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TPA Frustrations with Stop-Loss + Their Insights

This is part two of a candid exchange of between TPAs and Stop-Loss as co-dependent business partners.  At the Fall 2007 SPBA meeting the closed-session workshop of Stop-Loss Marketing experts was asked to come up with frustrations & concerns about TPAs.  That list was published in the February 14th, 2008 UPDATE on page 7, and is an attachment to this list.

The goal of this candid exchange is to avoid knee-jerk defensiveness & finger-pointing back and forth.  The good news is that the reaction from TPAs to the first list from Stop-Loss has been, "Those are good points and fair criticism; we'll work on."   It should also be noted that there were TPA comments submitted that said, "I have Stop-Loss who do the right thing every time." and  "Most of my book of business has been with one MGU since 1991, so I'm happy, and there have been no problems."

So, step two is the list below of frustrations solicited from TPAs about Stop-Loss, listed in no particular order.  Some may seem similar, but are listed separately to show different perspectives.  Below each is a summary of the comments from a large group of Stop-Loss being constructively candid.  Please take this in the constructive manner in which it is given.  The more we understand each other, the more success we have, and the fewer unnecessary headaches.

1.  TPA COMMENT:  When TPAs can arrange preferred discounts for unique services and other cost-saving techniques, Stop-Loss seem to give the same rates/factors on a prospect to other TPAs without the cost-saving techniques.  Are Stop-Loss familiar with what TPAs can achieve, and do Stop-Loss underwriters care or know how to measure the effectiveness of these cost-saving techniques?

STOP-LOSS COMMENT:  There seems to be the assumption among TPAs & plans that just because something claims or might be expected to same money, that there should be a S-L discount.  However, actuarially, most of the savings don't impact at the Stop-Loss levels.  So, the cost-saving techniques are wonderful news for clients, but unless or until there is evidence that it directly creates actuarially-significant savings in S-L claims, we can't give discounts for savings we don't see.   There is also the factor of how long an S-L insurer will have a plan.  Many programs take a few years to pay off.  So, the S-L making a quote today will probably not see the experience data and any later cost savings.

2.  TPA COMMENT:  Wellness & disease management strategies:  It would be nice if  Stop-Loss savings could be offered as a recognition to clients who implement programs that include incentives to improve plan participant health through compliance monitoring and active disease management.  Stop-Loss seems to only be interested in short-term PPO discounts and the 10 month renewal cycle.

STOP-LOSS COMMENT:  Similar to the answer above, we are limited to what actuarially impacts the claims.  The key is that it is a short term contract, so savings to the plan 10 years from now don't lessen the S-L claims this year.  Think of a car.  A shiny clean car looks good and will sell for more...but doesn't get a discount from the care insurance company.

3.  TPA COMMENT:  Employers with self-funding tend to  want to explore new fresh ideas as well as plan ahead for  the direction of government policy.  This kind of personalization has been a main reason for the success of self-funding & TPAs.  Some Stop-Loss need to be nagged to give separate quotes for different plan designs.  We need to be able to serve the innovative spirit of clients.

STOP-LOSS COMMENT:   Often, when S-L do not respond with separate quotes to various tweaks to plan design, the S-L do not want to seem impolite to say that they don't think some of the ideas are wise, or that the tweaks won't impact at the Stop-Loss level, and thus a separate quote is not applicable (see answers 1 & 2 above). 

4.  TPA COMMENT:  We often do not get the best quote up front, so it leaves the frustrating feeling for the TPA, broker & client that  they will have to go back and negotiate several times.

STOP-LOSS COMMENT:  It is often unclear when a TPA first asks for a quote whether they are seeking a ballpark idea, or a shop-around quote.  Unlike sealed-bid kinds of contract selections, in which best-offer quotes are given, compared, and selected with no further negotiation, TPAs tend to come back and ask the S-L to shave the price or meet some lower quote.  So, for self-protection, S-L have learned to build in some negotiating room into an initial quote

5.  TPA COMMENT:    Some Stop-Loss quotes do not reflect what the TPA requested, such as a specific deductible level, certain type of contract (such as 12/15 or paid, dental included in aggregate. etc.).  This wastes time for client, TPA & Stop-Loss, and makes self-funding look like amateurs to the client.

STOP-LOSS COMMENT:  Frankly, a general factor applying to many of these questions is that underwriters coming up with quotes is a huge time commitment and thus expense for S-L.   So, deciding the best use of underwriters' time often guides the quote.  Often, like in #1 & 2, it is the professional judgment of the underwriters that the variations would not impact spec or agg.  Also, frankly, sometimes it is a communication glitch, so you get the standard quote.

6.  TPA COMMENT:  If the Stop-Loss doesn't think they have a serious shot at writing a case, they just throw numbers out.  If we come back later and say that the client is interested, then the Stop-Loss back-pedal, want more information on large claims, suddenly want to laser, or totally re-rate the case.   If you don't think you want a piece of business or that it is not worth making the effort, then avoid the later embarrassment and decline it up front.

STOP-LOSS COMMENT:  This is a communication issue as well as the underwriter cost/time factor described in #5.  The TPA needs to honestly let the S-L know if this is a very serious possibility, or is just looking for a pre-sale ballpark quote.  If you want a serious quote, send as much data as possible and tell the S-L it is a serious possibility.

7.  TPA COMMENT:  Most (but not all) Stop-Loss seem hesitant to give serious consideration (price recognition ) to new types of markets, such as HSA, retiree-only health, prison inmates, etc.   "SPBA does a good job of exposing us to opportunities.  It is up to us to work together to develop them."

STOP-LOSS COMMENT:  As noted in #1 & 2, most new ideas are great, but don't provide any savings in claims at the S-L levels.  We can't save you money on something that doesn't save money for us.

8.  TPA COMMENT:   Lasers are a huge turn-off to clients against the whole self-funding concept.  They feel like they are paying a premium but left taking a big chunk of the risk.

STOP-LOSS COMMENT:  Stop-Loss are puzzled by TPA concern about lasers.  Every source offers a policy with no lasers, usually at only 9-11% more.  However, very few TPAs & plans choose the non-laser option.  It is a TPA/plan/broker decision, not something forced by S-L.  Frankly, S-L would prefer if TPAs/plans would take the mutually-more-efficient no-laser policies.

9.  TPA COMMENT:  Stop-Loss who by-pass TPAs by dealing directly with brokers create a lose-lose-lose scenario.  (a).  Brokers tend to churn and do frequent block transfers of business, because it helps their career & fees.  (b).   The broker isn't going to know the complete picture of detailed disclosure information the Stop-Los will want, and the broker has an incentive to not be as candid about disclosure.  "Adding insult to injury, sometimes the Stop-Loss will demand detailed data from the TPAs, but accept minimal data from brokers, and quote a better price to the broker for the seemingly-lower disclosed risk."  (c).  There is often a disconnect between the Stop-Loss suddenly working with an unknown TPA, or the TPA working with an unknown carrier, and all the variations of lack of a coordinated professional teamwork on the project.   It is lose-lose-lose.

STOP-LOSS COMMENT:   This multi-part comment warrants multiple answers.  First of all, TPAs & S-L agree that they would prefer to work together instead a via a broker.  However, brokers are a significant factor in the market, so it would be suicide to refuse to work with brokers, just as most TPAs work with brokers.  Meanwhile, too often, TPAs ask and get a quote, and nothing is ever heard again.  S-L say that brokers do not get off easier about providing data, and the S-L will only work with brokers who give the needed data.  If TPAs are concerned about problems arising from having the broker as middleman, the TPA should demand that a hold-harmless be signed by the client & broker to protect themselves from whatever fears they have.

10.  TPA COMMENT:  (In response to the Stop-Loss frustration of TPAs using too many Stop-Loss):

TPAs agree!  However, TPAs get forced, because many brokers want to see a long list of a dozen or more Stop-Loss to whom the case has been quoted.  Some TPAs also like to wow the client by showing 20 carriers to whom the case was quoted.  In the end, the actual quote is the same as when we offer from our small group of excellent Stop-Loss vendors, but a long list of Stop-Loss has become a competitive fad.  (As noted in #6,above, the "good" TPA may lose out, because another TPA will use the arbitrary quote that later needs to be renegotiated.  This leaves a bad taste with the client.)   If Stop-Loss could find a way to make the TPA who uses a small excellent group of Stop-Loss look good to the clients & broker, this would stop this fad which both of us dislike.

STOP-LOSS COMMENT:  A general concern and exemplified by this question is that TPAs need to be stronger about controlling the process.  In the case described, you are simply being used by the broker or other TPA  as a tool for their ego.  If you don't believe in it, have the guts to walk away, because if you're being used (abused) on this, you'll probably be used on other things later.   You also weaken your position with S-L sources.  If they feel they are just being used in ego games, they may drop you as a TPA.

11.  TPA COMMENT:  Stop-Loss vendors demand things such as weekly pre-certification & case management reports, and then require disclosure at renewal as if the group were new and unknown.

STOP-LOSS COMMENT:  We understand your point, but please, also understand our perspective.  You are sending out full consolidated recent data to non-incumbents for S-L quotes.  The incumbent S-L simply wants a level playing field working from the same data package, and, frankly, data on specific situations submitted during the year is probably not being seen or maintained in a record by the people drawing up the renewal quote.   The good news is that the incumbent S-L, working from the same data package and knowing the TPA & plan can often give a better quote.

12.  TPA COMMENT:   Getting Stop-Loss claims paid in a timely manner (2 weeks):  Some delays are understandable, but not getting their reimbursement is one of the visible very tender issues with clients.  Delays kill enthusiasm for self-funding.

STOP-LOSS COMMENT:  Don't lump good S-L with poor performers.  Get S-L sources who give you the service you want.  If it is not what you want, it is up to you to move!  Specific to the comment, the majority of delays are due to missing data, especially eligibility.  Meanwhile, electronic claims data may move quickly, but might not include some needed information, so don't assume that by pushing a few computer buttons you've sent everything needed.  TPAs need to be more proactive to reply quickly when S-L asks for follow-up data, and TPAs should confirm that the S-L has received everything they need.  Otherwise, "delay" is each side waiting on the other.

13.  TPA COMMENT: Specific Advancement and processing delay is causing problems with the medical providers & PPO contracts.

STOP-LOSS COMMENT:  Same comments as in #12, but also be sure to let the S-L know that it is a prompt-pay discount situation.  (Fred's note:  To ERISA & DOL, payment is the plan sponsor's responsibility.  They do not consider S-L advance pay or anything as an excuse.  So, to be blunt, your client is the one on the hook to pay in a timely manner to get the best deal for the use of plan assets.)

14.  TPA COMMENT:  In the Ô80's & Ô90's , our Stop-Loss used a pooled approach to underwriting the Specific.  Now it seems all coverages are experience-rated.

STOP-LOSS COMMENT:  The change is because you asked for lower rates (which healthy specific-rated cases get), so you're getting them.

15.  TPA COMMENT:   The Standard Disclosure Statement created several years ago was a great leap forward in connecting TPAs with Stop-Loss.  The problem today is that  Stop-Loss expects the TPA to research ALL cases involving the CPT codes on their form.  Not all TPAs have the resources to provide that information.

STOP-LOSS COMMENT:  This seems to be a fact of life for TPAs in our complex cost-competitive world.

TPA GENERAL SUMMARY COMMENT:  We (TPAs & Stop-Loss together) too often don't seem like we are presenting a coordinated professional team to clients.  This undercuts the market & popularity of self-funding, and thus undercuts the success and profitability of all of us.  We seem to be missing a marketing opportunity.

STOP-LOSS GENERAL SUMMARY COMMENT:  We agree 100%.  The good news is that, as you can see from this dialogue, most of the problems & frustrations can be solved by improving some operating customs.  The three biggest general suggestions we would have for TPAs are:

(a).  You need to stand up and take more control of the things that impact your firm.  Don't let yourself be jerked around by the egos and uninformed ideas of broker, clients, or whomever.  You are the professional.  Too often, we see you laying down and then unattainable situations ensue, which, as you say in your comment, hurts all of us.

(b).  We have both highlighted some simple-to-solve communications situations which become frustrations.  TPAs are usually more in the role of guiding a situation, so please maximize the candid communication & follow-up early rather than later.  If we are communicating partners, we are a winning team.

(c).  Please recognize that we live in an actuarial world.  We need data and direct cause-and-effect evidence that there will be savings for the insurer before the insurer can start talking about giving discounts.   That means that many things that may be popular or help patients or the plan years from now are good, but not relevant to S-L pricing.

The earlier list of Stop-Loss frustrations with TPAs is on the following page.....

Stop-Loss List Frustrations & Concerns with TPAs

Besides the goal of having Stop-Loss Service Partners hearing the speakers and developments & constant flow of laws & rules impacting TPAs and the market, there is the hope that the two sides can be constructively candid...even if candor hurts sometimes.  It makes the TPA/Stop-Loss team stronger in the overall marketplace, and avoids horror stories that trigger political demands for "reform".  We especially appreciate this list, because we know Stop-Loss feel very awkward making even constructive criticisms with their customers sitting beside them (just as TPAs would feel awkward speaking bluntly if their clients were sitting next to them).  Take this in the constructive spirit in which it is given.

At the SPBA Fall 2007 meeting, SPBA asked the split session workshop of  Stop-Loss marketing specialists to meet privately (no TPA customers present) and list the Top 10 frustrations or counter-productive things they see among TPAs(It's a compliment that they only came up with 6.)  Therefore, TPAs, please give these some serious thought.

1.  TPAs' willingness to work with "acquisition" (questionable reputation or no track record) Stop-Loss sources.  In some instances these sources have a history of delaying, reducing or denying excess reimbursements.  The end result is an unhappy plan sponsor and/or litigation which eats up the TPA's time.

2.  TPAs working with too many Stop-Loss vendors.  (They were not trying to dictate how many was "too many", but this issue popped up in more than one of the frustrations.)

3.  TPAs unwilling or unable to qualify prospect proposal requests.  They recognize that uncooperative prior insurers or TPAs are part of the problem, but the group was saying that files that are pended by the underwriter for additional information end up being declined about 75% of the time.

4.  TPAs not knowing who they work with (such as just following an underwriter individual).  Know the carrier, read the contract, know who is on the risk, etc.

5.  TPAs need to think about the cost/benefit of available options.  No-laser option, experimental procedures option, etc. are available, but it seems as if employers (via TPAs) don't wish to pay the load for them, but then wish they had, or assume they have them.

6.  Free E&O rider attached to the Stop-Loss policy??  This feeds a belief in the Stop-Loss community that TPAs are unwilling to be accountable for their mistakes.

Again, please take these not as insults or challenges.  This is candid constructive insight.  Do any of these apply to you?  What can you do to help the teamwork?

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