TPAs and Health Reimbursement Arrangements

[Guest AHayhow]

I am trying to determine the benefit of having a TPA (separate from the insurance company) adminster the HRA. It seems that with most of the carriers offering an HRA + HDHP option as a package, it wouldn't be necessary to have a separate TPA administer the plan (for fully insured HDHPs).

Does anyone have any feedback on this? Thanks!

[Ron Snyder]

If you can find a local TPA whose charges are comparable to the insurance company, you will likely be happier with the local service. Insurance companies are not nearly so qualified or attentive to administrative functions as TPA firms are.

[Guest AHayhow]

Unfortunately, the way many of the carriers/insurers are handling it is by packaging a HDHP with the HRA and charging only the premium (which they are pricing to include the HRA administration). We are trying to determine if we should offer HRA administration or leave it to the insurance carriers. While I am confident that we could do an exceptional job administratively, I am trying to find some concrete (quanitifiable) reasons to communicate with prospects why opting for an outside administrator is better than having the carrier do this. Any feedback from TPAs offering HRA administration would be greatly appreciated. Thanks

[Ron Snyder]

If the employer also offers a flex plan, the HRA claims should be administered by the same administrator that pays the 125 claims. This will avoid duplicate claims payments or reimbursements, as well as unnecessary duplicate claims processing.

The potential advantage of having an insurance company administer the HRA is if they permitted their network or contractual discounts to be applied to the amounts below the deductible under the HDHP. Their HDHP card could easily double as a debit card for accessing the HRA. However, I have yet to see a health insurance company employing this methodology.

[Don Levit]

Vebaguru:

Are you saying that the insurers who provide the coverage above the deductible are not typically applying the network negotiated prices below the deductible?

This would seem foolish, if the network prices are below what the HRA ends up paying?

Don Levit

[Ron Snyder]

I am saying that some insurance companies do not use the network contractual or UCR rates for payment of HRA claims. They simply pay or reimburse the retail amount billed by the provider.

This may be a breach of their fiduciary duty under the plan. When they find this out, many insureds find they have a bad case of the Blues.

I did not mean to imply that they don't use the network pricing for purposes of calculating eligible charges for purposes of the deductible.

[jeanine]

We're an insurance company and a TPA (2 separate affiliated companies). The TPA administers the HRA through a separate Administrative Services Only agreement because the HRA is a separate, self-funded health plan. We couple the HDHP with the HRA for several reasons. The claims are submitted directly to the HDHP first where network discounts are applied. This also allows us to accurately track the deductible for the HDHP since (sometimes) the HRA will pay for expenses that are not covered under the HDHP. In addition, in order to make the providers happy, we allow the enrollee to assign the benefits under the HRA to the provider so that the provider is paid quickly.

[Don Levit]

The HRA is a separate self-funded account, yet, I believe, it is considered an ERISA plan. In that situation, there would be fiduciary responsibility to the participants for providing low cost reimbursements.

However, the HSA is typically not considered an ERISA plan, although it is coupled with a qualified HDHP.

In that situation, I would assume there is no fiduciary liability, for, technically, the employee has complete control over the funds.

This may be a stretch, but I believe if the insured pays cash to the provider, the amount paid should go toward the deductible, whether it is below or above the actual negotiated price.

Any thoughts?

Don Levit

[jeanine]

Most enrollees do not want to pay cash then wait to be reimbursed by the HRA or HSA account. I can see your point of applying the non-negotiated amount to the deductible but we are checking to make sure that it is actually for something that would count against the deductible. Additionally, many of these accounts are only funded for a small amount of money. Why wouldn't the enrollee want to save as much of the account money as possible by having it debited by a negotiated amount rather than a higher amount?

[Don Levit]

Jeanine:

I was assuming the medical expense was a covered expense. There are times, of course, when whether it is covered or not can be questionable. I was also assuming there was enough money in the account to pay for the expense.

More importantly, the legal question is Does the insured have the right to negotiate for an automatic withdrawal from his HSA, regardless of what the insurance contract may state, or what is the traditional way of handling claims below the deductible?

My position is that the HSA is a very different trust account, which, legally, provides the insured the freedom of paying cash from the HSA at the time of service, if he chooses do so.

Certainly, the administrative costs are lower, without having the claim administered. I understand this would be "invading your space," but I still wonder what might be the "official" legal position.

Don Levit

[Guest rubindj]

Another issue to think about with HRA based PPO plan. (This coming from a HR person at a large medical practice).

Probably well over half of our physicians would completely pull out of a network if we started submitting claims and there was no money there on a regular basis. In that situation, we would rather negotiate directly with the patient (where we would have greater leverage). Getting a bill paid 30-40 days after providing a service from a consumer can be a problem, and most physicians are not truley set-up to handle large amounts of consumer credit. Most ouptatient focused physicians would start to require payment up front of visits.