Third Party Environment Under Attack

Removing primary care and specialty care out of a third party environment makes sense. That’s where the majority of claim volume comes from.

It makes no sense to pay a third party to administer a $65 – $150 office visit charge.

Ah, but what about claim re-pricing? Providers always bill for amounts they know they won’t receive. Third party administrators provide that important function. But is it necessary?

It’s only necessary when a plan relies on third party pricing facilitated through PPO contracts. But it’s not necessary when a plan retains pricing authority. In those instances it doesn’t matter what a provider bills. The plan decides what is to be paid and no one else.

Removing designated claims such as primary care from a third party environment significantly reduces claim volume. There is less work load for the TPA.

But how are these claims processed and paid? The answer is……….(Drum Roll Please)…….these are not claims anymore. They are cash transactions at the point of service. Or services are provided through capitation.

Cash transactions in health care is not new nor is it as common as it should be. Technology firms can facilitate cash payment plan-asset transfer to providers cheaply and efficiently.

Capitated models, which are growing in acceptance, removes plans from the third party environment, cutting out all the middle men skimming off the top of every designated medical encounter.

Frontier DPC has experienced phenomenal growth in deep South Texas recently. The capitation rate is $60 per member in return for unlimited, same day PCP encounters with no patient financial responsibility. Plan sponsors adopting the strategy are primarily driven by concerns about accessibility and member cost but they haven’t leveraged negotiating power with their third party administrators. Reducing claim volume should reduce TPA fees.

We are seeing a dynamic health care market with unparalleled innovation. Paying for health care doesn’t have to be complicated. Notice how plans pay for prescription drugs. No claims, all automatic transactions at the point of sale. Why can’t health care be the same?