Why Pay $900,000 To Intermediaries Instead Of Medical Care Givers? Nothing Makes Sense These Days!

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By Molly Mulebriar

Why pay intermediary fees when both providers of medical care and consumers would be better off dealing direct? Cost Plus Insurance and/or Reference Based Health Plans pay 120% of Medicare to hospitals in most cases. By the time intermediary fees are added, plan sponsors end up paying 135-150% of Medicare equivalent rates. Why not pay these intermediary fees to the provider of medical care instead?

We have seen fees as high as $650,000 (group of 750 employees) and $900,000 (group of 435 employees) – would this money have been better spent paying health care providers instead of auditors, TPA’s and law firms?

Plan sponsors have been willing to expend these enormous fees to protect their employees against balance billing and lawsuits although they do not have any liability themselves (the plan pays what it pays, nothing more, nothing less). However, more plan sponsors are reconsidering this expense and are turning to a reference based pricing model instead.¬† Onerous fees go away, patients are now, for the first time, participating in a direct dialog with their providers – it’s called “skin-in-the-game.”

At what level of reimbursement are hospitals willing to accept? We see some taking less than Medicare on an exclusive basis in certain areas. In other areas we see 120-150% as the magic number. The vast majority however, want more. After all, they are getting as much as 250-400% of Medicare through managed care contracts  leaving little incentive to settle for less.

See –¬† Are You Paying Competitive Fees For Your Cost Plus Plan?

Editor’s Note: Molly Mulebriar is a free-lance reporter from Waring, Texas and a frequent contributor to this blog. She can be reached at www.mollymulebriar.org

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