Our Senior Vice President, Prabal Lakhanpal, was quoted in an article from Captive.com spotlighting how private equity firms can utilize captive insurance to lower the costs of risk. You can find the full article here.

Title:

Managing Partner

When Did You Start Spring?:

In 2004, I co-founded Spring with Karen English, Steven Keshner, John Cassell, and Teri Weber as part of a management buy-out from Watson Wyatt. I thought we could all bring unique skills that would deliver for clients.

Where Are You From?:

I’m from Burlington, MA, and I’ve lived in Massachusetts most of my life. Although now I also spend time in Rhode Island and New Hampshire.

At Work Responsibilities:

I lead the team, drive thought leadership and business development, and contribute to some of our largest consulting engagements. My role also involves shaping our firm’s strategy and fostering client relationships.

Outside Of Work Hobbies/Interests:

I enjoy traveling, playing tennis, spending time with the family and following Formula 1.

Fun Fact:

I majored in both finance and film because I was passionate about becoming a movie director. You never know where your career path will take you!

Describe Spring In A Few Words:

Awesome people doing great work!

Favorite Movie:

The Seventh Seal by Ingmar Bergman.

Pets:

2 Pets named Shadow and Tygger . Shadow is a sweet, large black labrador retriever who loves to play! Tygger is a cat (whose coloring resembles Tigger from Winnie the Pooh).

Do You Have Any Children?:

I have 2 incredible daughters: Emily (46) and Stephanie (36)

Favorite Food:

I enjoy a bit of everything, especially love variety—Thai food comes to mind first!

Favorite Place Visited:

Stockholm during the winter.

If You Were A Superhero Who Would You Be?:

Wonder Woman.

Favorite Book:

Black Bird Oracle Book by Deborah Harkness.

Name One Thing On Your Bucket List:

To visit Jerusalem.

What Is One Of Your Proudest Moments?:

Seeing my daughter graduate and get married.

If You Won The Lottery, What Is The First Thing You Would Do?:

I would donate back to the community. Rosie’s Place is a specific philanthropy I’ve been involved with and they do wonderful work on behalf of women in the Boston communities. I’d use the winnings to help those less fortunate, to help lift them up.

What Are You Passionate About?:

Delivering excellent results for clients, building long-lasting relationships, and working with the incredible team we have at Spring!

As we slowly approach the end of 2024, we had the pleasure of sponsoring and attending The Northeast HR Association (NEHRA)’s Annual Conference in the scenic Newport, RI. NEHRA brings together HR experts across the region to discuss current trends and developments impacting the HR and benefits industry. Some of the topics I found most noteworthy include:

Championing Diversity, Equity and Inclusion (DEI)

Championing DEI was a focal point at NEHRA’s Annual Conference this year, underscoring its significance in today’s workforce. By actively promoting diverse perspectives, organizations can enhance creativity and problem-solving capabilities, driving better business outcomes and creating equitable workplaces. Here are some related sessions I found impactful:

Fostering a Supportive (& Efficient) Work Culture

Creating a supportive yet efficient work culture remains a challenge for HR teams nationwide. Speakers shared best practices for prioritizing collaboration and open communication while emphasizing efficiency. This focus on supportive environments that boost employee morale and productivity was a hot-button topic this year.

– HR leaders explored unique “Situational Awareness & De-Escalation [tactics] in the Workplace” and tips for addressing high-tension workplace situations.

– As the war for talent continues, two talent acquisition professionals discussed the importance of “Strategic Flexibility: [and] Navigating Talent Shortages with Flexible Hiring Practices.”

-Berklee College of Music’s Associate Director of Talent Acquisition discussed the importance of “Stay Interviews” and how simple check-ins can remind employees of their importance to organizational success.

Supporting Mental Health

Mental health continues to be a top priority for  HR and benefits professionals across the region. Workshops and panels highlighted the need for initiatives that reduce stigma and promote work-life balance. By prioritizing mental health, HR professionals can create happier, healthier workplaces that enhance company culture and drive long-term growth. Below are some valuable sessions I’d like to spotlight.

– This year, attendees were able to enjoy a Sunrise Wellness Walk each morning of the conference. It provided a great opportunity to destress and explore the beautiful Newport neighborhood.

– As isolation and loneliness continue to impact many Americans, the session “Isolation, Inclusion and Workplace Collective Care: Strengthening Staff Mental Health” showcased tactics  for fostering a supportive environment.

– A clinical psychologist addressed “Getting Intentional About Managing Stress and Burnout: From Personal Practice to Organizational Impact,” providing guidance on navigating personal stress and building confidence.

In summary, the NEHRA’s Annual Conference created a vibrant atmosphere for networking and meaningful discussions on pressing trends shaping the HR landscape. We thoroughly enjoyed reconnecting with industry leaders, meeting emerging talent, and participating in insightful sessions. We look forward to seeing how these discussions evolve at next year’s conference.

As seen Captive International’s US Awards 2024
A conversation with Spring Consulting Group’s experts sheds light on the importance of conducting thorough feasibility studies before establishing captives.

“Key stakeholders can’t make informed decisions without a clear picture of costs and potential savings.”

Peter Johnson

A crucial step in determining whether a captive is the right fit for a company is conducting a comprehensive feasibility study. This process involves more than just a surface-level review—it’s a deep dive into the organisation’s risk profile, historical data, and financial structure to ensure the most effective and efficient use of a captive.

At Spring Consulting Group, experts such as Peter Johnson and TJ Scherer lead the charge in guiding clients through this vital evaluation. Their approach combines deep actuarial analysis, extensive industry knowledge, and an independent, unbiased perspective to help businesses uncover the full potential of captives. 

In this interview, they shed light on the importance of feasibility studies, the necessary datapoints, the value of independent reviews, and how Spring’s approach sets it apart in the competitive captive consulting landscape.

Q: Why is a captive feasibility study important?

TJ Scherer: A feasibility study provides an independent assessment of the blueprint for a captive insurance company. A company needs someone to evaluate what risks should and can go into the captive and determine the appropriate retention levels. It’s about ensuring that the captive qualifies as a true insurance company, and that the insured reviews and concurs with the proposed structure.

There are various structural options such as cells, single parents, incorporated cells (both onshore and offshore) and group captives.

It’s essential to select the right captive structure and domicile that align with the company’s goals and risk profile. Without a holistic evaluation, significant factors could be missed.

Q: What kinds of datapoints are needed to conduct a feasibility study?

Peter Johnson: Initial required datapoints to kick off the review include:

Metrics such as the internal rate of return and tax rates and considerations at Federal and state levels are crucial. Receiving five to 10 years of the referenced historical data helps establish the initial review and thorough process that is generally required by the commercial markets who are being proposed the captive programmes.

Key stakeholders can’t make informed decisions without a clear picture of costs and potential savings, and that’s where data becomes indispensable.

TJ Scherer: You need to consider anything that could affect the projections:

Without comprehensive information, recommendations might not reflect the true state of the company and proposed captive structure. Open communication is key to ensuring our analysis reflects both current and future realities.

Q: What is the value of an independent viewpoint?

TJ Scherer: Independence allows an unbiased review of the current and proposed programme. Sometimes, the players involved are too invested in the status quo, which means options such as captives aren’t fully explored. By engaging an independent consultant, you’re ensuring that someone is evaluating the programme without an agenda, is focused solely on the insured and is agnostic to the domicile or ultimate structure of the proposed programme.

Peter Johnson: Having an independent review with a captive consulting focus can shed new light on value-adding options for the insured.

“The key is to start early enough to implement changes before issues become larger concerns.”

TJ Scherer
Q: How does loss experience come into play?

Peter Johnson: Loss experience is a vital factor, especially when determining whether a captive is a viable solution and to determine appropriate captive premium level. For example, if your loss ratio is consistently low—around 50 percent or below—it may indicate inefficiencies in the commercial market, allowing a captive to become a more cost-efficient risk funding solution.

When it comes to developing captive premiums, we analyse historical loss experience along with exposure and captive retention levels to determine the projected funding for the captive, ensuring there’s enough premium to cover expected losses and operating costs in expected and adverse scenarios.

TJ Scherer: It’s important to consider the frequency versus severity of losses. A high loss ratio could be due to one large claim over 10 years, but commercial markets may still hold that against the insured on renewal. Understanding these nuances is fundamental in designing the right retention and funding levels.

Q: What key insights can be uncovered from a captive feasibility study that inform a captive strategy?

TJ Scherer: A feasibility study can open options the insured may not have considered. For example, an insured might think its premiums are too high, but upon evaluation, they could find that their premium is actually reasonable, but there are possible savings by changing the current retention.

These studies broaden the insurance programme’s view, exploring the total cost of risk and the potential savings and loss scenarios, all focused on helping make go/no-go decisions on the captive strategy.

Peter Johnson: The study provides a transparent view of what the next few years could look like from a financial standpoint. It highlights costs such as upfront capitalisation and ongoing premiums which provide decision-makers with the information they need to make informed choices. It can address the best course of action around what exposures to add to the insured’s captive, and when.

Q: What makes Spring’s captive feasibility study process unique?

Peter Johnson: At Spring, we have internal credentialled actuaries that span both benefits and property and casualty (P&C), which is rare in the industry. Our actuarial expertise and integration of our consulting expertise across multiple disciplines allows us to deliver powerful, independent feasibility studies.

Everything is typically handled in-house and heavily peer-reviewed, ensuring that each study is viewed through various lenses to push the analysis further.

TJ Scherer: Our review process involves blind evaluations, where someone unfamiliar with the project assesses the study, ensuring it aligns with the insured’s goals and objectives. This internal scrutiny helps us address the full scope and deliver a comprehensive solution.

Q: Do you ever conduct ‘refeasibility’ studies, and if so, what is their value?

Peter Johnson: Yes, refeasibility studies are valuable, especially for existing captives. We recently worked with a large energy company to revisit its entire programme. By reassessing the insured’s current coverages, retentions, and domicile, we confirm the current structure is maximising efficiency or propose possible areas of change. It’s a process we recommend every three to five years to ensure the programme remains optimised.

TJ Scherer: Captives need to adjust to the market and their insureds’ needs, so refeasibility studies or annual actuarial updates are essential. Without periodic reviews, captives may lose their value or fail to meet the insured’s goals over time.

Q: When is the right time to start a captive feasibility study?

TJ Scherer: There’s no wrong time, but the sooner, the better. Some clients like to initiate a feasibility study right after renewal, while others may prefer mid-term evaluations. The key is to start early enough to implement changes before issues become larger concerns.

Each insured operates on a different timeline, but a typical feasibility study takes four to eight weeks from the start. From there, if a decision to form is made, it can take another two months or more to get to formation, depending on internal approvals and other timelines.

Regardless of the specific line of coverage, claim audits are a best practice for employers and plan sponsors to ensure accuracy, identify errors, and document process gaps. A comprehensive claims audit can uncover issues related to compliance, adherence to contractual provisions, and consistency with best practices.

While most employers and plan sponsors understand the value of a claim audit, it is common to struggle with knowing where to start, and more specifically, when to start. For clients looking to audit their disability claims, we recommend considering the following factors in determining an optimal timeframe:

1. Vendor Implementation

If you are implementing your fully-insured disability plan with a new carrier or your self-funded disability plan or program with a new claim administrator, conducting a claim audit after the go live date can ensure that:

Conducting a claim audit post-vendor implementation can help solidify the foundation for the relationship and serve to identify opportunities for improvement before they grow into more significant roadblocks as the volume of claims increases.

2. Renewal & Stewardship

Whether you have a vendor administering your self-funded disability plan or program or a carrier insuring your fully-insured plan, it may make sense to conduct a claim audit in anticipation of your renewal, allowing you greater insight into:

As your team comes to the table to advocate for a fair renewal, audit findings can be a powerful negotiation tool. They can be used not only to position your organization for a more favorable renewal, but also as leverage to correct those findings that have had a negative impact on the plan or program’s financials and/or your employees’ experience.

3. Compliance

When determining the right time for a disability claim audit, if your plan is subject to The Employee Retirement Income Security Act (ERISA), your fiduciary duties may drive your decision to conduct an audit. As the plan sponsor, your organization is a fiduciary and must act prudently. An audit is one way to fulfill your fiduciary duty to act prudently as it not only monitors your vendor’s performance, but also ensures that the plan is in compliance with ERISA, the Internal Revenue Code, and other applicable laws.

4. Trend

Most employers receive some type of regular reporting and claims analysis from their vendor partners. When considering a claim audit, pay close attention to the data you are receiving, and consider setting things in motion if your plan or program’s experience is yielding an unexpected or new trend. In doing so, the claim audit can:

5. Self-Funded, Self-Administered

If you have a self-funded disability plan or program which you manage inhouse, you may want to consider establishing a routine cadence for conducting an audit of your team’s claim handling to:

Conclusion

Disability claim audits should be one tool in an employer’s toolbox for ensuring compliance, vendor and internal performance, and an overall positive claim experience for your employees. In conducting a claim audit, employers need to determine stakeholders involved, resources (internal or external), data gathering methods, goals, and processes. While the ideal time may vary by employer, the question of when to conduct the audit is another integral component of your claim audit strategy and should not be overlooked.

If you are interested in conducting a claims audit but need guidance or an objective partner to assist, please get in touch with the Spring team.

Spotlight on Cancer Point Solutions: Supporting Employees with Targeted Innovations

In today’s rapidly evolving healthcare landscape, cancer remains one of the most complex and challenging conditions to treat and is a top cost driver for many employers, including colleges and universities. Thankfully, advancements in cancer care are offering hope and transforming patient outcomes. One of the most promising developments is the rise of cancer point solutions, which aim to address the specific needs of cancer patients through targeted interventions and comprehensive care models.

What Are Cancer Point Solutions?

Cancer point solutions are specialized programs or services designed to address key aspects of cancer care, from prevention and diagnosis to treatment and survivorship. These solutions often combine cutting-edge technology, personalized care, and multi-disciplinary approaches to improve patient outcomes and enhance the overall healthcare experience.

Why Are They Important?

Traditional cancer treatment often involves navigating a fragmented system of specialists, treatments, and services. Cancer point solutions are designed to streamline these touchpoints by offering a holistic approach that integrates various aspects of care. These areas may include:

Benefits to Patients and Providers

Cancer point solutions offer several advantages to both patients and healthcare providers:

  1. Improved Patient Outcomes: By leveraging innovative treatments and technology, cancer point solutions can lead to more successful outcomes, fewer hospital readmissions, and improved quality of life for patients.
  2. Cost-Efficiency: Early detection, personalized treatments, and streamlined care processes can reduce unnecessary treatments and hospital visits, ultimately lowering overall healthcare costs.
  3. Enhanced Care Coordination: With all aspects of cancer care integrated under one solution, providers can collaborate more effectively, reducing the risk of miscommunication and errors in treatment and improving the patient experience.

How Cancer Point Solutions Are Shaping the Future

As healthcare systems continue to adopt value-based care models, cancer point solutions may play an increasingly important role in optimizing care delivery. By focusing on both clinical and holistic outcomes, these solutions not only enhance patient care but also align with broader goals of improving efficiency and contributes to a holistic employee benefit model to support employees at various points in their lives.

Conclusion

While many cancer patients may have access to certain benefits through their providers and care teams, providing additional support through an employee benefit solution can give employees seeking care or caregivers supporting their family members additional resources and tools during a difficult time. By embracing these innovative models within a benefits program, employers can help their employees access more personalized, coordinated, and effective care, ultimately improving the lives of those affected by cancer and positively impacting organizational population health.

For more information on how our health and welfare consulting team can help you implement or optimize cancer point solutions within your organization, please contact us today.

1 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8634312/
2 https://www.cancer.org/#:~:text=The%20American%20Cancer%20Society%20offers,patients%2C%20families%2C%20and%20caregivers
3 Improving Modern Cancer Care Through Information Technology
4 Patient-Centered Cancer Treatment Planning: Improving the Quality of Oncology Care. Summary of an Institute of Medicine Workshop

Workforce populations tend to be diverse in terms of demographics as well as other factors such as geography. This is one of the primary reasons healthcare programs are aligned with and sponsored by employers. These programs aim to achieve high enrollment to accommodate the demographic diversity among members. This, in turn, creates a system where the highest utilizers are subsidized by the leanest. There are several typical drivers that affect utilization: age, gender, morbidity, family size, etc. For mature populations participating in employer-sponsored healthcare programs, new hires with more favorable demographic characteristics help offset rising costs for aging employees, providing a consistent balance between those subsidizing and those being subsidized.

One of the largest demographic drivers of cost is age. As age increases, so do costs. When a population has aging members staying on well beyond 65, it becomes difficult to maintain the same influx of younger members to offset these rising costs. There are many industries where employees tend to work beyond age 65, such as education, public administration, and real estate. Additionally, due to rising retirement costs and increases in the cost of living, it has become necessary for many individuals to work beyond the traditional retirement age. The result is an average age that dramatically increases over time and average plan costs that outpace already burdensome medical and pharmacy trend rates.

How can we control these ongoing costs?

In general, there are many levers typically used to control healthcare costs. Many of them still make sense in the present environment, though they may be unattractive in a competitive employment situation. Examples include increased employee cost-sharing, leaner healthcare offerings, more stringent participation requirements, disease management, utilization management, and leaner pharmacy formularies.

How can we specifically address older members?

In the case of consistently increasing average age, these cost-control approaches may be temporary and insufficient. Further steps may include such approaches, but employers may also seek to decrease the number of older members remaining enrolled in the plan. Some specific suggestions include:

In summary, mitigating the increase in medical and pharmacy costs over time is already a significant challenge for employers, and aging populations can exacerbate these increases. It’s important for employers to address these issues head-on or face financial headwinds that could impact their stability. Please reach out to our team to explore these solutions further.

1 https://newsroom.fidelity.com/pressreleases/fidelity-investments–releases-2024-retiree-health-care-cost-estimate-as-americans-seek-clarity-arou/s/7322cc17-0b90-46c4-ba49-38d6e91c3961#_edn2

In recent years, a new term, carewashing, has emerged in discussions about workplace culture and employee benefits.  The concept reflects a growing concern that companies are superficially adopting caring practices and policies—often as part of their branding—without genuine commitment.  Modern employers aiming to foster authentic and supportive workplace environments should reflect on this term and how it relates to their positioning with their external clients as well as their employees.

When we shine a spotlight on employee benefits, carewashing refers to the practice of companies presenting themselves as caring and employee-focused, without implementing substantial, changes that truly benefit employees. In some instances, employers may implement meaningful programs, but since employees are unable to take advantage of them due to cultural limitations they are still viewed as carewashing.  For example, a company might promote its new mental health day policy or wellness app extensively but fail to address systemic issues like excessive workloads, inadequate mental health resources, or poor management practices. The result is a veneer of care that can mislead both current and prospective employees about the organization’s true commitment to well-being. 

It is imperative that organizations work to combat carewashing because of the impacts it can have on the business, employees, and their families.

To mitigate the risk, employers must self-reflect and talk openly about their approach to employee benefits, ensuring their programs reflect their culture and vice versa.  In some instances, offering programs without cultural support may do more harm than good.  Using these guiding principles will go a long way to reduce the risk of carewashing:

Although the terminology will change, any program design that undermines the trust of employees or clients will lead to disengagement and dissatisfaction.  Make sure the programs you implement within your benefit offering do not mislead employees.  Employees often tap into employee benefit programs during some of the direst times in their lives; nobody wants to feel carewashed when what they really need in that moment is care. 

If you could use objective guidance on building and prioritizing realistic benefits initiatives, or evaluating your current state for carewashing red flags, please get in touch with our team.

1 Witters, Dan. “Showing That You Care About Employee Wellbeing.” GALLUP. https://www.gallup.com/workplace/391739/showing-care-employee-wellbeing.aspx

In August 2022, the Inflation Reduction Act (IRA, P.L. 117-169) was signed into law, bringing significant changes to Medicare. The law expands benefits, reduces drug costs, and improves the sustainability of the program, providing meaningful financial relief to millions of Medicare beneficiaries by enhancing access to affordable treatments1.

For the first time, Medicare now has the authority to directly negotiate the prices of certain high-cost, single-source drugs that lack generic or biosimilar competition. This groundbreaking provision is designed to help control costs and ease the financial burden on both the program and its participants.

Medications Selected for Price Negotiation

The Centers for Medicare & Medicaid Services (CMS) identified the initial group of drugs for negotiation based on multiple criteria, including the drug’s cost and the number of Medicare Part D enrollees currently using them. CMS engaged in direct negotiations with drug manufacturers to secure lower prices for some of the most expensive brand-name medications.

This negotiation process includes CMS presenting a final offer to the manufacturer, which can either accept or reject the proposal. The outcome? CMS and participating manufacturers have finalized pricing agreements, with Maximum Fair Prices (MFP) for ten selected drugs set to take effect on January 1, 20261,4.

This initiative is part of a broader, multi-year effort. By February 2025, CMS will select up to 15 additional drugs covered under Medicare Part D for negotiation, with new prices projected to be implemented in 2027. Another 15 drugs will be chosen in 2028, and an additional 20 the following year, expanding the reach of negotiated price reductions as required by the IRA4.

Although the Medicare drug price negotiations don’t apply to private insurance, 3.4 million people with employer coverage take at least one of the selected drugs. The ten medications are listed in the below graph3.

How Does This Affect Commercial Insurance?

Although these Medicare negotiations do not directly apply to private insurance, they could still have ripple effects on commercial drug pricing. Currently, 3.4 million people with employer-sponsored coverage use at least one of the drugs selected for negotiation3.

The impact on commercial insurance remains uncertain. Some experts suggest that lower Medicare prices could result in higher costs for private insurers as manufacturers look to recoup losses. Conversely, others believe that the negotiated Medicare prices could serve as a benchmark, potentially leading to lower prices in the private sector as well3.

While it’s too early to tell how private insurance will be affected, the ongoing Medicare drug price negotiations will be a closely watched development in the healthcare landscape.

To stay updated on this topic and learn more, click here.

1 Negotiating for lower drug prices works, saves billions. CMS. August 15, 2024. Accessed September 13, 2024. https://www.cms.gov/newsroom/press-releases/negotiating-lower-drug-prices-works-saves-billions
2 https://www.ajmc.com/view/lower-drug-prices-announced-under-medicare-negotiation-program
3 https://www.kff.org/medicare/issue-brief/explaining-the-prescription-drug-provisions-in-the-inflation-reduction-act/
4 https://www.cms.gov/inflation-reduction-act-and-medicare#:~:text=The%20Inflation%20Reduction%20Act%20makes,and%20limiting%20increases%20in%20prices