For the first guest blog on my site, I asked my friend Jay Kempton to contribute, giving insight into the world of self-funded company benefit adminstration (the easiest way for companies to escape Obamacare). I hope you enjoy this brilliant summary as much as I did.
Is your TPA Working for You?
By Jay Kempton
We are all impacted by the rising cost of health care services and the evolving legal landscape that accompanies offering employee benefits. Many of you have realized that the best way to manage the health benefits for your employees, and have more control over costs and benefits, is to have a self-funded plan.
Why are so many companies choosing to self-fund? It is simply business economics. Often, it costs far less, because any savings remain with the plan, not kept by an insurance company. So, to be blunt, instead of leftover money or savings going to paying for insurance company skyscrapers, with self-funding any unspent money remains as plan assets help pay future costs.
Your Third Party Administrator (TPA) is who pays your claims, guides you through the management of your plan, and advises you on the best course of action to ensure compliance and efficiency.
Is the TPA you have hired working for YOU? Are they the best option for your business and your employees? Here are some guidelines on choosing the best TPA to optimize your plan and make your self-funded life run smoothly.
Your TPA Should:
1. Always looking for long term solutions, not temporary fixes to the issues you face.
Your TPA should find solutions to your specific needs and issues to help you take control of your plan. The goal is to not blindly pay claims. Shrugging their shoulders and just saying ‘well that’s what the PPO discount is” is NOT the way to handle a high dollar claim. Your TPA should be willing to go to bat to protect your interests and your dollars. They should believe in working with you to manage your plan, not force you to do things their way. You are the Plan Sponsor and named fiduciary of your plan. Decisions about benefits, claims, and plan maintenance are always yours to make.
2. Believe in and promote transparency at all levels of business.
Instead of relying on the PPO to just tell them what the price is, your TPA should be looking for providers who believe in transparency, free market principles, and quality, VALUABLE care for your employees. These prices have been hidden from consumers for decades – allowing a perfect storm of medical inflation and price gouging to run rampant. Your TPA should explore partnering with like-minded medical professionals who believe that together we can change the way people make healthcare purchasing decisions, and therefore change the landscape of healthcare as we know it.
They also should utilize transparency ideals in their own business. What is their commission? Is it based on a percentage of your stop loss or is it fully disclosed as a per employee fee? Their proposal should always state the true administrative fees in total dollars.
a. Do they receive commissions on stop loss?
b. Do they keep the group’s rebates from the pharmacy benefit manager?
c. Is their compensation up-front and fee based?
d. Do they keep a percentage of the savings when it comes to out of network negotiations, dialysis negotiations, etc.?
e. Do they retain a percentage of what is recovered due to subrogation on the Plans behalf?
Each of these items can make the TPA’s compensation far higher than is stated. Percentage of savings after negotiations may make their reimbursement for performing these tasks almost as much as the paid claim amount.
2. Promote employee education.
When you have a self-funded plan, employee education is the number 1 priority. Your TPA should not just show up at renewal time and hand you a spreadsheet of stop-loss quotes. Their interaction with your employees needs to be frequent and focused on educating them about what having a self-funded plan means to them. The dollars they save stay with their employer and helps the business thrive. This translates into lower contribution amounts, higher raises, and a more stable employment environment.
Does your TPA do employee educational meetings? Is their customer service team providing the best service and education to every employee they speak with? The goal should be to make the conversations around the water cooler positive about the benefits you provide and how happy they are to work for you. They should be discussing how valuable their providers are, not how high their deductible is. They should always make the time to ensure that there is proper representation at all requested meetings and health fairs.
3. Innovate with programs that encourage employee participation through incentives and education.
Your TPA should offer innovative programs and tools that motivate employees to seek valuable care. For example, The Kempton Group Administrators promotes the ideas of transparency and quality providers with their Kempton Premier ProviderTM program. These providers, like the Surgery Center of Oklahoma, agree to let the clients of The Kempton Group Administrators utilizes their cash pricing because the plans are all self-funded. The KGA clients benefit by paying claims that are up to 80% less than other facilities, and the employees benefit because all procedures performed at a Kempton Premier ProviderTM are covered at 100% with no out-of-pocket cost. The providers benefit because they are paid quickly from an invoice and have no accounts receivable liability.
They also have partnered with Healthcare Blue Book which is an innovative online tool that can show your employees the fair price of health services based on your own claims and zip code, and guide them to the most efficient, high quality providers. Providers are then color coded from ‘green’ to ‘red’ to indicate their efficiency, with green providers being the highest quality and the lowest cost. The Go Green to Get Green piece of Healthcare Blue Book incents employees to use ‘green’, or the most efficient providers, by sending them a rewards check for certain procedures performed at a valuable, efficient aka ‘green’ provider.
Your self-funded plan can be your best asset as you navigate this new world of Obamacare and the changing landscape of employee health benefits. Your TPA should be a guide and an advocate for you, your plan, and your employees. Choosing the right TPA can impact the success, or failure, of your efforts to remain autonomous and in control over your employee benefits.