When it comes to insurance, having the right data is key — especially when mapping out a three-year course.
As a Cleveland-based insurance broker, Armada Risk Partners provides insurance solutions and risk strategies. And while it offers property and casualty, private risk and life insurance to its clients, it really excels in finding solutions and battling cost drivers in health care and benefits programs — especially in companies that have between 200 and 2,000 employees.
“We focus on companies with between 200 and 2,000 employees because once you get below 150 employees, insurance carriers do not like to give you the specific data to make a real impact on a program,” says Edward J. Purcell, executive vice president of the company. “Below a certain level, a carrier will only speak to you in generalities. Without that data, you really have no way of differentiating between programs; you can’t challenge, change, control or work with it — although with AI and some captive solutions, that may be changing in the very short term.”
In the health care space, Armada Risk Partners’ focus is to identify the true drivers of cost and administrative burden, whether it is poorly performing PPO (Preferred Provider Organization) networks, unmanaged pharmacy contracts, block-box fully insured arrangements or paper-based HR processes.
“We have unique ways of uncovering true costs and the drivers of those costs, and there are a couple of different areas that we focus on,” says Purcell. “We look at your pharmaceutical spend and can come up with creative programming or have contract negotiations to reduce costs through the PBM (Pharmacy Benefits Manager). They decide all your pricing for your pharmaceutical spend. Once we figure out the true spend in pharmaceutical, we then come up with ways we can approach the industry to effect a real change in savings, whether that is renegotiating rebates, or renegotiating the contract — lowering or eliminating the spread the PBM takes in the form of a compensation.”
This could include moving the program to international sourcing for exceptionally high-cost medications. In one case, says Purcell, Armada saved a client over $1 million over three years simply by maximizing rebates.
Another area that Armada tackles is when a company’s health care program gets “lasered.” Lasering involves a carrier setting a higher deductible for specific individuals or groups of employees who are deemed to be at a higher risk of incurring larger medical expenses.
“The deductible for the person being lasered can be $100,000, $1 million or even $5 million, which can be a significant pain point for a company or
individual,” says Purcell, and “depending on the reason for the laser, we have a few solutions to help get those reduced or eliminated altogether.”
Armada can also work with businesses to develop programs that help the company combat health care trends among employee populations to reduce costs, like anti-smoking campaigns or fitness programs that can help fight obesity or diabetes — which can ultimately reduce a company’s health care spend.
“We have seen companies come out with anti-smoking campaigns that cost tens of thousands of dollars, only to find out they only have five or six people in their company who actually smoke,” says Purcell. “At the same time, they may have 73 people who are obese, or maybe even diabetic, who are not taking their medication. Again, without having the proper data, it’s hard to know which approach will benefit the company the most.”
Having these kinds of customized programs based on health care data is an essential tool in reducing costs, says Purcell. “That’s why we emphasize sitting down and having long-term discussions on where we want to be in two or three years, and how we are going to get there — without shocking the budget or the employees. It’s very important to develop this two- to three-year plan.”
