By Bill Rusteberg
Would you like to know how a broker earned $614,000 on a Texas school district without anyone knowing about it?
Most plan sponsors, especially Texas public school districts, have no clue insurance brokers can earn 10–20+ types of hidden fees inside self‑funded health plans. These fees are buried on the claims side of the ledger and can only become visible through a thorough plan audit.
The practice is common. And ignored through ignorance. You can’t fix what you don’t see. You don’t know what you don’t know.
A “tell” hidden fees are driving the ship is when fee based consultants low ball fees that don’t support their expenses and professional value. A school district in deep South Texas awarded a Dallas firm an annual $24,000 contract to manage the district’s self-funded health plan. Any moron could figure out the fee wasn’t enough to cover travel, lodging, car rental, and other costs of business. The district didn’t care, it was the low bid for services they requested. They had no clue what the real cost was going to be and never would.
Would you like to know how a Valley school district in deep South Texas paid $614,000 in fees without anyone knowing about it? They thought their broker was earning $115,000 but discovered the truth when we were hired to audit their plan finances.
We found fees hidden on the claim side of the ledger derived from just about every method possible especially on the PBM side.
Here’s a few methods used to turbocharge behind the curtain fees:
- Undisclosed Broker Overrides & Bonuses
- Network Access %‑of‑Savings Fees
- Shared‑Savings & Contingency Fees
- PBM‑Related Hidden Revenue
- TPA Markups & Pass‑Through Fees
- Stop‑Loss Compensation That Isn’t Disclosed
- Vendor Referral Fees & Kickbacks
- Inflated or Hidden Administrative Fees
Unfortunately, federal brokerage disclosure law doesn’t apply to non-ERISA groups. Hide-and-Go-Seek still applies. City, county and school district health plans are not subject to ERISA.
Self-funded plans would be wise to engage an outside expert to review finances and contracts to ferret out value draining fees for what could be a very high return on investment.
Business is about solving other people’s problems. Solving the high cost of healthcare giving employers a competitive advantage is ours.
Status quo convergent thinking solves problems through a very narrow lens. Divergent thinking empowers us to solve problems with a wide lens allowing us to see what others don’t.
You can’t fix what you don’t see. You don’t know what you don’t know. We see opportunities others miss. We do what others don’t. Winning together is our goal.
