TPA / RBP Vendor Compares Fees To Competition

Commission driven broker / consultants push certain products over others. Here’s an example…….

We received an email this morning from a TPA / RBP vendor that focused on fees they charge compared to others in the market. Some RBP vendors charge an arm and a leg while others are significantly more competitive. The former are usually the vendors who entered the market early when there was little or no competition and haven’t changed their model since.

Both competitors in the comparison shown below offer essentially the same services including legal representation and patient advocacy. Competitor A is known to pay commissions as high as 25% of total fees (25% of the 12% of BILLED CHARGES fee). Competitor B’s fee is a flat PEPM fee and no commissions are payable.

Competitor A

Assuming a 250 life case:

Total Charges                                                                            $90,856.00

Allowable At 110% of Medicare                                            $10,902.00

Fees (12% of BILLED CHARGES)                                                  $10,903.00

Effective Medicare Rate                                                   230%

Competitor B

Total Charges                                                                            $90,856.00

Allowable at 150% of Medicare                                            $13,566.00

Fees (PEPM)                                                                              $3,187.00

Effective Medicare Rate (includes fees)                              152%

So why do plan sponsors buy from Competitor A? Could it be because their broker/consultant may earn enormous commissions while they earn nothing from Competitor B?

In the case of Competitor A, would it not be better to stay with a PPO plan? A quick cost analysis may provide an answer the BUCA’s would applaud.

NOTE: To pay a % of BILLED CHARGES as a fee is not something we recommend. Hospital chargemaster rates are constantly increasing while Medicare reimbursement rates curve ever so slightly. To charge a % of BILLED CHARGES guarantees a continuous fee increase. This is another example of why hospital chargemasters are a third party intermediaries best friend.

Hospitals Dismiss Significance Of Chargemaster Prices?