The Floor Beneath the Number

Private equity, IDR fees, and the variable expenses that can sit outside a health plan's quoted maximum liability.

You set employer and employee contributions to fund the maximum liability on the quote. The plan should have enough money, even in a high-claims year.

Then an additional invoice arrives.

It is an administrative expense. It does not count toward the claims attachment point. Funding the quoted maximum did not fund everything the plan could owe.

Two charges deserve separate attention: independent dispute resolution (IDR) process fees and out-of-network (OON) shared-savings charges.

They are different expenses. Both can remain outside the rates used to set contributions.

Depending on the contract, the plan uses an Incurred Claims Attachment Point (ICAP) or a Paid Claims Attachment Point (PCAP). The applicable attachment point follows the contract's incurred-claims or paid-claims basis. Separately charged administration does not become eligible claims simply because the plan has reached that attachment point.

Fixed administration may already be included in the quoted maximum. Additional variable charges may not be. The administrative-services agreement, rate exhibit, and stop-loss policy have to reconcile.

One public Blue Cross rate exhibit makes the distinction explicit: its maximum-liability formula includes fixed expenses and ICAP, while its OON shared-savings charge is excluded from both aggregate and specific stop-loss. Other fees in the same exhibit are included in the attachment-point calculation. The contract decides what counts. [1]

If an IDR fee or shared-savings charge is excluded, funding contributions to the quoted maximum still leaves that expense to be funded. A per-claim fee limit is not an annual limit on the plan's exposure.

Federal IDR resolves certain out-of-network payment disputes after open negotiation fails. It is not routine in-network repricing. The final medical payment and the cost of resolving the dispute are separate. [2]

The federal administrative fee is $15 per party for disputes initiated on or after June 11, 2026. A certified IDR entity also charges a fee; generally, the losing party bears it and the winner's IDR entity-fee payment is refunded. A third-party administrator (TPA), counsel, or outside vendor may charge for handling the dispute. [2] [3]

Do not assume those process expenses receive the same stop-loss treatment as the underlying claim. Where they are excluded administrative expenses, they remain outside the claims protection.

An OON shared-savings charge works differently. A repricer may collect a percentage of the difference between a provider's billed charge and the negotiated payment. A $20,000 bill reduced to $8,000 creates $12,000 of defined "savings." A 25% fee would be $3,000.

That percentage measures the contract's billing benchmark. It does not establish that the plan saved $12,000 against a reasonable market price.

OON shared savings can be a TPA's version of the retained-rebate question in pharmacy: compensation beyond the visible admin fee. A TPA retaining that revenue can quote a lower upfront fee and recover compensation through variable charges later.

In a 2026 study based on 22 interviews with 34 participants, interviewees described an incentive to compete on a low base fee and collect additional revenue elsewhere. They identified OON shared-savings fees as a pricing lever. The study does not measure market-wide prevalence. [8]

These charges should not automatically be stacked on the same claim. One public administrative-services agreement separately charges for IDR but excludes No Surprises Act claims from its OON shared-savings program. [1]

Ownership can affect the price before a dispute exists. Larger systems or groups may have more negotiating leverage. GAO's 2025 review associated hospital-physician consolidation with higher commercial prices or spending; private-equity findings varied by market and specialty. [4]

One study of dermatology, gastroenterology, and ophthalmology practices acquired during 2016–2020 found allowed amounts rose 11% compared with controls. A 2025 gastroenterology study found a 28.4% increase relative to matched health system-affiliated controls, driven by professional fees, with no significant facility-fee change. These are specific study results, not a universal private-equity surcharge. [5]

Private equity also appears in IDR. A study of one emergency-service code in 2023 found PE-backed groups won more often and at higher multiples of the qualifying payment amount, generally a median contracted-rate benchmark. It was one code and a heavily concentrated sample. It does not establish the effect across every specialty or today's disputes. [6]

This is how financial pressure from PE-backed healthcare businesses can reach an employer: higher allowed amounts or successful payment demands can increase claims spending. Separately, the vendors managing out-of-network bills and disputes may earn additional fees. Those vendors are not necessarily PE-owned.

The employer can face both a higher medical payment and an excluded expense for administering it. Calling the second dollar an administrative fee does not make it disappear.

Take a synthetic plan with 1,000 employees. Every amount and frequency is assumed, except the current $15 federal IDR administrative fee.

Combined employer and employee contributions fund a quoted annual maximum liability of $2,400,000, including fixed expenses and eligible claims funding. Enrollment stays fixed, eligible claims and fixed expenses use the full funded amount, and stop-loss performs as contracted.

Assume this contract excludes IDR process fees and OON shared-savings charges from the applicable claims attachment point and stop-loss reimbursement.

The final medical claim payments, including any IDR awards, are already accounted for in the funded amount. We are adding only excluded fees.

During the year, the plan loses 20 IDR disputes. Each costs the plan the $15 administrative fee plus an assumed $500 IDR entity fee: $10,300 altogether. We exclude any additional handling or legal fees.

Ten separate OON claims qualify for the shared-savings program. Each has a $20,000 billed charge and an $8,000 allowed amount. At an assumed 25% of the $12,000 reduction, the fee is $3,000 per claim, or $30,000.

The additional exposure is $40,300, or $3.36 per employee per month. Contributions funded the quoted maximum. They did not fund the whole cost.

Change only the shared-savings percentage from 25% to 10%. That fee falls to $12,000. With the base admin fee unchanged, total expense falls $18,000 without changing a medical payment. Any offsetting increase in base administration reduces that benefit.

In a lower-claims year, unused funding might absorb the fees. That does not make them covered by stop-loss or capped by the quoted maximum.

In a recent LinkedIn post, I examined compensation reported in consulting firms' own benefit arrangements. The group included PE-backed and publicly traded firms. The question carries over here: who earns more when the employer pays more? [7]

Disclosure tells you who gets paid. The employer still needs to understand what the payment rewards. A low quoted admin fee can sit alongside substantial shared-savings revenue. Compare the TPA's total compensation and the plan's total cost.

A percentage of billed-charge reductions rewards a particular benchmark. A dispute-handling fee rewards activity. Ask what result the employer is buying and whether the compensation supports it.

1. What does our quoted maximum actually include?

Reconcile the fixed charges, the applicable attachment point (ICAP or PCAP), and the stop-loss definitions. List every excluded variable expense and identify who funds it after the quoted maximum is reached.

2. What are we paying for IDR?

Separate final claim payments from federal, IDR entity, TPA, vendor, and legal fees. Show dispute counts, results, refunds, and treatment under stop-loss.

3. How is OON shared savings calculated?

Show the billed charge, final allowed amount, percentage, per-claim limit, annual cap if any, and credits. Confirm which claims qualify and whether later settlements change the fee. Request expected annual fee revenue and an alternative admin quote without that revenue. Compare total compensation.

4. Who receives money outside the claim?

Trace the administrator, repricer, consultant, affiliates, and subcontractors. Show direct and indirect compensation, then convert excluded expenses into an annual budget and a per-employee-per-month amount.

Employers carry the plan's budget. Members can feel that pressure through later contribution and benefit decisions. An IDR award does not authorize a higher balance bill or cost share on a claim protected by the No Surprises Act. [2]

Private-equity ownership, provider pricing, dispute outcomes, and administrative compensation need separate examination. Together, they can place more pressure on the same employer and employee dollars.

Funding the maximum liability is not the same as funding the maximum cost.

Got a quote or invoice where the maximum liability and additional fees do not reconcile? Describe the decision through Submit a case.

Do not send PHI, claimant details, identifying information, or confidential employer files. Submissions are considered for possible analysis and publication. Nothing is published without permission.

The cases that teach something are worth breaking down in the open. The names and private details are not.

Know an employee benefits stakeholder setting next year's contributions? Forward this issue. The budget needs to include the expenses outside the rate sheet.

See you in two weeks.

Scott

P.S. Next issue: Your Business Has Goals. Does Your Benefits Plan? Before choosing a plan or a contribution, decide what the business needs its benefits to accomplish.

1. Public administrative-services contracts: Blue Cross Blue Shield of Arizona, 2027 rate exhibit, maximum-liability formula and OON shared-savings exclusion (PDF pp. 4, 8) link; BlueCross BlueShield of Tennessee, Exhibit B §§5.8–5.9 and Exhibit W §7, separate IDR expenses and shared-savings program excluding No Surprises Act claims link

2. CMS, Federal Independent Dispute Resolution Process Guidance for Disputing Parties (eligibility, payment, fee mechanics, and protected member cost sharing) link

3. CMS, Federal Independent Dispute Resolution Operations Final Rule (administrative fee effective June 11, 2026) link

4. U.S. Government Accountability Office, Health Care Consolidation: Published Estimates of the Extent and Effects of Physician Consolidation (commercial prices, ownership, and evidence limitations) link

5. JAMA Health Forum, Association of Private Equity Acquisition of Physician Practices With Changes in Health Care Spending and Utilization link; Health Affairs, Increases in Physician Professional Fees in Private Equity-Owned Gastroenterology Practices link

6. Health Affairs Scholar, No Surprises Act independent dispute resolution outcomes for emergency services (2023 CPT 99284 ownership analysis and limitations) link

7. Scott Iwanowski, LinkedIn post on consulting-firm benefit compensation and Form 5500 research link

8. Health Affairs Scholar, Paying in the dark: third-party administrator fees and the limits of employer cost control in self-insured health plans (2026 qualitative study; 22 interviews, 34 participants; fee incentives and limits) link

General information, not insurance, legal, or tax advice.

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