In the classic TPA arrangement, the TPA does not assume fiduciary duties, instead relying on the plan administrator for guidance on claims and appeals that require discretion. Many TPAs are still living in the past – an era where Plan Sponsors embraced fiduciary duties – but now, plans and their brokers exist in a new paradigm, in which a TPA not offering a fiduciary option stands at a substantial disadvantage. As such, business opportunities are lost.
With this in mind, The Phia Group has developed PACE. With a PACE, plan sponsors and TPAs assign the riskiest fiduciary duty (that is, the power to make payment decisions in response to final appeals), to The Phia Group. This authority carries with it the most risk, because it is this final payment directive that will be scrutinized upon external review.
Self-funding veterans and novices alike will benefit from PACE. Groups that are moving from fully-insured or ASO arrangements can use PACE as a valuable tool to aid in the transition; these groups have never before had to be the fiduciary of their plans – and with the PACE, that daunting responsibility can be delegated to a neutral and capable third party.
The PACE not only enables the TPA to obtain new business not previously available to it, but also encourages client “stickiness” and also creates a new profit center for the TPA in the form of an administrative fee paid directly by The Phia Group to the TPA, in exchange for the TPA’s facilitation of the PACE service. In other words, PACE adds unprecedented value to the TPA from both a business and a revenue perspective.
In addition to having a third party expert analyze all appealed claims before they reach an external review, the PACE also ensures that legally mandated independent review organizations (IROs) are in place, and the PACE handles facilitation of external appeals with these IROs. Regardless of whether the PACE upholds or reverses a denial, the PACE’s service continues to apply. From handling external appeals of denied claims to negotiating amounts payable for claims deemed to be covered by the benefit plan, the PACE works to ensure the correct and optimal outcome every time. This includes coordinating efforts with stop-loss, plan sponsors, brokers, and TPAs whenever these partners do not align.
As we know, any entity exercising control over a benefit plan or its assets may be deemed to be a fiduciary; third party administrators, brokers, and any other entity making decisions on behalf of these benefit plans may be dealing with liability for which it simply isn’t prepared. PACE is a way for the employer to be able to focus less on the complexities of its health plan, fiduciary duties, and stop-loss concerns, and more on what matters – its business.
PACE is also a way for the TPA to rest easy knowing that it is not unwittingly assuming fiduciary duties on final appeals.
For years, self-funded plan sponsors and TPAs have asked how they can avoid the risks inherent in self-funding, while still enjoying the benefits of that plan structure. According to our CEO, Adam Russo, “With a PACE in place, we’re taking a giant step in the right direction. It’s a game changer.”