How Do Savings Fees with Networks Work?

When Self Fund Health uses regional PPO networks like The Alliance or Trilogy, those networks negotiate discounted rates with hospitals and providers. The difference between the provider’s billed charge and the discounted network rate is considered the savings generated by the network.

To support this structure, networks charge what’s known as a savings fee — a small percentage of the total savings achieved on each claim. This fee compensates the network for maintaining contracts, repricing claims, and ensuring provider access.

Here’s how it works in practice:

• The network reprices a provider’s billed charge to its contracted amount.
• The difference between the two numbers is the savings.
• A percentage of that savings is then charged as a fee to the health plan for using the network.

For example:

• The Alliance charges 1.9% of savings.
• Trilogy charges 3.5% of savings.

These fees are paid directly to the network (Alliance or Trilogy) as part of their administrative compensation.