A True Story By Bill Rusteberg
A large Texas group plan is fully-insured with a major BUCA. The carrier touts their all-in retention charge is the lowest in the industry at less than 10%. That’s a lie.
We were tasked with reviewing the group’s renewal. It’s always good to have an independent review and that’s what we do. So, we did. Details are for another day that are equally interesting to this one. But I digress.
Pharmacy spend is 57% of total plan spend. Fully-insured plans don’t share in rebate savings which on this group is 40% of Rx spend. Rebates are commissions, not claim dollars, yet these fees are hidden on the claim side of the ledger.
In this instance the carrier’s retention charge is 32%, not 10%. The group is paying more than they should. Now that they know, if they continue with the current arrangement will they have breached their fiduciary duties?