Paying in the Dark

Introduction

Employers are the largest purchasers of health care in the United States, covering more than 165 million people, yet they face persistent difficulty controlling costs. Most enrollees are in self-insured plans, which rely on third-party administrators (TPAs) to build provider networks and adjudicate claims. The fees employers pay these administrators are an under-documented source of health care spending. While recent litigation and news reporting allege that administrators overpay providers and charge large fees, the peer-reviewed literature offers limited detail on how these compensation mechanisms operate.

Methods

We conducted 22 semi-structured interviews with 34 participants during the fall of 2025, drawn from four groups nationwide: employers and employer coalitions; TPAs and partners; benefit consultants and brokers; and legal and policy experts. Transcripts were coded and analyzed for key themes.

Results

Participants distinguished the base administrative fee, which employers compare across vendors, from additional fees that are less visible at contract signing. These include percentage-based shared-savings fees on out-of-network claims, overpayment-recovery fees, retained network discounts, a-la-carte service fees, and cross-plan offsetting. Interviewees described two pathways to address these fees—expanded transparency and clearer fiduciary accountability.

Conclusion

While potential solutions exist, market consolidation may limit employers’ ability to act on disclosed information.