Reference Based Pricing Fees

Guess how many TPAs or consultants are willing to implement reference-based pricing on a flat fee structure? Very few, if any.” – Mark Flores

SOURCE: Self-Insurer 2018-12 (sipconline.net)

The following is an excerpt from the article whose link is shown above. Flores outlines conflicts of interest among many Reference Based Pricing vendors charging fees based on a % of “savings.”

He asks “ “Guess how many TPAs or consultants are willing to implement reference-based pricing on a flat fee structure? Very few, if any. Why are they going to bother doing it? It’s not their money. It’s the plan’s money.”

In his view fee schedules “must be evenly integrated across the board without discriminating against any members.”

Does this mean if Member A is reimbursed 140% MC for the same procedure Member B receives but the plan settles for 200% MC  for Member B (because of provider pushback, noise), has the plan violated their fiduciary duty? Is it discriminatory to reimburse one member more than another for the same benefit. Isn’t insurance by definition a reimbursement benefit?

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The following is an excerpt from the article that is worth noting:

Since RBP nearly always applies only to out-of-network providers, “the plan has to take into consideration whether or not they’re imposing an undue burden on the member,” explains Mark Flores, an ERISA claim appeal and compliance specialist who co-founded Avym Corp.

He says self-insured employers have a fiduciary duty to disclose ahead of time to their health plan members any limited fee schedule for certain procedures or services. That arrangement also must be evenly integrated across the board without discriminating against any members, while provisions that changed have to be properly ratified and executed into the plan documents. He cites a Department of Labor action against Macy’s for failing to do just that with RBP provisions in the department store’s health benefits plan.

His firm, which ensures that doctors, hospitals and employer plan claims are properly adjudicated and paid when claims are filed to self-insured plans, has seen a nefarious pattern in the marketplace. A payer, for example, might agree to only half of an out-of-network doctor bill for $200, citing RBP as the reason. The third-party administrator then would inform the self-insured employer that they saved them $100, then “invoice the plan for 30% of $100 savings on that balance between the $100 payment and $200 bill charge,” according to Flores.

“Guess how many TPAs or consultants are willing to implement reference-based pricing on a flat fee structure?” he asks rhetorically. “Very few, if any. Why are they going to bother doing it? It’s not their money. It’s the plan’s money.

They’re telling the plan we’re saving you money, but the ‘savings’ is being shifted to the patient responsibility. They have an inherent conflict of interest to try and generate as much savings fees as possible, even if it means saddling the patient with improper liabilities or exposing the plan to costly litigation.”

It behooves these assorted vendors and/or TPAs to have out-of-network doctors charging $300 or $400 per procedure “because they’re now going to charge a savings fee based on that billed charge,” Flores says. He predicts a “tsunami, of lawsuits” against plan administrators for allowing TPAs to inflate claims and misrepresent facts in breach of their fiduciary duties.

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