Frank Thomas interviews Dr. Joseph Sanford and Dr. Kevin Sexton on employer wellness programs. They explore the data sets that are available between self-funded and fully-insured plans, the changes in healthcare visits since the start of the pandemic, the kinds of nudges that work to help employees to choose healthy behaviors and participate in wellness visits and screenings, and the economic costs associated with the treatment of late-stage illness and early-stage illness, especially with various common cancers. They explore how employers can save money with an effective and iterative wellness program while helping their employees reach optimal health outcomes. Listen to this educational discussion for ideas to improve your wellness program with Stephens.
[:42] Frank Thomas welcomes Dr. Joseph Sanford and Dr. Kevin Sexton of the Stephens Insurance Medical Claims Analytics Teams to the program.
[:56] COVID-19 is still disrupting many businesses. More than half of the U.S. workforce continues to work remotely. Career pressures are at a high in this atmosphere of workplace uncertainty. Employers need to structure more efficient wellness programs with a better understanding of the risk profile of their populations to drive positive outcomes.
[1:32] No wellness data set is complete and all wellness data sets are at a risk for bias. Individual, family, societal, and environmental factors impact health conditions and have to be approximated for a given population.
[1:57] With the pandemic, more people are comfortable with receiving health care online. There is a growing national conversation about value-based care.
[2:20] Wellness plans are designed to be preventative. Employers can encourage behaviors that keep employees in the best health possible. A well-planned program typically includes an annual wellness assessment through a survey, a biometric component with lab tests, wellness visits, and ongoing engagement with individual employees.
[3:28] Age-appropriate screenings for common cancers help employees and employers catch early-stage cancers when they are treatable at a far lesser expense.
[4:36] Encouraging wellness visits can help stabilize variations in care, decrease stop-loss plan costs, and result in more predictable models that help everybody. A new approach to wellness, including time scheduled during the workday for wellness visits, will require a culture shift.
[8:11] A company can help build a culture that focuses on the safety and well-being of its employees. A 2019 report in JAMA shows that employees in a wellness program are more likely to report healthy behaviors like exercise and active weight management or dieting. Wellness programs do not have to be a large expense.
[9:38] Working with a self-funded plan, Stephens is able to access all the claims data and use that data to isolate key drivers of cost. In a fully insured program, Stephens only sees aggregate medical and prescription spending. Stephens considers self-funded plans to be more flexible.
[10:23] Analytics can play a valuable role in providing direction to a self-funded wellness plan. A good wellness program has to be iterative, as a work in progress. Effective online portal interface design can encourage employee participation. Make the things you most want to occur the easiest to do in the plan.
[14:46] Behavioral economics, combining aspects of psychology and economic modeling, helps us to better understand human behavior and why people don’t often make the optimal decision, even when they have all the available information and tools to do so. Nudges can be incorporated into a plan to encourage healthy behaviors.
[16:27] The principles of behavioral economics are to make things easy, attractive, social, and timely. Research by Dr. Katy Milkman on three groups of Google employees with different exercise arrangements showed that flexible incentives work better than incentives that encourage a more rigid behavior or activity.
[18:35] To help employees see the value in a wellness program, institute policies and procedures that foster the best possible employee health outcome, relative to what they could get elsewhere for the same cost. Most people define quality as a perceived outcome divided by the cost they pay.
[20:09] Employers with self-funded programs can use Stephens’ claims data analysis to review more claims, more consistently, in less time. That data allows them to have a quantitative conversation with the employers’ Third-Party Administrators affecting how reimbursements can occur and what will be covered by the plan and how.
[21:25] Employers with self-funded programs are in a better position to demand change than employers relying on insurers, in Dr. Kevin Sexton’s opinion. Insurance companies have their own regulations and priorities for driving down healthcare costs and increasing their margins.
[22:12] Tele-medicine has advanced five to 10 years since the pandemic kicked off in March of 2020. It is used at every level of care. There is an ever-growing list of tools on popular consumer devices that bring diagnostic capabilities into the home. Sharing health data is as easy as sending an email or text message.
[25:02] Dr. Joseph Sanford predicts the future is going to focus on adding robustness to these systems through a hybrid model of a digital-first front door that is supplemented by in-person visits when and as they make sense and then is back-stopped through individual monitoring by personal devices.
[25:25] Dr. Kevin Sexton sees the wellness programs of the future as being highly customized to the individual, providing a mix of incentives and data reporting to help members achieve their personal wellness goals while making sure they’re participating in routine care, like age-appropriate cancer screening.
[25:45] Frank thanks Dr. Joseph Sanford and Dr. Kevin Sexton for their time.
[26:52] For more information on this topic, please contact Stephens Insurance at 1-800-643-9691.
Richard Thaler
Amos Tversky
Daniel Kahneman
How to Change: The Science of Getting from Where You Are to Where You Want to Be, by Katy Milkman
Frank Thomas interviews Brian Chance on the complexities of the workers' compensation system, a state-regulated system that varies by state. They discuss how employers can obtain and manage state-compliant coverage, whether by buying a policy from an insurance company or third-party administrator, self-insuring, or buying a large deductible and acting as a self-insurer. Brian explains how the Cost Based Efficiency division of Stephens Insurance guides employers to realize substantial system savings in an insurance industry that has not seen innovation or disruption in decades.
[:29] What is workers’ compensation? Workers’ compensation was the country’s first no-fault payment system. It’s a state-by-state system that protects employees and their families when they’re injured. It insulates employers from negligence suits when employees get injured.
[1:05] The system was created in the United States in the early 1900s, as our economy moved away from agriculture toward industrial production. Before the states passed these laws, when employees were injured, they had to sue their employer to have their medical bills and lost wages paid. Employers could defend lawsuits by deflecting blame.
[1:40] With workers’ compensation laws, employers are required to purchase workers’ compensation insurance that covers medical bills, lost wages, and in the case of an employee killed in an accident at work, wage payments to the family for a long period. Some states also pay awards for permanent impairment of a body function.
[2:13] Employees are entitled to all of these benefits, even if the injury was caused by the negligence of the employee or a co-worker. If employers meet an exception and opt out of the workers’ compensation system, employees who are hurt at work can sue their employer.
[2:33] Why has workers’ compensation been the only profitable line of insurance over the last few years? Premium rates in workers’ comps are based on things that have happened in the past. Over the past five to ten years, we’ve seen a reduction in the number of injuries and a reduction in pharmacy prescription costs in those claims.
[3:29] Premium today assumes that prescription costs of four to five years ago will remain the same, but they haven’t been. There has been a huge reduction in prescribing opioids in workers’ compensation cases. That has resulted in a big drop in costs without a drop in premium.
[4:02] Large employers can significantly improve the quality of care their injured employees receive while reducing their costs, and improving their shareholder value. Workers’ compensation is one of the leading areas where an employer can make changes and reduce their total cost of risk.
[4:28] Declining volumes of claims resulted in a consolidation of service providers that are involved in managing workers' compensation claims. We’ve seen many mergers and acquisitions by third-party administrators (TPAs), medical bill review companies, nurse case management companies, specialty medical networks, and other providers.
[4:55] While the number of claims continues to drop, these service providers are compelled to generate more revenue from each claim transaction in order to satisfy their owners. COVID-19 will only accelerate that process.
[5:14] Workers’ comp pretty much covers everything that would happen to an injured employee, as long as they’re injured in the course and scope of their employment. Even companies that employ people who work at a desk still have an injury exposure for workers’ compensation.
[5:37] Employers have many options to finance the risk. Some options work best for different employers. The easiest but most expensive way to finance the risk is to simply buy the coverage from an insurance company. Employers can reduce the cost of that risk transfer by purchasing a deductible or going self-insured.
[6:10] Workers’ comp is a great risk to include in a captive program because it’s usually a high-frequency, low-severity risk type of program. When the workers’ compensation program is run well, costs are relatively predictable and readily financed through a captive.
[6:29] Self-insurance is a good option for large employers. There are several regulatory issues that have to be considered. In order to be self-insured, an employer has to guarantee the state that they have the financial ability to satisfy the benefits employees are entitled to if they’re injured. Most states allow employers to self-insure the risk.
[7:02] To self-insure the risk of workers’ compensation instead of buying insurance coverage, employers have to obtain approval from every state where they have employees and they want to self-insure, in order to be able to function that way. It would be difficult to become self-insured in 50 states and comply with each states’ regulations.
[7:22] It’s generally easier for you as an employer to buy a large deductible and function as though you are self-insured while avoiding regulatory headaches for each state.
[7:37] Workers’ compensation differs from state to state. Some states are more generous to employees than other states. National employers with multi-state operations should always look first to individual statutes to determine which state will have jurisdiction in workers’ compensation matters. Each state has its own statute.
[8:15] All states require lifetime payment of medical treatment for work-related injuries. Each state has a calculation for calculating lost wages and how they are paid, what limits are applied, how medical providers get paid, and sometimes awards for permanent physical impairment.
[8:39] Each state’s laws also address an employer’s subrogation interest and how jurisdiction is determined. Pennsylvania and New Jersey have different statutes on payments. The two states have different costs for medical care. Jurisdiction determines which state law applies for whether workers’ compensation is the exclusive remedy.
[9:48] Each state is a sovereign entity controlling the law within its boundary. Most states will try to apply jurisdiction outside of their borders if they have the most contact with the facts of the case.
[10:13] The finders of fact in a state will look for the number of connections that state has with the employee, such as their home state, the place where they were injured, and the state where their contract of employment originated. The employee’s home state or the state where the injury occurred will usually govern.
[10:50] It’s important to note that the courts will weigh heavily the employee’s requested jurisdiction. Jurisdiction may be shared between states in rare cases but it is difficult.
[11:14] An employee based in Michigan who travels to Ohio to work, who is injured at work in Ohio, will generally be treated near home. The place of treatment is usually where the benefits will be paid and so Michigan would have jurisdiction.
[12:12] Claims associated with COVID-19 have generally been less than $3,500. There are catastrophic cases but they are the exception. Shutdowns associated with COVID-19 caused a dramatic drop in claims frequency in the retail and hospitality industries. This drop almost offset the increase caused by COVID-19.
[13:12] COVID-19 should not affect the workers’ compensation industry dramatically. There are concerns developing about the lingering effects of COVID-19. There hasn’t been enough time to develop the data to study these effects yet.
[13:30] As the country reopens, restaurants operate in whatever the new normal looks like. The biggest challenge COVID-19 caused for restaurants was compliance with the evolving guidelines for reopening. Sometimes, individual cities enact unique rules and regulations. Compliance across multiple regulations is an operational nightmare.
[14:25] The best thing a restaurant chain can do is to make the workplace as safe as possible for their employees. If the restaurant is safe for your employees, it’s safe for your customers. The chain should designate a corporate office to monitor the regulations that govern each restaurant to ensure regulatory compliance.
[14:53] In most organizations, monitoring regulations for local compliance fell upon the risk management department. Without their guidance, most restaurants would not have been able to reopen. This is a witness to the advantage of strong risk management programs for every national chain that is up and running now.
[15:24] The recent consolidation in the industry has created conflicts of interest in large claim platforms. When a TPA is owned by the same company that owns the bill review company, or other service providers used in workers’ compensation, there is no internal pressure to deliver better results. Customary checks and balances are missing.
[16:00] Service agreements typically do not fully disclose or quantify arrangements that exist between separate service providers, so employers generally do not see the true cost of the services or obtaining data that makes these services transparent.
[16:29] Stephens has identified these arrangements and established associated benchmarks. Stephens’s Cost Based Efficiencies division works with clients to strip excess costs out of their workers’ compensation program.
[16:44] Stephens’s Cost Based Efficiencies division studied data from thousands of claims and developed metrics to evaluate the performance of a large claim-handling platform. Their metrics yielded conflicting and unusual results that caused Stephens to dig deeper into the data. They found perverse incentives within arrangements between providers.
[17:21] After discovering these hidden arrangements, Stephens worked to find solutions to eliminate them. Self-insured companies and companies that carry large deductibles have budgets and accruals for the claims they expect to pay. Stephens routinely finds savings of between 15 and 30 percent of the medical costs in these programs.
[17:57] With Stephens’s help, companies are able to realize a reduction in those costs and can reduce the accrual, which will immediately flow to the bottom line of the company. For publicly traded companies, those savings can affect earnings per share.
[18:08] Why are risk managers not finding and addressing these hidden costs? Workers’ compensation has not been a source of much pain for risk managers over the past few years. Results have improved slightly, year over year by maintaining the status quo. The insurance industry works hard to make sure these costs remain secret.
[18:54] Workers’ compensation will see dramatic data-driven changes in claims-handling philosophies, strategies, and staffing as Artificial Intelligence enters the industry.
[19:14] Over 20% of insurance industry employees are expected to retire over the next few years. There are not enough younger people entering the industry to fill the talent gap. Insurance carriers, TPAs, and other service providers are looking to technology to fill that talent gap.
[19:38] The most important thing for employers to consider when thinking about workers’ compensation is to recognize that they can control their workers’ compensation cost just like they do with any other business cost. Most employers don’t recognize the opportunity to improve results because they accept the industry’s status quo.
[20:05] The acceptance of the status quo has resulted in an industry that has not experienced any disruption or innovation for decades. Improved results over the last few years were not caused by industry efforts but by events like the reduction in injuries and opioid prescriptions.
[20:30] Employers should demand continuous improvements from their service providers and work with partners who want to help that innovation that’s long overdue.
[20:45] Frank thanks Brian for these important insights about workers’ compensation.
[20:50] For more information on this topic, please contact Stephens Insurance at 1-800-643-9691.
Brian Chance, SVP, Cost Based Efficiency Claims & Risk Manager
Frank Thomas interviews Dr. David Keisner on the meaning of the recent Supreme Court ruling for PBMs, how increased prescription costs may be passed along to employers and insured patents, how other states may act as a result of this ruling, and the potential ramifications of this ruling on other states’ regulation of healthcare providers, regardless of the federal Employee Retirement Income Security Act (ERISA). Listen in for action steps your company should take in considering the potential effects on your healthcare plan of this complicated ruling.
[:27] Frank Thomas introduces Dr. David Keisner. David specializes in pharmacy benefit management solutions, including contract negotiations with PBMs on behalf of employers.
[1:25] Act 900 was an Arkansas law dating back to 2015. It regulates what happens when a pharmacist fills a prescription medication through a patient’s health insurance plan. When the pharmacist runs a medication through a health insurance plan, the pharmacist is reimbursed for the cost by a Pharmacy Benefit Manager (PBM).
[2:04] Sometimes a PBM may reimburse a pharmacist less than the acquisition cost of the medication. Act 900 provided three things: a floor reimbursement based on the acquisition cost of the prescription, an administrative appeal procedure, and that a pharmacist may refuse to dispense a medication below the acquisition cost.
[2:53] Act 900 allowed independent, rural pharmacists to keep their doors open and provide broad access to healthcare in the state. People opposed to Act 900 pointed to increased costs to employers and employees.
[3:48] PBMs are hired by health insurers or directly by an employer to manage a prescription drug benefit for their employees. The “Big Three” of PBMs are CVS Caremark, Express Scripts, and OptumRx.
[4:10] PBMs perform electronic processing of prescription drug claims and establish a network of pharmacies for patients to use to fulfill their medication prescriptions. They contract with pharmacy chains and independent pharmacies to ensure that patients have the product and that the pharmacies will accept their drug plan.
[5:00] The question that the U.S. Supreme Court considered in reviewing this case was whether Act 900 applied to a self-insured health plan. The case was specifically whether Act 900 is preempted (displaced) by the federal Employee Retirement Income Security Act (ERISA).
[5:36] ERISA is a Federal law that sets minimum standards and establishes protections for private health plans and retirement plans. One notable exception is that fully insured health benefit plans are not preempted by ERISA. Laws like Arkansas Act 900 have traditionally applied to those plans.
[6:43] Justice Thomas wrote that language in ERISA that a state law does not apply if it relates to an employee benefit plan was so broad that it was essentially meaningless.
[7:06] Previously, the court had established that laws such as Act 900 do not apply to a self-insured plan if the law governs essential matters of a plan administration or interferes with national uniform plan administration.
[7:25] This recent court decision was an eight to zero decision (before Justice Coney Barrett was sworn in). The court ruled unanimously that Act 900 is not preempted by ERISA. The law does apply to self-insured plans.
[7:44] The court stated that this is a rate regulation and laws merely affecting cost are not preempted by ERISA. Laws like Act 900 do apply to self-funded plans even if they have the potential to raise costs for health plans and their beneficiaries.
[8:08] Can individual states regulate their health plans any way they want to? This is a subject of much discussion, and more clarification is needed. David does not believe that states can regulate matters that deal with plan design, such as mandating certain benefits or certain cost-sharing percentages.
[8:35] One big question David has is what other laws that typically did not apply to self-funded benefit plans will now apply as a result of this decision? If a state applies rate regulation that is so acute that it will effectively dictate plan choice, preemption may still apply. There is more to “play out.”
[9:23] How will states use this decision to regulate PBMs? What else do they feel they can do as a result of this Supreme Court decision?
[9:48] There is still a lot of discussion on whether this court decision is limited to PBMs. This may open a door to regulation on third-party administrators (TPAs) or other healthcare service providers. This potentially opens the door to inconsistent state regulation of various healthcare service providers.
[10:15] The main question David is getting is whether this decision will raise costs for patients and employers. David cites JB Hunt’s Friend of the Court Brief in favor of the PBMs, arguing that if Act 900 was in place it would significantly increase their plan costs.
[10:49] The opinion, written by Justice Sotomayer said “PBMs may well pass those increased costs on to plans, meaning that ERISA plans may pay more for prescription-drug benefits in Arkansas than in, say, Arizona. But ‘cost uniformity was almost certainly not an object of pre-emption.’”
[11:27] This could subject multi-state employers to different rates, from state to state.
[11:45] This court decision was focused on the contractual relationship between PBMs and pharmacists. How will it affect the contracts between PBMs and employers? David gives an example about contract language relating to renegotiating the contract if there are significant changes to federal regulation. PBMs may see this change as significant.
[12:45] Other contract language allows PBMs to limit services or apply additional fees to employers in states where they believe there are stricter laws.
[13:00] Stephens is currently reviewing all of their client contracts to see what the potential impact is and what the next steps are for those employers.
[13:33] Employers may be in a long-term deal with a PBM. All of a sudden, as a result of this decision, your PBM may attempt to renegotiate the financial terms of your agreement. It’s so important to have a benefit advisor on your side who is ready to engage in those renegotiations, should they take place.
[14:34] David shares his background. He started in nuclear pharmacy, working with radioactive materials. He has always been interested in unique aspects of health care. There is nothing more unique than the regulatory and insurance industries!
[14:58] One of the main things David does at Stephens is to negotiate and help employers with their contractual relationships with PBMs. Healthcare is very complex, so it’s very important for healthcare providers to be involved in the insurance and regulatory sides for the good of the industry.
[15:47] David’s advice to employers regarding this court decision is to thoroughly review your PBM contracts, talk to your benefits consultant and make sure they have a strategy, and that you have a long-term strategy for your company. The healthcare landscape is changing. Be in a position where you can be flexible and creative.
[16:18] Frank thanks David for his insights and direction in relation to this very complex issue involving the Supreme Court’s decision on Arkansas Act 900.
[16:29] For more information on this topic, please contact Stephens Insurance at 1-800-643-9691.
David Keisner Vice President, Associate Pharmacy Benefits Analyst
Rutledge vs. Pharmaceutical Care Management Association (2020), Supremecourt.Gov
Frank Thomas interviews Dr. Geri Bemberg. Geri specializes in prescription drug formulary and pharmacy benefit management solutions. Geri explains what a pharmacy benefit manager does. She covers the types of contracts PBMs make with plans, pharmacy groups and drug makers, and the differences between traditional and pass-through plans. Geri explains the benefits of having Stephens Insurance get involved between the plan and the PBM, and also offer formulary management and pharmacy benefit auditing. Finally, Geri leaves advice for plan managers to know how they can get the most transparent pharmacy benefit contracts to save money for their plans and their members.
[:24] Frank Thomas introduces Dr. Geri Bemberg.
[1:31] Over the years, the definition of a pharmacy benefit manager has changed quite a bit. Historically, pharmacy benefit managers have been evaluated on their ability to lower ‘total spend’ on prescription medicines for employers in health plans.
[1:49] Pharmacy benefit managers (PBMs) do this primarily by using their collective buying power to obtain discounts from pharmacies and rebates from drugmakers.
[2:01] At first, PBMs came onto the market as a way to electronically process prescriptions. Previously, the pharmacy had to send off paper prescriptions and it could take weeks or longer to find out how much they were going to be paid for them.
[2:21] When PBMs emerged, pharmacies could submit claims electronically. It also helped broaden pharmacy networks so patients traveling could go to different pharmacies where they were. Also, workers’ compensation plans could use multiple pharmacies.
[2:38] As pharmacy has changed and drugs have become more expensive, PBMs have started to take a more active role in plan management. You’ll start seeing them have clinical input. They’ll put prior authorization or step therapy on some medications.
[2:56] PBMs may also say we’re going to exclude a drug because they may have a rebate with another drug manufacturer for something similar.
[3:04] In the rebate area, PBMs may go to more narrow network pharmacy plans. A plan may completely eliminate a chain or group of pharmacies to try to get better rates at another group of pharmacies.
[3:27] The role of PBMs has changed over the years but essentially, they pay claims, they manage a pharmacy network, and now they’re in that plan management space. This is where Stephens believes they could use some help.
[3:42] PBMs would say they serve plans, consumers, and the market overall. Others might say PBMs serve themselves.
[4:04] Theoretically, PBMs should provide patients with greater access to the medicines at better cost. What is their process of negotiating rates with the wholesaler? Geri explains that the world of PBMs is opaque, at best. There’s not just one contract that’s held with a pharmacy supplier.
[4:26] PBMs first contract with the plan. If somebody is self-funded, or if they’re fully insured, they have a contract with a PBM to manage their pharmacy plan. Then, PBMs have contracts with pharmacies, in terms of a pharmacy network, negotiating a discount and providing a group of members.
[4:54] PBMs will also have contracts with manufacturers. Through these contracts, they negotiate a discount on the drug in exchange for a preferred place in the formulary. PBMs also have contracts from pharmacies to pharmaceutical wholesalers. The issue here becomes there’s not any clarity on what any of those contracts look like.
[5:45] The PBM is the holder of the ‘black box,’ if you will, on contracting and nobody’s really certain how the money is flowing.
[5:55] Stephens Insurance inserts themselves in between the PBM and the plan. They make sure that they guide the plan not only toward the best PBM for them but also the best contract for them.
[6:21] When Stephens Insurance is involved in monitoring the health plans, it benefits plan sponsors in four ways. First, plans get savings by knowing what you are paying for and second, by having that transparency put into your plan.
[6:55] Stephens talks plan sponsors through what the plan options are and how moving in a different avenue can save them money. Third, Stephens helps hold PBMs accountable to their plan contracts.
[7:14] Finally, Stephens helps provide guidance to the plan. After guiding the sponsors to a plan contract, Stephens is on hand to help find coverage solutions for issues that may come up throughout the year.
[7:43] According to the Pharmaceutical Care Management Association, over the next 10 years, PBMs are projected to save employers as much as $654 billion.
[7:54] PBMs can also push prices up. Geri explains it has to do with contracts. There are two main types of PBM contracts.
[8:28] The two types are traditional and pass-through. In a traditional contract, a PBM manages the pharmacy benefit for the plan. In return, they take some off the top of every claim they process for the plan. There is no way to know how much they take. In the contract, there is no limit to the spread.
[9:54] In a pass-through contract, there is no spread. In that contract, the PBM charges an administration fee that could be per claim, per month or per member, per month or per employee, per month.
[10:06] That charge is what the PBM makes on your plan. A big part of pass-through contracts is making sure that the rebate portion is also passed through to the plan.
[10:55] The PBM can drive up costs to the pian and to the member in a traditional contract. Geri explains how the plan pays more money to the pharmacy than they would in a pass-through contract.
[11:51] What ends up happening, is that as plans spend more money in pharmacy, they have to make up the difference somewhere, especially in self-funded plans.
[12:00] The plans make up the difference through increased premiums or reduced coverage. That’s where you start seeing the increase in costs.
[12:10] You also have the back-and-forth argument between PBMs and drug manufacturers that rebates are a big cost driver right now.
[12:33] So the rebate portion is something that’s very opaque in the industry. As we drive toward more transparency, hopefully, you will see that become more clear or go away completely.
[12:44] The only way to keep PBMs accountable is through transparency. Stephens gets better contracts for plans, so they know what’s going on in the pharmacy world, and Stephens also offers the auditing of how the PBM performs against their contract.
[13:24] Rising drug prices have been in the news for several years. They have been creeping up under the radar for many years. Several drugs are going through accelerated FDA approval.
[14:34] Accelerated approval happens when a disease doesn’t have many treatment options so the clinical trial segments are shortened to get the drug on the market sooner.
[14:47] Sometimes surrogate endpoints (e.g. a lower amount of uric acid in the blood) are used instead of clinical endpoints (e.g. a smaller number of gout flares) to accelerate drug approval. However, surrogate endpoints do not always translate to clinical endpoints.
[15:41] Geri tells how drug companies price their drugs as ‘cures’ after meeting surrogate endpoints, and they charge what the market can bear for a cure, when the drug may not really be a clinically effective treatment option.
[16:27] When you start looking at pricing on drugs, the market can’t bear what drug companies are charging. Geri gives the example of a drug that lowers the Hepatitis C virus in the lab 12 weeks out from treatment and is sold as a cure when the clinical results are not yet proven.This happens time and time again.
[17:10] In the case of Hep C, clinical results are starting to come in, and they look promising, but they are not complete.
[17:20] When you have high prices on medications, plans have to be more aware of how often they can provide that medication because there is a limited amount of funds. At the end of the day, you have to make sure those funds are dispersed the best way that you can disperse them.
[17:39] This puts both plans and consumers in a frustrating spot. Plans are frustrated because they have to say no. Plans have to turn on prior authorization or step therapies to limit access for drugs that are expensive and unproven.
[18:28] It’s extremely frustrating for the consumer who sees a commercial for a drug that sounds ideal and the plan administrator needs to say, not yet, or maybe you don’t need it at all. It puts everyone in a bad place.
[18:52] Stephens Insurance offers formulary management to plan sponsors to take a step further in a proactive approach. Formulary management uses clinical data to assess if a new drug is better than what is currently available in the market, or if it was based on surrogate endpoints and we need to wait and see how it translates clinically.
[19:42] Formulary management is able to help the plan control costs a little bit better. When a plan is able to know they are spending their money on the best drugs possible, then they are able to get better outcomes both on the pharmacy side and the medical side.
[19:57] Geri uses the example of diabetic drugs. They may lower your A1C but are they shown to clinically reduce the risk of any of the cardiovascular events or other clinical endpoints that diabetics deal with on a day-to-day basis?
[20:26] If the plan stays with drugs that are known to provide cardiovascular benefits as well as lowering blood sugar, that is the best way to spend the money that is available.
[29:41] Formulary management is not yet an industry standard. Geri notes that FDA head Scott Gottlieb says the FDA is not going to be the regulator of what plans should it should not cover. Plans are going to need somebody to help them make that choice.
[21:00] Plans don’t have the resources to hire pharmacists and educate themselves to figure out what they need to be covering for their members. They should work with a formulary manager.
[21:11] Stephens Insurance comes in with an unbiased third-party approach to formulary management.
[21:17] Stephens is not related to a PBM nor do they receive payment from PBMs. More plans will move in the direction of having a formulary manager as more drugs come out.
[21:33] The drugs coming out now are not $100 blood pressure medications. The new drugs are five-digit cancer treatments and five-digit per year cholesterol treatments.
[21:59] Geri hopes to see PBMs returning to the roles for which they were developed, network management and claims processing. Geri sees the rebate management and plan management aspects of PBMs as being too opaque.
[23:14] Increased consolidation between healthcare retail chains and insurers as well as between health insurers and PBMs is concerning for Geri. Consolidation traditionally leads to increased pricing.
[23:43] Only time will tell where consolidation is leading in the world of pharmacy benefits.
[23:53] Amazon purchased a company called PillPack recently. PillPack mails you your prescriptions. Amazon is known for their shipping service and quickness. It looks like they are getting into the pharmacy benefit world. Geri is interested to see where they will go over the next few years, possibly including PBM service.
[25:02] Geri considers how she might be able to help drive the industry in her position at Stephens Insurance. In this time of high prices, she sees opportunities for change in the pharmacy benefit world. Stephens Insurance can take this disruption and use it as teaching points for their plans and the plan members.
[26:28] Geri’s advice for plan sponsors: First, know your contracts. What are you paying for and who are you paying? Are you paying just for drugs, or for profit on the side? Ask how innovative is your plan design. Are you taking advantage of different PBM programs? Are you helping your members save money?
[27:15] Finally, Geri says, take a look at your formulary. What are you paying for in your drug benefit design? Are you paying for expensive, marginally effective treatments or for treatments with proven important clinical benefits?
[27:41] Geri says, we like to say we want to cover drugs that make your life better and longer. And so that’s really looking into your formulary and saying, are we doing those two things?
[27:53] Frank thanks Geri for this fascinating discussion and information.
[28:00] For more information on this topic, please contact Stephens Insurance at 1-800-643-9691. To listen to more Stephens Viewpoints, check out our website. Insurance products offered through Stephens Insurance, LLC, National Producer Number 8844362. Securities offered by Stephens, Inc., Member NYSE, SIPC.
Geri Bemberg, Vice President & Pharmacy Benefits Analyst
Frank Thomas interviews Prentice McIntosh, continuing and concluding the conversation on hurricane preparedness in this episode of Stephens Viewpoints. Prentice and Frank discuss steps businesses should take after a hurricane. They focus on getting back to the property and meeting the claims adjuster as quickly as possible, putting in place temporary fixes to mitigate future losses, and revisiting the disaster recovery plan to make sure all aspects of the business are protected.
Key Takeaways:
[:24] The previous two episodes, Part 1 and Part 2 of this conversation, covered how businesses can prepare ahead of a hurricane and during a storm. Today, we look at how businesses can deal with the aftermath of a storm.
[:41] Oftentimes during a major storm, businesses have to shut down, which can, in turn, impact the company’s revenue, staff members’ employment, and inventory. It goes back to having the natural disaster or hurricane preparedness plan. It’s important to begin to rebuild and fix the damage as quickly as possible.
[1:16] Contact any suppliers and vendors that you need to get your product back in line or to halt production for a period of time. Having things, like building supplies, prepared ahead of the storm so you’re not faced with inflationary pricing after the storm can greatly lower the cost of a potential claim.
[1:45] Have generators and fuel for the generators ahead of the storm. Fuel can be scarce or much more expensive post-storm. Thinking through those things ahead of the storm can help you lessen the impact of the storm after it’s over.
[2:08] In the last episode, Frank and Prentice talked about the 40% of small businesses that never reopen after closing for a hurricane. How can a business rebuild to ensure that this does not happen to them? Once you are allowed back on your property, assess the damages and make any immediate temporary fixes you can to minimize future loss.
[2:46] Document and photograph everything, including temporary fixes. As a Stephens Insurance customer, you will have been in touch with Stephens before and during the storm and loss adjusters will already be engaged and en route to see your property as quickly as possible to get you to the rebuilding phase and reopen as quickly as possible.
[3:17] Sometimes, lessons learned are the best way to revise your disaster recovery plans. Even after planning and running tabletop drills, testing your plan through a storm is the best way to reveal potential gaps to fix for the next disaster. Look back and see what you missed, so the next time you will be prepared even better.
[4:07] Stephens Insurance calls their clients proactively to advise them when a storm is tracking toward them, so even a business without a formal plan in place can take necessary precautions prior to that storm making landfall.
[4:54] If a company gets into the middle of a storm and they still don’t have a plan, they should call Stephens and the risk management, loss control, and claims departments will help them the best they can to mitigate loss and help them through that process.
[5:16] You need to look at all aspects of your company, from accounting to human resources, to IT, to suppliers — all aspects, so after the storm, Stephens and you can start over looking at all those areas of your business and help build a plan around any potential losses to any of those areas of your business.
[6:20] Not everything can be mitigated or avoided, so at that point, you would look to purchase insurance to cover those losses. That’s where Stephens Insurance can really be a team member for you to dovetail your insurance coverage and make sure all of your potential losses are potentially covered.
[6:52] Stay tuned for more insights from the Stephens Insurance team in the near future.
[6:56] For more information on this topic, please contact Stephens Insurance at 1-800-643-9691. To listen to more Stephens Viewpoints, check out our website. Insurance products offered through Stephens Insurance, LLC, National Producer Number 8844362. Securities offered by Stephens, Inc., Member NYSE, SIPC.
Mentioned in This Episode:
Frank Thomas interviews Prentice McIntosh, continuing the conversation on hurricane preparedness, in this episode of Stephens Viewpoints. Prentice and Frank discuss steps businesses may take to cover the business disruptions that come with a hurricane. These can include a storm safety plan, disaster recovery plans, business interruption coverage and contingent business interruption coverage.
Key Takeaways:
[:41] According to FEMA, almost 40% of small businesses that close during a disaster never reopen. How can a small business plan ahead to fight these odds?
[:52] A hurricane preparedness or natural disaster plan is important. What is most important for small businesses is to make sure that they have business income within their property coverage. Business income coverage would continue to pay your lost income and key employees while your covered business is down.
[2:16] Transit disruptions, power failures, and storms affecting suppliers and vendors can have a trickle-down effect on small businesses that can cause them to close their doors. Consider contingent business interruption, a sister coverage to business interruption coverage.
[3:16] Part of your disaster recovery plan needs to identify those key suppliers. Are there other suppliers you could use in the meantime to keep you in business? If not, it would be very important to have this contingent business interruption coverage to bridge the gap until they are back up and running.
[3:41] How can a business prepare their staff for a hurricane about to hit? When the plan is in place, the plan needs to be communicated to all the employees and all the employees need to be aware of how this plan is going to play out. It would be very beneficial to have a tabletop drill of the plan so that everyone is familiar with it.
[4:24] Someone needs to have the role of maintaining contact information post-storm, because all of your employees are going to evacuate and be spread out. If there is a way to monitor that and communicate with those employees, that is very important.
[4:43] What are some of the steps companies need to take during the storm? The first concern is safety. If you don’t evacuate, you need to make sure you have safety, food, water, and a way to communicate with others that have evacuated so you can protect your property.
[5:25] If you do evacuate, being able to communicate with local authorities, staff, and other employees, and getting back to your location to assess the damage are all important.
[5:41] During the storm, for safety, turn off all the utilities that you can, stay away from any windows, and take normal safety precautions. If you hunker down, make sure you’re in a safe place and have taken the necessary precautions.
[6:09] In the next episode with Prentice McIntosh, Frank Thomas will discuss with her what businesses need to do following a storm.
[6:14] For more information on this topic, please contact Stephens Insurance at 1-800-643-9691. To listen to more Stephens Viewpoints, check out our website. Insurance products offered through Stephens Insurance, LLC, National Producer Number 8844362. Securities offered by Stephens, Inc., Member NYSE, SIPC.
Mentioned in This Episode:
Prentice McIntosh is interviewed by Frank Thomas in this episode of Stephens Viewpoints. Prentice and Frank discuss the steps businesses should take to plan for hurricanes and other disasters, how to recover from disasters, how to drill the disaster plan, and how to obtain appropriate property insurance.
Key Takeaways:
[:31] Harvey, Irma, and Maria really whacked the U.S. last year. Prentice shares statistics. Insured losses are estimated at over $100 billion, with total losses at over $200 billion. The three main forecast centers predict 10 to 16 named storms in 2018, five to nine of those being hurricanes and one to four being major hurricanes.
[1:29] The impacts in 2017 were substantial. Stephens Insurance called their clients in the path of the storms and discussed their disaster recovery plans already in place in relation to the storms that were approaching and advised them to alert their loss adjusters to be at the ready before the storm so they would be at the top of the list.
[2:17] Stephens also advised clients to have building supplies and generators ready off-site, out of the path of the storm, so the impact would be as favorable as possible.
[2:45] A business can build a plan to have in place when a storm is approaching. The plan needs to incorporate all aspects of the business. Besides physical asset loss, it includes finance, human resources, and IT department. Look at how all areas of your business would be affected by a natural disaster and if you’re out of business for a time.
[3:28] Stephens’ Loss Control Group and Risk Management Group can be partners with clients to review their disaster readiness plans as they are being put into place to offer suggestions and to make sure that the plan is as robust as possible.
[3:47] Step 1 is to put the plan in place in writing. Step 2 is to do a tabletop drill. There are a lot of things to learn by going through a drill that you wouldn’t have thought of just writing it out. For instance, you might plan on the nearest warehouse being available to rent but 10 other companies might need to rent the same warehouse. Have a backup.
[4:39] Call your adjusters as the storm is tracking toward you to be at the top of their list. Store generators and building supplies off-site instead of trying to buy them when everyone else is trying to buy them. It’s very important to do the drill so that everyone goes through it. When a disaster happens, it won’t be the first time people see the plan.
[5:37] Both small and large businesses need emergency preparedness and disaster recovery plans. These need to be tailored exactly to the impacts a natural disaster would have on their business. This involves preparing for, reporting, and mitigating any losses that may occur. It’s important to have proper documentation in the event of a claim.
[6:19] As you go through your drill, assign different team members to have responsibilities for different parts of the disaster recovery plan. Team members will be assigned to contact all the employees and see that they’re OK. Make sure you have current contact information for all your employees. This is part of the plan.
[6:49] Make sure you have in your plan your preferred vendors for roof repair, water extraction and others that can help you recover as quickly as possible.
[7:04] Hurricane season runs from June to November. Prentice says there is no good time or bad time to build your plans. Review them early as often as needed, and especially as you make any changes to your business that would affect how you recover from a disaster. Review them at least every six months.
[8:02] At a minimum, reassess your plans annually, but as often as needed for your company.
[8:17] A disaster is a disruptive force. Key areas to plan for are all areas of the business that will be affected. Look at how you can minimize disruption or loss in each area of the business. If you can’t avoid or mitigate the risk, then you need to finance the risk with appropriate insurance coverage.
[9:07] Stephens has a manuscript form; special language built into property coverage that would respond to a natural disaster loss. Obtain the correct coverage that would protect you in the event of a loss and help you rebuild as soon as possible. Prentice stresses the importance of drilling your plans, so no one is surprised. Revise it.
[9:55] Stephens’ Risk Management and Loss Control Groups like to be support team members with the insureds to work with them as they’re building their plan. Stephens does not write the plan for the insureds because there are things only the insureds would know, but they help the insureds to follow best practices as they write their plans.
[10:41] Stephens will tailor insurance coverages that mirror the needs in the loss recovery plan, including business interruption and contingent business interruption for your major suppliers that are affected by the disaster. There are lots of things to look at and tailor into your property insurance coverages to have the best result possible.
[11:30] In the next episode with Prentice McIntosh, Frank Thomas will explore with her the unexpected hurdles that businesses can face when impacted by a hurricane.
[11:39] For more information on this topic, please contact Stephens Insurance at 1-800-643-9691. To listen to more Stephens Viewpoints, check out our website. Insurance products offered through Stephens Insurance, LLC, National Producer Number 8844362. Securities offered by Stephens, Inc., Member NYSE, SIPC.
Mentioned in This Episode:
Todd Whitthorne, President of ACAP Health Consulting, and Tom Kane, Executive Vice President and Director of Life & Health for Stephens Insurance, are interviewed by Frank Thomas in this episode of Stephens Viewpoints. Todd, Tom, and
Frank discuss the epidemic of obesity in America and around the world.
[:31] According to the CDC, productivity losses from missed work cost employers about $225 billion annually, not to mention the impact that prolonged absences from work have on the individual.
[1:00] ACAP’s mission is to measurably improve the health of the employee population by impacting the risk factors that contribute to costly conditions that are preventable. ACAP partners with Stephens in this mission. Client companies seek intentionally to improve employee health over time.
[2:45] Tom presents a 4,000-employee population client case study. In five years, almost 2,000 client employees participated in Naturally Slim, for an aggregate weight loss of almost 20,000 lbs. Their cost curve is back to 2006 numbers.
[3:46] Health touches everything, especially productivity and employee happiness. There are many benefits to a company culture of health. Most of today’s top-performing companies have a strong culture of health.
[4:46] 40% of American adults are obese, meaning their Body Mass Index is 30 or greater. In 1980 that number was about 15%. It is predicted that 60% of today’s children will be obese by age 35.
[5:44] If we do our job properly, we can deliver interventions that are clinically measurable, that we can put performance guarantees around, and that are imminently scalable, and that are easy for the employer and the employee to facilitate.
[6:09] Stephens is great at helping companies understand the value of a program where people feel better, sleep better, miss less work, and are happier. No one loses in that equation. The C-Suite needs to lead by example. Everyone needs to feel personal accountability for their health. This includes spouses and children.
[7:24] Todd sees “wellness” two ways; cultural wellness programs and clinical wellness. He explains Metabolic Syndrome in terms of a scoreboard, with blood glucose being the most important score.
[8:41] Todd examines the numbers behind wellness programs. If you can prevent an employee from converting from prediabetes to diabetes, that’s great. 37% of Americans are prediabetic. 90% of them don’t know it. 12% of Americans are diabetic. Individuals want to look and feel better.
[9:47] No one has more impact on your health than you do.
[11:34] Naturally Slim helps people with their behavior and habits. There are weekly lessons that help with skills around food.
[15:00] Social contagiousness applies to weight loss. A lot of people lean in toward success.
[16:37] Hunger is a continuum.
[18:11] Some individuals in Tom’s department have had tremendous success with Naturally Slim. Small incremental weight loss can have dramatic improvement in health.
[19:21] How should employers address the health concerns of the various generations in their workforce? Personalize the message and meet people where they are.
[20:57] Todd says leadership from the C-Suite is the most critical aspect of a culture of health. Tom says you’ve got to be able to challenge the status quo. If you want different outcomes, you have to have different strategies.
[23:31] If you want more information, please don’t hesitate to contact Stephens Insurance.
Tom Kane, Executive Vice President and Director of Life & Health
Kara Trott, Founder and CEO of Quantum Health and Walker Bowden, Director of Self-Funded Marketing for Stephens Insurance, are interviewed by Frank Thomas in this episode of Stephens Viewpoints. Kara, Walker and Frank discuss innovations in engagement that allow members to navigate much better the healthcare maze.
[:48] Kara’s career before healthcare was working with companies connecting with customers on their journey purchasing consumer goods and services — where people were getting value during the journey.
[1:40] Kara moved into healthcare in an advisory role on managed care strategies. She saw a fundamental problem with the healthcare journey being a bewildering experience for the consumer. She considered ways to shorten the journey and reduce costs.
[3:00] Employers, working with advisors like Stephens, work to get advances in care and treatment to connect effectively with humans. The system, as is, is too complex and benefits are hard to access.
[4:10] Kara wants someone to be primarily responsible for guiding a person requiring healthcare through the journey. She sees companies recognizing that people on a healthcare journey do not act or engage the same as people on a chosen journey.
[4:51] Walker says employers struggle to connect their employees to the services they need when they need them. The Quantum Real-Time Intercept helps to engage employees earlier and catch things when there is time to intervene. Engagement is over 60%. Cost savings come when preventive care is used.
[6:36] Kara sees Quantum Health as an industry disruptor by engaging the member in a customer model rather than a transaction model.
[8:40] Companies are responding to the model. Quantum has grown at 40% a year over the last 10 years. Companies are looking for solutions to get the best from the network.
[10:16] Walker sees that a variety of clients are embracing the Quantum model. Walker explains the Quantum model. It is a one-stop shop for employees.
[12:18] Karen sees advances in technology as positive. But while technology advances, the human experience does not change. The need for healthcare causes agitation. This agitation literally shuts down cognitive functions. There needs to be an expert guide.
[14:17] Walker explains the goals of the Stephens and Quantum Health partnership. They want to educate employers to understand that, from a self-funded viewpoint, there’s a different way to manage risks. Compare your current model to Quantum’s services.
[16:00] Quantum Health calls themselves ‘Healthcare Warriors.’ Members have a better experience and they achieve health savings.
[17:31] Stay tuned for more insights from Stephens Insurance.
Olin Wage, Senior Vice President and Long-Term Care Advisor for Stephens Insurance, is interviewed by Frank Thomas in this episode of Stephens Viewpoints. Frank and Olin discuss why long-term care insurance should be considered as part of a prudent retirement plan, the options available, and options for providing for long-term care needs and expenses.
[:44] Olin explains that long-term care addresses the needs of an individual because of a chronic condition, accident, or trauma, which requires assistance with the basic activities of daily living, including transferring, toileting, bathing, dressing, and eating.
[1:18] There are six activities of daily living. To qualify for a long-term care claim the individual needs assistance with at least two of the six activities. Alternatively, a cognitive impairment alone could qualify a person to receive benefits.
[1:39] Many researchers estimate that more than half of today’s 65-year-olds will need long-term care, at an average total cost of $138,000. A recent Forbes article says only 89,000 bought private long-term care insurance in 2016, a decline of 14% from 2015.
[2:06] Unfortunately, most people think that the government, their health insurance, or disability policy will take care of long-term care expenses. Some people assume that they can self-insure, without actually investigating the implications of using assets to pay for expenses.
[2:29] Medicare and Medicaid are not good for long-term care. Medicare is very limited and only pays for skilled care, up to 100 days. Medicaid requires a person to be financially poor to qualify.
[2:52] Purchasing long-term care in your mid-forties to mid-sixties is optimal. It’s important to act while you’re in good health, because the cost of long-term care is highly dependent upon your physical condition.
[3:14] It’s important to have long-term care insurance in place before you become disabled and dependent on care, even before your retirement age. Income from a disability policy won’t be sufficient to cover the long-term care expenses.
[3:44] In a typical long-term insurance claim, people qualify for benefits after 90 days. Benefit periods run from four to 10 years. The average length of care needed is statistically less than three years.
[4:17] Insurance companies are trying to minimize their risk to a sustainable level by reducing benefit durations and having a broader selection of inflation riders. Some insurance companies are offering life insurance policies with long-term care riders. Also, annuities have been used for long-term care benefits.
[4:56] Elder care costs continue to rise. Live-in facilities may cost in excess of $90,000 annually. Insurance companies adjust for increases in cost through inflation riders on the long-term care policies. Each year that you own the policy, the benefit increases.
[5:37] Stephens advises clients, both individuals and employer group clients to include long-term care in their overall financial plans. Having a long-term care policy protects their financial plan and their investment portfolio, and protects their family from becoming their caregivers.
[6:18] More and more employers are embracing long-term care benefits for their employees, largely because of the tax benefits associated with the deductibility of the premium for companies, and also the tax-free benefits for their employees. Some employers carve out their top executives and provide long-term care benefits for them.
[7:01] Olin is encouraged to think that long-term care benefits will become a common employer benefit offering as employers learn the tax benefits on both the employer and employee sides.
[7:33] Clients should make sure that they have a financial advisor that is well-versed in long-term care. Clients should involve all their advisors — attorneys, CPAs, insurance agents. When all are involved, it works for the betterment of the client. The need for long-term care is an integral part of their retirement plan.
[8:20] Retirement health-related risk could involve the need for long-term care insurance. If you are limited in the six activities of daily living, and you need help in that regard, there needs to be a means of paying for those expenses. Especially if you need multiple caregivers or 24-hour care, the expenses are higher than average.
[9:32] Another option beyond the traditional long-term care policy is a life insurance policy with a long-term care rider. Discuss this with your Stephens Insurance advisor and your other retirement plan advisors.
[10:00] For more information on this topic, please contact Stephens Insurance at 1-800-643-9691. To listen to more Stephens Viewpoints, check out our website.
Olin Wage, Sr. Vice President and Long-Term Care Advisor
The Traditional Long-Term Care Insurance Market Crumbles, by Howard Gleckman for Forbes
Frank Thomas interviews Jared White, Vice President of Stephens Inc.’s Public Finance Practice in North Carolina, in this episode of Stephens Viewpoints. Frank and Jared discuss North Carolina’s public finance. Communities are investing in Minor League baseball stadiums, public transportation in light rail lines and bus lines, and in innovative high schools, attracting commerce to downtown and growing their populations.
Key Takeaways:
[:43] In the North Carolina market, and in public finance in general, Jared is seeing a strong attraction to building Minor League baseball stadiums, especially in second-tier markets, to help revitalize downtown communities. North Carolina is the second-most populated state in terms of Minor League ballparks.
[1:22] Communities looking to attract a Minor League team first need to allocate land for a stadium. Land use is a top consideration. Charlotte had a team, but their stadium was in South Carolina. Building a stadium in downtown Charlotte brought their attendance from one of the nation’s lowest, to breaking minor league attendance records.
[2:28] Stephens Public Finance usually comes to the table after a baseball consultant, such as Hardball Capital, who works with the municipality to design the stadium, works with architects to lay it out on the plot, and takes the presentation to the ball club. At that point, Stephens comes in, having a general idea how much it will cost.
[3:19] From there, Stephens will work with the issuer on tailoring a financing plan that meets all of those needs at the lowest cost of capital. Stephens also looks at taxable bonds for this type of project, although upcoming Federal legislation may change that.
[4:11] Sports stadiums are being used as a magnet to attract development to downtown areas in other communities. Baseball is America’s pastime, especially at the affordable price of Minor League tickets for a family outing. There are four stadiums being built in North Carolina. NASCAR stadiums are being repurposed for teams when not in use.
[5:25] Stephens has a lot of stadium experience dating back to the Superdome financing in New Orleans. Stephens does a lot of college and university football and baseball stadium and sports complex financing. Stephens knows the small markets.
[6:08] Over the last 17 years, North Carolina has seen some of the strongest population growth. Most of the growth is in the downtown areas of communities. They are investing in public transportation with Lynx light rail lines and bus systems. Cities are turning high schools into innovative bridge-to-work programs, attracting industry to downtown.
[7:15] Jared says this downtown focus is definitely a trend. The six largest cities in North Carolina are seeing growth in their downtown area and they all have a Minor League presence. This activity attracts restaurants, hotels, other commerce, and really revitalizes and grows the downtown area.
[8:26] For more information on this topic, please contact Stephens Public Finance at 1-800-643-9691. To listen to more Stephens Viewpoints, check out our website.
Mentioned in This Episode:
Securities offered through Stephens, Inc., Member NYSE, SIPC.
This podcast should not be copied, distributed, published, or reproduced, in whole, or in part. The information contained in this podcast is not financial research, nor a product of Stephens Research. Stephens does not make any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast and any liability therefore is expressly disclaimed. The views expressed in this podcast are not necessarily those of Stephens and Stephens is not providing any investment, financial, economic, legal, accounting, or tax advice, or recommendations in this podcast. In addition, the downloading of this podcast by any listener does not make that listener a client of Stephens.
Frank Thomas interviews Tom Kane, Executive Vice President and Director of Life & Health for Stephens Insurance, in this episode of Stephens Viewpoints. Frank and Tom discuss the importance of the practitioner model when advising clients on health insurance and benefits. With medical practitioners on staff, account executives can provide clients with transparency on healthcare and pharmacy costs. Tom discusses the benefits of data-driven analytics in understanding health risks within a client employee group, and the benefit of providing important steps employees can take to reduce their risks of future disease and to manage existing disease.
Key Takeaways:
[:48] Stephens Insurance has both a medical practitioner and a pharmacist on staff. Tom explains how Stephens has responded to changes in client expectations over the last 10 to 15 years by transforming to a risk management philosophy from the historical transactional role of most brokers.
[1:46] Looking at the risks in a health plan population requires the insight of clinical practitioners. In 2006, Stephens hired two registered pharmacists, who are still with Stephens today. A few years later, Stephens added a medical director.
[2:11] Sitting with a client, the Stephens broker can now have a different conversation focused on what is actually happening within the plan, what is driving the cost, rather than just a conversation around shifting costs.
[2:25] The Stephens medical director works with account executives to study client health data and advise on the trends occurring within their population. They can find gaps in care, such as patients not following the protocols for managing diseases, or if employees are not getting screenings. Stephens can help incentivize compliance.
[3:29] The role of the pharmacists is to help clients design the best pharmacy program for their health plan. They understand the pharmacy industry. They have a hands-on role with the clients and the account management team.
[4:06] Stephens believes in total transparency. Clients have a right to know the Pharmacy Benefit Manager pricing methodologies. People need to have access to transparent quality data, as well. Stephens advises clients to provide tools to employees that allow them to understand what the costs are.
[4:53] In Central Arkansas, Stephens has done research that shows the cost for an MRI to be very different from one provider to the next. Transparency is the future of healthcare and insurance. People should be able to go online and see what an MRI costs, and not only what it costs, but who has the highest quality outcomes.
[5:19] Tom says health insurance is bad for your health because it was offered as a remedy for being sick. The message needs to change to things you can do to prevent getting sick. Having a practitioner model where you can present the client with practitioner expertise is empowering and transformative for the client and employees.
[6:32] For the first time, companies are dealing with the wellness of employees that span three generations. That adds levels of complexity from messaging, to the disease states of the generations. Younger people need to stay healthy; mature people need to change behaviors to reverse early disease; the elderly need to manage their diseases.
[8:30] Everything Stephens does begins and ends with data. It has done an exhaustive process of vetting data analytic vendors. It has found a best-in-class provider for its clients. Through risk-scoring and predictive analytics, Stephens can tell a client, if nothing changes, this is what your health care costs will look like.
[9:11] Stephens is able to predict with a high degree of accuracy what’s going to happen to care costs and admissions if a client employee group does not make any changes. It’s very empowering to have access to that data, where we can pinpoint individuals who are at risk for a significant health event.
[9:37] To our listeners, please continue to tune in as we explore more topics with experts from Stephens Insurance. For more information on this topic, please contact Stephens Insurance at 1-800-643-9691. To listen to more Stephens Viewpoints, check out our website.
Mentioned in This Episode:
Insurance products offered through Stephens Insurance, LLC., National Producer Number 8844362. Securities are offered through Stephens, Inc., Member NYSE, SIPC.
“This podcast should not be copied, distributed, published, or reproduced, in whole, or in part. The information contained in this podcast is not financial research, nor a product of Stephens Research. Stephens does not make any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast and any liability therefore is expressly disclaimed. The views expressed in this podcast are not necessarily those of Stephens and Stephens is not providing any investment, financial, economic, legal, accounting,
Stan Payne, Executive Vice President and Director of Property & Casualty of Stephens Insurance, is interviewed by Frank Thomas in this episode of Stephens Viewpoints. Frank and Stan discuss the risk management industry, starting with the history of risk coverages, through the trends of today and for the future. Stan suggests actions to take now that may help listeners understand and mitigate the risks facing their businesses.
Key Takeaways:
[:34] Stan has been in the insurance business for 22 years. He joined Stephens in 2009, at an interesting time for the financial services industry. He thinks it was a great move to join a privately-held firm that had a genuine interest in developing specialty services and resources for the risk management business.
[1:06] Stan observes that risk management clients are looking beyond traditional risk finance to the human capital aspect and the survival of a business. Threats are much more complex than weather or accidents, where Stephens has its roots.
[1:35] Reputational risk from social media exposures, and cybercrime, are at the forefront of Stephens’ clients’ minds.
[1:47] In the 1960s, loss control came into vogue, and became more specialized throughout the 1970s. In the ’80s and ’90s, employment practices along with directors and officers liability, became popular coverages because of litigation that ensued from how employers managed their workforce, as well as from shareholder actions.
[2:22] In the 21st century, two key elements have come into play. The first, from 2001, is terrorism, and how you finance that risk, or protect your business against it. Now, cyber risk is at the forefront of business.
[2:51] Stan explains why risk mitigation is more important than ever before. Business owners do not want to expose their investment to carelessly assessing risk. They want an inventory of risks to the enterprise, and a clear plan to thwart those risks, so in the event of a breach, they are seen as proactive.
[3:20] The speed of business and technology have made active risk management more critical. Thirty years ago, E. Coli at one restaurant wouldn’t have made national news. Today, in five minutes, people all over the world know of it, and watch your response.
[4:02] Stan talks about the Stephens process of bringing in experienced practitioners to counsel their clients. This is a concentrated investment in risk management professionals. Understanding the functional side of risk management within a client’s walls is important for implementing the right directives.
[4:42] Stephens owns and invests in many of the industries where they are managing risk for clients. Stephens has the buyer’s perspective. They understand the reality of implementing and managing the risk process, because they do it every day in myriad industries.
[5:19] Stan explains the role of loss control engineers. Loss control or safety engineers assist clients in developing action plans and coordinating resources for the prevention of claims, and the production of disaster recovery plans and other services.
[5:52] Stephens’ engineers have, in many instances, performed these duties in their past as clients, or on the insurance carrier side. These perspectives show Stephens what clients will encounter internally, with their own management and boards as they establish safety goals.
[6:21] Reality is in the implementation and perpetuation of sound risk management practices. The Stephens team has the experienced view of both perspectives.
[6:32] Additionally, technology has played a key role in the delivery of these resources. Stephens has a tool that allows them to deliver safety training to individual employees one-on-one, across the country, in several different languages. It also helps with OSHA regulations, and for managing reporting obligations.
[6:57] Insurance clients need to be planning for risks by consulting with their broker, and completing an enterprise risk assessment, in an ongoing process, that is fully integrated into their business plan.
[7:25] To our listeners, please continue to tune in as we explore more topics with experts from Stephens Insurance. For more information on the topic of risk mitigation, please contact Stephens Insurance at 1-800-643-9691. To listen to more Stephens Viewpoints, check our website at Stephens.com/podcasts.
Mentioned in This Episode:
Insurance products offered through Stephens Insurance, LLC., National Producer Number 8844362. Securities are offered through Stephens, Inc., Member NYSE, SIPC.
“This podcast should not be copied, distributed, published, or reproduced, in whole, or in part. The information contained in this podcast is not financial research, nor a product of Stephens Research. Stephens does not make any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast, and any liability therefore is expressly disclaimed. The views expressed in this podcast are not necessarily those of Stephens, and Stephens is not providing any investment, financial, economic, legal, accounting, or tax advice, or recommendations in this podcast. In addition, the downloading of this podcast by any listener does not make that listener a client of Stephens.”
Marty Rhodes, President and CEO of Stephens Insurance, concludes the conversation with Frank Thomas in this episode of Stephens Viewpoints. Frank and Marty discuss complying with The Affordable Care Act, covering cyber liability, the future of Stephens Insurance, and how the Stephens culture helps retain talented team members. Listen in to learn more.
Key Takeaways:
[:32] The 2700-page Affordable Care Act introduced many issues into employee benefits insurance. Stephens had a team study it, and start doing seminars in Arkansas, to help businesses prepare. Challenges continue today, with rising rates.
[2:35] Data analytics plays an important part in assessing a client’s insurance coverage needs. The Stephens benefits platform has a data analytics expert, an actuary, two pharmacists, an M.D., and an attorney; all expert in employee benefits.
[4:00] Why does Stephens — a mid-sized insurance broker — have a doctor and pharmacists on staff? Marty explains.
[4:48] Marty talks about how Stephens benefits platform specialists serve their clients.
[6:34] Cyber liability is another current insurance coverage issue. A lot of companies are considering it, but it needs to be more widely adopted. Stephens offers this coverage.
[8:23] Marty discusses Stephens Insurance’s efforts in cyber security coverage.
[9:13] Stephens Insurance has an exciting future, building on the progress of the last several years. They continue to focus on bringing in new, talented, team members that will fit in the Stephens culture. Stephens will continue to focus on client relationships.
[10:23] Stephens platforms combine new talented members and members with years of experience to mentor them. The emphasis is quality in the team, in the products, and the service. Stephens relationships are built on quality of service and products.
[12:09] Having the right culture in place is the key to retention. The Stephens culture includes team, family, service, relationships, and quality. It’s a tremendous place to be.
[13:23] That concludes this podcast series. For more information, please contact Stephens Insurance at (501) 377-2000.
Mentioned in This Episode:
The Affordable Care Act of 2010
The Wall Street Journal, Soaring Premiums under the ACA
Insurance products offered through Stephens Insurance, LLC., National Producer Number 8844362. Securities offered through Stephens, Inc., Member NYSE, SIPC.
“This podcast should not be copied, distributed, published, or reproduced, in whole, or in part. The information contained in this podcast is not financial research, nor a product of Stephens Research. Stephens does not make any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast, and any liability therefore is expressly disclaimed. The views expressed in this podcast are not necessarily those of Stephens, and Stephens is not providing any investment, financial, economic, legal, accounting, or tax advice, or recommendations in this podcast. In addition, the downloading of this podcast by any listener does not make that listener a client of Stephens.”
Marty Rhodes, President and CEO of Stephens Insurance, continues the conversation with Frank Thomas in this episode of Stephens Viewpoints. Frank and Marty discuss insurance capacity, loss control, risk management, and how Stephens builds its teams of loss control engineers, and the loss control services they provide.
Listen in to hear more.
Key Takeaways:
[:34] Marty talks about insurance capacity, in relation to recent storms. Even a Katrina-sized event would not ‘move the needle,’ in the property marketplace today.
[2:13] Marty contrasts individual loss catastrophes against large area catastrophes. While Katrina certainly qualified as a large catastrophe, the current policyholder surplus is more than ample for anything less than multiple major events throughout the year.
[3:58] Stephens brokers communicate frequently with clients, giving recommendations for preventive measures, loss control, and response action items for catastrophes.
[4:51] Stephens loss control engineers help educate clients on construction codes for Tier 1 coastal areas subject to hurricanes.
[5:31] Loss control engineers educate workplace clients. Middle market and smaller business use this service. Stephens loss control engineers are qualified to give mock OSHA inspections, so clients can correct deficiencies, and work to prevent incidents.
[7:41] Marty talks about how much time loss control engineers spent in visiting and educating the first client of the Risk Management Unit in 2009. Loss control is essential.
[9:15] Depending on the complexity of the account, Stephens loss control engineers schedule visits to the various sites, and also communicate with clients, between visits.
[10:26] Loss control engineers understand OSHA regulations, and the issues of the client sector they serve. Stephens loss control engineers are highly experienced.
[11:06] Stephens Insurance is relationship-driven. Stephens builds teams of experts in the sectors they cover. Last year transportation was their fastest-growing client sector; oil and gas, and public utilities are major sectors, and hospitality is quickly growing. They have teams of risk management experts in each of these sectors.
[13:18] In our next episode, we’ll be discussing notable upcoming changes in the insurance industry businesses should watch for.
[13:27] For more information, please contact Stephens Insurance at (501) 377-2000.
Mentioned in This Episode:
Insurance Services Office Inc.
Insurance products offered through Stephens Insurance, LLC., National Producer Number 8844362. Securities offered through Stephens, Inc., Member NYSE, SIPC.
“This podcast should not be copied, distributed, published, or reproduced, in whole, or in part. The information contained in this podcast is not financial research, nor a product of Stephens Research. Stephens does not make any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast, and any liability therefore is expressly disclaimed. The views expressed in this podcast are not necessarily those of Stephens, and Stephens is not providing any investment, financial, economic, legal, accounting, or tax advice, or recommendations in this podcast. In addition, the downloading of this podcast by any listener does not make that listener a client of Stephens.”
Marty Rhodes, President and CEO of Stephens Insurance, joins Frank Thomas in this episode of Stephens Viewpoints. Frank and Marty discuss the beginnings of Stephens Insurance and the array of services Stephens Insurance currently offers. They also discuss the mergers and acquisitions trend in the insurance industry, and what companies should look for in a provider, for their risks. Listen in to hear more.
Key Takeaways:
[:37] Stephens Insurance was formed in 1987, serving life and health insurance clients. In 2005, Marty joined the company, with a background in property and casualty. Stephens built a property and casualty practice as well, and has grown significantly.
[1:20] Stephens Insurance clients are broadly varied. One carries $7.5 Billion in coverage. Some clients have tens of thousands of employees; some have 10.
[2:01] What are the main industry sectors that Stephens Insurance serves?
[2:31] Stephens Insurance offers employee benefits, commercial insurance, personal insurance, and all facets of brokerage business.
[3:00] Marty explains how the insurance industry survives economic downturns.
[4:37] Stephens Insurance has a robust platform, including specialists in data analytics, risk management, and in the various industry sectors they cover.
[5:53] Marty talks about the importance of the oil and gas industry to Stephens Insurance.
[6:51] What does big data contribute to the insurance process? Marty makes it clear.
[7:37] Consolidation in the insurance industry creates fewer choices for the clients, and company cultures do not always match. Stephens Insurance looks at additions to the group to see first if they fit into the client-driven, service-driven Stephens culture.
[8:50] Are insurance mergers and acquisitions approaching a bubble? Marty ties their sustainability to low interest rates. How long will rates stay low?
[9:55] Companies searching for a provider should look for a team that is concentrated on servicing their needs, with a large platform that will perform all the functions their risks require, such as good loss control engineering, risk management experience, claims advocacy, management liability, cyber and fiduciary liabilities, and so on.
[11:03] For more information, please contact Stephens Insurance at (501) 377-2000.
Mentioned in This Episode:
Insurance products offered through Stephens Insurance, LLC., National Producer Number 8844362. Securities offered through Stephens, Inc., Member NYSE, SIPC.
“This podcast should not be copied, distributed, published, or reproduced, in whole, or in part. The information contained in this podcast is not financial research, nor a product of Stephens Research. Stephens does not make any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast, and any liability therefore is expressly disclaimed. The views expressed in this podcast are not necessarily those of Stephens, and Stephens is not providing any investment, financial, economic, legal, accounting, or tax advice, or recommendations in this podcast. In addition, the downloading of this podcast by any listener does not make that listener a client of Stephens.”
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Mitch Harless, Senior Vice President for Claims Management, concludes the conversation as Frank’s guest in this episode of Stephens Viewpoints. Frank and Mitch discuss why an indemnification specialist is an important adviser to help clients understand oil patch indemnification and mutual indemnification agreements, both before and after an incident. Listen in to hear more.
Key Takeaways:
[:29] There is a lack of clarity about the indemnification process, which is a highly specialized field. Firms that have claim management expertise in this area bring added value to businesses in this industry.
[1:11] Besides bringing expertise, what communication skills are needed for a claim management specialist? Mitch explains how he helps people visualize the complex relationships involved in indemnification obligations.
[1:52] Mitch offers flowcharts and dynamic discussions, with a review of real-life examples of the indemnification process.
[2:04] How long does it take for specialists to achieve results? The BP case took about five years to resolve. Complex issues involving insurance and indemnification agreements can take months to years to resolve.
[2:48] Mitch explains the benefits of a pre-loss review by a claims management specialist, who can offer insurance programs that respond best to the particular needs.
[4:04] Mitch has a final suggestion for oil services firms undecided as to whether they need to consult with an indemnification claims management specialist. Establishing a relationship with a specialist may achieve better outcomes than would otherwise occur.
Mentioned in This Episode:
Deepwater Horizon Oil Spill Litigation
Mitch Harless, Senior Vice President for Claims Management, continues the conversation as Frank’s guest in this episode of Stephens Viewpoints. Frank and Mitch look at a case study — the contractual dispute from the Deepwater Horizon disaster of 2010, and the insurance claims at its center. An indemnification specialist is an important adviser to help clients understand oil patch indemnification and mutual indemnification agreements, both before and after an incident. Listen to hear more.
Key Takeaways:
[:26] Mitch Harless reveals the focus of the contractual dispute between the parties from the Deepwater Horizon disaster of 2010: environmental damage! Whose tower of insurance was at the center of the dispute?
[1:00] The incident occurred in April, 2010. In November, 2011 a District Court issued a ruling that BP could not access Transocean’s $750 million tower of insurance.
[1:53] High-value disputes become complex, and that was not the end. The United States Court of Appeals for the Fifth Circuit, in New Orleans, heard an appeal. In March 2013, they reversed the ruling of the District Court, in favor of BP.
[2:59] Transocean asked the Circuit Court of Appeals for reconsideration, to hear from the Texas Supreme Court. In August 2013, the Fifth Circuit withdrew its March opinion. How did they involve the Texas Supreme Court?
[3:55] The Texas Supreme Court examined three questions certified by the U.S. Court of Appeals for the Fifth Circuit. In February, 2015, the Texas Supreme Court answered those three questions. What was the effect of their answers?
[4:36] Transocean was able to preserve for themselves their $750 million tower of insurance.
[4:44] Did this dispute have more of an impact on the legal process or on insurance practices? This extreme example documents the dire financial ramifications for parties of indemnification agreements.
[5:15] What changes did the insurance industry make after the Deepwater Horizon disaster of 2010? What is the importance of indemnification agreements today?
[6:01] Next and final episode of this discussion: How specialists shed light on the murkier aspects of the indemnification process for stakeholders!
Mentioned in This Episode:
Deepwater Horizon Oil Spill Litigation
U.S. District Court for the Eastern District of Louisiana
Mitch Harless, Senior Vice President for Claims Management, is Frank’s guest in this episode of Stephens Viewpoints. Frank and Mitch discuss oil field insurance issues, and why it is important to understand oil patch indemnification and mutual indemnification agreements, both before and after an incident. Listen to hear more.
Key Takeaways:
[:41] Mitch Harless tells of his career path in the Property & Casualty insurance industry, from 1983 until today.
[1:43] Mitch spent 20 years on the carrier side focused on the oil and gas industry.
[2:14] What are the complexities of oil patch indemnification in the oil services sector?
[2:54] What are the three key businesses involved in drilling an oil well? With which parties does Stephens normally interact?
[3:44] There are two typical contracts in the oil and gas industry for drilling a well: a drilling contract, usually by the IADC, and a Master Service Agreement, or MSA. What do they have in common?
[4:25] Mitch describes knock-for-knock, or mutual indemnification agreements.
[5:10] Stephens’ clients look to Stephens for expertise in the nuances of indemnification agreements as they pertain to the oil and gas industry.
[5:58] The claims management expert offers pre-loss reviews of contracts and indemnification, and post-loss claims management practices in the event of a claim.
[6:55] Mitch gives additional detail about knock-for-knock claims. The focus is on which employee, belonging to which employer, was injured in the incident.
[7:47] As a diversified agent, Stephens might represent either the operator, or the service contractors.
[8:27] The indemnification process is very complex. A number of states have anti-indemnification statutes, which have a compelling effect on an indemnification agreement. Case law, such as Corbett, adds to the complexity.
[9:20] Next episode: Study of the fallout from the Deepwater Horizon disaster of 2010!
Mentioned in This Episode: