EP433: The Mystery of the Weekly Claims Wire: What Are Plan Sponsors Actually Paying For Each Week? With Justin Leader

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Episode 433, "The Mystery of the Weekly Claims Wire.

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What Are Plan Sponsors Actually Paying For Each Week?"

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Today, I speak with Justin Leader.

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American Healthcare Entrepreneurs and Executives You Want to Know Talking.

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Relentlessly Seeking Value.

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On the show today, I am going to use the term TPA, Third Party Administrator, and

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ASO, Administrative Services Only vendor, kind of interchangeably here, but these

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are the entities that a plan sponsor, for example, a self insured employer is

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a plan sponsor, but these plan sponsors will use to administer their plan.

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And one of the things that TPAs and ASOs administer is this

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so called weekly claims wire.

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Every week, self-funded employers get a weekly claims run charge.

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So they can pay expenses related to their plan in weekly increments.

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The claims run usually comes with a register or an invoice.

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This invoice might be just kind of a total.

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Hey plan, pay this amount.

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Or there might be a breakdown, like here's your medical claims.

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And here's your pharmacy claims.

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Maybe there's another level down from that of detail, if the plan or

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their advisor is sophisticated enough and or concerned enough about the

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fiduciary risk to dig in hard about what the charges are actually for.

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I was talking about this topic earlier with Dana Erdfarb, who happens to be

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executive director of HR at a large financial services organization,

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Dana, I'm definitely going to credit for inspiring this conversation that

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I'm having today with Justin Leader.

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Dana was the first one to really bring to my attention just the

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level of hidden fees that are buried many times in these claims wires.

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Because when I say buried in the claims wire, I mean not charged

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for via an administrative invoice.

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These hidden fees are also not called out in the ASO finance

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exhibit in the contract, by the way.

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So yeah, hidden.

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I don't know if you have to hide your charges.

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In my mind, that's a pretty big tell that your charges are worth hiding.

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Now, the one thing I will point out is that just because the charges

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are worth hiding doesn't necessarily mean that the services those

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charges are for are unwarranted.

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Some of these services are actually pretty worthwhile to do.

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There's just a really big difference from a plan sponsor knowingly contracting

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at a known rate with a third party to do something versus paying for

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a service knowingly or unknowingly via fees hidden in a claims wire,

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wherein the amount paid is not in the control of the one paying the bill.

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Anyway, I was talking about all of this earlier, as I mentioned with Dana Erdfarb.

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That conversation was exactly the framework that I needed to snag Justin

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Leader, my guest today, to come on the pod and really dig into the detail level

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of what's going on with this claims wire.

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So today we're going to talk about the five fees that tend to

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be tucked into many claims wires.

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We also talk about one bonus, not sure if it's a fee, one bonus way that plan

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sponsors give money to vendors in ways the plan sponsor might be unaware of.

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Here are the five hidden fees that we talk about at length in the show

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today, and then I'll cover the bonus.

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First hidden fee is the shared savings fees.

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This is where a member of a plan goes out of network and the TPA/ASO

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goes and negotiates a discount from the out of network provider

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and then shares the savings.

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Get it?

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Shared savings.

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This category also might include BlueCard access fees, which we talk about in the

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show, but there also could be overpayment recoupment fees lumped in here.

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This is where the TPA messes up, overpays, and then charges the plan sponsor a

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percentage of the money they just got back when they corrected their own mistake.

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I'm just going to pause here while everyone contemplates how we've all

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gone so wrong in life to not have figured out a way to charge others

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when we correct our own mistakes.

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Second, hidden fee, prior auth fees, lots to unpack with this

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one, which Justin does in the pod.

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Number three are prepayment integrity fees.

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So this is evaluation of the claim before it's being paid.

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Listen to the show for how this may or may not differ from what the

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TPA/ASO is supposed to be doing, i.e.

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it's the TPA that's supposed to be, yeah, right, adjudicating and paying claims.

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Pay and chase fees, this is the fourth kind of fee.

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This is where a bill was paid wrong, and it's not immediately

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the TPA/ASO's mistake.

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This is where something like a provider double billed or overcharged or something.

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And the TPA/ASO later figures this out and then chases the pay to get the money back.

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And then five TPA claims review fees, sort of self explanatory, but also not.

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Again, please listen to the show for more.

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When I've been talking about all of this with Dana Erdfarb, as I mentioned earlier,

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just about this whole thing, she said something that Justin Leader echoes today.

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Many of these fees are structured as a percentage of savings.

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This is challenging for a plan sponsor because the savings is

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vendor reported and not validated.

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But it also means that if the savings increase annually with trend, as they

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generally speaking do, then the fees will increase with that trend as well.

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And that is something to keep in mind.

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Okay, so here's the bonus thing that didn't get a number in the show

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today, but it is certainly a way that plan sponsors pay money to vendors.

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And this is medical claims spread pricing.

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This is buried in the claims wire and inside the dollar amounts

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the plan sponsor thinks they are paying a provider for a service.

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It turns out, but it can turn out, that the amount the plan sponsor

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is paying is more than the check that's being written to the provider

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for the service being delivered.

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Or the amount the plan sponsor is paying the provider for a service.

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Is more than for simply that service that has been rendered right?

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The plan sponsor is paying the provider for other stuff as well, as is alleged

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in the DOL vs BCBS of Michigan lawsuit, which Justin brings up in the show today.

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It drives me nuts, honestly, when there are people who tout their transparency.

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But then it turns out if the equation is A plus B equals C, only like

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one of the numbers is transparent.

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Sorry, functionally, that doesn't count as transparency, except in marketing copy.

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As mentioned a myriad of times already, my guest today is Justin Leader, who

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is president and CEO of BenefitsDNA.

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Justin works with plan sponsors, both commercial plans as well as Taft

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Hartley plans across the United States.

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Before we kick into the show today, I just want to thank ByThe49ers for

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the really nice review on iTunes.

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ByThe49ers calls Relentless Health Value a leading voice in healthcare and says he

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or she always leaves with intrigue, a new idea or a new approach to problem solving.

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Really appreciate that.

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That is certainly one of our goals around here.

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So thank you so much.

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My name is Stacey Richter.

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This podcast is sponsored by Aventria Health Group.

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Oh, also, please subscribe to the weekly email that goes out.

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Justin Leader, welcome to Relentless Health Value.

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Stacey Richter, thank you for having me.

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Let's talk about this claims wire here.

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First of all, how is this claims wire typically explained?

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So if I'm a typical self insured plans sponsor, someone's probably

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going to tell me that this claims wire is going to happen.

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Maybe it's the broker that's explaining on behalf of the ASO, but how does that

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typical explanation go down in short?

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Typically the explanation is you're going to go from paying monthly

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claims or invoices to paying a weekly claims run, and there'll be some

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fluctuation, but we can budget for that.

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Now I'm role playing the plan sponsor.

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So you're just gonna draw from my bank account.

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What happens here?

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Each week we're going to hit you with a claims register.

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You're going to take a look at that and then you're going to

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approve those claims to be paid.

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Some weeks they'll be low, some weeks they'll be high.

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So claims, I'm told I'm paying claims?

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You're paying claims.

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You're paying medical and prescription claims.

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Typically on the same register.

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This is going to be really good for you, Mr.

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and Mrs.

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Plan Sponsor, because you'll be able to understand what's going on within your

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plan on a week to week basis by the invoice amount that you're going to pay.

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So, on my invoice, if I'm looking at a sample of one of

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these, what do I actually see?

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What is on there?

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A list of all of my claimants with their claims and all the drugs I paid?

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Stacey, you're asking a lot of questions.

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It really depends.

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It depends on the administrator.

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You may get very, very basic information like, here's your

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medical claims for the week.

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Here's your Rx claims for the week.

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Sometimes, you might get a little bit more detail.

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You might get claimant information, you might get maybe member ID, claim

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number, date of service and paid amount.

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If you get a little bit better information, you're going to get the

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type of service, provider information, the charged amount, the paid amount,

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claim status, but ultimately it's up to you as the plan sponsor or

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as the advisor in certain instances to push for that information.

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This wire is an amount that is paid by the plan on a weekly basis.

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Plans are told, okay, well, these are for your actual claims.

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I mean, there's other payments that are going on, which are supposed to be, which

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are for administrative stop loss, right?

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Like, so I mean, there's other bills, which are happening, but

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what this wire is supposed to be is to pay for actual claims.

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Did I get that right?

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You got that.

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Absolutely correct.

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I have to say, Justin, one of the reasons why I asked you to come on this podcast

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and talk about this topic is because I have gotten so many requests from plan

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sponsors who say to me, I'm getting this invoice and it's got to your exact point

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some level of detail, but I don't know much and I'm feeling like I actually

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keep asking, what am I paying for here?

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And bottom-line, I can't figure it out.

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It feels like there's other stuff that's going on here.

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Someone will allude to something else that I'm paying for, but I

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just cannot get any details here.

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And I think that's part of the major issue.

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Employers go to self-funding because they want to feel like they're more

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in control They want to be able to glean insights and look at data.

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However, by virtue of moving self-funded, it doesn't mean that you're going to have

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all this unencumbered access to data.

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I guess keep in mind too, like the whole point of this or self-funding in general

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is to be able to take actionable insights.

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So that's a big topic of discussion in itself.

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But, there's a lot of stuff that's buried in the claim that can go on.

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And that's why it's so, so vital to understand what

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the heck we are paying for.

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This is an opportunity really, this claims wire, because you don't have

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to wait till the end of the year to figure out that a lot of money got

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spent that now you can do nothing about.

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If there is a right sized amount of data that is in the claims wire that comes

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across just even relative to the claims, irrespective of everything else, then this

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is actionable information that this kind of black box starts to become more clear.

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And if it's a black box, the solution is also a black box,

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right, as Rick Renard has said.

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And the thing is the black box is sometimes buried in the middle of the

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Pacific Ocean and you have to really dig down to get to that level of detail.

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But on the surface, the beauty of it is you can start to take some action.

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The unfortunate thing is not all claims runs are created equal.

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Not all claims runs provide the level of detail that you want regarding what

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should be common, like the example that I just gave, but even more specifically,

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some of the buried fees that you have no idea are being incurred within the plan.

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All right, so let's talk about these buried fees.

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Exactly what are all of the things?

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There are five things.

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Shared savings fees.

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We have prior authorization fees.

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We have prepayment integrity.

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We have pay and chase.

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Then we have the bare bones basic, which is the TPA that's doing the adjudication.

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Okay, so taking it from the top.

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Let's talk about shared savings fees.

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So first of all, what is a shared savings fee?

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Shared savings fee is a fee that is taken by the administrator, or another

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point solution for helping to reduce that charge within the claims run.

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So it could be an out of network provider fee, that's typically the most common.

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One of my members goes to an out of network ER or something, right,

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or just an out of network place.

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I pay some exorbitant amount.

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The TPA goes to that out of network place, negotiates a 50 percent

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discount, and then gets a percentage of whatever the new discounted rate was.

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And it could be even something as common as BlueCard access fees, right?

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You're going into another Blue's network utilizing a Blue and you're

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going to get pinged for a fee for entering into another Blue territory.

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Basically, I have a Blue's plan if I'm, if I'm a member here.

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And my plan has a contract with my 10 local hospitals or whatever, but a

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member goes to another hospital, which is covered by another Blue's contract,

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which is outside my technical network.

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Is that what you mean?

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You got it, not all Blues are created equal, they do compete with one

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another, and while they are all part of the same Blue, I'm doing bunny

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ears, program, there are fees to enter into other Blue territories.

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That sounds great.

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Why wouldn't I want my plan TPA, ASO, why wouldn't I want

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them to go get me a discount?

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Yeah, and regardless if it's just a standard out of network negotiation

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fee that's collected, I say standard.

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It's important for you from a feesharing perspective to understand

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exactly what your contract says.

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And it could be a percentage of savings over the allowed amount.

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It could be a percentage of savings over the billed amount.

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It really depends.

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And sometimes the details are really, really vague.

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Example, I read a contract not too long ago where it just said the administrator

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reserves a right to receive a percentage of savings for any out of network service.

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Okay, percent of savings, there's no percent there, and savings based on what?

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Based on what reasonable and customary is, based on the allowed amount?

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So there's no detail.

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Request it.

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I've also seen as high as 50 percent of savings fees for these claims.

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You start thinking about it to your exact point.

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First of all, what's the price that was charged?

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The chargemaster rate, which is generally speaking this rate that, you

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know, even hospitals always say their excuse in a way or rationale for having

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a really high chargemaster is like, oh, no one actually pays that rate.

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Okay.

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So they're using a chargemaster rate to determine what the top-line price is.

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And then the bottom-line price, I guess, is the in network, right?

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But anyway, you can see that you'd have this huge potential savings.

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And then if someone's taking 50 percent of that, I could see that,

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that would add up to a lot of money.

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A ton in certain instances, and maybe it's a small percentage of your overall spend,

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but those fees, depending on how large of a claim it is, can be quite egregious

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if there's no cap on what they're taking.

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So, it's kind of absurd, really.

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I mean, changing the rate from bill charges to usual customary or some

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RBP method of repricing shouldn't cost 20 to 30 percent of the difference.

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Ultimately, it would be nice to see it as a fee for service, but

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keeping in mind most administrators year after year, they're in a

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battle to keep their fixed fees low.

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That's just the nature of how they're built and how the

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marketplace is positioning.

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So what I'm understanding you say is that there's a fierce competition

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amongst advisors, TPAs, like this just this whole cohort and plan sponsors

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are shopping based on fixed fees.

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So if somebody has a cheaper fixed fee, they're like, oh,

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I want to go with that one.

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And then it's like squeezing a balloon.

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It is, it is, and I gotta give props to Cora Opsahl.

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I know she's been on your podcast a number of times.

00:17:07
She made this very brilliant statement.

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Rates are important, but so are your rights, and your rights to be

00:17:13
able to understand what's going on.

00:17:16
So let's look at a, you know, another fee, overpayment recovery.

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We overpay a provider, and it's out mistake is the administrator, and now

00:17:25
we're gonna collect a fee for recoupment?

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That boggles my mind.

00:17:30
We're, we're gonna fix a mistake we made and then keep a

00:17:32
portion of that for ourselves.

00:17:35
So, they're almost always reported as claims cost.

00:17:39
But very clearly they're compensation, right?

00:17:42
That's another revenue source for the administrator.

00:17:45
So within this shared savings category, we may have also mixed up in here.

00:17:51
As you just said, TPA makes an error and then they're like, oh, I made a mistake.

00:17:57
They go and correct their mistake.

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Get the money back that they overpaid and then charge the plan sponsor

00:18:05
to correct their own mistake.

00:18:07
It's called an overpayment recoupment fee.

00:18:09
Now, there's a lot of rumors around the industry, and we'll

00:18:12
talk about some of those.

00:18:13
You have to separate fact from fiction.

00:18:15
But it's rumored that there are algorithms in the old COBOL processing

00:18:20
for the adjudication software that every so often it'll purposely

00:18:24
overpay to collect a fee back.

00:18:26
That could be just completely malarkey, but ultimately it's one of those other

00:18:31
areas that there are fees being collected.

00:18:34
But I could see why rumors such as this begin, because if I'm a TPA and

00:18:41
I am just trying to figure out how to make more money, my incentive is very

00:18:45
perverse and it's to make mistakes.

00:18:48
Like, I get paid more if I make a mistake than if I don't.

00:18:50
Isn't that an awesome job to have?

00:18:52
Like, you get paid more for making more mistakes.

00:18:55
Alright, so in our shared savings category here, we've got the getting money back

00:19:00
if one of my members goes out of network.

00:19:03
The other bit of this also could be if I make a mistake as a

00:19:07
TPA, correcting my own mistake.

00:19:10
Is there anything else that you would lump into the shared savings?

00:19:14
I think those are really the big ones, correcting out of network, you know,

00:19:17
different BlueCard access fees, fees on the backs of the administrator themselves.

00:19:22
I think one of the big points that you're making is that these tend to be

00:19:25
invisible, as are all of these categories.

00:19:28
In other words, I don't know that.

00:19:31
Lots of my members are going to this one particular hospital that

00:19:35
is charging some rate that my TPA is then going and negotiating down.

00:19:42
Like, I don't have any of this information.

00:19:44
As you said at the top of this conversation, I'm just getting one number.

00:19:47
It's called medical claims.

00:19:48
So, if you don't know something...

00:19:51
Well, and it's the cost of doing business.

00:19:54
They'll say they have various methodologies and ways our job is

00:19:59
to understand what those ways are and make sure that we're holding the

00:20:03
administrators accountable to provide fair fees for what we're, what we're buying.

00:20:08
The problem is it's so opaque.

00:20:10
It's tough for any plan sponsor to be able to approach the market and understand

00:20:14
truly what's going on within the data.

00:20:17
And it's an uphill battle and I've, I've fought it time and time again, sometimes

00:20:20
winning more often than not we lose, but we lose getting more information.

00:20:25
than what we started with.

00:20:27
So to me, that's winning the battle to eventually win the war.

00:20:30
Which I think is maybe inspiring for those who are listening, who are getting

00:20:35
claims wires with like one or two numbers who have been fighting the good fight

00:20:39
and not winning relative to like what they're paying for on a weekly basis.

00:20:43
Stacey, those that set up auto pay for the weekly claims run and don't even

00:20:49
review them before the invoice is paid.

00:20:51
Ouch.

00:20:52
All right.

00:20:53
So the first charge that may get folded into this claims wire, we just

00:20:59
discussed these shared savings fees.

00:21:01
The second one that you had mentioned is prior auth fees.

00:21:03
What's going on there?

00:21:04
Paying fees for prior authorization.

00:21:07
It just makes me scratch my head because you as an administrator have a

00:21:12
responsibility to administer the plan the way the plan documents have been written.

00:21:17
You're essentially, are you charging a fee for doing your job?

00:21:21
That's the question.

00:21:22
Yeah, so much to unpack here.

00:21:26
So the second thing that might be buried in this claims wire

00:21:29
are these prior auth fees.

00:21:31
And I do feel like it's really important and you said this to mention

00:21:37
that on its face, ensuring that care is appropriate and evidence based.

00:21:44
That feels like something that actually could benefit a plan member to understand

00:21:48
that, wow, there's a genetic test that could determine if this drug with terrible

00:21:52
side effects that's really expensive is going to actually work for you or not.

00:21:56
And you didn't get that genetic test.

00:21:58
There's certain things which definitely could be seen as a

00:22:01
member, a win win across the board.

00:22:04
On the other hand, we have what's going on now with prior auths, which is not that.

00:22:10
And if the plan sponsors are reimbursing a payer to be doing prior auth paperwork,

00:22:16
then what incentive really does the, I mean, let's make it as complicated as

00:22:20
possible because I'm making money here.

00:22:22
Once again, it's additional compensation that probably isn't being

00:22:25
broken out on a line itemization.

00:22:27
Especially if you're really compliant with the CAA rules, asking for a

00:22:31
408(b)(2) Fee Disclosure of all direct, indirect, and non-monetary compensation.

00:22:37
Good luck getting that identified as indirect compensation

00:22:40
that was earned on the plan.

00:22:41
Yeah, and Al Lewis has talked about this quite a bit also, about actually MRI prior

00:22:47
auths, and what they basically found is that, The MRIs tended to be done anyway,

00:22:52
just in the next quarter or something.

00:22:55
So like you had all of this paperwork that was being done, such that

00:22:59
the plan could basically say, oh, I prevented however many MRIs and

00:23:03
look how much money you saved plan.

00:23:05
But then those same MRIs transpired like the next quarter.

00:23:07
So it actually was just additional, it's a profit center.

00:23:11
You hit the nail on the head.

00:23:12
So that's the second thing that, that could be included in the claims wire

00:23:16
that people should certainly be aware of.

00:23:18
And I just want to be fair to your exact point.

00:23:20
You said this, there is value here if it's done in a way that's a win win with

00:23:26
the plan sponsor and if those dollars are transparent, but the way it's

00:23:30
currently being done may not be a win win and it's very, very not transparent.

00:23:34
I would agree.

00:23:35
Uh, okay.

00:23:35
So the third thing, prepayment integrity, I think you said.

00:23:39
Yeah, so evaluation of the claim itself before it's paid.

00:23:47
So a lot of folks will say, well, is that different than what the TPA is doing?

00:23:53
The fact of the matter is the TPA in most instances, 85 percent of

00:23:57
the claims are auto adjudicated.

00:23:59
So how much review is going into that live weekly run of claims?

00:24:04
I would argue it differs from administrator to administrator.

00:24:08
I would be concerned on how high the auto adjudication rate is for a lot

00:24:13
of these vendors that are out there.

00:24:15
I would prefer to have better oversight at time of claim processing.

00:24:21
So, what does that look like?

00:24:24
Right now, I would say that there's not enough of this going on.

00:24:28
Technically, under the ERISA guidelines, to be prudent, loyal to the plan, you

00:24:32
have to understand what's going on within the claims themselves and also have

00:24:36
to understand to some level of detail exactly what it is that we're paying for.

00:24:41
So in this you might see things like upcoding, unbundling, a number of

00:24:45
issues that we'll talk about in the pay and chase model, but here we have

00:24:49
a great opportunity with technology and artificial intelligence to implement

00:24:54
a better, a better methodology of analyzing these claims at the

00:24:58
time that they're being processed.

00:25:00
As opposed to some of the archaic technology that's being used

00:25:03
with the systems that are behind the scenes at the administrator.

00:25:07
It sounds like there's two ways a plan sponsor might get charged by

00:25:11
their administrator to process claims.

00:25:14
One of them is the administrative fee, which is, that's what it's supposed to

00:25:17
be used for, right, processing claims.

00:25:20
But then there may be a second goings on, which the plan sponsor is paying

00:25:25
for in this category, this prepayment integrity, in which like they're doing

00:25:28
something else over and above just merely administering claims in order to

00:25:35
ensure that the claims paid are correct.

00:25:37
Let me, let me lay this out to you.

00:25:39
Sometimes the carrier agrees in the provider contracts not

00:25:41
to review claims prepayment.

00:25:43
So the errors are let through intentionally or unintentionally, if

00:25:46
you will, as none of the claims are reviewed in detail prior to payment.

00:25:50
Why catch it prepayment when you are compensated more to find it post-payment?

00:25:55
Yeah, so what we're talking about right now in this category, as we

00:25:59
just mentioned, is this prepayment and integrity, the administrator, what they're

00:26:04
doing is charging an over and above fee to ensure that the claims are accurate.

00:26:11
And this could be happening prior to the claim being paid, but it

00:26:14
would be considered not normal.

00:26:16
Right.

00:26:17
So like maybe some are being, you get flagged for some reason and stuck

00:26:21
down the second shoot and looked at more carefully is that what do they

00:26:26
even explain that they're doing?

00:26:27
It's very prudent if your administrator's not doing a good job on the front end,

00:26:33
it really pays dividends to ensure that you have some sort of vendor in

00:26:39
there that's aggressively demanding this information and requiring it

00:26:43
to be shared as set forth in the gag clause prohibitions under ERISA.

00:26:48
This is one of the, one of the five that I think it's okay to pay

00:26:51
more money for because it's needed.

00:26:53
Accuracy is needed earlier on in the adjudication process.

00:26:57
There's point solutions that have developed out there that allow for

00:27:01
increased oversight and understanding of what is happening with the

00:27:05
claim before it actually gets paid.

00:27:08
You're not going to see that in most administrators because they're

00:27:12
incentivized to have errors with some of these other fees that we talked about.

00:27:17
In most instances, the really good administrators out there tend to

00:27:22
lose a lot of business because if they're doing a better job on the

00:27:25
front end, they tend to cost more.

00:27:27
And this is just because of the whole squeezing the balloon thing.

00:27:30
If they're up front, there's just enough employers who don't really

00:27:34
understand that you're going to pay for it on the front end.

00:27:37
And if you don't pay for it on the front end, you're going

00:27:39
to pay a lot on the back end.

00:27:41
So much on the back end.

00:27:43
I'll use a good example.

00:27:44
We got a fund that's a multi-employer fund.

00:27:46
It was spending about $13 million annually Just by virtue of doing

00:27:51
a better job on the front end, we reduce that expense by $1.5 million.

00:27:56
Wow.

00:27:57
I think it's becoming very clear to me just how much money is, is being

00:28:01
spent on that wire that doesn't, again, accrue to member health or

00:28:06
may not be a spend that has value.

00:28:09
If I'm going to put it that way.

00:28:10
This is much like the ShamWow guy.

00:28:13
Oh wait, there's more.

00:28:14
We can, if you want to, get into pay and chase.

00:28:16
Yeah.

00:28:17
Let's talk about pay and chase.

00:28:18
So this is our fourth category.

00:28:20
We've talked about shared savings.

00:28:22
We've talked about prior auth fees.

00:28:23
We've talked about prepayment integrity.

00:28:26
This is number fourth, pay and chase.

00:28:28
Pay and chase is not getting paid a shared savings fee if a patient goes

00:28:34
out of network and the administrator can negotiate some discount.

00:28:38
We already talked about that.

00:28:39
This is also not getting back dollars that the administrator paid by mistake

00:28:44
and then fix their own mistake.

00:28:46
That's also something else.

00:28:49
Pay and chase.

00:28:50
There was dollars that were paid, which were deemed to be wrong.

00:28:52
So maybe it was the provider overcharged.

00:28:55
That's most of what's in this category.

00:28:57
And I, as the administrator, have realized that the provider sent

00:29:01
me a wrong bill that got paid.

00:29:02
So now I'm going to go chase after those dollars and get them back.

00:29:06
Did I get that right?

00:29:07
Correct, and maybe within the claims there's unbundling, there's

00:29:11
upcoding, maybe there are a number of issues, uh, that you find in

00:29:15
when you're comparing some of those claims to case management notes and

00:29:19
let me, let me add an asterisk here.

00:29:21
Sometimes you're only looking at large claims, right?

00:29:23
So there are literally like thousands and thousands of claims that would fly under

00:29:28
the radar that may not get audited, that could have errors, that could add up.

00:29:32
It's just, it's, you have to be prudent.

00:29:34
Julie Selesnick was on this show a couple of weeks ago, and she's like, it is the

00:29:40
very definition of a fiduciary breach.

00:29:42
When you have the one auditing your claims, also the one who's doing the

00:29:47
claims, like, that is not prudent from a fiduciary standpoint, by any definition.

00:29:53
She is so right.

00:29:55
You look at like the J&J lawsuit, that's a big consideration for everybody regarding

00:30:00
what they're doing within their plans.

00:30:03
I had another Taft Hartley fund, wanted to do an audit.

00:30:07
They used the approved vendor to audit their claims.

00:30:10
The one that was approved by the network.

00:30:12
Lo and behold, the auditor found around $21.

00:30:17
in errors that they got money back from the administrator.

00:30:22
Can you take a guess what the fee was for that audit?

00:30:25
$21 was overpaid vis a vis errors.

00:30:29
And you're asking me what the fee the auditor charged to find that 21k was.

00:30:35
Correct.

00:30:35
It's $25.

00:30:37
Like, like, so you didn't even, you didn't even recoup enough money to

00:30:42
pay your own fee, which is ridiculous.

00:30:44
This is on millions and millions of dollars of claims.

00:30:48
So, we finally get the ability to do an audit with an independent party, right?

00:30:53
Somebody that we brought in.

00:30:56
Same amount of claims, same issues.

00:30:58
And they come out with more than 20 times that in errors?

00:31:04
Come on, man.

00:31:05
Are you kidding me?

00:31:06
Yeah.

00:31:06
Well, I mean, you got the fox guard in the hen house.

00:31:10
I mean, honestly, like you're going to hire the same exact company that's

00:31:14
doing the work to audit their own work.

00:31:16
In what world is that a good idea?

00:31:19
I talked to a plan not too long ago that has a couple

00:31:20
hundred million in annual spend.

00:31:23
And I asked, like, who's advising you?

00:31:25
And they're like, my administrators, also my network,

00:31:29
which also is also my stop loss.

00:31:32
We also use their PBM and then our actuary and advisor is also a part of their team.

00:31:37
I don't mean to laugh.

00:31:38
I'm sure it's very efficient.

00:31:40
I guess efficient to waste hundreds of millions of dollars.

00:31:43
That really segues into the TPA themselves and the TPAs and the

00:31:48
claim review that they're doing.

00:31:49
That would be the the fifth part.

00:31:51
Okay, so right now we have segued, as you said, into number five,

00:31:57
which is our TPA claim review.

00:31:59
What's, what's this?

00:32:00
Yeah, so this is just your basic administrator.

00:32:02
I mean, most administrators, and I'll quote a dear friend of mine,

00:32:06
Mark Davenport, he said, TPAs are kind of like khaki pants.

00:32:10
They're all pretty much the same, just a different shade of brown.

00:32:14
And he's right, all the claims have a network relationship.

00:32:18
Most of them are beholden to the network relationship, meaning that they're gonna

00:32:21
follow whatever the network rules are regarding what they're allowed to do with

00:32:25
the claims that they're adjudicating.

00:32:27
Most of these administrators, as I said, are auto adjudicating claims.

00:32:32
85, 90 percent of claims that flow from the provider have to

00:32:36
visit auto adjudicated, handled by software, not by people.

00:32:41
The auto adjudication process, checks for eligibility, prior auths, coverage,

00:32:44
plan design, member liability.

00:32:46
The problem is, is how accurate is that information that's just

00:32:50
hitting the software and paying?

00:32:51
It's a good question.

00:32:52
It is a good question.

00:32:53
Not many people know the answer to that question or are willing to

00:32:56
delve in to understand that with each of the administrators that they're

00:32:59
reviewing and potentially hiring.

00:33:01
You had alluded to when we were talking about our number three category,

00:33:04
which is the prepay integrity, that it's worth it to pay somebody.

00:33:08
Third party to do some due diligence here, TPAs are, you know, that's what

00:33:14
your administrative fee goes to paying to have these claims adjudicated,

00:33:18
but they may be doing a great job or they may be doing a really, really

00:33:22
bad job and you would never know it unless you have third party experts

00:33:28
with their eyes on what's going on.

00:33:32
100%.

00:33:33
Here's a great quote from Karen Handorf that she said to me the other day.

00:33:36
She said, getting gag clauses out of your contracts is a useless exercise

00:33:40
if you don't look at the data to figure out how it is hurting, not just you, the

00:33:45
plan, but the plan participants as well.

00:33:47
You hire an administrator.

00:33:49
They tell you they're going to do a great job.

00:33:51
Some of them might say, oh, we have a really, really high out adjudication rate

00:33:55
and we pay claims accurately and timely.

00:33:59
What does that really mean?

00:34:00
Okay, you're paying them accurately in timing.

00:34:02
How do you define that?

00:34:03
How do you define a clean claim?

00:34:05
How do you define the, the access rights that I have to be able

00:34:09
to review claims, whether it's a $20 claim or a $2 million claim.

00:34:14
And this is exactly also what any number of guests on this show have said.

00:34:19
Julie Selesnick, Dawn Cornelis was on the show.

00:34:22
You mentioned Dawn.

00:34:23
It's not only getting the data, but it's also using it.

00:34:27
A hundred percent.

00:34:28
You have to use it.

00:34:29
Data's data, so what?

00:34:31
What are you going to do with it?

00:34:32
You know, there's that Jim Collins quote, you can't manage what you can't measure.

00:34:36
And the data enables measurement.

00:34:39
It's a marketing statement to say that I, if I'm a TPA, the front page

00:34:44
of my website, it's going to be all about how amazing I am at adjudicating

00:34:47
claims, but it's a marketing statement.

00:34:49
It is.

00:34:49
You got to get the data to check.

00:34:51
There are dozens of TPAs out there that are involved with fully-funded,

00:34:56
level-funded, self-funded, they're involved with captains,

00:34:58
they're involved with consortiums.

00:35:00
Complacency is not okay.

00:35:02
It's now against the law.

00:35:04
I think people walk in with their sorcery.

00:35:07
I have this magic box of smoke and mirrors, and I will just feed

00:35:12
your claims in the one side, and I will get you 10 percent savings.

00:35:16
You know, like we had A.

00:35:17
J.

00:35:17
Loiacono on the show, and he said he was talking to some

00:35:21
broker and the broker said, A.

00:35:23
J., I can make the spreadsheet show anything I want.

00:35:26
And I think that's what we're talking about here.

00:35:28
One of A.

00:35:29
J.

00:35:29
's folks, Mike Miele, we talk about that all the time.

00:35:32
He'll be on that spreadsheet or we'll be having that discussion where somebody just

00:35:35
comes in and buys the business or shadow prices the, the lowest possible number.

00:35:41
And it's like, what are you buying?

00:35:42
You could save $100 on the front end, on the back end,

00:35:45
it's going to cost you millions.

00:35:47
Another thing that I have heard sometimes gets charged for within this claims

00:35:51
wire in the process of paying for claims is spread pricing and medical claims.

00:35:57
And I've certainly, I'm sure everybody who listens has heard this relative

00:36:01
to pharmacy claims, but there's medical claim spread pricing as well.

00:36:05
We certainly think it exists.

00:36:07
It's hard to say exactly where and how it's happening.

00:36:10
It's obviously, as you said, known within PBM pricing, the J&J complaint

00:36:15
discusses it in some detail.

00:36:16
It's thought that it is happening on the medical side, although we

00:36:19
don't have hard definitive proof, but we have enough evidence that

00:36:23
we think it sure is happening.

00:36:26
This is personal to me.

00:36:27
Many know that there's a complaint filed with the Bricklayers,

00:36:30
Local 1 in Connecticut, and Sheet Metal Workers against Anthem.

00:36:34
The Bricklayers are a client of ours.

00:36:36
One of the allegations is that there's money added to the actual cost of

00:36:40
a claim that either goes into the pocket of the insurer or provider,

00:36:43
which is still to the benefit of the insurer, who would otherwise be

00:36:47
on the hook for the compensation if it's being paid to said provider.

00:36:51
Yeah.

00:36:51
So just understanding what a spread is, is that the plan sponsor is

00:36:57
being charged a hundred bucks for some claim, but the provider is

00:37:03
only being reimbursed 50 bucks.

00:37:06
Therefore somebody in the middle, just made 50 bucks.

00:37:10
It doesn't disappear into the ethos.

00:37:12
And as we have more transparency files, machine readable files that are

00:37:16
made available, where we can look at specific procedures, services, and then

00:37:20
compare what the publicly posted price is for negotiated rates, we can start

00:37:26
to ask some very poignant questions.

00:37:28
But even look at the DOL case against Blue Cross Blue Shield of Minnesota.

00:37:32
It involves spread pricing if the provider agreement says it is the

00:37:36
obligation of Blue Cross Blue Shield to pay the shifted provider tax.

00:37:40
It's a hidden fee that gets pulled in.

00:37:42
So that's the whole basis of the lawsuit.

00:37:44
So does it exist?

00:37:45
I would argue, yes.

00:37:47
Interesting.

00:37:48
So basically what you're saying is that there, there are indications to show

00:37:53
that what the providers are charging for any particular claim might be less than

00:37:58
what the plan sponsor is getting charged.

00:38:00
Therefore there's dollars in the middle, which is often referred to as the spread

00:38:03
and relative to this DOL, Department of Labor case against BCBS Michigan, I think.

00:38:09
What was going on there is that the plan sponsors were unbeknownst to them paying

00:38:14
taxes on behalf of providers, right?

00:38:16
So the providers have to pay taxes, and it turned out plan sponsors

00:38:19
were paying provider taxes.

00:38:21
And to your point, you're like, how are they paying providers taxes?

00:38:25
If there wasn't dollars in the middle there, which were being added to

00:38:29
claims that the plan sponsors were told, oh, you're paying claims.

00:38:33
You got it.

00:38:34
See, listen, it doesn't take a rocket scientist.

00:38:37
It just takes a little bit of sleuthing to connect the dots and understand that this

00:38:40
is just another form of spread pricing.

00:38:42
Justin Leader, is there any place where you would recommend people

00:38:47
go to learn more about your work?

00:38:50
I put a lot of information out there on LinkedIn.

00:38:52
So look for me on LinkedIn, Justin Leader, the one out of Pennsylvania,

00:38:57
not the one out of California.

00:38:58
You can also go to benefitsdna.com or wefixyourhealthcare.com.

00:39:03
And I would highly recommend following Justin on LinkedIn.

00:39:07
We will link to Justin on LinkedIn as well as the two

00:39:11
websites that he just mentioned.

00:39:13
Justin Leader, thank you so much for being on Relentless Health Value today.

00:39:16
Thank you, Stacey.

00:39:17
I'm a big fan of your podcast as I've shared time and time

00:39:21
again, I'm a bit of a fan boy, so it's an honor to be here today.

00:39:24
So let's talk about going over to our website and typing your email address

00:39:28
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00:39:32
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00:39:36
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00:39:40
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00:39:47
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00:39:57
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