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

[00:00:00] Episode 433, The Mystery of the Weekly Claims Wire.

[00:00:06] What are plan sponsors actually paying for each week?

[00:00:10] Today I speak with Justin Leder.

[00:00:13] American health care entrepreneurs and executives you want to know.

[00:00:24] Talking.

[00:00:26] Relentlessly seeking value.

[00:00:29] On the show today I am going to use the term TPA, Third Party Administrator and ASO, Administrative

[00:00:36] Services Only Vendor, kind of interchangeably here.

[00:00:40] But these are the entities that a plan sponsor, for example a self-insured employer is a

[00:00:45] plan sponsor, but these plan sponsors will use to administer their plan.

[00:00:50] And one of the things that TPAs and ASOs administer is this so-called weekly claims

[00:00:57] wire.

[00:00:58] Every week self-funded employers get a weekly claims run charge so they can pay expenses

[00:01:04] related to their plan in weekly increments.

[00:01:08] The claims run usually comes with a register or an invoice.

[00:01:12] This invoice might be just kind of a total, hey plan, pay this amount.

[00:01:16] Or there might be a breakdown like here's your medical claims and here's your pharmacy

[00:01:20] claims.

[00:01:21] Maybe there's another level down from that of detail if the plan or their advisor

[00:01:25] is sophisticated enough and or concerned enough about the fiduciary risk to dig in

[00:01:30] hard about what the charges are actually for.

[00:01:34] I was talking about this topic earlier with Dana Erdfarb who happens to be Executive

[00:01:39] Director of HR at a large financial services organization.

[00:01:42] Dana, I'm definitely going to credit for inspiring this conversation that I'm having

[00:01:48] today with Justin Leder.

[00:01:49] Dana was the first one to really bring to my attention just the level of hidden

[00:01:54] fees that are buried many times in these claims wires because when I say buried in

[00:02:01] the claims wire, I mean not charged for via an administrative invoice.

[00:02:07] These hidden fees are also not called out in the ASO finance exhibit in the contract,

[00:02:12] by the way.

[00:02:13] So yeah, hidden.

[00:02:15] I don't know if you have to hide your charges.

[00:02:17] In my mind, that's a pretty big tell that your charges are worth hiding.

[00:02:21] Now, the one thing I will point out is that just because the charges are worth hiding

[00:02:25] doesn't necessarily mean that the services those charges are for are unwarranted.

[00:02:32] Some of these services are actually pretty worthwhile to do.

[00:02:35] There's just a really big difference from a plan sponsor knowingly contracting at a

[00:02:40] known rate with a third party to do something versus paying for a service knowingly or

[00:02:46] unknowingly via fees hidden in a claims wire wherein the amount paid is not in the

[00:02:51] control of the one paying the bill.

[00:02:53] Anyway, I was talking about all of this earlier as I mentioned with Dana Erdfarb.

[00:02:58] That conversation was exactly the framework that I needed to snag Justin Leder,

[00:03:02] my guest today, to come on the pod and really dig into the detail level of what's

[00:03:07] going on with this claims wire.

[00:03:08] So today we're going to talk about the five fees that tend to be tucked into many

[00:03:12] claims wires.

[00:03:14] We also talk about one bonus, not sure if it's a fee, one bonus way that plan

[00:03:19] sponsors give money to vendors in ways the plan sponsor might be unaware of.

[00:03:25] Here are the five hidden fees that we talk about at length in the show today and then

[00:03:30] I'll cover the bonus.

[00:03:31] First hidden fee is the shared savings fees.

[00:03:34] This is where a member of a plan goes out of network and the TPA slash ASO goes and

[00:03:41] negotiates a discount from the out of network provider and then shares the

[00:03:46] savings.

[00:03:47] Get it?

[00:03:47] Shared savings.

[00:03:48] This category also might include blue card access fees, which we talk about in

[00:03:53] the show, but there also could be overpayment recoupment fees lumped in here.

[00:03:57] This is where the TPA messes up, overpays, and then charges the plan sponsor a

[00:04:03] percentage of the money they just got back when they corrected their own

[00:04:06] mistake.

[00:04:07] I'm just going to pause here while everyone contemplates how we've all gone so

[00:04:11] wrong in life to not have figured out a way to charge others when we correct

[00:04:15] our own mistakes.

[00:04:16] Second hidden fee, prior off fees, lots to unpack with this one, which

[00:04:21] Justin does in the pod.

[00:04:24] Number three are prepayment integrity fees.

[00:04:28] So this is evaluation of the claim before it's being paid.

[00:04:31] Listen to the show for how this may or may not differ from what the TPA

[00:04:36] ASO is supposed to be doing, i.e.

[00:04:38] it's the TPA that's supposed to be, yeah right, adjudicating and paying

[00:04:43] claims.

[00:04:44] Pay and chase fees, this is the fourth kind of fee.

[00:04:46] This is where a bill was paid wrong and it's not immediately the TPA

[00:04:52] ASO's mistake.

[00:04:54] This is where something like a provider double billed or overcharged

[00:04:59] or something and the TPA ASO later figures this out and then chases the

[00:05:05] pay to get the money back.

[00:05:08] And then five TPA claims review fees, sort of self-explanatory but also

[00:05:12] not.

[00:05:13] Again, please listen to the show for more.

[00:05:14] When I've been talking about all of this with Dana Erdfarb as I

[00:05:17] mentioned earlier, just about this whole thing, she said something that

[00:05:20] Justin Leeder echoes today.

[00:05:22] Many of these fees are structured as a percentage of savings.

[00:05:26] This is challenging for a plan sponsor because the savings is vendor

[00:05:31] and not validated.

[00:05:32] But it also means that if the savings increase annually with trend, as they

[00:05:37] generally speaking do, then the fees will increase with that trend as

[00:05:41] well.

[00:05:41] And that is something to keep in mind.

[00:05:43] Okay, so here's the bonus thing that didn't get a number in the show

[00:05:47] today but it is certainly a way that plan sponsors pay money to

[00:05:51] vendors.

[00:05:51] And this is medical claims spread pricing.

[00:05:54] This is buried in the claims wire and inside the dollar amounts the

[00:05:58] plan sponsor thinks they are paying a provider for a service.

[00:06:02] It turns out that it can turn out that the amount the plan sponsor is

[00:06:06] paying is more than the check that's being written to the provider for the

[00:06:10] service being delivered or the amount the plan sponsor is paying the

[00:06:14] provider for a service is more than for simply that service that has

[00:06:20] been rendered, right?

[00:06:21] The plan sponsor is paying the provider for other stuff as well, as

[00:06:24] is alleged in the DOL versus BCBS of Michigan lawsuit, which Justin brings

[00:06:30] up in the show today.

[00:06:31] It drives me nuts honestly when there are people who tout their

[00:06:36] transparency but then it turns out if the equation is A plus B equal

[00:06:41] C only like one of the numbers is transparent.

[00:06:44] Sorry, functionally that doesn't count as transparency except in

[00:06:49] marketing copy.

[00:06:50] As mentioned a myriad of times already, my guest today is Justin

[00:06:54] Leder who is president and CEO of Benefits DNA.

[00:06:58] Justin works with plan sponsors, both commercial plans as well as Taft-Hartley

[00:07:01] plans across the United States.

[00:07:03] Before we kick into the show today I just want to thank By the 49ers for

[00:07:06] the really nice review on iTunes.

[00:07:09] By the 49ers calls Relentless Health Value a leading voice in health care

[00:07:14] and says he or she always leaves with intrigue a new idea or a new

[00:07:18] approach to problem solving.

[00:07:20] Really appreciate that.

[00:07:21] That is certainly one of our goals around here.

[00:07:24] So thank you so much.

[00:07:25] My name is Stacey Richter.

[00:07:26] This podcast is sponsored by Aventuria Health Group.

[00:07:29] Oh also please subscribe to the weekly email that goes out.

[00:07:33] You can do that by going over to our website and signing up.

[00:07:37] There are a lot of advantages to doing so which I've talked about

[00:07:40] before so I'm not going to do so again but it is a great way to make

[00:07:44] sure that if you're a member of the Relentless Health Value tribe you

[00:07:47] are aware of the current goings on.

[00:07:50] Justin Leder, welcome to Relentless Health Value.

[00:07:52] Stacey Richter, thank you for having me.

[00:07:55] Let's talk about this claims wire here.

[00:07:57] First of all how is this claims wire typically explained?

[00:08:02] So if I'm a typical self-insured plan sponsor someone's probably

[00:08:07] going to tell me that this claims wire is going to happen.

[00:08:09] Maybe it's the broker that's explaining on behalf of the ASO but

[00:08:15] how does that typical explanation go down in short?

[00:08:18] Typically the explanation is you're going to go from paying monthly

[00:08:22] claims or invoices to paying a weekly claims run and there'll be

[00:08:26] some fluctuation but we can budget for that.

[00:08:29] Now I'm role-playing the plan sponsor so you're just gonna

[00:08:33] draw from my bank account?

[00:08:35] What happens here?

[00:08:36] Each week we're going to hit you with a claims register.

[00:08:38] You're going to take a look at that and then you're going to

[00:08:40] prove those claims to be paid.

[00:08:42] Some weeks they'll be low, some weeks they'll be high.

[00:08:45] So claims, I'm told I'm playing claims?

[00:08:48] You're paying claims.

[00:08:49] You're playing medical and prescription claims.

[00:08:52] Typically on the same register.

[00:08:54] This is going to be really good for you Mr.

[00:08:56] or Mrs. Plan sponsor because you'll be able to understand what's

[00:09:00] going on within your plan on a week-to-week basis by the

[00:09:04] invoice amount that you're going to pay.

[00:09:06] So on my invoice if I'm looking at a sample of one of these

[00:09:09] what do I actually see?

[00:09:11] What is on there?

[00:09:12] A list of all of my claimants with their claims and all the drugs I paid?

[00:09:16] Stacey you're asking a lot of questions.

[00:09:19] It really depends.

[00:09:20] It depends on the administrator.

[00:09:22] You may get very, very basic information like here's your

[00:09:25] medical claims for the week.

[00:09:27] Here's your RX claims for the week.

[00:09:29] Sometimes you might get a little bit more detail.

[00:09:32] You might get claimant information.

[00:09:35] You might get maybe member ID, claim number, date of service,

[00:09:39] and paid amount.

[00:09:40] If you get a little bit better information you're going to get

[00:09:43] the type of service, provider information, the charged amount,

[00:09:46] the paid amount, claim status.

[00:09:48] But ultimately it's up to you as the plan sponsor or as the advisor

[00:09:52] in certain instances to push for that information.

[00:09:55] Stacey This wire is an amount that is paid by the plan on a

[00:10:00] weekly basis.

[00:10:01] Plans are told okay well these are for your actual claims.

[00:10:05] I mean there's other payments that are going on which are

[00:10:07] supposed to be, which are for administrative stop loss, right?

[00:10:11] Like so I mean so there's other bills which are happening but what

[00:10:14] this wire is supposed to be is to pay for actual claims.

[00:10:18] Did I get that right?

[00:10:19] Justin You got that absolutely correct.

[00:10:21] Stacey I have to say Justin one of the reasons why I asked

[00:10:24] you to come on this podcast and talk about this topic is

[00:10:27] because I have gotten so many requests from plan sponsors who

[00:10:34] say to me I'm getting this invoice and it's got to your exact

[00:10:40] point some level of detail but I don't know much and I'm

[00:10:44] feeling like I actually keep asking what am I paying for here?

[00:10:48] And bottom line I can't figure it out.

[00:10:51] It feels like there's other stuff that's going on here.

[00:10:53] Someone will allude to something else that I'm paying for but I

[00:10:56] just cannot get any details here.

[00:10:59] Justin And I think that's part of the major issue.

[00:11:02] Employers go to self-funding because they want to feel like

[00:11:05] they're more in control and they want to be able to glean

[00:11:08] insights and look at data.

[00:11:10] However by virtue of moving self-funded it doesn't mean that

[00:11:13] you're going to have all this unencumbered access to data.

[00:11:17] I guess keep in mind too the whole point of this or self-funding

[00:11:22] in general is to be able to take actionable insights so that's

[00:11:25] a big topic of discussion in itself but there's a lot of

[00:11:28] stuff that's buried in the claim that can go on and that's

[00:11:31] why it's so vital to understand what the heck we are paying for.

[00:11:35] Stacey This is an opportunity really this claims

[00:11:38] wire because you don't have to wait till the end of the year

[00:11:42] to figure out that a lot of money got spent that now you can do

[00:11:46] nothing about.

[00:11:47] If there is a right-sized amount of data that is in the claims

[00:11:51] wire that comes across just even relative to the claims

[00:11:53] irrespective of everything else then this is actionable information

[00:11:58] that this kind of black box starts to become more clear

[00:12:03] and if it's a black box the solution is also a black box right?

[00:12:07] So as Rick Renard has said.

[00:12:09] Rick The thing is the black box is sometimes buried in the middle of the

[00:12:13] Pacific Ocean and you have to really dig down to get to that

[00:12:16] level of detail but on the surface the beauty of it is you can

[00:12:19] start to take some action.

[00:12:21] The unfortunate thing is not all claims runs are created equal, not

[00:12:24] all claims runs provide the level of detail that you want

[00:12:27] regarding what should be common like the example that I just gave

[00:12:32] but even more specifically some of the buried fees that you have no idea

[00:12:36] are being incurred within the plan.

[00:12:37] All right so let's talk about these buried fees.

[00:12:40] Exactly what are all of the things?

[00:12:43] Rick There are five things shared savings fees

[00:12:47] we have prior authorization fees we have pre-payment integrity

[00:12:51] we have pay and chase and then we have the bare bones basic

[00:12:55] which is the tpa that's doing the adjudication.

[00:12:58] Rick Okay so taking it from the top let's talk about shared

[00:13:01] savings fees so first of all what is a shared savings fee?

[00:13:06] Rick Shared savings fee is a fee that is taken by the

[00:13:09] administrator or another point solution for helping to reduce

[00:13:13] that charge within the claims run so it could be an out of

[00:13:18] network provider fee that's typically the most common.

[00:13:21] Rekha One of my members goes to an out of network

[00:13:28] er or something right or just an out of network place

[00:13:31] I pay some exorbitant amount the tpa goes to that out of network place

[00:13:38] negotiates a 50 discount and then gets a percentage of whatever

[00:13:45] the new discounted rate was.

[00:13:47] Rick And it could be even something as common

[00:13:51] as blue card access fees right you're going into another blues network

[00:13:55] utilizing a blue and you're going to get pinged for a fee for

[00:13:58] entering into another blue territory.

[00:14:00] Rekha Basically I have a blues plan if I'm a member here and my plan has a contract with

[00:14:07] my 10 local hospitals or whatever but a member goes to another hospital which is covered by

[00:14:13] another blues contract which is outside my technical network is that what you mean?

[00:14:18] Rick You got it not all blues are created equal

[00:14:21] they do compete with one another and while they are all part of the same

[00:14:24] blue I'm doing bunny ears program there are fees to enter into other blue territories.

[00:14:31] Rekha That sounds great why wouldn't I want my

[00:14:34] plan tpa aso why wouldn't I want them to go get me a discount?

[00:14:39] Rick Yeah and regardless if it's just a standard

[00:14:42] out of network negotiation fee that's collected I say standard it's important for you from

[00:14:47] a fiduciary perspective to understand exactly what your contract says and it could be a

[00:14:51] percentage of savings over the allowed amount it could be a percentage of savings over the

[00:14:56] billed amount it really depends and sometimes the details are really really vague example

[00:15:03] I read a contract not too long ago where it just said the administrator reserves a right

[00:15:08] to receive a percentage of savings for any out of network service okay percent of savings

[00:15:14] there's no percent there and savings based on what based on what reasonable and customary is

[00:15:19] based on the allowed amount so there's no detail request it I've also seen as high as 50 percent

[00:15:25] of savings fees for these claims. Rekha You start thinking about it

[00:15:29] to your exact point first of all what's the price that was charged the charge master rate

[00:15:35] which is generally speaking this rate that you know even hospitals always say their excuse

[00:15:41] in a way or rationale for having a really high charge master is oh no one actually pays

[00:15:46] that rate okay so they're using a charge master rate to determine what the top line price is

[00:15:53] and then the bottom line price I guess is the in network right but anyway you can see that you'd

[00:15:58] have this huge potential savings and then if someone's taking 50 percent of that I could

[00:16:04] see that that would add up to a lot of money. Kevin A ton in certain instances and maybe it's

[00:16:09] a small percentage of your overall spend but those fees depending on how large of a claim

[00:16:14] it is can be quite egregious if there's no cap on what they're taking so it's kind of absurd

[00:16:20] really I mean changing the rate from billed charges to usual customary or some rbp method

[00:16:26] of repricing shouldn't cost 20 to 30 percent of the difference ultimately it would be nice to

[00:16:32] see it as a fee for service but keeping in mind most administrators year after year they're

[00:16:37] in a battle to keep their fixed fees low and that's just the nature of how they're built

[00:16:43] and how the marketplace is positioning. So what I'm understanding you say is that there's a fierce

[00:16:48] competition amongst advisors tpas like this just this whole cohort and plan sponsors are

[00:16:54] shopping based on fixed fees so if somebody has a cheaper fixed fee they're like oh I want to go

[00:16:58] with that one and then it's like squeezing a balloon. It is it is and I gotta give props to

[00:17:04] Cora Opsal I know she's been on your podcast a number of times she made this very brilliant

[00:17:09] statement rates are important but so are your rights and your rights to be able to understand

[00:17:14] what's going on. So let's look at a you know another fee over payment recovery we overpay

[00:17:20] a provider and it's our mistake as the administrator and now we're going to collect

[00:17:26] a fee for recoupment like that boggles my mind we're going to fix a mistake we made

[00:17:31] and then keep a portion of that for ourselves. So they're almost always reported as claims cost

[00:17:39] but very clearly their compensation right 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 as you just said

[00:17:53] tpa makes an error and then they're like oh I made a mistake they go and correct their mistake

[00:18:00] get the money back that they overpaid and then charge the plan sponsor to correct their

[00:18:06] mistake. It's called an overpayment recoupment fee now there's a lot of rumors around the

[00:18:11] industry and we'll talk about some of those you have to separate fact from fiction but it's

[00:18:15] rumored that there are algorithms in the old cobalt processing for the adjudication software

[00:18:21] that every so often it'll purposely overpay to collect a feedback that could be just

[00:18:27] completely malarkey but ultimately it's one of those other areas that there are fees being

[00:18:34] collected. Well I could see why rumors such as this begin because if I'm a tpa and I am just

[00:18:41] trying to figure out how to make more money my incentive is very perverse and it's to make

[00:18:46] mistakes like I get paid more if I make a mistake than if I don't. Isn't that an awesome

[00:18:51] job to have like you get paid more for making more mistakes? All right so in our shared savings

[00:18:57] category here we've got the getting money back 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 tpa correcting my own mistake

[00:19:10] is there anything else that you would lump into the shared savings? I think those are really the

[00:19:15] big ones correcting out of network you know different blue card access fees fees on the

[00:19:20] backs of the administrator themselves. I think one of the big points that you're making is

[00:19:24] that these tend to be invisible as are all of these categories in other words I don't know

[00:19:30] that lots of my members are going to this one particular hospital that is charging some rate

[00:19:38] that my tpa is then going and negotiating down 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 it's called medical

[00:19:48] claims so if you don't know something. Well and it's the cost of doing business they'll say

[00:19:55] they have various methodologies and ways our job is to understand what those ways are and make

[00:20:01] sure that we're holding the administrators accountable to provide fair fees for what

[00:20:06] we're what we're buying. The problem is it's so opaque it's tough for any plan sponsor to be

[00:20:12] able to approach the market and understand truly what's going on within the data and it's an

[00:20:17] uphill battle and I've fought it time and time again sometimes winning more often than not

[00:20:22] we lose but we lose getting more information than what we started with so to me that's winning the

[00:20:28] battle to eventually win the war which I think is maybe inspiring for those who are listening

[00:20:34] who are getting claims wires with like one or two numbers who have been fighting the good

[00:20:38] fight and not winning relative to like what they're paying for at a weekly basis. Stacey

[00:20:44] those that set up auto pay for the weekly claims run and don't even review them before

[00:20:50] the invoice is paid. Ouch. All right so the first charge that may get folded into this claims wire

[00:20:58] we just discussed these shared savings fees the second one that you had mentioned is prior off

[00:21:03] fees what's going on there? Paying fees for prior authorization it just makes me stretch my

[00:21:09] head because you as an administrator have a responsibility to administer the plan the way the

[00:21:15] plan documents have been written you're essentially are you charging a fee for doing your job?

[00:21:21] That's the question. Yeah so much to unpack here so the second thing that might be buried in this

[00:21:28] claims wire are these prior off fees and I do feel like it's really important and you said

[00:21:35] this to mention 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 that wow

[00:21:49] there's a genetic test that could determine if this drug with terrible side effects that's

[00:21:53] really expensive is going to actually work for you or not and you didn't get that genetic test

[00:21:58] there's certain things which definitely could be seen as a member a win-win across the board.

[00:22:04] On the other hand we have what's going on now with prior off which is not that and if

[00:22:10] the plan sponsors are reimbursing a payer to be doing prior off paperwork then what incentive

[00:22:17] really does the I mean let's make it as complicated as possible because I'm making money here?

[00:22:21] Once again it's additional compensation that probably isn't being broken out on a line

[00:22:26] itemization especially if you're really compliant with the CAA rules asking for a 408 B2B

[00:22:32] disclosure of all direct indirect and non-monetary compensation good luck getting

[00:22:38] that identified as indirect compensation 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 off and what

[00:22:48] they basically found is that the MRIs tended to be done anyway just in the next quarter or

[00:22:54] something so like you had all of this paperwork that was being done such that the plan could

[00:23:00] basically say oh I prevented however many MRIs and look how much money you saved planned

[00:23:04] but then those same MRIs transpired like the next quarter so it actually was just additional

[00:23:10] it's a profit center. You hit the nail on the head. So that's the second thing that that could

[00:23:14] be included in the claims wire that people should certainly be aware of and I just want

[00:23:19] to be fair to your exact point you said this there is value here if it's done in a way that's

[00:23:26] a win-win with the plan sponsor and if those dollars are transparent but the way it's currently

[00:23:30] being done may not be a win-win and it's very very not transparent. I would agree. Okay so the

[00:23:35] third thing prepayment integrity I think you said. Yeah so evaluation of the claim itself

[00:23:44] before its paid 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 the claims are auto

[00:23:58] adjudicated so how much review is going into that live weekly run of claims I would argue

[00:24:05] it differs from administrator to administrator. I would be concerned on how high the auto

[00:24:11] adjudication rate is for a lot of these vendors that are out there. I would prefer to have

[00:24:16] better oversight at time of claim processing so what does that look like right now I would say

[00:24:25] that there's not enough of this going on technically under the ERISA guidelines to be

[00:24:31] prudent loyal to the plan you have to understand what's going on within the claims themselves and

[00:24:35] also have 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 up coding unbundling a number of issues that we'll talk

[00:24:46] about in the pay and chase model but here we have a great opportunity with technology

[00:24:52] and artificial intelligence to implement a better methodology of analyzing these claims at the time

[00:24:58] that they're being processed as opposed to some of the archaic technology that's being used

[00:25:03] with the systems that are behind the scenes of the administrator. It sounds like there's two

[00:25:08] ways a plan sponsor might get charged by their administrator to process claims one of them is

[00:25:15] the administrative fee which is that's what it's supposed to be used for right processing

[00:25:19] claims but then there may be a second goings on which the plan sponsor is paying for in this

[00:25:25] category this prepayment integrity in which like they're doing something else over and above

[00:25:31] just merely administering claims in order to ensure that the claims paid are correct.

[00:25:37] Let me lay this out to you sometimes the carrier agrees and provider contracts not

[00:25:41] to review claims prepayments 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. Why catch it

[00:25:51] pre payment when you are compensated more to find it post payment? Yeah so what we're talking

[00:25:56] about right now in this category as we just mentioned is this prepayment integrity the

[00:26:03] administrator what they're doing is charging an over and above fee to ensure that the claims

[00:26:10] are accurate and this could be happening prior to the claim being paid but it would be

[00:26:15] considered not normal right so like maybe some are being get flagged for some reason and

[00:26:21] stuck down the second shoot and looked at more carefully is that what do they even explain that

[00:26:26] they're doing? It's very prudent if your administrator is not doing a good job on the

[00:26:31] front end it really pays dividends to ensure that you have some sort of vendor in there

[00:26:39] that's aggressively demanding this information and requiring it to be shared is set forth in

[00:26:44] the gag clause prohibitions under ERISA. This is one of the five that I think it's okay to

[00:26:51] pay more money for because it's needed accuracy is needed earlier on in the adjudication process

[00:26:57] there's point solutions that have developed out there that allow for increased oversight

[00:27:02] and understanding of what is happening with the claim before it actually gets paid.

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

[00:27:13] to have errors with some of these other fees that we talked about. In most instances the

[00:27:19] really good administrators out there tend to lose a lot of business because if they're doing

[00:27:24] a better job on the front end they tend to cost more and this is just because of the whole

[00:27:29] squeezing the balloon thing if they're up front there's just enough employers who don't

[00:27:34] really understand that you're gonna pay for it on the front end and if you don't pay for

[00:27:38] it on the front end you're gonna pay a lot on the back end. So much on the back end I'll use

[00:27:43] a good example we got a fund that's a multi-employer fund that was spending about

[00:27:47] 13 million annually just by virtue of doing a better job on the front end we reduce that

[00:27:53] expense by 1.5 million dollars. Wow I think that's becoming very clear to me just how

[00:27:59] much money is being spent on that wire that doesn't again accrue to member health or may not

[00:28:06] be a spend that has value if I'm going to put it that way. This is much like the sham white wow

[00:28:12] guy oh wait there's more we can if you want to and get into pay and chase. Yeah let's talk

[00:28:17] about pay and chase so this is our fourth category we've talked about shared savings

[00:28:22] we've talked about prior off fees we've talked about pre-payment integrity this is number

[00:28:26] fourth pay and chase. Pay and chase is not getting paid a shared savings fee if a patient goes out

[00:28:34] of network and the administrator can negotiate some discount we already talked about that this

[00:28:39] is also not getting back dollars that the administrator paid by mistake and then fix their

[00:28:45] own mistake that's also something else. Pay and chase there was dollars that were paid which

[00:28:51] were deemed to be wrong so maybe it was the provider overcharged that's most of what's in

[00:28:56] this category and I as the administrator have realized that the provider sent me a wrong bill

[00:29:02] that got paid so now I'm going to go chase after those dollars and get them back did I

[00:29:06] get that right? Correct and maybe within the claims there's unbundling there's up coding

[00:29:12] maybe there are a number of issues that you find in when you're comparing some of those

[00:29:17] claims to case management notes and let me add an asterisk here sometimes you're only looking

[00:29:22] at large claims right so there are literally like thousands and thousands of claims that

[00:29:27] would fly under the radar that may not get audited that could have errors that could

[00:29:31] add up it's just it's you have to be prudent. Julie Selesnik was on this show a couple of

[00:29:36] weeks ago and she's like it is the very definition of a fiduciary breach when you have

[00:29:43] the one auditing your claims also the one who is doing the claims like that is not prudent from

[00:29:50] a fiduciary standpoint by any definition. She is so right you look at like the J&J lawsuit

[00:29:57] that's a big consideration for everybody regarding what they're doing within their plans

[00:30:02] I had another Taft-Hartley fund that wanted to do an audit they used the approved vendor

[00:30:09] to audit their claims the one that was approved by the network lo and behold the auditor found

[00:30:14] around $21,000 in errors that they got money back from the administrator can you take a guess

[00:30:23] what the fee was for that audit? $21,000 was overpaid vis-a-vis errors and you're asking me

[00:30:30] what the fee the auditor charged to find that $21,000 was. Correct it's $25,000 like like so

[00:30:38] you didn't even you didn't even recoup enough money to pay your own fee which is ridiculous

[00:30:44] this is on millions and million dollars of claims so we finally get the ability to do it

[00:30:50] an audit with an independent party right somebody that we brought in same amount of claims same

[00:30:58] issues and they come out with more than 20 times that in errors come on man are you

[00:31:05] kidding me? Yeah well I mean you got the fox guard in the hen house I mean honestly like

[00:31:12] you're gonna hire the same exact company that's doing the work to audit their own work

[00:31:16] like in what world is that a good idea? You know I talked to a plan not too long ago that

[00:31:20] has a couple hundred million an annual spend and I asked like who's advising you and they're

[00:31:26] like my administrator is also my network which also is also my stop loss we also use their pbm

[00:31:34] and then our actuary and advisor is also a part of their team. I don't mean to laugh I'm sure it's

[00:31:39] very efficient. I guess efficient to waste hundreds of millions of dollars that really segues into

[00:31:45] the tpa themselves and the tpas and the claim review that they're doing

[00:31:49] that would be the the fifth part of our review here today. Okay so right now we have

[00:31:55] segue as you said into number five which is our tpa claim review what's what's this? Yeah so

[00:32:00] this is just your basic administrator I mean most administrators and I'll quote a dear friend of

[00:32:06] mine Mark Davenport he said tpas are kind of like khaki pants they're all pretty much the same just

[00:32:12] a different shade of brown and he's right all the claims have a network relationship most of

[00:32:18] them are beholden to the network relationship meaning that they're going to follow whatever

[00:32:22] the network rules are regarding what they're allowed to do with the claims that they're

[00:32:25] adjudicating most of these administrators as I said are auto adjudicating claims 85 90 percent

[00:32:34] of claims that flow from the provider have to visit auto adjudicated handled by software not

[00:32:39] by people. The auto adjudication process checks for eligibility prior auths coverage plan design

[00:32:45] member liability the problem is is how accurate is that information that's just hitting the

[00:32:50] software and paying it's a good question. It is a good question. Not many people know the

[00:32:54] answer to that question are willing to delve in to understand that with each of the administrators

[00:32:58] that they're reviewing and potentially hiring. You had alluded to when we were talking about

[00:33:03] our number three category 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 your administrative

[00:33:14] fee goes to paying to have these claims adjudicated but they may be doing a great job

[00:33:20] or they may be doing a really really bad job and you would never know it unless you have

[00:33:26] third party experts with their eyes on what's going on. 100 percent here's a great quote from

[00:33:34] Karen Handorf that she said to me the other day she said getting gag clauses out of your

[00:33:38] contracts is a useless exercise if you don't look at the data to figure out how it is hurting

[00:33:43] not just you the plan but the plan participants as well. You hire an administrator they tell you

[00:33:50] they're going to do a great job some of them might say oh we have a really really high out

[00:33:54] adjudication rate and we pay claims accurately and timely. What does that really mean? Okay

[00:34:01] you're paying them accurately in timing how do you define that? How do you define a clean claim?

[00:34:05] How do you define the the access rights that I have to be able to review claims whether it's

[00:34:10] a twenty thousand dollar claim or a two million dollar claim? And this is exactly also what any

[00:34:17] number of guests on this show have said Julie Selesnik, Dawn Cornelis was on the show you

[00:34:22] mentioned Dawn it's not only getting the data but it's also using it. 100 percent you have

[00:34:28] to use it data is data so what? What are you going to do with it? You know there's that

[00:34:32] Jim Collins quote you can't manage what you can't measure and the data enables measurement.

[00:34:39] It's a marketing statement to say that if I'm a tpa the front page of my website is going

[00:34:44] to be all about how amazing I am at adjudicating claims but it's a marketing statement. It is.

[00:34:49] You got to get the data to check. There are dozens of tpas out there that are involved with

[00:34:55] fully funded level funded self-funded they're involved with captains they're involved with

[00:34:59] consortiums complacency is not okay it's now against the law. I think people walk in

[00:35:05] with their sorcery I have this magic box and smoke and mirrors and I will just feed your

[00:35:13] claims in the one side and I will get you 10 percent savings. You know like we had AJ

[00:35:17] Laiaccano on the show and he said he was talking to some broker and the broker said AJ I can make

[00:35:24] the spreadsheet show anything I want and I think that's what we're talking about here. One of

[00:35:28] AJ's folks Mike Mealy we talk about that all the time he'll be on a spreadsheet or or we'll

[00:35:33] be having that discussion where somebody just comes in and buys the business or shadow prices

[00:35:38] the lowest possible number and it's like what are you buying you could save a hundred thousand

[00:35:44] dollars on the front end on the back end it's going to cost you millions. Another thing that

[00:35:48] I have heard sometimes gets charged for within this claims wire in the process of paying for

[00:35:53] claims is spread pricing and medical claims and I've certainly I'm sure everybody who

[00:35:59] listens has heard this relative to pharmacy claims but there's medical claim spread

[00:36:04] pricing as well. We certainly think it exists it's hard to say exactly where and how it's

[00:36:09] happening it's obviously as you said known within PBM pricing the J&J complaint discusses

[00:36:15] it in some detail it's thought that is happening on the medical side although we don't have

[00:36:20] hard definitive proof but we have enough evidence that we think it sure is happening

[00:36:26] this is personal to me many know that there's a complaint filed with the bricklayers local

[00:36:31] one in Connecticut and sheet metal workers against anthem 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 the claim that either

[00:36:40] goes into the pocket of the insurer provider which is still to the benefit of the insurer

[00:36:45] who would otherwise be on the hook for the compensation if it's being paid to to said

[00:36:50] provider. Yeah so just understanding what a spread is is that the plan sponsor is being

[00:36:57] charged a hundred bucks for some claim but the provider is only being reimbursed 50 bucks

[00:37:06] therefore somebody in the middle has just made 50 bucks. It doesn't disappear into the ethos and

[00:37:12] as we have more transparency files machine readable files that are made available where

[00:37:17] we can look at specific procedures services and then compare what the publicly posted prices

[00:37:23] for negotiated rates we can start to ask some very poignant questions but even look at the DOL

[00:37:30] case against Blue Cross Blue Shield of Minnesota it involves spread pricing if the provider

[00:37:35] agreement says it is the obligation of Blue Cross Blue Shield to pay the shifted provider tax.

[00:37:40] It's a hidden fee that gets pulled in so that's the whole basis of the lawsuit so does

[00:37:44] it exist I would argue yes. Interesting so basically what you're saying is that there

[00:37:51] are indications to show that what the providers are charging for any particular claim might be

[00:37:57] less than what the plan sponsor is getting charged therefore there's dollars in the middle

[00:38:01] which is often referred to as the spread and relative to this DOL Department of Labor case

[00:38:06] against BCBS Michigan I think what was going on there is that the plan sponsors were

[00:38:12] unbeknownst to them paying taxes on behalf of providers right so the providers have to pay

[00:38:17] taxes and it turned out plan sponsors were paying provider taxes and to your point you're like how

[00:38:23] are they paying providers taxes if there wasn't dollars in the middle there which were being

[00:38:29] added to claims that the plan sponsors were told oh you're paying claims. You got it see listen

[00:38:34] it doesn't take a rocket scientist it just takes a little bit of sleuthing to connect the

[00:38:39] dots and understand that this is just another form of spread pricing. Justin Leder is there

[00:38:44] any place where you would recommend people go to learn more about your work? I put a lot of

[00:38:51] information out there on LinkedIn so look for me on LinkedIn Justin Leder the one out of

[00:38:56] Pennsylvania not the one out of California. You can also go to benefitsDNA.com or WeFixYourHealthcare.com

[00:39:03] and I would highly recommend following Justin on LinkedIn we will link to Justin on

[00:39:09] LinkedIn as well as the two websites that he just mentioned. Justin Leder thank you so much

[00:39:14] for being on Relentless Health Value today. Thank you Stacey I'm a big fan of your podcast as I've

[00:39:20] shared time and time again I'm a bit of a fan boy so it's an honor to be here today. So let's

[00:39:24] talk about going over to our website and typing your email address in the box to get the weekly

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