“We’re not delivering the care, we’re the patient scout for the doctors.”

In episode #97 of Mission to Grow, the Asure podcast that serves as small business owners’ guide to cash, compliance and the War for Talent, CEO of Key Benefits Administrators Larry Dust, sits down with host Mike Vannoy to talk about why proactive health management is good for both employees and employers. Larry shares the difference between proactive health management and wellness plans, the benefit of a coach, and how to empower employees to get the most out of their doctors visits.

• Small business owners need to understand that proactive health management is not just a wellness program. Wellness programs lack results because they are not targeted enough, while proactive plans focus on tangible results.
• Good health is good business. By providing your employees with consistent care, chronic illnesses can be treated more effectively and cost efficiently. Consistent regimens of care can save 2⁄3 the cost of reactive treatment when issues arise.
• Coaching is a major part of a proactive health plan. By having a close relationship between employee and coach, employees get motivation to make changes and get plans to help them achieve their goals.
• As patient doctor relationships are changing, having a coach helps employees get the most out of their doctor’s visits. If patients have follow up questions or need help finding the right words to use at appointments, coaches become a crucial resource.
• Managing care for your employees requires providing the proper incentives to complete treatment. Providing reductions to employee contribution upon 100% completion of care saves both employees and employers money.
• Ultimately, proactive management plans are not providing care, but are scouting for patients who may need care. Once identified, these patients are given education to have a more effective interaction with their healthcare provider.
• The best treatment for a disease happens in stage one, however, due to financial constraints, many patients don’t seek medical care until stages 3 or 4. By assisting employees, you allow patients to seek care when issues arise.

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Read the Transcript:

Larry Dust:
We’re not delivering the care, Mike. What we are is the, we’re the scout, we’re the patients scout for the doctors, we’re scouting their patients and we’re creating patients, well-educated patients to get into their doctor’s office to have a more effective interaction with their healthcare provider.

Mike Vannoy:
Welcome to Mission To Grow the Small Business Guide to Cash Compliance and the War for Talent. I’m your host, Mike Vannoy. Each week we’ll bring you experts in accounting, finance, human resources, benefits, employment law, and more. You’ll learn ways to access capital through creative financing and tax strategies. Tactical information you need to stay compliant with ever-changing employment laws and people strategies you need to win. The War for Talent Mission to Grow is sponsored by Asure. Asure helps more than 100,000 businesses get access to capital, stay compliant and develop the talent they need to grow. Enjoy the show Proactive Health Management, how employers can reduce FICA while bending the cost curve of health insurance. So I think this is one of those areas where small business owners just don’t probably realize the impact on their business an unhealthy workforce has. Maybe more importantly, maybe it’s not more important, but at least it’s important.
They don’t realize how much they can actually affect the health of their employees and what impact that could have on their business anywhere from FICA tax reduction to more productive employees. So a lot to unpack here. Before I do it, I want to just share some really, really, really big statistics. So 38% of the adult population that’s 96 million adults in the US are pre-diabetic. 69% of the total population is obese or overweight. That 69%, 75% of Covid deaths had four or more comorbidities, right? So it wasn’t just covid, it was all the other illness. Six in 10 Americans have at least one chronic illness, four in one, have two or more chronic illnesses. So the health of our employees is just super important if we want to have a healthy, productive workforce. But there’s real cost to small business owners here as well when it comes to health claims and the cost of insurance.
And so I just can’t imagine a better guest to unpack this topic today. My guess is he’s made significant contributions to the field of healthcare administration, particularly in the area of population health management. In the early nineties, he founded the American Health Data Institute, the A HDI, focusing on population health and disease management. The A HDI holds eight patents on its chronic disease management process aimed at improving the health of those with chronic illnesses, ad’s, proactive health management plan. The PHMP incorporates patented chronic management techniques, and this is more than just patents. They actually have demonstrable results reducing medical spending 11 to 17% annually. This is something I just don’t think we hear much of. Please welcome to my show, the founder and CEO of Key Benefit Advisors. Larry Dust. Welcome, Larry.

Larry Dust:
Thank you, Mike. Nice to be with you today. I look forward to the conversation.

Mike Vannoy:
Yeah, looking forward to tapping into your unbelievable amount of experience. I think in an area that is, dare I say, a bunch of empty promises, and I’m not throwing stones at politicians, whichever side of the aisle you lean, I just don’t care. But there’s been so much talk for a few decades now about how do we bend the cost curve of healthcare? And it hasn’t happened legislatively, but there are real things that employers can do to bend the cost curve. What’s the number one thing that you think small business owners need to understand about proactive health management?

Larry Dust:
Well, let me start off with the fact that a lot of programs that are considered to be wellness programs, most of them do not have a good track record. They don’t have provable results. So when we talk about wellness programs, we basically changed the term into proactive health management programs, which carry a completely different twist to them than what the traditional wellness programs that have failed. I mean, if you were to Google wellness programs, you can find nothing but failure out there from the CEOs talking about the programs that they’ve tried that have not had provable results. We’re trying to figure out what the biggest problem is with employers, both small and medium-sized employers and large employers. We identified back in the early nineties that 80 to 85% of their dollar spend is being spent on 25 to 35% of their population. And that 25 to 35% of their population has one or more of, we originally started off with 19 chronic diseases, and as we’ve got more and more data on 2.8 million people that have been in the program, we’ve moved that up to 27 different chronic diseases. And in your opening, you were talking about comorbidities, and many of them have two or more chronic diseases. And out of that relatively small percentage of the population, the 25 to 35% of the population driving 80 to 85% of the dollar spend for an employer, it made sense, pretty much common sense to say, maybe we ought to focus on trying to help that population, first of all to become healthier and therefore less expensive.
When we started in the nineties, it was basically patted on the head by a lot of my peers in the business saying, chronic disease management, it’s not going to work. You’ll never get people motivated to get up and get activated in their own health regimen. And I said, you know what? Chronic disease management has not worked historically, but it’s not because it won’t work. I believe it’s because we haven’t figured out how to make it work yet. And subsequently, we started off and subsequently had the eight US patents on the process. So lemme just say something about the patents. It’s just prima fascia evidence that no one’s ever done it this way before because you’re never issued a patent by the US patent office. If there’s anything such as prior art, anybody has ever done it the way that you’re talking about doing it. So with eight of the US patents published, it is prima facie evidence that no one has ever done it this way before. And so as we began that process, and we didn’t get all eight at one time, we got eight over this period of time. But as we began the process and our database got larger and larger and larger, it became painfully clear that yes, the 25 to 35% of the population is actually driving 85% of the cost. And that we need to find ways to get them motivated and to coach them to get into the doctor’s office to get their regimens of care.
And as the American Diabetes Association said, to put this in a nutshell, they said that an adult diabetic who has a regimen of care prescribed by them that says that they need three office visits, a retinal eye exam, a glucose tolerance test, and a couple of other things throughout the year. And for the adult diabetic that is not taking care of themselves according to those regimens of care, spends around $12,000 per year on their healthcare average. Most of that spent the last several years of their life, but averaged over their lifespan is $12,000 a year. Versus an adult diabetic who is practicing or taking care of themselves according to the regimens of care, spends $4,000 per year. So we basically boiled it down to where good health is good business, we need to get the chronically ill patients into the doctor’s offices to get their regimens of care.
And that’s part of the magic within the entire patented process because we not only have the regimens of care that are a A approved, a D, a approved American Diabetes Association, approved, et cetera, they’re not our regimens of care. They’re the medical professions regimens of care to coach. And we have a full-time staff of healthcare professionals, RNs, especially RNs, dieticians, coaches, MDs, specialty MDs that we have on retainer to take care of the more complex kinds of situations in a coaching process. And then we had to engage employers in the process to say, look, we want your people to go into the doctor’s office. Well, won’t that drive up my claims and then drive up my cost? Well, it’s just the opposite because we’re converting the $12,000 patient, so to speak, into the $4,000 patient.

Mike Vannoy:
So you still have claims, but they’re inexpensive claims versus a heart attack, whatever,

Larry Dust:
Right? Yeah, Mike, that’s exactly right. So in the long run, we have been very blessed and fortunate to have a lot of people join this program. And we have a full-time PhD on our staff that does nothing but climb into our data to validate that the results of the getting people coach up motivated to get into the doctor’s office to get their regimens of care. So we focused on originally the population that were chronically ill. Now, the definition of chronic disease, by the way, is a disease in which you obtain that is there’s no cure for unless there’s some breakthrough medication or something of that nature. So you have this for the rest of your life. So the chronically ill are now being coached, and we have almost all of our employers participating in this program have agreed to set up incentives for them to get up and go.
Now, I’m going to talk about a couple of those incentives, but I want to talk about the center circle first, which are the chronically ill, and then I’ll talk about the unhealthy well, which are in the second circle of the bull’s eye. And the unhealthy well are the people that are doing everything they can to become a member of the revered inner circle of the chronically ill. So they need some lifestyle changes as well coached. If we can close that, if we can slow that migration route down from the second circle to the inner circle, we can find even more return on the dollar spent. Okay. So

Mike Vannoy:
Before we even go there, can you maybe I’m curious, this whole, I like where you started the conversation around wellness and I think wellness, and I’m going to anger some people I know, but I think wellness is developed a bit of a bad reputation as being kind of the soft stuff. And in a war for talent, the soft stuff matters. You need to offer benefits to employees to get them to come to you and stay with you and be brand loyal as an employer brand. But as a CFO or a business owner, CEO, you still have to manage a bottom line. And this is just this crazy expensive cost. Why is it that the general wellness world has failed at bending the cost curve and actually containing, I said before, you can contain costs. You actually have to modify employee behavior and they have to make healthier choices. They have to stay on their meds, they have to keep their weight down, they have to have actually do things that’s super hard to motivate. So before we even talk about what you guys are doing, what those mods are, why has everybody else failed for decades?

Larry Dust:
That’s a very good question, and it’s got multiple layers to it, but primarily two layers to the answer. And one is the first layer is under a CA, the Affordable Care Act, which was passed in 2010. That act was more of an insurance regulations, more of an insurance law than it was a healthcare law. But within the law, within the A CA, they make mention of wellness programs. But one of the biggest mistakes that was ever made within that law, and there are good things in it, and there are bad things in it, like in any massive law. I mean, that’s what happens. But one of the biggest mistakes that they made was they shortened down, they skinny down the incentives for wellness programs that employers could provide to employees into basically financially. You can incent them in only what’s called in the IRS’s eyes in a di minimis way, in a way that is not materially, is not material enough to actually get them motivated to change their behavior.
So one of the most popular things that still happens today, which there are some advantages to what I’m going to say next, but some disadvantages to what I’m going to say next, and that is under a wellness program, they may have people come in and do your weight and your blood pressure and your body mass index. And in most cases what happens is the people that are the triathletes or the marathoners are going to show up to get their BMI taken their body mass index because they’re proud of it and they should be. But there are people like me that don’t go because I already know that I don’t want to hear about it. And especially guys that are worse than females because we just, we’ll

Mike Vannoy:
Just ignore the problem until we

Larry Dust:
Just get sick and die and our wives take care of themselves, and then they tell us that we ought to be taking better care of ourselves. So that’s all true. So the wellness programs we’re disincentivized by Obamacare basically because they were squeezing down the incentives that could be provided under the wellness programs. So they became basically minimis programs where the returns are small because you can’t motivate them enough to get them activated. So along the way, the proactive health management is not a wellness program, it’s an active management, it’s a proactive management of your health. We have a process where we have nurses come out and do an HRA health risk assessment. We take your blood pressure, we take your, because blood doesn’t fib.
We found people that said that I don’t have this, I don’t have that. And yes, you do. You have blood pressure and so forth and so on. And thank goodness that we can find that through everything that we do. So we do that, but we do that just for openers to get some sort of a baseline on the health of the population. And we don’t stop there, which a lot of wellness programs just stop there. So the question that I’ve always had with wellness programs that just stop there is, so what do you do with this? So 40% of our people are overweight, and 35 or 50% of our people have high blood pressure. So I can report that to the employer, but what do we do about it? That’s where it stops. That’s where wellness programs stop,

Mike Vannoy:
I guess, as though awareness itself would’ve done something right. Oh, here’s your A1C, here’s your blood pressure, here’s your weight and shame on you. You need to lose some weight and eat your vegetables.

Larry Dust:
Supposedly, yes, okay. But without some exterior motivation being some sort of a financial motivation that is significant enough to get them moving. But also with the coaching. And the coaching is a major part of what we do on a proactive health management standpoint. So it’s we’re not doing just wellness. We do that for a baseline. And then we start off with the coaching that here’s what your chronic diseases are, here’s what your regimens are. We coach that, and all of our people are trained in adult motivational interviewing, which is a professional training system because we understand that as adults, we get better results if we take baby steps and we take baby steps and congratulate, take baby steps and reinforce, take baby steps and reinforce, if I weighed 400 pounds, I don’t need you to tell me that I weigh 400 pounds in that you need to get down to 180 pounds in 12 months. Okay, I know I can’t do that. Okay, well, let’s talk about losing five pounds. So it’s the motivational incremental steps that we are very, very good at coaching at, and you’re being coached by a healthcare professional, which adds something that wellness programs don’t do.
And what’s interesting about the wellness professional is we have people that we’re coaching that tell the wellness professional on the phone that they’ve developed a relationship with, because we don’t just have a group of wellness professionals. Each wellness professional ends up with a caseload so that John Doe gets to know Mary Jane nurse or Hank Aaron, the nurse. They get to know each other. And what’s interesting is that our population, population that is in their caseload will ask more questions of them than they will ever think about asking of their MD
At the time that they’re in. And they should be asking their md, now we’re even coaching people about what do you need to ask your MD about? And we’ll send you an email or a text with the questions in there that you ought to ask about your particular disease or your chronic disease, et cetera. So it’s coaching people not only to get into the doctor’s office, but it’s coaching people to have an effective engagement with their healthcare professional. Now, we’re not delivering the care, Mike. What we are is we’re the scout, we’re the patients scout for the doctors, we’re scouting their patients and we’re creating patients, well-educated patients to get into their doctor’s office to have a more effective interaction with their healthcare provider.

Mike Vannoy:
What do you mean by that? Their scout?

Larry Dust:
Well, it’s a scout that we are identifying who the chronically ill are. We’re identifying that here are the people that are not receiving their treatment. And if you don’t have a family practice doctor, which most people don’t today,

Mike Vannoy:
Really I did not

Larry Dust:
Know that they do not. The majority of people in the country do not have a family physician. The problem with that is, is the eight minute drive-by office visit that has been created where physicians have been purchased by large corporations, they’re expecting that they make a return on their investment. And so doc, you’ve got to start putting your people through your office eight minutes, every eight minutes, every eight minutes. So it’s a drive by eight minute office visit. And young physicians that are graduating from med school are actually taught how to, in fact, get people in and out of their office more quickly. And I’m old enough to remember Dr. Welby MD on tv.

Mike Vannoy:
I remember Dr. Welby.

Larry Dust:
Yeah, he was the first, yeah, he was the first TV doctor, but he made calls at home. He made home visits, and he knew more about you, and he knew more about your mother and your father and grandpa and your grandma and everybody else in your family. That doesn’t exist today anymore within the doctor patient relationship. So that doctor patient relationship is even broken down to where the doctors are. Many of them are saying this, look, I can tell them that you need to do this before I see you next. And if they don’t do that, there’s nothing I can do about that. You get more follow up from your veterinarian and your dentist than you do from your MD office. You get a phone call from maybe from your dentist, or you get a reminder many times of your office visit to your dentist, or you get a follow-up phone call from your veterinarian more frequently than you do your md.
So the scout, the scout is the one getting you prepared and getting you coached into the doctor’s office to ask the questions that you need to ask. But we’re motivating people to get into the doctor’s office where the care can be delivered. So we’re not delivering the care, but what we are is we’ve stepped into the void that Dr. Wellby created when he no longer existence, so to speak, figuratively speaking, to in fact stepped into the void, to in fact, take that position to get people into the doctor’s office. Now, employers have to join us in the incentives, which we can talk about too.

Mike Vannoy:
I want to go to incentives next. So comparing and contrasting of the failed, I’ll say category. I don’t want to lump everybody together, but I think you can darn your call it a failed category of wellness programs and their ability to impact the cost curve. It’s this proactive, the PHMP, proactive health management plan. It’s the proactive component, right? It’s eliminating the eight minute drive by healthcare into actually having, dare I say, a relationship, even if it’s not a personal relationship. It’s someone who knows your data, knows your health, but it’s not stopping at taking a baseline. Here’s my weight, here’s my blood pressure, here’s my triglycerides, here’s my family history, and then stopping there with, Hey, here’s all these services available to you should you choose to participate. This is actually taking that baseline and then having a coach, a trained coach, guide you and pairing you up with the resources proactively. Am I saying that right?

Larry Dust:
That’s right. And the trained coach is basically the Dr. Welby who doesn’t deliver the care, but is the Dr. Welby that delivers the relationship. It forms the relationship so that you can trust us, you can trust your advisor, you can trust your scout, you can trust your concierge. You can trust the person that you’re talking to. On our staff, we have phone calls all the time from people that say, I just visited the doctor and I don’t know what this means. He told me that I had this and I didn’t have time to ask him. And I’m not sure exactly what the ramifications of all that are. So we explain it to them and they depend upon us to, and when they call us, they call for Nurse Mike, they call for nurse Karen, whoever their nurse is. It’s a trusted advisor that doesn’t exist in a doctor’s office today. So when they trust that, and then we suggest to them that you need to get back in for the rest of your regimens of care.

Mike Vannoy:
So I get the proactive, I get the relationship. I like the scout metaphor. So what did the Affordable Care Act, you said it killed the incentives. What are the incentives, if it killed it, how are you able to establish incentives in a new different kind of plan?

Larry Dust:
Well, there’s two ways. One is to build a couple of things into each employer’s plan. Okay? One of those is that we need to break down the barrier of entry. We need to break down the financial barrier that the most employers out of necessity have created by raising their deductibles, raising their out-of-pocket maximums because their premiums have gone up so high over the last 10, 12 years. Actually, they’ve gone up almost 300% over that period of time. And so as employers can’t continue with that escalating cost at that pace, they’ve had to shift some of that over to employees now. So when those out-of-pockets get so high, and we’re now coaching them to get into the doctor’s office, and if it’s subject to your deductible, good luck with that. So of the 27 chronic diseases we’ve learned a long time ago that our employers have to cover should cover 100% of the cost of the regimens of care for those 27 chronic diseases.
Now, the regimens of care, like the three office visits, a retinal eye exam and glucose tolerance test for a diabetic, actually they’re surprisingly inexpensive. So those regimens of care are not that costly. We even show employers what those regimens of care will cost on a per call basis or a per annal basis, and it’s a small fraction of what is actually saved by the employer by having the total cost of their claims dropped by 11 to 17%. It’s infinitesimal compared to the two. So the ROI on that activity of changing your benefit structure to where you cover 100% of the cost of those regimens of care. So when we’re coaching you, we’re not telling you that now this is subject to your $3,500 deductible, so you’re going to have to pay for this. We’re saying, no, no, no, Mike, this is all covered under your plane. So we’ve knocked down the barrier.

Mike Vannoy:
Forgive me, Larry, just so make sure I got it. Think the light bulb just popped for me. With the escalating costs, deductibles continue to go up, which is why now the high deductible plans are so popular and there’s strategies employers can use there, but the bottom line is the employee is going to have to come out of pocket for that deductible. And if the proactive component, if the regimens are included in that, that they’re going to have to come out of pocket for that, deifies them from participating in these regimens, right?

Larry Dust:
That’s right. That’s right. It’s harder to coach them in. Okay. Even under HSAs, the high deductible plans that you’re talking about, yeah, under a CA, the law is this, that if you have a high deductible plan and you want it to be an HSA plan, so IT tax shelters anything left in the plan that you have for an employee, if you have a chronic disease management program that covers a hundred percent of the regimen of care to get you into the doctor’s office, that a hundred percent coverage in that HSA plan blows out your tax shelter on your HSA. You cannot pay a hundred percent of anything underneath that deductible without damaging the tax shelter of that deductible. So does that make any sense? The people that need to get into the doctor’s office to get their regimens of care to get the 11 to 17% reduction on their claims. Now the law says if your plan pays a hundred percent of that care, then your tax shelter on your HSA goes away. It’s a mistake. And they know, the legislators know that that is a mistake, but they haven’t been able to get the consensus to get the amendment into a CA to correct that over the last 13 years, what

Mike Vannoy:
Was the purpose of it in the first place?

Larry Dust:
The whole idea was that everybody in the country needs to have some skin in the game. So as employer, were covering a hundred percent coverage, at least let’s go way back, a hundred percent coverage, and then deductibles came into play and so forth, then they crept up. But since Obamacare passes gone, boom, sky high. So if you have a high deductible plan and you have money coming out of your pocket, you’re going to be a better healthcare consumer. That hasn’t happened. What’s happened is that almost 40% of the population in the United States delays going, doesn’t go almost 40% today, which is a record high does not go. Now, every doctor in this country will say that my next statement is true. If the doctor could have just seen you when you were in stage one of your disease, there’s four stages, 1, 2, 3, and four. That’s medical terms. Okay? Four is you’re done. Okay? We can’t do anything for you. If we could have just seen you in stage one of your disease instead of stage two, three, or four, we might have been able to stop it, delay it, improve it, and reduce your costs. When I see you in stage three and four, those are massive dollars. Those are six digit dollars in claims.
And so when people delay their care, they’re blowing through stage one, blowing through stage two, getting into stage three, and that’s when they get into the healthcare system when they have no other choice.

Mike Vannoy:
And so simply not participating, I’m not getting my tests, so I don’t, therefore I don’t know what my triglycerides are, my A one Cs, and so when I have that appendicitis that costs 80 grand, or I have the heart attack or stroke that costs 250 grand versus some simple, inexpensive regimens all along. But the system, I’m not, I’m financially disincentivized to participate in those regimens because I have to come out of pocket to do it. I’m saying that, right? Right.

Larry Dust:
That’s correct. And listen to this stat, okay? 50% of all Americans cannot put $500 together in the case of an emergency.
So if you have a 1500 or a 2000 or a $2,500 deductible, and that’s what you’re going to have to spend in order to get this 200, 300, $400 regimen of care throughout the year taken care of, which will prevent you from spending 20, 30, 40, 50, a hundred, 200, 500 hundred thousand dollars because costing in stage one instead of stage four, it doesn’t make any sense, but that’s what the law says on high deductible plans. Okay? Now lemme go back to the second incentive for employers, okay? One of the incentives that we like to use is that if you complete 100% of your regimen of care, if you’re chronically ill, you have to complete 100% of that. Now, we keep track of all of that for you, and we keep track of all of that for the employer about what you’re supposed to get in this regimen, whether you’ve got it or not, whether you receive that care or not. And we keep track of all the financials and all that. So if you receive 100% of your care according to the regimens that, don’t forget Mike, that your employer next year will decrease your employee contribution by 5%, 8%, 10%, the employer picket as to, because if you give them that incentive as an employer to get that regimen of care done, that gives us just a little more economic incentive to get you up and into it. So let me give you a hypothetical. You’ve gotten everything done, Mike, except for your last office visit.
We know that you’re supposed to have an office visit in the last quarter of the year, let’s say, and we don’t see it. We basically politely light you up. We’re texting you, we’re emailing you, we’re calling you, Mike. Don’t forget that you’ve got only one office visit left. I know you’re seeing Dr. Smith once we make contact. Don’t forget that if you get this last office visit, that your employer is going to take 10% off of your employee contribution next year because you complete it all. Okay? I know you’re seeing Dr. Smith. I’ll call Dr. Smith with your permission and I’ll get some dates that you can get in there to get this done. And I’ll even coordinate that with you. Even we have even, well, I don’t have any way to get there. We’ll order an Uber for you and we’ll put that on our tab to get you there and back. How important this is when you’re driving for the 11 to 17% reduction of overall claims. So that’s the two incentives. One is that you cover 100% of the regimens of care, and two is that you set some sort of an incentive up so that when they do complete everything that they’re supposed to, they’re rewarded.

Larry Dust:
Now we’re going to go a couple of steps further because we added another product, which we call the Proactive Health Management Program, which actually was added when we came up with the thought that we’re dealing with these 25 to 35% of the population that are driving 80 to 85% of the dollar spent. That’s the center circle of, let’s say, the bullseye.
Okay? We’ve impacted that and we’ve got more people getting their regimens of care done. But we have this second circle, which are the unhealthy well that are not chronically ill, but are working on becoming chronically ill because of their behavior, their lifestyle, or whatever it may be, and they’re doing everything they can to in fact become a, I said earlier, the revered member of the inner circle of the chronically ill. So if we expand then the population that we’re working with, then we can slow the rate of migration from the second circle into the inner circle. We can even find a bigger return for our employers because we get the second circle healthier. Now, the outer circle, the last circle of the bullseye is your healthy well, those are the people that show up to get their BMI tested. Now, we don’t ignore them, but they’re already very conscientious about their health.
Alright? So it’s these two circles in here. So we added then what we call the proactive health management plan, the HMP plan, and we’ve added a couple of additional incentives in order to make the incentives large enough to get people moving in that second circle. Moving meaning that we created certain things that they need to do in order to qualify for being in the, first of all, everybody’s in the program, but to stay in the program, they have to do certain things at least once a month. And there are things like taking an HRA counseling with a nurse or somebody on our staff actually electronically reading the wellness programs that we’re sending out to them by opening ’em up, taking a look at them, and then closing them a variety of other things. They can have their DNA tested and then we do a whole report on their DNA, et cetera, et cetera, which is possibly something we can go to later on in this discussion if you choose to. Yeah,

Mike Vannoy:
When we’ve talked before, that’s something that’s really intriguing for sure.

Larry Dust:
Yeah. Yeah. So we under a CA, because the incentives that they squash down when they passed the law, there is a product in the industry called an indemnity benefit, which is a fully insured indemnity benefit that is exempt from Obamacare. Being Obamacare does not regulate it.

Mike Vannoy:
If it’s a benefit plan. Why would a CA not regulate an indemnity benefit plan?

Larry Dust:
That’s pretty interesting too, is actually the story is at the very 24 hours before they passed at midnight, they voted on it, okay? 24 hours before that the industry providing indemnity benefits like Allstate and Colonial and Aflac and everybody we’re lobbying the daylights out of, don’t make us eligible. Don’t put us under this because you are paying a flat dollar amount for a medical event regardless of any other benefits that you have, is an indemnity benefit. Okay? So 24 hours before they actually voted on this, they inserted two paragraphs into a CA that said, fixed indemnity benefits are exempt from Obamacare. And that’s why, okay, because of the lobbying effort, and it was a justified lobbying effort. It was a correct thing to do because of the supplement to Obamacare is what it’s become. Now, lemme give you an example. If you’re 65 years old, you’re eligible for Medicare and many Medicare patients buy, what do they buy? They buy Medicare supplements. Well, okay, the indemnity benefits for the non-Medicare age are like supplements to Obamacare.

Mike Vannoy:
I get it. Yeah, yeah, that makes sense.

Larry Dust:
So they made them, they accepted them or exempted them from the regulation center, Obamacare. So when we developed PHMP thinking, okay, we can’t incent people enough inside Obamacare, then let’s go over here to the indemnity benefits where they’re not regulated that way and let’s develop a program which allows them to be incentivized by having a claim now, having a claim by doing something that is good for their health. Now, that’s kind of really interesting because in the development of this, when the first insurance company that I talked to about this, honest to goodness, they said, Larry, have, you’ve forgotten the business that we in. You’re talking about a product that wants them to have a claim. If you’ve forgotten a business that worship, we don’t want people to have claims. I said, I know, I know I, I literally said at the meeting, I said, why don’t we just leave this conference room, take a walk around the building, get a breath of fresh air because I need you to get out of the box that you’re in and think about how this can work to where it’s a profitable product to you as a risk taker, but it also does what we want it to do.
Okay? So we ended up with two carriers that are on board with us as far as that product is concerned, and it is purchased by the employee under section 1 25, which has been around since 1979, okay? That’s when section 1 25, which enables for small employers, any employer, it enables them to reduce the employee’s income by the cost of the premium for the product, for the indemnity product. And therefore, when that is no longer wages, the employer saves FICA savings on it, right? They don’t pay FICA on that. They don’t play payroll taxes on that anymore because it’s no longer wages.
It also enables the employee to purchase it with a before tax dollar because the employee actually ends up paying for it. So the mixture of that, the balance of that is for the premium dollar, the reduction of income that the employee experiences and then the benefit that is paid, the fully insured benefit that is paid when they do what we want them to do, which is good for them, good for their health, more than offsets the reduction in their pay. Suffice it to say for purposes of today, on average there’s a three to a 5% increase in the spendable income to the employee, which some of that might be taxable under the rules at the end of the year, but we even take care of that at the end of the year for the employee. So they have a three to 5% increase in their payroll.
That’s a big incentive for you to participate. Okay? That’s not $15 because you did this or $20 because you did this under Obamacare, it’s three to 5% of your income. It goes up, okay? If you spendable income and the employer saves FICA taxes on it, and so I always say this, the FICA taxes that you save on, it might be, call it $324 a year, okay? For the employer, and let’s say that the employer has, I’ll make it a hundred only because it’s easy for me on the math, you have 32,700 reasons. 100 times $327. You have $32,700 absolutely guaranteed. That’s how much this will save you and I to let me prove it to you. Then I can improve the health of your population to the tune of 11 to 17% reduction in your claims. Not only are we going to reduce your claims, but the fact that you have more presenteeism, the fact that you have happier, healthier, more productive employees is important. Now, if this program, when this program gives a three to a 5% increase in the spendable income, I would also ask you this, Mr. Employer, when was the last time you gave them a three to a 5% raise? In this day and age as a small employer, you might’ve just given him a 2% or 3% or 4% raise, but you can give him another three to 5%. That doesn’t cost you anything to do this.

Mike Vannoy:
Larry, I’m going to see if I can restate this back to you to make sure I got it right.
And so you and I have talked a few times, so I do think I understand it, but I will tell you the first time I heard it, I was waiting for the two. Good to be true. Gotcha. So I want to restate it and I want to come back to that and address that. So there’s two sides of this coin. There’s the employer portion, there’s the employee portion on the employee portion. Basically I need to buy insurance. It’s this proactive insurance that gives all this benefits that comes with proactive coaching. It’s this scout that you talked about. There are financial incentives. There are proactive incentives for me that if I do in fact participate, I don’t get to sit on the sidelines having taken a baseline assessment. I have to participate, I have to do something. But if I do that, then I’ve lowered my risk to the insurer and so that they can then incentivize me and pay me back to offset that premium at the same time, because this qualifies as an indemnity insurance, a section 1 25 plan. It is pre-tax. Therefore my FICA tax is decreased when I combine the rebate essentially. I don’t know if that’s the right word or not, but the rebate I get back from the industry.

Larry Dust:
No, no, no, no, no. We don’t use that word. It’s a claim when you combine the claim payment that you received claim

Mike Vannoy:
Payment. So when I combine the claim payment with the tax savings as an employee, I actually come out dollars ahead. Correct. I have that. Right, right. Well said. On the employer side, it’s simpler by offering this plan, and I love the way you described it as a supplemental plan to the primary health insurance. So offering this supplemental plan that helps people to stay proactive in their health. You are, in fact, you are reducing the FICA because it’s pre-tax. You’re reducing the FICA burden and you’re literally lowering your tax expense. Probably we can have a whole nother hour conversation on this. The impact of that lowering the claims, depending if you’re self-insured or not, there’s all kinds of flavors we can talk about. The punchline is by having lower claims, you can literally lower the expense of your health insurance you’re providing for your employees as well. Am I saying all this correct?

Larry Dust:
That is correct. That is correct. Okay. Now that expands by it by adding this to our chronic disease management that we started off with, and now we have the PHMP and our chronically I’ll participate in this as well, but it expands our reach from the chronically ill to the unhealthy, well actually to everybody in the workforce. The PHMP does the product that we’re talking about today. So we went from a center circle, 25 to 35% of the population spending 85% of the dollars, boom, all the way out to everybody in the organization and working on improving the health of everybody in the organization through the PHMP with some significant incentives. But we have the same coaches, we have the same scouts, so to speak, working with them, and we’re doing some interesting things there. If you want to talk just a little bit about the DNA.

Mike Vannoy:
Yeah, let’s talk about that. So we won’t unpack every single component of the benefit that you offer as this proactive, the PHMP, but one of them that’s I think most intriguing is the DNA test. I think we’ve all seen what the 23 and mes and the whatever, all other hierarchy.com or whatnot, hierarchy whatever, genealogy.com and all this kind of stuff. So this isn’t that. This is the DNA test that reveals all kinds of really interesting things that help in the proactive management of your health. Tell us more about that.

Larry Dust:
Well, you’re exactly correct. It is not genealogy, it’s not all that and none of that. Okay? It tells you according to your DNA, what kind of food do you need to eat that you metabolize better, and what food do you eat that you don’t metabolize? So we’re starting to work on a scientific approach to weight loss. And the quick story on my own, when I did this on my own, I’ve never liked green vegetables, okay? I’m never, and whenever I have a green vegetable put on my plate, I always salted automatically. I don’t even taste it. I put salt on it.
And my wife, who I love dearly, and she is very supportive and so forth, except for you don’t eat enough green vegetables and so forever it’s got you need to eat more green vegetables. So I’m eating green. And so when I get the DNA report back and it said literally on page 11, it’s like a 45 page report based upon how you metabolize everything and so forth and so on. But it said that you probably don’t like, according to your DNA, you probably don’t like green vegetables. And honest to goodness, it goes on to say, and because you think they taste bitter and because you think they taste bitter, you probably over season them. Wow. I’m going, this is crazy. This is crazy. Yeah. So I took it home and at dinner I said, look at this page, page 11, okay, I had highlighted it. I said, it’s not me, it’s my DNA, I can’t help it. Yeah,

Mike Vannoy:
You can’t help it. You’re absolved thi

Larry Dust:
Yeah, but it’s that detail. But it also tells you that how to exercise. Do you have the sprinter gene? Are you better off exercising, long duration, low impact? Are you better off with intervals and so forth and so on? And it knows by your DNA, they can tell by your DNA, how do you get the most benefit out of your exercise regimen and what you should be doing, et cetera, et cetera, et cetera. Now, let me tell you about something that we are close to adding, and there are 11 genes that are settled by CDC. That’s the government that these 11 genes, if you have any one of these 11 genes, which these 11 genes are centered around heart disease and cancer. And the reason why we’re interested in this is because heart disease and cancer are the two leading killers in the United States as far as disease are concerned. So if you have any one of these 11 genes, you are, you’re more prone to actually having heart disease or getting cancer. Now the science is settled on those 11 genes. These are for real.
So we’re on the threshold of adding that to the benefit lineup under the DNA testing for those 11. So the question that I’ve always had is if we’re testing for those 11, and I tell you, Mike, that you have a gene that says you might, you’re more inclined to have a heart issue than what somebody who doesn’t have that gene doesn’t mean you’re going to have it. It’s actually only like 3% of the people that test positive for those genes actually end up having it. So 97%, but so if I’m telling you that you have that gene or one of those 11 genes, am I going to scare the daylights out of you for the rest of your life? I mean, so what is not acceptable to me? So what we are in testing now, and it’s looking pretty good, is there’s a wristband that we can put on you that actually by wearing the wristband, it’s not like a smartwatch.
This is a wristband that sends an electronic message up to the cloud back to us that in fact, something is kicked into your system and it can diagnose over 100 different diseases according to what has been approved by the FDA so far. Alright? So if you have one of those genes, what we’re discovering now and testing now is if that gene kicks in and lights up, what will it do to this bracelet? And if it does something to that bracelet, it sends the signal to us, it comes back down to us and we’re back up with you saying, Mike, this thing just lit up. Okay, you need to get into the doctor’s office and this is why, blah, blah, blah. Now if we can get you into the doctor’s office when that lights up originally, originally, instead of having stage 1, 2, 3, and four, we think we might be onto stage minus one so that we can get you into the doctor’s office sooner and coach you into that. And we can tell that by monitoring you 24 7, if you allow us to do that about what your health is, and if one of those 11 genes lights up, hopefully we can tell that so we can get you into the doctor’s office and catch that sooner than they’ve ever been able to catch it before. So we’re not stopping where we are with the athletic stuff and with the dietary stuff and the lifestyle stuff, we’re progressing into an area that is significantly could be very significant relative to the top two killers in the United States.

Mike Vannoy:
So interesting. When I first heard about this, when you and I met a few months back, just been researching online, and I just haven’t thought about it this way before. We know we get eye color, hair, facial, hair height, weight. I mean, we accept all these variations is genetic we get from our parents and from our family trees, right? Just don’t necessarily, it doesn’t dawn on you that the way in which you metabolize food, the way in which your body does or doesn’t absorb nutrients. There’s genetic variation in how that happens the same way as their genetic variation to height, right? A very, very eyeopening. The capabilities here, it’s really cool.

Larry Dust:
We have a lot of people doing that within the PHMP product. We have a lot of people that take advantage of that, and that’s all within the product, and that’s all. That’s not an additional expense for the individual to do that either. So it’s all set up.

Mike Vannoy:
Here’s what I think is super cool, and I’d love to have you back on and I’d love to do a section 1 25 FICA related, more financially oriented conversation. This is real. This isn’t a too good to be true story. How the insurance industry reconcile this. I use the word bite. You quickly corrected me. I bet there’s a legal reason for that. There is.

Larry Dust:
Don’t do that.

Mike Vannoy:
Right? Right. And so it’s claims payments that, so I want people to, as an entrepreneur, I want to understand that because there’s something here that you’re going to offer me a benefit that’s going to actually save me money. I’m going to have to come out of pocket, you’re going to reimburse me. I mean there we need to unpack that. But on face value, I think we all, as employers, it’s not just altruism. We want healthier workforces. We recognize, especially small businesses, even if you’re under 50 employees, you don’t have to by law provide benefits to the Affordable Care Act requirements. Increasingly, I mean, we’re at 3.7 unemployment for a couple years now. This ain’t going away. The war for talent is permanent for the next, at least 50 years based on birth rights 30 and 50 years ago. So you’re going to have to compete for talent in a way you never did before.
So smaller and smaller employers are now offering, considering, and now offering health benefits more than they ever have. And when they do that, you instantly start caring about claims because claims a medical expenses cost the employee, but they also cost you as an employer, you have to start caring about this. So the big difference, and let’s see if I’m getting this right. The big difference of the wellness industry of the past, which made some of these same promises, but it never came true, and I would say especially after the Affordable Care Act, ironically, is because all the incentives to spend money to go do the doctors, to do the regimens went away. And because there’s no incentives, it’s actually counter incentive for people to get healthy. And so the difference of A-P-H-N-P type program is you’ve figured out a way to make this an indemnity policy that is the pre-tax, and it nets out cash positive for the employer and for the employee to then be because you were able to get the incentives in place to be proactive and actually do something about the health, not just taking a baseline snapshot. How did I do?

Larry Dust:
You did great. That’s absolutely right. I shouldn’t say also that when you talk about smaller employers, we’ve done this down to 10 and above. I mean, we’ve helped a lot of smaller employers with something like this. So it helps them with the cost because it increases their FCA savings. It doesn’t cost ’em anything. It actually increases their FCA savings and so forth. And it’s very positive for the employees. So it’s a win-win for both of them. We have actually had the PHMP in the marketplace for almost eight years now, and we have never had an increase in the cost of it.

Mike Vannoy:
Wow.

Larry Dust:
Yeah. So it’s totally stable. We don’t see anything in the future, knock on wood, we don’t see anything in the future where we have a rate increase on the PHMP at this point.

Mike Vannoy:
Yeah, that’s kind of unheard of.

Larry Dust:
It is unheard of, right? It absolutely is. So it’s not one of those things that an employee that an employer gets involved in and then all of a sudden X-Ray gets a 30% increase or it gets a 15% increase, and he has to worry about that too. That’s not happening with this product. Yeah.

Mike Vannoy:
I would close maybe with this then I’ll offer you some closing remarks, Larry. I’ve said it probably three, four times in the last hour that this isn’t necessarily about altruism. So wearing my capitalist pig entrepreneur hat, how do you compete in the war for talent to get employees who want to work for you and stay with you? There’s all kinds of really good black and white rows and columns capitalist running a business. Reality is that you should be thinking about this and providing for healthcare. There just is the also truth. A healthier workforce is going to be more productive. And if your employees see you as the employer is providing a path that’s different from the employer across the street that is not just about paying extra few cents an hour, but how do I make you healthier? And I’m providing you kind of novel concepts and novel ways of staying healthier. I mean, you’ve adhered yourself to that employee in a very different way and maybe to their family in a very different way. So I don’t want to look down my nose too much at the altruism here, helping take care of your team. It’s a good thing in and of itself. Larry, give you the final word here.

Larry Dust:
Well, I think just to summarize what you said, it is absolutely true that good health is good business all the way around. And for those of us who are employers who actually are interested in getting our people healthier or giving a benefit to our people, that actually is a big benefit to them. The question is, how do I afford it? This is one way to afford a benefit. It’s not the major medical benefit, but it’s one way to afford a benefit that is truly meaningful to your people. And you’re right, Mike, if somebody across the street is not making this available, we hear all the time that it makes a difference, employers, from employers, that it makes a difference about their turnover.

Mike Vannoy:
Yeah.

Larry Dust:
Right. Yeah. So yeah, you’re spot on.

Mike Vannoy:
All right. Next time we talk, we’ll get into the wonky, legalistic texts. We’re going to have to talk IRS Tech code, I’m afraid. But the impact is really, really important for business owners, especially small businesses who are just kicking scratch and clawing to get capital. So until next time, thank you so much, Larry.

Larry Dust:
Okay. Thank you, Mike,

Mike Vannoy:
And to everybody else for joining us today. If you got value from today’s conversation, if you enjoyed today’s conversation, invite you to like, comment, share, subscribe to the show on whatever platform of choice. Until next time, we’ll talk to you later. Thanks. Thanks again, Larry.

Larry Dust:
Thank you.

Mike Vannoy:
That’s it for this episode of Mission to Grow. Thanks for joining us today. For show notes and more episodes, visit us@missiontogrow.com. If you found this content valuable, I invite you to share it with a friend and subscribe to the show. If you really want to help. I’d love it if you left a five star review on Apple Podcasts, YouTube, or wherever you listen. Mission to Grow is sponsored by Asure. Asure helps more than 100,000 businesses get access to capital, stay compliant, and develop the talent they need to grow. To learn more about how Asure can help your business grow, visit Asure software.com. Until next time.