RFP for Insurance Brokerage Services

[Guest bartelswilcox]

Nationwide Student transportation provider sent RFP to 4 insurance brokerage firms and is interested in responses from this forum.

We are a large employer of seasonal parttime drivers. Where required, we offer

health, dental, vision and life. Only about 1/3 of our drivers are enrolled.

We sent RFP to

Nieman Hanks. - Austin, Texas

Benefit Administrative Systems - Illinois

J. Wortham & Son, Houston, Texas

Marsh

Any information will be appreciated.

[Guest rmg]

Which Marsh office?

[GBurns]

Your post is titled "RFP for Insurance Brokerage Services" and you then list 4 firms, 1 of which seems to be a TPA.

What do you mean by "Insurance Brokerage Services"? Why would you need a Broker rather than an agent, insurer, TPA, PPO or product provider?

How large an employer are you? What state of domicile? What products? Fully insured of self-funded?

More info should get more responses and suggestions.

[Guest Benmark]

My company recently went through a search for an insurance broker. Although we are a 3,000 employee firm, we were using a small insurance broker when I was hired. The service was great and they were very knowledgeable about insurance, however, one thing that they were lacking--and I would assume most of the smaller agencies--is a good actuarial department. Basically, they relied on the insurance companies to determine rates that should be charged as well as a host of other things. Given that we are self-insured, the actuarial analysis we needed was critical. (Although I don't have that much experience in the fully insured environment, if you do have this type of mechanism, I would still think the actuarial analysis would be critical for your broker so that they could effectively negotiate on the underwriting analysis done by your insurance companies.)

I would advise you to do a very thourough review the proposed firms' actuarial capabilities. Do they do this service in-house? Do they use a third-party (if so, who)? Will they help you set budgets for the upcoming year? Will they monitor those budgets throughout the year? Will they help explain claim variances (if self-insured)? In that regard, you might want to look at including some of the larger benefit consulting firms in your pool--they would have both aspects (the consulting and the actuarial work) covered.

Another thing I'd advise is to get in touch with some of your peers at other similar firms. Find out who they use and how satisfied they are. I would also look at your competitors and do a Welfare Plan 5500 search on Free Erisa.com. Brokers are listed on the 5500's. Find out who those firms are using. You may want to include those in your pool.

Good Luck!

[GBurns]

Very few 5500s list the broker.

If you are self funded, the actuarial services should be provided by the Claims Admnistrator not the insurance broker. If you are fully insured you should use a n actuarial service.

There is much more to the insurance rates than that which is covered by actuarial techniques or underwriting analysis. In a self insured environment it is even of less value. Reimbursement schedules, provider contracts, provider placement, provider access fees, formulary, PBM fees, schedules and contract terms, claims adjudication, error checking of claims etc etc make up the vast majority of the expenses in a self insured plan, none of these items are subject to actuarial analysis.

For health insurance very few states allow brokers, so you probably are referring to an insurance agent rather than to a broker. These are 2 very different services.

[oriecat]

Very few 5500s list the broker.

Isn't it required to be listed on the Schedule A, if commissions were paid, and what brokers don't charge commission?

[GBurns]

Yes, but just go to www.freeerisa.com and look up any number of companies, large or small and you will see that there are very very few that name the Broker although a number will list some of the commissions.

[Larry M]

GBurns wrote:

"There is much more to the insurance rates than that which is covered by actuarial techniques or underwriting analysis. In a self insured environment it is even of less value. Reimbursement schedules, provider contracts, provider placement, provider access fees, formulary, PBM fees, schedules and contract terms, claims adjudication, error checking of claims etc etc make up the vast majority of the expenses in a self insured plan, none of these items are subject to actuarial analysis."

I take exception to your comment. Those are actuarial considerations and are provided by actuarial firms - large and small.

[GBurns]

Why would such things as the reviewing and analyzing provider contracts or reimbursement schedules etc require an actuary? The fact that any actuarial firm might provide these services does not make it an actuarial function.

[Larry M]

I guess I am just an old-fashioned actuary who believes it is necessary to know what is happening (e.g., the level of provider reimbursement, the basis upon which referrals are made, the ability of the tpa to pay claims properly, the charges made by these providers of services, the claims controls, etc.) in order to be able to help the client develop and maintain a plan and project future claims and future costs of administration.

As such, I do get involved in these "non-actuarial" areas, including negotiating the contracts and analyzing the claims administration.

I agree an actuary is not the only person who has the experience and training to review and evaluate these items - there are lots of people who have training and experience in some of these areas and a few people who have training and experience in many of the areas.

I also recognize an actuary can not and should not be doing everything and it may be less expensive to allow others to perform certain functions. A good actuary is very much a key part of the management of any medical plan - whether insured or self-funded. (S)he must be involved in all aspects.

[Guest THE_CEO]

So what is going on with this RFP?

CEO

[Guest Young]

Based on your broker selection I would encourage you to consider one other brokerage firm located in Houston, TX. I have worked on both sides of the house as a Benefits Director for several very large employers and my last few years have been spent on the brokerage side of the business. The firm I am suggesting is Madison Benefits Group. They do an outstanding job of marketing as well as customer service like you would imagine customer service shoud be. If you are interested in learning more, please send me an e-mail.

Good luck as marketing benefit programs always poses its own special challenges.

[Guest skier1]

What is your experience in negotiating incentives with the TPA vendors in a self-funded plan as a cost containment device? It seems that it is necessary as plan fidciary to set up some incentives for TPAs using/promoting all diseasement mangement/wellness programs that are effective and efficient but at the same time, any incentive that appears to motivate a denial of claims sets up an inherent conflict of interest. How do you do negotiate something that works and yet preserves an abuse of discretion standard of review?

[GBurns]

Why do you think that any incentive beyond the TPA fees and/or the fees charged by any supplemental provider, is necessary or is even customary?

If the item or strategy is provided by another supplier, Why would you want to or even be considering paying the TPA an incentive for something that they are not providing?

A TPA very often uses these additional "freebies" as the reason for choosing them over another TPA who either does not offer such cost containment strategies, or charges extra. The securing of services are part of your negotiating NOT something you pay extra for.

Bear in mind that these are services that a TPA most likely cannot provide. Usually items such as disease management are not supplied by most TPAs but are supplied by those with the necessary expertise, license and staff.