By Bill Rusteberg
Hidden fees in health care delivery earned by third party intermediaries can be significant.
For example a RBP vendor charges a fee of 12% of billed charges then turns around and pays the placing broker 1% of billed charges and pays the TPA 25% of the total fees earned. The plan sponsor is clueless.
A 2,400 life case with a total medical facility (hospital, free standing surgical center, etc) spend of $7,650,000 (45% of total medical spend) would generate fees of $918,000. This honey pot is shared between the placing broker ($76,500), TPA ($229,500) and the RBP vendor ($688,500) who is doing all of the work.
In some cases it’s less expensive to remain with a PPO contract. This was illustrated in a Milliman study done for the City of Lewisville, Texas several years ago when the city was considering a move from a managed care plan to a Reference Based Pricing model.
This practice of third party intermediaries paying providers less and then paying the difference to themselves is self-dealing and constitutes fraud. Yet the practice continues unhindered.
