A MATRIX Minute by MATRIX Group Benefits, LLC
As an employer plan sponsor, you try to do everything right to provide the best benefit program at a cost that you (the employer) can afford and that you can make affordable for your employees. You hire an experienced benefit advisor/consultant. You have the advisor do a Request for Proposal (RFP) for TPA services, a comprehensive medical management company, a quality provider network, a reputable PBM service, a quality medical stop loss provider, and quality resource support programs/companies.
After the advisor evaluates the RFP responses and proposals, you consider all the variables and make the best choices for your company. The selected companies provide you with their “standard form” contracts and everyone tells you the documents are pretty straightforward and nothing unusual. Often the standard contract from a selected company has attachments, exhibits, sub-agreements, joinder agreements or access agreements which are described as agreements the company selected to perform certain services so they can work with other resources on your behalf to help manage claims. These supplemental agreements are not the agreement that the selected company has with the resource company – you the employer do not get to see those, but they are what binds you. You also do not get to see any of the financial arrangements between the two companies – financial arrangements that can cost you considerable sums of money, in the name of large claim management.
How can agreements meant to save you money, and cost you money? The best intentions often result in unintended consequences. For example, provisions in the Plan Document may create an order of processes that result in determining a claim payment amount that is considerably greater than had the claim been processed using another method. Such provisions can transform an out-of-network claim to one that is paid as an in-network claim. In other situations, such provisions can engage one of the supplemental contractors who are compensated on a percentage of the savings they provide. Sounds great – save the employer money and get paid out of the savings. Knowing how such programs work, and understanding there usually are not sliding scales or caps on fees unless you the employer negotiate those provisions, can result in significant fees being avoided by the plan. These fee amounts may significantly reduce the real savings the benefit plan and the plan participants realize. Other situations that can cost the employer occur when more than one resource company is engaged but there are no savings and the service provider still has a fee that someone has to pay. That someone generally ends up being the employer.
Specialty resource services can provide significant value to employer plan sponsors. In order to realize the value and get maximum savings, employers must take an active role in reviewing resource service agreements and negotiating their terms. Passively accepting what a contracted service provider attaches to their service agreement for you to sign or initial as part of their service agreement may result in unintended consequences for the employer, particularly when the employer realizes those agreements are subject to state contract law not ERISA.
Use the RFP process to your advantage, including interviews and onsite visits, requiring all responses in the proposal be made part of the final service agreement, checking references, and performing legal review of all documents and agreements that will be related to the services to be performed by the selected company. Use these processes to be sure you get all the information you need to make the best decisions for your benefit plan.
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