[00:00:00] Stacey Richter: Episode 512. Three Kinds of Broker/EBC Rent Seeking Payment Models. A Lawyer's Perspective. Today I am speaking with Doug Aldeen.
Why Lawyer Perspective
[00:00:30] Stacey Richter: I wanted to talk to a lawyer because yeah, lawyers are the ones that see stuff that falls the whole way down to the level of legal action. But I wanted to find out what are the main categories of things that wind up in legal land when it comes to broker or EBC, employee benefit consultant payment agreements?
Like what are the top ways that compensation agreements go horribly awry? Doug Aldeen, my guest today rose to the challenge, and let me just state for the record that while there are a whole lot of brokers and EBCs who would or do engage in some of these practices, there are also many who do not and or it might not be the broker/EBC themselves, but the company that they work for who is up to some of the things that we're gonna be talking about in the episode today.
But I really for sure want to support the gang of honest actors, great fee-based, integrity-based brokers and EBCs, and I wanna support them all day long, many of whom listen to the show and are part of the Relentless Health Value Tribe.
But let's talk about how the rent seeking ones roll so that you can spot them. See what they did there.
Direct Fees Ground Zero
[00:01:45] Stacey Richter: So yeah, the first kind of ground zero that Doug and I talk about today is just upfront direct compensation agreements, which may be just ridiculously complicated and or ridiculously expensive compared to what others are charging for a similar group. Where there's mystery, there is margin that is so relevant in so many situations, and this is just another one of them.
Three Risky Models
[00:02:09] Stacey Richter: So then after that, Doug and I move on and we get into three categories of stuff that sits in that undisclosed or maybe even disclosed zone, where just the whole model of payments is problematic on its face.
First up, and this is a biggie. Brokers/EBCs recommending rent seeking solutions to their clients. Like a broker or EBC suggests a solution to their clients where the solution itself makes money on a perverse incentive, and then the broker or EBC gets a piece of that action, which might be called shared savings. So yeah, even if the dollars to the broker or EBC are disclosed, a naive plan administrator might not see that overcharged for what it really is, and Doug gives a bunch of examples in the show that follows.
Chris Deacon and Justin Leader also wrote posts (Chris Deacon Post and Justin Leader Post) about this. Donovan Pyle wrote a whole book about it.
Undisclosed Vendor Payments
[00:03:26] Stacey Richter: Okay, the next big category of typical payment model methodologies that Doug Aldeen, again a lawyer, has seen plans get themselves into trouble with their EBCs and brokers, the ones who are sharks. I mean, circling the plan like it's a gold mine. This big category is undisclosed payments from vendors who the plan doesn't realize has a business relationship with the EBC or broker.
This can also be a whole basket of solutions that the EBC/broker wants to install, which is basically this problematic payment model at scale and right, this matters because then the plan doesn't know if this particular point solution, PBM, stop-loss carrier, right, they think their broker EBC is recommending it because it's the best option for that particular plan, not understanding that it's the right option for the broker or EBC.
And these dollars can be undisclosed because to a certain extent, the Consolidated Appropriations Act, it's a little bit unclear on certain points. There's some loopholes if you go looking for them because you are so inclined. We get into more detail on this later on.
After this Doug offers a really great roadmap with six steps in it for any plan to really think about as they consider, first, the maybe integrity of their broker or EBC and what is being recommended to the plan.
And that's important because look, and we say this in the conversation that follows, but I'm gonna say it again here loudly. If a plan realizes that their broker or EBC is not really serving the best interest of the plan, there are great options out there. There are great EBCs and brokers who are honest, upstanding, that really care about their clients, their plans, their members, and doing the right thing.
But telling the difference between the not so good ones and the good ones, takes some diligence, takes some validation on the part of the plan sponsor. It just does.
But the amount of dollars that can be saved is millions, and this is actually saving those millions is actually better for the plan because it's not like those do, they were going in somebody's pocket. It's not like they were being put towards better, safer, lower premiums. These are dollars that can be cut and the plan is actually better.
Meet Doug Aldeen
[00:05:46] Stacey Richter: My guest today, as I have mentioned at least several times already, is Doug Aldeen, who is a well-known attorney who has spent many years in the self-insured space.
My name is Stacey Richter. This podcast is sponsored by Aventria Health Group, and I do want to give a shout out and a thanks to our 2026 series underwriter Payerset. Thank you so much for your financial support. That helps keep this podcast on the air. And with that, here is my conversation with Doug Aldeen.
Doug Aldeen, welcome to Relentless Health Value.
[00:06:19] Doug Aldeen: Actually, good to be here. Happy to be chatting with you.
[00:06:22] Stacey Richter: It's nice to have you back.
Why Comp Review Matters
[00:06:23] Stacey Richter: So let's just take this from the why. Why is reviewing broker/employee benefit consultant compensation extremely important to look into? Like are we talking change in the couch cushions here and this is just, the juice ain't worth the squeeze.
[00:06:42] Doug Aldeen: I think there's three layers. There's both the direct compensation, more importantly, there's the indirect compensation, but then even on a third level is do you even need whatever product they're peddling?
And so I think that there's three layers you go through. What's the direct amount that's above board everybody sees, pays, acknowledges the indirect stuff can get super murky. When you look at how those arrangements are structured.
And then thirdly, is it a service and or product that's even appropriate for the group follow the money? I mean, how much is the broker getting paid to place something like that? With the group? I mean, 'cause a group I can guarantee you has no clue.
[00:07:28] Stacey Richter: Like if you look across different groups, just even how much the direct fees getting paid are. If there's one group who has been with one consultant or broker for a really long time, the only frame of reference they have is that one EBC or broker. And they haven't done an RFP or they haven't shopped around they may not even realize just how wildly overpriced the direct comp that's even being reported is.
[00:07:52] Doug Aldeen: Oh yeah. Do you even understand what the formula is on the direct compensation? Because it should not take a NASA scientist to reverse engineer. What do we have? What are we paying here? So, lot of different levels.
Ohio Potato Cautionary Tale
[00:08:05] Stacey Richter: There was just the, the Ohio Potato company, did you wanna talk about that?
[00:08:10] Doug Aldeen: Yeah. So the broker was paid over $2 million in a level funded arrangement. It completely depleted the claims fund. I mean, the broker was paid handsomely, but when it came time to pay the medical, I mean, so who's losing? I mean, the patients are losing, the doctors are losing. The facility is losing. Only people who are winning are is the broker who took the fee.
[00:08:32] Stacey Richter: Yeah. So the broker or this vendor took $1.9 million for year one. They took $800,000 for year two. And then the company that they were advising, they found out that they were $600,000 in deficit.
[00:08:48] Doug Aldeen: And balance billing going crazy.
I mean, people just getting shelled. Unbelievably awful. It's a gift that keeps on giving because now the group's gonna have to probably go to a fully insured arrangement. You know, they're gonna overpay for that. So there's a downstream effect as well.
[[00:09:05] Stacey Richter: I was talking to someone who would know the other day. He has purview over how much hundreds of plans are paying their brokers or EBCs employee benefit consultants. And for similar sized groups with similar sized needs, even just looking at the direct compensation, he was telling me that the variation is big.
Some groups are paying wildly higher, even just direct compensation than other groups for the exact same services.
So yeah, don't overlook this one. And I'd also call it kind of our ground zero way. Plans, wind up paying some amount to their Broker/EBC and just be fuzzy on how they got to that dollar figure.
You can see how this can happen if, like Doug just said, it takes a NASA engineer to understand the basic compensation agreement.
So with this baseline, let's move on to what I wanted to get to with Doug and what the title of this show suggests, from his standpoint as an attorney getting pulled into stuff that you'd pull an attorney into, where does he see the biggest problems with plans not really understanding how the payment model itself is kind of nefarious. So here we go.]]
Rent Seeking Solutions
[00:10:28] Stacey Richter: Let's get into our first category where brokers are making money undisclosed/disclosed, but just in ways that the plan may not be quite aware of or aware of what the math adds up, to your point.
The first way brokers/EBCs may be getting compensated where there's more than meets the eye might be rent seeking solution recommendations.
Do you wanna talk about this?
RBP Cost Of Savings
[00:10:54] Doug Aldeen: This is an example, so you could be in a reference based pricing program. And the vendor is using a cost of savings models.
[00:11:03] Stacey Richter: That's a really interesting example because a lot of folks are immediately gonna think to themselves, well, reference-based pricing is actually a way to save money on these underlying hospital charges.
[00:11:14] Doug Aldeen: You could have implemented a reference-based pricing program, which is tied to a cost of savings. So as the hospital prices increase, and they are increasing geometrically, by the way, the reference-based pricing vendor is going to receive a fee and it's going to increase as those hospital charges increase.
But then the, the broker's fee, who placed the reference-based pricing vendor with the group, presumably his fees are going to increase as well, as long as that relationship exists.
[00:11:45] Stacey Richter: Explain what cost of savings means.
[00:11:48] Doug Aldeen: So if a hospital charges $10,000 for a CT scan and you, there's a 20% cost of savings fee in order, if you reduce it, frankly, it, it's pretty easy to do. So you just say it's a thousand dollars. You reprice the CT scan too, which is fair.
There's a $9,000 savings at 20%, so the RBR vendor is gonna get 1800. So 9,000 times 20% is 1800. So you're already getting paid more than the facility. And then the broker's fee, however it's calculated on the backside, is going get getting paid something as well.
You know, and I dunno if it's a 50/50 split or whatever it may be, but I mean, it's gonna be pretty close to what the hospital's getting paid, if not more.
[00:12:31] Stacey Richter: Listen to the show with Cynthia Fisher that talks about that same idea in an out of network version. It's kind of like, you know, same trick, different day.
The incentive here is to have those hospital prices get higher or higher, or if the members go to the highest price place in a way, I mean, there's just some weird incentives that wind up happening here.
[00:12:54] Doug Aldeen: You can go into any number of facilities and look at the services that people actually use. And the markup could be 17000%.
So not all the diagnostics, the CT, MRI, anesthesiology, 17000% of a markup. So I mean, you can think about the fees that are being generated on the backside when those claims get repriced.
[00:13:15] Stacey Richter: If the broker places a plan with an RBP, reference-based pricing, vendor that charges in this way, a percentage of the savings. If you start connecting the dots, then you've got an EBC or a broker who knows exactly what they're doing. They know exactly how much they're gonna get paid by using this RBP vendor, which is charging their client in this particular way. They know exactly about the 17000% markups and you hear this stuff all the time.
So in this particular way, you wind up with a broker who can make a lot, a lot of money by advising their client base to work with this particular, and there's plenty of RBP vendors who do not operate in this, in this model, but if anyone does like this is what downstream is gonna happen.
[00:14:05] Doug Aldeen: Absolutely correct.
Balance Billing Trap
[00:14:07] Stacey Richter: Give me another rent seeking solution recommendations.
[00:14:10] Doug Aldeen: A balance billing program is, so just, just by way of background, I mean. Most balanced billing programs are gonna have a base level of reimbursement, let's just call it 150% of Medicare.
[[00:14:21] Stacey Richter: What Doug is talking about here is, if a plan puts in, for example, an RBP, reference-based pricing, program and pays a hospital some calculated amount, the hospital may disagree with that amount.
And they may go after the patient in this case for the balance of what the hospital thinks it is still owed after that payment.
There are companies you can hire to take the risk for possible balance billing, and Doug explains the rent seeking way to go about that service. I'd also keep in mind that there are some areas of the country where a hospital is not even allowed to balance bill, such as in Texas with the Texas District Hospital statute.
So definitely from the plan perspective, this falls into the bucket of what Doug was talking about earlier, things that you don't really need.]]
[00:15:18] Doug Aldeen: In order to qualify for balance bill defense, I mean, you're gonna have a risk corridor that the plan is gonna have to bear the responsibility of payments. So typically that's between 150% of Medicare and 200% of Medicare, where the plan would end up having to pay whatever you know the bill is.
But in the event that it's 201% and above, the balance billing vendor would then have that risk.
As an example, you had one where not only was this group, a majority of the claims going through a Texas District Hospital statute where there is no balance billing authority. Okay? So nobody's gonna be getting balance, but at least they don't have the authority to do it.
But then to qualify for a balanced bill, and you look at the PEPM that was being paid, this was 2.2 million over three plan years relative to a captive payout of $94,320.
[00:16:11] Stacey Richter: There was a balance bill vendor in the mix here, and they took $2.2 million in fees. That's how much the plan paid them, $2.2 million in fees, and the whole time, what was in question was $94,000.
[00:16:28] Doug Aldeen: Correct.
[00:16:29] Stacey Richter: So this particular plan paid $2.2 million of its own plan members and the employer's money to have at $94,000.
[00:16:39] Doug Aldeen: A service that wasn't even appropriate or needed.
[00:16:42] Stacey Richter: As the icing on the cake because with these balance bills statutes, the plan would've had that 94k anyway, like so it was completely irrelevant.
[00:16:50] Doug Aldeen: Completely irrelevant.
[00:16:51] Stacey Richter: That's probably the very definition of a rent seeking vendor placement by this broker.
[00:16:57] Doug Aldeen: So you, you really need to do, you know, a traditional ROI or cost benefit analysis. Is it even appropriate? If a hospital can't balance bill, why would you even have the service? Okay, as an example. But more importantly, does that solution what you're paying?
Is it more than what you're, you're getting in benefits in terms of the savings or the impact to the plan, which in many cases happens more frequently than people think.
Voluntary Benefits Commissions
[00:17:25] Stacey Richter: And then the third kind of example of maybe rent seeking is these voluntary benefits, which I know you have talked a lot about.
[00:17:32] Doug Aldeen: I mean the, a lot of these voluntary benefits are not worth the paper that they're written on.
And the commission structure typically is front loaded in that first year. Because these are all employee paid commissions.
[00:17:42] Stacey Richter: I had been talking to someone with a large purview over about 200 self-insured plans financials. And he said exactly the same thing. He pointed out that across those 200 plans, just the amount of money that was being made off of the voluntary benefits and just how obvious it was if you really start looking into it, how the carriers that were being offered for these voluntary benefits, when the carriers wound up changing, you know, the plans that were being offered by the brokers. He said it was just stunningly obvious how the whole operation was constructed to maximize the EBC or brokers commission payouts.
[00:18:31] Doug Aldeen: That's exactly right. In the commissions, you know, anywhere from 70 to 90% on that first year and no claims you're getting paid. It literally is a pass through to the broker in terms of the commission. That's it.
Flat Out Undisclosed Money
[[00:18:42] Stacey Richter: Okay, so now we move on into the category of undisclosed payments, just flat out undisclosed stuff. And this could be pernicious if the plan thinks that their broker/EBC has selected whatever vendor for reasons such as this is the best vendor for the plan. It's the best price, it's the highest value, whatever.
Not realizing that this vendor was actually selected because this is the best vendor for the broker/EBC or their agency. And that is a really, really key point.
Sometimes the broker/EBC has no kind of idea how much their agency, their company is making off of the relationship with some vendor.
This individual is just told that this is the preferred partner.]]
I'm gonna ask you to give me some examples, but it is my understanding, and I'm also gonna ask you to correct me if I'm wrong here. It is allowed to be undisclosed because it's done at the book of business level. There's some vendor that is paying the broker for services for the vendor.
So now it's not, they're not paying for anything to do with your plan in particular, like this vendor has a separate business relationship with the broker and they're paying the broker to do something that has nothing to do with the plan.
[00:19:59] Doug Aldeen: So you could take any number of different point solutions, whatever that may be, and the broker is not paid by the plan, but rather the broker is paid by the point solution on their side of the ledger. Let's just say it's a cost of savings model, whatever it may be. So the plan pays the point solution, but then the point solution is gonna pay out of their fee, the broker. And that doesn't have to be disclosed.
[00:20:24] Stacey Richter: Yeah. And it doesn't have to be disclosed because it's tagged as like providing services to the vendor, like they're providing marketing services or something that is to the vendor itself. So the vendor is paying them for services rendered. You can sort of see why, well, logically, I mean, why would I report that to the plan?
But at the same time, if I know, if I'm a broker and I know that this one guy, this one diabetes solution, I'm gonna get paid for my marketing services. Then I have a very big vested interest to pick diabetes point solution one, and that rationale may have nothing to do with what their quantified patient reported outcomes are, or savings to the plan downstream or anything like that.
[00:21:06] Doug Aldeen: Well said.
[00:21:07] Stacey Richter: Do you see this a lot?
[00:21:10] Doug Aldeen: Believe it or not, I've been seeing this more frequently.
[00:21:13] Stacey Richter: More frequently.
CAA Loopholes And PBMs
[00:21:14] Doug Aldeen: More frequently, just well, because you think about, I mean the CAA is a pretty well-known vehicle out there right now in the marketplace.
[00:21:22] Stacey Richter: The Consolidated Appropriations Act, you mean?
[00:21:24] Doug Aldeen: Exactly. And so the disclosures in terms of, you know, who's being paid what. Point solution A, have any, you know, reason to provide that he's paying Doug or Stacey on their side of the ledger? No, none.
[[00:21:36] Stacey Richter: The point being made here, it's probably a few fold, and I didn't double check this with Doug, but realized in the re-listen that it's a bit of a hanging chad.
What I hear often enough with the CAA, the Consolidated Appropriations Act, is that it is potentially unclear on a few key points, which could be exploited if one is so inclined, and also enforcement of the CAA. Spotty at best.
So if a broker/EBC and or their company is hellbent to maximize their revenue, their income at the expense of their clients, first off, what are the odds of a CAA violation even being discovered in the first place? Because let's get real, most planned administrators do not listen to the show. Or they fall victim to the various things discussed in that show with Lee Lewis from several weeks ago, and they turn a blind eye.
Or they do notice the plan and they're pissed about it, but like what do you do now? Do you sue? Do you call the DOJ or the DOL? What are the chances that whatever actions that plan decides to take are going to amount to consequences substantial enough for any broker, brokerage, consultancy company making lots of money to reevaluate and rethink their ways.]]
So point solutions for sure, and I hear this a lot with PBMs as well, listen to the show with AJ Loiacono from a couple of years ago, where if a PBM wants to even participate in an RFP, you've got a broker on the other side who's just like, well, you know, it's 50 grand just to get in. It's 50 grand just to be on the sheet.
[00:23:13] Doug Aldeen: Rent seeking at its best.
[00:23:15] Stacey Richter: Yeah. I'm kind of thinking we made rent seeking that second category, but the more I'm thinking about this, the more I'm just like that is the valence that sits over pretty much all of this. Right?
Because also with PBMs, every single time, any plans, members goes into that pharmacy and gets a script filled. I mean, you see often enough contracts where some big brokerage house is getting paid by the PBM $7 a script, $2.50 a script. They often don't call it a payment, they call it a discount, or they call it something else.
There's one contract I looked at, which specifically said, well, we're gonna call this a discount. So it is not subject to disclosure, right? Like so. It's so bold, it's so boldly done.
[00:23:59] Doug Aldeen: It is. Caveat emptor
[00:24:01] Stacey Richter: Caveat emptor. Buyer beware.
Roadmap Ask Why
[00:24:04] Stacey Richter: Let's talk about actionable advice for plan sponsors now. The first bit of advice that you had given before, which I think is really sage, is ask why five times? Why is this being recommended?
Do you wanna just kind of go through an example of asking why five times where you wind up?
[00:24:23] Doug Aldeen: Do you even need, or is it an appropriate service? Why do we need this? And an example we can just use is, is the balance billing.
So if the local hospital doesn't have authority to balance bill pursuant to its FAP or by statute in Texas, why do you need it? You don't.
[00:24:40] Stacey Richter: Why do I need it? Why is this particular vendor being recommended? Like, why this one over that one? Why is it being done this way? Like, why is the payment model this way? Just really think through what each of these recommendations are and just do the why, why I thing?
[00:24:57] Doug Aldeen: Second, what's the ROI?
So let's just say for example, it is appropriate, what's the ROI? What am I paying to generate this type of savings? In other words, are you gonna be paid? Is a vendor or the point solution gonna be getting paid more than what I'm realizing in terms of the benefit.
[00:25:14] Stacey Richter: Right? Like it could be a relatively small problem that we wind up paying lots and lots of money to solve. And yeah.
[00:25:22] Doug Aldeen: And then I would say thirdly, in the event it goes south and let's just use a level funding issue with the Oregon Potato Company, what's the downstream impact in terms of finding another arrangement? So in other words, not only did you lose $2.1 million, but now you're gonna have to belly up to a fully insured arrangement, and you're gonna have to pay through the nose for the privilege.
[00:25:43] Stacey Richter: In other words, if the level funding plan fails, and the same broker knows that if the level funding fails, they're gonna get your fully insured business and they actually make more on the fully insured business, then they're, they could be thinking to themselves, sure, try whatever the heck you want. Right? Because now I'm gonna get you coming and going.
Which brings us to the, so we just talked about the first thing in the roadmap, which is ask a lot of whys.
Demystify Commissions
[00:26:08] Stacey Richter: The second item in our roadmap here is demystifying the commission structure.
And you alluded to this earlier, would, we kind of were talking about this and you said like you need a degree in higher math to figure out what that commission structure is. Like that in and of itself, is a tell.
[00:26:26] Doug Aldeen: So if you actually look at the language under the Consolidated Appropriations Act, I mean it specifically says, you know, allows the plan sponsor to reasonably conclude what that fee is.
Well, I mean, little bit gray, but I mean, it shouldn't require a NASA scientist to reverse engineer the compensation formula. I mean, two sentences max.
I'm getting paid X. Thank you. I mean. I don't know what else really needs to be said.
[00:26:53] Stacey Richter: And I think that this one is pretty simple, but really powerful, Doug. The more complicated the commission structure is to explain like if there's four pages or 60 pages in, the plan documents in the contract, it takes that long to explain what the commission structure is.
[00:27:13] Doug Aldeen: Yes, it is.
[00:27:14] Stacey Richter: So second item on our roadmap is demystify the commission structure or think about what that commission structure is and how long it takes to talk about.
And as you said, there is a requirement in the Consolidated Appropriations Act that says, “Plan must reasonably be able to figure out what that commission structure is.”
[00:27:29] Doug Aldeen: We should not have to go to MIT to hire somebody to figure out what I'm getting paid or what I'm paying the broker.
Independent Broker RFPs
[00:27:35] Stacey Richter: Third piece of advice along these lines, I mean obviously all of these are sort of a build and interlock, but use a broker, RFP from a third party reputable source.
There's a bunch of open source examples that are available in the market right now. We had Dave Chase (Episode 484) on talking about Nautilus Health has some of these 32BJ, they had a PBM, they may have a broker one as well. Or working with a very, and again, be real careful if there is an entity that you're choosing to work with. There's really good ones out there.
[00:28:13] Doug Aldeen: Yeah, I mean, you definitely have to have an independent RFP that's gonna give you the answers you need to formulate whatever position you're gonna take.
[00:28:22] Stacey Richter: Right. But there's plenty who. Their business is doing RFPs and they're making money doing it in ways that are undisclosed.
Audit Data And Documents
[00:28:31] Stacey Richter: Fourth thing on our roadmap, Doug, audit your data and your documents. What do you mean by that?
[00:28:36] Doug Aldeen: Auditing claims. I mean, so when you think about, not only do you need to look at all the different arrangements between, for example, like the stop loss in your plan document. Nine times out of 10 there's gonna be a different level of reimbursement. So the plan's gonna pay X. Your stop-loss is gonna reimburse Y.
So there's gonna be a gap between what the plan pays and what they're gonna get reimbursed.
And then when you start looking at who's placing the stop-loss carrier, typically a TPA. But you know, the broker has an involvement in that, but you really have to understand what that ecosystem is, why it's set up that way. And then was getting paid what, based on those arrangements that are with the plan.
[00:29:14] Stacey Richter: Yeah. It's amazing. It took this long for stop-loss coverage to come up in this conversation. Wow, it's so important. I mean, usually paying for stop loss is the biggest, if not one of the biggest expenses for any given plan.
Listen to the way there's a two part show (Part 1) (Part 2) with Andreas Mang and Jon Camire just simply about stop-loss.
But one of the things that you're talking about here is again, this kind of like rent seeking behavior in the healthcare sector is pervasive and it's really important to have antenna way up looking out for it.
But if there is a broker or EBC who's recommending a stop-loss carrier, and then if you dig into it, what I think what you're talking about, we talked, we're talking about what do you audit? You audit, you go through the plan documents, and then you see the plan documents are different than the stop-loss document and that there's a gap.
Like, that is a sign there is a broker or EBC, I mean, maybe they were just ill informed or careless, right? Like, so what are they? What's that quote? Never ascribed to malice. What could be explained by ignorance or something like this, right? Yeah. But like, so it could just be that this is complicated and which you know, in and of itself is good information.
But it also could be that that stop-loss carrier was being recommended because the broker or EBC is being paid.
The fifth piece of advice in our roadmap is watch your own Defcon five reactions. Because Doug, you have told me earlier, there's enough examples of a plan itself who someone on the team at the plan heard something had kind of a Defcon five level reaction. And then because of that reaction, the vendor wants to serve the plan.
So if the plan is asking for something, maybe even demanding something, it may be like I had a mentor who used to say to me a lot, do you want me to tell you what you want to hear? Or do you want me to be a good servant?
[00:31:19] Doug Aldeen: Exactly.
[00:31:19] Stacey Richter: As a vendor? As an EBC. It's hard to tell a customer, “No, I don't think you need that.”
[00:31:28] Doug Aldeen: No, I would agree with that a hundred percent.
Contract Outs And Auto Renew
[00:31:29] Doug Aldeen: I would say in terms of the contract, I mean, you always have to have an out, without, you know, with cause I mean those auto renews. And if you're not paying attention to it, I mean, you could be stuck for another 10 months and have to pay for the privilege to get out from underneath it.
So just even going into the arrangement, you know, one year deals with a 90 day out. That's fair.
[00:31:49] Stacey Richter: So to your point, be careful what you ask for. You may ask for something and then wind up signing a contract that then you can't get out of even after you come to your senses. Yeah. But it also is kind of, if you are working with a broker/EBC with a clear contract, right?
Like there's a flip side to all this. If you go through and you're asking all these questions, you ask why five times? You look at those plan documents, they're simple, right? Like, and everything is starting to check out. And if that EBC or broker tells you you don't need this, then there's a good chance you don't really need it.
[00:32:27] Doug Aldeen: Take it to face value. Keep on moving. Yeah.
Trust But Verify
[00:32:31] Stacey Richter: And then our last one is trust but verify. Like you hear so often, you look across these lawsuits. The average term of the broker or EBC with the plan that wound up turning around and suing for really egregious stuff is what I would consider long time.
Having an EBC or a broker for a long time, you might really want to trust them because obviously you've got a long relationship with them, but a long relationship doesn't equal trustworthy without verifying.
[00:33:03] Doug Aldeen: Could be the worst thing that ever, I mean, best thing that ever happened, but worse thing that ever happened.
Because find out what's really been going on. I just, I mean, I think truly, I mean, when you look at these lawsuits, I mean, I think the broker community is that substantial risk? I mean, there's a ton of good brokers out there, and I know a lot of them are my good friends.
But it's just, unless you're adding real value, I don't know. It could be, it could be in a difficult spot.
[00:33:29] Stacey Richter: In the trust but verify category also, I know one of the things that you've often had your eye on is just the entrenchment sometimes of public school districts, municipalities. There are the Osceola County lawsuit, right? Like there's a bunch of different lawsuits that have to do right now, the New Jersey case with the entrenchment of vendors with public entities.
[00:33:51] Doug Aldeen: Well, South Texas probably is the worst. I mean, you get down in the valley, a lot of the school districts, municipalities, tax supported entities, the broker relationship is because of political patronage and you start looking at the fees and everything else like that. It's just unbelievably crooked and wretched and it's not an easy thing to get rid of.
[00:34:14] Stacey Richter: Yeah. So in our kind of trust but verify category, you wanna trust the commissioner's neighbor's, brother, sister is in fact not rent seeking. But yeah, so. Our last in our roadmap here is, is trust but verify.
So we've talked a lot about what the problems are that can develop if we do have a rent seeking broker, a rent seeking EBC just kind of all the havoc that and the dollars, just millions that can wind up in their pocket. Then we went through a roadmap of five things to really think about.
Honest Brokers Add Value
[00:34:52] Stacey Richter: And let's just end on a high note here because there are plenty, especially who listen to this show of amazing brokers who are doing the right thing by their clients and plan sponsors. They have easy to read contracts, their fees are disclosed.
[00:35:08] Doug Aldeen: You can have a substantial impact simply by working with somebody who truly understands, you know, that market.
[00:35:17] Stacey Richter: Absolutely. And, and on the flip side, underlining the advantages that a good broker can bring, I was just talking with someone who, immediately found three or $400,000 extra a year that was being charged for.
Listen to the show with Andreas Mang also earlier about what a good broker kind of, or EBC brings to bear.
[00:35:37] Doug Aldeen: You just gotta find the right person.
[00:35:39] Stacey Richter: Doug Aldeen, if anyone is interested in learning more about you or your work, I would highly recommend that they follow you on LinkedIn.
[00:35:47] Doug Aldeen: Thank you, Stacey.
[00:35:48] Stacey Richter: Doug Aldeen, thank you so much for being on Relentless Health Value today.
[00:35:51] Doug Aldeen: I appreciate it very much. I enjoyed talking to you. It's been great.