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TPAs are stuck with the bill in health reform contraception coverage dispute


Even before rulings in Hobby Lobby Stores Inc. and Wheaton College court cases, third-party administrators were paying millions of dollars for contraceptive services on behalf of their religious organization clients that automatically qualified for an exception to this coverage mandate.

Now that the U.S. Supreme Court has essentially given an exemption to closely held, for-profit employers that self-insure, some TPAs are even more concerned about how they might recoup these expenses.

“We have paid several hundreds of thousands of dollars, and we have yet to find a confirmed source of reimbursement,” said one TPA executive who declined to be identified. “If the accommodation granted to religious organizations ... could be applied to closely held corporations that object to providing the contraceptives for religious reasons, it would open up another whole segment of the population that could somehow transfer the cost of this coverage to us as the TPA. A lot of our clients would consider themselves closely held corporations.”

Citing undue financial burdens placed on TPAs, the Self-Insurance Institute of America Inc. sent a letter to the U.S. departments of Health and Human Services, Justice and Treasury earlier this month saying it was “deeply concerned” about the prospect of expanding the accommodation to other employers.

HHS regulations allow for TPAs to seek reimbursement from the insurers participating on the public health insurance exchanges, which in turn would receive a reduction in their participation fees. However, so far no insurers have agreed to reimburse the TPAs, according to Mike Ferguson, president and CEO of the SIIA. This could eventually force TPAs to withdraw from that business segment, he said.

“In the short run, the TPAs serving those companies will have problems maintaining those business relationships. In the long run, they may withdraw from serving those businesses, and they may have to discontinue self-funding or drop coverage,” Mr. Ferguson said.

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