J U LY 2 0 2 2
A S I P C P U B L I C AT I O N
A Matter of
Biosimilars, chemical copies of biologic drugs, hold promise for unlocking significant Rx cost savings
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TABLE OF CONTENTS
JULY 2022 VOL 165
W W W. S I P C O N L I N E . N E T
A MATTER OF CHEMISTRY BIOSIMILARS, CHEMICAL COPIES OF BIOLOGIC DRUGS, HOLD PROMISE FOR UNLOCKING SIGNIFICANT RX COST SAVINGS By Bruce Shutan
CORPORATE GROWTH FORUM LAUNCHES OPPORTUNITIES FOR INVESTMENT, MERGERS AND ACQUISITIONS IN SELFINSURED MARKET SPACE
By Laura Carabello
ACA, HIPAA AND FEDERAL HEALTH BENEFIT MANDATES THE AFFORDABLE CARE ACT (ACA), THE HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996 (HIPAA) AND OTHER FEDERAL HEALTH BENEFIT MANDATES
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The Self-Insurer (ISSN 10913815) is published monthly by Self-Insurers’ Publishing Corp. (SIPC). Postmaster: Send address changes to The Self-Insurer Editorial and Advertising Office, P.O. Box 1237, Simpsonville, SC 29681,(888) 394-5688 PUBLISHING DIRECTOR Erica Massey, SENIOR EDITOR Gretchen Grote, CONTRIBUTING EDITOR Mike Ferguson, DIRECTOR OF ADVERTISING Shane Byars, EDITORIAL ADVISORS Bruce Shutan and Karrie Hyatt, 2022 Self-Insurers’ Publishing Corp. Officers James A. Kinder, CEO/Chairman, Erica M. Massey, President, Lynne Bolduc, Esq. Secretary
JULY 2022 3
F E AT U R E
A Matter of
Chemistry Written By Bruce Shutan
Biosimilars, chemical copies of biologic drugs, hold promise for unlocking significant Rx cost savings
here’s a promising development in the Rx space largely flying under the radar across the self-insurance community. While a combination of bureaucratic and market barriers currently stand in their way, experts are hopeful that educating key stakeholders will unlock a potentially game-changing solution. Significant cost savings can be realized, alongside better clinical outcomes, through the use of biosimilars, according to research and recommendations released earlier this year by the nonprofit National Alliance of Healthcare Purchaser Coalitions. Biosimilars are chemical copies of biologic drugs that have more complex proteins made from living cells, explains Margaret Rehayem, the group’s vice president. Their traction in the U.S. is manly dependent on policymakers to address the lack of transparency and misaligned incentives. In stark contrast, the European Union is several years ahead for biosimilars where the results are lower prices and higher uptake.
A Matter of Chemistry Only slightly more than 30 biosimilars have been approved in the U.S. over the past decade with about 160 more in the R&D pipeline, Rehayem says. A pandemicrelated backlog at the Food and Drug Administration delayed approvals of anything other than COVID-related vaccines and treatments, but the floodgates are expected to open by next year and beyond. The European market where several hundred biologics have been approved and drug prices have come down “didn’t have as many guardrails in place when biosimilars came out,” she notes. “There’s not as much of a bureaucratic pathway to get biosimilars into use because of a health-care-for-all approach.” Also, she says access to biosimilars can be limited when a pharmacy benefit manager’s (PBM’s) formulary favors brand-name biologic drugs for which rebates are available. Not surprisingly, it has been difficult to assess the value of biosimilars in the U.S.
“We’re approving record numbers of medications most years, many of which are specialty in nature,”
given the snail’s pace of product approval and biologics dominance.
says Eric Barker, RPh, chief growth officer
“so the biosimilar market is lagging far behind expectations.” of True Rx Health Strategies,
OVERCOMING SIGNIFICANT BARRIERS While educating health plan sponsors and members about the merits of biosimilars is top of mind, that effort extends to winning over the hearts and minds of doctors. “The biggest challenge is probably adoption in the physician community,” suggests Andy Crighton, M.D., former chief medical officer of Prudential Financial and a member of the National Alliance Medical Director Advisory Council. It’s important that they’re comfortable prescribing biosimilars since patients rely heavily on their provider to recommend scripts and respect their expertise. Biosimilars initially were perceived as inferior to biologics, which he attributes to some bias and misinformation in the early communication of these drugs. But that view hasn’t panned out in studies, he hastens to add. Crighton says biosimilars are available to treat the same inflammatory conditions that biologics target, including rheumatoid or psoriatic arthritis, as well as some
inflammatory bowel conditions, but in a more cost-effective way. The problem, he notes, is that there’s an inherent fear of trying something new on patients that have painful inflammatory conditions with the potential for serious side effects. Another point worth considering is that it’s hard to bring a biosimilar to market relative to, say, generic medication. The manufacturers of original medications have argued that biosimilars are not strictly an interchangeable product that meets additional requirements outlined by the Biologics Price Competition and Innovation Act, Barker reports. So a barrier to entry is the point of sale at pharmacy counters where serious time constraints make it difficult to exchange specialty drugs for biosimilars, he says. For example, a pharmacist is free to fill a prescription for Lipitor with the lesscostly generic equivalent without needing permission from the patient’s doctor
“Yet many laws around biosimilars require the pharmacist to make a phone call to enable that exchange, allow that substitution to happen,” Barker to make that change.
explains. While he would love to be able to say that biosimilars have been a great solution to helping control specialty medication costs, it’s difficult to make that case because there simply aren’t enough of them in the market. “But that being said,” Barker notes, “as a pharmacist, I’m very comfortable for any of our patients to be prescribed a
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A Matter of Chemistry biosimilar in place of the specialty medication. I think they’re safe and effective.”
ENORMOUS SAVINGS POTENTIAL The potential for cost savings, though not fully realized at the present, may be enormous. Bill Miller, CEO of Drexi, an AMPS company, expects biosimilars to cut 75% to 80% off the cost of biologics. “Half of the spend is happening in these specialty drugs, which really only accounts for 1% to 2% of the employees,” he says. That means 10 to 20 members in Andy Crighton a 1,000-employee group will drive 50% of pharmacy cost for the entire plan, which could be up to 25% and 30% of the overall medical spend for the employer.
“That 75% savings will end up being an overall 35% savings on pharmacy and around 10% of the overall medical spend,” he adds. “So bringing in biosimilars and being aware of them a year down the road could be saving 10% of the entire medical spend of a plan.” In order to realize this potential, there needs to be a change in overall approach. Self-insured health plans tend to focus on population health that supports their workforce around wellbeing or condition management. But Rehayem of the National Alliance says pharmaceutical manufacturers set themselves up to focus on more of a precision medicine model, which is where the market is moving, particularly for costly specialty pharmacy solutions.
“Employers need to catch up around their benefit design and being able to deliver the right drug at the right time to the right patient,” she opines. That includes being more knowledgeable about care available pathways and what’s on formulary or should be added to the list. It also involves leaning in more to medical and pharmacy, not just the pharmacy
side of their drug spend. The National Alliance has suggested to its members that they implement health plan and formulary design changes, along with tweaks to drug pricing and rebates, and study the impact of site-ofcare on cost of delivery. Rehayem says the group is “looking at not only educating employers, but a deeper dive with a few of the coalitions and really taking a look at their own data. Key points include uncovering the biggest challenges associated with getting biosimilars on formulary, as well as how to move forward with formulary and benefit designs and Rx administration. There’s a need to not just provide resources and tools, but actually take employers through a process, which the National Alliance calls a learning collaborative that allows members to share data and experiences. The study involves three coalitions that are bringing in three employers apiece. The goal is to educate employers and empower them to push back with their own Rx vendor partners and consider a more thoughtful approach.
ALL EYES ON HUMIRA
One area where the gradual emergence of biosimilars will be closely watched involves Humira, a blockbuster biologic drug with more than $21 billion in U.S. sales. It was the best-selling of the top 200 pharmaceuticals based on retail sales that the University of Arizona studied other than Covid-19 vaccines, Miller notes. He says Humira’s
A Matter of Chemistry
“roughly above the entire economy of Iceland and somewhere around the middle of the pack of GDPs of countries.”
staggering sales are
With about eight biosimilars for Humira called adalimumab eventually expected to hit the market, along with a significant number of other biosimilars, Miller agrees with other industry experts that the chief challenge will be educating health plan members and clinicians alike about this drug category. There are three areas where biologics, also known as “reference” drugs when they’re first created to treat a particular condition, have Bill Miller made inroads and created significant expense for self-insured plans, according to Miller. They include insulins, autoimmune and cancer drugs. As such, this is where there will be growing opportunities for biosimilars. “The very first biosimilars that are being approved are in the insulin side,” he reports. “The FDA is trying to make things a little bit simpler and not requiring in some instances the switching studies so that a pharmacist can make the change with a biosimilar.” The biggest change that happened at the beginning of 2020 was the two main manufacturers for fast-acting insulin in the U.S., Eli Lilly and Novo Nordisk, both have products. Humalog is from Eli Lilly and Novolog is from Novo Nordisk. “Each company has exactly the same situation,” Miller notes. “The analogs are exactly the same for Novo Nordisk. Eli Lilly came out with a biosimilar for their Humalog called Insulin Lispro.” It’s priced at about $284 for one vial, and with the average person using about two vials per month, he says the roughly $568 price-tag is a huge amount of money with much of it in rebates and spread pricing arrangements between Eli Lilly and the member. Since there was some pressure to bring down the cost of insulin, a generic version came out. “Now, it’s actually a biosimilar, but in this case because it’s exactly the same, it’s a bioequivalent,” he explains. “You can get this in places for $30. If we could get the education out to the members and employers to tell them that if they were researching this particular information, they could save 90% on their insulin costs if they directed their members into this Insulin Lispro, which is made on the same manufacturing line as Humalog.” The tricky part is that prior authorization is required to obtain the generic bioequivalent insulin, which Miller describes as a huge barrier to saving money
for both the members and the plan. Reiterating the importance of education, he suggests a transparent or fiduciary PBM will help the plan put them on formulary, whereas it would be more difficult using one of the big-three PBMs because of their rebate strategy.
“Biosimilars are facing headwinds from clinical education and awareness, member education and awareness, and financial incentives built in to the PBM’s administration of the plan’s pharmacy benefit,” Miller observes. “If an employer understands what’s going on, they can take steps to overcome those headwinds.” In the end, embracing biosimilars can help move the needle on containing the cost of prescription drugs, what have long been the fastest-growing segment of health care costs. “Biosimilars and biologics are treating very complicated diseases,” Crighton points out, “so having more options available will not only benefit patients and result in better adherence to drug regimens, but also keep self-insured health plan costs under control.” Bruce Shutan is a Portland, Oregon-based freelance writer who has closely covered the employee benefits industry for more than 30 years.
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F E AT U R E
Corporate Growth Forum Launches Opportunities for Investment, Mergers and Acquisitions in Self-Insured Market Space
Written By Laura Carabello
ositive Energy’ describes the overall atmosphere during the recent SIIA Corporate Growth Forum (CGF) which brought together key leaders in the investor community with the SIIA member-companies that are focused on growth opportunities.
It was a first-time event for SIIA and proved to be not only well-attended and productive for all, but also an opportunity for attendees to learn and better understand what will be required for taking next steps. Every participant was complimentary of SIIA for hosting this meeting and supportive of making this an annual event.
With 10+ private equity investor groups attending the CGF, including growing interest from other investors unable to attend this meeting, the marketplace reflects a highlevel appetite for investment and acquisitions.
Corporate Growth Forum Launches Opportunities Dr. Michael Taylor, Council Capital, compliments SIIA for supporting for entrepreneurism,
“Of all the different events I attend, this is one of the very best for finding highly engaged, highly interested business owners. This is a great scenario Dr Mike Taylor where the business owners have already expressed interest and they come into a situation where we can have a great dialogue, great education for both sides and a lot of meaningful meetings. This meeting is actually pairing up the people who want and need private equity with the firms that can provide it.” saying,
Dr. Taylor indicates that while Council Capital is interested in general healthcare, there's no sector in healthcare that's more cost conscious than the self-insured employer.
“A lot of the innovation for healthcare cost containment and payment integrity comes out of the self-insured marketplace. And that's why it's a special area of interest for us.” Riva Dumeny, chief operating officer, Group Benefits Division, Amwins, echoes this sentiment: “Amwins participates in SIIA and events like the CGF because we recognize value in networking with leaders in the self-
insurance industry. We continuously evaluate opportunities to grow and improve our firm, including strategic partnerships in the group benefits segment.”
She says that with over $27 billion in premium, Amwins has the ability to invest in a wide range of assets, but their approach to growth goes deeper than financial performance. “We primarily evaluate culture and look for talented people who strengthen our position as the largest wholesale distributor in the US. People and relationships are at the core of our success.”
Water Street Health Care Partners has been a long-term supporter of SIIA, and Patrick Teyro, VP says, “I've always found a lot of benefit to coming to SIIA meetings and giving back to the companies who turn to our firm for guidance. It's been a great way to network and meet with aspiring leaders. This first-time event is a great way to meet innovative companies that are ‘up and comers’ of employer benefit healthcare services and businesses and build partnerships with them over time.”
He forecasts that should SIIA hold this meeting again next year, “It would be or could be double the size. There are plenty of folks in the growth partner stage that would love to come and do this. The question is, are there enough vendors? There may be companies that are a part of big corporate entities that don't have the same questions or issues that face the folks that are here today.
Corporate Growth Forum Launches Opportunities SIIA is really providing an opportunity to identify a growth partner.
Orlo Spike Dietrich
Orlo ‘SPIKE’ Deitrich, partner, Ansley Capital, worked behind the scenes with SIIA leadership to set up the meeting.
“Most of the private equity people here received a personal invitation from me because I have worked with them, know them and have done business with them. But the real reason for me to attend this meeting is that I'm now ostensibly an investment banker, following 40 years of building my comp business.” He recalls that back in the early eighties, he became fascinated with what really works in healthcare and built his first company around aligning self-insured employers directly with medical providers.
“I believed then, and believe even more strongly now, that one of the problems in healthcare is we've got too many people in the middle who are making money and not bringing commensurate value,” he says, asserting that the more efficiently we can put self-funded employers directly working with medical providers, the better off everybody will be -- the providers, the employers and the patients/employees.
“That’s the reason this meeting is so important and we have gotten a lot of great feedback,” he continues. “During this meeting, the attendees I have met are all saying the same thing: we have come here to learn and hear what the private equity venture capital people have to say. To me, that's the greatest compliment to this conference. This is reality and what you should think about when you begin the process. We are focusing on the things to think about as you go through the process and this is what you can expect.”
SEEKING MARKET LEADERS Sasank Aleti, Partner, LLR Partners, says his firm is very thesis driven as investors, and will sometimes spend years developing a particular point of view on a market. “Once we have conviction around that, we look for executives, operators and strategic partners to get the right mix of talent to help us refine our thesis and then ultimately dedicate effort to finding the right investment opportunity,” says Aleti.
“Everything that we invest in is really strategic from that perspective, and long multidecade trends reflect our portfolio of companies that are speaking to different parts of the value proposition. So you can have multiple themes, multiple businesses and different elements that support a broader thesis.”
He emphasizes that everything the firm invests in is growth focused, differentiating LLR Partners from a typical leverage buyout or growth investment firm. Aleti explains,
Corporate Growth Forum Launches Opportunities “We're more focused on the market opportunity and creating a category leader in the space. If the unit economics make sense, we look to accelerate growth.” Aleti says they back a management team and the firm gets involved on the board by creating a value creation team that supports executives at each functional area of a company: “In some cases, this team rolls up their sleeves and actually does some of the work. But they're really charged with driving growth and helping the company align and scale along that growth curve.” He explains that there are several areas of interest – from providing growth capital to fund expansion of the business going forward or supporting an acquisition. “Or it could be providing liquidity to shareholders. There needs to be a certain amount of scale to justify these decisions but we don’t have a hard and fast rule.”
Carrick Capital Partners is thematically interested in the self-insurance industry,
We believe that enabling more companies to self-insure will provide them the opportunity to better control healthcare expenses and improve outcomes for their employees.”
and Chris Wenner, managing director says, “
As the fulcrum for the self-insurance industry and a multitude of businesses in this sector, SIIA is supporting its stakeholders by sponsoring an event of this caliber and fostering meaningful discussions.
Richard J. Fleder, president, ELMC Risk Solutions, shares, “For 10 years, we have been at the forefront of a roll-up strategy for consolidating leading underwriting companies. In the PE world, we’ve also seen consolidation of stop loss businesses, third party administrators and PBM acquisitions, as well as the merging of other vendors. All of this has been in an effort to control expenditures and lower the cost of claims.”
Going forward, Fleder foresees more activity in artificial intelligence, referencebased pricing companies and PBM cost containment service providers as the opportunity for more traditional vendor areas is nearly exhausted.
The firm is actively investing in and acquiring businesses in this sector and has invested in multiple companies in healthcare and in companies that provide solutions to self-funded employers. Chris Wenner
“Carrick is a growth oriented private equity firm that makes minority and majority investments,” explains Wenner. “We target equity checks between $35-$120MM in companies that generally have a minimum of $15MM of revenue or $5MM of EBITDA and growing at least 15% per year.” Richard Fleder
COST CONTAINMENT IS KEY Despite supply chain disruptions, inflation, and the onset of Covid-19 variants raising uncertainties in the broader economy, there is growing investor interest in healthcare cost containment enterprises.
“There may not be enough traditional companies left for acquisition, so investors need to look at other niches,”
JULY 2022 13
Corporate Growth Forum Launches Opportunities
he continues. “But the thirst for cost containment, data, and data aggregators continues to fuel the market.”
Innovation is the byword, and many deals are focused on cost-savings. The pressures to reduce the claims cost are mounting amid growing amid regulatory issues that accompany the transition to value-based care. The slow but steady shift away from the fee-for-service model impacts self insured companies in a variety of ways.
Council Capital also has current interest in the cost containment space, as Dr. Taylor
“We're looking for companies that represent a unique and differentiated value proposition, a platform that we could use to help build the next generation in cost control and payment integrity.” adds,
Aleti also sees tremendous growth opportunity in the self insurance market, adding, “In order to serve employers, we need to help them bring down the cost of their healthcare. We see a number of tools and capabilities for controlling administrative expenditures -- all the things that you need to really deliver on that promise. These are really the companies that are here at this meeting.”
CGF PARTICIPANTS VALIDATE OPPORTUNITIES A common theme in healthcare investing has clearly emerged: buyers are looking for opportunities that can evolve and respond to the rapidly changing landscape where large insurers are joining forces with other distribution channels to create new, vertically integrated structures. Consolidation is uniting fragmented sub-sectors, with digital solutions, AI and technology proving to reduce costs and change how care is delivered.
For example, Council Capital is looking for companies with technological differentiation. “We are seeking businesses that are doing something different or better than in the past by using technology,” says Dr. Taylor. “The differentiator can be artificial intelligence (AI) and its value in lowering the human labor involved to increase accuracy and ultimately get doctors and providers paid correctly by health
plans and other payers. AI can reduce friction in the whole system while taking cost and waste out of the system. So that at the end of the day, the patients, the members can benefit most by getting the most for their healthcare dollars.”
Council Capital is also looking for companies that need growth capital, businesses that could benefit from a recapitalization where the owner might want to take some money off the table but continue on working.
“The owner might want to sell the company or merge into other companies that want to be part of a bigger platform,” he continues. “So we enter here with an open mind and we look for fit. How does our vision align with the management team and owners?”
Teyro likes to think about the self-insured employer benefit landscape as kind of an incubator of new, innovative solutions that can be applied to the broader healthcare system, especially for selfinsured employers where the pain points around healthcare are so severe. “Employers can be more innovative and are somewhat desperate to make
Corporate Growth Forum Launches Opportunities
niches because of that need and desire to do something. We find that there are very interesting and innovative, exciting companies that are doing something that's never been done before. This creates opportunity to find the ones that are doing it the best and, back them and grow them.” Patrick Teyro changes to their own health benefits,”
“Typically, you see more innovation in this self-insured employer landscape compared to other explains Teyro.
What his firm cares about most the long-term opportunity and the thesis around the specific business and what it's trying to accomplish. “Certainly, bigger is sometimes better,” he smiles, “but we don't have a hard threshold minimum. For us, it's seeing the vision towards something where we can create a real market leader in a space. We're trying to build market leaders in healthcare. We really do mean that if a business is $5 million in revenue, but is becoming a market leader, this is just as important as a company that has a hundred million in revenue and is a high-profile market leader.”
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Corporate Growth Forum Launches Opportunities
For Preston Brice, partner, Grant Avenue Capital, the intent is to work with dedicated entrepreneurs at the top companies serving the self-funded market.
His firm is not necessarily interested in emerging companies since they are not
“What “Who we partner with matters more than how the company is performing,” he we are is a resourceful, says candidly. “We are looking for thoughtful leaders and a strategic partner. We scalable business model. This meeting will grow as more often provide capital to opportunities emerge and an annual event will bring fuel strategic sales and together a greater number of investors who want to network marketing, advance techand meet one another.” enabled solutions, bring His firm is evaluating businesses with $5-25M EBITDA, but the focus must be operational efficiencies or on serving the self-insured marketplace. “We are keenly interested in operating fund service line expansion. businesses that are doing well, improving provider services or bringing innovative medical devices (not drugs or molecules) to the marketplace. Companies must be We also support acquisitions committed to doing the right thing.” that represent opportunities to buy or build innovative solutions.” day-to-day operations support.
IMPORTANCE OF CREATING VALUE
Transactions in the space will encounter market challenges that have caused PE firms to rebalance risk mitigation and value creation. According to one industry thought leader1, PE investors face escalating—though no longer novel— pains such as ever-higher valuations, competitive bidding dynamics, and sellers who are less willing to entertain prospective buyers’ questions.
To address these challenges and justify higher valuations, PE firms have shifted
Corporate Growth Forum Launches Opportunities their diligence approach. While risk mitigation will always be critical, leading firms are underwriting their investments based on future value creation, which means diligence is increasingly focused there.
Dr. Taylor explains, “In some cases, a company can be grown and the management team will decide that they want to continue their run and they can be sold to a larger private equity company. In fact, a management team can go through three or four transactions, each time taking a little bit of wealth off the table for their personal bank accounts while incentivizing an ever larger group of the employees. That can be a very beneficial approach.”
In other cases, he says a strategic acquirer will come in and be the ultimate destination.
“A strategic acquirer sometimes has such a great desire for what that company offers that they will pay a multiple that is not based on revenue. The valuation is based on the value that that company can provide. And so that can be a great outcome for seller.”
investors, we bring sellers or borrowers to private equity, strategic buyers or strategic lenders. We help them find the investors.” They begin the process by meeting the client, package the offering, analyze the business and prepare a confidential information memorandum. This includes doing their projections and their performers which provide a basis for taking the company to market.
“We identify buyers – the private equity firms that are most aligned with the
The private equity community is united on this point: always staying focused on what value a company is adding to the healthcare system, as long as it is providing a fundamental value.
“As long as we have patients and adequately capitalize these companies to get through the rough turns, eventually they're going to get to a successful exit,” says Dr. Taylor. “The key is to have a longer-term focus and get on the right side of healthcare -- improve quality and take away cost. Investing should be viewed as a social responsibility.”
INVESTMENT BANKING PERSPECTIVE Steve Nigro, managing director, Tagfin Group, brings yet another perspective to the
“We’re an investment bank,” he explains. “Although our capital markets per se, are private equity firms or strategic
particular sector,” says Nigro. “Here we are in a room with PE firms although we are really on the other side -- even though they're my friends. I make sure that I know exactly what they're looking for and what they're not looking for. I only have to be told once that this is not what they are seeking and I'll never go back again.”
Corporate Growth Forum Launches Opportunities
Nigro has multiple relationship and builds upon them to try and to get the best
“We might have different views on an opportunity, and this is good because we share an interest in the self insurance marketplace. Why? Because I think it's a little more sophisticated to sell an insurance broker to another insurance broker. There's a lot of competition, but if I'm better than my competition, then I ought to step it up and do something a little more sophisticated, a little more creative.” value.
He notes that the firm always likes opportunities in alternative risk transfer, such as captives. “We always felt that if there was a broker that wanted to take risk, and that showed well, it would be attractive. Brokers make a commission for taking insurance risk and transferring it to a carrier. Now, all of a sudden they become the carrier and take the underwriting risk.”
ANOTHER “INVESTMENT” MODEL
Another perspective comes from the chair-elect of SIIA, Liz Midtlien, vice president, Emerging Markets, AmeriHealth Administrators which offers clients a full spectrum of business process outsourcing (BPO) and selffunded health plan administration services. The company is powered by a culture that is nimble, adaptive and relentlessly dedicated to solving problems from the ground up. She views this meeting as an opportunity to support and help members with the entire investment landscape.
When the broker indicates they want some of that risk too, because it's profitable,
“We've taken that opportunity to do a lot of work with captives and alternative risk transfer strategies,” he affirms. “When we close a deal or form a captive, we are essentially an advisor to a captive manager and negotiate reinsurance. People start to look at us and say, “That's not just a business broker.” A lot of times people call investment bankers, brokers.” Nigro says it's better for the carrier.
He emphasizes that their clients need everything -- from merges and acquisitions to capital raising. “They don't know where that process stops. So some have asked us to help pick out the right management or accounting system and we become a quasi CFO to certain brokers. This is just to get the business up and running or ready for sale. We actually have to recreate their back-end and literally provide people, functions, accounting capabilities and more. It’s like kids running after the soccer ball and everybody's doing something.”
“We are committed to supporting the future growth of SIIA members, from investment strategies to pursuing joint ventures,” says Midtlien. “This can translate into opportunities to meet multiple private equity firms that want to invest or supplement growth activities. This is not simply for emerging companies that want to sell, rather to learn what’s possible -- from an insured platform to a sophisticated claims repricing model. We seek to
HOW ADVANCED AI ADVANCES THE HEALTH OF A COMPANY Marpai helps self-insured employer health plans get healthier. Marpai uses proprietary AI models to predict potential near term health events for members. Marpai Care Guides clinically intervene to ensure the best care journey. This is one way that Marpai works to prevent and reduce costly claims, create healthier members and a healthier bottom line.
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interconnect entities that are in the benefits ecosystem.”
While her company is “Blue-owned,” it operates as a “non-Blue.”
“We work as a TPA, which is always needed, but we look and feel different than most of the attendees here,” she says.
WHERE DO WE GO FROM HERE? Attendees have been incredibly pleased with this event and all expressed their continued support. Dietrich shares, “As we modify the meeting, I believe this will become an annual event for SIIA. One private equity group came up to me afterwards and said, “Everybody in this industry should hear these panel presentations.” It is evident that the PE investors would much prefer to deal with sophisticated young companies who understand what they're trying to accomplish.”
He views the self-funded employer market segment to be as strong as it's ever been and growing.
“When you look at the percentage of the employed population in this country, it goes around 63% that selfinsure and creeping upward,” notes Dietrich. “So the idea of self-insurance is strong and growing stronger because the economy's growing and because people are figuring out how to bring the self-funded philosophy down to even smaller employers. SIIA is a Petri dish for ideas about how to do things better for self-funded employers.” 20
Laura Carabello holds a degree in Journalism from the Newhouse School of Communications at Syracuse University, is a recognized expert in medical travel, and is a widely published writer on healthcare issues. She is a Principal at CPR Strategic Marketing Communications. www.cpronline.com
References: West Monroe; The Future of Due Diligence in Private Equity; https:// www.westmonroe.com/perspectives/ signature-research/future-ofdiligence-in-private-equity; https:// go.westmonroe.com/e/166592/ruvbReshapingHealthcareMA-pdf/4zckq 3/866880514?h=TqDdIgVSNlu9P So_QuUi-jsCHaYoFUwQlBtWBiIjr-4
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A QQ& A
ACA, HIPAA AND FEDERAL HEALTH BENEFIT MANDATES:
he Affordable Care Act (ACA), the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and other federal health benefit mandates (e.g., the Mental Health Parity Act, the Newborns and Mothers Health Protection Act, and the Women’s Health and Cancer Rights Act) dramatically impact the administration of self-insured health plans. This monthly column provides practical answers to administration questions and current guidance on ACA, HIPAA and other federal benefit mandates. Attorneys John R. Hickman, Ashley Gillihan, Carolyn Smith, Ken Johnson, Amy Heppner, and Laurie Kirkwood provide the answers in this column. Mr. Hickman is partner in charge of the Health Benefits Practice with Alston & Bird, LLP, an Atlanta, New York, Los Angeles, Charlotte, Dallas and Washington, D.C. law firm. Ashley, Carolyn, Ken, Amy, and Laurie are senior members in the Health Benefits Practice. Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner’s situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation. Readers are encouraged to send questions by E-MAIL to Mr. Hickman at john.hickman@ alston.com.
UNCHARTED TERRITORY: FINDING A PATH FOR ABORTION COVERAGE IN A CHANGING LANDSCAPE
On the other hand, several states have introduced legislation aimed at protecting abortion rights, and Vermont even has a protective state constitutional amendment on its November ballot.
TAX TREATMENT OF MEDICAL The leaked draft opinion in Dobbs v. Jackson Women’s Health Organization revealed that the U.S. Supreme Court may be moving toward overturning Roe v. Wade, which could limit the protection of abortion under the U.S. Constitution and possibly open the door for states to more heavily regulate the procedure. State legislatures have been active this year introducing a variety of abortion restrictions and bans. Some laws, like the Mississippi law at issue in Dobbs, would regulate the timeframe in which the procedure can be performed. Other laws, like Oklahoma’s HB 4327, may make almost all abortions illegal at the outset. What it means to “aid and abet” an abortion will be relevant under some state laws, as long-arm statutes may attempt to reach procedures that are performed outside a specific state’s borders. It is too early to know which laws will be enacted if Roe is overturned, and whether they will withstand scrutiny on other constitutional and legal grounds. Many employer sponsors of group health plans are considering whether to cover the cost of travel if a plan participant lives in a state that bans the procedure. Tracking these laws and their possible effects on providing abortion benefits under a group health plan is a complex analysis. This article covers the topic of abortion coverage and medical travel benefits at a high level, as many of these issues will undoubtedly need to be worked out on a state-by-state basis.
FEDERALLY MANDATED ABORTION COVERAGE Abortion cannot be entirely banned under state law. Plans are required to cover abortion under Title VII of the Civil Rights Act, as amended by the Pregnancy Discrimination Act, if the mother’s life would be endangered by carrying the pregnancy to term. Plans are also required to cover complications arising from abortion (even if abortion is not covered by the plan), such as excessive hemorrhaging. State laws—even Oklahoma’s “total” ban--are generally drafted to allow for this. A few states have pre-Roe v. Wade (and pre-Pregnancy Discrimination Act) bans and restrictions that may spring back into effect if Roe is limited or overturned, while over half of all states have introduced legislation that would further restrict the procedure.
Sponsors of group health plans in states that ban or severely restrict abortion may be able to facilitate access to the procedure in a state where it remains legal by covering the travel expenses through an ERISA-covered health plan. ERISA defines group health plans as providing medical care, and Code Section 213(d) allows deductions for medical care. The Section 213(d) definition also governs the type of expenses that are excludible from employees’ incomes if paid under a group health plan. Under both ERISA and IRS rules, medical care includes “amounts for transportation primarily for and essential to” medical care. Many plans already provide travel benefits, such as to Centers of Excellence (COEs) for specified surgery. The medical care itself also has to be legal in order for the tax-favored treatment to apply. Some sponsors have already considered the need for a new or increased travel benefit for regionally banned or restricted covered procedures. With certain limitations, travel expenses for abortion should be excludable from income under the federal tax rules as long as the abortion is legally obtained.
There are limits under the federal tax code for how much can be excluded for medical travel. Lodging is capped at $50 per night per person. If traveling by automobile, the medical standard mileage rate is less than the mileage rate for business travel purposes—just 18 cents per mile in 2022. Other modes of travel (train, plane, bus, etc.) are permitted, but in all cases the transportation must be primarily for medical care and not for non-medical purposes. Travel expenses for medically necessary travel companions, such as the parent of a minor child, are also covered under these rules.
PLAN DESIGN CONSIDERATIONS Expenses for travel for a legally obtained abortion can be reimbursed directly through the employer’s group health plan, provided abortion travel is a covered service. In order to avoid disqualifying HSA eligibility, abortion travel should be subject to the same cost sharing and deductible requirements as any other covered benefit. However, limiting medical travel benefits to only medical/surgical services like abortion (or COEs) could raise issues under the Mental Health Parity and Addiction Equity Act (MHPAEA) if the plan fails to provide similar coverage for travel related to obtain mental health services. Potentially, a travel benefit that would cover travel for any otherwise regionally impermissible benefit (whether medical/surgical or mental health/substance abuse) may be allowable under MHPAEA; however, if the plan provides travel benefits for COEs or other medical/surgical services, but no mental health services, then the risk remains.
EBHRAS For employers that want to extend travel beyond their group health plan footprint, potential ACA issues arise. One possible way to structure an abortion travel benefit for employees who are eligible for, but who do not enroll in, the group health plan is through an excepted benefit HRA (EBHRA), which is a relatively new benefit option available since 2020. EBHRAs can be used by employers of any size to reimburse out-of-pocket Code Section 213(d) medical care and have an annual limit capped at $1,800 (for 2022). Employers offering EBHRAs must make them available to all similarly situated employees, and must make other nonexcepted, non-account-based group health plan coverage available to the EBHRA participants for the plan year. The participants do not actually have to enroll in such primary coverage.
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EBHRAs are excepted benefits, and thus are not subject to the ACA mandates. EBHRAs are not exempt from all compliance mandates, however. EBHRAs are still ERISA plans and are subject to COBRA and Code Section 105(h) nondiscrimination rules. Also, HIPAA’s privacy and security requirements apply to EBHRAs. To limit discrimination claims employers may want to ensure the EBHRA is not restricted to abortion benefits, but rather extends to any regionally prohibited benefits. In order to receive tax-favored treatment, the travel expenses will need to be substantiated, which will, in all likelihood, involve protected health information (PHI). Employer plan sponsors may not be set up to handle PHI and may need a third party to administer the EBHRA. EBHRAs can also impact other account-based benefits, like HSAs. EBHRAs can disqualify a person from participating in an HSA because the EBHRA provides a benefit below the HDHP deductible.
STAND-ALONE PLANS Some employers are considering ways to extend abortion travel benefits to all employees, even those who are not enrolled in or eligible for their group health plan. Offering such a benefit has risks. Even a travel-only benefit could be considered a group health plan that would be subject to the ACA. Under the ACA, group health plans must cover certain preventive services and cannot impose any annual limits, which is likely beyond the employer’s intended scope of coverage for an abortion travel benefit. Tax-favored arrangements also require substantiation to confirm that the travel was for medical care, which would raise HIPAA compliance requirements mentioned above.
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COBRA would also apply to a group health plan offered by an employer. As with the EBHRA, any coverage for medical care before the deductible for a person enrolled in an HSA would be disqualifying coverage for HSA purposes.
ERISA PREEMPTION Plan sponsors will face a number of difficult questions as to whether and how abortion and abortion travel can be covered. While ERISA preempts state laws that “relate to” an ERISA plan, the preemption analysis is complicated and is tied to the particulars of the state law in question.
Self-insured ERISA group health plans may still be able to cover the procedure if it is legally obtained out-of-state, depending on the provisions of the state law itself. For fully-insured ERISA plans, state insurance law will control whether abortion and related travel can be covered. It is possible that even reimbursements from HRAs integrated with a fully-insured plan could be limited by state insurance regulators.
OTHER ISSUES Returning abortion regulation to the states will create numerous challenges for plan sponsors, many of which may not yet be apparent. Plan sponsors will need to be vigilant as the law evolves in this area.
Like other preemption issues, whether any given state abortion restriction or ban impermissibly “relates to” an ERISA plan will be a case-by-case analysis for the courts. Criminal statutes of general applicability are usually not preempted by ERISA, but a preemption argument would stand a better chance as applied to a state criminal law that specifically targets group health plans than a criminal law that broadly bans abortion. Legislators in at least one state—Texas— have signaled that they may craft legislation that bans in-state employers that pay for out-of-state abortions from doing business in Texas. Whether such a law, if enacted, would survive a preemption challenge remains to be seen. ERISA preemption favors self-insured plans, because the ERISA “savings clause” allows state insurance regulators to control the policies issued to fullyinsured plans.
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GROUP CAPTIVES OFFER STOP-LOSS SOLUTION FOR SELF-INSURED PLANS For self-funded programs, captives can offer unique savings on stop-loss coverage.
Written By Karrie Hyatt
top-loss insurance is an important risk mitigation tool for any company’s medical benefits program and particularly for self-funded programs, where unpredictable losses can undermine finances. Yet, for self-funded health plans, traditional stop-loss insurance coverage may not be the right solution. Self-insured plans more and more are turning to captives to place their stop-loss coverage. As many as 90% of large companies use a captive to cover their medical stop-loss risk, according to data released by Marsh, but the idea has not spread as rapidly to mid-market companies. While large companies are more likely to put their stoploss into their pure captive, mid-market companies have the ability to join an already established group captive. A medical stop-loss group captive pools small to medium-sized companies to add a layer of protection from unpredictable or excessively high health claims. Companies most often join already established group captives, rather than setting up a new captive, whether they already have a self-funded plan or are still insuring through the traditional market.
According to Jeff Fitzgerald, vice president of employee benefits with Innovative Captive Strategies, “I think that the majority of groups that we are dealing with are coming from fully insured to self-funding, but we do have a significant number of people who have been self-funded on their own then going into a captive.”
“Traditionally, what we’ve seen are employers that are fully insured and see the financial opportunity to get into the self-funded world through a group captive,” said Jim Hoitt, senior vice president of the captive division for Berkley
“They have the opportunity to spread their risk and reduce pricing volatility across a number of other employers who share their concerns.”
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Hoitt continued, “Group captives bring together a number of self-funded employers who join together for a variety of reasons and allows them to take advantage of captive insurance without the risk that might come with it.” “Middle market employers can access stop-loss captive programs that use the ‘law of large numbers’ to smooth renewals and lower overall medical spending,” said Donald McCully, founder of Medical Captive Underwriters.
The primary benefits of putting stop-loss coverage into a group captive are reducing premiums and stabilizing pricing from year-to-year. The group captive spreads the risk across a number of similar companies which can reduce the unpredictability of market forces. Financial reasons are the main impetus for most self-funded trusts to make the transition from traditional insurance to self-insurance. “For most companies, it’s the financial outlook. They’ve been paying for medical stop-loss for the last five years and they’ve run their program very well, yet their carrier kept all of that profit or all of that benefit loss-ratio. By participating in a stop-loss group captive, those companies now have the chance to keep some of that back for themselves,” said Hoitt. According to McCully, an important benefit of a group captive is the potential to see some of the premium returned. “Lowering medical spend is a function of the stoploss captive program returning some of the employer’s premium. It’s a second layer of savings, if the employer’s own premiums are returned, effectively lowering the employer’s medical spend.”
However, joining a group captive has many more benefits besides financial ones, benefits that are unique to all captives. Fitzgerald said, “For a currently self-funded group joining a group captive, the benefits of a captive still apply. What I mean by that is that there is a stability that comes from participating in a captive. If the captive is run well and performing well, there are flatter renewals and they will be more predictable than they would be in a regular market.”
Captive benefits include reduced costs, tailored coverage, the ability to get coverage not available in traditional markets, access to reinsurance markets, flexibility when it comes to underwriting, and improved cash flow. Importantly, for self-insured medical plans, that are used to having control over their spending, they can extend that control to their stop-loss insurance coverage. One of the most anticipated benefits of joining a group captive is the ability to work with fellow owners. From sharing concerns to sharing ideas for best practices that can benefit the whole group, this prospect is one of the biggest draws to group captives. For Hoitt, “The group captives gives them the opportunity for collaboration, surrounded by a number of other employers that are doing great stuff to manage their risk and exposure. For the ability to collaborate like that, more than ever we are seeing self-funded groups transition into a captive.”
“For a self-funded employer, they can join a group captive at any time,” said Hoitt. “They are joining the captive via their stop-loss coverage, the stop-loss coverage is going to cede into the captive. That’s how it functions. It avoids any concerns with plan assets being mingled into a group captive or into an unregulated captive. They’re buying regulated filed medical stop-loss and the stop-loss is being ceded into a captive that they are participate in, from a risksharing standpoint.”
The process of joining a medical stop-loss group captive is nearly as simple as getting a traditional insurance policy. According to Fitzgerald, “It’s the same process and procedure. Self-insurance plans that are already self-funded won’t have to change their TPA, or even their network, unless there is a real need to. They would be replacing one stop-loss policy with another. It’s relatively straightforward for a selffunded plan to do so.”
Members of a group captive, besides sharing medical stop-loss, also have to opportunity to work together to lower prices on other benefits. According to Hoitt, “They can band together with those other employers to leverage a
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better pricing deal. For example, if they are all on disparate PBMs [pharmacy benefit managers], they could all go the same route with one PBM and they could get a better deal and better outcome. They can leverage their scale for other opportunities to make their self-funded plan run more efficiently.” “Well-run captives really have a sense of best practices and work together across the group for what works best—whether that be pharmacy, wellness, or claims management. These programs are available to a self-funded group, but it doesn’t have the knowledge to access them,” said Fitzgerald. With so many benefits, why aren’t more self-funded medical plans putting their stoploss insurance into captives? It comes down to education, to knowing about medical stop-loss group captives. Many brokers don’t have the time or ability to research this type of solution for their clients. For Fitzgerald, “Each group is different, each group’s relationship with their broker is different. As much as anything else, it’s when a self-funded plan finds out about captives, hears about the solution that group captives offer. A lot of them just don’t know that it’s an option.”
“It’s another step in the direction of selffunding,” Hoitt said. “[Self-funded plans] find that funding a portion of their stoploss by participating in a captive is an opportunity with a limited downside. The upside is that rather than paying a carrier for stop-loss and kissing that money goodbye, they retain control.” When companies move their stop-loss into a group captive, are expanding their capacity, not just in terms of insurance, but in risk management, price leveraging, and other tools that can make a world of difference to the management of their self-funded plan. Karrie Hyatt is a freelance writer who has been involved in the captive industry for more than ten years. More information about her work can be found at: www. karriehyatt.com.
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IIA’s 42nd National Educational Conference & EXPO will be October 9-11th at the JW Marriott Desert Ridge Resort & Spa in Phoenix, AZ. The educational program for SIIA’s upcoming National Conference will feature many timely topics, industry experts, and general session speakers you are unlikely to see anywhere else. This year’s Keynote address details: Election Day Preview With the mid-term congressional elections, as well as many state/local contests happening just weeks after the conference, join us for this timely general session where one of the country’s top political analysts previews what may happen on election day.
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ENDEAVORS Speaker: Tom Bevan RealClearPolitics A Fresh Approach to Networking — From Burden to Opportunity For more than a decade, Jordan has built a wide and highly effective network. Now, it runs itself and incoming opportunities are virtually automated. He will teach you the same skills, systems and habits that he teaches to high-performers in military special operations, the intelligence services, government & Silicon Valley so that you can leverage what most people dread into one of your strongest competitive advantages. Speaker: Jordan Harbinger The Jordan Harbinger Show The format for this year’s program has also been updated to encourage greater engagement among attendees by incorporating multiple “Engagement Accelerator” sessions where open discussion will be facilitated on a variety of hot industry topics. Engagement Accelerator: Charting Successful Careers in the Self-Insurance Industry This session has been organized specifically for younger (under 40) professionals to talk about career advancement opportunities, challenges, and strategies generally, as well as those specific to the self-insurance industry. Share with and learn from your peers in this exclusive setting. The next generation of industry leaders will be represented in this room so you don’t want to miss out. Speakers: Cassie Bachman, Elevate Risk Solutions, LLC Matthew Hayward, Optum Keith Hodges, Health Plans, Inc. Engagement Accelerator: Regulatory Challenges and Solutions for Captives This unique interactive session will have direct discussions among the audience, including captive industry participants and state regulators, on top of mind regulatory and legislative issues in the captive insurance space. Bring up hot topics, learn what’s going on among regulators, and what may be coming in the future. Speakers: Steve Kinion, Delaware Department of Insurance Joanne Shaver, The Intuitive Companies Engagement Accelerator: Going There…Tackling Today’s Most Crucial Workforce Challenges We are experiencing the greatest workforce disruption in generations, and the pace
is likely to intensify. Join SIIA’s 2022 Chairwoman as she moderates a live and unscripted discussion forum where we will address today’s most pressing workforce challenges. Expected topics include “sitting is the new smoking,” competing in the war for knowledgeable worker talent, and building a corporate culture that can withstand how unevenly this disruption plays out across your organization. Speakers: Kari Niblack, Niblack & Associates, LLC Engagement Accelerator: Getting Ready for Cell & Gene Therapy Advancements After hearing from the cell & gene therapy manufacturers in the morning, please join us for an afternoon open discussion on how the self-insurance industry can best prepare for the amazing but highly expensive medical advancements that are coming fast. Speakers: Theresa Galizia Berkley Accident and Health Engagement Accelerator: Adventures in NSA Arbitration Claims By the time of the conference, it is expected that many surprise billing claims will have been resolved via arbitration as prescribed by the No Surprises Act (NSA). We’ll take this opportunity to talk about how the arbitration process is actually working, with a particular emphasis on the selfinsured payer perspective. So come share your stories and listen to the experience of others who have had real
Alignment makes the difference. It’s how we chart your course to smarter, better, faster healthcare. At Vālenz®, we ensure alignment of the member, provider and payer across one end-to-end Healthcare Ecosystem Optimization Platform to bring you more value: • Engage employees early and often • Improve provider credentialing and compliance • Lower costs and improve access • Provide deep data transparency • Assure accuracy of claims One dynamic platform to simplify the complexity of self-insurance. Call today to start charting your course to smarter, better, faster healthcare: 866-762-4455
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ENDEAVORS world involvement with the NSA arbitration process. Speakers: Christine Cooper Aequum by Koehler Fitzgerald LLC Engagement Accelerator: Captive Industry Hot Topic Discussion Join other attendees to broach the hottest industry topics and questions, from risk strategy and mitigation, how to tackle emerging risk, and the evolving dynamic of working with carriers in the captive space. The audience will also be asked their own takes on key results from SIIA’s 2022 Captive Industry Survey. Speakers: John Capasso Captive Planning Associates, LLC Engagement Accelerator: Selling in the Self-Insurance Market Are you responsible for organizational growth made possible by effective sales strategies? Trying to understand how the acceleration of change, challenges of staffing, and other industry developments is shifting the mind of the buyer in the selfinsurance value chain? If this resonates with you, please join us for a forward-focused open conversation where everyone will be encouraged to share their experiences and strategies on how to work most effectively to support the self-insurance industry buyers while achieving your corporate growth objectives. Speaker: Rob Gelb Valenz For more information, including registration, please visit www.siia.org.
SCHEDULE-AT-A-GLANCE: Sunday, October 9, 2022 8:00 a.m. - 12:30 p.m. SIEF Golf Tournament 3:00 p.m. - 5:00 p.m. SIPAC Reception & Networking 4:00 p.m. - 7:00 p.m. On-site Conference Registration 5:00 p.m. - 7:00 p.m. Welcome Reception in Exhibit Hall 8:00 p.m. - 10:00 p.m. SIIA Future Leaders Networking Event *All times are listed in Mountain Time.
Monday, October 10, 2022 7:30 a.m. - 6:30 p.m. On-site Conference Registration 7:30 a.m. - 8:30 a.m. Networking Continental Breakfast 8:30 a.m. - 10:00 a.m. Welcome Remarks & Keynote Address 10:15 a.m. – 11:30 a.m. Breakout Sessions 11:30 a.m. – 1:30 p.m. Luncheon & Exhibit Viewing 1:30 p.m. - 2:45 p.m. Breakout Sessions 3:15 p.m. - 4:30 p.m. Breakout Sessions 4:30 p.m. – 6:30 p.m. Reception in Exhibit Hall **All times are listed in Mountain Time. Tuesday, October 11, 2022 7:30 a.m. - 5:00 p.m. On-site Conference Registration 7:00 a.m. - 8:00 a.m. Networking Continental Breakfast 8:30 a.m. - 10:00 a.m. Keynote Address 10:15 a.m. – 11:30 a.m. Breakout Sessions 11:30 a.m. – 1:30 p.m. Luncheon & Exhibit Viewing 1:30 p.m. - 2:45 p.m. Breakout Sessions 3:15 p.m. - 4:30 p.m. Breakout Sessions 7:30 p.m. - 10:00 p.m. SIIA National Conference Party *All times are listed in Mountain Time.
Depend on Sun Life to help you manage risk and help your members live healthier lives Behind every claim is a person facing a health challenge. By supporting members in the moments that matter, we can improve health outcomes and help employers manage costs. For nearly 40 years, self-funded employers have trusted Sun Life to quickly reimburse their stop-loss claims and be their second set of eyes, looking for savings opportunities. But we are ready to do more to help members in the moments that matter. We now offer care navigation and health advocacy services to help your employees and their families get the right care at the right time – and achieve better health outcomes. Let us support you with innovative health and risk solutions that benefit you and your medical plan members. It is time to rethink what you expect from your stop-loss partner. Ask your Sun Life Stop-Loss Specialist about what is new at Sun Life or click here to learn more! STOP-LOSS
DENTAL / VISION
The content on this page is not approved for use in New Mexico. For current financial ratings of underwriting companies by independent rating agencies, visit our corporate website at www.sunlife.com. For more information about Sun Life products, visit www.sunlife.com/us. Stop-Loss policies are underwritten by Sun Life Assurance Company of Canada (Wellesley Hills, MA) in all states except New York, under Policy Form Series 07-SL REV 7-12. In New York, Stop-Loss policies are underwritten by Sun Life and Health Insurance Company (U.S.) (Lansing, MI) under Policy Form Series 07-NYSL REV 7-12. Product offerings may not be available in all states and may vary depending on state laws and regulations. © 2022 Sun Life Assurance Company of Canada, Wellesley Hills, MA 02481. All rights reserved. Sun Life and the globe symbol are trademarks of Sun Life Assurance Company of Canada. Visit us at www.sunlife.com/us. BRAD-6503-u SLPC 29427 01/22 (exp. 01/24)
NEWS FROM SIIA MEMBERS 2022 JULY MEMBER NEWS SIIA Diamond, Gold, and Silver member companies are leaders in the self-insurance/ captive insurance marketplace. Provided below are news highlights from these upgraded members. News items should be submitted to firstname.lastname@example.org. All submissions are subject to editing for brevity. Information about upgraded memberships can be accessed online at www.siia.org. If you would like to learn more about the benefits of SIIA’s premium memberships, please contact Jennifer Ivy and email@example.com. 42
DIAMOND MEMBERS VĀLENZ® HIRES JOHN PAOLACCI AS CHIEF CLAIMS OFFICER PHOENIX, AZ — Vālenz® is pleased to announce John Paolacci, MBA, has joined the company as Chief Claims Officer. With more than 20 years’ experience in managed care and claims, Paolacci has served in leadership roles in client services, operations, strategic planning, managed care product design, pricing, strategic partner contracting, business development strategy and M&A integrations. At Valenz, he will lead the Validation, Integrity and Accuracy (VIA) of claims and payments, implementing tech-enabled solutions that support a robust claim infrastructure for accelerated and streamlined claim operations. As Chief Claims Officer, Paolacci will partner with Amy Gasbarro, Chief Operations Officer, who ensures early engagement and continuous clinical, member and provider advocacy across the entire healthcare ecosystem.
Together, Gasbarro and Paolacci will facilitate a seamless entry for self-insured employers and members into the Valenz Healthcare Ecosystem Optimization Platform, a fully integrated suite of solutions that drives value and assures alignment of the member, payer and provider across the Claim Cost ArcSM. “John is widely recognized as a resultsdriven, solutions-oriented leader with deep expertise in claim management and cost containment,” said Rob Gelb, Chief Executive Officer of Valenz. “His superior capabilities position us well to continue building a strong foundation in claim operations as our member base grows, and his philosophy of servant leadership aligns perfectly with the collaborative Valenz culture. We are thrilled he is joining the team.”
Specializing in serving the risk management needs of over 3,600 clients. GPW offers a unique combination of captive and reinsurance management, accounting, tax compliance, and actuarial services all under one roof, providing clients with efficient and comprehensive service. GPW’s team of experts includes credentialed Actuaries, Certified Public Accountants, and Associates of Captive Insurance. Learn more at www.gpwa.com GPW and Associates, Inc. 3101 North Central Ave., Suite 400 Phoenix, Arizona 85012 Ph 602.200.6900 Fx 602.200.6901
NEWS Most recently, Paolacci was Senior Vice President, Managed Care for Sedgwick, with responsibility for standalone managed care cost containment divisions including medical bill review, provider networks and client services. He also has held senior leadership positions with York Risk, Avizent Risk, and the Frank Gates Service Company. Paolacci earned his master’s degree in Business Administration at Franklin University in Columbus, Ohio, He lives in Granville, Ohio.
that improve cost, quality and outcomes for you and your members, Valenz engages early and often for smarter, better, faster healthcare. Valenz is backed by Great Point Partners. Visit valenzhealth.com.
“I’m honored to have the opportunity to be part of such an energetic, collaborative company that is driving true innovation in the market,” Paolacci said. “As we anticipate the needs of our self-funded customers and continue building the next generation claim organization to serve an ever-evolving healthcare industry, I look forward to advancing the business operations and Valenz vision for smarter, better, faster healthcare.”
JAMES DONNELLY JOINS
About Valenz Vālenz® simplifies the complexities of self-insurance for employers through a steadfast commitment to data transparency and decision enablement. To balance the relationship between healthcare quality, advocacy and cost, the Valenz approach aligns the member, provider and payer. We deliver this synergy through a strong foundation with deep roots in clinical and member advocacy, alongside decades-long expertise in claim reimbursement and payment validity, integrity and accuracy. By establishing “true transparency” and offering data-driven solutions
CANARX sets the standard for safety and savings, making us the smart choice for self-funded health plans and their members, who get maintenance medications at zero copay.
CONTACT US TODAY FOR YOUR FREE SAVINGS ASSESSMENT canarx.com | 1-888-739-2718 44
LOCKTON RE’S ACCIDENT,
HEALTH & LIFE SEGMENT AS CLIENT BASE EXPANDS
Lockton Re is pleased to announce that James Donnelly has joined as a Senior Broker in its’ Accident, Health & Life Segment. Rob Kreager, Accident, Health & Life Leader, Lockton Re, said, “I am thrilled to have James join Lockton Re’s Accident Health and Life team.
SIMPLE. SAFE. SMART.
NEWS He brings tremendous energy as well as unique product expertise within the medical reinsurance space. I look forward to having James be a cornerstone of our team’s rapid success in one of the fastest growing industry segments.” James has relevant experience in both broking and underwriting, giving him a fully rounded perspective on the needs of clients and market dynamics. He was most recently part of the Life, Accident & Health team at Guy Carpenter and has also spent time at Aon as an Associate Director. Previous to that he spent time at Euler Hermes and IHC Risk Solutions in underwriter roles. James will be based in New York working across the whole of North America as well working with global clients and opportunities. Nick Durant, North America CEO, Lockton Re concludes, “Rob has made great inroads into this market since we launched this segment at the start of the year and James will be a great addition to this growing capability. As we continue to grow in North America, the caliber and energy of our collaborative team gives me real pride and I know is delivering great service and expertise to our client base. James is another outstanding hire who shares the drive and determination that is making Lockton Re stand out from the competition. I look forward to working with him and welcoming him to the business.”
GOLD MEMBERS TRUESCRIPTS MANAGEMENT SERVICES ANNOUNCES
JENNIFER BRITTENHAM AS MANAGER OF STRATEGIC PARTNERSHIPS
TrueScripts Management Services is proud to announce and welcome Jennifer (Jen) Brittenham, CEBS as the company's Manager of Strategic Partnerships. This new role for the company arises from the group's mission to build lasting relationships. “Adding to our team someone who could dedicate themselves to serving the partners we strategize with to deliver prescription benefit solutions just made sense,” said Vice President of Sales and Marketing, Dave Parker. “And with Jen’s strong industry background, she was an excellent fit for the role.” Jen Brittenham comes to TrueScripts with a rich history in the employee benefits space, having held roles on many sides of the business throughout her career. Her work has included roles in human resources, underwriting consulting, sales, and client management as an individual contributor and a leader. Most recently, Jen served as Regional President for Meritain Health's Captive & Alternate Distribution division. In this position, she worked with various partners to drive business and improve client retention. Before joining Meritain, Jen held several sales leadership roles, including Vice President of Sales, Marketing, & Account
Benefits are an endlessly evolving landscape. Stop-loss. Skyrocketing prices. Administrative challenges. Shock claims. Amwins is your group benefits lifeline—whether you need help navigating the chaos, solving for the unique or simply looking for additional options. Our purpose is simple: Find and deliver the specialty products you want coupled with the administrative solutions you need. Broker, consultant or carrier, let us make your life easier through custom programs and expanded capabilities. Amwins has the relationships and insights to tackle what comes next.
Bring on the future – we’ll cover it.
NEWS Management with SimplyWell and Vice President of Large Group Sales & Sales Support with BlueCross BlueShield of Nebraska. Jen holds bachelor's and master's degrees from the University of Nebraska-Lincoln. She also holds the Certified Employee Benefit Specialist (CEBS) designation obtained through the Wharton School of the University of Pennsylvania. Outside of her professional career, Jen enjoys traveling, spending time with friends and family, and considers herself a science nerd. She is passionate about health and functional nutrition and is always experimenting with new protocols and ideas. Jen’s inquisitiveness and desire to develop by virtue of the relationships she builds will make her both a successful agent in this role and an excellent addition to the TrueScripts team.
TRUESCRIPTS MANAGEMENT SERVICES ANNOUNCES STACEY
BANE AS NATIONAL DIRECTOR OF BUSINESS DEVELOPMENT & INNOVATION
TrueScripts Management Services is pleased to announce and welcome Stacey Bane, PharmD, as National Director of Business Development.
As a Doctor of Pharmacy with broad expertise in leading high-performing teams, organizing advanced sales and marketing initiatives, and delivering transformational growth, Stacey will serve to support and build TrueScripts' innovation efforts and broker relationships across the US. "Our mission is to build lasting relationships by providing prescription benefit management expertise. And having the opportunity to bring on a pharmacy expert such as Stacey will prove invaluable to this mission," said TrueScripts VP of Sales and Marketing, Dave Parker. He continues, "Stacey's combined skillset of clinical and technical proficiencies bring a special X factor to our Business Development team."
Safeguarding our clients’ plans—the HPI advantage
Innovative solutions built around you.
As a national leader in stop loss placement, HPI stands out from the rest.
HPI specializes in scalable, customized self-funded solutions across industries and the country.
Direct Partnerships: • Preferred A-rated reinsurance carrier relationships nationally • In-house stop-loss product available in select US states
Plan Alignment: • Consultative approach between our sales executives, underwriting team, and carriers to place each stop-loss policy • Coordination with our in-house clinical management teams
Future Forecasting: • A dedicated stop-loss leadership team to oversee the placement, growth, and P&L • Robust reporting packages to help identify historical cost trends to estimate future spending
See what sets us apart from other third-party administrators.
Best in class Claims Administration System powered by state of the art technology. Serving Third Party Administrators, Insurance Carriers, Insurtech Health Plans, Provider Sponsored Plans, Medicare Advantage Plans Customization capabilities well beyond other systems Industry leading features and functionality with optimal performance Real time modification Ease of configuration Secure cloud based software - no upfront hardware costs
NEWS Stacey joins TrueScripts from a nearly 12-year career with Genoa Healthcare, where she most recently pioneered a new business line, bringing customized pharmacy services to residential assisted living communities. In this role, she hired and trained 10 Business Development Directors and signed 100+ agreements with assisted living communities. Under her direction, the team ranked #1 nationwide for the highest employee engagement survey scores in the Sales & Growth category. Additionally, Stacey's professional achievements have awarded her recognition in other spaces, including 2018 Presidents Club winner - Top 5% Performing Pharmacy Site Managers, and 2019 - 2020 Presidents Club - Top Sales Director. Stacey notes that "According to Myers-Briggs, I am an ESTJ, and as an "Executive," I am known for leading the way, especially during difficult times. My respect for tradition and order motivates me to work harder to bring families and communities closer together. I am very passionate about innovation, trust, customer satisfaction, and client success."
About TrueScripts Management Services TrueScripts Management Services is a pharmacist-founded, fully transparent PBM that has been revolutionizing the pharmacy benefit management industry since 2014. Our mission is to build lasting relationships by providing prescription benefit management expertise at a personal and customized level to ensure optimum value at the lowest possible cost. The people we serve can rest assured in our commitment to lowering prescription drug spend, achieving clinically effective solutions, and always delivering Amazing Care. Visit www.truescripts.com.
TrueScripts looks forward to a bright and prosperous future with Stacey.
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HEALTHCARE MANAGEMENT ADMINISTRATORS (HMA) UNVEILS NEW PRODUCT, MENTAL AND BEHAVIORAL HEALTH
Bellevue-based HMA, a pioneer and leader in self-funded health plan benefit design and administration for hundreds of employers across the Pacific Northwest and members in all 50 states, announced the upcoming January 2023 launch of its new virtual behavioral health product. HMA’s new product solves the complex challenges of mental and behavioral healthcare access, quality, and affordability for employers that value whole-person (mind & body) health. HHMA acknowledges the vital role of the mind in whole-person health and HMA is committed to empowering members to feel well. HMA took swift action early in the COVID-19 pandemic to enhance access to mental health triage services for members in crisis and to connect members in need with in-network and communitybased mental health resources. We have now made this part of our Support Resources Program available to all members. In 2021, across HMA’s book of business, 1 in 5 members received mental health treatment and 1 in 50 members experienced a substance use disorder. These numbers from our member population mirror national statistics, yet behind every number is a real person who is struggling and needs more help. About HMA Founded in 1986, HMA, understands the issues and challenges faced by Pacific Northwest companies because we live here too. We're also connected to the best provider network in the Pacific Northwest, an advantage that makes for coverage and care your employees can count on. Visit www.accesshma.com.
SILVER MEMBERS CAPTIVE RESOURCES ADDS MOLLY HENTGES AS BUSINESS DEVELOPMENT EXECUTIVE
Captive Resources has appointed Molly Hentges as assistant vice president and business development executive for medical stop-loss group captives. As a consultant to member-owned group captive insurance companies, Captive Resources provides support across implementation and operation, including safety and claims advocacy, operational oversight, risk management and investment services.
Do you aspire to be a published author? We would like to invite you to share your insight and submit an article to The Self-Insurer! SIIA’s official magazine is distributed in a digital and print format to reach 10,000 readers all over the world. The Self-Insurer has been delivering information to top-level executives in the self-insurance industry since 1984. Articles or guideline inquires can be submitted to Editor Gretchen Grote at ggrote@ sipconline.net The Self-Insurer also has advertising opportunties available. Please contact Shane Byars at sbyars@ sipconline.net for advertising information.
NEWS Hentges previously served as account executive in the carrier practice at Gallagher Bassett, where she was responsible for new business development for carriers, captives, programs and alternative market claim sourcing solutions. In this role, Hentges also oversaw the financial aspects of property and casualty programs throughout the sale and implementation processes, including proposal, pricing and contract. Before this, Hentges was a sales intern at Gallagher Bassett.
“I am excited to announce that I have started a new position as an assistant vice president, business development executive for medical stop-loss group captives at Captive Resources. This is a great opportunity to expand my skill set and advance my career. I am thrilled to embark on this journey!” Commenting on her new role via LinkedIn, Hentges says:
Steadfast protection for the unpredictable
Stop Loss coverage that weathers any storm Our Stop Loss Insurance mitigates the impact of devastating medical claims through flexible contracts, customizable plans and a consultative, client-focused approach. With more than 40 years of industry experience, we provide unparalleled guidance and protection for businesses – whether you’re carving out Stop Loss for the first time or an experienced client looking for cost containment. Trust the provider that’s stopped loss over and over again: visit voyastoploss.com for more information
Stop Loss Insurance is underwritten by ReliaStar Life Insurance Company (Minneapolis, MN) and ReliaStar Life Insurance Company of New York (Woodbury, NY). Within the State of New York, only ReliaStar Life Insurance Company of New York is admitted, and its products issued. Both are members of the Voya® family of companies. Voya Employee Benefits is a division of both companies. Product availability and specific provisions may vary by state. ©2022 Voya Services Company. All rights reserved. 2225973 204657-06012022
SELF INSURANCE INSTITUTE OF AMERICA, INC. 2022 BOARD OF DIRECTORS
CHAIRWOMAN OF THE BOARD*
Kari L. Niblack, JD, SPHR CEO ACS Benefit Services Winston Salem, NC
Laura Hirsch Co-CEO Aither Health Carrollton, TX
Deborah Hodges President & CEO Health Plans, Inc. Westborough, MA
Elizabeth Midtlien Vice President, Emerging Markets AmeriHealth Administrators, Inc. Bloomington, MN
TREASURER AND CORPORATE SECRETARY*
John Capasso President & CEO Captive Planning Associates, LLC Marlton, NJ
Lisa Moody Board of Directors Chair Renalogic Phoenix, AZ Shaun L. Peterson VP, Stop Loss Voya Financial Minneapolis, MN
SIEF BOARD OF DIRECTORS CHAIRMAN Nigel Wallbank Preisdent Leadenhall, LLC Ocala, FL
PRESIDENT Daniél C. Kimlinger, Ph.D. CEO MINES and Associates Littleton, CO
DIRECTORS Freda Bacon Administrator AL Self-Insured Workers' Comp Fund Birmingham, AL
Thomas R. Belding President Professional Reinsurance Mktg. Svcs. Edmond, OK
Les Boughner Chairman Advantage Insurance Management (USA) LLC Charleston, SC
Amy Gasbarro Chief Operating Officer Vālenz Phoenix, AZ
Alex Giordano Chief Executive Officer Hudson Atlantic Benefits Bellmore, NY
* Also serves as Director
Virginia Johnson Strategic Account Director Verisk/ISO Claims Partners Charlotte, NC
SIIA NEW MEMBERS JULY 2022
REGULAR CORPORATE MEMBERS
Adam Allen CEO Antum Risk Columbia, SC Teresa OKeefe VP Business Development ArmadaHealth Hunt Valley, MD Dahlia Imanbay VP of Marketing BASE10 Genetics Chicago, IL Blake Holderread Vice President of Marketing Beacon Technologies Group, Inc. Carmel, IN Mary Beth Gregory VP of Stop-loss Underwriting CBRM Portland, OR Maria McAfee National Business Development Costco Health Solutions Issaquah, WA Stephanie States Director of Human Resources Curry Supply Altoona, PA
Lisa Smith Marketing Embold Health Nashville, TN
Tim Woodyard VP of Sales Redirect Health Inc. Scottsdale, AZ
Gary Meyers Partner FH Insurance Boulder, CO
Benjamin Prinzing CEO Rover Analytics, LLC Forest Grove, OR
Brett Banhazl Events Manager First Dollar Austin, TX
Peter Mikhail President & CEO RXTalents, LLC Mechanicsburg, PA
Joanne Eason President Five Wishes Tallahassee, FL Laura Carlson Director of Growth Health at Scale San Jose, CA Meg McDonald Vice Presdient InstaMed, a J.P. Morgan company Philadelphia, PA Emmy German Director of Customer Success & Engagement Radion Health, Inc. New Orleans, LA
SILVER CORPORATE MEMBERS David Gillis VP, Business Development Captive Resources Itasca, IL John Blackburn Chief Marketing Officer HealthEZ Bloomington, MN
The Payment Harmonization Index 2022 The Business Case for Harmonizing the Healthcare Payment Experience. We all know the healthcare financial experience is complex and often slow, confusing and even frustrating. Ever wonder what can be done to make it more seamless and simple? This groundbreaking research from the Aite-Novarica Group establishes the current state of healthcare payment modalities and identifies practical and prescriptive ways to align your business around the optimal healthcare financial experience for all. Get your copy of the report to gain insights like these:
Why payment integrity requires workflow automation How maintaining up-to-date provider directories improves relationships Why electronic remittances are important for provider satisfaction What the industry views as important to a personalized member experience Download the report at qrco.de/harmonization or call 888.311.3505 to find out how Zelis can help harmonize healthcare payments.
zelis.com © 2022 Zelis.
Pay for care, with care.
Life Is Not Without Risk.
An infant with a 60-day NICU stay could exceed $1 million in costs.*
Amy didn’t think she’d spend her maternity leave with her baby in the NICU. Neither did her self-funded employer. Catastrophic claims can arise unexpectedly. If the plan has the right Stop Loss protection in place, focus can remain on achieving business goals and welcoming Amy back when it’s time. When you work with the experts at HM Insurance Group, you can have confidence that the claims will be paid. Find more on hmig.com.
SECURE FINANCIAL PROTECTION WITH OUR INSURANCE AND REINSURANCE OPTIONS: Employer Stop Loss: Traditional Protection • Small Group Solutions • Coverage Over Reference-Based Pricing Managed Care Reinsurance: Provider Excess Loss • Health Plan Reinsurance *
Cost estimate based on HM Insurance Group historical Stop Loss data and additional industry observations, May 2022.
In all states except New York, coverage may be underwritten by HM Life Insurance Company, Pittsburgh, PA, or Highmark Casualty Insurance Company, Pittsburgh, PA. In New York, coverage is underwritten by HM Life Insurance Company of New York, New York, NY. The coverage or service requested may not be available in all states and is subject to individual state approval. MTG-3438 (5/22)