The People’s Picks: The Most-Watched Moments of the Year
Somewhere between the renewal notice and the open enrollment meeting, most employers stop asking questions. They accept the increase, adjust the deductible, and hope next year is better. For Episode 84 of The Business of Benefits, “The People’s Picks: The Most-Watched Moments of the Year,” Ethos Benefits pulled together the boldest, most useful moments from seven separate conversations, an HVAC company owner, a hospital finance leader turned HR advocate, a stop loss expert, a reference-based pricing specialist, a PBM consultant, a birth advocate, and Mark Cuban, into one episode.
The thread running through all seven: a self-funded health plan only works if someone is actually paying attention to it. Here is what they found when they did, and what it means for the company writing the check every month.
What Your PBM Isn’t Telling You About Rebates
Rachel Strauss, known in the industry as the PBM Princess, walks through how vertically integrated the biggest pharmacy benefit managers really are: Express Scripts partnered with Cigna, CVS Caremark owned by CVS, Optum owned by UnitedHealthcare. Her advice to any self-funded health plan sponsor is a single, direct question: ask how your rebates are being aggregated, and who is actually doing it.
The scale of this concentration is not a fringe concern. The Federal Trade Commission’s interim staff report on prescription drug middlemen found that the three largest PBMs process nearly 80 percent of all prescriptions filled in the United States, and that pharmacies affiliated with those same three PBMs now account for nearly 70 percent of specialty drug revenue nationally. The FTC also documented close to $1.6 billion in excess revenue collected on just two cancer drugs over less than three years by PBM-affiliated pharmacies.
Mark Cuban, co-founder of Cost Plus Drugs, makes a related point in the episode about long RFP tenure requirements, the “10 years in business” and “50,000 lives managed” thresholds that show up in almost every broker RFP. In his words, that requirement is often just a way of protecting the incumbents already collecting a check, rather than a filter for who actually delivers results. That protects the status quo, not the self-funded health plan footing the bill.
The $80,000 Claim That Became a $2,000 Claim
Bryan Orr, co-founder of Kalos Services, an HVAC company in Florida, tells one of the most concrete stories in the episode. An employee was bitten by a spider on his pinky finger. The hospital pre-authorized a skin graft at more than $80,000, later reduced to $57,000 after a negotiated discount, for a single finger. The claim landed squarely inside his company’s self-funded health plan. When Bryan’s team looked closer, they found the exact same physician had admitting privileges at an ambulatory surgical center a few miles down the road. Same doctor. Same standard of care. No delay in treatment. The price there: $2,000.
That is a 97 percent difference for identical care from the identical physician on the identical day. It sounds extreme, but it is not an outlier. RAND Corporation’s ongoing hospital price transparency study found that employers and private insurers paid an average of 254 percent of what Medicare would have paid for the same services at the same facilities, with wide variation driven mostly by hospital market power rather than the actual cost of care. For a self-funded health plan, that gap is real money left on the table every year.
Most companies never look this closely at a claim. They assume the number on the bill is the real cost. A properly managed self-funded health plan makes moments like Bryan’s catchable, and they are not rare once someone is actually looking.
How to Tell When Your Broker Isn’t Actually on Your Side
When Bryan started asking real questions about his company’s plan, his broker of many years did not respond with data. “It wasn’t just, oh please, we make so much money off you, please stay,” Bryan recalls. “It was, you guys are making a horrible mistake, you’re going to regret this.” What finally moved him was not a pitch from a new partner. It was the silence from the old one. When he asked his existing broker to show him the numbers that justified staying, nothing came.
This is a useful, repeatable test for any self-funded health plan sponsor. When you ask a direct question about cost, performance, or plan alternatives, does the answer come back as data or as a warning? Federal rules now back this up directly: the Consolidated Appropriations Act, 2021 requires brokers and consultants working with employer health plans to disclose their compensation in detail, specifically so that plan fiduciaries can spot conflicts of interest hiding in indirect payments from insurers and vendors.
The Department of Labor’s enforcement guidance describes the goal plainly: shedding light on fee arrangements that have historically stayed opaque. If your broker has never shown you that disclosure, or has never shown you the math behind a renewal recommendation, that silence is itself an answer. A self-funded health plan sponsor who never sees that paperwork is flying blind.
Reference-Based Pricing and the Big Lie of Healthcare Pricing
Stephanie Porrino, founder and CEO of Empower Healthcare Insights, was defending an 18 percent renewal increase to her leadership team when her department ran one real claim through two pricing models side by side. Under the traditional plan, the claim priced out around $3,200. Under a reference-based pricing model, the same claim priced out around $300.
“That was the moment I started realizing, that was the big lie. The light bulb went on, and I started understanding the mechanics of the plan and why the system is misaligned. Really, it’s sick care, and that’s problematic.” (Stephanie Porrino)
The results compounded from there. Stephanie’s organization saved nearly $24 million in billed charges between 2019 and the present, and used the savings to reinvest in richer benefits rather than absorbing them as pure cost avoidance. As she puts it, “we are no longer a cost center, we are helping to become a profit center for the company.” Her closing framework for any self-funded health plan sponsor stuck at renewal season is simple: choose your hard. Is it harder to tell your employees about another increase and a worse plan next year, or harder to learn a new plan design and take on more active management? Both paths take real work. Only one of them compounds in the employer’s favor.
The Truth About Balance Billing
Danielle from ClaimDoc addresses the objection that keeps many employers away from reference-based pricing in the first place: the fear of balance billing. Her point is direct. Balance bills already happen on traditional, fully insured plans, not just alternative funding models. Broader research backs up how common this problem is across the market: Kaiser Family Foundation’s analysis of surprise medical billing found that roughly one in five insured adults had an unexpected medical bill from an out-of-network provider within a two-year span, and that 18 percent of emergency room visits result in at least one surprise bill.
Danielle notes that with the right partner and real provider relations infrastructure in place, a modern reference-based pricing plan can bring its own balance bill rate under 1 percent. The fear of balance billing, she argues, has become a sales tactic used to keep employers on plans that already carry the same risk, just less visibly. For any self-funded health plan considering the switch, that data point alone should settle the objection.
What Does It Actually Mean to Have a Self-Funded Health Plan?
Donovan Ryckis, CEO of Ethos Benefits, opens this part of the conversation with a branding problem that has quietly cost employers real money for years. “The term self-funded is created by the insurance companies to scare the crap out of you and just sound terrible,” he says. “Fully insured seems like a warm blanket. Self-funded, you’re out on the streets.” Neither description has much to do with the actual financial mechanics underneath either model. The truth is simpler: a self-funded health plan just means the employer, not an insurer, decides how the healthcare dollars get spent.
Spencer Smith of Pareto Health uses a simpler test to cut through the fear. He asks employers who are fully insured today a question: would you ever use your car insurance to pay for gas, or for tire rotations? Of course the answer is no, but the same idea holds true in health insurance. A fully insured plan bundles every small, predictable expense, a basic office visit, a routine lab test, right alongside the big, unpredictable ones, and prices the whole thing the way your car insurance premium would triple if it also covered oil changes.
A self-funded health plan lets an employer choose the real insurance it needs for the big risks, and pay directly, at its own negotiated rates, for the smaller and more predictable costs.
This is not a fringe strategy. According to the Kaiser Family Foundation’s 2025 Employer Health Benefits Survey, 80 percent of covered workers at firms with 200 or more employees are already in self-funded health plans, even as the average annual family premium for employer-sponsored coverage climbed to $26,993 in 2025, a 6 percent jump that outpaced both inflation and wage growth.
Most employers evaluating this shift for the first time want to see the mechanics laid out side by side before they commit. Ethos breaks down the full comparison, including stop loss coverage and administrative responsibilities, in its guide to self-funded health versus fully insured plans. That comparison matters most for finance and HR leaders trying to decide whether now is the right time to make the move.
The Purpose of a System Is What It Does
Spencer Smith closes out this same segment with a systems thinking principle he calls POSIWID: the purpose of a system is what it does. Whatever outcome a system consistently produces, that is what it is actually built to do, regardless of what it claims its purpose is. Applied to a fully insured health plan that gets a little worse every year, the uncomfortable conclusion is that the system is not failing. It is succeeding at a different job than the one it advertises. The same test applies to a self-funded health plan that stops getting real oversight: eventually, it starts behaving exactly like the fully insured plan it was built to replace.