For prepay claims review, this can range anywhere from 20% of savings to 40% of savings. Most vendors charge 25% of savings, since most stop loss carriers cap the fees they will reimburse at 25% of savings. Postpay fees are generally 10% to 20% higher, so 35% to 45% of savings. Post pay is harder and many identified dollars are not recovered.
For prepay claims review, this can range anywhere from 20% of savings to 40% of savings. Most vendors charge 25% of savings, since most stop loss carriers cap the fees they will reimburse at 25% of savings. Postpay fees are generally 10% to 20% higher, so 35% to 45% of savings. Post pay is harder and many identified dollars are not recovered.
You opened the article by stating "the big three ASO (Administrative Services Only) carriers—Cigna, Aetna, and Anthem— directly charge employers around $225 per enrollee per year" (which works out to only ~$19 PEPM). Was that a typo, did you mean $225 PEPM, not year? Asking because in the rest of the article you refer to various PEPM fees that add up to much more than $19 PEPM
1) They are mainly serving larger groups - where they can realize economies of scale and admin costs on a PEPM level go down. The rates I quoted are prevalent rates for programs covering smaller groups (5-500 employees)
2) The PEPM fees reported by them only include direct fees, the carriers make most of their revenue through indirect fees, though, such as PBM fees or fees that are charged as a claim.
For prepay claims review, this can range anywhere from 20% of savings to 40% of savings. Most vendors charge 25% of savings, since most stop loss carriers cap the fees they will reimburse at 25% of savings. Postpay fees are generally 10% to 20% higher, so 35% to 45% of savings. Post pay is harder and many identified dollars are not recovered.
Curious what the typical % of savings charged by claims audit/review in your "indirect cost" section?
For prepay claims review, this can range anywhere from 20% of savings to 40% of savings. Most vendors charge 25% of savings, since most stop loss carriers cap the fees they will reimburse at 25% of savings. Postpay fees are generally 10% to 20% higher, so 35% to 45% of savings. Post pay is harder and many identified dollars are not recovered.
This was a tour de force and incredibly valuable breakdown for anyone building in the space. Hat tip.
You opened the article by stating "the big three ASO (Administrative Services Only) carriers—Cigna, Aetna, and Anthem— directly charge employers around $225 per enrollee per year" (which works out to only ~$19 PEPM). Was that a typo, did you mean $225 PEPM, not year? Asking because in the rest of the article you refer to various PEPM fees that add up to much more than $19 PEPM
Hi Anoop - great catch! A few notes:
1) They are mainly serving larger groups - where they can realize economies of scale and admin costs on a PEPM level go down. The rates I quoted are prevalent rates for programs covering smaller groups (5-500 employees)
2) The PEPM fees reported by them only include direct fees, the carriers make most of their revenue through indirect fees, though, such as PBM fees or fees that are charged as a claim.
TPA & PBM are two highly unregulated entities, contributing to higher healthcare plan costs!
you likely mean ASO providers not independent TPAs