Now, I say this to say that my guest today, AJ Loiacono, calls 2022, right now, a “magical moment” for plan sponsors—and for straight-shooting EBCs and PBMs and all the others who are actually doing the right thing by their clients also. It’s because of the Consolidated Appropriations Act (CAA), which states quite clearly that plan sponsors can ask their healthcare and benefits service providers to disclose the money that they are making off of the plan—all of the money, not just the direct fees. The CAA went into effect December 2021, and contrary to what some people have said or may believe, it is in force right now. The field memo went out on 12/31/2021. So, the CAA is the rule right now. And in fact, the CAA makes it imperative under ERISA (Employee Retirement Income Security Act) to do what I just said: Plan sponsors must disclose the monies that they are paying out on behalf of employees and ensure that those fees are reasonable and free from conflict. If you’re the fiduciary of the plan, you gotta disclose all these indirect and direct compensations of the people that you are paying or the people that you are paying who may be kicking back dollars to other people you are working with, unbeknownst to you. The Department of Labor is putting as much emphasis right now on healthcare as they put on 401(k) plans in the early 2000s, so this is a big deal—or it should be—for plan sponsors. So obviously, in order to comply with the CAA, self-insured employers should be requesting from their EBCs and brokers or others that they disclose, in writing, how much money they are making off the plan. You can see why this disclosure would be necessary if the plan sponsor is responsible to determine if those payments are reasonable and seem to be free from conflict, right? You can’t evaluate something you do not know about, and if you don’t know about it, the plan sponsor is the one at risk. Ignorance is not an excuse here. Here’s one example: What if the EBC or TPA is collecting a $40 payment per prescription from the PBM? Wait … what? Some plan sponsor is paying $40 per script in, I guess you’d call it, a commission? Yes, that is a rumored example—$40/Rx. It is basically full-on arbitrage, and if anyone disagrees, let me know why and how it’s not. Or let’s say the EBC is making, say, $6 per script payable by the PBM, and this sum should be mailed quarterly to a PO box in another state. This was a condition, by the way, for a PBM to win an RFP (request for proposal) that the EBC wrote and picked the winner of. Yeah, you as the plan sponsor really probably want to know that this is going on because it’s your butt on the line. So, in sum, the CAA is in effect right now. Penalties can be levied right now against plan sponsors. For a deep dive into the CAA, listen to the show with Christin Deacon (EP342) from 2021. So, what’s the process if I’m an employer plan sponsor? Step 1: Request in writing the dollars that your EBC or broker is making off of you. Similar to the advice that you’ll hear often on this show, ask for actual dollars, not a percentage of this or that. Ask for how much money did you (broker or EBC) make off each program that you recommended to us, and what did that total up to. Once you make that request, the EBC/broker/TPA (whoever you’re asking) has 30 or 90 days to respond, depending on who you ask. But if they do not respond, then you, the employer, should report them to the Department of Labor. Keep this in mind: Once that EBC or broker is reported for failure to comply by anybody, meaning likely some other employer, it is only a matter of time before that information becomes public. And the second that info becomes public, I guarantee you that there’s some attorney out there just waiting to file a class action lawsuit against every other self-insured employer who uses that EBC/broker because everybody else out there is now out of compliance. Right? I’m not a lawyer and I am certainly not a class action ambulance chaser, but even I can figure out that strategy. AJ Loiacono is the CEO of Capital Rx, which is a PBM 2.0, as they call it. To see how the CAA is playing out, you can read about one real-life example of a school district’s lawsuit against an insurance consultant. Also mentioned in this episode are Benjamin Jolley, PharmD; Ge Bai; Joey Dizenhouse; Mark Cuban; Ferrin Williams, PharmD, MBA; Scott Haas; Paul Holmes; Olivia Webb; and Chris Deacon. You can learn more at cap-rx.com and find resources through law firms.   AJ Loiacono is a serial entrepreneur with over 20 years of experience in pharmacy benefits, finance, and software development. As the CEO of Capital Rx, his mission is to upgrade America’s healthcare infrastructure to deliver the highest level of client service and patient engagement while reducing total cost of care. AJ has spent his career studying the pharmaceutical supply chain and developing solutions that have continually redefined the pharmacy benefit industry to achieve this goal. Before Capital Rx, AJ was a co-founder of Truveris, where he served for eight years as CEO, CIO, and a board member, leading the company to record growth (Deloitte FAST 500 and Crain’s Fast 50). Prior to Truveris, AJ co-founded SMS Partners, a joint venture with Realogy (RLGY), and in 2010 exited the partnership with a buyout. In his first venture, AJ started Victrix, a pharmaceutical supply chain consultancy, which was successfully sold to Chrysalis Solutions in 2007.   07:09 Who can get in trouble for mismanaging employee funds? 07:48 “When you talk about conflicts of interest, they’re everywhere.” 13:13 “You’re paying for access.” 13:34 Why is it important to request that they disclose direct and indirect compensation? 14:04 What are the layers to these hidden fees and compensations? 18:13 What is a reasonable fee for a good plan admin? 19:27 “I think people need to take a step back and say, ‘How many different ways are they getting compensated?’” 24:50 “The compensation is not just unreasonable, but if they were to move it, they would lose access to an entire column of revenue.” 25:06 “For every good broker consultant, there’s a horrible individual lurking out there and it’s easy to figure out: Ask for them to disclose their fees.” 28:08 “You can’t win if you can’t even pay the house fee to come in.” 31:35 Why do you need to ask for disclosure, and what do you need to ask specifically? 32:21 What are some of the characteristics of a good plan consultant?   You can learn more at cap-rx.com and find resources through law firms.   AJ Loiacono of @cap_rx discusses #ebcs, #brokers, and #plansponsors on our #healthcarepodcast. #healthcare #podcast #digitalhealth #healthcareleadership #healthcaretransformation #healthcareinnovation   Recent past interviews: Click a guest’s name for their latest RHV episode! Nina Lathia, Marshall Allen, Stacey Richter (INBW39), Peter Hayes, Joey Dizenhouse, Benjamin Jolley, Emily Kagan Trenchard (Encore! EP392), Cora Opsahl (Encore! EP372), Jodilyn Owen, Ge Bai