Introduction and Overview

[00:00:00] Stacey Richter: Encore episode.  

The Role of Employee Benefit Consultants and Brokers

[00:00:03] Stacey Richter: "How Much Money, Really, Are Employee Benefit Consultants and/or Brokers Making From Plan Sponsors?" Today I speak with A. J. Loiacono. 

American Healthcare Entrepreneurs and Executives You Want To Know, Talking. Relentlessly Seeking Value.  

The Impact of PBM and Pharmacy Practices

[00:00:28] Stacey Richter: Here on Relentless Health Value, we have done a bunch of shows lately on how some weird PBM and pharmacy goings on impact plan members, patients, and also independent pharmacies. During the conversation with Benjamin Jolley, for example, that was episode 422, 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. 

Think about this, you have these huge vertically integrated PBMs who own their own retail pharmacies and or mail-order. Or 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 A.J. Loiacono talks about on the podcast encore today. 

The Compensation of EBCs and Brokers

[00:01:15] Stacey Richter: 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 A.J. says in the context of these recent shows with Ge Bai, Joey Dizenhouse, Mark Cuban, and Ferrin Williams, and Benjamin Jolley, as I just mentioned. Also, keep in mind the shows with Scott Haas and Paul Holmes from earlier, Olivia Webb as well. I'll link to all of them in the show notes. And with that, here's your encore.  

The Importance of Transparency in Healthcare

[00:01:50] Stacey Richter: This show with A.J. Loiacono is different than others you may have heard with him because today we are not talking about PBMs, pharmacy benefit managers. 

We're talking about brokers and EBCs, Employee Benefit Consultants. 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, 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.  

The Role of the Consolidated Appropriations Act

[00:02:54] Stacey Richter: Now, I say this to say that my guest today, A.J. 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 the Consolidated Appropriations Act, the 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 12/31/21. So the CAA is the rule right now. And in fact, the CAA makes it imperative under ERISA 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 got to 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 401k 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?  

The Risks of Non-Compliance With the CAA

[00:04:37] Stacey Richter: 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.  

The Hidden Costs in Healthcare

[00:04:47] Stacey Richter: 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? And I guess you'd call it a commission? Yes, that is a rumored example. $40 per 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 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.  

The Impact of Hidden Fees on Plan Sponsors

[00:05:35] Stacey Richter: So in sum, the CAA is in effect right now, penalties can be leveled right now against plan sponsors. 

For a deep dive into the CAA, listen to the show with Christin Deacon from last year. So what's the process if I'm an employer plan sponsor? Step one, 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 the show, ask for actual dollars, not like 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 ABC/broker because everybody else out there is now out of compliance, right? 

I'm not a lawyer and I'm certainly not a class action ambulance chaser, but even I can figure out that strategy. A.J. Loiacono is the CEO of CapitalRx, which is a PBM 2.0, as they call it.  

My name is Stacey Richter. This podcast is sponsored by Aventria Health Group.  

The Role of Brokers and EBCs in Healthcare Decisions

[00:07:05] Stacey Richter: A.J. Loiacono, thank you so much for being on Relentless Self Value today. 

[00:07:08] A.J. Loiacono: Thank you for having me, Stacey.  

[00:07:10] Stacey Richter: The CAA really specifies the self-insured employer is responsible to ensure that covered service providers are reasonably compensated, that there's nobody who is egregiously filtering money directly or indirectly from their employees. It's the self-insured employer themselves that could get in trouble here as mismanaging employee funds as defined by ERISA. 

[00:07:37] A.J. Loiacono: I think what we've always known, I say we people have been in the industry for decades, is that since 2000, the industry has just become murkier and murkier. And when you talk about conflicts of interest, they're everywhere when it comes to compensation.  

[00:07:54] Stacey Richter: So given all of this Post CAA and so if I'm a self-insured employer, I know I've got a good one if they're doing what?  

[00:08:02] A.J. Loiacono: I always want to put forth the footnote here that there are wonderful broker consultants out there that do an outstanding job guiding the fiduciary to make the best decisions on behalf of their membership. 

And then there are a rogues gallery of brokers and consultants, people that should not go anywhere near a plan and that they view the plans assets almost like, you know, mining for gold. This is where it becomes nauseating when you go into the details and the number of stories we all have been, I have personally experienced. 

It's brutal. It's when you start to look at these things, what are kind of characteristics of a good broker consultant? So, well, the first part is how are they getting paid? I love when I hear a broker consultant only has a flat administrative fee. I think what you're saying there is I've removed conflicts of interest. 

Now that person could make a very good living. No one is against that. I often say, what's the difference between a thousand dollar an hour lawyer and a two hundred dollar an hour lawyer? Well, I guess the thousand dollar an hour lawyer must have proven their worth to continue to charge that amount. And so when you go to brokers and consultants, if they're doing an excellent job, no one's going to fight them on their compensation. 

I think where it becomes unreasonable is when you have all of this undisclosed compensation or it's bundled in ways that people can't see or it's just kind of signed off on a 20 page document and it's the last page and it has these broad statements like time to time, broker consultant may have direct or indirect compensation for variety of vendors for services rendered or marketing agreements, et cetera. 

And someone's like, yeah, whatever. Okay. That's the problem. And we could go into all the different areas in which I think there's like rotten decision making going on here because I don't know how a broker consultant could actually make a reasonable decision when many of them, unfortunately, are picking the things that make the most money for them.  

The Consequences of Non-Disclosure in Healthcare

[00:10:12] Stacey Richter: You know there's a reason why these things are hidden because they're really hidden anything that's buried on the last page in very opaque terms is stuff that they are literally hiding. And then of course, the logical next question is why are they hiding it? 

So if we're gonna move into maybe some of these areas that get hidden, which then cause plan sponsors to make, as you call them, rotten decisions, where would you start?  

[00:10:37] A.J. Loiacono: Well, let's start where I've been living for the last four and a half years, which is on the PBM side. And perhaps I was naive coming into this equation where I was like, Oh, you know, everyone is treated fairly and they're professionals, but there's a gangster approach with some of these firms when it comes to compensation. 

And these are true stories that my colleagues would tell you. A great example is, I'm working with a national broker group and I'm going back and forth and I'm saying here's the value here's a case study I'm showing that I'm reducing trend. I could see that I'm just losing them. They're just like they don't care and finally the ask comes. They just turned to me very matter of factly and they're like, look this is how it works A.J. Everybody, everybody being the PBMs that bid with us, pay me $6.50. So if you want to be considered, the bidding starts at $6.50. And maybe you pay me $7 and you get more per script. Yeah, per script. And you get more business if you pay me more money. And I'm sitting there and I'm like, perhaps you haven't heard my presentation for the last hour here, which is we are a fully transparent public ledger system where the buy and sell side between the pharmacy and the payer is identical. 

We don't make any money on fulfillment, and I only make a flat admin fee, which coincidentally is four to five bucks. And you're telling me you need $6.50 as the starting point. So you would like to make 120 percent over my fee, and you're not administrating it, you don't have a call center, you're not printing documentation, you don't have mobile applications, patient portal, clinical, decision support. You have none of these things.  

[00:12:21] Stacey Richter: So it's the very definition of arbitrage. They're providing no value in that transaction, but taking that override.  

[00:12:28] A.J. Loiacono: Well, it gets even worse. So then I'm just like, well, how could I win if I were to add your fee? And they're like, oh, well, you don't show the fee. You just kind of bury it and stuff. 

And I'm like, well, wait, if you're proud of this fee. Like, if I'm charging $5 and you would like $7, then our fee becomes $12 and we disclose you're taking $7. They're like, no, no, no, it doesn't work that way. And I'm just like, but you're taxing the plan roughly 6-7 percent of their drug spend at that rate, and you would like me to not disclose your fee. 

And then they'll go on and they'll say, And this is absolute truth. A.J., you don't get it. I can make anyone win on my spreadsheet. And I'm like, come again? You're paying for access. This is a marketing transaction fee. Whatever you want to call it.  

The Importance of Full Disclosure in Healthcare

[00:13:18] A.J. Loiacono: Be like, to be on my spreadsheet, it's $6.50. You pay me a little more, maybe you win. 

But this is what is out there. And this is not a small firm. Some of these people hide under the guise of practice leader. And I am not besmirching all practice leads. I think there are some wonderful ones. But I think to figure out who the bad ones are. You need to go to CAA as the fiduciary and request from the broker and consultant to disclose directed indirect compensation because they have to disclose they're getting paid the seven bucks suddenly. 

[00:13:50] Stacey Richter: By the way, that's exactly what happened in Florida with the school district that is suing a major broker.  

[00:13:59] A.J. Loiacono: Yeah, Osceola.  

[00:14:00] Stacey Richter: Yeah. We'll put a link to the article in the show notes for doing exactly that.  

[00:14:04] A.J. Loiacono: But what is very scary is there are layers of it. There's a layer that may be introduced by the broker consultant. 

There are back end fees that may be paid after the fact. Like, hey, you've hit a certain market share or certain retention rate, and I'm going to compensate you in a different way. Some of these just staying put for a second on PBM, they could be some sort of coalition fee, a commission. Sometimes they collect implementation fees. I love the implementation fee because oftentimes I look at this and I go, are you actually going on the system and implementing the plan design? And the answer is no, but they're still collecting money for it. And back to marketing fees, sales fees. anything they could package, and then they continue to package add-on services. 

This is where I think the conflict begins, where someone says, you know what I heard is a good practice. I think it's a good practice if we carve out a certain class of drugs. Now, that may be the case, but I would like to know if someone who's making that recommendation is getting compensated for that recommendation. 

Because then you begin to say, is there a conflict? Like, why are you recommending that I take a certain approach or clinical stance or I direct my drug fulfillment through a specific channel versus having what I would say an unbiased approach to decision making. Here's where it becomes horribly conflicted. 

I have literally been in the room with some of these consultants and brokers that are misbehaving. And they'll do things like, Oh, I'm not getting compensated for this. And they are, from a variety of ways. It's a small industry. But I think the veneer in the past of just saying, I could just poke her face and be like, Hey, I'm not getting paid, is now going away because of the Consolidated Appropriations Act. Because you can expose everyone.  

The Impact of Hidden Fees on Healthcare Costs

[00:16:03] Stacey Richter: This is not a victimless. situation, just kind of going back to that Osceola case, the school district is seeking at least $2 million from these alleged secret payments that the broker had set up, which were coming out of teachers pockets, right? 

It's not like there's some slush fund in the sky that this money has come from, that like there's hardworking teachers, I mean, we know what's going on. If you look at the news with teachers in Florida, like it's a bad scene and they can't figure out how to compensate these teachers enough. Okay, well, two million dollars just got taken out of their pockets and the payment was secret. 

I mean, the word secret is used in the lawsuit. It was not disclosed and the school district found out about it. But at this juncture, self-insured employers have every right to ask for the information.  

[00:16:53] A.J. Loiacono: You, as the fiduciary of your fund, or as the plan sponsor, you know, you're responsible. And that someone could very easily come after you. 

It could be a third party. It could be one of your own members that takes a suit against you for not being a good fiduciary. I think this kind of leads us to that second point here, which is, okay, what's reasonable? If you asked me on the PBM side, what's reasonable compensation? I would say 1 percent or less of the discounted drug. 

Price is a reasonable, if you're going to have a product based compensation, and it's roughly a buck, let's just say, on average, this is broad paint strokes, average discounted prescription drug price is like a hundred dollars, let's just say, across the plan, so one percent is a dollar. If it's a dollar, yeah, yeah, okay. 

You know, you start getting up to $2, that may become unreasonable, especially if it's a larger plan. To be fair, if someone's like, look, I want to charge $2 because it's a 200 life case, that's not that big of a deal. A 200 life case maybe has, you know, call it 2,000 scripts, $2, it's 4 grand, yeah, that's reasonable money. 

But if you have a 50,000 life case, $2 becomes flat out unreasonable. You're getting into the realm of million dollar compensation. I think what you need to begin to look at is what is reasonable for the services being provided. And I think a good gauge of reasonable is I go back to the PBM. Look at the PBMs that charge admin fees. 

You're going to see, let's just say on average, a range from $3 to $6 depending upon the size of the end payer, so if someone's making a dollar and you're charging five, yeah, maybe it's reasonable, 20 percent or so of the cost of the actual administration of the plan. Yeah, it seems a little high, but maybe. 

But when you see people that are suddenly making equivalent numbers, $4, $5, $6, we've seen $10 asks. Suddenly, the compensation starts to add up and oftentimes the compensation, this goes to direct and indirect, is over multiple pieces. So it's not just hiding in plain sight, hey, I charge a prescript fee. I also get an implementation allowance, which is $50,000 and that's paid by the PBM. 

So let's do some math on that. Divided by the membership. That can be equivalent to the very fee that we're discussing. In addition to that, I also get compensated in some other ways from, you know, this relationship.  

The Role of the CAA in Disclosing Hidden Fees

[00:19:28] A.J. Loiacono: I think people need to take a step back and saying, how many different ways are they getting compensated? 

Point solution applications, which kind of are different health plan add on services. I mean, there are brokers and consultants out there that are getting compensated like they're the Apple Store selling the damn app. And people have no clue. They're like, Oh, I got recommended these five healthcare apps. 

And like, did you ask the compensation on them? And they'd be like, what do you mean? Now, again, I want to be fair. There are plenty of people that fully disclose and represent the value of these applications, but what we're trying to have people understand is there's plenty of people that have been completely blindsided. 

[00:20:10] Stacey Richter: The takeaway that we're crafting here is, is very much buyer beware. You listed several things that we need to be paying attention to. One of them, and I think you made this point very clearly, is there's money that can be made at every step along the process, from any party in the process. There's just columns and rows of ways to tax. 

Any piece of a multi pronged transaction, right? So it could be implementation fee. It could be rebates. It could be, call it whatever you want. But because the process is so opaque, there's any number of ways to add-on dollars. So that's way number one to hide fees. The second way would be to overcharge, it sounds like, for certain things. 

You're actually saying it's a flat fee, but the charge is just higher than it should be. So, those are two unreasonable things that could certainly be going on. You explained what an example from the PBM side, sort of how that works. But then I think the point that you're also making is that this goes for other things as well. 

Like the point solutions you could have an insurer who's like, Hey, you should add this diabetes telehealth solution or whatnot and they may not be telling you that the reason that they are recommending this particular diabetes point solution because there's many. And there might be a really really amazing one out there that went through the validation institute and has all kinds of credentialing but they're recommending this other one because that point solution just happens to be the one that'll pay them the most money. 

[00:21:44] A.J. Loiacono: And think about this Stacey, is if you're trying to do the right thing, you're a PBM, you're transparent, you have low fees and high value that you're demonstrating. But you can't get through the front door because you refuse to pay these fees, or you won't even be invited into the conversation because, to be fair, the broker consultant is happy with their stable of PBMs because they're paying out the money. 

The issue that I have is, to your point, yes, it's impacting the end member and the patient in the actual plan itself, but you can't even cure it sometimes.  

The Importance of Asking the Right Questions

[00:22:19] A.J. Loiacono: Up until now, because there was no way to get through, the plan sponsor just assumed all the right decisions were being made, and that other options were out there, but they were just deemed not competitive, you know, you're uncompetitive with our current group and you can't come in and this comes to the conflicts of interest where you see massive amounts of business done with one, two or three very specific partners. 

You begin to understand or ask a question about the conflict of interest, which is things like lets pivot gently to overrides for the broker consultant. This is an additional payment made by a carrier for premiums sold or lives sold or lives retained. Now, that has nothing to do with, is this the right plan? 

This is the problem. That is a massive problem, conflict of interest and it has been ignored. Now people will be like, Oh, I disclosed my overrides. And I'm like, no, no, you're not disclosing what you're paid specifically of that override amount. Because it's typically, it's a lump sum check to the broker consultant. 

That's important for people to understand as well as is it the compensation reasonable? Are all of these fees being disclosed and then any conflicts of interest? I think this is that next phase of filtering down. Is this broker consultant a good person or a questionable person?  

[00:23:51] Stacey Richter: I think what you're referring to there also as one aspect of this are, and this has been well publicized, that the insurance carriers give bonuses to brokers. 

You know, they'll have a retention bonus. And you're kind of like, okay, well then at that moment in time, who does the broker work for? They're basically a sales agent for a carrier, and you don't want to think this way, but at the same time, the broker has a vested interest to keep an employer on a plan that might not be right for them anymore, say. 

[00:24:25] A.J. Loiacono: Oh, you see this all the time. I can't tell you the number of times I see a plan that is a couple thousand lives that has grown very quickly over time. Should be self-insured, but for whatever reason it's still fully insured. And the next question is, how much money is being made on this account, staying fully insured, it's a fortune. 

The conflict of interest there is clear. The compensation is not just unreasonable, but if they were to move it, they would lose access to an entire kind of column of revenue that they couldn't access anymore. Again, I always want to be careful and make it clear that 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.  

The Consequences of Non-Compliance with the CAA

[00:25:16] Stacey Richter: I think the point that you're making is a good one. There's these large national companies that employ many, many, many brokers and EBCs. Even within that one organization, there may be great people and there may be some gangsters, as to use your term. 

You've got, obviously, it was Gallagher that's, that was cited in the Osceola School District case. There's some great Gallagher ABCs and then obviously there's ones who are allegedly doing something which got them embroiled in a lawsuit.  

[00:25:47] A.J. Loiacono: And it's everywhere in healthcare. There's never been any reporting on how people can make money. 

And it pops up all the time, and even in our travels as the PBM, because the PBM does touch different things and oftentimes we provide services and solutions. For different entities and kind of the healthcare ecosystem and then you bump into like TPAs periodically. One of the areas is we'll have a self-insured customer, they'll sign on to a new TPA and they'll be like, Oh, the TPA has its own product. 

And I'll be like, oh, okay, that's, that's fine. What is it? How does it compare? And there isn't a lot of information provided. They're reselling something because clearly a TPA is not a PBM. And then the question becomes, what is the compensation behind it? One of the most notable moments was when this TPA literally went to us and said, look, the number starts at $40. 

I was so confused by the ask. I was like, what is $40? And they're like, that's how much I get paid by the PBM on every prescription. Forty dollars? I was like, out of morbid curiosity, how does this even work? They're like, I don't really care what you charge for a discount, or mail, or specialty, and you guys get to keep the rebates, but you just need to pay me the forty bucks. 

[00:27:06] Stacey Richter: Wow, these EBCs making seven are amateurs, huh?  

The Importance of Transparency in Healthcare

[00:27:09] A.J. Loiacono: Oh, well, I was just like, what? I was like, there was no RFP that was considering discounts or even guarantees at this point. It had literally become, how much do you pay me? And the person is obviously able to make this kind of demand because one, someone is paying them presently because they didn't come up with that number magically. The other thing is the person again, who is suffering are the underlying employee groups, the members and their dependents.  

[00:27:39] Stacey Richter: Yeah, everybody wonders why premiums are so high, right? Or out of pockets are so high.  

[00:27:45] A.J. Loiacono: But this is just pharmacy. It's just pharmacy. And there's no way to see it. 

Because again, it's back end. It's, I've had brokers and consultants ask me to mail rebate checks to P.O. boxes. I am like, uh, no, and it's a shame, you know, you're looking for fair market access, you're looking for a fair evaluation. By no means anyone assumes they're going to win all the time, but you can't win if you can't even pay the house fee to come in, which is some absurd amount of money that oftentimes is able to be sustained by healthcare companies that have opaque pricing schemes in which they can bury these asks or the money. 

And so for us and others, this isn't helping us reduce any costs or not just reduce reduction in cost, but provide better outcomes or better service. We're losing objectivity because the first filter is how does someone get paid?  

[00:28:43] Stacey Richter: If you're not willing to pay the VIG, then you aren't under consideration. 

And as long as employer plan sponsors don't bother to ask the right questions, they're paying $40 a script? Too much. I mean, just by getting rid of that, they could save insane amounts of money. With that example alone, you can see the rationale behind the CAA. Because wow, is that employee's money being spent in an incredibly unreasonable way with a ton of conflict of interest? 

I mean, these are dollars that are getting taken out of people's paychecks that are going into the hands of someone who is receiving a rebate check that was mailed to their P.O. box. They know it's wrong. Anytime someone asks you to do that, they are fully aware of the fact that...  

Conclusion and Final Thoughts

[00:29:35] A.J. Loiacono: There's something amiss, like, let's, you know, like, uh, that doesn't sound right. 

What's interesting is a lot of people believe, well, this is just happening to unsophisticated smaller employer groups. I had a discussion with a consultant the other day. They made an early request of their broker consultant on compensation. And the number that came back was unbelievably high of total compensation. 

This was like a Fortune 500 company. So this is not a small unsophisticated plan sponsor and it was so big they had to term their contract immediately with the broker of record. This is becoming kind of a quiet case study of it's not just the small inexperienced HR person that's being boxed in with unreasonable advice. 

When they actually got through all the ways they were getting paid this number was I don't know the exact number, but it was enough to term the agreement. I think that's a big deal when you have someone who's a Fortune 500 company suddenly saying, whoa, like there has been some bad advice provided to me. 

I need to step away from this and I need to step away from you, the person who's provided me this information. And it's sad, but this is also a moment of kind of hope and triumph in the sense that. There is now a way to determine precisely what that is to make that judgment of, is this compensation reasonable? 

I always say that there are plenty of reasonable folks out there and are there any conflicts of interest and let's go through that together.  

[00:31:10] Stacey Richter: The case study that you just mentioned, there was a Fortune 500 company that asked under their rights under the CAA. For their broker EBC and or to disclose how much money they are being made. 

They got that number back and the self-insured employer was like, whoa, holy cow. We are at risk here. Big time. You're done, EBC broker.  

[00:31:36] A.J. Loiacono: One of the best practices that we're seeing on these forms is put it into dollars and cents. I need, and you need to ask for it, to say, I am asking you to disclose, not just I get paid from this and I get paid a percent from that and I get an override and a slice of this, is to say, for my plan, how much did you make last year? 

And how much are you going to make roughly this year on us with all the things you've signed us up for? Again, going back to this example, this is one of the people that employer groups that made an early request, Fortune 500, and they were shocked. They could not believe all the compensation that had been loaded on over time. 

And you can now ask for this and it's your responsibility as the fiduciary of the plan.  

[00:32:21] Stacey Richter: Summarizing what we're talking about here, if I was going to come up with the characteristics of a really good consultant pulling together a bunch of the different threads that we talked about, it sounds like one thing that they would be doing for sure is actually probably being proactive and informing, I'd say, the self-insured employers that they work with that maybe they should be asking for this. 

[00:32:46] A.J. Loiacono: Absolutely. This went into effect. We have to do this. I could give you a form that I could fill out for you, or you could send me your own. But yeah, I think that's a reasonable first step, which is, are they being proactive and saying, we need to have this discussion?  

[00:33:03] Stacey Richter: And certainly it's a warning sign if the self-insured employer has brought it up and the EBC broker is poo pooing it, like, red flags all over the place. 

[00:33:13] A.J. Loiacono: Well, I think we'll see. This is the first year. I think the fireworks may go off more in 2023, where people did not report or did not do this. And you have to remember, this isn't a lawsuit necessarily potentially against an errant broker or consultant. This is potentially a lawsuit against the plan's sponsor. 

The case is being brought forth by one of the members of the plan.  

[00:33:38] Stacey Richter: A.J., where can people go to learn more about your work into this area? Or Capital Rx.  

[00:33:44] A.J. Loiacono: Law firms are a great resource. Typically larger practices. I've seen publishing information on the impact of the update in Consolidated Appropriations Act on ERISA and they have resources on their website that you can read. Many of them may have forms that you can even download. For ourselves, we're a PBM. I'd like to say the reason why I observe this is because there are lovely, intelligent people out there in Broker Consultant that I love working with every day. 

But there are a large number that I'm not happy with and it's very difficult to offer a transparent or in our case we call public ledger or clearinghouse model where we only make compensation on a flat admin fee and I'm working against multiple headwinds. It's not just the competition in the other PBMs and the value they bring. 

It's a gatekeeper that unfortunately may be unreasonable or have a conflict of interest that prevents us from even showing.  

[00:34:48] Stacey Richter: Thanks so much, A.J.  

A.J.. Loiacono. Thank you so much for being on Relentless Health Value today.  

[00:34:52] A.J. Loiacono: Thanks for having me, Stacey.  

[00:34:54] Stacey Richter: Links to everything discussed can be found at Another cool feature is, you know, you can subscribe to the show so that every week the episode is automatically sent to you so you don't have to remember to go to the website to download it. Thanks so much for listening.