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Open Letter to SPBA TPAs & Stop-Loss Service Partners

Dear Friends,

This is a quick way to get my head bitten off by all of you, and become the pin-up boy (as in voodoo pins) of SPBA. However, I seem to be in the middle getting insights from both sides, which you are not telling each other, so think of this as group therapy. Obviously, I am speaking in generalities. No one take anything personally.

1. "TPAs & Stop-Loss are at war with each other." Someone directly said it, and others intimated it. If that is so, we donÍt need government to screw up our market. We can fight among ourselves and kill our golden goose. Instead, it is clear that both TPAs and Stop-Loss are under (different) tremendous business threats & pressures, and the eruption point for those tensions is the TPA/Stop-Loss relationship. (I should also point out that if this is "war" the Stop-Loss side sure has been generous recruiting new troops to join the TPA team. Many of SPBAÍs new TPAs say their Stop-Loss recommended SPBA.)

Many TPAs took a competitive beating for several years from mega managed care competitors who "bought" (under-priced) business. Now that mega managed care is under attack and having to bring their prices closer to reality, TPAs need all the lowest possible client costs (including Stop-Loss) to build and keep their self-funded portfolio. So, it is a tense & desperate effort for many TPAs.

Stop-Loss, meanwhile, had whipped itself into a frenzy of lower prices and too-low attachment points. It was well-intentioned, to serve their customers (both TPAs & client plans)ƒbut playing Santa Claus eventually hits the bottom line. So, the end-payors Stop-Loss costs have taken a severe financial beating the past few years. Unfortunately, at this same time, many in the Stop-Loss community are finding themselves with new owners or masters who don't like losses. Some new overseers donÍt even give slack for the normal good year/bad year cycles. They want profit every year. So, those bosses are applying the screws to the Stop-Loss folks with whom TPAs work, who then have to convey that pressure to TPAs & plans.

Folks, this is going to be a tough couple of years until the self-funded market (not to mention government intervention) and Stop-Loss companies' finances settle down. Mutual patience, understanding and especially candid communication on a case-by-case basis are the best medicine.

2. "SPBA should ..." Some people want SPBA to terminate the Service Partner role. Some TPAs want to make SPBA meetings public lynching time for individual incidents with Stop-Loss. Many people are upset that Stop-Loss attendees are't as open and vocal in sharing insights as TPAs are at meetings. Meanwhile some people think there should be some sort of Stop-Loss executive council to advise the SPBA Board and/or that there should be a Stop-Loss representative at Board meetings. Let me address each.

The Service Partner category was created almost entirely to solve one problem that plagued the relationship. (Im including lasering in this broad category.) Stop-Loss would often balk at including or paying for an individual who did not meet the strict terms of the Stop-Loss contract. Such people might have been forced onto the plan by COBRA, QDRO, QMCSO, etc. The Stop-Loss were unfamiliar with the laws, so balked at including such persons & situations, or wanted to "laser" a much higher cost. That original goal has been achieved admirably. We get virtually no complaints of that kind anymore. Since government will continue to throw us curve balls, that role of keeping TPAs & Stop-Loss "reading from the same page" continues to be important, and thus a reason to have the Service Partner category.

Today's fights between TPAs & Stop-Loss seem to be case-by-case disagreements, not broad national issues. These are issues for the involved parties to work together to solve amicably. It isnÍt something that a national association can solve on a case-by-case basis. Therefore, SPBA is not the venue for venting personal gripes that do not apply to the whole groupÍs business. All sides need to keep things in perspective.

Are Stop-Loss Service Partners "members" of SPBA? No, for several reasons. SPBA was carefully founded (mainly by members of a more general association) for the specific focus on TPAs. We remain true to those founding goals. We are not aligned with any one type of plan, any type of employer/client or type of funding. As noted, the Service Partner arrangement was mainly to help TPAs avoid problems they were having with Stop-Loss who did not know about new laws & requirements the client plans needed to obey. This isn't snobbery or second-class citizens. It's just SPBA remaining true to its focus.

A Stop-Loss voice: Originally, when Stop-Loss individuals expressed a desire for a home, we assumed they meant their own Stop-Loss association, and SPBA provided some assistance to that exploration. However, it was the opinion of the Stop-Loss folks, themselves, that the industry did not have the kind of cohesion & sharing needed to have a successful association. Thus, the SPBA Service Partner category was a mutually-convenient fall-back. However, because of SPBAÍs dedication to TPAs, SPBA's governance will remain a TPA affair. In reality, SPBA is the most open and democratic organization around. There are no secret power plays at Board meetings. SPBA policy making & positions are all out in the open and done via constant input from the TPAs & Stop-Loss Service Partners. So, every Stop-Loss Service Partner already has more of a chance to impact SPBA policy than they have in most other associations.

"Why does SPBA charge Service Partners so much?" We hope that your answer is that you get what you pay for. If not, see if you are using SPBA just as another sales outlet or are you using it as intended to provide you insight about the market & influences. When the Service Partner category was created, there was great debate. Some said we should do as many other associations do soak the vendors. $10,000 was floated as a possible fee. However, recognizing that the average assets of most Service Partners are about equal to a fairly large TPA, the amount was set to equal a fairly large TPA. (TPA dues go as high as $3,500.) If we had done some minimal charge, it would be unfair to TPAs, and would be far under-pricing the value of the information being provided. (Figure out what it would cost to hire competent staff & reference resources to duplicate what you get from SPBA.)

3. "___________(fill in Stop-Loss or TPAs) are sloppy in the way they are dealing with us." Both TPAs & Stop-Loss point the finger at the other, and both are probably often right, from their perspective. There are some very disturbing tales about both sides. TPAs arenÍt bashful about telling their tales to educate the groupƒbut the Stop-Loss folks have been polite-to-a-fault about not speaking up at SPBA meetings with their stories. For example, a year ago, there were dozens of TPA complaints about Stop-Loss failures to pay when the TPA sent a report showing an attachment point had been hit. In a private session with just Stop-Loss, I hit hard on this complaintƒonly to have much of the Stop-Loss audience point out that TPAs carelessly send reports (sometimes just post-it notes) which include dental, vision and other costs which donÍt count towards the attachment point. In other issues, there were stories of TPAs with their hand in the clientÍs till, and TPAs with unrealistic expectations of having money advanced from Stop-Loss before it is spent. That is the kind of useful insight Stop-Loss should be sharing with TPAs at SPBA meetings on an on-going basis. Get it out on the table!!! Silence is not golden. If you donÍt speak up, we become self-righteous and assume weÍre always right.

4. Whose client is it? This is always a hot question. Brokers think it is their client and every one else is peripheral. TPAs are the ones who have to face the client with bad news and fix problems, so they think the client is theirs. Stop-Loss (depending who is the technical owner of the policy & coverage) thinks of the employer or plan as their client. Because the TPA/client relationship tends to be very intimate & personalized, TPAs become very protective of their clients. So, any perceived threat to a client or potential problem that could be avoided can turn a TPA into a growling protective momma lion.

LIVING HAPPILY EVER AFTER: This saga ends with good news. The pressures that are causing the TPAs & Stop-Loss to sometimes be irritable or uncharitable will balance out with time. TPAs & Stop-Loss need each other. TPAs have more and more of the marketplace, and to serve that marketplace (and for self-funding to survive) requires Stop-Loss that appears to the client to be cost-efficient, reliable & trouble-free. Though some tempers on both sides are still frayed, there are growing signs that Stop-Loss Service Partners are using SPBA as more than a marketing goodwill opportunity. As Stop-Loss senior management, underwriting and other aspects of the business become more involved in SPBA & meetings, those Service Partners will shine. The range of personalities & expertise in the Service Partner community is growing and its dynamism will be felt more and more. In the meantime, we need to heed what every speaker at the recent Fall meeting Stop-Loss session said: COMMUNICATE early & often with complete candor. Put yourself in the other role and understand what they are facing.