Host Stacey Richter discusses the intricacies of stop-loss coverage with Andreas Mang and Jon Camire from Blackstone. The episode focuses on defining stop-loss insurance and exploring its critical role in protecting self-insured employers from catastrophic financial losses.
The conversation delves into the nuances of individual and aggregate stop-loss policies, laser claims, and the importance of selecting an experienced consultant to navigate this complex landscape. The episode is essential listening for those managing high-cost claimants and exploring self-insurance options.
This is a two part show. The second show will cover major fails, mistakes that happen with stop-loss when somebody doesn’t understand or do everything that we talk about. So, tune back in for the next part of this conversation, in two weeks.
Thank you to Havarti Risk for sponsoring this weeks episode.
Havarti Risk empowers healthcare leaders like you to make smarter
decisions that increase quality and lower cost of care.
https://havarti-risk.com/
=== LINKS ===
🔗 Show Notes with all mentioned links:
https://relentlesshealthvalue.com/episodes
✉️ Enjoy this podcast? Subscribe to the free weekly newsletter:
https://relentlesshealthvalue.com/join-the-relentless-tribe
🫙 Support the podcast with a small donation to the Tip Jar:
https://relentlesshealthvalue.com/join-the-relentless-tribe
🎤 Listen on Apple Podcasts
https://podcasts.apple.com/us/podcast/feed/id892082003?ls=1
🎤 Listen on Spotify
https://open.spotify.com/show/6UjgzI7bScDrWvZEk2f46b
📺 Subscribe to our YouTube channel
https://www.youtube.com/@RelentlessHealthValue
=== CONNECT WITH THE RHV TEAM ===
✭ LinkedIn https://www.linkedin.com/company/relentless-health-value/
✭ Threads https://www.threads.net/@relentlesshealthvalue/
✭ Bluesky https://bsky.app/profile/relentleshealth.bsky.social
✭ X https://twitter.com/relentleshealth/
07:24 What is stop-loss?
08:27 What is reinsurance?
09:57 EP420 with Ge Bai, PhD, CPA.
10:10 Why h
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Episode 478.
"Stop Loss Coverage. Part One, How It GoesRight, And How It Can Go Horribly Wrong".
This show is chockfull of advice.
Today I speak with AndreasMang and Jon Camire.
(00:21):
American Healthcare Entrepreneurs andExecutives You Want To Know, Talking.
Relentlessly Seeking Value.
Hey, question for you.
Can it ever actually be betterfor a claim to get lasered?
If your knee jerk reaction is, Nope.
No, not so much.
Lasered claims are always bad.
And or if you have no idea what I'mtalking about, do continue to listen.
(00:44):
This question gets answered.
Also, if you are interested in highcost claimants from almost any angle,
this show is in fact part of thehigh cost claimant run of shows.
What you'll learn today is someinsights relative to how plan sponsors
go about making sure they can pay you.
Like if you work for, for example,some clinical organization.
(01:06):
This run of shows, by the way, abouthigh cost claimants, includes episode
471 with Christine Hale, which spillsover into the Eric Bricker episode
472, about high cost claimants, mostlyfrom the hospital point of view.
And yeah, in the same breath asany plan sponsor is gonna say, high
cost claimant, they are also likelygonna say, stop-loss coverage.
(01:27):
So you can see how this kind offits into this trifecta here.
So, right, this show is aboutstop loss coverage, and as such,
maybe you're thinking this topicsounds a little desperately boring.
Like after 470 some shows, I'mscraping the bottom of the barrel.
I mean, don't get me wrong, lasersor laser claims has a cool ring to
(01:48):
it and all, but stop-loss coverage,well, it kind of needs a rebranding.
Stop-loss comes off as, I don't know,not a ringer as far as compelling
podcast titles go, but do not be fooledby, its nothing to see here name.
Stop-Loss is, and I'm quotingAndreas Mang, one of my guests today
who would know, Andreas says thatfor any given self-insured plan
(02:09):
sponsor, stop-loss is one of themost important buying decisions.
I take that to mean plan successor failure might hinge on how well
the stop-loss decision gets made.
But danger Will Robinson, becauseas Andreas says, a lot of times
stop-loss decisions are one of thefinal calls that winds up getting
(02:31):
made in any given plan year.
So it's so easy to face thesereally, actually very big decisions.
While completely exhausted andinadvertently kind of phone it in.
But yeah, don't do that.
Big mistake.
So I gotta tell you, this episode onthis topic was really a long time coming.
I wanted to talk with someone who kind ofdidn't have a horse in the race of selling
(02:56):
stop-loss and also knows the stop-loss,what the, what's inside and out.
This was no easy task.
It was almost as hard finding someonefor the show as it was to find someone
to talk about 340B before I managedto find in shanghai, Shawn Gremminger.
But I digress.
I'm so pleased to be speaking todayto Andreas Mang, who is senior
(03:20):
managing director at Blackstoneand CEO Equity Healthcare.
I am also speaking today with JonCamire, who is also over at Blackstone.
Jon is managing directorand CFO Equity Healthcare.
Jon is an actuary and heruns their stop loss program.
So yeah, you can see I'mbringing the big guns here.
(03:40):
All right, logistics.
This conversation aboutstop-loss is gonna be two shows.
This show that you'll hear today willlock down the basic concepts, dispel
some myths, including the nuances oflaser claims, and wrap up with the
hugest of huge, you better get thisright or things can go horribly wrong.
Which I'm not gonna keep you insuspense over the hugest of huge
(04:03):
is pick a really, really goodconsultant and know how they are paid.
It is easy to say this, and youmight be, yeah, yeah, yeahing me.
I've heard this before so many times.
But after listening to Andreas and Jontalk through some of the stuff that
we talked through today, it can be ascalding, really expensive hot mess.
(04:23):
So, wow.
Yeah, it just drives home why a reallyexperienced unconflicted consultant
matters with three underlines.
The second show will cover major fails,mistakes that happen with stop-loss
when somebody doesn't understand ordo everything that we talk about.
(04:45):
So tune back in for the next part ofthis convo, as I said, in two weeks.
I will also mention the earliershow that I did with Andreas, it
was about a year ago, comes up abunch of times in the show today.
We reference it because as I said, wetalk a lot about the role of the broker
in stop-loss and purchasing stop-loss,and we also talk at great length
(05:06):
about brokers in that earlier episode.
Link in the show notes asusual for your convenience.
Normally right now I say my name isStacey Richter, and then I say, this show
is sponsored by Aventria Health Group.
What I'm going to say instead today isthat the show is also sponsored by Havarti
Risk, which I am very thankful for.
(05:28):
The show actually does cost anunexpectedly large sum of money
to create and produce, so I alwaysappreciate when somebody offers to
sponsor a show or help sponsor a show.
Havarti Risk empowers healthcareleaders like you to make smarter
decisions that increase qualityand lower the cost of care.
Havarti's cutting edge approachcombines deep industry knowledge and
(05:49):
also actuarial expertise with advancedtechnology to transform how you
manage risk and optimize performance.
Imagine having the power to, numberone, predict financial outcomes,
both claim and admin with confidence.
Number two, measure performance acrossvalue-based care contracts in real time.
Number three, validate ROI on healthinnovations, ensuring better care delivery
(06:13):
at greater efficiency, like for example,build a tracking mechanism to measure and
validate ROI's, return on investments.
And then number four, develop novelcapital risk structures tailored to
your organization's unique needs.
So do please support Havarti Risk.
You can visit them at their website,which we will link to in the show
(06:33):
notes to take the first step towardgreater visibility and control of
risk outcomes in your business.
And once again, thank you somuch to Havarti Risk for their
financial support of this show.
And with that, here's the firstpart of my conversation with Andreas
Mang and Jon Camire about stop-loss.
(06:54):
Andreas Mang, welcome toRelentless Health Value.
Hey, Stacey, thanks for having me back.
Happy to chat aboutstop-loss with you today.
It is a pleasure to have you back.
Jon Camire, thank you somuch for being here today.
Thank you, Stacey.
It's a real pleasure.
Why don't we start fromthe very beginning.
Let's define terms here.
What is stop-loss?
For most people, they probably hearthis and they are already asleep.
(07:16):
Hopefully not.
They're running for the hills.
Yeah, they're running for the hills.
I'm gonna encourage everyone to keepthe play button hit and to listen
to this because in as much as it maysound sort of mundane, or not exciting.
It's probably one of the most importanttopics for a self-insured company because
what it is, is stop-loss, really, it'sa form of reinsurance, and it is the
(07:38):
insurance that is purchased by an insuredentity, and we'll talk about what that
is, to protect against catastrophic loss.
Okay, so it's the protective layerthat essentially removes a tranche
of risk for an insurer, and thatinsurer can be an insurance company,
like a property and casualty insurer.
(07:58):
I can assure you that those thatinsured the homes that were devastated
by the fires out in California areprobably covered by reinsurance.
I'm sure they are.
It could also be aself-insured entity, right.
And the stop-loss, which is thereinsurance that a self-insured entity
purchases, the amount that they purchaseis relative to the size of the risk pool.
(08:22):
So you're saying that if I say reinsuranceor I say stop-loss, those are synonyms.
I'd say stop-loss is a subset of anoverall umbrella known as reinsurance.
So reinsurance broadlyis what we discussed.
It's the insurance purchase toprotect against catastrophic coverage.
Underneath that umbrella ofreinsurance, we have stop-loss and
(08:47):
other forms of insurance that peoplecan buy to protect against risk.
There's insurance products for genetherapy if you want, but in general,
stop-loss is a form of reinsurancethat is a comprehensive form of
insurance that should cover allexpenses above a certain threshold.
(09:08):
And we're basically sayingthat you are a self-insured
employer or whoever's listening.
If we're a plan sponsor here, we maybe confident and capable of managing
day-to-day kinds of risk, normal kindsof risk, but if something absolutely
nuts happens, we can't bankrupt our wholecompany, so therefore we need a stop loss.
(09:29):
We need some kind of coverageso that we protect in the chance
that something really bad happens.
That's the very simplisticexplanation here.
That's right.
It's actually funny in healthcarecoverage, what people are getting
today from employers or froman insurance company, it really
(09:49):
isn't insurance anymore, right?
Insurance, by definition, should below probability, high cost events,
that's what insurance covers.
Listen to the show with Ge Bai wherewe dig in on that exact concept.
And I'd say stop-loss coverage is stillone of the few pieces of this overall
puzzle that still meets that criteria.
low probability, high cost events
(10:10):
Stop loss should be for thoselow probability, high cost events
that a self-insured employerwants to protect themselves from.
And quite frankly, it has been,historically, it's been one of
the barriers to smaller companiesgoing self-insured because this
protection can be fairly expensive.
Because why?
Because I said before that theamount of protection that you buy
(10:31):
is relative to the size of therisk pool that you are insuring.
So if you are small, if you'rea very small company, let's say
you're 400 employees and you'reself-insured, your appetite for
risk is gonna be less than that.
Of, say, a company with 5,000employees and what is essentially
your coverage, your deductible isgoing to be much lower than that
(10:52):
of a company with 5,000 employees.
So if you're 400 employees and you'rebuying stop-loss, you're gonna buy
coverage that has a deductible that'squite low, probably in the, could be
75, could be a hundred or $125,000deductible, meaning that you're on
the hook for the first, let's say thedeductible is a hundred thousand dollars.
They call it an attachment point,and this is for a form of stop-loss
(11:15):
that we call individual stop-loss.
There's actually two forms, Ishould have said that before.
There's two forms of stop-lossfor a self-insured entity.
There's individual and there's aggregate.
Individual says for an individualsituation, an individual case,
you the employer, are on thehook up to a certain threshold.
Whatever that deductible is thatwe set, let's say in this case
it's a hundred thousand dollars.
(11:36):
If someone has something bad happen,they're going through cancer, for
instance, you, the employer, will be onthe hook for the first a hundred thousand.
After that, you are free and clear.
The stop-loss carrier isgonna pick up the rest.
Now, if you're 5,000 employees.
That deductible may be $750,000.
It could be up to a milliondollars because you're much bigger.
You're more able to absorb thosehigher cost expenses within the
(12:00):
overall budget of your plan.
What I'm understanding you say is thatstop loss obviously is it's protecting
a self-insured entity, employer plan,sponsor of some kind against some
kind of catastrophic situation ormaybe situations that happen in any
given plan year such that that planwinds up with way more expense for
(12:24):
healthcare than they had budgeted.
And it's interesting that you put asmall employer at 400, which I know from
the last episode you said was you'repretty much bottom for what you would
consider someone should be self-insured.
Is about 400 employees.
So we've got a small 400person employer here or a plan.
(12:45):
And you said there's individualstop-loss and then there's aggregate.
And if we're thinking about theindividual, then if any claim exceeds
for the smaller employer, maybe they're,you call it a deductible, which is kind
of interesting because normally we thinkabout deductibles as as patients, but
if we're thinking about it at the planlevel, this is the plan's deductible.
At about a hundred K forthat given individual.
So you have one individual who hassome kind of very high cost claimant.
(13:09):
The stop loss carrier's gonna pick upanything that's above the a hundred
K or whatever the floor is on that.
And if it's a larger plan, thenobviously they've got more money they
can absorb a higher high cost claimant.
So maybe it's 175 if it's a larger plan.
Did I get that right?
You got it right.
And I'd add that if you're largeenough, some companies go without it.
(13:30):
So companies that are around,call it, eh, it's around 10,000
or so employees on their plan,they actually can start thinking
about completely eliminating this.
The individual, you mean?
The individual.
So think of it as a, you know, Jonwill probably talk about this, think
of it as a risk management tool that weoftentimes will say, look, this decision
(13:50):
needs to be, and I talk about this alot, joint with finance and HR. I think
everything with self-insurance should bea joint decision between finance and HR.
But this really is a CFO decisionbecause it is a risk management tool.
It is a risk management decision.
How much risk are we willing to takeon the balance sheet of our company.
Before we get to the next questionwhere we talk about aggregate.
(14:14):
Jon, do you have anything that youwanna fold in here to this conversation?
I would just say that, you know, to putsome numbers around what Andreas was
just saying, when you have a companythat has 10,000 employees, they could
have a plan that's running $10 milliona month in claims, and so you know,
a claim that's 250,000 or 500,000,really isn't something that becomes
(14:36):
catastrophic for their cash flow ina way that it does for a smaller plan
that might be running 200,000 a month.
They have a claim for $500,000, that'sreally a major hit on cash flow.
And when you think about stop-lossinsurance, and really what you're trying
to do is understand the risk toleranceof your specific company, your cashflow
needs, your cashflow limits, and putsome insurance around it so that you
(15:01):
do not result in a bad situation.
And I think what you just did thereis put an underline under what Andreas
was just talking about, about howstop-loss is a risk management tool.
This is all about understandingrisk tolerance, and then finding
a level of stop-loss coveragethat seems suitable for that risk.
(15:22):
And that sounds like something thefinance department should be all over.
So as you say that this definitelyshould be a joint decision with
finance, I am cottoning onto that.
That sounds like it is.
Correct.
Exactly.
So we just talked about individualstop-loss coverage or stop loss
coverage and how that impacts maybean individual high cost claimant.
(15:46):
You had also mentioned there's twokinds and the second kind is aggregate.
So what's that all about?
Sure.
So aggregate is thesecond form of stop-loss.
But this is all within one policy, right?
So you have stop-loss and thenyou've got the individual component
and the aggregate component, oris this a whole separate policy?
It's really separate.
It's a separate decision.
So what aggregate insurance is going todo is it's gonna cap your overall risk.
(16:11):
So it's gonna end generallywith that's where that's set.
It's generally set at about 125% ofyour expected cost, so it sort of sets a
maximum or a ceiling that you as a companywill pay in a given year and in general,
aggregate reinsurance, aggregate stop-lossis purchased by smaller companies.
(16:33):
When you get to be about athousand employees or so.
You generally see companies eliminatingthe aggregate policy and it's cheap.
This is the piece that doesn't cost aton, but it's also hard to engage it.
So I asked our stop losssort of administrator once,
what's sort of the average?
How many times do you see a companyhit the aggregate stop loss?
(16:56):
If you think about, again, it's at 125%of your expected, your forecasted amount.
That's a pretty big miss.
If you're hitting that, theysaid one out of a hundred years
you're gonna hit it as a company.
So it's nice to have it.
It gives people peace of mind.
It doesn't cost much, but ingeneral, you're not gonna hit it.
Think about what you wouldneed for that to happen.
You have an individual policy in place.
(17:18):
Let's say it's a hundred thousanddollars individual policy.
To hit aggregate, you'd have to havesomething really strange happen where
you have a whole bunch of cases that arejust coming in right below that where
individual may not be kicking in anda whole bunch of somethings happened
that sort of ended up where you wereway beyond your budget or, or you did
a poor job before forecasting yourexpenses, which could also be the case.
(17:41):
But again, in general, aggregate issomething that goes away once you're
large enough because why, you know,basic principle of insurance, the
larger the risk pool, the easierit is to kind of forecast and
understand where things are gonna go.
Yeah.
This sounds like a lot of reallyheavy duty looking at past trends,
trying to figure out exactly likeyou just said, what is the risk here?
(18:02):
So I'm glad we have anactuary in this conversation.
Well, so am you know, this bringslegitimacy to this whole thing.
But look, you know, we've talked, wetalked about this last time, you had
me on the importance of having a goodbroker, a good partner, because the, we
always say the math gets so much morecomplicated when you're self-insured.
And for those who maybe didn't hearthe first time I was with you, Stacey,
(18:24):
you know I talked about self-insurance.
As companies are running their ownhealth insurance company, when you
are self-insured, you're runningyour own health insurance company.
You need to be able toforecast risk appropriately.
You need to be able to forecast whereare the potential areas where you
could get hurt sort of financially.
What are these protective layers ofinsurance that you need to make sure
(18:45):
that your plan is run in an efficientway, in a smart way, in a way that
protects you as the self-insured entity?
It gets complicated, right?
And this one right here is square in thebullseye of where problems can occur.
And Jon will talk about this in a bit,but we have seen some really interesting
things in our time here over the yearswhere companies are not structured
(19:06):
properly with this insurance and they facesome real, you know, unforeseen expenses.
So it's important to get this one right.
It is complicated.
And this one really highlightsthis sort of notion that when
you're self-insured, you're reallyrunning your own insurance company.
And stop-loss is one of these keyprovisions that all insurers have.
Right?
So if the insurers are doing it,you better be doing it as well in
(19:27):
the situations where it makes sense.
Yeah, because you buy too much, youwind up spending a lot of unnecessary
dollars and kind of mitigate the wholepoint of, not the whole but a point
of being self insured to begin with.
But you don't spend enough, you can getin a lot of trouble if the worst winds
up happening in any given plan year.
(19:48):
It's such a great point.
Stacey, I just wannahighlight what you just said.
We've seen so many companieswho in their first year of going
self-insured, they're nervous, right?
They're a little apprehensiveabout taking on this risk.
And oftentimes we see companieswho initially have the knee jerk
reaction to over insure, andthis coverage is expensive, you
know, make no mistake there.
(20:08):
And so, choosing the right levels andhaving a partner who can help you with
that math and project your risk and doit in a way that is best for you and your
situation is really important becauseit can completely turn the economics
upside down of going self-insured.
Just to add new companygoing self-insured.
Everything about stop-lossis gonna be unfamiliar.
(20:30):
All the terms, all the decisionpoints are gonna be unfamiliar for
a company that has just been makingdecisions in a fully insured world.
And so, you know, you may not reallyunderstand where the blind spots are, and
that's where that consultant comes in.
So important.
And I also could see, again, just kind ofgoing back to the whole, who within any
(20:52):
given plan, sponsor owns this whole thing.
I mean, finance is actually makinga lot of these types of decisions
for all the other insurance they'rebuying, which probably is coming out
of the finance department, right?
Like for their property, for workers'comp, like for all those other things.
So like as we talk about these unfamiliarwords, they could be very unfamiliar
(21:14):
for someone in HR who likely did notgo to get a human resources education
to, as you say, run a small insurancecompany off the side of their desk.
Right.
But at the same time, likethis is sort of very financey,
even just in terms of language.
Alright.
What's a laser claim?
What an awful title.
What an awful name for apiece of this overall game.
(21:37):
So what a laser claim is this, ifyou think about, if you put yourself
in the shoes of the reinsurer, thestop-loss carrier, they like, you
are also projecting risk, right?
So they're looking at your claims data.
They're trying to understand what'stheir exposure, and in turn, they then
wanna price your policy appropriately.
What a laser is, is whenthere is a known risk.
(22:00):
So let's say someone is going throughsome kind of a prolonged treatment.
Again, let's use the example, Ihate to use it, but you know, it's
appropriate for the, for the discussion.
Someone is going through cancer.
And let's say they started treatmentsin November and they're gonna be
flowing into the next year, and yourplan year follows the calendar year.
So you're facing a renewal andyou go to the market and you're
(22:22):
looking for a new policy oryou're looking for a renewal rate.
That reinsurer, the stop-loss carrier isgoing to see that risk in your population
because they have your claims data.
And that's the equivalent of knowingif you're a property and casualty
insurer, that's the equivalent ofknowing an earthquake is coming, right?
So you see that risk, you see thatthat cost is in there, and what
(22:42):
a laser does is it pulls out thatindividual person from the risk pool.
And in general, what they usuallydo is they set a different
deductible for that individual.
So your individual stop-loss policy maybe set at, let's say, you know, $350,000
deductible, but for that person, thatindividual, they laser them out, and that
(23:03):
person may have a $500,000 deductible.
So you are on the hook for agreater piece of the overall cost.
That's what a laser is.
It's pulling out known risks, andit's assigning a different financial
threshold to that known risk.
So basically if there is an individualor individuals who, they're crossing
the plan period, as you said, right?
(23:26):
Like they start a treatment orhave some kind of chronic something
or other where they begin in oneplan year, but then it crosses the
renewal period of the stop loss.
Exactly like you just said, thestopwatch carrier's, like, I'm onto you.
I see that is gonna happen.
So at this juncture, youdon't need insurance.
You need someone to pay your bill.
If I'm just thinking about it froma, you know, from the perspective
(23:49):
of this other entity that is on thesales side of the equation and on
the, on the hook side of the equation.
So a laser claim is them basically saying,you're gonna have this expense and you
need to figure out what to do with it.
Like at this juncture, it's notinsurance, it's a known entity.
As you said perfectly,it's no longer insurance.
It's a known thing.
Now, you know, obviously somethingthat's episodic and that you expect to
(24:13):
resolve hopefully in a positive way.
On the employer's side, they're tryinghard to say, Hey, this, this is either
their, the individuals at the endof their treatment or they've gotten
better, or the claims you're seeingare no longer gonna be caring forward.
The employee may no longerbe with the company.
There's a number of discussions thathappen to understand where that person
is versus, and you just said this aswell, someone who's chronic, right?
(24:35):
A hemophiliac who's gonna be on the planis, we know is going to generate quite
a bit of, expense going forward that'sgonna carry on for the foreseeable future.
That, that is gonna be treatedslightly differently as well.
But, but in a, you know, in anutshell, you, you nailed it.
That's what a laser is.
I wish it had a different name.
It sounds a little too exciting maybe forwhat it actually is, which is not good,
(25:02):
generally speaking for both the company aswell as the individual that is involved.
So Jon, before we move into the nextquestion I have for you, which I'm very
excited to get to, is there anythingthat you wanna kind of add in summary
for what we just talked about there?
Yeah, look, I would say that a laser, itsounds like it's bad, but actually there
(25:22):
are situations where companies should bepleased that a laser is being offered.
So basically what that means is theinsurance company underwriters for
that company have evaluated that riskand they feel like there's a greater
risk there than they wanna accept.
So they're gonna ask for a highdeductible for that individual.
But what that means is they're notgonna build that into the premium.
(25:44):
So the alternative is they don'tlaser that claimant and then they
just throw a couple hundred thousandextra onto the premium and you
don't really know the difference.
So, you know, one of the things I thinkis an important principle with stop-loss
is to, you know, market and get differentperspectives from different carriers.
(26:04):
But we've certainly seen situationswhere accepting the laser on one
policy is a 100% financial winnerrelative to another policy that's being
offered that doesn't have a laser,but just has a much higher premium.
So, these situations are all unique.
They're all individualistic.
You have a variety of different clinicalfactors, financial factors, all kinds
(26:27):
of things, but each one is individual.
You have to evaluate them each year, eachpolicy, and then make a good decision.
Yeah, so that's really interestingthat if you get a stop-loss carrier,
like I'm, here's a totally exaggeratedreenactment, but the employer might
be like, oh no, don't laser my claimthinking that that's a good thing.
And the carrier's like, sure.
And then they just added into thepremium what the employer would've
(26:51):
paid for anyway, probably withsome additional dollars there.
I mean, basically the, what theemployer may have just purchased
is a very expensive payment plan.
Absolutely.
That's exactly what happens.
The margin on these products is high.
So if it's as an Andreas example,350 versus 500,000, they're not just
gonna add 150,000 to the premium.
(27:11):
They're gonna add, you know,250,000 to the premium and
that's what you're gonna eat.
And we've certainly encounteredcompanies that are like, we hate lasers.
We don't like lasers.
And you know, obviouslyin isolation, sure.
But each situation needs tobe evaluated individually.
So my next question for you, Jon, iswhat's most important here to know?
(27:33):
Like if you were going to select atip-top rate critical, what would it be?
We just talked about how it'd beimportant to know stuff like, Hey, not
all lasers are a bad thing , and I aminferring from what Andreas mentioned,
that a good broker or consultantwould know about stuff like this.
(27:53):
But what's most important here?
Well, there's definitely a few things.
I think actually right in your question,maybe the top thing, it's time.
You know, when you're stepping upto evaluate self insurance or even
considering evaluating self insurance,it's really time to take a hard look
at who your consultant is and maybe atthat point you're calling 'em a broker.
(28:13):
I really feel like once you getinto self insurance, the consulting
piece becomes more critical, right?
The math gets a little harder.
The work gets a little more complicated.
You have more flexibility andstop-loss is only one of those areas.
But one of the things I like to say tocompanies that are in this space where
they're considering self-insurance is,when you're fully insured, it's a lot
(28:35):
like ordering a meal at a restaurant.
You're looking at the menu, you see theprices, and you're making a decision.
With self-insurance, it's a lot likegoing to the grocery store, picking
out groceries, cooking the meal.
It's more complicated.
It's likely to cost you less at the end ofthe day than going out to the restaurant,
but the person or the consultant thatcan help you do that, I like to say it's
(28:57):
not the same person that can order agood steak, that can cook a good steak.
And so that's really where comes in.
That consultant is gonna be critical.
All right, so we have gone through today,we have talked about what stop-loss is.
We have talked about these termsthat wind up getting bandied
about relative to stop-loss.
We have talked about making sure thatthe consultant knows what they're
doing because this sounds very muchlike something that one would need an
(29:21):
experienced guiding hand to accomplish.
Is there anything that we neglected totalk about that we wanna bring up today?
The one thing I wanted to add is make sureyou know what your consultant is getting
paid, and if you're using some type ofcollective or captive or whatever, make
sure you know what they're getting paid.
Over the years, we've seen somequestionable behavior when it comes
(29:43):
to commissions on stop-loss becauseit's not an employee benefit.
It's not reported on 5500s.
If you have that reputable broker.
You're doing disclosures and thingslike that, you're probably okay.
Same thing with a strong collective.
Definitely know what these peopleare being paid on this coverage.
Yeah, I think that's really good points.
(30:04):
Andreas, anything that youwanna add as a wrap up here?
This stuff is complicated.
I hope it doesn't scare anyone away.
I hope this helps clarify some of theimportant points that you need to look at.
And it's just, it's a really integral,important part of the overall
self-insurance equation that is tooeasy to sort of view as that last buying
decision that we talked about and sortof you wanna sweep it under the rug.
(30:25):
It's probably one of the mostimportant buying decisions.
Unfortunately, it happens at the way endof the process when everybody's really
tired and beat up and you know, you gottahang in there and get through this one
and put as much into it as every otherpart of what you've done to sort of
structure your plan for your employees.
Okay, you listening right now, consideryourself informed about the basics now.
(30:47):
So let me tell you whatyou gotta do in two weeks.
Tune in and listen to part two of thisdiscussion where, yeah, we talk about
the biggest mistakes plan sponsors makewhen it comes to stop-loss and a bunch
of other, I don't know, pretty, for me,at least, unintuitive and also rarely
discussed aspects of this whole conundrum.
(31:08):
Just as unintuitive as, Hey, sometimesa laser isn't a terrible thing if
you think it the whole way through.
So see on the other side.
Andreas Mang and Jon Camire,thank you so much for being on
Relentless Health Value today.
Happy to be here.
Thanks so much for having us.
Thank you, Stacey.
Hi, I'm Keith Passwatter,an actuary Havarti Risk.
Listening to Relentless Health Valuehas consistently challenged the way
(31:30):
I think about healthcare, and it'sgiven me answers to the question, how
can we actually make healthcare workfor the patients, the doctors and
nurses, and all those paying the bill?
The conversations unlock clever ideasthat are smart, relevant, and grounded
in the realities we face every day.
If you're as passionate about drivingmeaningful change in healthcare
as I am, I really encourage youto subscribe to the newsletter.
(31:52):
It's a great way to stay in the loopand be notified about new episodes.
Thanks for listening.
Episode 478.
"Stop Loss Coverage. Part One, How It GoesRight, And How It Can Go Horribly Wrong".
This show is chockfull of advice.
Today I speak with AndreasMang and Jon Camire.
(00:21):
American Healthcare Entrepreneurs andExecutives You Want To Know, Talking.
Relentlessly Seeking Value.
Hey, question for you.
Can it ever actually be betterfor a claim to get lasered?
If your knee jerk reaction is, Nope.
No, not so much.
Lasered claims are always bad.
And or if you have no idea what I'mtalking about, do continue to listen.
(00:44):
This question gets answered.
Also, if you are interested in highcost claimants from almost any angle,
this show is in fact part of thehigh cost claimant run of shows.
What you'll learn today is someinsights relative to how plan sponsors
go about making sure they can pay you.
Like if you work for, for example,some clinical organization.
(01:06):
This run of shows, by the way, abouthigh cost claimants, includes episode
471 with Christine Hale, which spillsover into the Eric Bricker episode
472, about high cost claimants, mostlyfrom the hospital point of view.
And yeah, in the same breath asany plan sponsor is gonna say, high
cost claimant, they are also likelygonna say, stop-loss coverage.
(01:27):
So you can see how this kind offits into this trifecta here.
So, right, this show is aboutstop loss coverage, and as such,
maybe you're thinking this topicsounds a little desperately boring.
Like after 470 some shows, I'mscraping the bottom of the barrel.
I mean, don't get me wrong, lasersor laser claims has a cool ring to
(01:48):
it and all, but stop-loss coverage,well, it kind of needs a rebranding.
Stop-loss comes off as, I don't know,not a ringer as far as compelling
podcast titles go, but do not be fooledby, its nothing to see here name.
Stop-Loss is, and I'm quotingAndreas Mang, one of my guests today
who would know, Andreas says thatfor any given self-insured plan
(02:09):
sponsor, stop-loss is one of themost important buying decisions.
I take that to mean plan successor failure might hinge on how well
the stop-loss decision gets made.
But danger Will Robinson, becauseas Andreas says, a lot of times
stop-loss decisions are one of thefinal calls that winds up getting
(02:31):
made in any given plan year.
So it's so easy to face thesereally, actually very big decisions.
While completely exhausted andinadvertently kind of phone it in.
But yeah, don't do that.
Big mistake.
So I gotta tell you, this episode onthis topic was really a long time coming.
I wanted to talk with someone who kind ofdidn't have a horse in the race of selling
(02:56):
stop-loss and also knows the stop-loss,what the, what's inside and out.
This was no easy task.
It was almost as hard finding someonefor the show as it was to find someone
to talk about 340B before I managedto find in shanghai, Shawn Gremminger.
But I digress.
I'm so pleased to be speaking todayto Andreas Mang, who is senior
(03:20):
managing director at Blackstoneand CEO Equity Healthcare.
I am also speaking today with JonCamire, who is also over at Blackstone.
Jon is managing directorand CFO Equity Healthcare.
Jon is an actuary and heruns their stop loss program.
So yeah, you can see I'mbringing the big guns here.
(03:40):
All right, logistics.
This conversation aboutstop-loss is gonna be two shows.
This show that you'll hear today willlock down the basic concepts, dispel
some myths, including the nuances oflaser claims, and wrap up with the
hugest of huge, you better get thisright or things can go horribly wrong.
Which I'm not gonna keep you insuspense over the hugest of huge
(04:03):
is pick a really, really goodconsultant and know how they are paid.
It is easy to say this, and youmight be, yeah, yeah, yeahing me.
I've heard this before so many times.
But after listening to Andreas and Jontalk through some of the stuff that
we talked through today, it can be ascalding, really expensive hot mess.
(04:23):
So, wow.
Yeah, it just drives home why a reallyexperienced unconflicted consultant
matters with three underlines.
The second show will cover major fails,mistakes that happen with stop-loss
when somebody doesn't understand ordo everything that we talk about.
(04:45):
So tune back in for the next part ofthis convo, as I said, in two weeks.
I will also mention the earliershow that I did with Andreas, it
was about a year ago, comes up abunch of times in the show today.
We reference it because as I said, wetalk a lot about the role of the broker
in stop-loss and purchasing stop-loss,and we also talk at great length
(05:06):
about brokers in that earlier episode.
Link in the show notes asusual for your convenience.
Normally right now I say my name isStacey Richter, and then I say, this show
is sponsored by Aventria Health Group.
What I'm going to say instead today isthat the show is also sponsored by Havarti
Risk, which I am very thankful for.
(05:28):
The show actually does cost anunexpectedly large sum of money
to create and produce, so I alwaysappreciate when somebody offers to
sponsor a show or help sponsor a show.
Havarti Risk empowers healthcareleaders like you to make smarter
decisions that increase qualityand lower the cost of care.
Havarti's cutting edge approachcombines deep industry knowledge and
(05:49):
also actuarial expertise with advancedtechnology to transform how you
manage risk and optimize performance.
Imagine having the power to, numberone, predict financial outcomes,
both claim and admin with confidence.
Number two, measure performance acrossvalue-based care contracts in real time.
Number three, validate ROI on healthinnovations, ensuring better care delivery
(06:13):
at greater efficiency, like for example,build a tracking mechanism to measure and
validate ROI's, return on investments.
And then number four, develop novelcapital risk structures tailored to
your organization's unique needs.
So do please support Havarti Risk.
You can visit them at their website,which we will link to in the show
(06:33):
notes to take the first step towardgreater visibility and control of
risk outcomes in your business.
And once again, thank you somuch to Havarti Risk for their
financial support of this show.
And with that, here's the firstpart of my conversation with Andreas
Mang and Jon Camire about stop-loss.
(06:54):
Andreas Mang, welcome toRelentless Health Value.
Hey, Stacey, thanks for having me back.
Happy to chat aboutstop-loss with you today.
It is a pleasure to have you back.
Jon Camire, thank you somuch for being here today.
Thank you, Stacey.
It's a real pleasure.
Why don't we start fromthe very beginning.
Let's define terms here.
What is stop-loss?
For most people, they probably hearthis and they are already asleep.
(07:16):
Hopefully not.
They're running for the hills.
Yeah, they're running for the hills.
I'm gonna encourage everyone to keepthe play button hit and to listen
to this because in as much as it maysound sort of mundane, or not exciting.
It's probably one of the most importanttopics for a self-insured company because
what it is, is stop-loss, really, it'sa form of reinsurance, and it is the
(07:38):
insurance that is purchased by an insuredentity, and we'll talk about what that
is, to protect against catastrophic loss.
Okay, so it's the protective layerthat essentially removes a tranche
of risk for an insurer, and thatinsurer can be an insurance company,
like a property and casualty insurer.
(07:58):
I can assure you that those thatinsured the homes that were devastated
by the fires out in California areprobably covered by reinsurance.
I'm sure they are.
It could also be aself-insured entity, right.
And the stop-loss, which is thereinsurance that a self-insured entity
purchases, the amount that they purchaseis relative to the size of the risk pool.
(08:22):
So you're saying that if I say reinsuranceor I say stop-loss, those are synonyms.
I'd say stop-loss is a subset of anoverall umbrella known as reinsurance.
So reinsurance broadlyis what we discussed.
It's the insurance purchase toprotect against catastrophic coverage.
Underneath that umbrella ofreinsurance, we have stop-loss and
(08:47):
other forms of insurance that peoplecan buy to protect against risk.
There's insurance products for genetherapy if you want, but in general,
stop-loss is a form of reinsurancethat is a comprehensive form of
insurance that should cover allexpenses above a certain threshold.
(09:08):
And we're basically sayingthat you are a self-insured
employer or whoever's listening.
If we're a plan sponsor here, we maybe confident and capable of managing
day-to-day kinds of risk, normal kindsof risk, but if something absolutely
nuts happens, we can't bankrupt our wholecompany, so therefore we need a stop loss.
(09:29):
We need some kind of coverageso that we protect in the chance
that something really bad happens.
That's the very simplisticexplanation here.
That's right.
It's actually funny in healthcarecoverage, what people are getting
today from employers or froman insurance company, it really
(09:49):
isn't insurance anymore, right?
Insurance, by definition, should below probability, high cost events,
that's what insurance covers.
Listen to the show with Ge Bai wherewe dig in on that exact concept.
And I'd say stop-loss coverage is stillone of the few pieces of this overall
puzzle that still meets that criteria.
low probability, high cost events
(10:10):
Stop loss should be for thoselow probability, high cost events
that a self-insured employerwants to protect themselves from.
And quite frankly, it has been,historically, it's been one of
the barriers to smaller companiesgoing self-insured because this
protection can be fairly expensive.
Because why?
Because I said before that theamount of protection that you buy
(10:31):
is relative to the size of therisk pool that you are insuring.
So if you are small, if you'rea very small company, let's say
you're 400 employees and you'reself-insured, your appetite for
risk is gonna be less than that.
Of, say, a company with 5,000employees and what is essentially
your coverage, your deductible isgoing to be much lower than that
(10:52):
of a company with 5,000 employees.
So if you're 400 employees and you'rebuying stop-loss, you're gonna buy
coverage that has a deductible that'squite low, probably in the, could be
75, could be a hundred or $125,000deductible, meaning that you're on
the hook for the first, let's say thedeductible is a hundred thousand dollars.
They call it an attachment point,and this is for a form of stop-loss
(11:15):
that we call individual stop-loss.
There's actually two forms, Ishould have said that before.
There's two forms of stop-lossfor a self-insured entity.
There's individual and there's aggregate.
Individual says for an individualsituation, an individual case,
you the employer, are on thehook up to a certain threshold.
Whatever that deductible is thatwe set, let's say in this case
it's a hundred thousand dollars.
(11:36):
If someone has something bad happen,they're going through cancer, for
instance, you, the employer, will be onthe hook for the first a hundred thousand.
After that, you are free and clear.
The stop-loss carrier isgonna pick up the rest.
Now, if you're 5,000 employees.
That deductible may be $750,000.
It could be up to a milliondollars because you're much bigger.
You're more able to absorb thosehigher cost expenses within the
(12:00):
overall budget of your plan.
What I'm understanding you say is thatstop loss obviously is it's protecting
a self-insured entity, employer plan,sponsor of some kind against some
kind of catastrophic situation ormaybe situations that happen in any
given plan year such that that planwinds up with way more expense for
(12:24):
healthcare than they had budgeted.
And it's interesting that you put asmall employer at 400, which I know from
the last episode you said was you'repretty much bottom for what you would
consider someone should be self-insured.
Is about 400 employees.
So we've got a small 400person employer here or a plan.
(12:45):
And you said there's individualstop-loss and then there's aggregate.
And if we're thinking about theindividual, then if any claim exceeds
for the smaller employer, maybe they're,you call it a deductible, which is kind
of interesting because normally we thinkabout deductibles as as patients, but
if we're thinking about it at the planlevel, this is the plan's deductible.
At about a hundred K forthat given individual.
So you have one individual who hassome kind of very high cost claimant.
(13:09):
The stop loss carrier's gonna pick upanything that's above the a hundred
K or whatever the floor is on that.
And if it's a larger plan, thenobviously they've got more money they
can absorb a higher high cost claimant.
So maybe it's 175 if it's a larger plan.
Did I get that right?
You got it right.
And I'd add that if you're largeenough, some companies go without it.
(13:30):
So companies that are around,call it, eh, it's around 10,000
or so employees on their plan,they actually can start thinking
about completely eliminating this.
The individual, you mean?
The individual.
So think of it as a, you know, Jonwill probably talk about this, think
of it as a risk management tool that weoftentimes will say, look, this decision
(13:50):
needs to be, and I talk about this alot, joint with finance and HR. I think
everything with self-insurance should bea joint decision between finance and HR.
But this really is a CFO decisionbecause it is a risk management tool.
It is a risk management decision.
How much risk are we willing to takeon the balance sheet of our company.
Before we get to the next questionwhere we talk about aggregate.
(14:14):
Jon, do you have anything that youwanna fold in here to this conversation?
I would just say that, you know, to putsome numbers around what Andreas was
just saying, when you have a companythat has 10,000 employees, they could
have a plan that's running $10 milliona month in claims, and so you know,
a claim that's 250,000 or 500,000,really isn't something that becomes
(14:36):
catastrophic for their cash flow ina way that it does for a smaller plan
that might be running 200,000 a month.
They have a claim for $500,000, that'sreally a major hit on cash flow.
And when you think about stop-lossinsurance, and really what you're trying
to do is understand the risk toleranceof your specific company, your cashflow
needs, your cashflow limits, and putsome insurance around it so that you
(15:01):
do not result in a bad situation.
And I think what you just did thereis put an underline under what Andreas
was just talking about, about howstop-loss is a risk management tool.
This is all about understandingrisk tolerance, and then finding
a level of stop-loss coveragethat seems suitable for that risk.
(15:22):
And that sounds like something thefinance department should be all over.
So as you say that this definitelyshould be a joint decision with
finance, I am cottoning onto that.
That sounds like it is.
Correct.
Exactly.
So we just talked about individualstop-loss coverage or stop loss
coverage and how that impacts maybean individual high cost claimant.
(15:46):
You had also mentioned there's twokinds and the second kind is aggregate.
So what's that all about?
Sure.
So aggregate is thesecond form of stop-loss.
But this is all within one policy, right?
So you have stop-loss and thenyou've got the individual component
and the aggregate component, oris this a whole separate policy?
It's really separate.
It's a separate decision.
So what aggregate insurance is going todo is it's gonna cap your overall risk.
(16:11):
So it's gonna end generallywith that's where that's set.
It's generally set at about 125% ofyour expected cost, so it sort of sets a
maximum or a ceiling that you as a companywill pay in a given year and in general,
aggregate reinsurance, aggregate stop-lossis purchased by smaller companies.
(16:33):
When you get to be about athousand employees or so.
You generally see companies eliminatingthe aggregate policy and it's cheap.
This is the piece that doesn't cost aton, but it's also hard to engage it.
So I asked our stop losssort of administrator once,
what's sort of the average?
How many times do you see a companyhit the aggregate stop loss?
(16:56):
If you think about, again, it's at 125%of your expected, your forecasted amount.
That's a pretty big miss.
If you're hitting that, theysaid one out of a hundred years
you're gonna hit it as a company.
So it's nice to have it.
It gives people peace of mind.
It doesn't cost much, but ingeneral, you're not gonna hit it.
Think about what you wouldneed for that to happen.
You have an individual policy in place.
(17:18):
Let's say it's a hundred thousanddollars individual policy.
To hit aggregate, you'd have to havesomething really strange happen where
you have a whole bunch of cases that arejust coming in right below that where
individual may not be kicking in anda whole bunch of somethings happened
that sort of ended up where you wereway beyond your budget or, or you did
a poor job before forecasting yourexpenses, which could also be the case.
(17:41):
But again, in general, aggregate issomething that goes away once you're
large enough because why, you know,basic principle of insurance, the
larger the risk pool, the easierit is to kind of forecast and
understand where things are gonna go.
Yeah.
This sounds like a lot of reallyheavy duty looking at past trends,
trying to figure out exactly likeyou just said, what is the risk here?
(18:02):
So I'm glad we have anactuary in this conversation.
Well, so am you know, this bringslegitimacy to this whole thing.
But look, you know, we've talked, wetalked about this last time, you had
me on the importance of having a goodbroker, a good partner, because the, we
always say the math gets so much morecomplicated when you're self-insured.
And for those who maybe didn't hearthe first time I was with you, Stacey,
(18:24):
you know I talked about self-insurance.
As companies are running their ownhealth insurance company, when you
are self-insured, you're runningyour own health insurance company.
You need to be able toforecast risk appropriately.
You need to be able to forecast whereare the potential areas where you
could get hurt sort of financially.
What are these protective layers ofinsurance that you need to make sure
(18:45):
that your plan is run in an efficientway, in a smart way, in a way that
protects you as the self-insured entity?
It gets complicated, right?
And this one right here is square in thebullseye of where problems can occur.
And Jon will talk about this in a bit,but we have seen some really interesting
things in our time here over the yearswhere companies are not structured
(19:06):
properly with this insurance and they facesome real, you know, unforeseen expenses.
So it's important to get this one right.
It is complicated.
And this one really highlightsthis sort of notion that when
you're self-insured, you're reallyrunning your own insurance company.
And stop-loss is one of these keyprovisions that all insurers have.
Right?
So if the insurers are doing it,you better be doing it as well in
(19:27):
the situations where it makes sense.
Yeah, because you buy too much, youwind up spending a lot of unnecessary
dollars and kind of mitigate the wholepoint of, not the whole but a point
of being self insured to begin with.
But you don't spend enough, you can getin a lot of trouble if the worst winds
up happening in any given plan year.
(19:48):
It's such a great point.
Stacey, I just wannahighlight what you just said.
We've seen so many companieswho in their first year of going
self-insured, they're nervous, right?
They're a little apprehensiveabout taking on this risk.
And oftentimes we see companieswho initially have the knee jerk
reaction to over insure, andthis coverage is expensive, you
know, make no mistake there.
(20:08):
And so, choosing the right levels andhaving a partner who can help you with
that math and project your risk and doit in a way that is best for you and your
situation is really important becauseit can completely turn the economics
upside down of going self-insured.
Just to add new companygoing self-insured.
Everything about stop-lossis gonna be unfamiliar.
(20:30):
All the terms, all the decisionpoints are gonna be unfamiliar for
a company that has just been makingdecisions in a fully insured world.
And so, you know, you may not reallyunderstand where the blind spots are, and
that's where that consultant comes in.
So important.
And I also could see, again, just kind ofgoing back to the whole, who within any
(20:52):
given plan, sponsor owns this whole thing.
I mean, finance is actually makinga lot of these types of decisions
for all the other insurance they'rebuying, which probably is coming out
of the finance department, right?
Like for their property, for workers'comp, like for all those other things.
So like as we talk about these unfamiliarwords, they could be very unfamiliar
(21:14):
for someone in HR who likely did notgo to get a human resources education
to, as you say, run a small insurancecompany off the side of their desk.
Right.
But at the same time, likethis is sort of very financey,
even just in terms of language.
Alright.
What's a laser claim?
What an awful title.
What an awful name for apiece of this overall game.
(21:37):
So what a laser claim is this, ifyou think about, if you put yourself
in the shoes of the reinsurer, thestop-loss carrier, they like, you
are also projecting risk, right?
So they're looking at your claims data.
They're trying to understand what'stheir exposure, and in turn, they then
wanna price your policy appropriately.
What a laser is, is whenthere is a known risk.
(22:00):
So let's say someone is going throughsome kind of a prolonged treatment.
Again, let's use the example, Ihate to use it, but you know, it's
appropriate for the, for the discussion.
Someone is going through cancer.
And let's say they started treatmentsin November and they're gonna be
flowing into the next year, and yourplan year follows the calendar year.
So you're facing a renewal andyou go to the market and you're
(22:22):
looking for a new policy oryou're looking for a renewal rate.
That reinsurer, the stop-loss carrier isgoing to see that risk in your population
because they have your claims data.
And that's the equivalent of knowingif you're a property and casualty
insurer, that's the equivalent ofknowing an earthquake is coming, right?
So you see that risk, you see thatthat cost is in there, and what
(22:42):
a laser does is it pulls out thatindividual person from the risk pool.
And in general, what they usuallydo is they set a different
deductible for that individual.
So your individual stop-loss policy maybe set at, let's say, you know, $350,000
deductible, but for that person, thatindividual, they laser them out, and that
(23:03):
person may have a $500,000 deductible.
So you are on the hook for agreater piece of the overall cost.
That's what a laser is.
It's pulling out known risks, andit's assigning a different financial
threshold to that known risk.
So basically if there is an individualor individuals who, they're crossing
the plan period, as you said, right?
(23:26):
Like they start a treatment orhave some kind of chronic something
or other where they begin in oneplan year, but then it crosses the
renewal period of the stop loss.
Exactly like you just said, thestopwatch carrier's, like, I'm onto you.
I see that is gonna happen.
So at this juncture, youdon't need insurance.
You need someone to pay your bill.
If I'm just thinking about it froma, you know, from the perspective
(23:49):
of this other entity that is on thesales side of the equation and on
the, on the hook side of the equation.
So a laser claim is them basically saying,you're gonna have this expense and you
need to figure out what to do with it.
Like at this juncture, it's notinsurance, it's a known entity.
As you said perfectly,it's no longer insurance.
It's a known thing.
Now, you know, obviously somethingthat's episodic and that you expect to
(24:13):
resolve hopefully in a positive way.
On the employer's side, they're tryinghard to say, Hey, this, this is either
their, the individuals at the endof their treatment or they've gotten
better, or the claims you're seeingare no longer gonna be caring forward.
The employee may no longerbe with the company.
There's a number of discussions thathappen to understand where that person
is versus, and you just said this aswell, someone who's chronic, right?
(24:35):
A hemophiliac who's gonna be on the planis, we know is going to generate quite
a bit of, expense going forward that'sgonna carry on for the foreseeable future.
That, that is gonna be treatedslightly differently as well.
But, but in a, you know, in anutshell, you, you nailed it.
That's what a laser is.
I wish it had a different name.
It sounds a little too exciting maybe forwhat it actually is, which is not good,
(25:02):
generally speaking for both the company aswell as the individual that is involved.
So Jon, before we move into the nextquestion I have for you, which I'm very
excited to get to, is there anythingthat you wanna kind of add in summary
for what we just talked about there?
Yeah, look, I would say that a laser, itsounds like it's bad, but actually there
(25:22):
are situations where companies should bepleased that a laser is being offered.
So basically what that means is theinsurance company underwriters for
that company have evaluated that riskand they feel like there's a greater
risk there than they wanna accept.
So they're gonna ask for a highdeductible for that individual.
But what that means is they're notgonna build that into the premium.
(25:44):
So the alternative is they don'tlaser that claimant and then they
just throw a couple hundred thousandextra onto the premium and you
don't really know the difference.
So, you know, one of the things I thinkis an important principle with stop-loss
is to, you know, market and get differentperspectives from different carriers.
(26:04):
But we've certainly seen situationswhere accepting the laser on one
policy is a 100% financial winnerrelative to another policy that's being
offered that doesn't have a laser,but just has a much higher premium.
So, these situations are all unique.
They're all individualistic.
You have a variety of different clinicalfactors, financial factors, all kinds
(26:27):
of things, but each one is individual.
You have to evaluate them each year, eachpolicy, and then make a good decision.
Yeah, so that's really interestingthat if you get a stop-loss carrier,
like I'm, here's a totally exaggeratedreenactment, but the employer might
be like, oh no, don't laser my claimthinking that that's a good thing.
And the carrier's like, sure.
And then they just added into thepremium what the employer would've
(26:51):
paid for anyway, probably withsome additional dollars there.
I mean, basically the, what theemployer may have just purchased
is a very expensive payment plan.
Absolutely.
That's exactly what happens.
The margin on these products is high.
So if it's as an Andreas example,350 versus 500,000, they're not just
gonna add 150,000 to the premium.
(27:11):
They're gonna add, you know,250,000 to the premium and
that's what you're gonna eat.
And we've certainly encounteredcompanies that are like, we hate lasers.
We don't like lasers.
And you know, obviouslyin isolation, sure.
But each situation needs tobe evaluated individually.
So my next question for you, Jon, iswhat's most important here to know?
(27:33):
Like if you were going to select atip-top rate critical, what would it be?
We just talked about how it'd beimportant to know stuff like, Hey, not
all lasers are a bad thing , and I aminferring from what Andreas mentioned,
that a good broker or consultantwould know about stuff like this.
(27:53):
But what's most important here?
Well, there's definitely a few things.
I think actually right in your question,maybe the top thing, it's time.
You know, when you're stepping upto evaluate self insurance or even
considering evaluating self insurance,it's really time to take a hard look
at who your consultant is and maybe atthat point you're calling 'em a broker.
(28:13):
I really feel like once you getinto self insurance, the consulting
piece becomes more critical, right?
The math gets a little harder.
The work gets a little more complicated.
You have more flexibility andstop-loss is only one of those areas.
But one of the things I like to say tocompanies that are in this space where
they're considering self-insurance is,when you're fully insured, it's a lot
(28:35):
like ordering a meal at a restaurant.
You're looking at the menu, you see theprices, and you're making a decision.
With self-insurance, it's a lot likegoing to the grocery store, picking
out groceries, cooking the meal.
It's more complicated.
It's likely to cost you less at the end ofthe day than going out to the restaurant,
but the person or the consultant thatcan help you do that, I like to say it's
(28:57):
not the same person that can order agood steak, that can cook a good steak.
And so that's really where comes in.
That consultant is gonna be critical.
All right, so we have gone through today,we have talked about what stop-loss is.
We have talked about these termsthat wind up getting bandied
about relative to stop-loss.
We have talked about making sure thatthe consultant knows what they're
doing because this sounds very muchlike something that one would need an
(29:21):
experienced guiding hand to accomplish.
Is there anything that we neglected totalk about that we wanna bring up today?
The one thing I wanted to add is make sureyou know what your consultant is getting
paid, and if you're using some type ofcollective or captive or whatever, make
sure you know what they're getting paid.
Over the years, we've seen somequestionable behavior when it comes
(29:43):
to commissions on stop-loss becauseit's not an employee benefit.
It's not reported on 5500s.
If you have that reputable broker.
You're doing disclosures and thingslike that, you're probably okay.
Same thing with a strong collective.
Definitely know what these peopleare being paid on this coverage.
Yeah, I think that's really good points.
(30:04):
Andreas, anything that youwanna add as a wrap up here?
This stuff is complicated.
I hope it doesn't scare anyone away.
I hope this helps clarify some of theimportant points that you need to look at.
And it's just, it's a really integral,important part of the overall
self-insurance equation that is tooeasy to sort of view as that last buying
decision that we talked about and sortof you wanna sweep it under the rug.
(30:25):
It's probably one of the mostimportant buying decisions.
Unfortunately, it happens at the way endof the process when everybody's really
tired and beat up and you know, you gottahang in there and get through this one
and put as much into it as every otherpart of what you've done to sort of
structure your plan for your employees.
Okay, you listening right now, consideryourself informed about the basics now.
(30:47):
So let me tell you whatyou gotta do in two weeks.
Tune in and listen to part two of thisdiscussion where, yeah, we talk about
the biggest mistakes plan sponsors makewhen it comes to stop-loss and a bunch
of other, I don't know, pretty, for me,at least, unintuitive and also rarely
discussed aspects of this whole conundrum.
(31:08):
Just as unintuitive as, Hey, sometimesa laser isn't a terrible thing if
you think it the whole way through.
So see on the other side.
Andreas Mang and Jon Camire,thank you so much for being on
Relentless Health Value today.
Happy to be here.
Thanks so much for having us.
Thank you, Stacey.
Hi, I'm Keith Passwatter,an actuary Havarti Risk.
Listening to Relentless Health Valuehas consistently challenged the way
(31:30):
I think about healthcare, and it'sgiven me answers to the question, how
can we actually make healthcare workfor the patients, the doctors and
nurses, and all those paying the bill?
The conversations unlock clever ideasthat are smart, relevant, and grounded
in the realities we face every day.
If you're as passionate about drivingmeaningful change in healthcare
as I am, I really encourage youto subscribe to the newsletter.
(31:52):
It's a great way to stay in the loopand be notified about new episodes.
Thanks for listening.
Popular Podcasts
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
Cold Case Files: Miami
Joyce Sapp, 76; Bryan Herrera, 16; and Laurance Webb, 32—three Miami residents whose lives were stolen in brutal, unsolved homicides. Cold Case Files: Miami follows award‑winning radio host and City of Miami Police reserve officer Enrique Santos as he partners with the department’s Cold Case Homicide Unit, determined family members, and the advocates who spend their lives fighting for justice for the victims who can no longer fight for themselves.