Catalyst for Payment Reform

Three Provisions to Give Your 2022 ASO Agreement Extra Spice

Three Provisions to Give Your 2022 ASO Agreement Extra Spice

It’s almost that time of year – a warm pumpkin spice latte (PSL) is the drink for many at the local coffee shop, beautiful fall foliage will soon appear, and lawn décor will signal Halloween’s approach.

But a nice PSL is far from the only thing on the mind of most benefits managers in September.  To those of you benefits managers reading this and your staff, fall represents the final sprint from benefits decisions to annual enrollment.  Hours go into implementation meetings and iterative drafts of member communications.  Benefits staff have become so good at communicating instructions for open enrollment that by the time it rolls around, employees only spend an average of 18 minutes enrolling in benefits.  On the flip side, I still hear benefits managers complain about complacency during annual enrollment as some employees either don’t make an election or spend inadequate time evaluating their options.

Wedged in the fall project plan somewhere between implementation and communication is another important activity for you benefits managers – reviewing your third-party administrator’s (TPA) updated administrative services only (ASO) agreement or amendment.  Do you – as a plan sponsor – dedicate more than 18 minutes to reviewing the agreement or amendment each year?  (Ok, that was a rhetorical question. Of course, you do!)  But seriously, this is your annual opportunity to make sure your TPA is working hard on your behalf for the next 12 months.

In June, CPR published a collective set of demands that purchasers should include in their ASO agreements.  When multiple purchasers ask for the same thing at the same time, it broadcasts a powerful signal to TPAs on purchaser priorities.  These collective demands on TPAs include the following priorities:

  • Combatting high prices and stimulating provider competition
  • Increasing transparency into provider cost and quality
  • Reforming provider payment and care delivery
  • Offering high-value benefit and network design options
  • Reducing health care disparities and improving care
  • Collaborating with purchaser clients and their other vendors and partners

Among these aspirational yet foundational expectations, the delivery is in the details.  Below, I share three provisions of note in CPR’s latest model contract language:

  • Require your TPA to report outpatient and inpatient paid rates relative to Medicare for the top five hospitals utilized by your plan members in your top markets. RAND Hospital Price Transparency Study results show a growing gap between commercial prices and Medicare.  Purchasers should consider monitoring the impact on their purchasing and consider strategies to direct plan participants to higher-value providers.
  • Encourage your TPA to launch and evaluate payment models in primary care that blend capitation and fee-for-service. The pandemic adversely affected the financial viability of providers that relied primarily on fee-for-service.  In addition, purchasers are concerned that the cost of some virtual visits are additive instead of in place of in-person visits.  Hybrid payment models have the potential to address concerns on both sides, but must be tried and evaluated.
  • Commit your TPA to obtaining demographic data from at least 80% of your plan participants for the purpose of measuring and reducing disparities in patient care and outcomes. Addressing these disparities begins with measuring the experience of plan participants broken down by key demographics.  TPAs should commit to tracking outcomes across the following demographic groups:
    • Race and ethnicity
    • Income
    • Disability status
    • Sexual orientation
    • Gender identity
    • Limited English Proficiency
    • Spoken language   

If the requirements listed above inspire you, I encourage you to download the rest of our model contract language.

You know what goes really well with your autumnal jolt of pumpkin-spiced caffeine?  The knowledge that your TPA will commit to improving the quality, cost and experience that your plan members deserve.  Let the negotiations begin!

Ryan Olmstead wrote this blog post.

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