Cost Plus Insurance To Make Offer To Hospitals?


By Molly Mulebriar

Is Cost Plus Insurance in the process of formulating an offer to hospitals to end the impasse between hospitals relying on egregious charge master rates (Hospitals Dismiss Significance Of Chargemaster Prices?) coupled with phony “discounts” and willing payers seeking transparency and fair market value based on a competitive market as opposed to a market cloaked in secrecy aided by nefarious PPO contracts that no one can see or examine?

Officials of Cost Plus Insurance are meeting today in Costa Rica to discuss strategies. After almost seven years in business, Cost Plus Insurance continues to grow market share. Initially it was thought hospitals and their PPO partners would put a quick end to the scheme of transparent and defensible payment, but that didn’t happen. Fearful of publicity and exposure of egregious pricing strategies, hospitals quietly cashed their Cost Plus Insurance checks after a cursory attempt to balance bill indigent patients.

Cost Plus Insurance officials are wondering why hospitals are leaving money on the table these days. Paying hospitals Cost Plus 12%  or Medicare +20% incurs expenses on behalf of the Plan Sponsor. Added to the reimbursement rate are fees for numerous items such as audit fees, patient advocacy fees, legal defense fees, TPA commissions, broker commissions and specialized clerical support.

On a 600 life group, Milliman estimates the fees to exceed $500,000 per year. See Milliman Analysis Of Cost Plus vs PPO Plan

Some TPA’s and audit firms charge 12% of billed charges. That is a big number and represents money that goes to third party intermediaries, not medical care givers. And, as much as 25% of that fee are commissions to  TPA’s who do little to earn it.

Unidentified sources tell us Cost Plus Insurance officials are to make an announcement soon on the steps of the Texas Hospital Association headquarters in Austin sometime next week.

“We are going to offer Texas hospitals a choice. Either keep cashing our checks based on 120% of Medicare and continue to lose the balance billing battle, or agree with us it makes more sense to accept 150% of Medicare, cash bigger checks and be happy” stated Homer G. Farnsworth, M.D., Senior Vice President at Cost Plus Insurance.