We recently reviewed a renewal offer by Blue Cross on a fully insured account. The loss ratio shown was 98%. The renewal action required a 16% rate increase. That just doesn’t add up.
A 98% loss ratio produces a much larger increase. Could it be the loss ratio, after taking out hidden fees on the claim side of the ledger, more like 70%? If that is the case the renewal should be a pass.
The following article by Mark Flores exposes common practices within the industry that have been going on for years. This blog, since it’s inception, has outlined lawsuits exposing the practice of hiding fees on the claim side of the ledger. Some examples are Weslaco ISD vs Aetna, Oakland County vs Blue Cross, Anheiser Busch vs Cigna and many more.
Published on Linkedin by Mark Flores, Vice President and Co-Founder at AVYM Corporation
“It seems apparent that TPAs can and do hide “undisclosed” Administrative Compensation fees within Medical Claims payments.”
These undisclosed fees, which can account for 30%‐60% of a plan sponsor’s health claims expenditures, may be transitioned into the TPA variance account through “retention reallocations” and “cross plan overpayment offsets“, among other techniques.
Full Article Here:
Former Lawmaker Blasts Tennessee’s Effort to Find Million$ Erroneously Paid Out in Health Claims
Published on September 27, 2022
Both Public & Private Self-Insured Health Plan Administrators Should Seek Return of Billions in Plan Assets.
Why Aren’t other States Asking the Same Questions?
According to a recent article and news report, the State of TN spends $600 Million Per Year on medical claims payments for its members. Yet, one former lawmaker is asking why the State isn’t doing more to recover alleged overpayments.
According to a report done by the consulting group hired by the state, Healthcare Horizons, the vendor audit of TN State Health Plan claims from 2020 found just $268,770 in overpayments to TPA BlueCross BlueShield TN, or less than 1/10th of one percent error rate.
Yet, according to the Healthcare Horizons website, TPAs “can unintentionally make errors that may range, on average, from 1 to 3 percent of total claims.”
For the TN State Plan spend of $600 Million, that equates to $6M -$18M Per Year, of possible overspending.
That is a huge difference.
And while TN State Health Plan may eventually get to the bottom of these alleged overpayments, this raises a very important issue:
Why aren’t other states asking the same questions?
In NJ, for example, the state health plan spends upwards of $6 BILLION for their roughly 600,000 members. Yet when one legislator started asking questions, he was never given any clear answers.
The CA state health system, CalPERS is the largest public employer purchaser of health benefits in the state and the second largest employer purchaser in the nation after the federal government. In 2020, CalPERS spent $9.74 billion to purchase health benefits for 1.5 million members.
Yet, one of the CalPERS claims administrators, Anthem, is being sued by the US Justice Department for allegedly overcharging Medicare by millions of dollars.
Based on these developments, should the state of CA be proactive in monitoring taxpayer dollars?
In Michigan, BCBS Michigan has been sued by many of their own employer plan clients for allegedly skimming additional fees from the organizations, according to court documents.
According to court records in one such case:
“It is undisputed, that, like in the multitude of other similar cases that have been brought against BCBSM, the company included hidden administrative fees in its charges to the Tribe. BCBSM agrees that, between 2004 and 2012, the tribe paid approximately $13 million in hidden administrative fees”
This leads to the obvious question, what are states doing to find tax dollars that may have been erroneously paid to their claims administrators?
Based on these situations and other recent court cases, it seems apparent that TPAs can and do hide “undisclosed” Administrative Compensation fees within Medical Claims payments.
These undisclosed fees, which can account for 30%‐60% of a plan sponsor’s health claims expenditures, may be transitioned into the TPA variance account through “retention reallocations” and “cross plan overpayment offsets“, among other techniques.
Both Public and Private self-insured health plan administrators charged with properly monitoring and safeguarding taxpayer dollars and plan assets should do so, independent of their TPA’s own reporting.
Using industry estimates and national claims processing standards, we believe these same self-insured health plan administrators, should seek the return of Billions in taxpayer dollars and Private Employer Plan Assets.
Reining in healthcare costs continues to be a challenge for both public and private employer self-funded plans. In order to achieve greater transparency, improved cost, and quality outcomes, all health plans must engage in rigorous monitoring of TPA practices, and adopt straightforward disclosure and transparency measures for health insurance claims.
