Bundled v. Unbundled Programming: Employers Have the Power

How involved does an employer want to be when looking at getting the best claims management for your program? How many decisions does an employer want to make when looking at overall programming? Is everything under one roof a more accessible option, given the organization’s timing, size, and scope? Or is there a more robust skillset present within the internal risk programming? Does anyone possess a knowledge base of workers’ compensation exist in your organization? Does the workers’ compensation programming reflect a positive light on the organizational behavior of the Employer? 

In the claims management world, two options exist for programming: bundling and unbundling. Here is what you need to know. 

Bundling is the process of combining multiple claims service products within a unique offering. Think of this like a one-stop shop for all claims needs without much thought. The bundling option has already vetted any potential strategic partners for this option and selected who they believe is the best strategic partner. The bundled approach keeps control of claims management within the third-party claims administrator. Unbundling is the opposite; it consists of taking different parts of the claims management process (mainly from the vendor selection arena) and creating stand-alone products and services at a more reasonable price with greater control. One thought to consider: the motives for this selection criteria benefit the organization selecting. 

The benefits of bundling services for an Employer

Bundling takes the guesswork out of the claims management process. The claims administrator selected to adjudicate an employer’s claims can utilize their programming and vendor partnerships as they like with little to no say or input from the Employer. Some advantages to this give the appearance of a traditional seamless model where name recognition of the TPA can be helpful through offering care with an integrated single vendor option. Think of this in terms of buying power. 

The bundled option keeps the control and ownership of decision-making up to a specific threshold with the third-party claims administrator, especially with vendor options such as pharmacy benefits management (PBM), medical bill review (MBR), durable medical equipment (DME), Medicare Set-Asides (MSA), transportation, translation, diagnostic imaging, reporting and data analytics, utilization review (UR), utilization management, and many more. 

The flip side of bundling services for an Employer 

With so many ancillary pieces, many employers participate in the bundled programming to keep things under one roof for uniformity in claims administration. While bundling services through one integrated vendor simplifies the plan name and is the easiest path to choose, it will only sometimes save you money. Saving money through bundled programs is a misconception by third-party claims administrators and may sometimes be false advertising. Many employer programs with bundled services continue to be frustrated by their lack of control and the need for more transparency in their programs. 

While the simplistic nature of bundling can appear to be the easiest way to approach claims management, having everything housed under one roof, the simplicity is offset by the lack of customization, flexibility, and nimbleness to address cost drivers. Program plans are created with a cookie-cutter design and lack interchangeable parts, and it is essential to pay attention to the third-party administrators’ unwillingness to download data for data analytics or risk management integration with outside vendors. With a bundled approach, you also give up the ability to carve out or directly contract with vendors, providers, or specialty services you may want for your programming. 

Buyer beware: many strategic vendor partnerships aligned for bundling with third-party administrators have financial incentives for their use. Make sure to ask about this when approaching bundled programs, as many have been ‘built in’ not to be easily seen in the transparent nature of bundled billing optics. 

Advantages of unbundling services for an Employer

When looking to unbundle services for claims administration, competition is encouraged, assisting in cost reduction. With the transparent nature of unbundled programming, the Employer is aware of what services are being provided and how much you are paying. The ability exists to select the most competitively priced service offerings with direct contracting through strategic vendor partnerships. Direct contracting allows the individual selection of best-in-class vendors that meet the specific needs of the environment of the Employer. 

When making strategic partnership decisions with vendors, unbundling allows options. Employers can choose vendors that are the best fit based on location, size, demographics, unique risk factors, and more. In addition, the service offerings and customer service can be tailored to an employer’s specific needs. Attention to mission, vision, values, and alignment with organizational culture is essential. The selection of strategic vendor partnerships can focus on alignment in each of these areas as needed. After all, the strategic partners, claims administrators, and everyone involved in the workers’ compensation process is acting as an extension of the Employer. How your employees are treated by all of these people can and will affect your employees as well as your organizational culture. 

The flip side to unbundling services for an Employer 

While unbundling is very cost-effective, there are drawbacks. Building a plan takes a lot of responsibility from a financial and human capital standpoint. Many employers need more time and the expertise to feel adequately versed in options to build a claims program. Creating the plan design can be administratively taxing, especially in finding strategic vendor partners that will meet the Employer’s needs. The framework to get the unbundled programming up and running can be complex, with many moving parts and various players at the table. There is also a lack of name recognition for employees and medical providers when operating in this manner, leading to less comprehensive networks and the potential for interface fees with third-party carriers. 

Transparency is vital… and not always found

Over the decades, one area that has been a pain point for employers is the hidden markups embedded in the cost of claims services for bundled programs. An easy one to reference if you want to look this up specific to your programming comes from the “cost-of-savings-charge”

imposed on bill review services. Bills are reviewed for a fee, and an additional percentage of the amount saved is routinely billed, allowing bundled programs to hide money. With a bundled program, there is no transparency regarding what you are paying and how much revenue and profit is being derived from your program. 

While some bundled third-party administrators are moving towards a more transparent approach to billing, more money can be demanded up front to recoup the hidden feeds they can no longer collect. Another area to pay attention to is when there are fees associated with claims handling, costs related to loss control, and no precise isolation of how much is genuinely assessed for the claims administration component itself. 

Unbundled programs allow greater transparency as employers are more readily able to identify how much money their providers are receiving for any piece of the vendor program. If an employer is highly involved with risk programming, a significant loss reduction can be achieved by working with a highly effective claims management partner. The unbundled approach allows programs to partner with a claims administrator with a like mind and acceptable programming for the mutual benefit of the relationship. Transparency in payments, claims direction, and overall philosophy can move the Employer’s program in the desired direction. 

To bundle or unbundle…

While unbundled programs allow for greater control over the claim services as a primary advantage, it does take work to establish the programs in a manner that would be to an employer’s liking. Bundling makes things easy with a one-stop shop for all things claims related. Unbundling is an excellent option for employers with sophistication in the risk management realm and a strong desire for oversight of their third-party administration. Unbundling creates flexibility, while bundling is more rigid. How much control, transparency, and supervision will depict which option is best for you… and your human capital.

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