Are you the Fiduciary or Co-Fiduciary for RBR balance billing claims? Why?

 Mike Reagan

Fiduciary risks are major concerns for most employers and their advisors, especially when the employer’s healthcare plan is self-funded……………

February 28, 2018

By Michael Reagan, CBPA

Fiduciary risks are major concerns for most employers and their advisors, especially when the employer’s healthcare plan is self-funded. Those who have a fiduciary role within a business must first, have timely access to data to be able to properly fulfill their duties; and, make sure the plan is operating in the most efficient, cost effective manner.

Daily, Employee Benefit Advisors share with me their frustrations of not having access to claims data when they need it most. I am delighted to respond by saying: “ABMS, USA is an ally to business by providing each of our clients and their advisors unlimited access to on-line, real-time claims data!” We also provide the best in class transparent (RBR) Reference Based Reimbursement services. A former business associate of mine, Bill Rusteburg at developed a good list of questions: RBR Done Right, provides a guide in making the right selection.

Nationally, RBR is rapidly becoming the format of choice over PPOs and these are some of the many reasons why ABMS, USA decided to partner with (AMPS) Advanced Medical Pricing Solutions as our “go to” for RBR plans:

Current Problem

  • BUCA Carriers (BCBS, UHC, Cigna, Aetna) show little value outside of their networks
  • Discounts off billed charges
  • Number of providers participating in the network
  • Little to no diligence performed on hospital claims prior to payment
  • BUCA pays hospital after receiving summary bill (Uniform Bill) prior to applying discounts and setting reimbursement
  • Even if the payer had plan sponsor’s best intentions in mind, the uniform bill does not have enough details to perform even minimal diligence
  • Massive conflict of interest
  • BUCA ASO is given a plan sponsors check book to pay claims incurred by their employees; the bill is sent to carrier from THEIR partner hospital who participates in THEIR network; hospital gives BUCA massive discount off billed charge which allows them to market how great THEIR discounts are.
  • PPO Allowable amounts (Billed Charges minus Discount) are not benchmarked to any nationally accepted references prior to payment
  • For past 15 years AMPS benchmarked every claim reviewed and found the average BUCA allowable amount ranged between 250 – 300% of Medicare
  • 100% of Medicare = Single digit profit margin for efficient hospital
  • Hospitals can inflate their billed charges to any level they choose and the plan sponsor is obligated to pay that egregious bill minus the negotiated discount.
  • Plan Sponsors have been cost shifting to plan members more and more each year via higher deductibles, co-payments, co-insurance to help offset the increasing costs and yet costs are still going up each year an average of 9%. This is unsustainable.

AMPS History

  • ~2,000,000 claims processed over the past 14 years
  • All claims have been resolved with providers
  • National Average savings off billed charges is 67.5%
  • Average Reference Based Reimbursement benchmarked at 156% of Medicare
  • This reimbursement is greater than 70% of typical provider payor mix

Setting a Reasonable and Defensible Reimbursement

  • Every hospital and facility claim will run through AMPS proprietary technology which is then followed with a line by line Physician audit to identify clinical and data entry errors (avg savings 8%) and determine what Fair Market Value is for each VALIDATED line item of the claim. These audits are performed by a U.S. Board Certified Physician.
  • If a provider appeals the reimbursement, AMPS doesn’t respond with, “this is a defined benefit, if you don’t like it speak to our attorney”. Rather they respond with, “we have a detailed physician report on this claim, let us review together to ensure that AMPS did not make any mistakes and that we received all of the bills for that service provided, and then see if there is a justifiable reason to pay a greater amount”.
  • AMPS treats hospitals and facilities with the same respect we treat the plan member and plan sponsor, all while holding hospitals and facilities accountable.

Permitted Payment Level (PPL)

  • AMPS is Flexible on where they set the reimbursement ensuring alignment with each client’s objectives for savings and push back
  • Goal: Reimburse all hospital/facility claims (and physicians) at a fair and reasonable level that is acceptable for all stakeholders including the Plan Sponsor, Plan Member and in most instances the Hospital/Facility/Physician. If the H/F/P demand an unreasonable reimbursement then AMPS will hold them accountable.

Typical PPL for AMPS Client

  • Average of Medicare +50% / Cost to Charge Ratio (CCR) +35%
  • AMPS will have the settlement authority to reimburse a provider up to an additional 25% of Medicare (175% of Medicare with PPL described above)
  • It is very rare AMPS gets anywhere near the 175% of Medicare level but have never had to go above.
  • AMPS has settlement authority to reimburse up to 2.5% of claims at a hospitals “self-pay” rate (All providers have a cash pay fee schedule that is typically listed)
  • AMPS has settlement authority to reimburse “hospitalists” claims (Emergency Room Providers, Radiology Providers, Pathology Providers, Neonatology Providers, Ambulance Providers or Anesthesiology Providers for either a Hospital or Professional Claim) up to a member responsibility of less than $1000.
  • If a hospital won’t accept the maximum allowable amount, the plan sponsor will have the option to pay that claim outside the plan provisions if they want to make a specific claim go away. This is a “worst case scenario”, but not something we have seen any plan enact to date.
  • Part of the settlement could fall outside of the plan parameters (stop loss)
  • This scenario would have a minimal impact on overall savings for plan

 Named Fiduciary

  • AMPS will be the named fiduciary taking on the greatest level of fiduciary risk allowable under ERISA. AMPS is personally liable to ensure the language in the plan document is adhered too on ALL CLAIMS
  • Many benefit consultants see the lack of oversight found in traditional PPO plans as the greatest risk exposure for any plan sponsor.

National Balance Bill Statistics for AMPS RBR clients over the past 12 months

  • Initial Balance Bill occurred on 3.8% of claims processed
  • Subsequent Balance Bill occurred on 1.7% of claims processed
  • Negotiated with provider on .5% of claims processed
  • Example: 250 members enrolled in plan
  • 25 members incur a Hospital/Facility Service = 10% of enrolled members (national avg would be closer to 7%)
  • If this group had 100% greater balance bill rate than our statistical average then 2 members would receive an initial balance bill and 1 member would receive a subsequent balance bill
  • Meanwhile all 250 plan members have richer benefits and the 2 members impacted directly by balance bill will have full advocacy and legal support/protection.

Do Balance Bills occur with a Traditional PPO plan?

  • Yes! The most common cause of bankruptcies in the U.S. are medical bills and over 60% of those bankruptcies are with members who have a traditional PPO plan in place.
  • This occurs when members utilize an out of network provider, or in-network facility but specialist happened to be out of network.
  • With higher deductibles becoming the norm, many members are unable to cover their out of pocket responsibilities.
  • No advocacy or support by a team of experts.

Legal Defense Cost Indemnification

  • AMPS has a Policy with A Rated Carrier here in the U.S. that covers Plan Sponsor and Plan Participant at $1,000,000 per claim / $2,000,000 in aggregate
  • In six years of having these indemnity policies in place, zero claims
  • AMPS is prepared to go to court and defend our reimbursement on every claim
  • Over the past 14 years AMPS had four attempted suits filed by hospitals with three dismissed during summary judgement (no case) and one in early stages with expected result as other three. 

Fair Credit Billing Act (FCBA) and dispute process

  • Any bill can be disputed within 60 days of provider attempting to collect an “improper” balance
  • Once AMPS is notified of this balance bill, AMPS notifies the provider to not contact the member again as AMPS will be representing member
  • Per the FCBA, the Provider must respond within 30 days they received the dispute notice and they have another 60 days to come up with a written resolution or prove how the payment received wasn’t reasonable; we make this is very difficult any provider to achieve as our detailed physician report that is produced on every hospital/facility claim will provide ample evidence that the reimbursement paid was more than fair and reasonable

 Why don’t providers fight AMPS RBR?

  • It is well known that bullies don’t pick fights when they know they will lose!
  • When a provider sees that the AMPS clinical, advocacy and legal teams are involved, they typically accept the reimbursement that is on average a 50 – 60% profit margin for the provider.

AMPS Care Connex

  • AMPS Care Connex services are safe harbor options for members to choose from in need of the following services
  • Elective surgical procedures (90% of surgical procedures are non-emergent
  • Imaging such as MRIs, CT Scans, and other high cost imaging
  • Lab work
  • Physicians
  • These services are typically better served outside of a hospital setting.
  • Utilizing direct arrangements put in place by AMPS, and various vendor partners, AMPS has select health systems, Ambulatory Surgery Centers, National Imaging Network, and National Lab Network.
  • Care Connex typically has significant member incentives (I.e. no out of pocket).
  • If Care Connex is not utilized the members can choose to access any hospital, facility or physician in the U.S. and they will be reimbursed at the Permitted Payment Level which will result in a small percentage of claims where the provider will attempt to collect an “improper” balance from the member, and the member will have to pay their standard deductible, co-pay, and co-insurance.
  • Physicians are handled a little different as they are not one of the primary reasons for the rising costs of healthcare; we look to pay them at the same level they receive from the PPO today or even possibly more than typical PPO reimbursement
  • AMPS will look to set up direct contracts with the most utilized physicians.
  • These contracts are wrapped by a large national PPO called Prime Health Services.
  • Any physician claims that fall outside of Prime Health Services will be reimbursed via the Permitted Payment Level.


  • RBR provides plan sponsors who are looking to be good stewards of plan assets and ensuring that only validated hospital services are reimbursed at a fair and reasonable level that is acceptable by all stakeholders including the Plan Sponsor, Plan Member and Hospitals.
  • Traditional model is unsustainable which is applying a discount off a highly inflated bill
  • NET Savings when a Plan Sponsor moves from a PPO to RBR will range from $1500 to $3000 Per Member Per Year
  • Richer benefits possible for members now that AMPS limits the waste and abuse that is rampant with traditional models
  • No more handing the checkbook to the fox watching the hen house
  • There is a right way to implement a RBR plan and a wrong way
  • There are many other RBR/RBP options to choose from and there are many horror stories to go along with these botched attempts to replace the PPO
  • AMPS is the robust models that does it the right way to ensure better benefits at a reasonable cost
  • Members will NOT be required to pay the balance between what was paid to the provider and the improper balance the provider is trying to collect.


Moving HealthCare Risk Management in a New Direction

Mike Reagan Regional Director, Texas 214-850-1069