Health care is one of employers’ largest expenses, but too many third-party administrator (TPA) contracts conceal fees, restrict access to critical data and limit employers’ ability to manage rising costs.
WTW projects says 2027 will be the largest increase of health care costs in more than two decades. 78% of employers surveyed say cost control dominates their health care strategy. And 49% expect significant changes to their health care programs within three years, up from 34% in 2025.
In our recent “What’s in the Fine Print” health care webinar, experts shared where hidden costs typically surface and which contract provisions deserve a closer look.
“The ‘dark money’ categories are fees you rarely see,” said Lee Lewis, chief strategy office and GM Medical Solutions at Health Transformation Alliance.
Places to look for hidden costs:
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Out-of-network shared savings: Carriers may retain a percentage of negotiated savings on billed charges, often without a cap.
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Embedded operating fees: Payment-integrity and coordination-of-benefits fees may be deducted directly from claims.
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Unclaimed drug rebates: Rebates billed under the medical benefit may never reach the employer’s plan.
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Provider incentive payments: Carriers may receive bonuses from providers without reporting how much was earned.
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Independent dispute resolution costs: Employers may pay surprise-billing arbitration awards that are rarely reported.
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BlueCard fees: Access and other charges associated with out-of-area claims may be billed on top of admin fees.
Five Areas CHROs Should Scrutinize
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Data ownership and access: Employers need access to their own claims, utilization and spending data to evaluate vendor performance and understand how plans are designed. Without that visibility, it’s almost impossible to track how dollars are spent.
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Fee transparency: Administrative fees tell only part of the story. Employers should examine additional revenue streams, including shared savings arrangements, fees embedded in claims and other payments.
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Audit rights: Contracts should give employers the ability to examine claims, verify fees and recover overpayments. Without meaningful audit provisions, it’s much harder for employers to track discrepancies.
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Carve-out rights: Employers should preserve the flexibility to use independent vendors or alternative benefit arrangements without penalties. Restricting that option can prevent employers from pursuing more cost-effective solutions.
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Steerage rights: Employers should retain the ability to guide employees toward higher-value care at lower costs.
Contract terms are a cost-control lever. Greater visibility into vendor fees, claims data and contract restrictions can help employers control costs before shifting expenses to employees.
