June 5, 2025 • 38 mins
Stacey Richter has a second take on the original episode 433 since it is so relevant right now. Stacey engages in a compelling conversation with Justin Leader, CEO of BenefitsDNA, about the opaque practices of third-party administrators (TPAs) and their impact on healthcare costs.
They discuss the hidden fees tucked into weekly claims wires, including shared savings fees, prior authorization fees, prepayment integrity fees, pay and chase fees, and TPA adjudication fees.
The episode emphasizes the need for transparency, understanding hidden costs, and ensuring fiduciary responsibility for self-funded employers. Additionally, Leader shares insights from a Health Affairs article and mentions ongoing legal cases that highlight the financial discrepancies in TPA practices.
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06:32 EP457 with Cynthia Fisher.
06:56 How is the claims wire typically explained to a plan sponsor?
10:49 What is the whole point of self-funding?
10:58 Why is it so vital to understand what you’re paying for?
11:53 What are the five “buried” items that wind up in these claims wires?
12:12 What is a shared savings fee?
16:14 “Rates are important, but so are your rights.”
20:13 What’s going on with prior auth fees?
22:44 What is prepayment integrity?
27:29 What is pay and chase?
28:46 EP428 with Julie Selesnick.
30:58 What is a TPA claim review?
33:21 EP285 with Dawn Cornelis.
34:16 EP379 with AJ Loiacono.
34:45 Is there medical claim spread pricing?
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:01):
Take Two, Episode 433.
Wow, is this episode relevant right now?
"The Mystery of the Weekly ClaimsWire." Today I speak with Justin Leader.
American Healthcare Entrepreneurs andExecutives You Want to Know, Talking.
(00:26):
Relentlessly Seeking Value.
I decided to take a second listen tothis episode due to the large number of
posts on LinkedIn and conversations, whichwe will link to in the show notes by the
likes of Peter Hayes, Jamie Greenleaf,Steve Ditto, Julie Selesnick, Chris
Deacon, Darren Fogerty, just about thedollars disappearing when TPAs third party
(00:50):
administrators managed to get themselvesin the middle of dollars flowing between
the first party and the second party.
And for the record here, I am conflatingTPAs and ASO's here, which may or may not
be fair in some cases, but just FYI, I'malso not digging into the Why's and the
Wherefores and some of the constraintsthat TPAs may face from their carrier
(01:12):
and PPO network partners, et cetera.
But consider the RHV, the RelentlessHealth Value episode a couple of weeks ago
with Ann Lewandowski, where we discusseda whistleblower case where the TPA arm
of an EBC, employee benefit consultantmanaged to pocket, allegedly something
like $27 million of their client's moneyand put it in their executive bonus pool.
(01:36):
$27 million dollars.
Probably, and when I say probably, I meandefinitely in that whistleblower episode
earlier, I didn't make it fully clearthat it was the TPA arm of the EBC, the
broker that was allegedly responsiblefor the money getting lost in the
(01:56):
middle in a very not transparent way.
And I thank Joe Levon forbringing this to my attention.
Joe wrote me, "I hope transparencywins." Me too, which is why
transparently revealing the mystery ofthe Weekly Claims Wire really matters.
So let me pivot to my guest for thistake two about the claims wire today.
(02:17):
Justin Leader, who recently wrote apost on LinkedIn that goes like this,
"TPAs, the hidden middleman driving uphealthcare costs. Everybody's talking
about PBMs and for good reason, butTPAs still operating in the shadows".
Then Justin mentions a Health AffairsForefront article by Karen Handorf,
Christine Monahan and Kennah Watts.
(02:40):
Justin writes, "This Health Affairsarticle uncovers the hidden fees spread
pricing and conflicting incentivesembedded in TPA contracts that too often
leaves self-funded employers in thedark and employees footing the bill".
Then Justin continues, "And while you'reat it, check out my conversation with
Stacey Richter on Relentless Health Valuepodcast, where we explore this very topic,
(03:01):
the mystery of the Weekly Claims Wire".
So right here, you are.
Welcome to it.
Today you will get to hear myconversation with Justin, where we
pull back the curtain on these opaquepractices and get back to aligning
incentives with the people who mattermost members and plan sponsors.
So let's do this thing.
Oh, before we do though, huge shout outto Justin Leader, founder, and CEO of
(03:23):
BenefitsDNA for being named a finalistfor Advisor of the Year by BenefitsPro.
Congrats Justin, so well deserved.
My name is Stacey Richter.
This podcast is sponsoredby Aventria Health Group.
And here is my conversationwith Justin Leader.
One of the things that TPAsand ASOs administer is this
so-called Weekly Claims Wire.
(03:45):
Every week self-funded employersget a weekly claims run charge, so
they can pay expenses related totheir plan in weekly increments.
The claims run usually comeswith a register or an invoice.
This invoice might be just kind ofa total, Hey plan, pay this amount,
or there might be a breakdownlike, here's your medical claims.
(04:07):
And here's your pharmacy claims.
Maybe there's another level downfrom that of detail if the plan or
their advisor is sophisticated enoughand or concerned enough about the
fiduciary risk to dig in hard aboutwhat the charges are actually for.
These hidden fees are also notcalled out in the ASO Finance
exhibit in the contract, by the way.
(04:28):
So, yeah, hidden.
Now, the one thing I will point out isthat just because the charges are hidden
doesn't necessarily mean that the servicesthose charges are for are unwarranted.
Some of these services areactually pretty worthwhile to do.
There's just a really big differencefrom a plan sponsor knowingly contracting
(04:49):
at a known rate with a third partyto do something versus paying for
a service knowingly or unknowinglyvia fees hidden any claims wire
wherein the amount paid is not in thecontrol of the one paying the bill.
Justin Leader is my guest today, and weare gonna talk about the five fees that
tend to be tucked into many claims wires.
(05:12):
Many of these fees are structuredas a percentage of savings.
This is challenging for a plansponsor because the savings is
vendor reported and not validated.
But it also means that if the savingsincrease annually with trend as they
generally speaking do, then the feeswill increase with that trend as well.
And that is something to keep in mind.
(05:33):
We also talk about one bonus,not sure if it's a fee.
One bonus way that plan sponsorsgive money to vendors in ways the
plan sponsor might be unaware of.
And this is medical claims spread pricing.
This is buried in the claims wireand inside the dollar amounts
the plan sponsor thinks they arepaying a provider for a service.
(05:54):
It turns out that it can turn out thatthe amount the plan sponsor is paying.
Is more than the check that'sbeing written to the provider
for the service being delivered.
Or the amount the plan sponsor ispaying the provider for a service
is more than for simply that servicethat has been rendered, right?
The plan sponsor is paying the providerfor other stuff as well as is alleged in
(06:18):
the DOL versus BCBS of Michigan lawsuit,which Justin brings up in the show today.
Chris Deacon just wrote a long updatepost about the DOL versus BCBS of
Michigan lawsuit, and also let meremind everyone about the show from
last December with Cynthia Fisher, whichis all about medical spread pricing,
(06:43):
As mentioned a myriad of times already,my guest today is Justin, Leader, who
is President and CEO of BenefitsDNA.
Justin Leader, welcome toRelentless Health Value,
Stacey Richter, thank you for having me.
Let's talk about this claims wire here.
First of all, how is thisclaims wire typically explained?
(07:03):
So if I'm a typical self-insured plansponsor, someone's probably gonna tell
me that this claims wire is gonna happen.
Maybe it's the broker that's explainingon behalf of the ASO, but how does
that typical explanation go down.
In short.
Typically the explanation is you'regonna go from paying monthly claims
or invoices to paying a weeklyclaims run, and there'll be some
(07:27):
fluctuation, but we can budget for that.
Now I'm role-playing the plan sponsor.
So you're just gonna, you'regonna draw from my bank account,
what, what happens here?
Each week we're gonna hityou with a claims register.
You're gonna take a look atthat, and then you're gonna
approve those claims to be paid.
Some weeks they'll be low.
Some weeks they'll be high.
So claims, I'm told, I'm paying claims.
(07:48):
You're paying claims, you're payingmedical and prescription claims,
typically on the same register.
This is gonna be really good for you,Mr. Mrs. Plan, sponsor, because you'll be
able to understand what's going on withinyour plan on a week to week basis by the
invoice amount that you're gonna pay.
So on my invoice, maybe if I'mlooking at a sample of one of
(08:08):
these, what do I actually see?
What, what is on there?
A list of all of my claimants withtheir claims and all the drugs I paid.
Stacey, you're asking a lot of questions.
It really depends.
It depends on the administrator.
You may get very, very basicinformation like, here's your
medical claims for the week.
Here's your Rx claims for the week.
Sometimes you might geta little bit more detail.
(08:31):
You might get claimant information.
You might get maybe member ID, claimnumber, date of service, and paid amount.
If you get a little bit betterinformation, you're gonna get the type of
service provider information, the chargedamount, the paid amount, claim status.
But, ultimately it's up to you as theplan sponsor or as the advisor in certain
instances to push for that information.
(08:53):
This wire is an amount that, ispaid by the plan on a weekly basis.
Plans are told, Okay, well theseare for your actual claims.
I mean, there's other payments that aregoing on, which are supposed to be, which
are for administrative, stop loss, right?
Like so.
I mean, so there's other bills which arehappening, but what this wire is supposed
to be is to pay for actual claims.
(09:15):
Did I get that right?
You got that?
Absolutely correct.
Hi, I'm Chris Deaconwith VerSan Consulting.
If you're listening to RelentlessHealth Value, we already have
something important in common.
You care about fixingwhat's broken in healthcare.
This isn't just a podcast I tune into.
It's one that I revisit, reflecton, and highly recommend.
(09:35):
Stacey's conversationsdon't stop at the mic.
They spark ideas, challengeassumptions, and fuel the work so many
of us are doing to fix healthcare.
If you're here for real change,you're in the right place.
Subscribe to the podcast.
Sign up for the newsletter, andlet's keep the momentum going.
Thanks for listening.
I have to say, Justin, one of thereasons why I asked you to come on
(09:57):
this podcast and talk about thistopic is because I have gotten so many
requests from plan sponsors who sayto me, I'm getting this invoice and
it's got to your exact point, somelevel of detail, but I don't know much.
And I'm feeling like I actually keepasking what am I paying for here?
(10:20):
And bottom line, I can't figure it out.
It feels like there's otherstuff that's going on here.
Someone will allude to somethingelse that I'm paying for, but I
just cannot get any details here.
And I think that's partof the major issue.
Employers go to self-funding because theywant to feel like they're more in control.
And they wanna be able to gleaninsights and look at data.
(10:41):
However, by virtue of moving self-funded,it doesn't mean that you're gonna have
all this unencumbered access to data.
I guess keep in mind too, like thewhole, the whole point of this, or
self-funding in general is to beable to take actionable insights.
So that's a big topicof discussion in itself.
But, there's a lot of stuff that's buriedin the claim that can go on, and that's
(11:02):
why it's so, so vital to understandwhat the heck we are paying for.
This is an opportunity really, thisclaims wire, because you don't have
to wait till the end of the year tofigure out that a lot of money got
spent that now you can do nothing about.
If there is a right sized amount of datathat is in the claims wire that comes
across just even relative to the claims,irrespective of everything else, then this
(11:26):
is actionable information that this kindof black box starts to become more clear.
And if it's a black box, thesolution is also a black box, right?
But on the surface, the beauty of itis you can start to take some action.
The unfortunate thing is not allclaims runs are created equal.
Not all claims runs provide thelevel of detail that you want.
(11:47):
More specifically, some of theburied fees that you have no idea
are being incurred within the plan.
All right, so let's talkabout these buried fees.
There are five things,shared savings fees.
We have prior authorization fees.
We have prepayment integrity.
We have pay and chase.
Then we have the bare bones basic, whichis the TPA that's doing the adjudication.
(12:08):
Okay, so taking it from the top.
Let's talk about shared savings fees.
So first of all, whatis a shared savings fee?
Shared savings fee is a fee that istaken by the administrator, or another
point solution for helping to reducethat charge within the claims run.
So it could be anout-of-network provider fee.
(12:29):
That's typically the most common.
One of my members goes to an outof network ER or something, right?
Or just an out-of-network place.
I pay some exorbitant amount.
The TPA goes to that out of workplace, negotiates a 50% discount,
(12:50):
and then gets a percentage ofwhatever the new discounted rate was.
And it could be even something ascommon as Blue Card access fees, right?
You're going into anotherBlues network utilizing a Blue.
And you're gonna get pinged for a feefor entering into another blue territory.
Basically, I have a Blues plan ifI'm, if I'm a member here and my
(13:14):
plan has a contract with my 10 localhospitals or whatever, but a member
goes to another hospital, which iscovered by another Blues contract,
which is outside my technical network.
Is that what you mean?
You got it.
Not all Blues are created equal.
They do compete with one another and whilethey're all part of the same "Blue", I'm
doing bunny ears, program, there are feesto enter into other Blue territories.
(13:38):
That sounds great.
Why wouldn't I want my plan?
TPA/ASO, why wouldn't I wantthem to go get me a discount?
Yeah.
And, and regardless if it's just astandard out of network negotiation
fee that's collected, I say standard.
It's important for you from afiduciary perspective to understand
exactly what your contract says.
And it could be a percentage ofsavings over the allowed amount.
(14:00):
It could be a percentage ofsavings over the build amount.
It really depends, and sometimes thedetails are really, really vague.
Example, I read a contract not too longago where it just said, The administrator
reserves a right to receive a percentageof savings for any out of network service.
Okay?
Percent of savings.
There's no percent there.
(14:21):
And savings based on what?
Based on what reasonable and customaryis based on the allowed amount.
So if there's no detail, request it.
I've also seen as high as 50% ofsavings fees for these claims.
You start thinking aboutit to your exact point.
First of all, what's theprice that was charged?
The charge master rate, which isgenerally speaking this rate that,
(14:44):
you know, even hospitals always saytheir excuse in a way or rationale for
having this really high charge masteris, oh, no one actually pays that rate.
Okay, so they're using a charge masterrate to determine what the top line
price is, and then the bottom lineprice, I guess, is the in network, right?
But anyway, you can see that you'd havethis huge potential savings, and then if
(15:08):
someone's taking 50% of that, I could seethat that would add up to a lot of money.
A ton in certain instances, and maybe it'sa small percentage of your overall spend,
but those fees, depending on how largeof a claim it is, can be quite egregious
if there's no cap on what they're taking.
So it's kind of absurd, really.
I mean, changing the rate from buildcharges to usual customary or some
(15:30):
RBP method of repricing shouldn'tcost 20 to 30% of the difference.
Ultimately, it would be nice to seeit as a fee for service, but keeping
in mind, most administrators yearafter year, they're in a battle
to keep their fixed fees low.
That's just the nature ofhow they're built and how the
marketplace is positioning.
So what I'm understanding you sayis that there's a fierce competition
(15:53):
amongst advisors, TPAs like this, justthis whole cohort and plan sponsors
are shopping based on fixed fees.
So if somebody has a cheaperfixed fee, they're like, oh,
I wanna go with that one.
And then it's like squeezing a balloon.
It is, it is.
And I gotta give props to Cora Opsahl.
I know she's been on yourpodcast a number of times.
She made this very brilliant statement.
(16:14):
Rates are important,but so are your rights.
And your rights to be able tounderstand what's going on.
So that, let's look at a, you know,another fee overpayment recovery.
We overpay a provider and it'sour mistake as the administrator.
And now we're gonna collecta fee for recoupment.
Like that boggles my mind.
We're gonna fix a mistake we made andthen keep a portion of that for ourselves.
(16:37):
So they're almost alwaysreported as claims cost.
But very clearly theircompensation, right?
That's another revenuesource for the administrator.
So within this shared savings category,we may have also mixed up in here, as
you just said, TPA makes an error, andthen they're like, oh, I made a mistake.
(16:59):
They go and correct their mistake,get the money back that they
overpaid, and then charge the plansponsor to correct their own mistake.
It's called an overpayment recoupment fee.
Now, there's a lot of rumorsaround the industry, and we'll
talk about some of those.
You have to separate fact fromfiction, but it's rumored that there
are algorithms in the old COBOLprocessing for the adjudication software
(17:22):
that every so often it'll purposelyoverpay to collect a fee back, that
could be just completely malarkey.
But ultimately it's one of those otherareas that there are fees being collected.
I could see why rumors such as thisbegin because if I'm a TPA and I am
just trying to figure out how to makemore money, my incentive is very
(17:45):
perverse and it's to make mistakes.
Like, I get paid more if Imake a mistake than if I don't.
Isn't that an awesome job tohave, like you get paid more
for making more mistakes.
All right, so in our sharedsavings, uh, category here,
we've got the getting money back.
If one of my members goes out of network.
Also Blue card access fees.
There also could be overpayment,recoupment fees lumped in here.
(18:08):
This is where the TPA messes up.
Overpays and then charges theplan sponsor a percentage of the
money they just got back whenthey corrected their own mistake.
I'm just gonna pause here whileeveryone contemplates how we've all
gone so wrong in life to not havefigured out a way to charge others
when we correct our own mistakes.
Is there anything else that youwould lump into the shared savings?
(18:31):
I think those are really the big ones.
Correcting out of network, you know,different Blue card access fees.
Fees on the backs of theadministrator themselves.
I think one of the big points thatyou're making is that these tend to be
invisible, as are all of these categories.
In other words, I don't know thatlots of my members are going to
this one particular hospital thatis charging some rate that my TPA is
(18:56):
then going and, and negotiating down.
Like I, I don't have any ofthis information, as you said
at the top of this conversation.
I'm just getting one number.
It's called medical claims.
Well, and it's the cost of doing business.
They'll say they have variousmethodologies and ways.
Our job is to understand what those waysare and make sure that we're holding
(19:17):
the administrator's accountable toprovide fair fees for what we're, buying.
The problem is it's so opaque.
It's tough for any plan sponsor to beable to approach the market and understand
truly what's going on within the data.
And it's an uphill battle andI've, I've fought it time and
time again sometime winning.
More often than not, we lose, butwe lose getting more information
(19:38):
than what we started with.
So to me, that's winning thebattle to eventually win the war.
Well, which I think is maybe inspiringfor those who are listening, who are
getting claims wires with like one or twonumbers who have been fighting the good
fight and not winning relative to likewhat they're paying for on a weekly basis.
Stacey, those that set up auto pay forthe weekly claims run and don't even
(20:01):
review them before the invoice is paid.
Ouch.
Alright, so, uh, the first charge that mayget folded into this claims wire, we just
discussed, these shared savings fees.
The second one that you hadmentioned is prior auth fees.
What's going on there?
Paying fees for prior authorization,it just makes me scratch my head
(20:21):
because you as an administrator have aresponsibility to administer the plan the
way the plan documents have been written.
You're essentially, are youcharging a fee for doing your job?
That's the question.
Yeah.
So much to unpack here.
So the second thing that mightbe buried in this claims wire
are these prior auth fees.
(20:42):
And, I do feel like it's really importantand you said this to mention that.
On its face, ensuring that care isappropriate and evidence-based, that
feels like something that actually couldbenefit a plan member to understand that,
wow, there's a genetic test that coulddetermine if this drug with terrible
(21:04):
side effects that's really expensiveis gonna actually work for you or not,
and you didn't get that genetic test.
There's certain things whichdefinitely could be seen as a
member, a win-win across the board.
On the other hand, we have what's going onnow with prior auths, which is not that.
And if the plan sponsors are reimbursinga payer to be doing prior auth paperwork,
(21:27):
then what incentive really does the, Imean, let's make it as complicated as
possible because I'm making money here.
Once again, it's additionalcompensation that probably isn't being
broken out on a line itemization.
Especially if you're really compliantwith the CAA rules, asking for a
408(b)(2)(b) disclosure of all direct,indirect and non-monetary compensation.
Good luck getting that identifiedas indirect compensation
(21:51):
that was earned on the plan.
Yeah, and Al Lewis has talked about thisquite a bit also about actually MRI prior
auths, and what they basically found isthat the MRIs tended to be done anyway
just in the next quarter or something.
So like you had all of this paperworkthat was being done such that the
plan could basically say, Oh, Iprevented however many MRIs, and look
(22:13):
how much money you saved planned.
But then those same MRIstranspired like the next quarter.
So it actually was justadditional, it's a profit center.
You hit the nail on the head.
So that's the second thing that couldbe included in the claims wire that
people should certainly be aware of.
And, I just wanna befair to your exact point.
you said this.
There is value here if it's done in a waythat's a win-win with the plan sponsor.
(22:36):
And if those dollars are transparent,but the way it's currently being
done may not be a win-win andit's very, very not transparent.
I would agree.
Okay, so the third thing, prepaymentintegrity, I think you said.
Yeah.
So evaluation of the claimitself before it's paid.
So a lot of folks will say, well, is thatdifferent than what the TPA is doing?
(23:00):
The fact of the matter is theTPA in most instances, 85% of
the claims are auto adjudicated.
So how much review is going intothat live weekly run of claims?
I would argue it differs fromadministrator to administrator.
I would be concerned on how high theauto adjudication rate is for a lot
of these vendors that are out there.
(23:20):
I would prefer to have betteroversight at time of claim processing.
So what does that look like?
Right now, I would say thatthere's not enough of this going on
technically under the ERISA guidelines.
To be prudent, loyal to the plan, youhave to understand what's going on within
the claims themselves and also haveto understand to some level of detail
(23:42):
exactly what it is that we're paying for.
So in this, you might see things likeupcoding, unbundling, a number of
issues that we'll talk about in thePay and Chase model, but here we have
a great opportunity with technology andartificial intelligence to implement
a better methodology of analyzingthese claims at the time that they're
being processed as opposed to some ofthe archaic technology that's being
(24:05):
used with the systems that are behindthe scenes at the administrator.
It sounds like there's two ways aplan sponsor might get charged by
their administrator to process claims.
One of them is the administrativefee, which is that's what
it's supposed to be used for.
Right?
Processing claims.
But then there may be a second goingson which the plan sponsor is paying
(24:26):
for in this category, this prepaymentintegrity in which like they're doing
something else over and above justmerely administering claims in order to
ensure that the claims paid are correct.
Let me lay this out to you.
Sometimes the carrier agrees in theprovider contracts not to review claims
prepayment, so the errors are let throughintentionally or unintentionally, if
(24:47):
you will, as none of the claims arereviewed in detail prior to payment.
Why catch it pre-payment when you arecompensated more to find it post-payment?
Yeah, so what we're talking aboutright now in this category, as we just
mentioned, is this prepayment integrity.
The administrator, what they're doingis charging an over and above fee to
(25:07):
ensure that the claims are accurate.
And this could be happening priorto the claim being paid, but it
would be considered not normal.
Right?
So like maybe some are being, getflagged for some reason and stuck
down the second shoot and lookedat more carefully, is that, what do
they even explain that they're doing?
It's very prudent if your administrator'snot doing a good job on the front end,
(25:32):
it really pays dividends to ensurethat you have some sort of vendor in
there that's aggressively demandingthis information and requiring it
to be shared as set forth in thegag clause prohibitions under ERISA.
This is one of the, one of thefive that I think it's okay to pay
more money for because it's needed.
Accuracy is needed earlier onin the adjudication process.
(25:56):
There's point solutions that havedeveloped out there that allow for
increased oversight and understandingof what is happening with the
claim before it actually gets paid.
You're not gonna see that in mostadministrators because they're
incentivized to have errors with some ofthese other fees that we talked about.
In most instances, the really goodadministrators out there, tend to
(26:19):
lose a lot of business because ifthey're doing a better job on the
front end, they tend to cost more.
And this is just because of thewhole squeezing the balloon thing.
If they're upfront, there's just enoughemployers who don't really understand that
you're gonna pay for it on the front end.
And if you don't pay for iton the front end, you're gonna
pay a lot on the backend.
So much on the backend.
(26:40):
I'll use a good example.
We got a fund that spent, amulti-employer fund that was
spending about 13 million annually.
Just by virtue of doing a betterjob on the front end, we reduce
that expense by $1.5 million.
Wow.
So this is prepayment, integrityfees, evaluation of the
claim before it's being paid.
This may or may not differ from what theTPA slash ASO is supposed to be doing.
(27:05):
IE it's the TPA that'ssupposed to be, yeah, right,
adjudicating and paying claims.
I think that's becoming very clear tome just how much money is being spent on
that wire that doesn't, again, accrue tomember health or may not be a spend that
has value, if I'm gonna put it that way.
This is much like the ShamWowguy, Oh wait, there's more.
(27:27):
We can if you want to,and get the pay and chase.
Yeah, let's talk about Pay and Chase.
So this is our fourth category.
We've talked about shared savings.
We've talked about prior auth fees.
We've talked about pre-payment integrity.
This is number fourth, pay and chase.
Pay and Chase is not getting paid ashared savings fee if a patient goes
out of network and the administratorcan negotiate some discount.
(27:50):
We already talked about that.
This is also not getting back dollarsthat the administrator paid by mistake
and then fix their own mistake.
That's also something else.
Pay and chase, there was dollars that werepaid, which were deemed to be wrong, so
maybe it was the provider overcharged.
That's most of what's in this category.
And I, as the administrator haverealized that the, the provider
(28:13):
sent me a wrong bill that got paid,so now I'm gonna go chase after
those dollars and get them back.
Did I get that right?
Correct.
And maybe within the claims there'sunbundling, there's upcoding, maybe there
are a number of issues, uh, that youfind in when you're comparing some of
those claims to case management notes.
And let me, let me add an asterisk here.
Sometimes you're only lookingat large claims, right?
(28:36):
So there are literally like thousandsand thousands of claims that would fly
under the radar that may not get audited,that could have errors that could add up.
It's just it, it's,you have to be prudent.
Julie Selesnick was on this show, andshe's like, it is the very definition
of a fiduciary breach when you havethe one auditing your claims, also
(28:56):
the one who is doing the claims.
Like that is not prudent from afiduciary standpoint by any definition.
She is so right.
You look at like the J&J lawsuit, that's abig consideration for everybody regarding
what they're doing within their plans.
I had another Taft Hartley fundthat wanted to do an audit.
They used the approved vendorto audit their claims, the one
(29:20):
that was approved by the network.
Lo and behold, the auditor foundaround $21,000 in errors that they
got money back from the administrator.
Can you take a guess whatthe fee was for that audit?
$21,000 was overpaid vis-a-vis errors.
And you're asking me what the fee theauditor charged to find that 21 K was?
(29:42):
Correct.
It's $25,000.
Like, like, so you didn't even, youdidn't even recoup enough money to
pay your own fee, which is ridiculous.
This is on millions andmillion dollars of, of claims.
So we finally get the abilityto do it with a, an audit with
an independent party, right?
Somebody that we brought in same amountof claims, same issues, and they come out
(30:06):
with more than 20 times that in errors.
Come on, man.
Are you kidding me?
Yeah.
Well, I mean, you, you got thefox guard in the hen house.
I mean, honestly, like you're gonnahire the same exact company that's
doing the work to audit their own work.
Like in what world?
Is that a good idea?
Yeah.
I talked to a plan not too longago that has a couple hundred
million in annual spend, and Iasked like, who's advising you?
(30:30):
And, uh, they're like.
My administrator is also my network,which also is also my stop-loss.
We also use their PBM, andthen our actuary and advisor
is also a part of their team.
I don't mean to laugh, I'msure it's very efficient.
I guess, efficient to wastehundreds of millions of dollars.
That really segues into the TPAthemselves and the TPAs and the
(30:52):
claim review that they're doing.
That would be the, the fifthpart of our review here today.
Okay.
So right now we have segued,as you said, into number five,
which is our TPA claim review.
What's, what's this?
Yeah, so this is justyour basic administrator.
I mean, most administrators and a quote,a dear friend of mine, Mark Davenport, he
said TPAs are kind of like khaki pants.
(31:14):
They're all pretty much the same,just a different shade of brown.
And he's right.
All of the claims havea network relationship.
Most of them are beholden to the networkrelationship, meaning that they're gonna
follow whatever the network rules areregarding what they're allowed to do with
the claims that they're adjudicating.
Most of these administrators, as Isaid, are auto adjudicating claims,
(31:35):
85, 90% of claims that flow from theprovider after visit auto adjudicated,
handled by software, not by people.
Audit adjudication process, checksfor eligibility, prior auths coverage,
plan design member liability.
The problem is, is how accurateis that information that's just
hitting the software and paying?
It's a good question.
It is a good question.
(31:56):
Not many people know theanswer to that question.
Are willing to delve in to understandthat with each of the administrators that
they're reviewing and potentially hiring.
You had alluded to when we were talkingabout our number three category,
which is the prepay integrity thatit's worth it to pay somebody third
party to do some due diligence here.
TPAs are are, you know, that's whatyour administrative fee goes to, paying
(32:18):
to have these claims adjudicated.
But they may be doing a great job or theymay be doing a really, really bad job.
And you would never know it unlessyou have third party experts with
their eyes on what's going on.
A hundred percent.
Here's a great quote from Karen Handorffthat she said to me the other day.
(32:38):
She said, getting gag clauses outof your contracts is a useless
exercise if you don't look at thedata to figure out how it is hurting.
Not just you the plan, butthe plan participants as well.
You hire administrator.
They tell you they're gonna do a greatjob, some of them might say, Oh, we have a
really, really high out adjudication rateand we pay claims accurately and timely.
(33:01):
What does that really mean?
Okay.
You're paying them accurately in timely.
How do you define that?
How do you define a clean claim?
How do you define the access rightsthat I have to be able to review
claims, whether it's a $20,000claim or a $2 million claim.
And this is exactly also what anynumber of guests on this show have said.
Julie Selesnick, DawnCornelis was on the show.
(33:23):
You, mentioned, Dawn.
It's not only getting thedata, but it's also using it.
A hundred percent you have to use it.
Data's data.
So what.
What are you gonna do with it?
You know, there's that Jim Collins quote.
You can't manage what you can't measure.
And the data enables measurement.
It's a marketing statement to say thatif I'm A TPA, the front page of my
(33:43):
website, it's gonna be all about howamazing I am at adjudicating claims.
But it's a marketing statement.
It is.
You gotta get the data to check.
There are dozens of TPAs outthere that are involved with fully
funded, level funded, self-funded.
They're involved with captives,they're involved with consortiums.
Complacency is not okay.
It's now against the law.
I think people walk in with their sorcery.
(34:07):
I have this magic box and smokeand mirrors, and I will just
feed your claims in the one sideand I will get you 10% savings.
You know, like we had AJ Loiacono on theshow and he said he was talking to some
broker, and the broker said, AJ, I canmake the spreadsheet show anything I want.
And I think that's whatwe're talking about here.
(34:27):
I'm one of AJ's folks, Mike Neely,we talk about that all the time.
He'll be on a spreadsheet or we'll behaving that discussion where somebody
just comes in and buys the business orshadow prices, the lowest possible number.
And it's like, what are you buying?
You could save a hundred thousanddollars on the front end, on the back
end, it's gonna cost you millions.
Another thing that I have heard sometimesgets charged for within this claims
(34:49):
wire in the process of paying for claimsis spread pricing and medical claims.
And I've certainly, I'm sure everybodywho listens has heard this relative
to pharmacy claims, but there'smedical claim spread pricing as well.
We certainly think it exists.
It's hard to say exactlywhere and how it's happening.
It's obviously, as you said,known within PBM pricing.
(35:11):
The J&J complaint discussesit in some detail.
It's thought that it is happeningon the medical side, although we
don't have hard definitive proof,but we have enough evidence that
we think it sure is happening.
This is personal to me.
Many know that there's a complaintfiled with the Bricklayers Local
1 in Connecticut, and SheetMetal Workers against Anthem.
(35:31):
The bricklayers are a client of ours.
One of the allegations is that there'smoney added to the actual cost of
the claim that either goes intothe pocket of the insurer provider,
which is still to the benefit ofthe insurer, who would otherwise be
on the hook for the compensation ifit's being paid to, to said provider?
Yeah, so just understanding what aspread is, is that the plan sponsor
(35:53):
is being charged a hundred bucksfor some claim, but the provider
is only being reimbursed 50 bucks.
Therefore, somebody in themiddle, just made 50 bucks.
It doesn't disappear into the ethos.
And as we have more transparencyfiles, machine readable files that are
made available where we can look atspecific procedures services and then
(36:16):
compare what the publicly posted pricesfor negotiated rates, we can start
to ask some very poignant questions.
But even look at the DOL case against,Blue Cross Blue Shield of Minnesota,
it involves spread pricing if theprovider agreement says it is the
obligation of Blue Cross Blue Shieldto pay the shifted provider tax.
It's a hidden fee that gets pulled in.
(36:37):
So that's the whole basis of a lawsuit.
So does it exist?
I would argue.
Yes.
Interesting.
So basically what you're saying isthat there are indications to show that
what the providers are charging for anyparticular claim might be less than what
the plan sponsor is getting charged.
Therefore, there's dollars in the middle,which is often referred to as the spread
(36:57):
and relative to this DOL, Department ofLabor case against BCBS Michigan, I think,
what was going on there is that the plansponsors were unbeknownst to them paying
taxes on behalf of providers, right?
So the providers have to pay taxes,and it turned out plan sponsors
were paying provider taxes.
And to your point, you're like, howare they paying providers taxes?
(37:19):
If there wasn't dollars in the middlethere, which were being added to
claims that the plan sponsors weretold, Oh, you're paying claims.
You gotta see.
Listen, it doesn't takea rocket scientist.
It just takes a little bit of sleuthing toconnect the dots and understand that this
is just another form of spread pricing
Justin Leader, is there any placewhere you would recommend people
(37:41):
go to learn more about your work?
I put a lot of information out there onLinkedIn, so look for me on LinkedIn.
Justin Leader, the oneout of Pennsylvania, not
the one outta California.
You can also go to benefitsDNA.comor wefixyourhealthcare.com.
And I would highly recommendfollowing Justin on LinkedIn.
(38:01):
We will link to Justin onLinkedIn as well as the two
websites that he just mentioned.
Justin Leader, thank you so much forbeing on Relentless Health Value today.
Thank you, Stacey.
I'm a big fan of your podcast as I'veshared time and time again, I'm a bit of a
fanboy, so it's an honor to be here today.
Hi, this is Cynthia Fisher,patientrightsadvocate.org.
(38:22):
We subscribe to Stacey's podcast and we'velearned so much from her podcast with all
the incredible individuals she interviewson healthcare and the opportunities
to affect change for the better.
I suggest everyone listen to thesegreat podcasts that Stacey provides.
(38:44):
So well informed for all ofus engaged in healthcare.
Take Two, Episode 433.
Wow, is this episode relevant right now?
"The Mystery of the Weekly ClaimsWire." Today I speak with Justin Leader.
American Healthcare Entrepreneurs andExecutives You Want to Know, Talking.
(00:26):
Relentlessly Seeking Value.
I decided to take a second listen tothis episode due to the large number of
posts on LinkedIn and conversations, whichwe will link to in the show notes by the
likes of Peter Hayes, Jamie Greenleaf,Steve Ditto, Julie Selesnick, Chris
Deacon, Darren Fogerty, just about thedollars disappearing when TPAs third party
(00:50):
administrators managed to get themselvesin the middle of dollars flowing between
the first party and the second party.
And for the record here, I am conflatingTPAs and ASO's here, which may or may not
be fair in some cases, but just FYI, I'malso not digging into the Why's and the
Wherefores and some of the constraintsthat TPAs may face from their carrier
(01:12):
and PPO network partners, et cetera.
But consider the RHV, the RelentlessHealth Value episode a couple of weeks ago
with Ann Lewandowski, where we discusseda whistleblower case where the TPA arm
of an EBC, employee benefit consultantmanaged to pocket, allegedly something
like $27 million of their client's moneyand put it in their executive bonus pool.
(01:36):
$27 million dollars.
Probably, and when I say probably, I meandefinitely in that whistleblower episode
earlier, I didn't make it fully clearthat it was the TPA arm of the EBC, the
broker that was allegedly responsiblefor the money getting lost in the
(01:56):
middle in a very not transparent way.
And I thank Joe Levon forbringing this to my attention.
Joe wrote me, "I hope transparencywins." Me too, which is why
transparently revealing the mystery ofthe Weekly Claims Wire really matters.
So let me pivot to my guest for thistake two about the claims wire today.
(02:17):
Justin Leader, who recently wrote apost on LinkedIn that goes like this,
"TPAs, the hidden middleman driving uphealthcare costs. Everybody's talking
about PBMs and for good reason, butTPAs still operating in the shadows".
Then Justin mentions a Health AffairsForefront article by Karen Handorf,
Christine Monahan and Kennah Watts.
(02:40):
Justin writes, "This Health Affairsarticle uncovers the hidden fees spread
pricing and conflicting incentivesembedded in TPA contracts that too often
leaves self-funded employers in thedark and employees footing the bill".
Then Justin continues, "And while you'reat it, check out my conversation with
Stacey Richter on Relentless Health Valuepodcast, where we explore this very topic,
(03:01):
the mystery of the Weekly Claims Wire".
So right here, you are.
Welcome to it.
Today you will get to hear myconversation with Justin, where we
pull back the curtain on these opaquepractices and get back to aligning
incentives with the people who mattermost members and plan sponsors.
So let's do this thing.
Oh, before we do though, huge shout outto Justin Leader, founder, and CEO of
(03:23):
BenefitsDNA for being named a finalistfor Advisor of the Year by BenefitsPro.
Congrats Justin, so well deserved.
My name is Stacey Richter.
This podcast is sponsoredby Aventria Health Group.
And here is my conversationwith Justin Leader.
One of the things that TPAsand ASOs administer is this
so-called Weekly Claims Wire.
(03:45):
Every week self-funded employersget a weekly claims run charge, so
they can pay expenses related totheir plan in weekly increments.
The claims run usually comeswith a register or an invoice.
This invoice might be just kind ofa total, Hey plan, pay this amount,
or there might be a breakdownlike, here's your medical claims.
(04:07):
And here's your pharmacy claims.
Maybe there's another level downfrom that of detail if the plan or
their advisor is sophisticated enoughand or concerned enough about the
fiduciary risk to dig in hard aboutwhat the charges are actually for.
These hidden fees are also notcalled out in the ASO Finance
exhibit in the contract, by the way.
(04:28):
So, yeah, hidden.
Now, the one thing I will point out isthat just because the charges are hidden
doesn't necessarily mean that the servicesthose charges are for are unwarranted.
Some of these services areactually pretty worthwhile to do.
There's just a really big differencefrom a plan sponsor knowingly contracting
(04:49):
at a known rate with a third partyto do something versus paying for
a service knowingly or unknowinglyvia fees hidden any claims wire
wherein the amount paid is not in thecontrol of the one paying the bill.
Justin Leader is my guest today, and weare gonna talk about the five fees that
tend to be tucked into many claims wires.
(05:12):
Many of these fees are structuredas a percentage of savings.
This is challenging for a plansponsor because the savings is
vendor reported and not validated.
But it also means that if the savingsincrease annually with trend as they
generally speaking do, then the feeswill increase with that trend as well.
And that is something to keep in mind.
(05:33):
We also talk about one bonus,not sure if it's a fee.
One bonus way that plan sponsorsgive money to vendors in ways the
plan sponsor might be unaware of.
And this is medical claims spread pricing.
This is buried in the claims wireand inside the dollar amounts
the plan sponsor thinks they arepaying a provider for a service.
(05:54):
It turns out that it can turn out thatthe amount the plan sponsor is paying.
Is more than the check that'sbeing written to the provider
for the service being delivered.
Or the amount the plan sponsor ispaying the provider for a service
is more than for simply that servicethat has been rendered, right?
The plan sponsor is paying the providerfor other stuff as well as is alleged in
(06:18):
the DOL versus BCBS of Michigan lawsuit,which Justin brings up in the show today.
Chris Deacon just wrote a long updatepost about the DOL versus BCBS of
Michigan lawsuit, and also let meremind everyone about the show from
last December with Cynthia Fisher, whichis all about medical spread pricing,
(06:43):
As mentioned a myriad of times already,my guest today is Justin, Leader, who
is President and CEO of BenefitsDNA.
Justin Leader, welcome toRelentless Health Value,
Stacey Richter, thank you for having me.
Let's talk about this claims wire here.
First of all, how is thisclaims wire typically explained?
(07:03):
So if I'm a typical self-insured plansponsor, someone's probably gonna tell
me that this claims wire is gonna happen.
Maybe it's the broker that's explainingon behalf of the ASO, but how does
that typical explanation go down.
In short.
Typically the explanation is you'regonna go from paying monthly claims
or invoices to paying a weeklyclaims run, and there'll be some
(07:27):
fluctuation, but we can budget for that.
Now I'm role-playing the plan sponsor.
So you're just gonna, you'regonna draw from my bank account,
what, what happens here?
Each week we're gonna hityou with a claims register.
You're gonna take a look atthat, and then you're gonna
approve those claims to be paid.
Some weeks they'll be low.
Some weeks they'll be high.
So claims, I'm told, I'm paying claims.
(07:48):
You're paying claims, you're payingmedical and prescription claims,
typically on the same register.
This is gonna be really good for you,Mr. Mrs. Plan, sponsor, because you'll be
able to understand what's going on withinyour plan on a week to week basis by the
invoice amount that you're gonna pay.
So on my invoice, maybe if I'mlooking at a sample of one of
(08:08):
these, what do I actually see?
What, what is on there?
A list of all of my claimants withtheir claims and all the drugs I paid.
Stacey, you're asking a lot of questions.
It really depends.
It depends on the administrator.
You may get very, very basicinformation like, here's your
medical claims for the week.
Here's your Rx claims for the week.
Sometimes you might geta little bit more detail.
(08:31):
You might get claimant information.
You might get maybe member ID, claimnumber, date of service, and paid amount.
If you get a little bit betterinformation, you're gonna get the type of
service provider information, the chargedamount, the paid amount, claim status.
But, ultimately it's up to you as theplan sponsor or as the advisor in certain
instances to push for that information.
(08:53):
This wire is an amount that, ispaid by the plan on a weekly basis.
Plans are told, Okay, well theseare for your actual claims.
I mean, there's other payments that aregoing on, which are supposed to be, which
are for administrative, stop loss, right?
Like so.
I mean, so there's other bills which arehappening, but what this wire is supposed
to be is to pay for actual claims.
(09:15):
Did I get that right?
You got that?
Absolutely correct.
Hi, I'm Chris Deaconwith VerSan Consulting.
If you're listening to RelentlessHealth Value, we already have
something important in common.
You care about fixingwhat's broken in healthcare.
This isn't just a podcast I tune into.
It's one that I revisit, reflecton, and highly recommend.
(09:35):
Stacey's conversationsdon't stop at the mic.
They spark ideas, challengeassumptions, and fuel the work so many
of us are doing to fix healthcare.
If you're here for real change,you're in the right place.
Subscribe to the podcast.
Sign up for the newsletter, andlet's keep the momentum going.
Thanks for listening.
I have to say, Justin, one of thereasons why I asked you to come on
(09:57):
this podcast and talk about thistopic is because I have gotten so many
requests from plan sponsors who sayto me, I'm getting this invoice and
it's got to your exact point, somelevel of detail, but I don't know much.
And I'm feeling like I actually keepasking what am I paying for here?
(10:20):
And bottom line, I can't figure it out.
It feels like there's otherstuff that's going on here.
Someone will allude to somethingelse that I'm paying for, but I
just cannot get any details here.
And I think that's partof the major issue.
Employers go to self-funding because theywant to feel like they're more in control.
And they wanna be able to gleaninsights and look at data.
(10:41):
However, by virtue of moving self-funded,it doesn't mean that you're gonna have
all this unencumbered access to data.
I guess keep in mind too, like thewhole, the whole point of this, or
self-funding in general is to beable to take actionable insights.
So that's a big topicof discussion in itself.
But, there's a lot of stuff that's buriedin the claim that can go on, and that's
(11:02):
why it's so, so vital to understandwhat the heck we are paying for.
This is an opportunity really, thisclaims wire, because you don't have
to wait till the end of the year tofigure out that a lot of money got
spent that now you can do nothing about.
If there is a right sized amount of datathat is in the claims wire that comes
across just even relative to the claims,irrespective of everything else, then this
(11:26):
is actionable information that this kindof black box starts to become more clear.
And if it's a black box, thesolution is also a black box, right?
But on the surface, the beauty of itis you can start to take some action.
The unfortunate thing is not allclaims runs are created equal.
Not all claims runs provide thelevel of detail that you want.
(11:47):
More specifically, some of theburied fees that you have no idea
are being incurred within the plan.
All right, so let's talkabout these buried fees.
There are five things,shared savings fees.
We have prior authorization fees.
We have prepayment integrity.
We have pay and chase.
Then we have the bare bones basic, whichis the TPA that's doing the adjudication.
(12:08):
Okay, so taking it from the top.
Let's talk about shared savings fees.
So first of all, whatis a shared savings fee?
Shared savings fee is a fee that istaken by the administrator, or another
point solution for helping to reducethat charge within the claims run.
So it could be anout-of-network provider fee.
(12:29):
That's typically the most common.
One of my members goes to an outof network ER or something, right?
Or just an out-of-network place.
I pay some exorbitant amount.
The TPA goes to that out of workplace, negotiates a 50% discount,
(12:50):
and then gets a percentage ofwhatever the new discounted rate was.
And it could be even something ascommon as Blue Card access fees, right?
You're going into anotherBlues network utilizing a Blue.
And you're gonna get pinged for a feefor entering into another blue territory.
Basically, I have a Blues plan ifI'm, if I'm a member here and my
(13:14):
plan has a contract with my 10 localhospitals or whatever, but a member
goes to another hospital, which iscovered by another Blues contract,
which is outside my technical network.
Is that what you mean?
You got it.
Not all Blues are created equal.
They do compete with one another and whilethey're all part of the same "Blue", I'm
doing bunny ears, program, there are feesto enter into other Blue territories.
(13:38):
That sounds great.
Why wouldn't I want my plan?
TPA/ASO, why wouldn't I wantthem to go get me a discount?
Yeah.
And, and regardless if it's just astandard out of network negotiation
fee that's collected, I say standard.
It's important for you from afiduciary perspective to understand
exactly what your contract says.
And it could be a percentage ofsavings over the allowed amount.
(14:00):
It could be a percentage ofsavings over the build amount.
It really depends, and sometimes thedetails are really, really vague.
Example, I read a contract not too longago where it just said, The administrator
reserves a right to receive a percentageof savings for any out of network service.
Okay?
Percent of savings.
There's no percent there.
(14:21):
And savings based on what?
Based on what reasonable and customaryis based on the allowed amount.
So if there's no detail, request it.
I've also seen as high as 50% ofsavings fees for these claims.
You start thinking aboutit to your exact point.
First of all, what's theprice that was charged?
The charge master rate, which isgenerally speaking this rate that,
(14:44):
you know, even hospitals always saytheir excuse in a way or rationale for
having this really high charge masteris, oh, no one actually pays that rate.
Okay, so they're using a charge masterrate to determine what the top line
price is, and then the bottom lineprice, I guess, is the in network, right?
But anyway, you can see that you'd havethis huge potential savings, and then if
(15:08):
someone's taking 50% of that, I could seethat that would add up to a lot of money.
A ton in certain instances, and maybe it'sa small percentage of your overall spend,
but those fees, depending on how largeof a claim it is, can be quite egregious
if there's no cap on what they're taking.
So it's kind of absurd, really.
I mean, changing the rate from buildcharges to usual customary or some
(15:30):
RBP method of repricing shouldn'tcost 20 to 30% of the difference.
Ultimately, it would be nice to seeit as a fee for service, but keeping
in mind, most administrators yearafter year, they're in a battle
to keep their fixed fees low.
That's just the nature ofhow they're built and how the
marketplace is positioning.
So what I'm understanding you sayis that there's a fierce competition
(15:53):
amongst advisors, TPAs like this, justthis whole cohort and plan sponsors
are shopping based on fixed fees.
So if somebody has a cheaperfixed fee, they're like, oh,
I wanna go with that one.
And then it's like squeezing a balloon.
It is, it is.
And I gotta give props to Cora Opsahl.
I know she's been on yourpodcast a number of times.
She made this very brilliant statement.
(16:14):
Rates are important,but so are your rights.
And your rights to be able tounderstand what's going on.
So that, let's look at a, you know,another fee overpayment recovery.
We overpay a provider and it'sour mistake as the administrator.
And now we're gonna collecta fee for recoupment.
Like that boggles my mind.
We're gonna fix a mistake we made andthen keep a portion of that for ourselves.
(16:37):
So they're almost alwaysreported as claims cost.
But very clearly theircompensation, right?
That's another revenuesource for the administrator.
So within this shared savings category,we may have also mixed up in here, as
you just said, TPA makes an error, andthen they're like, oh, I made a mistake.
(16:59):
They go and correct their mistake,get the money back that they
overpaid, and then charge the plansponsor to correct their own mistake.
It's called an overpayment recoupment fee.
Now, there's a lot of rumorsaround the industry, and we'll
talk about some of those.
You have to separate fact fromfiction, but it's rumored that there
are algorithms in the old COBOLprocessing for the adjudication software
(17:22):
that every so often it'll purposelyoverpay to collect a fee back, that
could be just completely malarkey.
But ultimately it's one of those otherareas that there are fees being collected.
I could see why rumors such as thisbegin because if I'm a TPA and I am
just trying to figure out how to makemore money, my incentive is very
(17:45):
perverse and it's to make mistakes.
Like, I get paid more if Imake a mistake than if I don't.
Isn't that an awesome job tohave, like you get paid more
for making more mistakes.
All right, so in our sharedsavings, uh, category here,
we've got the getting money back.
If one of my members goes out of network.
Also Blue card access fees.
There also could be overpayment,recoupment fees lumped in here.
(18:08):
This is where the TPA messes up.
Overpays and then charges theplan sponsor a percentage of the
money they just got back whenthey corrected their own mistake.
I'm just gonna pause here whileeveryone contemplates how we've all
gone so wrong in life to not havefigured out a way to charge others
when we correct our own mistakes.
Is there anything else that youwould lump into the shared savings?
(18:31):
I think those are really the big ones.
Correcting out of network, you know,different Blue card access fees.
Fees on the backs of theadministrator themselves.
I think one of the big points thatyou're making is that these tend to be
invisible, as are all of these categories.
In other words, I don't know thatlots of my members are going to
this one particular hospital thatis charging some rate that my TPA is
(18:56):
then going and, and negotiating down.
Like I, I don't have any ofthis information, as you said
at the top of this conversation.
I'm just getting one number.
It's called medical claims.
Well, and it's the cost of doing business.
They'll say they have variousmethodologies and ways.
Our job is to understand what those waysare and make sure that we're holding
(19:17):
the administrator's accountable toprovide fair fees for what we're, buying.
The problem is it's so opaque.
It's tough for any plan sponsor to beable to approach the market and understand
truly what's going on within the data.
And it's an uphill battle andI've, I've fought it time and
time again sometime winning.
More often than not, we lose, butwe lose getting more information
(19:38):
than what we started with.
So to me, that's winning thebattle to eventually win the war.
Well, which I think is maybe inspiringfor those who are listening, who are
getting claims wires with like one or twonumbers who have been fighting the good
fight and not winning relative to likewhat they're paying for on a weekly basis.
Stacey, those that set up auto pay forthe weekly claims run and don't even
(20:01):
review them before the invoice is paid.
Ouch.
Alright, so, uh, the first charge that mayget folded into this claims wire, we just
discussed, these shared savings fees.
The second one that you hadmentioned is prior auth fees.
What's going on there?
Paying fees for prior authorization,it just makes me scratch my head
(20:21):
because you as an administrator have aresponsibility to administer the plan the
way the plan documents have been written.
You're essentially, are youcharging a fee for doing your job?
That's the question.
Yeah.
So much to unpack here.
So the second thing that mightbe buried in this claims wire
are these prior auth fees.
(20:42):
And, I do feel like it's really importantand you said this to mention that.
On its face, ensuring that care isappropriate and evidence-based, that
feels like something that actually couldbenefit a plan member to understand that,
wow, there's a genetic test that coulddetermine if this drug with terrible
(21:04):
side effects that's really expensiveis gonna actually work for you or not,
and you didn't get that genetic test.
There's certain things whichdefinitely could be seen as a
member, a win-win across the board.
On the other hand, we have what's going onnow with prior auths, which is not that.
And if the plan sponsors are reimbursinga payer to be doing prior auth paperwork,
(21:27):
then what incentive really does the, Imean, let's make it as complicated as
possible because I'm making money here.
Once again, it's additionalcompensation that probably isn't being
broken out on a line itemization.
Especially if you're really compliantwith the CAA rules, asking for a
408(b)(2)(b) disclosure of all direct,indirect and non-monetary compensation.
Good luck getting that identifiedas indirect compensation
(21:51):
that was earned on the plan.
Yeah, and Al Lewis has talked about thisquite a bit also about actually MRI prior
auths, and what they basically found isthat the MRIs tended to be done anyway
just in the next quarter or something.
So like you had all of this paperworkthat was being done such that the
plan could basically say, Oh, Iprevented however many MRIs, and look
(22:13):
how much money you saved planned.
But then those same MRIstranspired like the next quarter.
So it actually was justadditional, it's a profit center.
You hit the nail on the head.
So that's the second thing that couldbe included in the claims wire that
people should certainly be aware of.
And, I just wanna befair to your exact point.
you said this.
There is value here if it's done in a waythat's a win-win with the plan sponsor.
(22:36):
And if those dollars are transparent,but the way it's currently being
done may not be a win-win andit's very, very not transparent.
I would agree.
Okay, so the third thing, prepaymentintegrity, I think you said.
Yeah.
So evaluation of the claimitself before it's paid.
So a lot of folks will say, well, is thatdifferent than what the TPA is doing?
(23:00):
The fact of the matter is theTPA in most instances, 85% of
the claims are auto adjudicated.
So how much review is going intothat live weekly run of claims?
I would argue it differs fromadministrator to administrator.
I would be concerned on how high theauto adjudication rate is for a lot
of these vendors that are out there.
(23:20):
I would prefer to have betteroversight at time of claim processing.
So what does that look like?
Right now, I would say thatthere's not enough of this going on
technically under the ERISA guidelines.
To be prudent, loyal to the plan, youhave to understand what's going on within
the claims themselves and also haveto understand to some level of detail
(23:42):
exactly what it is that we're paying for.
So in this, you might see things likeupcoding, unbundling, a number of
issues that we'll talk about in thePay and Chase model, but here we have
a great opportunity with technology andartificial intelligence to implement
a better methodology of analyzingthese claims at the time that they're
being processed as opposed to some ofthe archaic technology that's being
(24:05):
used with the systems that are behindthe scenes at the administrator.
It sounds like there's two ways aplan sponsor might get charged by
their administrator to process claims.
One of them is the administrativefee, which is that's what
it's supposed to be used for.
Right?
Processing claims.
But then there may be a second goingson which the plan sponsor is paying
(24:26):
for in this category, this prepaymentintegrity in which like they're doing
something else over and above justmerely administering claims in order to
ensure that the claims paid are correct.
Let me lay this out to you.
Sometimes the carrier agrees in theprovider contracts not to review claims
prepayment, so the errors are let throughintentionally or unintentionally, if
(24:47):
you will, as none of the claims arereviewed in detail prior to payment.
Why catch it pre-payment when you arecompensated more to find it post-payment?
Yeah, so what we're talking aboutright now in this category, as we just
mentioned, is this prepayment integrity.
The administrator, what they're doingis charging an over and above fee to
(25:07):
ensure that the claims are accurate.
And this could be happening priorto the claim being paid, but it
would be considered not normal.
Right?
So like maybe some are being, getflagged for some reason and stuck
down the second shoot and lookedat more carefully, is that, what do
they even explain that they're doing?
It's very prudent if your administrator'snot doing a good job on the front end,
(25:32):
it really pays dividends to ensurethat you have some sort of vendor in
there that's aggressively demandingthis information and requiring it
to be shared as set forth in thegag clause prohibitions under ERISA.
This is one of the, one of thefive that I think it's okay to pay
more money for because it's needed.
Accuracy is needed earlier onin the adjudication process.
(25:56):
There's point solutions that havedeveloped out there that allow for
increased oversight and understandingof what is happening with the
claim before it actually gets paid.
You're not gonna see that in mostadministrators because they're
incentivized to have errors with some ofthese other fees that we talked about.
In most instances, the really goodadministrators out there, tend to
(26:19):
lose a lot of business because ifthey're doing a better job on the
front end, they tend to cost more.
And this is just because of thewhole squeezing the balloon thing.
If they're upfront, there's just enoughemployers who don't really understand that
you're gonna pay for it on the front end.
And if you don't pay for iton the front end, you're gonna
pay a lot on the backend.
So much on the backend.
(26:40):
I'll use a good example.
We got a fund that spent, amulti-employer fund that was
spending about 13 million annually.
Just by virtue of doing a betterjob on the front end, we reduce
that expense by $1.5 million.
Wow.
So this is prepayment, integrityfees, evaluation of the
claim before it's being paid.
This may or may not differ from what theTPA slash ASO is supposed to be doing.
(27:05):
IE it's the TPA that'ssupposed to be, yeah, right,
adjudicating and paying claims.
I think that's becoming very clear tome just how much money is being spent on
that wire that doesn't, again, accrue tomember health or may not be a spend that
has value, if I'm gonna put it that way.
This is much like the ShamWowguy, Oh wait, there's more.
(27:27):
We can if you want to,and get the pay and chase.
Yeah, let's talk about Pay and Chase.
So this is our fourth category.
We've talked about shared savings.
We've talked about prior auth fees.
We've talked about pre-payment integrity.
This is number fourth, pay and chase.
Pay and Chase is not getting paid ashared savings fee if a patient goes
out of network and the administratorcan negotiate some discount.
(27:50):
We already talked about that.
This is also not getting back dollarsthat the administrator paid by mistake
and then fix their own mistake.
That's also something else.
Pay and chase, there was dollars that werepaid, which were deemed to be wrong, so
maybe it was the provider overcharged.
That's most of what's in this category.
And I, as the administrator haverealized that the, the provider
(28:13):
sent me a wrong bill that got paid,so now I'm gonna go chase after
those dollars and get them back.
Did I get that right?
Correct.
And maybe within the claims there'sunbundling, there's upcoding, maybe there
are a number of issues, uh, that youfind in when you're comparing some of
those claims to case management notes.
And let me, let me add an asterisk here.
Sometimes you're only lookingat large claims, right?
(28:36):
So there are literally like thousandsand thousands of claims that would fly
under the radar that may not get audited,that could have errors that could add up.
It's just it, it's,you have to be prudent.
Julie Selesnick was on this show, andshe's like, it is the very definition
of a fiduciary breach when you havethe one auditing your claims, also
(28:56):
the one who is doing the claims.
Like that is not prudent from afiduciary standpoint by any definition.
She is so right.
You look at like the J&J lawsuit, that's abig consideration for everybody regarding
what they're doing within their plans.
I had another Taft Hartley fundthat wanted to do an audit.
They used the approved vendorto audit their claims, the one
(29:20):
that was approved by the network.
Lo and behold, the auditor foundaround $21,000 in errors that they
got money back from the administrator.
Can you take a guess whatthe fee was for that audit?
$21,000 was overpaid vis-a-vis errors.
And you're asking me what the fee theauditor charged to find that 21 K was?
(29:42):
Correct.
It's $25,000.
Like, like, so you didn't even, youdidn't even recoup enough money to
pay your own fee, which is ridiculous.
This is on millions andmillion dollars of, of claims.
So we finally get the abilityto do it with a, an audit with
an independent party, right?
Somebody that we brought in same amountof claims, same issues, and they come out
(30:06):
with more than 20 times that in errors.
Come on, man.
Are you kidding me?
Yeah.
Well, I mean, you, you got thefox guard in the hen house.
I mean, honestly, like you're gonnahire the same exact company that's
doing the work to audit their own work.
Like in what world?
Is that a good idea?
Yeah.
I talked to a plan not too longago that has a couple hundred
million in annual spend, and Iasked like, who's advising you?
(30:30):
And, uh, they're like.
My administrator is also my network,which also is also my stop-loss.
We also use their PBM, andthen our actuary and advisor
is also a part of their team.
I don't mean to laugh, I'msure it's very efficient.
I guess, efficient to wastehundreds of millions of dollars.
That really segues into the TPAthemselves and the TPAs and the
(30:52):
claim review that they're doing.
That would be the, the fifthpart of our review here today.
Okay.
So right now we have segued,as you said, into number five,
which is our TPA claim review.
What's, what's this?
Yeah, so this is justyour basic administrator.
I mean, most administrators and a quote,a dear friend of mine, Mark Davenport, he
said TPAs are kind of like khaki pants.
(31:14):
They're all pretty much the same,just a different shade of brown.
And he's right.
All of the claims havea network relationship.
Most of them are beholden to the networkrelationship, meaning that they're gonna
follow whatever the network rules areregarding what they're allowed to do with
the claims that they're adjudicating.
Most of these administrators, as Isaid, are auto adjudicating claims,
(31:35):
85, 90% of claims that flow from theprovider after visit auto adjudicated,
handled by software, not by people.
Audit adjudication process, checksfor eligibility, prior auths coverage,
plan design member liability.
The problem is, is how accurateis that information that's just
hitting the software and paying?
It's a good question.
It is a good question.
(31:56):
Not many people know theanswer to that question.
Are willing to delve in to understandthat with each of the administrators that
they're reviewing and potentially hiring.
You had alluded to when we were talkingabout our number three category,
which is the prepay integrity thatit's worth it to pay somebody third
party to do some due diligence here.
TPAs are are, you know, that's whatyour administrative fee goes to, paying
(32:18):
to have these claims adjudicated.
But they may be doing a great job or theymay be doing a really, really bad job.
And you would never know it unlessyou have third party experts with
their eyes on what's going on.
A hundred percent.
Here's a great quote from Karen Handorffthat she said to me the other day.
(32:38):
She said, getting gag clauses outof your contracts is a useless
exercise if you don't look at thedata to figure out how it is hurting.
Not just you the plan, butthe plan participants as well.
You hire administrator.
They tell you they're gonna do a greatjob, some of them might say, Oh, we have a
really, really high out adjudication rateand we pay claims accurately and timely.
(33:01):
What does that really mean?
Okay.
You're paying them accurately in timely.
How do you define that?
How do you define a clean claim?
How do you define the access rightsthat I have to be able to review
claims, whether it's a $20,000claim or a $2 million claim.
And this is exactly also what anynumber of guests on this show have said.
Julie Selesnick, DawnCornelis was on the show.
(33:23):
You, mentioned, Dawn.
It's not only getting thedata, but it's also using it.
A hundred percent you have to use it.
Data's data.
So what.
What are you gonna do with it?
You know, there's that Jim Collins quote.
You can't manage what you can't measure.
And the data enables measurement.
It's a marketing statement to say thatif I'm A TPA, the front page of my
(33:43):
website, it's gonna be all about howamazing I am at adjudicating claims.
But it's a marketing statement.
It is.
You gotta get the data to check.
There are dozens of TPAs outthere that are involved with fully
funded, level funded, self-funded.
They're involved with captives,they're involved with consortiums.
Complacency is not okay.
It's now against the law.
I think people walk in with their sorcery.
(34:07):
I have this magic box and smokeand mirrors, and I will just
feed your claims in the one sideand I will get you 10% savings.
You know, like we had AJ Loiacono on theshow and he said he was talking to some
broker, and the broker said, AJ, I canmake the spreadsheet show anything I want.
And I think that's whatwe're talking about here.
(34:27):
I'm one of AJ's folks, Mike Neely,we talk about that all the time.
He'll be on a spreadsheet or we'll behaving that discussion where somebody
just comes in and buys the business orshadow prices, the lowest possible number.
And it's like, what are you buying?
You could save a hundred thousanddollars on the front end, on the back
end, it's gonna cost you millions.
Another thing that I have heard sometimesgets charged for within this claims
(34:49):
wire in the process of paying for claimsis spread pricing and medical claims.
And I've certainly, I'm sure everybodywho listens has heard this relative
to pharmacy claims, but there'smedical claim spread pricing as well.
We certainly think it exists.
It's hard to say exactlywhere and how it's happening.
It's obviously, as you said,known within PBM pricing.
(35:11):
The J&J complaint discussesit in some detail.
It's thought that it is happeningon the medical side, although we
don't have hard definitive proof,but we have enough evidence that
we think it sure is happening.
This is personal to me.
Many know that there's a complaintfiled with the Bricklayers Local
1 in Connecticut, and SheetMetal Workers against Anthem.
(35:31):
The bricklayers are a client of ours.
One of the allegations is that there'smoney added to the actual cost of
the claim that either goes intothe pocket of the insurer provider,
which is still to the benefit ofthe insurer, who would otherwise be
on the hook for the compensation ifit's being paid to, to said provider?
Yeah, so just understanding what aspread is, is that the plan sponsor
(35:53):
is being charged a hundred bucksfor some claim, but the provider
is only being reimbursed 50 bucks.
Therefore, somebody in themiddle, just made 50 bucks.
It doesn't disappear into the ethos.
And as we have more transparencyfiles, machine readable files that are
made available where we can look atspecific procedures services and then
(36:16):
compare what the publicly posted pricesfor negotiated rates, we can start
to ask some very poignant questions.
But even look at the DOL case against,Blue Cross Blue Shield of Minnesota,
it involves spread pricing if theprovider agreement says it is the
obligation of Blue Cross Blue Shieldto pay the shifted provider tax.
It's a hidden fee that gets pulled in.
(36:37):
So that's the whole basis of a lawsuit.
So does it exist?
I would argue.
Yes.
Interesting.
So basically what you're saying isthat there are indications to show that
what the providers are charging for anyparticular claim might be less than what
the plan sponsor is getting charged.
Therefore, there's dollars in the middle,which is often referred to as the spread
(36:57):
and relative to this DOL, Department ofLabor case against BCBS Michigan, I think,
what was going on there is that the plansponsors were unbeknownst to them paying
taxes on behalf of providers, right?
So the providers have to pay taxes,and it turned out plan sponsors
were paying provider taxes.
And to your point, you're like, howare they paying providers taxes?
(37:19):
If there wasn't dollars in the middlethere, which were being added to
claims that the plan sponsors weretold, Oh, you're paying claims.
You gotta see.
Listen, it doesn't takea rocket scientist.
It just takes a little bit of sleuthing toconnect the dots and understand that this
is just another form of spread pricing
Justin Leader, is there any placewhere you would recommend people
(37:41):
go to learn more about your work?
I put a lot of information out there onLinkedIn, so look for me on LinkedIn.
Justin Leader, the oneout of Pennsylvania, not
the one outta California.
You can also go to benefitsDNA.comor wefixyourhealthcare.com.
And I would highly recommendfollowing Justin on LinkedIn.
(38:01):
We will link to Justin onLinkedIn as well as the two
websites that he just mentioned.
Justin Leader, thank you so much forbeing on Relentless Health Value today.
Thank you, Stacey.
I'm a big fan of your podcast as I'veshared time and time again, I'm a bit of a
fanboy, so it's an honor to be here today.
Hi, this is Cynthia Fisher,patientrightsadvocate.org.
(38:22):
We subscribe to Stacey's podcast and we'velearned so much from her podcast with all
the incredible individuals she interviewson healthcare and the opportunities
to affect change for the better.
I suggest everyone listen to thesegreat podcasts that Stacey provides.
(38:44):
So well informed for all ofus engaged in healthcare.
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