Working in third party administration for nearly 25 years, Caroline Fraker of MedBen has seen some of the more dubious methods like “guaranteed discounts” associated with traditional health plans. She explains how self-funding offers actual savings versus perceived. As the vice president of compliance and chief privacy officer, Fraker shares how her TPA firm is able to save clients an average of 48.5% on each claim identified for review as a result of smart, individualized plan management and transparency. She includes an example of nearly $200,000 in savings on one claim through a dialysis cost containment solution. Read more about Fraker’s take on self-funding success in the article below.

For more information or to contact MedBen, visit or call (740) 522-8425.


Self-Funding: Actual Cost Savings vs. Perceived

Self-funded employers who use the services of an independent third party administrator (TPA) save more money per covered person on their health plans. How is this achieved? TPAs manage each client’s plan or plans the way the client wants them managed – not the same way someone else’s plan is managed.

Take so-called “guaranteed discounts” from large national health insurance carriers, for example. First, the carrier guarantees to deliver a discount on the employer’s total claims costs for an entire plan year. If the carrier fails to meet its promise, it agrees to pay the employer a penalty. So, how do you lose? An employer loses by not realizing that the carrier is actually charging the employer the cost of the penalty as part of its service fees. With an independent TPA, service fees are transparent and appropriate.

Self-funding saves money through smart, individualized plan management, not through marketing schemes. Independent TPAs apply a host of cost containment programs that pass savings directly on to the employer. The direct knowledge of what’s important to an employer allows a TPA to customize the management of benefits and claims accordingly and obtain savings that positively affect the employer’s bottom line.

Consider this:

A dialysis cost containment solution saved one MedBen client almost $200,000 alone.
The original dialysis charge came to $380,755 – not an unusual amount for such a procedure, and one that other health insurance carriers would often pay without a second thought. But MedBen seized the opportunity to reduce that amount. By negotiating the claim directly with the dialysis provider, MedBen brought the employer’s cost down to $181,180. Add these kind of savings up on all large claims and you can see the substantial benefit from using an independent TPA to manage your health plan.

For MedBen, these type of savings have averaged $10.94 per employee per month – savings which are in addition to those afforded by plan language, network discounts and pharmacy rebates. That’s 48.5% in savings on each claim identified for review.

What did one client say about the savings? “Bottom line, the program works as advertised. Our claims are lower, and we’re thankful for the savings.”