Transcribed from the recording and lightly corrected. It may contain errors; the recording is the record.
00:01Welcome, welcome to The Business of Benefits. The Business of Benefits is your no-BS, no-sales guide to real solutions. No gimmicks, just the truth about how to take control, transform your benefits, and care for your most valuable asset, your people. If you're tired of the same old sales pitch and you're ready to rethink your benefits, this podcast is for you. The truth is out there. Are you ready to hear it?
00:01Chelsea Ryckis: Hey everybody, welcome to this week's episode of The Business of Benefits. This week's episode is a little bit different. So what it is, is it's Donovan and I's talk with a client at a recent conference. So the conference was the Florida Healthcare Alliance on May 1st, 2025 in Orlando, Florida. And this is a large group of employers, well over a hundred of them, who come together annually to this conference, and they discuss healthcare purchasing and making good healthcare decisions. So, we had a full room, at least 100 plus employers, mid to large market. We ended up inviting about 10 of our local clients who attended as well, and even five of the Ethos team members flew in from all over the country to just be with the clients and hang out for the day.
00:58Chelsea Ryckis: So, Donovan and I spoke for 30 minutes. That's what you're going to hear today. So, it's actually a two-part presentation. Today, you're going to hear the first 30 minutes of our talk. What we talked about, it was titled Beyond Blind Trust: A Fiduciary Approach to Purchasing Healthcare. And essentially what we dove into: ERISA fiduciary responsibility, how to use the CAA, as it's a very, very powerful tool if used right, and then really what we went into was the spirit of these laws versus the checking of a box. So, a lot of employers, I mean, you can literally Google or ChatGPT a checklist for how to not get sued, right?
01:58Chelsea Ryckis: And mind you, I know a lot of people say, "Oh, these lawsuits are happening to jumbo companies." They are coming down market. And here's the cool thing. When you have a fiduciary decision-making process and a great procurement process and a way to manage and control your vendors and your plan performance, guess what happens? You save a lot of money and your employees are significantly healthier. So even if the lawsuits aren't going to hit you this year, next year, probably within the next five years, it's like, why would you not, right? So the first 30 minutes is about what we're seeing, the letter of the law. So what does the law actually say for the CAA and for ERISA? What are we seeing in practice? So what are people actually doing? And I think this part will blow people's minds. And then what's the spirit of the law? What are you actually supposed to be doing other than just checking a box and not using these laws to your full advantage? So, that's what the first 30 minutes is about. That's what you're going to hear today.
02:53Chelsea Ryckis: And then the coolest part was we brought up one of our clients, Bryan Orr with Kalos Services in Florida. They're an HVAC company with about 400 employees. And under his leadership, he has completely transformed his healthcare program over the last three years. And he went from being kind of stuck in this year-over-year renewal game, increases, crappy situation, no data, to an amazing program, which you'll hear about in two weeks. So, part two is all about his transformation, and I'll give you a couple little hints. He's paying 42% less. Him and his employees are paying 42% less than the national benchmarks, and the employee cost share is 50% less than the national benchmarks, and that's before direct primary care, accessing a physician same day, same doctor all the time, right? Direct contracting for imaging, for cancer treatments, for outpatient surgeries, for all sorts of things. Literally free health care. It's incredible. Free specialty drugs. I can't wait for you guys to hear about this program, because on paper it's one of those things where it sounds too good to be true, but you can really design it, and the whole talk with him is about how he used his fiduciary decision-making process to yield these outcomes. So here's part one. It's 30 minutes. It's Donovan and I going through fiduciary responsibility and the letter of the law, what we're seeing, and then the true spirit of it. So I hope you find it valuable. Don't forget: like, share, subscribe, and then tune in for the best part, which is the interview with Bryan Orr in two weeks.
04:18Chelsea Ryckis: Hi everybody. Thank you so much for sticking around this afternoon. Today, when you look at the title, right, kind of like Karen alluded to, you're like, fiduciary compliance. Awesome. Can't wait. And it's after lunch, right? But what I can guarantee you is that, and actually tell me if I'm wrong at the end of it, we love feedback, I hope that this is the most engaging and stimulating conversation that you've had to date on fiduciary compliance, because like she said, we take a very different approach to it.
04:46Chelsea Ryckis: All right, so Beyond Blind Trust. What are we trying to do today, guys? This is the plan. We're going to tell you who we are. We're going to tell you why we're the ones up here talking about fiduciary. What exactly is an employer's responsibility? What started these healthcare lawsuits? Has everyone in the room, pretty familiar with some of the recent lawsuits? Yeah. Okay. Quick recap. So, if you're not, don't worry. We got you. And then three actions employers must complete. And the way we're going to go through it is we're going to look at the letter of the law, right? Which is where most of you are probably compliant. We're going to look at the penalties. We're going to tell you what we're actually seeing in practice, where that falls short, and then the spirit of the law, what it's really meant to do to empower you and give you more access to the data that you deserve in your health plans. And then the best part, we are going to bring up the man, the myth, the legend, Bryan Orr of Kalos Services. Once you hear him speak, you'll understand why he's given that title. But here we go.
06:07Chelsea Ryckis: So my name is Chelsea Ryckis. I'm the president of Ethos Benefits. My first interaction with the American health care system was in college. I got a D1 scholarship to play at Stetson University. My senior year, it was like a dream. I was leading in RBIs. Finally figured out how to hit. Leading in RBIs, leading in home runs, captain, accepted to med school. Just felt like I was at the top of the world, right? Then I was hit in the head with a softball after practice, right on this side. A girl was doing a long toss, cleared the fence, total freak accident. I go to the ground. The coach is like, "How you doing?" I'm like, "Everything's kind of blurry." But the next day, we started conference play, and there was zero chance I was missing conference play. So, like the stubborn 21-year-old that I was, I was cleared to play too soon because I told everybody I was fine when I wasn't. Got back out on the field and hit my head again. And after that, it was pretty much lights out.
07:02Chelsea Ryckis: Ended back home in Canada, where I'm from, to do a brain injury rehab program for about 10 months. Unfortunately, to see a neurologist in Canada was going to be a six-month wait. So, my parents, they own a roofing company. They were paying, they literally took out a loan to pay for me to go and do this functional neurology traumatic brain injury rehab. I'm waitressing with earplugs in to try to help them. Imagine me being your waitress. I have memory loss and I can't hear you. Worst waitress ever, right? Well, long story short, I thought it was pretty shitty, right? Pretty bad. And I'm Canadian, excuse me. And the medical bills from the American hospital started to figure out where I was in Canada. So, all of a sudden, I'm 22, going through this hardship in life. My parents are broke trying to finance it. It's like $5,000, $10,000. And I'm like, I thought I had insurance. Isn't this what insurance is? I thought I was covered, right? Who said that before? So, I experienced what one in 12 Americans experience, which is medical debt. And I think that's what pretty much ignited my journey into trying to help employers. My dad's an employer. I'm an employer. You guys make decisions for 181 million American workers.
08:00Chelsea Ryckis: So, I later found Donovan, which I'll tell you about shortly, but we've been lucky enough with the work that we do. We've really pioneered a lot of the fee-based advising, removing all the misaligned incentives out of health plans, gotten some pretty cool awards because of it. And the most important thing is we get to work with, there's three tables worth of them, the most amazing employers all over the country who are innovative, progressive, and hopefully you'll learn a lot from them.
08:28Donovan Ryckis: All right. Donovan Ryckis. My wife earlier told me I talk very slowly when I'm on stage, and I'm kind of unsure what to do with that now.
08:56I told him if I blinked twice, speed up. She said, "What's the sign?" And I was like, "How about you just do this on stage?" No. Okay.
08:56Donovan Ryckis: So I thought I'd tell you a little bit about how I got into this industry, because I think it's very telling about fiduciary, where that comes from, how it works in other parts of financial services. So I started in financial services in 2013. I immediately realized it was a great industry. It's a great industry because I realized I could work with any type of persona I wanted and solve any problem I wanted. That was great. I didn't know who that was or what problem I was going to solve, but I realized I could figure it out. So, around 2015, I decided I'm going to start studying for my securities license, which is basically the license to be a financial adviser. And at that same time, the fiduciary rule came out, which was this pending legislation that all financial advisers were going to be licensed as fiduciaries and have to act in the best interest of the clients. And the industry was freaking out. And I kind of paused. I'm like, I don't know. Kind of asked the agency I was working with, is this not what we do? We don't work in the best interest of our clients? And the answer I got very much felt like, yes, we do.
09:53Donovan Ryckis: So what I found out in my studies is that there are two, there's actually a few, but there's two main types of securities license. In my agency that I was in, nationwide, everybody was a Series 6 or a Series 7 advisor. So they can sell multiple financial products. They're going to be commission-based, earning commission from the individual products they sell. The standard of care for a Series 6 or 7 is suitable, and the advice scope is actually limited to the products they sell. So if they weren't already intending to sell you that product, they're really not supposed to be talking about it, which seemed kind of strange to me. On the other side, I found out there was a Series 65, and that was going to be fee-based advising. Instead of earning a commission, we'd be working directly for the clients, and the standard of care was fiduciary, legally required to act in the client's best interest. So, I kind of decided that I wanted to be a fiduciary. I wanted to be a Series 65. There was nobody in my company nationwide that was doing it. So, I said, "All right, well, I'm going to do it on my own. I'm going to license as a fiduciary. I'll open up my own registered investment advisory and I'll advise in the gap."
11:22Chelsea Ryckis: You guys should have seen his headshot. This is like 2015. I'm not in the picture yet. I come in two years later. But I saw his website. He looks like a 15-year-old that's like, I'm a registered investment advisory. I tried to find the headshot to put it up there and be like, who wants to take advice from this guy? Sorry. It's so cute. It's so cute. I love you.
11:49Donovan Ryckis: There I was. I had a cute registered advisory. And I wanted to work with business owners and advise in the gap. And the gap that I realized, by kind of looking at the industry and looking at the incentives, right? Because if you look at the incentives in any business, you'll figure out the results, how you'll get there. So the gap was the kind of optimal outcome for the client and then the compensation. And in the middle is where I'd find basically all the returns for my clients. And it worked incredibly well, because before I even opened accounts, I would find these things for the business owner clients, because when they were working with a Series 6 advisor, they're going straight to the financial product, get the commission, move on to the next one, right? So, since I was fee-based and I was taking my time, we'd open up the right financial structures. We'd combine a defined benefit and a defined contribution plan. We'd realize they need revocable trust and irrevocable life insurance trust. We'd work on their estate planning. So before we even started, I'd created so much value that I was able to acquire clients really quickly, even though I was young and cute. And I also had no big financial institution backing. So while these other advisers have been with Merrill Lynch for 20 years, I was still able to acquire those clients.
13:09Donovan Ryckis: And that was going. And one day I had a client call, and he was freaking out. I could hear how frantic he was over the phone. And he said, "You know, I'm going to get a 37% increase on my healthcare plan. And my broker said this is it, this is the best thing, there's nothing else there for me. Can you do something?" And I had never sold health insurance. That's something I hadn't done. But I said, "Yeah, sure. I'll take a look at it. Send me everything you have." And I said it that way because I had no idea what he would have. I had no idea what I would need. I didn't know what the problem entailed or how these things were quoted, what the options were, nothing. But when he sent it to me, what was shocking was that this 37% increase was on one page, about two paragraphs. That was it. Going to pay 37% more. And I'm looking at it, and I'm looking at the census of all the people, and I'm like, I don't know much, but with all these employees, there had to be thousands of transactions, imagining Rx and primary and specialists and hospital and urgent cares and all that kind of stuff, and no data behind this at all. So, I was a little confused. In securities, it's very much an opposite world. You have every disclosure, all the information you could possibly want to solve these problems.
14:31Donovan Ryckis: And after a couple weeks of meeting everybody I could in the industry, trying to solve the problem, learning from others, I was able to actually mitigate that increase. Actually came in with a 40% reduction. So we came a couple points under where he was currently, and we matched the SBCs. We went from an HMO to a PPO and no increase in premiums to the employees. So, what that actually meant was about $2,400 annually for every employee. And that was the first thing I looked at when I got the results. I was kind of calculating all that. And then I was thinking about my average 401(k). What does that look like? Average 401(k), I was saving a company anywhere from 25 to 50 basis points. So, that's a quarter of a percent or a half a percent. And if the average 401(k) balance is $126,000, that was only going to be $630 annually. So, I'm kind of weighing those two, and I'm like, I'm helping these companies. I'm trying to help them avoid 401(k) litigation. I'm trying to save the employees money. And then it's going right out the front door on healthcare spend. Realized once again, I'm working with the right persona, but I'm not solving the right problem. That's when we got into healthcare. So in insurance, there is no designation for fiduciary like securities. So what I imagine, what I kind of envisioned, was having that same securities requirement on an insurance license. Why, if we're talking about a 401(k), can we hire a fiduciary advisor, but not for health insurance?
16:24Chelsea Ryckis: So I came into the picture in 2017, and I had just met Donovan. He was doing, I had a Colonial Life agency. He was doing what he was doing with health insurance, and he was the first fee-based adviser in Florida, and he's saying to me, he's like, well, if you were to come work alongside me, this is the problem we're solving. This is the future of healthcare. This is the only way that consultants are going to work in the modern benefits world. So almost 10 years ago, right? And he's like, and health plan lawsuits are coming. I'm like, okay, I'm hitching my whatever to this, right? Let's go. So we were actually business partners first, by the way, before, we only got married two years ago. I think that's a really interesting part of the story. But anyways, so I made it sound like I was like, I'm just going to ride along his coattails. I was part of the process, I swear. But nonetheless, so he's telling me these health... What are you gonna say? I was, wow, I see the look.
17:19Donovan Ryckis: I was going to say, she was waiting. She's like, when are these healthcare lawsuits coming about? You told me this was going to happen. Where are they?
17:19Chelsea Ryckis: Right. Yeah. I'm like, does he really have the foresight that I was hoping he did? And turns out he did.
17:45So the first health plan lawsuits started coming out last year, 2024, with Lewandowski versus Johnson. That was kind of the first big one. The most recent one is down there in the middle, the JPMorgan Chase. Well, the most recent employer, basically participant against plan sponsor. What's really interesting about this one, right? So, these health plan lawsuits are happening under the premise of violation of fiduciary duty under ERISA. All of them are about the, well, almost all of them are about PBM, right? The pharmacy benefit manager selection and the fraud, waste and abuse that's happening in that portion of the health plan. The interesting thing about the JPMorgan Chase one, it has more standing than any of the other suits. And the reason for that is they were able to make a much more direct correlation between the decisions that the benefits committee, the board of directors, and basically the company made and rising costs for current employees. The other lawsuits kind of lacked that correlation in that standing. Another very interesting thing about this one is their PBM is CVS Caremark, who happens to be one of their largest banking clients. Does that sound like a conflict of interest to anybody else? Right. And then last interesting point about this one. This employer attends organizations and events like this one, a really large national healthcare purchasing coalition. That coalition specifically is a very outspoken advocate against fraudulent PBM practices. So literally cited in the lawsuit is this premise that you are going to these events. You are learning, you have insider information on this industry. Why are you not using it? Almost like a hypocrisy kind of issue. So it's not enough to just go to the events. You really want to start looking at what can I do to actually implement innovation.
19:09I don't know which one's worse, that one or Johnson & Johnson, a drug company getting ripped off on drugs. I don't know.
19:37True.
19:37Chelsea Ryckis: So the ones in light blue there, this is just sort of an FYI. I'll focus on the one on the bottom right for everybody. So that's actually a compliance employee at a brokerage, the brokerage listed there. And he was basically saying, "Hey, with the CAA, we're not disclosing our compensation correctly." And the brokerage said, "Don't say anything." He said something. So this is a whistleblower case. And it turns out that there were about $27 million in rebates in one year that should have been passed on to employers that the brokerage actually took. So you're seeing that fraud, waste and abuse and sort of those misaligned incentives that Donovan's talking about. It's not just with your PBM. It's usually going to be in every part of the healthcare supply chain, which is why it's so important to understand those contracts, Sean, and to work with advisers that you know they're being paid in a way where they're only winning when you win. That's the most important takeaway.
20:31So under ERISA, what is a fiduciary duty? These are the core fiduciary duties. Number one is loyalty, and that's the one we kind of all know, right? Act solely in the best interest of plan participants and beneficiaries. The second one is prudence. So that's acting with care, skill and diligence. This is having a process, a really well-documented process showing why you chose this PBM, why you chose this direct contract, why you chose United, whatever the reason, right? That's the due diligence process. Mostly with retirement plans, you see a duty to diversify, but then absolutely in healthcare, a duty to follow the plan documents. So why now? I've heard it mentioned a few times. The CAA. Who here knows about the CAA of 2021? Everybody. Perfect. So, here's the interesting thing about it. If you look at the spirit of this law, right? The entire premise of it is to give employers like you sitting in this room power: access to your data, access to understanding the incentives of the people working for you, and basically empowering you to make better decisions. So, we're going to go through those three things today: what the law says, what people are actually doing, and then how you can use it to better your health plans.
22:00All right, so let's start with fee disclosure. So, the letter of the law is that any service provider that's expected to earn over $1,000, so this is more than just the broker. This is everything in the health care chain: your TPA, your PBM, everything. Medical management. And the other big thing that we see not being done correctly is, well, I guess that's, is when these things should be disclosed. It should be disclosed during the decision-making process. Getting it after the fact, after you've accepted maybe a conflicted transaction, is not the time to figure that stuff out. It's supposed to be done prior. So, penalties for non-compliance. I'm going to skip over these because we put a ton of information in this presentation, and I don't think anybody in here is trying to do the minimum. But I do think the interesting thing about these penalties for non-compliance is it could be all of them. It doesn't have to be just one. And if you were to be sued for something, it very likely would be all of them. We'll give you a QR code at the end and you'll get this entire...
22:55So, this is what we're seeing in... and essentially, like I said, we're only seeing the broker disclose. There's a lot of fine print and a lot of big... So sometime after open enrollment, when everybody in the company is very fatigued and ready to move on from this insurance renewal, they get something that looks like this, with even finer print on the bottom that basically says there could be an additional 0 to 3% based on premium retention, premium growth, a bunch of factors like that. Let's pause for a sec. Does everybody know what that means? Premium growth, your premium's going up, right? Plan retention, you stay in the same plan. There's literally in your contracts that you're signing and you're agreeing to, there is, and you'll see how much this equates to in this example, but loaded compensation for convincing you to do the same thing you did last year or to accept an increase for XYZ reason.
23:49Well, the other thing is this is not actually in any contract. So, this is after the fact. So you're signing all your contracts, agreeing to everything, looking at your spreadsheets. This usually is coming after the fact. There's no signature required. So this often gets kind of lost in the mix. But if it were kind of disclosed the proper way, what it should look like is, hey employer, we're going through renewal. I have three options for you: A, B and C. And this is my compensation. I really like carrier A. The network is so much better on carrier A, and the PPO discount's so much better on carrier A, right? You hear these things, and you hear it. Oh, you had bad claims, you don't qualify for this. And you had a cancer, you had a high-cost drug. Everybody has claim issues, right? And to go to Sean's point, it's what we're paying for the cost of care that needs to be the focus. But you probably can't even get into that model if you're not understanding why you're being recommended something else. So if you got this during the renewal, I bet there would be different and better questions to ask during that process. How and why?
25:10And I think the big thing to understand here is, as the employer plan sponsor, you're hiring that broker, but you're not the one incentivizing them. And there's no other transaction, employee, someone we would hire, that we would hire this way. Does anybody want to hire a CPA that gets paid off a percentage of the taxes that you pay? How about an attorney who's getting paid by the other side? It just doesn't make any sense. And if we get these disclosures in the right way, this, not to say the whole industry is against you and everybody's trying to rip you off, but this will certainly lead you to ask different questions, which is important. And that is the spirit of the law, understanding this and asking better questions.
25:40Let's pull it back even a little bit further. Let's think of this a little bit more macro. So, if we're talking about risk, or healthcare risk, there's only four things we can do. We can avoid it. We can reduce it. We can retain the risk, or we can transfer it. Does everybody know what the most expensive option is? Anybody? Starts with a T. Transfer. Transfer is the most expensive option you can do. Let's think of that now. Where is all the compensation for our brokers? It's only in transfer. There's no other mode or method compensation. It's in the name, right? Broker. They are selling the risk transfer. And when that happens, we're often skipping past the easy things we could do to avoid risk, to reduce risk, and then do the risk transfer.
26:35So, this is a compensation disclosure that you will get emailed to you. So, there'll be a QR code at the end. This is a 408(b)(2) compensation form. And this again would be for every single service provider within your plan. So, your TPA, your PBM, your EAP, if you're using direct contracting companies, whatever it is you have, everyone making over $1,000, which is likely every vendor, will need one of these, and you'll get one to use.
27:02So, let's move now to RxDC reporting. So, the requirement is that group health plans and carriers, they must report detailed information about everything there on the screen. So, it's really all about your prescription drug spending, and it's an annual requirement. It's coming up. It's on June 1st, so it's right around the corner. You've probably been getting emails about it and seeing all sorts of bulletins. So, the letter of the law is that this needs to get done. And the interesting thing, let's keep going. Oh, the penalties for non-compliance. So, ultimately, plan sponsors are the ones responsible, just like plan sponsors are the ones responsible for having these comp disclosures on file. So even if you, and I just had this happen with actually a local employer, they've been working with the same broker for a long, long time, decades and decades, asked for a compensation disclosure. He refused. Interesting, that becomes a prohibited transaction that now needs to be reported. They didn't go that route, and that's fine, but again, they're the ones being held responsible, not him, for not giving it, right? Same thing here. You can trust that somebody else is doing this for you, but at the end of the day, it is your responsibility.
28:23So, here's what we're actually seeing in practice. Don't worry, carrier or broker or whoever, usually it's going to be the PBM or the carrier, right? We're going to do this reporting for you. Then you say, "Can I have a copy?" Nah, you don't need one. You don't need one. This is what we're actually seeing in practice. And remember, what is the spirit of this law? The spirit of this law is to allow you to know what is your plan paying for drugs, how much is being rebated. Do you know how many times we've negotiated down renewals when we have to work with carriers, because we just figure out which drugs are being rebated? We figure out how much, and we throw that into the equation, and then they're like, "Oh, yeah, sorry, we forgot about those." You can find out exactly what those are with your RxDC reporting and use that as negotiating power. And then again, who's keeping the rebates? Is it the PBM? Is the plan sponsor? I hope it's not your broker, right? And these insights are very powerful, because you want to be auditing your PBMs. You want to be negotiating better prices, and you want to be following your fiduciary obligations.
29:19So, if you're not getting it, which is likely everybody in the room, get the raw data and have a third party do the reporting. At the minimum, if that's, and I know that some of these compliance items can be expensive, especially if you're also doing mental health parity, at the minimum, take your top 10, 25 or 50 claims reports, benchmark against cash prices, rebates, and run it through a fiduciary PBM. Get an analysis. If I worked with a fiduciary PBM over Optum, whoever, what would be my drug prices? What would we be paying? That's the spirit of the law. And once you see that, you can't unsee it. I'll tell you that much. A good PBM is willing to do a pricing study for you. A bad one will say, "No, no thanks. We're the biggest. You don't need to do that. Don't worry about it." So the spirit of it is for plan sponsors to benchmark, not for the PBM to benchmark themselves, because the plan sponsor's on the hook at the end of the day. Even if you were to just take your top 10, let's say you're in a plan that really restricts your claims data. If you were to just take your top 10 and check cash prices, what rebates exist, have a different PBM run it, you'd capture a good 70% of your Rx claim dollars just looking at the top 10. So, it doesn't need to be an exhaustive process. Anybody can do it in your office in under 30 minutes if the PBM is not doing it for you and you don't want to pay a third party to do the reporting.
30:43Could I just jump in for a second? Last year, or whatever year it was when this started with the reporting requirement, we said to all of our employer members, you're the fiduciary. You need to have the evidence of it. You need the receipt, if you will, because they were all here and, you're fine, you're fine, you're fine. And I can't tell you how many of our employer members who went to their PBM and to their health plan, and they said, "Oh, nobody's ever asked us."
31:11Yeah. Or we just can't. Right.
31:11Well, it was like, "I'm not sure I can give it to you." Like, well, yes, let's assert the fiduciary duty here, and I'll be the one who has to demonstrate that it's happened. Well, long story long, no, long story short, what came back was absurd. It looked like I made it on a little Excel spreadsheet with a couple of boxes, and it didn't demonstrate at all the employer. It was just a whole book of business, and I was like, "Yeah, we're good."
32:09Yeah, that was it. They'll tell you that they can't. I haven't seen an updated version, but it, I mean, it's not happening. This data, this information, this receipt, if you will, of compliance, they're aggregating it and saying that they can't de-aggregate it, is what's happening. Even in 2024, they're acting like they just heard about this CAA thing. Like, no. We got to do a lot of these. I couldn't possibly give you a copy of your own report. And shouldn't that be enough, right? If you get something back that's, I think that's the end of the conversation, really. It's like, if you get back something that you can't decipher, it's not usable, it's not readable, you're probably working with a vendor that's misaligned, right? I wouldn't even want to look at the contract at that point.
32:37So the last thing we're going to talk about here is gag clause, and then we're getting Bryan on the stage, and he's a lot of fun, so it won't be so compliance-y, I promise. The gag clause attestation. It's basically, you need to go onto the CMS website and basically disclose that you are getting your data, you're not in conflicts of interest, you have service provider agreements, you have insights into all of your contracts, and basically you're sharing this information with business associates. That's the short of it. The penalties for non-compliance. So there's not a specific or distinct penalty, but the IRS could impose a tax of $100 per day. And then again, even if the TPA or somebody's telling you that they're doing this for you, once again, like all things, it's on the plan sponsor.
33:33So what we're seeing in practice, carriers, brokers are submitting this attestation regardless of existing gag clauses. And the interesting thing is, if you saw the CMS website last year, there wasn't even an option to say that I do have gag clauses in my contracts. It literally only let you put, yes, I'm in compliance. This year, thank God, by the end of the year, you have to do this by December 31st, you can say no. For my clients that were, we're on a multi-year journey, and maybe they're with a contract and a carrier where they still have gag clauses, right? And we're getting them out slowly but surely. We didn't do it. We documented why. We wrote down all the reasons why. And then we actually, we have a bunch of verbiage. I'll send it to you after the presentation, that you can send to carriers, from attorney. It's an attorney speak, all about why you need these contracts removed. And then you're at least showing, I'm being prudent. I'm being diligent. I'm a good fiduciary. Even if you're not getting what you deserve.
34:28I think the biggest win here, the spirit of the law in this case with gag clause and claims reporting, is internal alignment. So with the fees, we were talking about external alignment, how you're incentivizing the broker you're hiring, maybe changing that up, right? You picking that structure instead of the insurance carriers choosing the incentives. Or receiving your claims data and sharing that. I think what it brings most is internal alignment. What I mean by that is really building an internal benefits committee of, minimum, CEO, CFO and HR, instead of all of that responsibility falling onto one person. And what we see in our book of business on average is we get about 18 claims per insured employee per year. You might say, well, that sounds like a lot. I don't know. If you have 100 employees, you might have 170 plan participants with dependents and everything. But we look at it from an employee perspective, because that's what the employer knows they have. So if you have 500 employees, that's 9,000 claims. That's 9,000 invoices, which probably is the largest area of accounts payable in that business. At least it's a strong contender for one of the biggest areas of accounts payable in a business unit within their business. So once we're getting that claims data, I think it really should bring in all those departments to work together to solve this problem, instead of pushing it down, making HR make all the decisions, have all the legal responsibility. This is a lot bigger of a decision than picking carrier A, B or C. And if we're looking at it from an 18 claims per insured employee, we start to understand that.
36:20So, the spirit of the law, right, the spirit of ERISA, the spirit of the Consolidated Appropriations Act, again, is to empower you. You can get a checklist from anybody. You could literally go on ChatGPT and it can give you your fiduciary checklist. That wasn't the point of today. The point of today was to help you identify where maybe some of these misaligned incentives exist within relationships, contracts and maybe even plan design. There's two tables of employers over there, and I know this because I advise them, that they've been doing fiduciary-based decision-making, data-driven decision-making for five plus years, some of them, even six. So, I hope, if you're not in this situation where you have all this data, that have some conversations, start asking some questions, get more people on your committees. That's really our big takeaway.
36:48Resources. If you scan this QR code, you'll get this, what day is it? Thursday. You'll get this next week. It will have the comp disclosure, the slides, the documentary, the gag clause verbiage to request data from your carrier, and a couple more things that I'll surprise you with.
37:16All right, guys. I hope you found that valuable. If you're curious about any of those resources, please reach out to me. I'm happy to share. Always am, always will be. Rising tide lifts all boats. So, let me know if you need something. Don't forget, in two weeks you're going to hear from Bryan Orr of Kalos Florida and how he completely transformed his healthcare program to be, in my opinion, and I mean it's not even my opinion, it's literally just benchmarking and comparing to other businesses, one of the top plans in the state. Absolutely. And maybe even in the country. So, incredible program, incredible leader, and you're going to hear from him firsthand. How he did it, why he did it, what sparked it, how did employees receive it, what roadblocks did we hit. So share, like, subscribe, check it out. It'll be available in two weeks.
