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.
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!