Victor Lustig would be proud…………..A 4,500 life Texas school district has been conned into believing they are getting free ASO claim administration
The price of prescription drugs in this county includes commissions. You can’t remove them because they are imbedded in the manufacturer’s list pricing and is the source of billions of dollars to the benefit of middlemen who control the distribution system.
If you are a plan sponsor and want to know how much in commissions total strangers are making, multiply your plan Rx spend by 30-40% and you will get a pretty good idea of how much you’re being ripped off without even knowing it.
One specialty drug we are familiar with costs $96,000 for a year’s supply. The commissions earned amounts to +$40,000. That’s better than a Poke in The Eye.
SOURCE: The Association Between Drug Rebates and List Prices – USC Schaeffer
A sneaky insurance broker or TPA can earn extra undisclosed income off non-ERISA groups by disguising commissions as claim costs. Two brokers we know turned $127,000 in disclosed commissions to $614,000 by inflating pharmacy costs without even trying. And on top of that they earned pharmaceutical manufacturer commissions too. How sweet is that!
There are a lot of games played to make you feel better. For example, a BUCA offers “free” medical claim administration in return for all the Rx commissions.
“We do not pay Blue Cross to administer our plan at all”
They raise their ASO fee above what they need, then discount it to what they needed in the first place just like car salesmen do, plus they earn all the Rx commissions on top of that. There’s nothing like that euphoric Lustig feeling of accomplishment so many enjoy in the crazy world of American health care finance.
The scheme is effective. For example the ECISD, a 4,500 life Texas school district, has been conned into thinking they are getting free administration (Grab some popcorn and watch the video above).
If you’re told you will be getting back 100% of all commissions you’ve been lied to. You can take that to the bank.
