Self Funded Employers: What Do We Need In Our ASO Agreement To Fully Execute Our Fiduciary Duties On Behalf of Members?

By Jim Arnold, CPA, CMA, CFE

Founder & CEO @ finHealth, Inc.

8 Contract "Asks" for Your TPA Renewal

1. Functional Fiduciary

Employee expects the Carrier/ TPA to serve as a "functional fiduciary" in safeguarding health plan assets, and always act in the best interests of the members and the Employer health plan.

2. Claims Data Ownership

All medical and pharmacy claims data is owned by the Employer as the self-funded plan sponsor, requiring timely access by the Employer to ALL claim fields (including "billed changes", "allowed amounts" and "pricing method"). This claims detail information should be provided electronically to the Employer and/or their third-party vendor commensurate with the health plan funding cycle (daily/weekly).

3. Independent Third-Party Payer

Employer has the right to electronically vet ALL healthcare claims prior to reimbursement via integration with an independent, third-party vendor. Carrier/ TPA will bear the cost of integrating with Employer's independent third-party vendor. Additionally, Carrier/ TPA will provide our third-party vendor with their full support as our agent in resolving payment integrity issues raised.

4. Prepayment Vetting >= $50,000

Carrier/ TPA shall immediately notify Employer of all claims >= $50,000 submitted, even if denied or put on hold (to support corporate financial planning). Those claims slated to be paid will be pended for an itemized bill review prior to payment, regardless of bill type (impatient, outpatient, professional, etc.). No claim >= $50,000 should be paid until the itemized bill is vetted by the Employer and/or their third-party vendor. If the itemized bill is not made available for any reason, the claim will be denied with no reimbursement.

5. Carrier/ TPA Payment Integrity Review

Commensurate with the Employer's independent itemized bill review, Carrier/ TPA will subject all hospital bills exceeding the $50,000 threshold to their OWN internal claim review process and disallow/ document all disputed line items for Employer review. This service should be performed by a nurse coder with the proper hospital coding certifications. If Carrier/ TPA has not collected adequate documentation from the hospital to support the payment or performed the nurse coder review, Carrier/ TPA will be financially responsible for claim costs and any late payment fees/ missed discounts incurred if paid without adequate review. Upon request, Carrier/ TPA will share the relevant claim pricing method with Employer relative to the negotiated provide contract and terms, any claim fields/ notes in their internal systems, and access to any itemized bills/ medical records. In addition, Carrier/ TPA will share their detailed payment integrity results from any internal audit, clinical review and/ or third- party audit. If Carrier/TPA is unwilling to pursue negotiation/ recovery directly with the health system, Carrier/ TPA will support Employer's efforts to negotiate single case rates with the provider where applicable.

6. Errors Defined & Agreed Upon

Employer expects Carrier/ TPA to flag and act on all erroneous claim lines, including NCCI errors, MUE errors, age/ gender conflicts, missed provider discounts, inconsistent pricing, experimental drugs, highly inflated charges, and routine charges for services/ supplies that are not billable. Carrier/ TPA will submit a comprehensive list at least annually of all types of disallowed charges that will be flagged in their claim review process to the Employer to confirm mutual agreement on "errors", as well as disclose the payment integrity fees paid to itself for fraud, waste and abuse services and contract negotiation fees (i.e. MultiPlan) monthly. If Carrier/ TPA & Provider cannot amicably resolve billing discrepancies, Employer reserves the right to fair-pay the bill to a competitive market rate. This rate will be the lesser of the cash price or the quoted Carrier/ TPA rate for that hospital on their chargemaster. If the hospital is not in compliance with the Hosptial Transparency regulations, Employer will use the closest "comparable hospital" from a capability (trauma center, teaching hospital, children's hospital) and geographic standpoint.

7. Contracting Method

Employer's preference is for Carrier/ TPA to contract with the hospitals primarily on a DRG basis, with the negotiated rates tethered to replicable industry cost benchmarks. If Carrier/ TPA chooses an alternate contracting method, Employer reserves the right to remove the hospital from the network and/ or reduce payments on those bills to a level that meets the "reasonableness" requirement under the CAA (competitive market rates). Carrier/ TPA contract details & Terms should be available to Employer via electronic access. Specific contract provisions should include:

a) Employer does NOT wish to contract with hospitals on a percentage of billed charges basis, due to the difficulty of effective enforcement and the prevalence of hospital billing abuse.

b) Additionally, as relates to "pass through" expenses such as drugs, surgical supplies, lab tests, etc. Carrier/ TPA contract will integrate limitations on the level of percentage markup allowed by the hospital, not to exceed a markup to 150% of acquisition cost.

c) Employer maintains the right to insist upon the hospital "cash price" when navigating claims with billing integrity issues.

d) Under no circumstances is Carrier/ TPA authorized to pay more than requested by hospital in billed charges, regardless of contract terms.

e) Finally, Carrier/ TPA will incorporate a "most favored nations" clause in their contract to ensure the hospital is billing their most advantageous rate to the Employer.

8. Detailed Fee Disclosure

On a monthly basis, Carrier/ TPA will provide Employer a detailed disclosure listing all fees/ compensation paid by Employer directly or indirectly to Carrier/ TPA, its affiliates, brokers/ consultants, health & wellness vendors in relation to its business with Employer. This includes fees whether paid out of plan assets or via administrative fees.

Don't be disappointed if you are not able to get all of these protections in place, as you will likely face a level of resistance from your TPA/ Carrier. Any provisions you are able to integrate will help support you in your fiduciary role in safeguarding health plan assets.