# What a Third Party Administrator Does for Your Health Plan. Eugene Starks, a TPA industry veteran. Source: https://ethosbenefits.com/podcast/third-party-administrator-eugene-starks Type: Podcast episode Series: The Business of Benefits, Episode 53 Published: 2025-06-12 Duration: PT45M43S Hosts: Chelsea Ryckis, Founder and President, Ethos Benefits Guests: Eugene Starks, Third party administrator executive Video: https://www.youtube.com/watch?v=ZCbccJSi9PM Publisher: Ethos Benefits Cite as: "What a Third Party Administrator Does for Your Health Plan. Eugene Starks, a TPA industry veteran.," The Business of Benefits, Episode 53, Ethos Benefits, https://ethosbenefits.com/podcast/third-party-administrator-eugene-starks, 2025-06-12. **Summary:** A third party administrator pays a self-funded health plan's claims, manages eligibility and connects the PBM, stop-loss carrier and network. Chelsea Ryckis of Ethos Benefits and TPA partner Eugene Starks cover what a TPA does, the questions to ask before hiring one, and the fees and contract terms to watch. ## Key takeaways - Eugene Starks says a TPA's core function is paying claims timely and accurately, and that the provider, member, consultant and client all notice when it does not. - Starks says the TPA's eligibility data has to be the source of truth, which the TPA then sends to the PBM, the network, the repricer and other partners. - Chelsea Ryckis lists procurement questions for a TPA: claim turnaround, auto-adjudication, how it is paid, who owns it, conflicts of interest, cyber insurance, active litigation and whether it outsources claims processing. - Starks says transparency is the key with TPA fees, including charges such as a per-script fee for the PBM interface, and his TPA reports every fee in its fee disclosure. - Chelsea Ryckis says choosing the TPA with the lowest admin fee resulted in moving every time she did it early in her career. - Starks's one piece of advice for employers is to pick the right consultant, because his TPA succeeds most where the partnership starts with the right consultant. ## Chapters - 01:50 Meet Eugene Starks (https://www.youtube.com/watch?v=ZCbccJSi9PM&t=110s) - 02:18 From HMO contracting to TPA partner (https://www.youtube.com/watch?v=ZCbccJSi9PM&t=138s) - 04:40 The four core pieces of every health plan (https://www.youtube.com/watch?v=ZCbccJSi9PM&t=280s) - 06:02 A TPA's main job: paying claims timely and accurately (https://www.youtube.com/watch?v=ZCbccJSi9PM&t=362s) - 08:24 Eligibility and the TPA as the source of truth (https://www.youtube.com/watch?v=ZCbccJSi9PM&t=504s) - 10:17 Who quarterbacks the plan: the consultant or the TPA (https://www.youtube.com/watch?v=ZCbccJSi9PM&t=617s) - 15:34 Questions to ask when selecting a TPA (https://www.youtube.com/watch?v=ZCbccJSi9PM&t=934s) - 21:10 How TPAs are paid and what to look for in fees (https://www.youtube.com/watch?v=ZCbccJSi9PM&t=1270s) - 24:56 TPA red flags: outsourcing, scalability and ownership (https://www.youtube.com/watch?v=ZCbccJSi9PM&t=1496s) - 32:48 Clawback fees and rebates in TPA contracts (https://www.youtube.com/watch?v=ZCbccJSi9PM&t=1968s) - 35:45 Cost containment: navigation, reference based pricing and direct contracts (https://www.youtube.com/watch?v=ZCbccJSi9PM&t=2145s) - 42:52 Eugene Starks's advice for employers (https://www.youtube.com/watch?v=ZCbccJSi9PM&t=2572s) ## Quotes > if we're not paying the claim timely and accurately, everybody's upset Eugene Starks, third party administrator > the TPA's data has to be the source of truth Eugene Starks, third party administrator > if you're fixed on these admin fees, you're going to get what you pay for. Chelsea Ryckis, Ethos Benefits ## In this episode. Employers in a self-funded or level-funded plan depend on their third party administrator to pay every claim correctly and keep eligibility clean. In this episode of The Business of Benefits from Ethos Benefits, Chelsea Ryckis talks with Eugene Starks, a partner in a TPA since 2007, about what a TPA actually does, how it works with the PBM, stop-loss carrier and network, and what to ask before you hire one. - **The core job.** Paying claims timely and accurately and managing eligibility, the basics covered in our guide to the [third party administrator](https://ethosbenefits.com/benefits-101/third-party-administrator). - **Plan build.** Why the TPA builds the plan from a signed-off [summary plan description](https://ethosbenefits.com/benefits-101/summary-plan-description) before the first claim arrives. - **Choosing a TPA.** The procurement questions Chelsea Ryckis asks, and what [TPA procurement](https://ethosbenefits.com/services/tpa-procurement) covers. See also [how to vet benefits vendors](https://ethosbenefits.com/insights/how-to-vet-benefits-vendors). - **Cost containment.** Member navigation, direct contracts and [reference based pricing](https://ethosbenefits.com/benefits-101/reference-based-pricing) in a [self-funded health plan](https://ethosbenefits.com/benefits-101/self-funded-health-insurance). - **A plan in practice.** How [Hendry Marine Industries built its self-funded plan](https://ethosbenefits.com/results/hendry-marine) with Ethos Benefits. ## About the guest. Eugene Starks started on the provider side doing HMO contracting for a hospital, then joined an HMO in New Orleans, where he learned claims payment, plan build and stop-loss. He opened his own consulting company in 2000 and became a partner in a third party administrator in 2007. He says all of the partners in his TPA owned their own agencies first, so the TPA still has direct clients alongside its consultant relationships. ## Guests - **Eugene Starks**, Third party administrator executive. Eugene Starks moved from HMO contracting for a hospital to an HMO in New Orleans in the 1990s, where he learned claims payment, plan build and stop-loss. He opened his own consulting company in 2000, became a partner in a third party administrator in 2007, and lives in the Jackson, Mississippi area. ## Related guides - [Third party administrator](https://ethosbenefits.com/benefits-101/third-party-administrator) - [How does self-funded health insurance work?](https://ethosbenefits.com/benefits-101/self-funded-health-insurance) - [What is reference-based pricing?](https://ethosbenefits.com/benefits-101/reference-based-pricing) - [The summary plan description](https://ethosbenefits.com/benefits-101/summary-plan-description) - [How to vet benefits vendors](https://ethosbenefits.com/insights/how-to-vet-benefits-vendors) ## Frequently asked questions ### What does a third party administrator do for a health plan? A third party administrator processes and pays the plan's claims, which Eugene Starks calls its core function. He says the TPA also manages eligibility, builds the plan from the summary plan description, and works with the PBM, stop-loss carrier, network and any outside programs built into the plan. ### What questions should an employer ask when choosing a TPA? Employers should ask how quickly the TPA pays claims and at what volume, how much it auto-adjudicates, and how it is paid. Chelsea Ryckis adds how long it has been in business, who owns it, what conflicts of interest and active litigation it has, whether it carries cyber security insurance, and whether it outsources claims processing during busy times of year. ### How are TPAs paid? Eugene Starks says his TPA charges a per member per month fee for administration and a dollar per script on the PBM to cover the interface and file feeds. He says some TPAs used to take a commission on stop-loss they placed, and his TPA has moved everything to the fee. He says every fee should be transparent and shows up in the fee disclosure and the Form 5500. ### Should an employer pick the TPA with the lowest admin fee? No, according to Chelsea Ryckis, who says going with the lowest admin fee early in her career resulted in moving every single time. Eugene Starks gives an example where his fee was 2.3% of a client's plan cost, so a 15% cut would affect about 0.2% of plan cost. ### What is a clawback fee in a TPA contract? A clawback fee is a charge a TPA adds for recovering a claim it overpaid. Chelsea Ryckis says she has seen these built into contracts recently and asks why a TPA should be rewarded for finding its own mistake. Eugene Starks says his TPA has never charged for recovering an overpayment. ### Who should quarterback a self-funded health plan, the TPA or the consultant? Both share the job today, according to Eugene Starks. He says 20 years ago the TPA was the quarterback, but with more complex plans the consultant is now the coach calling the plays, and on complex plans he talks with the client and consultant almost every week. ### What cost containment strategies does a TPA see working? Eugene Starks says navigating members to the right place of care at the right time is the biggest cost saver and the biggest measure of member satisfaction. He names direct contracts and reference based pricing next, and says local high performance networks can work well for employers moving from fully insured to self-funded. ## Full transcript [00:01] Welcome, welcome to business. The Business of Benefits is your no-BS, no-sales guide to real solutions. No gimmicks, just the truth about how to take control, transform your benefits, and care for your most valuable asset: your people. If you're tired of the same old sales pitch and you're ready to rethink your benefits, this podcast is for you. The truth is out there. Are you ready to hear it? [00:01] Chelsea Ryckis: This is Chelsea Ryckis. Welcome to The Business of Benefits. Today we are talking all things third-party administrator. TPA is the acronym. I know we throw a lot of acronyms around in this business. There's another one, and it's actually, in my opinion, the most important part of your health plan. So you're going to hear in this episode from Eugene Starks. Eugene, you're going to hear in the episode, it's not his first rodeo. He's been doing this a long time and he comes with a ton of wisdom. I'd also like to point out that he is an avid CrossFitter and 10 times as fit as I am, which embarrasses me, but nonetheless, super cool guy. Check him out on LinkedIn. Listen to the episode. You're going to hear all sorts of things about TPAs, from what is the primary function, what else are they doing, how do they interact with other vendors, how do they manage all the pieces of a plan, where might you find hidden fees in their contracts, what's an acceptable fee range for a TPA. Oh man, we got into so much. And then he's going to leave us with his biggest piece of advice for employers. So employers, this is such a good episode because whether you're fully insured, level funded, on the road to self-funded, the TPA is the quarterback of your plan. So listen, like, share, subscribe, follow Eugene, and let me know what you think about this episode. [01:50] Chelsea Ryckis: Hi everybody, welcome to The Business of Benefits. I am your host Chelsea Ryckis, and I am so excited about our guest today. We have Mr. Eugene Starks. Eugene, how are you? [01:50] Eugene Starks: I'm doing great. And I've been around this business a long time, so everybody calls me mister, but always, you tell everybody I'm Eugene. [01:50] He's like, just please don't. [01:50] Chelsea Ryckis: Understood. So thank you so much for being here. We're really excited to have you because you are an expert in all things third party administrator. So before we dive into what the heck a third party administrator is in a health plan, why don't you just give us a bit of a background on who you are and what you've been doing in this business? [02:18] Eugene Starks: Well, go. Well, how long do we have for this recording? Right. I'll keep it short. But I'm blessed. I mean, I was working for a hospital back in the mid 90s and I was doing their HMO contracting, which some people don't even know what that is. And I got hired by the HMO in New Orleans, so I guess I was doing something right, but I got hired by an HMO in New Orleans, and that's really where I went from being on the provider side to being on the benefit side, and it was the best education I ever had. The company was Vantage Health Plan. My CEO was a lady named Jane Cooper. Now, she was tough as a Marine sergeant, but I learned so much through her, and really because of her and because of that opportunity, I really came to understand the inner workings of claims payment, plan build, stop-loss, all of those things that surround the operation of a self-funded plan. And so, yeah, I went from doing that. I came up to Jackson, Mississippi, where I live, this area now, in 99 to help a PO that wanted to start an HMO. And after I was there about 6 months, the board made the wise decision not to start an HMO, but that left me in the awkward position of being overpaid. So I've been around a while. I knew what that meant eventually. So a few months later, they said, "Hey, we kind of don't need you anymore." So I did a couple of consulting gigs, but then I opened my own consulting company because I just thought, I'm tired of other people telling me when I can work and when I can't work. So it started way back there with the experience I gained in New Orleans working for the HMO. And I built that. That was 2000 when I opened my own consulting company, 2025. So I've been doing self-funding, and actually became partner in a TPA in 2007, and so I've just been immersed in it for a long time, and it's a great area, challenging area, and great opportunities like we've never seen before. [04:40] Chelsea Ryckis: I couldn't agree more. This is definitely such a unique time to be in this business, and I'm sure your perspective, having seen it evolve and kind of coming to this moment of transparency and this demand for better that we're seeing with regards not only to employers and consultants but legislation and the country as a whole, right? Yeah, it's a very exciting time to be, especially on your side, because the TPA, for everybody listening, the third party administrator, is one of four main functions in a health plan. So every single health plan has the same four pieces at the very least. These are the fundamental kind of core principles of a health plan. This is the same if you're buying a product off the shelf from Blue Cross, Cigna, United, or if you're designing your own custom healthcare plan. So the same four pieces, really quick, what those are. We've got the TPA, which we're going to dive in really deep today into all that they're supposed to do, how they get paid, what can go wrong, what can go right. Eugene is our TPA expert because he, like he said, he's a partner in a TPA. So the TPA is one piece. The second piece is a PBM, a pharmacy benefit manager, which we actually will have Rachel Strauss, the PBM princess, on in a later episode diving into all things PBM. Next, we have stop-loss. That's the actual insurance that's protecting you from catastrophic claims. And then you have a network, and some plans have networks, some don't. But the really interesting thing about all of those pieces is that the TPA has to interact with every single one of them. So what is, Eugene, in your opinion, the main function of the third party administrator in a group health plan? [06:02] Eugene Starks: Well, I mean, really the core function, the fundamental thing we need to do, and if we don't do this everybody will know it immediately and everybody will be upset, that's basically to process a claim. So that means a claim comes in the door, these days it's electronic. I could tell you stories about when we would get reams and reams of mail, paper invoices or whatever, claims from hospitals and stuff. But the main thing we do is we pay a claim, and there's a lot of logic that goes into building how a claim is paid and all those connections. But at the core function, if we're not paying the claim timely and accurately, everybody's upset: the provider, the member, the consultant, the client. So at the core, that's really what we do. We have to pay the claims. [06:57] Chelsea Ryckis: So something that I want to add into this for additional context is, a lot of people don't understand that a claim is a request for dollars, right? So a claim, it's different than a condition. So a claim is for a certain amount of dollars that a health plan is paying for a covered service under some type of contract, usually. That is a claim. A condition is different, right? You can have cancer, you can have kidney disease, you can have a high-cost drug, but what you're paying for that condition, the claim varies greatly based on your health plan. So for example, a knee surgery under a fully insured BUA plan might be $30,000, but under your custom health care plan, it may be $6,000. So I think it's important for the employers listening to understand that in this country there is not a price per condition, a price per procedure. It's a price per payer. Which makes a TPA's job really interesting, because it's not just like they're looking at one master chargemaster that's like, "Oh, okay. Well, every knee surgery that comes through is going to be $36,000." Every single plan is different. So, to his point, the most fundamental part of a health plan is getting claims paid, getting them paid timely, and getting them paid according to the plan documents. [08:24] Right. Right. [08:24] Chelsea Ryckis: What else does a TPA handle? [08:24] Eugene Starks: Well, a TPA handles eligibility. All right. So, yeah, a TPA handles everything that has to do with the plan. It's really kind of the hub in the wheel. So there's a lot of spokes: the PBM, and the network of Sunberry iteration, the stop-loss, and in the designed plans that we administer, more complex, there's a lot of point solutions we're connecting with. But at the core, the TPA's data has to be the source of truth. So however we receive the eligibility file, once we have it, the eligibility comes to us and then we disperse the eligibility to our partners, to the PBM, to the network if needed, the reference based pricing repricer, whomever. So I'd say the next main function, and I said we have to pay those claims timely and accurately, but if we don't have accurate member data, member only coverage, is the family covered, dates of birth, I mean anything could be off, and if it's off, it's going to be inaccurate. Most likely if there's a discrepancy, it's going to pin. We've got, employer has Joe's date of birth as 1974, and we have it as 1976 or something like that. Something disconnected somewhere. So the other really core function we do is managing that eligibility. [10:17] Chelsea Ryckis: So, and I guess I'm assuming that most of the groups that you work with are working on file feeds and everything's electronic for the most part. Right. [10:17] Eugene Starks: Right. Right. Yeah. [10:17] Chelsea Ryckis: But there's still human error in entering those socials and dates of birth, nonetheless. Right. [10:17] Less than there probably used to be. [10:17] Chelsea Ryckis: So, some say, and I used to believe this when I first started doing self-funding, that TPAs were the quarterback. And whenever anything would go wrong, I would get pissed off at the TPA, full transparency. I've since learned that that's not really fair a lot of the time. Sometimes it is, I will tell you. However, I argue that it might be the consultant's job to quarterback a plan. And I'm curious, this is kind of a hot topic. What do you think? Is it your job? Is it my job? [10:44] Eugene Starks: Yeah, that's a great question, and I would really say it's our job. But it does speak to the change and complexities of the plans. So 20 years ago, I would say honestly the plan designs were pretty fundamental, and particularly we weren't integrating outside point solutions for different imaging, knee surgery. I mean, with any group now, it's not just go see a doctor and have the procedure done, or go to a facility and have the procedure done. We prescribe point solutions, particular solutions that when the member follows those, it maximizes their benefits. It's designed to maximize their outcomes, right, or selecting client providers. I would say 20 years ago, consultants weren't nearly as educated. Some were really smart on stop-loss. Some understood ERISA law and plan design. But I would say 20 years ago that was probably a more fair comment to say that the TPA was the quarterback. And maybe it is, and maybe the analogy is that we're the quarterback, but you're the coach and you're calling the plan design. You're calling the plays. So what I find is that the collaboration with the consultant is more paramount now than ever. I mean, on a basic plan, honestly, you'd load everything, process everything, send a check register every now and then to the client. You would talk to the consultant a couple times a year, certainly if somebody had a member issue or something like that, but outside of that, monitoring the plan was pretty easy. Today, I don't go probably a week on our more complex plans without having conversations with the client and the consultant. So it's much more of a shared responsibility. 20 years ago, you probably could have just blamed me. Now I might be blaming you, because we do have some consultants we work with that layer in too many solutions, and then they start to conflict with each other, and then I get in trouble, because in somebody's mind this was going to pay, and in my mind I'm sorting out, I'm applying logic and saying, well, these two conflict, I'm going to go with the main solution, of course. [13:41] Chelsea Ryckis: That's actually a very interesting point, because I feel like there's this continuum of where employers and consultants fall. So you still have, and I talked to a company yesterday, they've been fully insured with the same broker, same carrier for over 20 years. They've never changed their plan. They've never marketed their plan. Very, very old school. All the way to, I've recently talked to a smaller self-funded client that had so many point solutions that employees didn't know what the heck was going on. And you'll meet consultants, you'll meet employers along this continuum, but the most important thing is you can have all the innovation and point solutions in the world, but if it's not being properly administered, or more importantly well-received by employees, what's the point, right? How much of the communication of, let's say there's a direct contract for imaging, I know my answer to this, which is I handle everything, but I'm curious, in general, how much of the communication around these special programs do you think falls on the TPA? [14:38] Eugene Starks: Well, I think that's good. I think it's driven by what is the communication plan. So a company like yours that I'm familiar with, y'all, you as the consultant really own a lot of the communication. On some of our clients, we'll use maybe the precert medical management company, like an ICM, where they're doing kind of the care navigation, and we even start serving as a concierge role and the main point of contact for a member question, and then they help navigate the member to whether it's a surgical center or something like that. Sometimes on our smaller groups we just do that internally. So we have an internal concierge team. So it varies widely by the consultant and by the [15:34] Chelsea Ryckis: Yeah. And I think that's maybe a takeaway for employers listening, is really understanding, not just assuming, that either the consultant or the TPA or the people that you hire are doing all the things that you think that they're doing. A big part of fiduciary responsibility as a plan sponsor is not only proper selection of vendors, but it's the monitoring and the management of that vendor performance, right? So, well, let's talk first about vendor selection, right? And then I'd love to get your opinions on different ways that employers could maybe monitor whether a TPA is meeting their expectations and successful. But let's start at procurement, right? What are some questions that employers should be asking, or consultants, if they're the ones doing this RFP for employers, should be asking of TPAs? Do you pay your claims on time? [16:29] Yeah. [16:29] Chelsea Ryckis: Right. So what's an acceptable answer, in your opinion, to that, or a time frame? [16:29] Eugene Starks: Yeah. Well, I mean, what I would do is just give you a report that shows volume of claims processed, number of days. And I would say, over the years, we did everything manually, and I think we had like a 5-day turnaround on a clean claim. And then we moved to doing a lot of it automated, electronically, a lot of auto, and we got that up. We could kind of set that throttle at 70%, 80% on auto adjudication, depending on the kickers we had, what CPT codes, where we'll pause them to review manually. Now, with all of the complex point solutions, our auto adjudication rate has gone back down, because we're really taking a closer look and navigating people. [17:54] Chelsea Ryckis: Right, and you have to. And just for employers, if there's these point solutions that Eugene's talking about, what that might look like is a direct imaging contract, where if employees need an MRI and they go through a certain vendor that's built onto the plan, they get that imaging at no cost. They could be direct contracts for cancer treatment, surgery centers, centers of excellence. There's reference based pricing with facilities. Usually you don't see that on PCP or specialist visits, but you see it more on facility claims. And you might also just have direct contracts with facilities. The TPA has to manage all of that. They have to be able to say, this claim comes in, and let me go through the five to 10 programs that this company might have in place to figure out how much I pay. It's a big job. So how do you keep everybody organized, knowing that custom health plans are all very different? Right. It's not like you can just tell your employees, here's our playbook, right? [18:47] Eugene Starks: Yeah. There, when you seen one self-funded plan, you seen one self-funded plan. And so with us, we have teams that work with each client. So depending on the size of the client, we might have a team that's working exclusively or almost exclusively with a large client. Most of the time, I mean, we have some clients in the 1,500, 2,000 range, but our TPA client size reflects really the population we serve, and that is, I mean, most of this country is built on small business, right? So small business might be 50, might be 30, might be 300. So we always have a lead claims processor for every client, and then we have others that assist based on volume. So it's specific education, and when they go to work, if they're toggling between a couple of clients, they're continually reviewing what's the plan design say. [19:41] Chelsea Ryckis: Yeah, the SPD. [19:41] Eugene Starks: What's that say, what's the point solution. And we build a lot of that logic in, right? So it's built into the plan, so that everything's not a manual decision. But one of the most important things we do is the buildout on the front end, because if we don't... You're asking what are those core functions. I mean, we build the plans. We get the SPD, and that's an area where it's consultant sign-off, client sign-off: okay, this is the SPD, this is the SPD we're building, yes, this is the SPD we're building, okay. And so it's a lot of checks and balances just on the front end. And still, with that, to take an example of, say, imaging, if we're routing them to Green Imaging. [20:41] Are they a paying sponsor for this? [20:41] They are not, but I will reach out to them. Just kidding. [20:41] Eugene Starks: But we actually get a list invoice from them on the images. So it doesn't even come in as a UB or HCFA. We have to track it and report it to stop-loss. So there's certain services that don't even come in on a traditional billing format, because it's sort of an invoice. Disease management, it's an invoice, right? [21:10] Chelsea Ryckis: So, back to the procurement: asking how quickly do you pay claims, what's the volume of claims that you're processing, at what level are things being auto-adjudicated. Usually the way that we like to do things is a claim dollar amount, like anything over a certain threshold, we want it flagged. Another good question that I think is always relevant in the procurement process is, how are you paid? Right? What are some ways that your compensation aligns with the success of the employer, or maybe some ways that it doesn't? I'd love to hear from you, and you don't have to focus on Acuity, you could just focus on the industry in general. What are typical TPA fees, and then also, what are some things that employers should look out for that may be hidden in those contracts? [22:08] Eugene Starks: Well, I think the main thing you would want to look at, I would say, is what are the fees? How do they bill them each month? Like sample billing, because there are some things, like for instance on PBM, because we have a per member per month fee for administering, but on a PBM we have a dollar per script. Now, that helps pay for the interface and the file feeds and everything between the PBM, and the interaction with PBMs now, it's much more intense than it used to be. Just the fact, when you had to track everything to the accumulator, that changed everything, because that used to almost exist out there, sort of a separate benefit plan almost, but now everything has to accumulate to the same stop-loss, right? To the same accumulator on the plan. So it's really how transparent are they with their fees, because there may be some interactions where it costs me to access, or costs me to set up the file feed, that kind of stuff. So the key is really transparency in how the TPA... And I wouldn't call them out. In fact, honestly, I think a lot of them are out of business now, but I was familiar with a TPA that, I would see their fee and I'm like, okay, there's no way they're administering this plan for that fee. [23:05] Chelsea Ryckis: 100%. And that's actually a conversation that I've been having a lot recently with CFOs. So, pushing back on certain fixed costs, like an administrative fee, for example, like broker compensation. Okay, their current consultant on a fully insured plan is making $27 per employee per month. We're going to be going to a custom unbundled self-funded program where you're saving $500 to $600,000 guaranteed. Plan performs the worst possible, that's the minimum savings. Our fee is going to be 35, let's just say that's what it was, $35 per employee per month. And the CFO is fixated on that $27 to $35 difference, when it's really the variable cost. And I think a lot of times people don't... if you're fixed on these admin fees, you're going to get what you pay for. [24:00] Eugene Starks: Yes. 100%. And honestly, we're working through that with an outside consultant now that's wanting us to drop our fee on a group, and I might, because I want to work with this client, this consultant. But our cost is 2.3% of their plan cost. So you want me to reduce my fee by 15%. So you've impacted what? 0.2% of the plan cost. [24:27] You know, yeah, that's shortsighted. Why don't we work together to figure out where are the opportunities to save dollars? There is nothing wrong with, companies have to make money, consultants have to make money, PBMs need to make money, TPAs need to make money. It's about, is it aligned and is it fair for the services that are being rendered? [24:56] Chelsea Ryckis: And I think that TPAs, in my experience, it's been the most challenging piece of managing a health plan, because what tends to happen, and this is obviously not speaking about your TPA, otherwise I wouldn't have you on the show, and you've been around long enough that you've stood the test of time. However, a lot of TPAs out there, and here's another good question for procurement, is like, how long have you been in business? What conflicts of interest do you have with vendors that you're working with? Who actually owns you? Do you have cyber security insurance? What active litigation do you have? Are you outsourcing your claims processing during the busy times of year to a third party company that's not going to meet the deadlines that you've told me you will? Those are more questions. But things that I've seen happen to my own book of business when we first started, before we really knew how to vet appropriately, was things like: the TPA grows really fast. Everybody starts talking about this awesome TPA. Everybody's funneling their business to them. They don't have the scalability in their operations. And then they outsource to another claims processing company who then isn't meeting the standards. There's no quality control. And then, oh, 2 years later, we've got $100,000 worth of claims hitting our register and we're like, well, where did this come from? Oh, we hired this firm. Those are the worst TPA experiences that I've had. So we know how to appropriately vet for that, and we write into our contracts, like, if you're going to be doing that, then any liability that comes up is on you. It's not on us. What other things have you seen, not Acuity, but just in general, as big fails on the TPA side? [26:49] Eugene Starks: Well, I think you touched on some of them. I mean, a TPA, I mean, we've been doing this a long time. We've had seasons of great growth. We've had seasons where it's like, okay, no partners get paid, but everybody else gets paid, right? I mean, business is like a lung. It's going to expand and it's going to contract, right? So we've never outsourced anything. I mean, we have some outsourced vendors, like, shoot, what's the right word? All of our claims go electronically to, they're received somewhere, shipping, and so they aggregate all our claims. So that kind of stuff, but we're not outsourcing the core functions. We're not outsourcing the payment of claims, those kind of things. The questions about litigation, I will just say one thing that's changed immensely is, we went I bet 20 years and never had an E&O claim, never had a legal... Well, in the last 5 years, we probably had three cases that we had to get an attorney to help us with. It's become very litigious over things that before wouldn't have happened, or we're trying to do more complex claims. And look, I think one of the most important things for a consultant and a TPA is to vet the prospective client, because one of my favorite, another potential sponsor for you, TrueScripts, but one of the mantras we've adopted from TrueScripts is work with people you know, like and trust. People you know I can trust. And life is too short. The business is too challenging to do anything less than that. But I say that because a couple years ago we were really wooed in on a pretty large case, about 800 employees, and every TPA loves to get an 800 bank case. But we didn't have... no, you might want to see the financials of the TPA. Well, we didn't see the financials of the employer. So they're less than a year in. They're eight months, 10 months in, and they file for bankruptcy. Well, they're in now. I'm in it. Now I've got to get my attorneys to get my money. [29:06] Chelsea Ryckis: Now you're in it. Yeah. Well, and that's definitely like a self-funded feasibility study, right? Like, is this a good fit? Do you really... because also think about it, there's runout claims, right? It doesn't end when the plan ends. There's a lot more to it, and stop-loss has to be designed appropriately. So let's talk a little bit more about ways that TPAs are paid. So obviously, I think one of the big takeaways is don't be afraid of a higher admin fee on a TPA if they do a good job, especially if the turnaround time with claims is good, if they're not outsourcing things to unreliable parties, especially if they're handling data analytics and a lot of these integrations. They need to make money. And trust me, I've made the mistake early in my career of going with the lowest admin fee, and every single time it resulted in us moving. So just don't do it. So, but what about now that vetting process? You want to ask about how do you manage eligibility? How do you feed eligibility? [30:03] Eugene Starks: Junior feed that was, so like I said, for us, we're the source of truth. We inherited some cases where it was going from Navigator out to each vendor partner, but then there was the opportunity that we were not all working... the sheet music was not the same. So one of the... we gained a lot of credibility. One of our clients took on a whole new HR team, which is always exciting, right, in the middle of a plan year. Now they're getting to know their TPA that they weren't responsible for selecting. But one of the things that really helped them was them knowing we were the source of truth, and that we were pulling the feeds and we were sending them out to the clients. So I think that's important. I mean, the accuracy of the eligibility data across all the vendor partners is an imperative. So you want to look at your TPA and see how they manage that. [30:57] Chelsea Ryckis: Do you feel like there are a lot of hidden fees in TPA contracts that employers are unaware of? [31:26] Eugene Starks: I don't think so as much today. I mean, 10 years ago... So for us, we've been doing this a long time. If we get a consultant that really doesn't know as much about stop-loss and all that, we may do the stop-loss shopping. I mean, we've got access to 30 markets. Now, in reality, there's probably about eight we haven't played at any given time. So it wasn't unusual in the past for the TPA to have a commission on the stop-loss if they placed it. Again, that's fine. There needs to be a commensurate... I mean, we know where we need to be dollar-wise to administer a case of a certain size, and we're not going to give it away, because I can't lose money, right? I may have tighter margins on some groups than others, but overall I've got to make money. So we'll talk to the consultant about this size group, with these complexities, this is where we need to be. We don't do that, meaning the commission on stop-loss, so much anymore. We've just transferred everything to just the fee, because it just makes it so much easier. [32:48] Chelsea Ryckis: Well, I've seen things like clawback fees. [32:48] Eugene Starks: Oh, never. I... [32:48] Chelsea Ryckis: Right. Will you tell everybody what that is? [32:48] Eugene Starks: Yeah. So, yeah. I mean, clawbacks, if you're... clawback, and you might want to talk about claw... I've never done it. I've heard of it. [32:48] So I... but so basically you overpay, and then the TPA is going to overpay, and then they realize their mistake, and they go back and they recoup whatever it is that they overpaid, and then they charge a fee for clawing that money back, for the recovery. [33:17] Chelsea Ryckis: Yeah. And to me it's like, who made the mistake in the first place? Why are we rewarding you for finding your mistake? But there's a lot of things like that. [33:17] Eugene Starks: Yeah. Well, and look, we're not perfect. We've overpaid a claim, and I've been on the phone with the provider, and I've had to negotiate getting the fees back, or withholding a future payment on that client. But we never charge for that. We generally apologize for that when that happens. [33:45] Chelsea Ryckis: Yeah. And it happens. So it makes sense. But yeah, those are built into contracts. I've seen it recently. [33:45] Eugene Starks: Yeah. Golly, that blows my mind. Actually, that never even occurred to us. I would say TPAs used to keep a lot of rebates, and we've always passed through 100% of the rebates received. Now, what's 100% of rebates? Meaning, that's a whole different discussion about what PBMs are sending back. But ours has always been, every fee is a transparent fee, meaning even if it's a dollar on the PBM, we report that in the fee disclosure. So before they contract with us, they know what the fees are, and of course there's a 5500 at the end of the year that also reports this is what they all total to. So I guess I'm not that creative. I haven't thought of other ways to hide fees. Ours have been pretty straightforward. [35:10] Chelsea Ryckis: Well, I appreciate that about you. And reading some of these contracts, it's super interesting to see some of the percentage of savings arrangements for mistakes that were made. And it's not always just on medical claims, but nonetheless. Let's talk about... you obviously have an insider look into the performance of hundreds, if not thousands, of plans across the country. What are you seeing as the top cost containment solutions that are driving [35:45] Eugene Starks: At the core, it's navigating the member to the right place of care at the right time, and we see it in terms of certainly the claims cost, but then the quality and the outcomes. So I think that's, cumulatively, the biggest cost saver and the biggest measure of member satisfaction. Members, they're not that excited, or they're pretty much indifferent to what the plan is saving. They're very keenly attuned to what they're paying or what they're not paying. So I would say the next to that would be whether it's direct contracts or a reference based pricing model, huge cost driver, and I think you have to start there. [36:46] Chelsea Ryckis: I like that. I am a big fan as well of reference based pricing. And when you were talking about the right care at the right time, are you referring to a quality medical management solution? [36:46] Eugene Starks: Yeah. Yeah. So where we're seeing, I think again, the best member satisfaction, and the best savings to the member, and then we know that translates to savings for the plan, is when we can navigate them to the right provider for something as simple as durable medical equipment, or a procedure. So working with... and there's some highly skilled, very capable medical management care navigation companies out there that really make a huge difference. When we're looking for an opportunity with a consultant, a new consultant or a new client, we want to know who are their go-tos on PBM and medical management and that kind of thing. And we can build a connection and build a relationship with anybody, but we also know who's out there and doing a good job, and so we always have an opinion. Ultimately we defer to the consultant or the client, but we always have an opinion. [38:08] Chelsea Ryckis: Well, the great thing is, whether it's medical management or reference based pricing or these direct contracts that you're talking about, all of them are essentially reliant on members knowing that they have support and that they have these extra programs, which comes back to one of our original points of communication, right? Like, who's in charge of communicating to the member, and how do we interact with them and engage them prior to them deciding to go to the hospital for an MRI? How do we build that trust, so that they're texting us and letting us know that they need an MRI, and allowing us or the medical management team the opportunity to guide them through the healthcare delivery in the most affordable, quality way? So I find it interesting that so many employers and consultants are focused on finances, finances, finances. And it's like, again, the tactics, the strategic communication plan that's needed to actually make this work, right, at the best member level experience possible. That's a huge piece that I feel like you understand, I understand, but I don't know that a lot of people really give it the merit that it deserves. Right. [39:07] Eugene Starks: I agree with you, and I would say, if you're coming off a fully insured plan, I'm going to the networks. I find that the networks that save the most dollars, that can compete with RBP without the complexity and without the fees associated, are generally local high performance networks. All right. So you make a move from fully insured to self-funded. You may engage that strategy, and that works very well. In Louisiana, there's a great network, and the discounts are great, and the access is very high quality. It's not, you can see everybody. But the next move after that is some form of combination of reference based pricing and direct contracting. When you implement those two pieces, A, it takes a lot of employee education to understand how to navigate, particularly that reference based pricing piece. But when you implement those, you're going to move the client towards savings at a volume they don't even anticipate. They can't anticipate. Right. [40:34] Yes. 30 to 50%. Right. [40:34] Eugene Starks: So once you do that, in my opinion, that's a fundamental building block. Now the savings are there. Now everything else we're doing is building member experience and helping the members to realize the savings that we're getting. Because in our plan designs for our clients, which you, the consultants, help us with, there's always going to be, if you just want to go your own way, there's a song, like there's a song about that. You can go your own way. It's a little older. [41:01] I love that song. Okay. Fleetwood Mac. See, now there's why we're connected. This is why we're... Exactly. This is why we get along so well. Exactly. [41:01] Eugene Starks: But we also say, look, if you follow this guidance, if you start here with the care, you're going to have, A, a better experience, and B, you're going to realize less out-of-pocket cost to you. [41:29] Chelsea Ryckis: So, and that's the win-win, and that's when programs are designed really intentionally. You can have employees winning at the same time that employers are winning. And the traditional mindset, a lot of the employers listening are probably used to hearing: if you want to lower cost, we have to negatively impact member experience. We have to tell them you can't go somewhere. We have to increase out-of-pocket expenses. We have to narrow a network. We've got to take drugs off of our formulary. That's not the only way. There is actually a way where, if you make data-driven decisions, you can get access to significantly higher quality care at significantly lower prices. And it just challenges that paradigm that there's a correlation in healthcare between cost and quality. Higher cost does not mean higher quality, hardly ever, in healthcare. [42:25] That work. Yeah. And usually it's the opposite, because if you are getting some super specialized back surgery at a general hospital, it's going to cost them a lot more to do that than to go to an outpatient back surgery center that does that 10 times a day, all day, and the surgeons are super experienced. So that's how the cost quality equation actually works. [42:52] Chelsea Ryckis: But well, we are out of time. I want to ask you one more question, and that is: if you could give employers one piece of advice when it comes to either being on an unbundled self-funded plan or choosing a quality TPA, what would it be? [42:52] Eugene Starks: Look, I'm going to defer to: you need to pick the right consultant. I mean, it really is. And a little bit on our history, all of us who are partners in this TPA, we all owned our own agency before we owned a TPA, so we still have kind of a commercial side where we still have direct clients. I value when I can work with a brilliant consultant, because I think the employer wins, and I think the consultant and the TPA win. And quite frankly, I think all of our vendor partners that we work with win. So this is complex. We really need more smart people with the same vision, with the same values and same goals. And so our clients where I think we're succeeding the most are where the partnership for the TPA starts with the right consultants. [44:15] Chelsea Ryckis: I love that. It's having the right [44:15] And then picking the right quarterback, and then the rest of the players. [44:15] Chelsea Ryckis: For sure. Well, Eugene, where can our listeners find you if they want to get a hold of you? [44:15] Eugene Starks: Well, they can shoot me an email at... They can go to our website, which is, leave the W's off, but whatever it is .com. Yeah. And I'm sure you can put that in the show notes. I think I gave you my email address for the show notes. So that's a good place to start, and we would love to talk to you and love to meet, whether you're a client or a consultant. If you're a client, we want to know about the consultant you're working with. But we'd love to have this conversation with you. [44:43] Chelsea Ryckis: Absolutely. And I just realized we never really got to talk about how to properly assess the performance of certain vendors within health plans. So I'm going to have to have you back, and we're going to have a whole conversation about using a fiduciary framework to manage, monitor your vendor partners, assess KPIs, set KPIs, things like that. [45:12] So that would be a great conversation. It'd be fun. [45:12] Chelsea Ryckis: So thank you so much for being here. You are the best, and I hope you have a great rest of your day. [45:12] Thanks again.