As one of the year's hottest topics, you have undoubtedly heard about the Consolidated Appropriations Act of 2021 (CAA). While we at Bolton believe it brings great opportunities for health plans to own their data and make better healthcare purchasing decisions, not all parties embrace the CAA’s intent.
With the healthcare landscape quickly changing, carrier "partners" are increasingly trying to become providers. Yes, the party we all work with to negotiate prices and network "discounts" on a health plan’s behalf is also the party with whom they are negotiating. Given this development, it is essential to examine your contracts from a fiduciary liability perspective. A company could potentially earn $50 PEPM on the administrative side with a 50% profit margin on the provider side, all without anyone checking their work.
A recent Becker's Healthcare article highlighted Blue Cross Blue Shield's (BCBS) efforts to become a health service organization that provides healthcare, not just a company that pays for it. In 2022 and 2023 BCBS plans have launched several healthcare delivery subsidiaries. For example: Premera Blue Cross has established primary care clinics for its members in Washington state; CIGNA operates a division known as Evernorth, presenting itself as an independent business unit focused on building employer health centers while sustaining itself through various revenue streams; BCBS North Carolina has purchased 55 FastMed urgent care clinics; and Horizon BCBS spun off its first for-profit venture in NovaWell, a behavioral health solution. Maybe these purchases make sense from a business perspective for the carriers and perhaps they are high-quality providers with valuable services, but under no circumstances should the carriers be permitted to negotiate both sides of the bargain for self-funded health plans.
These contract provisions are just a few examples that highlight what a glaring conflict it is to allow a TPA to play both sides of the deal. Consider, for instance, if FastMed Clinics sought 400% of the Centers for Medicare & Medicaid Services (CMS) rates or a substantially higher-than-market price—why would BCBS North Carolina decline when they stand to profit from elevated prices? It is important to remember that there are some good TPAs, PBMs, and carrier programs in the market, we just need boundaries. If you are a self-funded plan administrator doing business with an entity that can be both the payer and provider, check your contracts for these terms and others like it. Contact your Bolton representative or email us at solutions@boltonusa.com for more information.
