Dear Secretary of Labor Martin Walsh:
On behalf of millions of members, supporters and activists across America, the undersigned organizations collectively write regarding an urgent healthcare-related issue. Specifically, we urge the Department of Labor (DOL) to require transparency and disclosure to employers with respect to so-called “shared savings fees” under employer-sponsored health plans to better ascertain their propriety and impact upon millions of Americans.
As you know, the so-called “No Surprises Act” that took effect on January 1 of this year ostensibly aimed to protect Americans from surprise medical bills. Unfortunately for Americans whom it claimed to benefit, however, the Biden Administration has to date ignored the intent of the law and implemented it in a way that fails to protect patients from continued unnecessary insurance costs. Despite creating a new framework for determining out-of-network reimbursement, some insurance companies appear to continue exploiting unnecessary and little-known “shared savings fees” that drive up costs for employers and their employees.
We urge you to require transparency and disclosure to employers with respect to these fees that ongoing practice so that patients and plan sponsors can realize the same form of savings from the No Surprises Act.
What Are Shared Savings Fees?
“Shared savings fees,” which are sometimes known by different names depending upon the health insurance companies administering them, relate to out-of-network medical claims, and they contribute to the ever-increasing costs for essential healthcare. They amount to out-of-network cost-management fees and are sold to health insurance plan sponsors (usually employers) as protection from surprise bills (also known as “balance bills”) charged to employees.
Accordingly, “shared savings fees” purport to offer a way for employers to save money by lowering out-of network health insurance costs. However, in reality these programs often impose hidden fees that instead drive-up premiums, with questionable benefit to plan sponsors and employees. In some cases, shared savings fees exceed total administrative fees for many plan sponsors, and some may not even be aware of the total amount they’re paying in these fees. That’s partly a function of a significant lack of transparency since insurance companies do not routinely report their revenues from shared savings programs. Unfortunately, the No Surprises Act does not directly address those fees, and we believe that insurers should more responsibly disclose the fees that plan sponsors are charged every year in an effort to help reduce healthcare prices for millions of American families.
With the implementation of the No Surprises Act, those shared savings fees should be unnecessary. Accordingly, an opportunity now exists to bring transparency and lower or eliminate these fees and bring down the ballooning cost of healthcare.
Join Us in Advocating for Fiscal Responsibility and Cost Transparency
Greater fiscal responsibility in our healthcare system can lower costs for all patients. If shared savings fees persist under the guise of “administrative fees,” however, they will continue creating a perverse incentive for insurers to narrow their networks. In turn, healthcare costs will continue to rise, and patients will have fewer choices for in-network doctors.
We therefore strongly urge DOL to require transparency and disclosure to employers with respect to these shared savings fees under employer-sponsored health plans, and determine their effect and propriety going forward.
Southwest Public Policy Institute
Center for a Free Economy
Consumer Action for a Strong Economy (CASE)
Institute for Regulatory Analysis and Engagement
Center for Innovation and Free Enterprise (CIFE)
Center for Individual Freedom
Domestic Policy Caucus
Krisztina Pusok, Ph.D
Director of Policy and Research
American Consumer Institute Center for Citizen Research
Taxpayers Protection Alliance