Introduction
[00:00:01] Stacey Richter: Take Two, Episode 433. Wow, is this episode relevant right now? "The Mystery of the Weekly Claims Wire." Today I speak with Justin Leader.
The Mystery of the Weekly Claims Wire
[00:00:29] Stacey Richter: I decided to take a second listen to this episode due to the large number of posts on LinkedIn and conversations, which we will link to in the show notes by the likes of Peter Hayes, Jamie Greenleaf, Steve Ditto, Julie Selesnick, Chris Deacon, Darren Fogarty, just about the dollars disappearing when TPAs (third party administrators) managed to get themselves in the middle of dollars flowing between the first party and the second party.
To listen to this episode or read the show notes with the mentioned links, visit the episode page.
And for the record here, I am conflating TPAs and ASO's here, which may or may not be fair in some cases, but just FYI. I'm also not digging into the “Why’s” and the “Wherefores” and some of the constraints that TPAs may face from their carrier and PPO network partners, etc.
But consider the RHV, the Relentless Health Value episode a couple of weeks ago with Ann Lewandowski, where we discussed a whistleblower case where the TPA arm of an EBC (employee benefit consultant) managed to pocket, allegedly something like $27 million of their client's money and put it in their executive bonus pool. $27 million dollars.
Probably, and when I say probably, I mean definitely in that whistleblower episode earlier, I didn't make it fully clear that it was the TPA arm of the EBC, the broker that was allegedly responsible for the money getting lost in the middle in a very not transparent way. And I thank Joe Levon for bringing this to my attention.
Joe wrote me, "I hope transparency wins." Me too, which is why transparently revealing the mystery of the Weekly Claims Wire really matters. So let me pivot to my guest for this Take Two about the claims wire today.
Guest Introduction: Justin Leader
[00:02:17] Stacey Richter: Justin Leader, who recently wrote a post on LinkedIn that goes like this, "TPAs, the hidden middlemen driving up healthcare costs. Everybody's talking about PBMs and for good reason. But TPAs? Still operating in the shadows".
Then Justin mentions a Health Affairs Forefront article by Karen Handorf, Christine Monahan, and Kennah Watts. Justin writes, "This Health Affairs article uncovers the hidden fees spread pricing and conflicting incentives embedded in TPA contracts that too often leaves self-funded employers in the dark and employees footing the bill".
Then Justin continues, "And while you're at it, check out my conversation with Stacey Richter on Relentless Health Value podcast, where we explore this very topic, the mystery of the Weekly Claims Wire". So right here, you are, Welcome to it.
Today you will get to hear my conversation with Justin, where we pull back the curtain on these opaque practices and get back to aligning incentives with the people who matter most members and plan sponsors. So let's do this thing.
Oh, before we do though, huge shout out to Justin Leader, founder, and CEO of Benefits DNA for being named a finalist for Advisor of the Year by BenefitsPRO. Congrats Justin, so well deserved.
My name is Stacey Richter. This podcast is sponsored by Aventria Health Group.
And here is my conversation with Justin Leader.
Understanding TPAs and Weekly Claims Wire
[00:03:38] Stacey Richter: 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.
These hidden fees are also not called out in the ASO Finance exhibit in the contract, by the way. So, yeah, hidden. Now, the one thing I will point out is that just because the charges are hidden 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.
Hidden Fees in TPA Contracts
[00:05:02] Stacey Richter: Justin Leader is my guest today, and we are gonna talk about the five fees that tend to be tucked into many claims wires.
Many of these fees are structured as a percentage of savings. This is challenging for a plan sponsor because the savings is vendor reported and not validated.
But it also means that if the savings increase annually with trend as they generally speaking do, then the fees will increase with that trend as well. And that is something to keep in mind.
Medical Claims Spread Pricing
[00:05:33] Stacey Richter: 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. And this is medical claims spread pricing.
This is buried in the claims wire and inside the dollar amounts the plan sponsor thinks they are paying a provider for a service. It turns out that it can turn out that the amount the plan sponsor is paying. Is more than the check that's being written to the provider for the service being delivered. Or the amount the plan sponsor is paying the provider for a service is more than for simply that service that has been rendered, right?
The plan sponsor is paying the provider for other stuff as well as is alleged in the DOL versus BCBS of Minnesota lawsuit, which Justin brings up in the show today.
Chris Deacon just wrote a long update post about the DOL versus BCBS of Michigan lawsuit, and also let me remind everyone about the show from last December with Cynthia Fisher, which is all about medical spread pricing,
As mentioned a myriad of times already, my guest today is Justin, Leader, who is President and CEO of BenefitsDNA.
[00:06:51] Stacey Richter: Justin Leader, welcome to Relentless Health Value,
[00:06:53] Justin Leader: Stacey Richter, thank you for having me.
[00:06:56] Stacey Richter: Let's talk about this claims wire here. First of all, how is this claims wire typically explained? So if I'm a typical self-insured plan sponsor, someone's probably gonna tell me that this claims wire is gonna happen.
Maybe it's the broker that's explaining on behalf of the ASO, but how does that typical explanation go down. In short.
[00:07:19] Justin Leader: Typically the explanation is you're gonna go from paying monthly claims or invoices to paying a weekly claims run, and there'll be some fluctuation, but we can budget for that.
[00:07:29] Stacey Richter: Now I'm role-playing the plan sponsor. So you're just gonna, you're gonna draw from my bank account. What happens here?
[00:07:36] Justin Leader: Each week we're gonna hit you with a claims register. You're gonna take a look at that, and then you're gonna approve those claims to be paid. Some weeks they'll be low. Some weeks they'll be high.
[00:07:45] Stacey Richter: So claims, I'm told, I'm paying claims.
[00:07:48] Justin Leader: You're paying claims, you're paying medical and prescription claims, typically on the same register. This is gonna be really good for you, Mr. and Mrs. Plan, sponsor, because you'll be able to understand what's going on within your plan on a week to week basis by the invoice amount that you're gonna pay.
[00:08:05] Stacey Richter: So on my invoice, maybe if I'm looking at a sample of one of these, what do I actually see? What, what is on there? A list of all of my claimants with their claims and all the drugs I paid.
[00:08:15] Justin Leader: Stacey, you're asking a lot of questions. It really depends. It depends on the administrator. You may get very, very basic information like, here's your medical claims for the week. Here's your Rx claims for the week.
Sometimes you might get a little bit more detail. You might get claimant information. You might get maybe member ID, claim number, date of service, and paid amount. If you get a little bit better information, you're gonna get the type of service provider information, the charged amount, the paid amount, claim status.
But, ultimately it's up to you as the plan sponsor or as the advisor in certain instances to push for that information.
[00:08:53] Stacey Richter: This wire is an amount that, is paid by the plan on a weekly basis. Plans are told, Okay, well these are for your actual claims. I mean, there's other payments that are going on, which are supposed to be, which are for administrative, stop-loss, right? Like so. I mean, so there's other bills which are happening, but what this wire is supposed to be is to pay for actual claims. Did I get that right?
[00:09:16] Justin Leader: You got that. Absolutely correct.
The Role of Plan Sponsors and Advisors
[00:09:53] Stacey Richter: I have to say, Justin, one of the reasons why I asked you to come on this podcast and talk about this topic is because I have gotten so many requests from plan sponsors who say to me, I'm getting this invoice and it's got to your exact point, some level of detail, but I don't know much.
And I'm feeling like I actually keep asking what am I paying for here? And bottom line, I can't figure it out. It feels like there's other stuff that's going on here. Someone will allude to something else that I'm paying for, but I just cannot get any details here.
[00:10:31] Justin Leader: And I think that's part of the major issue. Employers go to self-funding because they want to feel like they're more in control. And they wanna be able to glean insights and look at data. 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 the whole, the whole point of this, or self-funding in general is to be able to take actionable insights. So that's a big topic of discussion in itself. But, there's a lot of stuff that's buried in the claim that can go on, and that's why it's so, so vital to understand what the heck we are paying for.
[00:11:07] Stacey Richter: This is an opportunity really, this claims wire, because you don't have to wait till the end of the year to figure out that a lot of money got spent that now you can do nothing about. If there is a right sized amount of data that is in the claims wire that comes across just even relative to the claims, irrespective of everything else, then this is actionable information that this kind of black box starts to become more clear. And if it's a black box, the solution is also a black box, right?
[00:11:37] Justin Leader: But on the surface, the beauty of it is you can start to take some action. The unfortunate thing is not all claims runs are created equal. Not all claims runs provide the level of detail that you want. More specifically, some of the buried fees that you have no idea are being incurred within the plan.
Five Hidden Fees in Claims Wire
[00:11:53] Stacey Richter: All right, so let's talk about these buried fees.
[00:11:55] Justin Leader: 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, which is the TPA that's doing the adjudication.
Shared Savings Fees Explained
[00:12:08] Stacey Richter: Okay, so taking it from the top. Let's talk about shared savings fees. So first of all, what is a shared savings fee?
[00:12:15] Justin Leader: Shared savings fee is a fee that is taken by the administrator, or another point solution for helping to reduce that charge within the claims run. So it could be an out-of-network provider fee. That's typically the most common.
[00:12:31] Stacey Richter: One of my members goes to an out of network ER or something, right? Or just an out-of-network place. I pay some exorbitant amount. The TPA goes to that out of work place, negotiates a 50% discount, and then gets a percentage of whatever the new discounted rate was.
[00:12:56] Justin Leader: And it could be even something as common as Blue Card access fees, right? You're going into another Blues network utilizing a Blue. And you're gonna get pinged for a fee for entering into another blue territory.
[00:13:09] Stacey Richter: Basically, I have a Blues plan if I'm, if I'm a member here and my plan has a contract with my 10 local hospitals or whatever, but a member goes to another hospital, which is covered by another Blues contract, which is outside my technical network. Is that what you mean?
[00:13:27] Justin Leader: You got it. Not all Blues are created equal. They do compete with one another and while they're all part of the same "Blue", I'm doing bunny ears, program, there are fees to enter into other Blue territories.
[00:13:38] Stacey Richter: That sounds great. Why wouldn't I want my plan? TPA/ASO, why wouldn't I want them to go get me a discount?
[00:13:47] Justin Leader: Yeah. And, and regardless if it's just a standard out of network negotiation fee that's collected, I say standard. It's important for you from a fiduciary perspective to understand exactly what your contract says. And it could be a percentage of savings over the allowed amount. It could be a percentage of savings over the build amount.
It really depends, and sometimes the details are really, really vague. Example, I read a contract not too long ago where it just said, The administrator reserves a right to receive a percentage of savings for any out of network service. Okay? Percent of savings. There's no percent there. And savings based on what?
Based on what reasonable and customary is based on the allowed amount. So if there's no detail. Request it. I've also seen as high as 50% of savings fees for these claims.
[00:14:34] Stacey Richter: You start thinking about it to your exact point. First of all, what's the price that was charged? The charge master rate, which is generally speaking this rate that, you know, even hospitals always say their excuse in a way or rationale for having this really high charge master is, oh, no one actually pays that rate.
Okay, so they're using a charge master rate to determine what the top line price is, and then the bottom line price, I guess, is the in network, right? But anyway, you can see that you'd have this huge potential savings, and then if someone's taking 50% of that, I could see that that would add up to a lot of money.
[00:15:12] Justin Leader: A ton in certain instances, and maybe it's a small percentage of your overall spend, but those fees, depending on how large of 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 build charges to usual customary or some RBP method of repricing shouldn't cost 20 to 30% of the difference.
Ultimately, it would be nice to see it as a fee for service, but keeping in mind, most administrators year after year, they're in a battle to keep their fixed fees low. That's just the nature of how they're built and how the marketplace is positioning.
[00:15:50] Stacey Richter: So what I'm understanding you say is that there's a fierce competition amongst advisors, TPAs like this, just this whole cohort and plan sponsors are shopping based on fixed fees. So if somebody has a cheaper fixed fee, they're like, oh, I wanna go with that one. And then it's like squeezing a balloon.
[00:16:05] Justin Leader: It is, it is. And I gotta give props to Cora Opsahl. I know she's been on your podcast a number of times. She made this very brilliant statement. Rates are important, but so are your rights. And your rights to be able to understand what's going on.
So that, let's look at, you know, another fee overpayment recovery. We overpay a provider and it's our mistake as the administrator. And now we're gonna collect a fee for recoupment. Like that boggles my mind. We're gonna fix a mistake we made and then keep a portion of that for ourselves.
So they're almost always reported as claims cost. But very clearly their compensation, right? That's another revenue source for the administrator.
[00:16:46] Stacey Richter: So within this shared savings category, we may have also mixed up in here, as you just said: TPA makes an error, and then they're like, oh, I made a mistake. They go and correct their mistake, get the money back that they overpaid, and then charge the plan sponsor to correct their own mistake.
[00:17:08] Justin Leader: It's called an overpayment recoupment fee. Now, there's a lot of rumors around the industry, and we'll talk about some of those. You have to separate fact from fiction, but it's rumored that there are algorithms in the old COBOL processing for the adjudication software that every so often it'll purposely overpay to collect a fee back, that could be just completely malarkey. But ultimately it's one of those other areas that there are fees being collected.
[00:17:35] Stacey Richter: I could see why rumors such as this begin because if I'm a TPA and I am just trying to figure out how to make more money, my incentive is very perverse and it's to make mistakes. Like, I get paid more if I make a mistake then if I don't.
[00:17:50] Justin Leader: Isn't that an awesome job to have, like you get paid more for making more mistakes.
[00:17:55] Stacey Richter: All right, so in our shared savings 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.
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.
Is there anything else that you would lump into the shared savings?
[00:18:31] Justin Leader: I think those are really the big ones. Correcting out of network, you know, different Blue card access fees. Fees on the backs of the administrator themselves.
[00:18:39] Stacey Richter: I think one of the big points that you're making is that these tend to be invisible, as are all of these categories.
In other words, I don't know that lots of my members are going to this one particular hospital that is charging some rate that my TPA is then going and, and negotiating down. Like I, I don't have any of this information, as you said at the top of this conversation. I'm just getting one number. It's called medical claims.
[00:19:05] Justin Leader: Well, and it's the cost of doing business. They'll say they have various methodologies and ways. Our job is to understand what those ways are and make sure that we're holding the administrator's accountable to provide fair fees for what we're, buying. The problem is it's so opaque. It's tough for any plan sponsor to be able to approach the market and understand truly what's going on within the data.
And it's an uphill battle and I've, I've fought it time and time again sometime winning. More often than not, we lose, but we lose getting more information than what we started with. So to me, that's winning the battle to eventually win the war.
[00:19:43] Stacey Richter: Well, which I think is maybe inspiring for those who are listening, who are getting claims wires with like one or two numbers who have been fighting the good fight and not winning relative to like what they're paying for on a weekly basis.
[00:19:55] Justin Leader: Stacey, those that set up auto pay for the weekly claims run and don't even review them before the invoice is paid.
[00:20:04] Stacey Richter: Ouch. Alright, so the first charge that may get folded into this claims wire, we just discussed, these shared savings fees.
Prior Authorization Fees
[00:20:13] Stacey Richter: The second one that you had mentioned is prior auth fees. What's going on there?
[00:20:17] Justin Leader: Paying fees for prior authorization, it just makes me scratch my head because you as an administrator have a responsibility to administer the plan the way the plan documents have been written. You're essentially, are you charging a fee for doing your job? That's the question.
[00:20:34] Stacey Richter: Yeah. So much to unpack here.
So the second thing that might be buried in this claims wire are these prior auth fees. And, I do feel like it's really important and you said this to mention that on its face. Ensuring that care is appropriate and evidence-based, that feels like something that actually could benefit a plan member to understand that, wow, there's a genetic test that could determine if this drug with terrible side effects that's really expensive is gonna actually work for you or not, and you didn't get that genetic test.
There's certain things which definitely could be seen as a member, a win-win across the board. On the other hand, we have what's going on now with prior auths, which is not that.
And if the plan sponsors are reimbursing a payer to be doing prior auth paperwork, then what incentive really does the, I mean, let's make it as complicated as possible because I'm making money here.
[00:21:33] Justin Leader: Once again, it's additional compensation that probably isn't being broken out on a line itemization. Especially if you're really compliant with the CAA rules, asking for a 408(b)(2)(b) disclosure of all direct, indirect and non-monetary compensation. Good luck getting that identified as indirect compensation that was earned on the plan.
[00:21:52] Stacey Richter: Yeah, and Al Lewis has talked about this quite a bit also about actually MRI prior auths, and what they basically found is that the MRIs tended to be done anyway just in the next quarter or something. So like you had all of this paperwork that was being done such that the plan could basically say, oh, I prevented however many MRIs, and look how much money you saved plan.
But then those same MRIs transpired like the next quarter. So it actually was just additional, it's a profit center.
[00:22:20] Justin Leader: You hit the nail on the head.
[00:22:22] Stacey Richter: So that's the second thing that could be included in the claims wire that people should certainly be aware of.
And, I just wanna be fair to your exact point. you said this. There is value here if it's done in a way that's a win-win with the plan sponsor. And if those dollars are transparent, but the way it's currently being done may not be a win-win and it's very, very not transparent.
[00:22:43] Justin Leader: I would agree.
Prepayment Integrity
[00:22:44] Stacey Richter: Okay, so the third thing, prepayment integrity, I think you said.
[00:22:48] Justin Leader: Yeah. So evaluation of the claim itself before it's paid. So a lot of folks will say, well, is that different than what the TPA is doing? The fact of the matter is the TPA in most instances, 85% of the claims are auto adjudicated. So how much review is going into that live weekly run of claims? I would argue it differs from administrator to administrator.
I would be concerned on how high the auto adjudication rate is for a lot of these vendors that are out there. I would prefer to have better oversight at time of claim processing. So what does that look like?
Right now, I would say that there's not enough of this going on technically under the ERISA guidelines. To be prudent, loyal to the plan, you have to understand what's going on within the claims themselves and also have to understand to some level of detail exactly what it is that we're paying for.
So in this, you might see things like upcoding, unbundling, a number of issues that we'll talk about in the Pay and Chase model, but here we have a great opportunity with technology and artificial intelligence to implement a better methodology of analyzing these claims at the time that they're being processed as opposed to some of the archaic technology that's being used with the systems that are behind the scenes at the administrator.
[00:24:09] Stacey Richter: It sounds like there's two ways a plan sponsor might get charged by their administrator to process claims.
One of them is the administrative fee, which is that's what it's supposed to be used for, right? Processing claims. But then there may be a second goings on which the plan sponsor is paying for in this category, this prepayment integrity in which like they're doing something else over and above just merely administering claims in order to ensure that the claims paid are correct.
[00:24:38] Justin Leader: Let me lay this out to you. Sometimes the carrier agrees in the provider contracts not to review claims prepayment, so the errors are let through intentionally or unintentionally, if you will, as none of the claims are reviewed in detail prior to payment. Why catch it pre-payment when you are compensated more to find it post-payment?
[00:24:55] Stacey Richter: Yeah, so what we're talking about right now in this category, as we just mentioned, is this prepayment integrity. The administrator, what they're doing is charging an over and above fee to ensure that the claims are accurate. And this could be happening prior to the claim being paid, but it would be considered not normal. Right?
So like maybe some are being, get flagged for some reason and stuck down the second chute and looked at more carefully, is that, what do they even explain that they're doing?
[00:25:27] Justin Leader: It's very prudent if your administrator's not doing a good job on the front end, it really pays dividends to ensure that you have some sort of vendor in there that's aggressively demanding this information and requiring it to be shared as set forth in the gag clause prohibitions under ERISA.
This is one of the, one of the five that I think it's okay to pay more money for because it's needed. Accuracy is needed earlier on in the adjudication process. There's point solutions that have developed out there that allow for increased oversight and understanding of what is happening with the claim before it actually gets paid.
You're not gonna see that in most administrators because they're incentivized to have errors with some of these other fees that we talked about. In most instances, the really good administrators out there, tend to lose a lot of business because if they're doing a better job on the front end, they tend to cost more.
[00:26:25] Stacey Richter: And this is just because of the whole squeezing the balloon thing.
If they're upfront, there's just enough employers who don't really understand that you're gonna pay for it on the front end. And if you don't pay for it on the front end, you're gonna pay a lot on the backend.
[00:26:38] Justin Leader: So much on the backend. I'll use a good example. We got a fund that spent, a multi-employer fund that was spending about 13 million annually. Just by virtue of doing a better job on the front end, we reduce that expense by $1.5 million.
[00:26:53] Stacey Richter: Wow. So this is prepayment, integrity fees, evaluation of the claim before it's being paid. This may or may not differ from what the TPA/ASO is supposed to be doing. IE it's the TPA that's supposed to be, yeah, right, adjudicating and paying claims. I think that's becoming very clear to me just how much money is being spent on that wire that doesn't, again, accrue to member health or may not be a spend that has value, if I'm gonna put it that way.
[00:27:24] Justin Leader: This is much like the ShamWow guy, Oh wait, there's more. We can if you want to, and get the pay and chase.
Pay and Chase Fees
[00:27:29] Stacey Richter: 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 a shared savings fee if a patient goes out of network and the administrator can negotiate some discount.
We already talked about that. This is also not getting back dollars that the administrator paid by mistake and then fix their own mistake. That's also something else. Pay and chase, there was dollars that were paid, 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 have realized that the provider 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?
[00:28:20] Justin Leader: Correct. And maybe within the claims there's unbundling, there's upcoding, maybe there are a number of issues that you find 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 looking at large claims, right? So there are literally like thousands and 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.
[00:28:46] Stacey Richter: Julie Selesnick, and she's like, it is the very definition of a fiduciary breach when you have the one auditing your claims, also the one who is doing the claims. Like that is not prudent from a fiduciary standpoint by any definition.
[00:29:04] Justin Leader: She is so right. You look at like the J&J lawsuit, that's a big consideration for everybody regarding what they're doing within their plans.
I had another Taft Hartley fund that wanted to do an audit. They used the approved vendor to audit their claims, the one that was approved by the network. Lo and behold, the auditor found around $21,000 in errors that they got money back from the administrator. Can you take a guess what the fee was for that audit?
[00:29:33] Stacey Richter: $21,000 was overpaid vis-a-vis errors. And you're asking me what the fee the auditor charged to find that 21k was?
[00:29:42] Justin Leader: Correct. It's $25,000. Like, like, so you didn't even, you didn't even recoup enough money to pay your own fee, which is ridiculous. This is on millions and million dollars of claims. So we finally get the ability to do it with a, an audit with an independent party, right? Somebody that we brought in same amount of claims, same issues, and they come out with more than 20 times that in errors.
Come on, man. Are you kidding me?
[00:30:12] Stacey Richter: Yeah. Well, I mean, you, you got the fox guard in the hen house. I mean, honestly, like you're gonna hire the same exact company that's doing the work to audit their own work. Like in what world? Is that a good idea?
[00:30:24] Justin Leader: Yeah. I talked to a plan not too long ago that has a couple hundred million in annual spend, and I asked like, who's advising you?
And they're like, my administrator is also my network, which also is also my stop-loss. We also use their PBM, and then our actuary and advisor is also a part of their team.
[00:30:42] Stacey Richter: I don't mean to laugh, I'm sure it's very efficient.
[00:30:45] Justin Leader: I guess, efficient to waste hundreds of millions of dollars. That really segues into the TPA themselves and the TPAs and the claim review that they're doing. That would be the, the fifth part of our review here today.
TPA Claim Review
[00:30:58] Stacey Richter: Okay. So right now we have segued, as you said, into number five, which is our TPA claim review. What's, what's this?
[00:31:04] Justin Leader: Yeah, so this is just your 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. They're all pretty much the same, just a different shade of brown.
And he's right. All of the claims have a network relationship. Most of them are beholden to the network relationship, meaning that they're gonna follow whatever the network rules are regarding what they're allowed to do with the claims that they're adjudicating.
Most of these administrators, as I said, are auto adjudicating claims, 85, 90% of claims that flow from the provider after visit auto adjudicated, handled by software, not by people. Audit adjudication process, checks for eligibility, prior auths coverage, plan design member liability. The problem is, is how accurate is that information that's just hitting the software and paying? It's a good question.
[00:31:55] Stacey Richter: It is a good question.
[00:31:56] Justin Leader: Not many people know the answer to that question. Are willing to delve in to understand that with each of the administrators that they're reviewing and potentially hiring.
[00:32:04] Stacey Richter: You had alluded to when we were talking about our number three category, which is the prepay integrity that it's worth it to pay somebody third party to do some due diligence here.
TPAs are are, you know, that's what your administrative fee goes to, paying to have these claims adjudicated. But they may be doing a great job or they may be doing a really, really bad job. And you would never know it unless you have third-party experts with their eyes on what's going on.
[00:32:34] Justin Leader: A hundred percent.
Here's a great quote from Karen Handorf that she said to me the other day. She said, getting gag clauses out of your contracts is a useless exercise if you don't look at the data to figure out how it is hurting. Not just you the plan, but the plan participants as well.
You hire administrator. They tell you they're gonna do a great job. Some of them might say, oh, we have a really, really high out adjudication rate and we pay claims accurately and timely.
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 rights that I have to be able to review claims, whether it's a $20,000 claim or a $2 million claim.
[00:33:15] Stacey Richter: And this is exactly also what any number of guests on this show have said. Julie Selesnick, Dawn Cornelis was on the show. You, mentioned, Dawn. It's not only getting the data, but it's also using it.
[00:33:27] Justin Leader: A hundred percent you have to use it. Data's data. So what. What are you gonna do with it?
[00:33:32] Stacey Richter: 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 that if I'm A TPA, the front page of my website, it's gonna be all about how amazing I am at adjudicating claims. But it's a marketing statement.
[00:33:49] Justin Leader: It is.
[00:33:49] Stacey Richter: You gotta get the data to check.
[00:33:51] Justin Leader: There are dozens of TPAs out there 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.
[00:34:03] Stacey Richter: I think people walk in with their sorcery. I have this magic box and smoke and mirrors, and I will just feed your claims in the one side and I will get you 10% savings.
You know, like we had AJ Loiacono on the show and he said he was talking to some broker, and the broker said, “I can make the spreadsheet show anything I want.” And I think that's what we're talking about here.
[00:34:27] Justin Leader: I'm one of AJ's folks, Mike Miele, we talk about that all the time. He'll be on a spreadsheet or we'll be having that discussion where somebody just comes in and buys the business or shadow prices, the lowest possible number.
And it's like, what are you buying? You could save a hundred thousand dollars on the front end, on the back end, it's gonna cost you millions.
[00:34:45] Stacey Richter: Another thing that I have heard sometimes gets charged for within this claims wire in the process of paying for claims is spread pricing and medical claims. And I've certainly, I'm sure everybody who listens has heard this relative to pharmacy claims, but there's medical claim spread pricing as well.
[00:35:03] Justin Leader: We certainly think it exists. It's hard to say exactly where and how it's happening. It's obviously, as you said, known within PBM pricing. The J&J complaint discusses it in some detail. It's thought that it is happening on 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 complaint filed with the Bricklayers Local 1 in Connecticut, and Sheet Metal Workers against Anthem. The Bricklayers are a client of ours. One of the allegations is that there's money added to the actual cost of the claim that either goes into the pocket of the insurer provider, which is still to the benefit of the insurer, who would otherwise be on the hook for the compensation if it's being paid to said provider.
[00:35:48] Stacey Richter: Yeah, so just understanding what a spread is, is that the plan sponsor is being charged a hundred bucks for some claim, but the provider is only being reimbursed 50 bucks. Therefore, somebody in the middle, just made 50 bucks.
[00:36:06] Justin Leader: It doesn't disappear into the ethos. And as we have more transparency files, machine readable files that are made available where we can look at specific procedures services and then compare what the publicly posted prices for 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 the provider agreement says it is the obligation of Blue Cross Blue Shield to pay the shifted provider tax. It's a hidden fee that gets pulled in. So that's the whole basis of a lawsuit. So does it exist? I would argue. Yes.
[00:36:41] Stacey Richter: Interesting. So basically what you're saying is that there are indications to show that what the providers are charging for any particular 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 and relative to this DOL (Department of Labor) case against BCBS Minnesota, I think, what was going on there is that the plan sponsors 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, how are they paying providers taxes? If there wasn't dollars in the middle there, which were being added to claims that the plan sponsors were told, Oh, you're paying claims.
[00:37:27] Justin Leader: You got it. See, listen, it doesn't take a rocket scientist. It just takes a little bit of sleuthing to connect the dots and understand that this is just another form of spread pricing.
Conclusion and Final Thoughts
[00:37:36] Stacey Richter: Justin Leader, is there any place where you would recommend people go to learn more about your work?
[00:37:44] Justin Leader: I put a lot of information out there on LinkedIn, so look for me on LinkedIn. Justin Leader, the one out of Pennsylvania, not the one outta California. You can also go to benefitsDNA.com or wefixyourhealthcare.com.
[00:37:57] Stacey Richter: And I would highly recommend following Justin on LinkedIn. We will link to Justin on LinkedIn as well as the two websites that he just mentioned.
Justin Leader, thank you so much for being on Relentless Health Value today.
[00:38:11] Justin Leader: Thank you, Stacey. I'm a big fan of your podcast as I've shared time and time again, I'm a bit of a fanboy, so it's an honor to be here today.
[00:38:18] Cynthia Fisher: Hi, this is Cynthia Fisher, patientrightsadvocate.org. We subscribe to Stacey's podcast and we've learned so much from her podcast with all the incredible individuals she interviews on healthcare and the opportunities to affect change for the better. I suggest everyone listen to these great podcasts that Stacey provides. So well informed for all of us engaged in healthcare.