0:00

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

0:06

What Are Plan Sponsors Actually Paying For Each Week?"

0:10

Today, I speak with Justin Leader.

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American Healthcare Entrepreneurs and Executives You Want to Know Talking.

0:27

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

0:35

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

0:40

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

0:45

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

0:50

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

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so called weekly claims wire.

0:57

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

1:03

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

1:08

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

1:12

This invoice might be just kind of a total.

1:14

Hey plan, pay this amount. Or there might be a breakdown, like here's your medical claims.

1:19

And here's your pharmacy claims. Maybe there's another level down from that of detail, if the plan or

1:25

their advisor is sophisticated enough and or concerned enough about the

1:28

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

1:34

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

1:38

executive director of HR at a large financial services organization,

1:43

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

1:47

I'm having today with Justin Leader. Dana was the first one to really bring to my attention just the

1:53

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

1:59

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

2:04

for via an administrative invoice.

2:07

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

2:11

exhibit in the contract, by the way.

2:13

So yeah, hidden. I don't know if you have to hide your charges.

2:17

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

2:24

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

2:28

charges are for are unwarranted.

2:32

Some of these services are actually pretty worthwhile to do.

2:35

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

2:40

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

2:45

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

2:49

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

2:53

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

2:58

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

3:02

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

3:06

of what's going on with this claims wire. So today we're going to talk about the five fees that tend to

3:11

be tucked into many claims wires.

3:14

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

3:19

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

3:25

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

3:29

today, and then I'll cover the bonus. First hidden fee is the shared savings fees.

3:34

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

3:40

goes and negotiates a discount from the out of network provider

3:44

and then shares the savings.

3:47

Get it? Shared savings. This category also might include BlueCard access fees, which we talk about in the

3:53

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

3:57

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

4:03

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

4:07

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

4:11

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

4:14

when we correct our own mistakes. Second, hidden fee, prior auth fees, lots to unpack with this

4:21

one, which Justin does in the pod.

4:24

Number three are prepayment integrity fees.

4:28

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

4:31

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

4:35

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

4:38

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

4:44

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

4:51

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.

5:13

Again, please listen to the show for more. When I've been talking about all of this with Dana Erdfarb, as I mentioned earlier,

5:19

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

5:22

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

5:26

This is challenging for a plan sponsor because the savings is

5:30

vendor reported and not validated. But it also means that if the savings increase annually with trend, as they

5:37

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

5:41

And that is something to keep in mind. Okay, so here's the bonus thing that didn't get a number in the show

5:47

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

5:51

And this is medical claims spread pricing.

5:55

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

5:58

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

6:06

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

6:10

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

6:16

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

6:21

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

6:25

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.

6:37

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

6:42

one of the numbers is transparent. 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

7:01

Hartley plans across the United States. Before we kick into the show today, I just want to thank ByThe49ers for

7:06

the really nice review on iTunes.

7:09

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

7:15

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

7:20

Really appreciate that. That is certainly one of our goals around here.

7:24

So thank you so much. My name is Stacey Richter.

7:26

This podcast is sponsored by Aventria Health Group.

7:29

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

7:33

You can do that by going over to our website and signing up.

7:37

There are a lot of advantages to doing so, which I've talked about before, so I'm not

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7:50

Justin Leader, welcome to Relentless Health Value.

7:52

Stacey Richter, thank you for having me.

7:55

Let's talk about this claims wire here. First of all, how is this claims wire typically explained?

8:02

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

8:07

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

8:16

typical explanation go down in short?

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

8:23

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

8:26

fluctuation, but we can budget for that.

8:29

Now I'm role playing the plan sponsor.

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

8:35

What happens here? Each week we're going to hit you with a claims register.

8:38

You're going to take a look at that and then you're going to approve those claims to be paid.

8:43

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

8:45

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

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You're paying claims. You're paying medical and prescription claims.

8:52

Typically on the same register. This is going to be really good for you, Mr.

8:56

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

9:01

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

9:06

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

9:09

these, what do I actually see? What is on there?

9:12

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

9:16

Stacey, you're asking a lot of questions. It really depends.

9:20

It depends on the administrator. You may get very, very basic information like, here's your

9:26

medical claims for the week. Here's your Rx claims for the week.

9:29

Sometimes, you might get a little bit more detail.

9:33

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

9:38

number, date of service and paid amount. If you get a little bit better information, you're going to get the

9:43

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

9:47

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

9:52

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

9:55

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.

10:05

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

10:09

are for administrative stop loss, right?

10:11

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

10:14

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

10:18

Did I get that right? You got that. Absolutely correct.

10:21

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

10:26

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

10:33

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

10:41

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

10:45

keep asking, what am I paying for here?

10:48

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

10:51

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

10:53

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

10:56

just cannot get any details here.

11:00

And I think that's part of the major issue. Employers go to self-funding because they want to feel like they're more

11:05

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

11:10

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

11:14

all this unencumbered access to data.

11:17

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

11:23

is to be able to take actionable insights. So that's a big topic of discussion in itself.

11:27

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

11:41

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

11:44

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

11:51

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.

12:03

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

12:07

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

12:13

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

12:17

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

12:21

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.

12:38

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. Shared savings fees.

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We have prior authorization fees. We have prepayment integrity.

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

12:58

Okay, so taking it from the top. 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

13:10

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.

13:22

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. I pay some exorbitant amount.

13:35

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

13:41

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

13:47

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

13:53

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

13:56

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

14:00

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

14:04

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

14:10

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

14:14

which is outside my technical network.

14:17

Is that what you mean? You got it, not all Blues are created equal, they do compete with one

14:22

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

14:25

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

14:31

That sounds great. Why wouldn't I want my plan TPA, ASO, why wouldn't I want

14:37

them to go get me a discount?

14:39

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

14:43

fee that's collected, I say standard.

14:46

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

14:49

exactly what your contract says. And it could be a percentage of savings over the allowed amount.

14:54

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

14:57

It really depends. And sometimes the details are really, really vague.

15:02

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

15:07

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

15:12

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

15:16

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

15:21

So there's no detail. Request it. I've also seen as high as 50 percent of savings fees for these claims.

15:28

You start thinking about it to your exact point.

15:31

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

15:34

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

15:38

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

15:42

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

15:47

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

15:53

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

15:56

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

16:02

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

16:05

that would add up to a lot of money. A ton in certain instances, and maybe it's a small percentage of your overall spend,

16:11

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

16:16

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

16:19

So, it's kind of absurd, really. I mean, changing the rate from bill charges to usual customary or some

16:25

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

16:30

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

16:34

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

16:38

battle to keep their fixed fees low.

16:41

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

16:44

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

16:49

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

16:54

are shopping based on fixed fees. So if somebody has a cheaper fixed fee, they're like, oh,

16:58

I want to go with that one. And then it's like squeezing a balloon.

17:01

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

17:04

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

17:07

She made this very brilliant statement.

17:10

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

17:13

able to understand what's going on. So let's look at a, you know, another fee, overpayment recovery.

17:19

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

17:25

we're gonna collect a fee for recoupment? That boggles my mind.

17:30

We're, we're gonna fix a mistake we made and then keep a

17:32

portion of that for ourselves.

17:35

So, they're almost always reported as claims cost.

17:39

But very clearly they're compensation, right?

17:42

That's another revenue source for the administrator.

17:45

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

17:51

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

17:57

They go and correct their mistake.

18:00

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

18:05

to correct their own mistake. It's called an overpayment recoupment fee.

18:09

Now, there's a lot of rumors around the industry, and we'll

18:12

talk about some of those. You have to separate fact from fiction.

18:15

But it's rumored that there are algorithms in the old COBOL processing

18:20

for the adjudication software that every so often it'll purposely

18:24

overpay to collect a fee back. That could be just completely malarkey, but ultimately it's one of those other

18:31

areas that there are fees being collected.

18:34

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

18:41

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

18:45

perverse and it's to make mistakes. Like, I get paid more if I make a mistake than if I don't.

18:50

Isn't that an awesome job to have? Like, you get paid more for making more mistakes.

18:55

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

19:00

if one of my members goes out of network.

19:03

The other bit of this also could be if I make a mistake as a

19:07

TPA, correcting my own mistake.

19:10

Is there anything else that you would lump into the shared savings?

19:14

I think those are really the big ones, correcting out of network, you know,

19:17

different BlueCard access fees, fees on the backs of the administrator themselves.

19:22

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

19:25

invisible, as are all of these categories.

19:28

In other words, I don't know that.

19:31

Lots of my members are going to this one particular hospital that

19:35

is charging some rate that my TPA is then going and negotiating down.

19:42

Like, I don't have any of this information.

19:44

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

19:47

It's called medical claims. So, if you don't know something...

19:51

Well, and it's the cost of doing business.

19:54

They'll say they have various methodologies and ways our job is

19:59

to understand what those ways are and make sure that we're holding the

20:03

administrators accountable to provide fair fees for what we're, what we're buying.

20:08

The problem is it's so opaque.

20:10

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

20:14

truly what's going on within the data.

20:17

And it's an uphill battle and I've, I've fought it time and time again, sometimes

20:20

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

20:25

than what we started with. So to me, that's winning the battle to eventually win the war.

20:30

Which I think is maybe inspiring for those who are listening, who are getting

20:35

claims wires with like one or two numbers who have been fighting the good fight

20:39

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

20:43

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

20:49

review them before the invoice is paid.

20:51

Ouch. All right. So the first charge that may get folded into this claims wire, we just

20:59

discussed these shared savings fees. The second one that you had mentioned is prior auth fees.

21:03

What's going on there? Paying fees for prior authorization.

21:07

It just makes me scratch my head because you as an administrator have a

21:12

responsibility to administer the plan the way the plan documents have been written.

21:17

You're essentially, are you charging a fee for doing your job?

21:21

That's the question. Yeah, so much to unpack here.

21:26

So the second thing that might be buried in this claims wire

21:29

are these prior auth fees. And I do feel like it's really important and you said this to mention

21:37

that on its face, ensuring that care is appropriate and evidence based.

21:44

That feels like something that actually could benefit a plan member to understand

21:48

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

21:52

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

21:56

And you didn't get that genetic test. There's certain things which definitely could be seen as a

22:01

member, a win win across the board.

22:04

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

22:10

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

22:16

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

22:20

possible because I'm making money here. Once again, it's additional compensation that probably isn't being

22:25

broken out on a line itemization. Especially if you're really compliant with the CAA rules, asking for a

22:31

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

22:37

Good luck getting that identified as indirect compensation

22:40

that was earned on the plan. Yeah, and Al Lewis has talked about this quite a bit also, about actually MRI prior

22:47

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

22:52

just in the next quarter or something.

22:55

So like you had all of this paperwork that was being done, such that

22:59

the plan could basically say, oh, I prevented however many MRIs and

23:03

look how much money you saved plan. But then those same MRIs transpired like the next quarter.

23:07

So it actually was just additional, it's a profit center.

23:11

You hit the nail on the head. So that's the second thing that, that could be included in the claims wire

23:16

that people should certainly be aware of.

23:18

And I just want to be fair to your exact point.

23:20

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

23:26

the plan sponsor and if those dollars are transparent, but the way it's

23:30

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

23:34

I would agree. Uh, okay. So the third thing, prepayment integrity, I think you said.

23:39

Yeah, so evaluation of the claim itself before it's paid.

23:47

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

23:53

The fact of the matter is the TPA in most instances, 85 percent of

23:57

the claims are auto adjudicated. So how much review is going into that live weekly run of claims?

24:04

I would argue it differs from administrator to administrator.

24:08

I would be concerned on how high the auto adjudication rate is for a lot

24:13

of these vendors that are out there. I would prefer to have better oversight at time of claim processing.

24:21

So, what does that look like?

24:24

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

24:28

Technically, under the ERISA guidelines, to be prudent, loyal to the plan, you

24:32

have to understand what's going on within the claims themselves and also have

24:36

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

24:41

So in this you might see things like upcoding, unbundling, a number of

24:45

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

24:49

a great opportunity with technology and artificial intelligence to implement

24:54

a better, a better methodology of analyzing these claims at the

24:58

time that they're being processed. As opposed to some of the archaic technology that's being used

25:03

with the systems that are behind the scenes at the administrator.

25:07

It sounds like there's two ways a plan sponsor might get charged by

25:11

their administrator to process claims.

25:14

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

25:17

be used for, right, processing claims. But then there may be a second goings on, which the plan sponsor is paying

25:25

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

25:28

something else over and above just merely administering claims in order to

25:35

ensure that the claims paid are correct. Let me, let me lay this out to you.

25:39

Sometimes the carrier agrees in the provider contracts not

25:41

to review claims prepayment. So the errors are let through intentionally or unintentionally, if

25:46

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

25:50

Why catch it prepayment when you are compensated more to find it post-payment?

25:55

Yeah, so what we're talking about right now in this category, as we

25:59

just mentioned, is this prepayment and integrity, the administrator, what they're

26:04

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

26:11

And this could be happening prior to the claim being paid, but it

26:14

would be considered not normal. Right.

26:17

So like maybe some are being, you get flagged for some reason and stuck

26:21

down the second shoot and looked at more carefully is that what do they

26:26

even explain that they're doing? It's very prudent if your administrator's not doing a good job on the front end,

26:33

it really pays dividends to ensure that you have some sort of vendor in

26:39

there that's aggressively demanding this information and requiring it

26:43

to be shared as set forth in the gag clause prohibitions under ERISA.

26:48

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

26:51

more money for because it's needed.

26:53

Accuracy is needed earlier on in the adjudication process.

26:57

There's point solutions that have developed out there that allow for

27:01

increased oversight and understanding of what is happening with the

27:05

claim before it actually gets paid.

27:08

You're not going to see that in most administrators because they're

27:12

incentivized to have errors with some of these other fees that we talked about.

27:17

In most instances, the really good administrators out there tend to

27:22

lose a lot of business because if they're doing a better job on the

27:25

front end, they tend to cost more.

27:27

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

27:30

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

27:34

understand that you're going to pay for it on the front end.

27:37

And if you don't pay for it on the front end, you're going to pay a lot on the back end.

27:41

So much on the back end. I'll use a good example.

27:44

We got a fund that's a multi-employer fund.

27:46

It was spending about $13 million annually Just by virtue of doing

27:51

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

27:56

Wow. I think it's becoming very clear to me just how much money is, is being

28:01

spent on that wire that doesn't, again, accrue to member health or

28:06

may not be a spend that has value.

28:09

If I'm going to put it that way. This is much like the ShamWow guy.

28:13

Oh wait, there's more. We can, if you want to, get into pay and chase.

28:16

Yeah. Let's talk about pay and chase. So this is our fourth category.

28:20

We've talked about shared savings. We've talked about prior auth fees.

28:23

We've talked about prepayment integrity.

28:26

This is number fourth, pay and chase. Pay and chase is not getting paid a shared savings fee if a patient goes

28:34

out of network and the administrator can negotiate some discount.

28:38

We already talked about that. This is also not getting back dollars that the administrator paid by mistake

28:44

and then fix their own mistake. That's also something else.

28:49

Pay and chase. There was dollars that were paid, which were deemed to be wrong.

28:52

So maybe it was the provider overcharged.

28:55

That's most of what's in this category.

28:57

And I, as the administrator, have realized that the provider sent

29:01

me a wrong bill that got paid. So now I'm going to go chase after those dollars and get them back.

29:06

Did I get that right? Correct, and maybe within the claims there's unbundling, there's

29:11

upcoding, maybe there are a number of issues, uh, that you find in

29:15

when you're comparing some of those claims to case management notes and

29:19

let me, let me add an asterisk here. Sometimes you're only looking at large claims, right?

29:23

So there are literally like thousands and thousands of claims that would fly under

29:28

the radar that may not get audited, that could have errors, that could add up.

29:32

It's just, it's, you have to be prudent.

29:34

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

29:40

very definition of a fiduciary breach.

29:42

When you have the one auditing your claims, also the one who's doing the

29:47

claims, like, that is not prudent from a fiduciary standpoint, by any definition.

29:53

She is so right. You look at like the J&J lawsuit, that's a big consideration for everybody regarding

30:00

what they're doing within their plans. I had another Taft Hartley fund, wanted to do an audit.

30:07

They used the approved vendor to audit their claims.

30:10

The one that was approved by the network. Lo and behold, the auditor found around $21,000.

30:17

in errors that they got money back from the administrator.

30:22

Can you take a guess what the fee was for that audit?

30:25

$21,000 was overpaid vis a vis errors.

30:29

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

30:35

Correct. It's $25,000.

30:37

Like, like, so you didn't even, you didn't even recoup enough money to

30:42

pay your own fee, which is ridiculous.

30:44

This is on millions and millions of dollars of claims.

30:48

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

30:53

Somebody that we brought in. Same amount of claims, same issues.

30:58

And they come out with more than 20 times that in errors?

31:04

Come on, man. Are you kidding me? Yeah.

31:06

Well, I mean, you got the fox guard in the hen house.

31:10

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

31:14

doing the work to audit their own work. In what world is that a good idea?

31:19

I talked to a plan not too long ago that has a couple hundred million in annual spend.

31:23

And I asked, like, who's advising you?

31:25

And they're like, my administrators, also my network,

31:29

which also is also my stop loss.

31:32

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

31:37

I don't mean to laugh. I'm sure it's very efficient.

31:40

I guess efficient to waste hundreds of millions of dollars.

31:43

That really segues into the TPA themselves and the TPAs and the

31:48

claim review that they're doing. That would be the the fifth part.

31:51

Okay, so right now we have segued, as you said, into number five,

31:57

which is our TPA claim review. What's, what's this?

32:00

Yeah, so this is just your basic administrator.

32:02

I mean, most administrators, and I'll quote a dear friend of mine,

32:06

Mark Davenport, he said, TPAs are kind of like khaki pants.

32:10

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

32:14

And he's right, all the claims have a network relationship.

32:18

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

32:21

follow whatever the network rules are regarding what they're allowed to do with

32:25

the claims that they're adjudicating. Most of these administrators, as I said, are auto adjudicating claims.

32:32

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

32:36

visit auto adjudicated, handled by software, not by people.

32:41

The auto adjudication process, checks for eligibility, prior auths, coverage,

32:44

plan design, member liability. The problem is, is how accurate is that information that's just

32:50

hitting the software and paying? It's a good question.

32:52

It is a good question. Not many people know the answer to that question or are willing to

32:56

delve in to understand that with each of the administrators that they're

32:59

reviewing and potentially hiring.

33:01

You had alluded to when we were talking about our number three category,

33:04

which is the prepay integrity, that it's worth it to pay somebody.

33:08

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

33:14

your administrative fee goes to paying to have these claims adjudicated,

33:18

but they may be doing a great job or they may be doing a really, really

33:22

bad job and you would never know it unless you have third party experts

33:28

with their eyes on what's going on.

33:32

100%. Here's a great quote from Karen Handorf that she said to me the other day.

33:36

She said, getting gag clauses out of your contracts is a useless exercise

33:40

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

33:45

plan, but the plan participants as well.

33:47

You hire an administrator. They tell you they're going to do a great job.

33:51

Some of them might say, oh, we have a really, really high out adjudication rate

33:55

and we pay claims accurately and timely.

33:59

What does that really mean? Okay, you're paying them accurately in timing.

34:02

How do you define that? How do you define a clean claim?

34:05

How do you define the, the access rights that I have to be able

34:09

to review claims, whether it's a $20,000 claim or a $2 million claim.

34:14

And this is exactly also what any number of guests on this show have said.

34:19

Julie Selesnick, Dawn Cornelis was on the show.

34:22

You mentioned Dawn. It's not only getting the data, but it's also using it.

34:27

A hundred percent. You have to use it.

34:29

Data's data, so what? What are you going to do with it?

34:32

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

34:36

And the data enables measurement.

34:39

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

34:44

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

34:47

claims, but it's a marketing statement.

34:49

It is. You got to get the data to check.

34:51

There are dozens of TPAs out there that are involved with fully-funded,

34:56

level-funded, self-funded, they're involved with captains,

34:58

they're involved with consortiums. Complacency is not okay.

35:02

It's now against the law. I think people walk in with their sorcery.

35:07

I have this magic box of smoke and mirrors, and I will just feed

35:12

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

35:16

You know, like we had A. J. Loiacono on the show, and he said he was talking to some

35:21

broker and the broker said, A.

35:23

J., I can make the spreadsheet show anything I want.

35:26

And I think that's what we're talking about here. One of A.

35:29

J. 's folks, Mike Miele, we talk about that all the time.

35:32

He'll be on that spreadsheet or we'll be having that discussion where somebody just

35:35

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

35:41

And it's like, what are you buying? You could save $100,000 on the front end, on the back end,

35:45

it's going to cost you millions. Another thing that I have heard sometimes gets charged for within this claims

35:51

wire in the process of paying for claims is spread pricing and medical claims.

35:57

And I've certainly, I'm sure everybody who listens has heard this relative

36:01

to pharmacy claims, but there's medical claim spread pricing as well.

36:05

We certainly think it exists. It's hard to say exactly where and how it's happening.

36:10

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

36:15

discusses it in some detail. It's thought that it is happening on the medical side, although we

36:19

don't have hard definitive proof, but we have enough evidence that

36:23

we think it sure is happening.

36:26

This is personal to me. Many know that there's a complaint filed with the Bricklayers,

36:30

Local 1 in Connecticut, and Sheet Metal Workers against Anthem.

36:34

The Bricklayers are a client of ours.

36:36

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

36:40

a claim that either goes into the pocket of the insurer or provider,

36:43

which is still to the benefit of the insurer, who would otherwise be

36:47

on the hook for the compensation if it's being paid to said provider.

36:51

Yeah. So just understanding what a spread is, is that the plan sponsor is

36:57

being charged a hundred bucks for some claim, but the provider is

37:03

only being reimbursed 50 bucks.

37:06

Therefore somebody in the middle, just made 50 bucks.

37:10

It doesn't disappear into the ethos.

37:12

And as we have more transparency files, machine readable files that are

37:16

made available, where we can look at specific procedures, services, and then

37:20

compare what the publicly posted price is for negotiated rates, we can start

37:26

to ask some very poignant questions. But even look at the DOL case against Blue Cross Blue Shield of Minnesota.

37:32

It involves spread pricing if the provider agreement says it is the

37:36

obligation of Blue Cross Blue Shield to pay the shifted provider tax.

37:40

It's a hidden fee that gets pulled in. So that's the whole basis of the lawsuit.

37:44

So does it exist? I would argue, yes.

37:47

Interesting. So basically what you're saying is that there, there are indications to show

37:53

that what the providers are charging for any particular claim might be less than

37:58

what the plan sponsor is getting charged.

38:00

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

38:03

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

38:09

What was going on there is that the plan sponsors were unbeknownst to them paying

38:14

taxes on behalf of providers, right?

38:16

So the providers have to pay taxes, and it turned out plan sponsors

38:19

were paying provider taxes. And to your point, you're like, how are they paying providers taxes?

38:25

If there wasn't dollars in the middle there, which were being added to

38:29

claims that the plan sponsors were told, oh, you're paying claims.

38:33

You got it. See, listen, it doesn't take a rocket scientist.

38:37

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

38:40

is just another form of spread pricing. Justin Leader, is there any place where you would recommend people

38:47

go to learn more about your work?

38:50

I put a lot of information out there on LinkedIn.

38:52

So look for me on LinkedIn, Justin Leader, the one out of Pennsylvania,

38:57

not the one out of California. You can also go to benefitsdna.com or wefixyourhealthcare.com.

39:03

And I would highly recommend following Justin on LinkedIn.

39:07

We will link to Justin on LinkedIn as well as the two

39:11

websites that he just mentioned.

39:13

Justin Leader, thank you so much for being on Relentless Health Value today.

39:16

Thank you, Stacey. I'm a big fan of your podcast as I've shared time and time

39:21

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

39:24

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39:28

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39:40

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39:47

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