Healthcare “Syntopical”: The CEO’s Guide to Restoring the American Dream 3 (part 11 of 15)

Chapter 13: Independent Claims Administrators vs. Insurance Company Claims Administrators – the Trade-Offs

It’s important to realize that not all self-insuring is the same. It can vary enormously depending on whether you decide to work with an insurance carrier that provides the administrative services (ASO) or an independent third party administrator (TPA) that provides them.

When a company self-insures its health plan, it sets aside its own money plus employee premiums, using them to pay claims for medical services itself. But rarely does an organization have the resources necessary to process claims – to receive, interpret, and pay medical bills. Nor does it understand the intricacies involved in creating and managing a health plan while complying with applicable laws. Thus an ASO or TPA is required.

Second, to address the cost of catastrophic claims, a self-insured plan will purchase reinsurance or excess coverage from a stop-loss carrier.

The traditional and simplest way to administer a self-insured plan calls for a large insurance carrier to shed its risk-bearing role but continue to serve as a claims processor for the employer – substituting the employer’s money for its own.

ASOs prefer to pick and hire the stop-loss coverage company (sometimes called excess or reinsurance coverage) for clients themselves and provide a predetermined health plan that aligns with its own excess loss carrier and provider network agreements. This bundling of the plan document, excess insurance, and network agreements severely limits plan customization. On the other hand, it eliminates potential gaps in coverage between these components. … it’s easier with an ASO.

The downside is that the employer can’t take as much of an active role in cost management or provider relations. Nor can it easily negotiate a direct contract with a hospital or “carve out” a particular type of claim. … With a TPA, on the other hand, you call the shots and get more transparency and flexibility at what is generally a lower cost. The TPA does what you dictate.

A TPA can afford medical expertise and achieve group purchasing discounts that are significantly more advantageous than those available to a single employer.

With a TPA, there is a true unbundling of services. For some employers, the fact that a TPA requires the employer to see and select the moving parts is exciting. It allows a hands-on employer to more actively contain costs and pick what they feel is best for their employees. For others, it is frightening and overwhelming. For those employers, an ASO that makes the decisions for them is likely the way to go – if they’re willing to pay the premium.

Caveat: Whether ASO or TPA, some claims processors are partly owned by large insurance carriers, health systems, network administrators, and other entities.

Here are some reasons you might decide to self-insure:

  1. Plan Control
  2. Interest and Cash Flow
  3. Federal Preemption and Lower Taxes
  4. Data Access
  5. Risk Reduction

Is the TPA able to drive you value? This can be in the following forms:

  • Value-based contracting
  • Integration with local primary care practices
  • Chronic care management and reporting
  • Cost and quality transparency
  • Seamless integration and promotion of third-party solutions like telehealth or second opinions
  • Flexibility in customer communication (phone only between 8am and 5pm? Or text, email, chat anytime?)


Chapter 14: Value-Based Primary Care

There are two primary models for VBPC:

  • Direct Primary Care (DPC), in which care is offered to individuals, plan administrators, and employer in a range of practice models from solo practitioners to national organizations.
  • Onsite / near-site clinics fully or partially dedicated to the workforce of a specific employer.

Providers of VBPC typically charge a monthly, quarterly, or annual membership fee, which covers all or most primary care services including acute and preventive care.

The flawed incentive structure of FFS demands very short primary care appointments, which often drive referrals to unnecessary high-margin services such as scan and specialists and result in an overreliance on prescriptions. The reduced overhead from eliminating FFS billing also allows VBPC practices to offer a more proactive care model that can lead to significant reductions in downstream costs.

What are the Key Elements to Look For in a VBPC Provider?

  1. Quality Reporting
  2. Shared Decision Making
  3. Care Coordination
  4. Population Health Management
  5. Value-based Payment Models
  6. Patient Experience
  7. Evidence-based Medical Care
  8. Participation in a Health Information Exchange (HIE)
  9. Ease of Access to Care and Care Information
  10. Clinical Pharmacy and Mental Health Embedded within Practice
  11. Physician Loyalty
  12. Referral Patterns

What Challenges Can You Expect?

  1. Administrative Challenges
  2. Employee Education
  3. Care Dislocation
  4. Criteria for Choosing a Practice
  5. Care Coordination
  6. Slow Migration to the New VBPC Model
  7. Obfuscation to Preserve Status Quo


Chapter 15: Transparent Medical Markets

A Transparent Medical Market (TMM) offers purchasers such as employers and unions fair and fully transparent pricing for medical services / procedures ranging from specific treatments to specific conditions.  Services and procedures are typically bundled, meaning there is just one bill for all the services received from multiple providers and multiple settings.

Providers supply up-front pricing at significantly reduced rates in exchange for increased volume, quick pay, reduced friction, and avoiding claims/collection problems. … In exchange for significantly reduced rates, employers encourage plan members to use these providers, typically by waiving all of the individual’s costs including copays, coinsurance, and deductibles.

What are the Key Elements to Look for?

  1. Transparency
  2. Bundled Payment
  3. Shared Risk
  4. Efficient Administration
  5. Employee Education
  6. Ease of Use

An effective TMM functions best in tandem with a value-based primary care model and use of shared decision-making tools to avoid overtreatment.

What Challenges Can You Expect?

  1. Administrative Challenges
  2. Provider Reluctance
  3. Complex Implementation
  4. Employee Education
  5. Data Sharing
  6. Data Analytics
  7. Confusion About Price Transparency Tools
  8. Obfuscation to Preserve Status Quo


Chapter 16: Concierge-Style Employee Customer Service

Concierge service is the conductor that harmonizes much of this discord and fragmentation, providing one point of interaction and distilling complex information down to actionable guidance.

Concierge services are available as a subscription benefit for employees in value-based reimbursement contexts. … the key to an effective concierge experience is integration of information so employees have hassle-free access to simple and actionable guidance on any issue when they need it.

What are the Key Elements to Look for?

  1. Network Directories
  2. Price Transparency
  3. Scheduling Capability
  4. Understanding of the Individual Consumer


Chapter 17: High-Value, Transparent TPA

Employers who choose to partner with a high-value, transparent TPA typically do so because they are sick of convoluted rules, data that aren’t actionable, opaque provider contracts, constant administrative runaround, and paying unknown and irrational amounts in exchanges for services that don’t add value.

What are the Key Elements to Look for?

  1. Health Care Cost Transparency
  2. Quality Data
  3. Utilization Data
  4. Continuous Progress
  5. Positive Financial Outcomes
  6. Engaged, Satisfied Employees


Chapter18: Transparent Pharmacy Benefits

 The term transparency is incredibly over-used in the market and not all transparency is created equal. … Compared to some Health Rosetta components, Transparent Pharmacy Benefits don’t’ actually work much differently than what you’re used to. The primary difference is the process for engaging your consultant or PBM services vendor. It focuses on contracts, access to data, and distribution channels for accessing drugs that counteract the pricing opacity, undisclosed financial incentives, and other conflicts that permeate status quo pharmacy benefits. The most critical piece is the role and involvement of an expert who know the space top to bottom and has incentives aligned with your interests.

What are Key Elements to Look For?

  1. Clarity on How PBMs Work
  2. Access to Your Claims Data
  3. Complete Contract Understanding
  4. Expert Resources
  5. Creative Distribution Channels

What challenges can you expect?

  1. The Appearance of Savings
  2. Interference
  3. Lack of understanding
  4. Not all transparency is equal
  5. Obfuscation to preserve Status Quo



5 Steps to Start Implementing High-Performance Benefits

  1. Reset your benefits advisor relationship expectations
    1. Complete and Sign the compensation disclosure form in Appendix C
  2. Start now and select approaches that minimize disruption to your benefits group
  3. Build compounding momentum by implementing programs that quickly reduce spending and deliver value
    1. Three simple examples that work for nearly any size organization and don’t require geographically concentrated workforces are pharmacy analysis / optimization, Centers of Excellence models, and out-of-network claims settlement services.
  4. Develop an outstanding communications strategy to ensure program success
  5. Let the Health Rosetta ecosystem help guide the way.



  • Hire a specialized Benefits Consultant (Broker)
  • Seek “aggregators” for prepackaged access to Centers of Excellence
  • ASO is easier than TPA. TPA allows more control and is cheaper
  • Use a TPA to get group purchasing discounts
  • Use a TMM vendor to make all pricing known
  • Use “cost plus a management fee” model for drugs instead of Average Wholesale Price (AWP) [ain’t what’s paid]




  • org/employers for brokers
  • org/health-rosetta for lists of VBPCs, TMMs, Concierge Services, TPAs, PBM vendors, best practices, toolkits, etc
  • TLC Benefits Solutions for claims processing
  • HealthInsight for hospital rankings
  • The National Quality Forum (NQF) for evidence based quality measures
  • Hospital Compare for hospital quality comparisons
  • Business Groups on Health are nonprofits that support employers in purchasing and managing health care benefits
  • Catalyst for Payment Reform is a nonprofit that helps navigate value-based payment models
  • Crystal Clear Rx for pharma transparency
  • Broker Compensation Disclosure Form – Appendix C