Ep #464: The Art and Science of Staying Relevant in the Insurance Industry - with Daniel Grun

Host: 0:00

This episode is sponsored by NextGen Advisors, creator of the Advisor Mastery Track, where you can learn everything you need to create state-of-the-art client solutions and win more cases, even edging out the big dogs in your market. Stay tuned to learn more and for a special 25% discount code, for our listeners only. And now here's David, with this week's episode.

David Saltzman: 0:25

If data and numbers rule the world, at least our world, how is one TPA making sure that data is accurate and actionable? We'll find out on this episode of Shift Shapers.

Host : 0:39

This is the Shift Shapers podcast, connecting benefits advisors with thought leaders and entrepreneurs who are shaping the shifts in the industry. And now here's your host, David Saltzman.

David Saltzman: 0:53

And to help us answer that question, we have invited Daniel Grun Chief Marketing Officer at Leading Edge Administrators. Hey, Daniel, welcome.

Daniel Grun: 1:01

Hey, how are you?

David Saltzman: 1:02

I'm well, thank you, thanks for taking some time to share your thoughts with us. Tell us a little bit about your journey, because almost nobody in this business ends up doing what they started doing, so how'd you get to be doing what you're doing?

Daniel Grun: 1:14

Yeah, it's not one of those things where when you're in seventh grade, you're like, hey, I'm gonna go into insurance. I was in the nonprofit world working with special needs young adults, putting myself through a school. Accidentally, I became a health insurance broker for a very brief period and when the opportunity presented itself for me to get involved on the third party side and try to instill some change in the actual market, get creative, build rather than sell somebody else's product, I obviously jumped on that Fast forward about nine, nine and a half years later and I'm still there.

David Saltzman: 1:52

It's you know you're right. Nobody in seventh grade says I think I should go, and if they do, they should be tested immediately and probably kept away from sharp objects. But you know it's been a great career for a lot of us, myself included, so I guess I can't grouse too much, but it's never the way you start out, right. So tell me what the problem is that you guys are working on. I mean, where do you see the biggest need?

Daniel Grun: 2:13

Yeah, so again, the need is almost two separate questions the need and the biggest problem. Right, the biggest problem is the evolution in the market and the market itself staying static. Right, it's a combination of regulatory the cost of care, the access to care, the education of care and staying kind of ahead of the curve on that, and typically we find the best course of action to do that is really to have great relationships with partners, right. So, understanding the people who have boots on the ground, who are talking to their clients on a daily basis to anticipate the need, coming down the horn rather than trying to solve the needs of yesterday, I would say that was really, for my experience, the biggest problem. The second part of that is I'm sorry if you can repeat the second part of that question which was the biggest problem and the biggest need, right?

David Saltzman: 3:09

Right, yeah.

Daniel Grun: 3:11

The biggest need is and it sounds somewhat cliche in nature it's to provide benefit right. These are benefits, these are supposed to be people's health cares, without it putting companies out of business. And that's been the challenge since. Really, in my opinion, the Affordable Care Act and the things like COVID certainly didn't help that Cost of care is going up excessively, and being able to create ways to deliver quality benefit at somewhat of an affordable cost has been definitely, from my experience, one of the largest needs I've seen in the last decade or so.

David Saltzman: 3:46

You talked about the folks with boots on the ground, and self-funded plans are now reaching smaller and smaller and smaller groups, groups that you and I would never have considered credible or even a good candidate for self-insurance Even a few years ago. Do you see the complexion of the army, the people who have the boots on the ground changing, and Do they really understand what they're selling, or do they need more help and more training and more hand holding?

Daniel Grun: 4:13

Boy, is that a loaded question? Unfortunately, I don't think the answer is across the board. Obviously, you have your best in breed. That certainly do know. Unfortunately, there is somewhat of irresponsible selling out there, especially when look, I don't think it's from a malice perspective I think brand new ideas come out that, in concept, are brilliant. Right, low-space pricing would be one of those concepts. Right, anytime you have the ability to lower the cost of care and still allow for care, obviously the downstream impacts of that can be positive. However, the education associated to that, to my opinion, is still lacking, and some of the infrastructure. Right, everyone wants to be on the cutting edge, but there's a fine line between cutting edge and baiting your new programs correctly.

David Saltzman: 5:03

Yeah, but for some of these folks they're sliding down the razor blade of life. When you talk about cutting edge, Years ago the carriers had programs and they wouldn't let you lose in the field unless you had been to Bruce's school or one of the other things. I was with State Mutual Life out of Worcester, Mass, and they sent me to Worcester for four weeks and I thought, piece, I'm brand new with this business. Who did I piss off? But they taught me a lot while I was up there and then they put me out on the street. Were you guys engaged in doing some of that training, just of necessity?

Daniel Grun: 5:36

Yeah, so again with us, personally, the relationship to the people that we're doing business with is extremely important because it's not a one-way trust just to grow your business. It has to be a two-way trust because, well, people don't realize you have to look at things kind of organically, right? So you have to look at it from the point of a business and be honest with yourself. Your cost of acquisition is so high that if you're not retaining clients long-term, it's a bad business model and the only way to really retain business is to trust the people that are both bringing you to that business and helping you manage that business. And to your earlier point in terms of more options available to the smaller market, yes, I mean realistically. If you're looking at any of, let's say, kaiser's data, you'll see any group over 500 or 1,000, it's the high 80s that they're already self-funded, right. So stop loss, which is a lot of the product associated to self-funding.

Daniel Grun: 6:35

To allow risk to be palatable to, really any group has now created programs and have gotten creative that you can leverage some of the capabilities that historically only the big boys had access to.

Daniel Grun: 6:48

But the partners you choose to educate you on what's out there and what is really appropriate for your risk appetite really will, in my opinion, dictate your success or not, right?

Daniel Grun: 7:00

So, for example, we all know what 12-12s are, right, 12-12s is a great way to be to spreadsheet, but it's not a great way to sustain a long-term benefit, right? Unless your education is appropriate, which is, hey, you're coming from fully insured. You don't necessarily year one need a mature contract. But understand, this is a 24-month strategy and whether you run great or not, at the end of that you're going to have to mature that contract and there's going to be cost and additional risk associated to that. If that conversation this is just one example if that conversation has had appropriately up front, you have a phenomenal outcome. However, if they're running at 50% or 60% and suddenly they're getting an increase and they don't understand why, or they have claims in inventory that fall outside of a contract because they don't want to take a run in provision, suddenly you have done an irresponsible thing while trying to do something positive. And that's just one of the small examples.

David Saltzman: 7:54

Yeah, the letters I, b, n and R are foreign to a lot of groups that aren't sold properly until all of a sudden they say, wow, we've had a great first year and you want to know you've had a good nine months, even though 12 months have elapsed.

Daniel Grun: 8:06

And all of four of those months are credible.

David Saltzman: 8:09

Right, why didn't you explain this to me before? Back in my TPA days we did a lot of work unscrewing stuff, and I'm sure you do too. Folks with good intentions go out and they want to find the best solution for a client and sometimes they wade into water that's a little deeper than they ought to be and they don't take a partner like a knowledgeable TPA with them. I'm sure the technology has changed a lot since I was in the TPA side of the industry. What are you seeing with technology that's helping you guys provide a better product out on the street?

Daniel Grun: 8:43

So, yeah, I mean, technology is certainly evolving and you have baseline technology which is helping things like you know these, these apps right now with integrated telemedicine and you can get access to your ID cards and your accumulators. It can even geo fence and help you find doctors. But to me, what's exciting a little bit nerve wracking at this point because we're still very much investigating it, but is the implementation of some of this bot technology which will allow us to better streamline things like customer service function, things like EDI build right, which is historically a very lengthy and sometimes expensive proposition. By alleviating some of those costs and timelines, you can essentially ensure a better outcome at a more reasonable cost. So that is something we're very, very excited about.

Daniel Grun: 9:30

But but technology in general has evolved, right? Yeah, I think if you went back in time 1015 years, people talking about API's and EDI's would be just the carrier to the doctor's office. You know groups with their payroll vendors and what their Ben Admin systems wouldn't have integrations into the TPA in real time, and they do today. And and you know the segment is called. You know data integrity for all intensive purposes right, we all know this the saying garbage and garbage out. So the more that infrastructure you can put to make sure that it's not garbage in the better chance you have of making sure it's not garbage out.

Host: 10:08

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David Saltzman: 10:13

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Daniel Grun: 11:55

Right. So I mean the magic word in IT right now is testing, then production right. You have to make sure that you have a very, very specific spec built for your EDI. You have to make sure that you have a open dialogue with the person you are grabbing and pushing information to. You have to test in a non-productive environment to make sure that the outcome yield, and then you go from testing into production. Then you have audit right. So audit it should be both internal to the unit and then you have quality, which should be external to the unit right.

Daniel Grun: 12:28

Everything you can do to make sure that your exchanges from the information in is secure will again very, very much improve the outcome of your data out. I also would recommend that you have multiple sources of data right, so it's a very big thing in the market right now. Another one of these technologies is data lakes. Data warehouses right. I don't know if I'm supposed to be using vendors by name, but there's several of them Springbuck, deerwalk, there's a self-insured reporting. There's a bunch of them.

Daniel Grun: 12:59

By putting your data into a format where they're receiving very similar data from many, many sources, sometimes you can identify if there is an issue or it can verify that your process is working well and then the outcome of that right. So you should have your internal reporting and your external reporting, and you should be auditing and making sure that you can reconcile the difference between them. The other thing really is to label your data correctly, right? So if you are reporting to a client and you're reporting financials, don't present it as claims paid data, present it as financials and vice versa. Right. If you're showing a paid claims registry, don't show that as the universe of claims. Show that as the cash claims. It is very important to label and to explain what it is that your data is representing, rather than take the premise that people just understand it.

David Saltzman: 13:52

You mentioned a few of the data warehouses, and one of the things that I think we need education on, beyond just understanding the claims data, is to put that against benchmarking. Would you talk about benchmarking and explain how actually important it is, especially if you get into what we used to call non-credible groups?

Daniel Grun: 14:13

Yeah. So look, benchmarking is important for you to know in a holistic view how you're doing through the overall market. But, like everything else, there's many layers to that onion right, so you have to be able to break down to specific demographics, specific SIC. What it really helps you do is understand where there are opportunities for you to put resources to change outcomes. So, yeah, there's tremendous, tremendous value in benchmarking.

Daniel Grun: 14:43

Now, that being said, they're trying to leverage benchmarking and kind of marry it with AI to kind of bridge the gap on an underwriting basis and unfortunately, like many other things we see in this industry, there was a failure to launch the first time out. Right, I'm sure everyone is somewhat familiar with something called GRX or Curve, which was them trying to extrapolate data from pretty much pharmacy and giving it credibility on in the entire group, which unfortunately did not go well and a lot of partners got burned on that exchange. So they're a little bit more hesitant now, even though the tools available to them are significantly better. But now you have a bunch of things out there, like Rover and Gradient and several others, that can take your benchmark data, can take their geographical data, can pull publicly available information and build a risk portfolio. So now where historically, benchmarking has been very important for you to see your outcome once you're in an arrangement, now benchmarking can actually help you get into arrangement which you were limited to before because you did not have access to your data.

David Saltzman: 15:49

Because that's still more a province of the stop-loss carriers than of the plans.

Daniel Grun: 15:56

So yes and no right. So to the stop-loss carriers it makes the risk palatable to them for them to write it. For the groups themselves, it gives them tools and capabilities, if they have the right partners, to make sure that they're not wasting money in stop-loss. So, for example, if you're much better than benchmark in certain areas, like your facility-based claims, I would recommend leveraging something called an aggregating spec, which is you retaining some more of your own risk inside of your premium, which historically people weren't utilizing you for. So I think knowing where your plan's utilization is versus where utilization is as a whole gives you, as a consumer, some power as well.

David Saltzman: 16:37

I think that's true. Skipping ahead a little bit, are you seeing a lot of folks employing reference-based pricing? Do you think it's a good idea, a bad idea? Is it still as blunt an instrument as it was when we first started talking about it?

Daniel Grun: 16:50

So it's a very, very, in my opinion, complex conversation, because reference-based pricing on its surface is brilliant in concept, right, Assuming the provider will accept it, assuming the provider knows what it is, assuming that the provider doesn't essentially deny you at point of service or nine months later decides what's going on here. So, deployed correctly, I think reference-based pricing is very important. I think it is probably a step to where we go long term, which is probably more of a blend between reference-based and direct contracting. However, I also do believe that there isn't necessarily room for a Bucca in a reference-based pricing environment.

Daniel Grun: 17:36

I think you can yield a lot of the outcomes of reference-based pricing while still partnering with different variations of a carrier to try to improve on the process or the experience of the member itself, which, in my opinion, was the biggest thing that got left out with the development of RBP, and now, just now, are the resources being created and deployed correctly to potentially make reference-based pricing more available and more seamless to its end user. I also would recommend that you do things in stages. Don't jump from A to Z. Don't take a client from a fully insured Cadillac Blue plan to a reference-based pricing. You take them in stages. You can take out of network coverages and show them what reference-based looks like and have them go on that journey with you.

David Saltzman: 18:25

It's interesting you mentioned Buccas and I guess very shortly, maybe next year Bucca will be a literal four-letter word. Do you caution clients against ASO-type plans where they've got one foot on one side of the river and one foot on the other?

Daniel Grun: 18:42

So again, this is just a personal choice. I try not to deal in absolutes. I think understanding a client's need, their agenda on what they're trying to achieve with their benefit, their appetite for risk and their financial situation is very important before making a recommendation. Look, the Buccas do and will always have their place in this world. At the end of the day, on guaranteed issue business, they're essentially operating estate funds, so there is always going to be the need for a Bucca, even in environments where you're looking at provider-only networks or micro-networks or direct-contract networks, there is always going to be the need for that infrastructure. Is it utilized more than necessary? In my opinion, yes. Is it not necessary at all? In my opinion, absolutely not. They do have 100% of place here.

David Saltzman: 19:32

Well, because otherwise, if you get a prospect, if you're an advisor, and you get a prospect, who is really timid about going full tilt, boogie, self-funded? Maybe it scares them, maybe they're not sure about their cash flow, you know, whatever. This is kind of a middle ground, isn't it, for advisors to maybe stash a client for a year or two and then move them into a fully self-insured plan.

Daniel Grun: 19:56

So, like everything else, from an intention perspective, certainly right. So let's say, let's use Etna and Signer, for example. They have level funded plans, right, or minimum premium plans which allow you to segue nicely into the self-funded environment. Now again, there are caveats to those programs where you're not entitled to 100% of your surplus, but it's a nice way to dip your toe in. However, circling back to the topic of conversation, data, the issue with some of these environments is you don't get the necessary data out of them or the appropriate data out of them to transition yourself appropriately and that's been a tremendous challenge then into a fully independent environment on a self-funded basis. That has been a tremendous challenge and I think in the coming years that is going to be something that we see change drastically and that is going to give people a lot more capability than they have today.

David Saltzman: 20:46

We've got a minute left or so and you just touched on it very briefly. Do you see AI impacting in the next three, four, five years hugely what you guys do for a living?

Daniel Grun: 20:57

I do, I certainly do Well. Again, if you understand the underwriting methodologies behind self-funding, you really look. They're all using Towers underwriting manual and how much they can get credible versus the experience, versus the manual, is the more aggressive you're going to get in a format. Now the carriers are getting smart. They're delaying their renewals to the point where you don't have enough time to buy them. They're changing the labelings on spreadsheets from incurred to paid. It's this same subset of data. The underwriters never had issues taking it before, but suddenly it's still information. Ai will be leveraged to bridge that gap in data availability and will change drastically the outcome of the kind of business that can be written, the conversion of that business, and when the market segment shifts that much, the carriers are going to be forced to pivot and I think that will help the industry tremendously.

David Saltzman: 21:54

Well, and I hope, as that rolls out, you'll come back and visit us again. Daniel Grun, Chief Marketing Officer at Leading Edge Administrators. Daniel, thanks for a fascinating conversation.

Daniel Grun: 22:03

Oh, thank you so much for having me. This is an absolute pleasure.

Host: 22:09

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