40 min
EP433: The Mystery of the Weekly Claims Wire: What Are Plan Sponsors Actually Paying For Each Week? With Justin Leader Relentless Health Value™
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- Medicine
For a full transcript of this episode, click here.
On the show today, I am going to use the term TPA (third-party administrator) and ASO (administrative services only) vendor kind of interchangeably here. But these are the entities that a plan sponsor—for example, a self-insured employer is a plan sponsor—but these plan sponsors will use to administer their plan. And one of the things that TPAs and ASOs administer is this so-called weekly claims wire.
Every week, self-funded employers get a weekly claims run charge so they can pay expenses related to their plan in weekly increments. The claims run usually comes with a register or an invoice. This invoice might be just kind of a total (“Hey, plan. Pay this amount.”). Or there might be a breakdown like, “Here’s your medical claims, and here’s your pharmacy claims.” Maybe there’s another level down from that of detail if the plan or their advisor is sophisticated enough and/or concerned enough about the fiduciary risk to dig in hard about what the charges are actually for.
I was talking about this topic earlier with Dana Erdfarb, who happens to be executive director of HR at a large financial services organization. Dana I’m definitely gonna credit for inspiring this conversation that I’m having today with Justin Leader. Dana was the first one to really bring to my attention just the level of hidden fees that are buried (many times) in these claims wires … because when I say buried in the claims wire, I mean not charged for via an administrative invoice. These hidden fees are also not called out in the ASO finance exhibit in the contract, by the way. So, yeah … hidden.
I don’t know … if you have to hide your charges, in my mind that’s a pretty big tell that your charges are worth hiding. Now the one thing I will point out is that just because the charges are worth hiding doesn’t necessarily mean that the services those charges are for are unwarranted. Some of these services are actually pretty worthwhile to do. There’s just a really big difference from a plan sponsor knowingly contracting at a known rate with a third party to do something versus paying for a service knowingly or unknowingly via fees hidden in a claims wire wherein the amount paid is not in the control of the one paying the bill.
Anyway, I was talking about all of this earlier, as I mentioned, with Dana Erdfarb. That conversation was exactly the framework that I needed to snag Justin Leader, my guest today, to come on the pod and really dig into the detail level of what’s going on with this claims wire. So, in this healthcare podcast, we’re gonna talk about the five fees that tend to be tucked in to many claims wires. We also talk about one bonus—not sure if it’s a fee—one bonus way that plan sponsors give money to vendors in ways the plan sponsor might be unaware of. Here are the five hidden fees that we talk about at length in the show today, and then I’ll cover the bonus:
1. Shared Savings Fees. This is where a member of a plan goes out of network, and the TPA/ASO goes and negotiates a discount from the out-of-network provider and then shares the savings. Get it? Shared savings? This category also might include BlueCard Access fees, which we talk about in the show. But there also could be overpayment recoupment fees lumped in here. This is where the TPA messes up, overpays, and then charges the plan sponsor a percentage of the money they just got back when they corrected their own mistake. I’m just gonna pause here while everyone contemplates how we’ve all gone so wrong in life to not have figured out a way to charge others when we correct our own mistakes. Here’s a link to a great LinkedIn post by Chris Deacon and a deep dive article on this topic.
2. Prior Auth Fees. Lots to unpack with this one, which Justin does in the pod.
3. Prepayment Integrity Fees. This is evaluation of the claim before it’s being paid. Listen to the show for how this ma
For a full transcript of this episode, click here.
On the show today, I am going to use the term TPA (third-party administrator) and ASO (administrative services only) vendor kind of interchangeably here. But these are the entities that a plan sponsor—for example, a self-insured employer is a plan sponsor—but these plan sponsors will use to administer their plan. And one of the things that TPAs and ASOs administer is this so-called weekly claims wire.
Every week, self-funded employers get a weekly claims run charge so they can pay expenses related to their plan in weekly increments. The claims run usually comes with a register or an invoice. This invoice might be just kind of a total (“Hey, plan. Pay this amount.”). Or there might be a breakdown like, “Here’s your medical claims, and here’s your pharmacy claims.” Maybe there’s another level down from that of detail if the plan or their advisor is sophisticated enough and/or concerned enough about the fiduciary risk to dig in hard about what the charges are actually for.
I was talking about this topic earlier with Dana Erdfarb, who happens to be executive director of HR at a large financial services organization. Dana I’m definitely gonna credit for inspiring this conversation that I’m having today with Justin Leader. Dana was the first one to really bring to my attention just the level of hidden fees that are buried (many times) in these claims wires … because when I say buried in the claims wire, I mean not charged for via an administrative invoice. These hidden fees are also not called out in the ASO finance exhibit in the contract, by the way. So, yeah … hidden.
I don’t know … if you have to hide your charges, in my mind that’s a pretty big tell that your charges are worth hiding. Now the one thing I will point out is that just because the charges are worth hiding doesn’t necessarily mean that the services those charges are for are unwarranted. Some of these services are actually pretty worthwhile to do. There’s just a really big difference from a plan sponsor knowingly contracting at a known rate with a third party to do something versus paying for a service knowingly or unknowingly via fees hidden in a claims wire wherein the amount paid is not in the control of the one paying the bill.
Anyway, I was talking about all of this earlier, as I mentioned, with Dana Erdfarb. That conversation was exactly the framework that I needed to snag Justin Leader, my guest today, to come on the pod and really dig into the detail level of what’s going on with this claims wire. So, in this healthcare podcast, we’re gonna talk about the five fees that tend to be tucked in to many claims wires. We also talk about one bonus—not sure if it’s a fee—one bonus way that plan sponsors give money to vendors in ways the plan sponsor might be unaware of. Here are the five hidden fees that we talk about at length in the show today, and then I’ll cover the bonus:
1. Shared Savings Fees. This is where a member of a plan goes out of network, and the TPA/ASO goes and negotiates a discount from the out-of-network provider and then shares the savings. Get it? Shared savings? This category also might include BlueCard Access fees, which we talk about in the show. But there also could be overpayment recoupment fees lumped in here. This is where the TPA messes up, overpays, and then charges the plan sponsor a percentage of the money they just got back when they corrected their own mistake. I’m just gonna pause here while everyone contemplates how we’ve all gone so wrong in life to not have figured out a way to charge others when we correct our own mistakes. Here’s a link to a great LinkedIn post by Chris Deacon and a deep dive article on this topic.
2. Prior Auth Fees. Lots to unpack with this one, which Justin does in the pod.
3. Prepayment Integrity Fees. This is evaluation of the claim before it’s being paid. Listen to the show for how this ma
40 min