By Melina Kambitsi, Ph.D., Vice President of Business Development and Member Services
Can you spot a “bad apple“?
As a cooperative of employers and insurance trusts that self-fund their health benefits, The Alliance is pleased to work with many forward-thinking, ethical brokers for health benefits.
But every now and then, we realize someone is acting like a “bad apple.” It usually occurs when we hear from companies whose broker has steered them to a particular product or network for reasons that seem to be based on what’s best for the broker instead of what’s best for the employer.
So how do you tell the difference?
One way to identify “bad apple” broker behavior is to ask three vital questions about where the broker’s money comes from and how the broker makes decisions. It’s worth noting that similar questions are on the list recommended by Health Rosetta, which has some great ideas about what to ask your broker.
Question One Follows the Money
Your first question should always be focused on where the broker’s money comes from.
Unfortunately, some payment arrangements are structured to let brokers say they don’t receive a commission for guiding a client’s business to a particular vendor.
In this scenario, a broker might get a bonus for retaining a specific percentage of customers, or for guiding a minimum percentage of their business to a specific network or insurance carrier. Since it’s not labeled a “commission,” they may feel justified in saying “No” when they are asked if they receive a commission.
That’s why it’s important to broaden your question. A good way to state it might be, “Do you receive any money from insurance carriers or from vendors who provide services to self-funded employers? Please include any commissions, bonuses or other types of rewards.”
This question will help you learn about the financial incentives that influence your broker. While some brokers who serve businesses with more than 100 employees claim to work on fees, not commissions, they sometimes build commissions into ancillary service lines.
If the broker refuses to respond, you’ve probably already got your answer.
Question Two Asks, ’Who Pays?‘
Now it’s time to dig a little deeper. Ask the broker this question: Do you receive the majority of your revenue — 51 percent or more — from a single insurance carrier or another source?
Why does it matter? Brokers who receive the majority of their money from a single source are unlikely to look for a better deal for you and your employees. They’re also likely to be quick to reject new ideas, options and approaches. That means you could miss out on innovations that could deliver big rewards.
Remember, if the apple cart regularly trundles up to the broker’s door carrying a load of money, the broker will be unlikely to upset it in favor of a new opportunity.
Question Three Brings It Home
That brings me to the final question you should ask a broker: How do you find the right solution for my organization?
If a broker assures you that they always look around but always end up with the same solution — an HMO, or a fully-insured plan, or a health system’s partially self-funded option — then you know that they’re not really looking around. If the apple never falls far from the same tree, it means the broker is limiting your options.
Look for a broker who truly examines the marketplace to find solutions that work for you. In most cases, that means finding a broker who is experienced with self-funding so they understand all the options available to employers today.
Aim for Transparency
While these can be three tough questions to ask, they will help you discover whether your broker is truly transparent about their relationships.
Once you’re satisfied with the answers to the first three questions, you’re ready to learn more. Of course, that means asking more questions. Areas to explore include:
- Knowledge of self-funding, including when it is or is not a good option for the employer.
- Understanding of how to use data to dive into costs and potential savings.
- Ability to explore plan design to deliver better outcomes for employees.
- Capacity to decrease the employer’s workload for administering the plan.
- Approach to learning about innovations that could help you improve services or reduce costs.
- Willingness to consider performance-based contracting, where the broker and business mutually agree on goals for the plan year and then tie a set percentage of compensation to achieving them.
Remember, the best way to find the broker who is truly a good apple is to talk with them about what they will do on your behalf and how they will do it.