A Texas based association sponsors a group medical plan for member firms throughout the state administered by a nationally recognized insurance carrier. As a service to their members, the association performs billing services on behalf of the carrier. Following the money is not always easy.
An ASO Agreement between a Texas political subdivision and an association sponsored health plan makes for interesting reading. The association collects all fees and claim dollars for disbursement. In this case we will call the association ABC Association, or ABCA.
Definitions within the ASO Agreement include one for “NET CLAIMS PAID.” To wit: “Net Claims Paid means the net benefit payment calculated by ABCA, upon submission of a Valid Claim, in accordance with the benefits specified in (Name of Plan Sponsor) health benefit plan, plus any supplemental charges as authorized in the Agreement.”
A section of the ASO Agreement discusses Net Clams Transfer Payment: “In consideration of the ABCA’s responsibilities as set forth in this Agreement and at the end of each Transfer Payment Period, (Name of Plan Sponsor) shall transfer to the ABCA’s Bank and amount equal to the Transfer Payment Period’s Net Claims Paid less any refunds or reimbursements due to (Name of Plan Sponsor) including but not limited to stop loss claims, subrogation payments or provider refunds.”
The question becomes “What comprises supplemental charges, and does ABCA up- charge members with the difference retained by ABCA as a source of sponsorship revenue? For example, subrogation fees described within the Agreement is 25%, which of course is paid by each plan sponsor as billed by ABCA. How much is retained by the association or is this fee a 100% pass through?
A look at ABCA’s annual financial statement may provide clues.