TPA Fees, Data Dumps & The Dark Knight

Why Reference-Based Pricing Means Paying More for Admin (and That’s a Trade You Want)

Over the last couple of weeks, I’ve had a few disjointed, or maybe only partially disjointed thoughts twittering about in my cranium. So, I’m going to do my best to weave them together somewhat cohesively in this post.

RBP TPA Costs

If you’re moving to a reference-base priced (RBP) health plan to stop burning money like incense in a Bikram yoga studio, kudos. Welcome to the Thunderdome. We’re honored to be fighting alongside you. You’ve now entered the wild, unbound lands of health plans without rails. But we need to set one expectation up front:

You’re not going to save on third-party administrative (TPA) fees with RBP.

You’ll pay more - at least you’d better. That isn’t a flaw; that’s the admission price for putting Thunderdome vets in charge of your claim process.

In the old PPO routine, a claim comes in, a “discount” is stamped onto a fake sticker price, everyone celebrates 50% percent savings off a number nobody would actually pay, and the plan writes a grotesquely bloated check. It’s a tribute to the entrenched godfathers of monopolistic hospitals, big insurance, and institutional brokerages.

With RBP, you’re bringing a gun to a knife fight. We pay rational, legally defensible amounts, and we back those numbers with work, actual work, carried out by a third-party administrator (TPA) that knows what it’s doing.

Sidebar: When I’m giving detailed counsel like this, industry folks often ask me, “Aren’t you worried about giving all your trade secrets away so publicly?”

I used to. But not anymore. You show me the top 10 institutional brokerage willing to do this level of work, and maybe I’d start to be more circumspect with my secret sauce. But the reality is, they don’t exist in any sort of volume, and as long as Wall Street and private equity keep gobbling them up like a fat boy with a tub of buttery popcorn, that won’t change. They’re too smitten by the seductive allure of big insurance bonuses, overrides and kickbacks to want to grind the way we do.

I’m reminded of what Bane told Batman in their first battle in The Dark Knight Rises. Bane beat Batman ruthlessly and said,

“Peace has cost you your strength; victory has defeated you.”

I think about this all the time as it relates to both consultants and TPAs. Years of easy button, bloated pricing with PPOs (or even worse for consultants with fully insured plans) have softened them into flaccid, pasty Brooks Brothers mannequins, hoisting frou-frou cocktails in the luxury box at their favorite health insurer’s local WNBA team. You need a benefit team with much sharper elbows, calloused hands, and a tinge of irreverence to rock RBP like a caped vigilante on the streets of Gotham or in the Thunderdome. Yeah, mixing hellscapes here, but I think healthcare in America deserves an analogy to two different hellscapes.

Back to TPA Pay (and Consultant) Pay

What does that look like on the ground for consultants and TPAs?

Let me paint a picture.

My TPA is on the phone with our repricer at 8:00 a.m. because a hospital “revised” a UB-04 overnight. At 9:45, they’re answering a revenue-cycle manager who insists on “full charges or collections.” Before lunch, they’re on hold with a national lab about a panel that got miscoded and bundled. After lunch, they’re closing the loop on an appeal with documentation a stop-loss auditor won’t rip apart six months from now. Somewhere in there, a front desk asks a member to sign a credit card authorization “just in case,” and the TPA talks them down and educates them, calmly, on how the plan actually works. That’s what we call Tuesday in the Thunderdome.

None of that exists at the same scale in a traditional PPO. RBP requires:

More human effort.

More judgment calls.

More accountability.

More grit.

So yes, good RBP administration costs more. If someone offers to “do RBP for the same PEPM as PPO,” consider that your warning label. Either they aren’t doing the work or they’re planning to outsource the pain to your people, your members, and your HR team when the facility pushes back. Cheap RBP is like a cheap parachute: available.

... you want to try it first?

We’ve been doing this long enough to separate the JV from the Varsity from the Elite Seals (how we affectionately refer to, ahem, ourselves at Mahoney California 😉).

We work with a handful of TPAs who can administer RBP. Only a few actually play at the level you need. The best have built muscle memory, repeatable workflows, trained staff, and documented playbooks. They call back hospitals the same day. They escalate when they should. They write appeal letters that read like they were meant to be read by an auditor because they were. The rest? Still running spring training drills for a playoff game.

“Fine, Craig, admin goes up. Where do I win?”

Claims. Specifically, hospital claims. We stop the discount off a unicorn nonsense and anchor payment to something rational. When large facility claims settle at predictable, defensible levels, it bleeds into stop-loss as well. Carriers see less volatility. Underwriters stop flinching. Renewals behave. Net effect: admin creeps up, claims come down dramatically, and the total plan spend drops 20 to 30 percent. You trade pennies in administration to stop hemorrhaging dollars in claims.

“What about the budget?”

Already baked into our projection. Our proposals assume RBP-level administrative effort, a realistic stop-loss posture, and a hospital savings profile based on what happens in the real world. So when we finalize vendors, there’s no budget shock. You’ll see a higher TPA PEPM than your old PPO; the total plan cost will still land significantly lower because the big-ticket items are finally being priced with real scrutiny.

Of course, you could chase a rock-bottom admin fee and call it victory. That’s the perfect play if your goal is to save a nickel and spend a dollar. Bargain TPAs show up in the ugliest places: noisy provider calls, nervous members, messy documentation that spooks carriers, and “just pay it,” settlements that quietly wipe out your savings.

With RBP, agree to pay more for administration because you want the right fights, fought the right way, at the right time, so your hospital spend comes back to earth and your stop-loss stops flaring. Pick a TPA that actually does the work. Expect more coordination, more documentation, and more professional judgment.

You need a competent partner and a realistic budget. We’ve lined up both, and we’re ready to get to work.

Postscript. Spoiler alert on a dozen-year-old movie.

After Batman was bludgeoned to within moments of death, he was banished to an underground prison and forced to watch his beloved Gotham City tear itself apart on a closed-circuit monitor.

He had to grind daily to rebuild, strengthen, and harden himself for the battle that lay ahead with Bane. And, of course, he did. He’s The Batman.

So if there are any of you Batmen or Batwomen out there toiling in the mundane, lazy, phony, back-slapping cesspool of insurance sycophants who are ready to stop implementing Big Insurance’s playbook, work their tails off, and fight against this healthcare nightmare we all face, drop me a note.

We’ve crafted a team of elite individuals with special talents, and we’re always looking for more.