PlumBot: Bot: Creating new article from JSON

2026-03-12T00:54:18Z

Bot: Creating new article from JSON

New page

💲 '''Spread pricing''' is a compensation and pricing mechanism in insurance — most visible in [[Definition:Pharmacy benefit manager (PBM) | pharmacy benefit management]] within [[Definition:Health insurance | health insurance]] — where an intermediary charges the [[Definition:Insurance carrier | insurer]] or plan sponsor one price for a service or product and pays the provider a lower amount, retaining the difference as revenue. In the insurance context, this model appears across various intermediary relationships, including [[Definition:Third-party administrator (TPA) | third-party administrators]], [[Definition:Managing general agent (MGA) | MGAs]], and service vendors, wherever the entity sitting between the payer and the provider has discretion over the price charged versus the price paid.

🔍 Under a spread pricing arrangement, the intermediary negotiates discounted rates with service providers — pharmacies, medical networks, or repair shops in [[Definition:Property and casualty insurance | property and casualty]] lines — and then invoices the insurer at a higher, often undisclosed, rate. The spread between the two figures constitutes the intermediary's margin. Because the insurer may not have full visibility into the provider's actual reimbursement, spread pricing can obscure the true cost of claims or services. Some [[Definition:Self-insured retention | self-insured]] employers and insurers have pushed back by demanding [[Definition:Pass-through pricing | pass-through pricing]] models, which separate the administrative fee from the actual cost, giving the plan sponsor a transparent view of expenditures.

📊 The significance of spread pricing extends into regulatory and actuarial territory. When an insurer cannot accurately decompose its [[Definition:Loss cost | loss costs]] because intermediary margins are embedded in claims data, [[Definition:Actuarial analysis | actuarial analysis]] and [[Definition:Rate filing | rate filings]] can be distorted. State [[Definition:Insurance regulator | regulators]] and the [[Definition:National Association of Insurance Commissioners (NAIC) | NAIC]] have increasingly focused on transparency requirements to ensure that spread pricing does not inflate [[Definition:Premium | premiums]] or impair [[Definition:Loss ratio (L/R) | loss ratio]] calculations. For insurtech platforms seeking to disrupt traditional intermediary models, eliminating or reducing pricing spreads has become a competitive differentiator and a trust-building mechanism with carrier partners.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Pass-through pricing]]
* [[Definition:Pharmacy benefit manager (PBM)]]
* [[Definition:Third-party administrator (TPA)]]
* [[Definition:Loss ratio (L/R)]]
* [[Definition:Claims cost transparency]]
* [[Definition:Administrative services only (ASO)]]
{{Div col end}}

Definition:Spread pricing - Revision history

PlumBot: Bot: Creating new article from JSON