Sarlo Seeks Explanation on Third Party Administrators

TRENTON–April 23, 2018–Senator Paul Sarlo wrote to State Treasurer Elizabeth Muoio seeking information on the use of third party administrators to manage the costs of health benefits for public workers. The TPA’s administer the State Health Benefits Plan and School Employees Health Benefits Plan by paying claims and negotiating charges with health care providers.

Senator Sarlo believes that greater transparency and accountability on the part of the third party administrators will yield savings for state and local government and drive premiums downward. Senator Sarlo’s letter to Treasurer Muoio seeks information to identify the cost drivers, to find ways to capture savings and to ensure that savings are shared with those who pay for the care and benefits.

“Greater transparency on the operations of these third-party administrators will help identify cost savings that should be passed on to the members and government employers,” said Senator Sarlo. “There needs to be an accounting of fees and commissions by the insurance companies to ensure that savings are shared, as they should be.”

The plans cover more than 600,000 current employees and retirees, including state, local and school members, costing state and local government and school districts approximately $6 billion in 2016, according to the New Jersey Treasurer’s Office. The contracts for SHBP and SEHBP are set to expire in June. Senator Sarlo said that the need for more accountability should be addressed before the next contract for an administrator is awarded.

“Every year, doctors and other health care providers complain of decreasing reimbursements,” said Senator Sarlo. “At the same time, health care consumers complain about rising premiums and increasing costs. The obvious question that needs to be asked is: Where is all the money going?”

Correspondence from Senator Sarlo to Treasurer Muoio (PDF)

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