Payers Increasingly Dismiss Managed Care Contracts

It stared in the early 1990’s when a mid-west third party administrator started paying a client’s medical bills using Medicare as a pricing benchmark. Over time more clients did the same. Through trial and error this TPA became very good at paying claims using benchmarks instead of relying on managed care contracts that typically rely on negotiating charged based fees. (Negotiating charge based rates is the same as negotiating for a new automobile off the sticker price.)

Their clients have enjoyed significant savings and continue to do so.

Short term medical policies have traditionally been doing the same for years as have most dental plans.

Cost Plus  Insurance is gaining momentum with Group & Pension Administrators leading the charge. Since 2007, GPA has successfully managed their clients health care costs using this approach, saving 40% or more in real claim dollars, much to the displeasure of the last four remaining health carriers in the state. Over 100 Texas employers, to date, have adopted the Cost Plus model.

Competing TPA’s, taking note of GPA’s success,  are entering the market with variations/hybrids of the Cost Plus program.

It is apparent – getting away from managed care makes economic sense.

Editor’s Note: In-network charges are more than out-of-network charges? How can that be possible?