By Mike Lanza, Senior Vice President, USBenefits Insurance Services
LinkedIn: Mike Lanza
LinkedIn: USBenefits Insurance Services, LLC
In the stop-loss industry, on occasion there can be tension between the Claim Payer (payer or TPA) and the Stop-Loss carrier when it comes to determining reimbursing claims that exceed the specific deductible.
Most claims payers have a claims review process in place to ensure that claims payment follows the Employer’s Plan document. But what role should the stop-loss carrier play when the claim exceeds the specific deductible? Should the stop-loss provider just let the TPA make payment decisions, or should they be involved in the claim review process?
This comes down to the title of the article – Whose money, is it? For most of us with the insurance products we purchase as individuals, our purchases are generally “first dollar” coverage, and possibly subject to a small deductible. Using personal lines insurance as an example, if you have a car accident or a homeowner’s claim, generally you will not be able to get the repairs done on your own, unless it’s approved in advance of the repair. The insurance company, who is also the payer, will either send you to companies they have agreements with that will give a fair estimate of the claim and/or they may even send out their own adjusters to determine the amount of the claim, whereby allowing you to get the repairs done on your own with the understanding that they will be invoiced and the price is fair.
While we may sometimes struggle with the insurance process when our property has been damaged and feel we’re at the mercy of the insurance company, it’s the transfer of risk for premium concept. That is; to mitigate our financial liability, we pay the insurance company premium with the understanding that we have transferred our risk (aka liability) to which they will indemnify us. Therefore, we need to understand at this point it’s the insurance company’s money, so they have the right to ensure the repairs are done in a cost-efficient manner without compromising the quality.
In situations where the insurance company permits you to get repairs from you preferred contractor (auto body shop, etc.), they will require the contractor provide an invoice for payment or some cases, reimbursement to you. Businesses have options, which makes the dynamics more complicated. Businesses can purchase coverage on a “first dollar” or “excess” basis. The latter involves the employer undertaking more liability via a large deductible, so that they may control the outcome with limited, and often, no influence from the insurance company, so long as the claim within the deductible. However, once the expected claim dollars are expected to exceed the deductible, the insurance company will want to have a say the claims management, since it’s their capital going forward.
So why is there so much concern when a stop-loss carrier requests to review claims that will exceed the deductible prior to payment? Especially, if they stop-loss carrier is willing to absorb the expense to review the claim, negotiate with the provider and handle all provider appeals, all in an effort to support the TPAs in managing claims in the best interest of the employer.
The stop-loss industry recognizes the challenges faced by TPAs in these scenarios, especially when network agreements are held hostage as medical bills are scrutinized. Further, these networks are generally contracted via a BUCA (Blue Cross / Blue Shield, United Healthcare, Cigna and Aetna). These tactics often threaten a TPA’s ability to evaluate and negotiate in the employer’s best interest, forcing the TPA to capitulate in a unilateral benefit for the interest of the network.
Make no mistake that the medical industry is overbilling, charging for erroneous services and providing unnecessary medical treatments. Thus, the action noted above hinders the TPA and stop-loss carrier’s ability to serve in the employer’s best interest.
The Employer Plan is a policyholder of the stop-loss carrier, who is an aligned partner of the TPA, so it is incumbent upon the stop-loss carrier to make good payment decisions. By doing so, the stop-loss carrier will reduce the medical costs (aka save money), which will lead to a lower loss ratio for the Employer Plan, and a better renewal price.
As an industry, we need to require enforcement of the transparency act, make the network accountable for their billings and services and provide appropriate venues to negotiate invoices.