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Medical RFP
Benefits & Compensation
Medical RFP
Exchange ideas about health plans, retirement, work/life benefits, and employee assistance.
I am preparing to present my recommendation that our Fund should (after 16 stagnant years with a combined fully & self insured set-up) actually go out to bid and and some competition to the mix -
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Forums » Topic Forums » Benefits & Compensation » Medical RFP
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Medical RFP
posted at 12/30/2009 4:15 PM EST
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Posts: 4
First: 12/30/2009 Last: 11/23/2010 |
I am preparing to present my recommendation that our Fund should (after 16 stagnant years with a combined fully & self insured set-up) actually go out to bid and and some competition to the mix - oh and hopefully move to self funded given we have 11.000 members. I'm struggling to gather information on how often employers take vendors out to bid and the average cost. My quote was $90k for 4 carriers. Any help? |
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Medical RFP
posted at 12/31/2009 6:18 AM EST
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Posts: 1047
First: 4/11/2002 Last: 9/14/2011 |
I'm not sure what you mean $90K for 4 carriers?
I think most employers go out to bid at a minimum of every 3 years. Although I see employers go out annually or every other year, I don't see a whole lot of value in doing this unless service is a huge issue or networks have dramatically changed. Feel free to shoot me an email if you need a hand: matthew.roberts@heliosconsultinggroupllc.com. |
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Medical RFP
posted at 12/31/2009 6:45 AM EST
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Posts: 4
First: 12/30/2009 Last: 11/23/2010 |
Thanks. Consulting has quoted a fee of $90,000 for the RFP process - this quote covers them looking at 4 medical carriers. Apparently the price fluctuates based on how many carriers they analyze, which does make sense. My board will be asking if the $90 is a fair market price...I honestly don't know. |
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Medical RFP
posted at 12/31/2009 9:28 AM EST
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
Our one broker goes to at least 4 carriers for our census each year. Of course we are a lot smaller and not self-funded. And it doesn't cost us a penny. We review/RFP brokers about every 3 years...but this last one has been so good that I doubt I will look to change anytime soon!
$90000 sounds a bit excessive. Usually brokers get their fees back from the insurance companies. It sounds like you are using a consulting firm though...rather than a insurance brokerage firm. I know there are some rules that consultants can't take fees directly from the insurance companies like brokers do unless they are actual insurance brokers. I remember a large HR consulting firm getting caught up in a lawsuit with a government client about this....a school district or something....the fees paid were considered kickbacks rather than brokerage fees....since they weren't a licensed broker. Personally I would look into a large brokerage firm or two. |
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Medical RFP
posted at 1/1/2010 7:07 AM EST
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Posts: 1047
First: 4/11/2002 Last: 9/14/2011 |
Does the $90K cover ongoing service by the consultant? If it's just for reviewing 4 carriers/administrators, it seems high. Most of what's going to be presented by the consultant is "canned" in the sense that virtually every other large employer is going to be looking for similar analyses.
I would say there is only nominal work to do when it comes to reviewing 4 administrators/carriers. Here's what I can think of off the top of my head: - Network analysis - number of providers by city/region, disruption, missing provider groups, etc. - Network discounts - top 20 CPT codes by citye for the most populous areas. - High-performance networks - depending on if the data is available, quality vs cost analysis. This can be used to steer utilization. - Administrative fees - self-explanatory. - Resources - in addition to obvious costs (administrative fees + claims), what else can the administrator do to lower overall claims? For the most part, discounts are probably going to be similar for each of the administrators. As I say, claims are claims. What is the administrator/carrier doing to lower claims further and/or prevent them from occurring? The above outline is pretty rudimentary, but gives you a general idea of what's being done. To charge a client $90K for that seems like a little overkill, unless you are wanting "non-standard" services. I'm assuming your plan costs are right around $10M, so I realize that $90K is less than 1% of total plan cost, however, there's no real reason to waste money. I'm assuming you have a separate PBM? Not that the same carrier/administrator couldn't handle everything, but there's probably a fair chance that you want to separate the Rx from the medical. |
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Medical RFP
posted at 3/2/2010 8:11 AM EST
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Posts: 18
First: 12/22/2000 Last: 3/2/2010 |
Paying a fee to have a consultant produce an RFp is rediculous. In my opinion, its one of the biggest scams out. You have no idea if the consulting firm will even produce the results you're looking for.. ie.. are they good negotiators? did they overturn every rock?
You best bet is to got to several brokers and have them compete against each other. The broker will make commissions and fees from the insurance carriers. |
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Medical RFP
posted at 3/3/2010 4:31 AM EST
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Posts: 1047
First: 4/11/2002 Last: 9/14/2011 |
You're way off base here. The worst thing a company can do is have multiple brokers trip over themselves in the marketplace. Consider the following:
* Assuming the same information is given to the providers, all brokers will come back with identical rates. BCBS wouldn't be able to give one broker a different set of rates vs. another. * Because of the above, the best and most competent broker will have its hands tied. While different plans and strategies can be brought to the table, it's nearly impossible for a client to make the right decision when several brokers are trying to do this and muddying up the waters. * This does the exact opposite of what it seems - the client doesn't get the best possible pricing due to the inability of one broker/consultant to solely negotiate on behalf of the client. * Most reputable brokers/consultants won't go down this road. While they will be open to a broker RFP in which the client will select the broker on abilities and capabilities, they know the inferior brokers would be the ones most benefits by this mess. My industry does a terrible job educating decision makers as the best way to manage an employee benefits program. And this definitely is not the right road to go down. |
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