One of the essential required services for a client that a broker should perform is that of writing Request For Proposals (RFP). This questionnaire and inquiry could go to a variety of vendors for proposed services and could include a Third Party Administrator (TPA), a Pharmacy Benefit Manager (PBM), a reinsurer, a Wellness and Disease Management company, etc. And while this is an essential service offered by a broker for their client, the question that comes in to play is: “Is the RFP constructed in a thorough and effective manner”? In other words, are all the essential items that need to be discovered and evaluated included in the RFP in the precise and proper way?
Brokers have a tendency to have favorite markets for all of the vendors mentioned above. They may or may not be aware of alternative markets simply because of their geographic reach or experience. While the actual RFP questionnaires are assembled, it’s very important that the RFPs be delivered to a wide cast of markets so that the client gets the best results. If a particular RFP is simply a copy and paste type of document, then it’s not constructed in such a way that best serves the client and their specific needs and objectives. Unfortunately it’s simply a document that’s been utilized many times before and is rather generic. If a broker is working strictly on behalf of the client, the RFP should reflect very specific needs and objectives of the client, not dozens of group of employers before them.
Most RFPs are sent out to various vendors to evaluate their services and prices – after all, it’s a request for proposal. I would argue that a RFP is in many cases inadequate to understand a vendor’s capabilities. Rather a Request For Information (RFI) is more suitable to understand the vendor’s exact capabilities, and once again the exact, precise, and thorough questions need to be asked. One can negotiate price, you cannot negotiate capabilities.
For example, when I have talked with various third-party administrators’ (TPA) on numerous occasions they have seen RFPs that have been sent to them by a broker whereby it’s very, very obvious by the nature of the questions that the RFP is designed to obtain the best response from a competitor vendor. The RFP may be designed for an insurance company but yet sent to the TPA. It may ask questions that are relevant to the insurance company, but not the TPA. On the other hand, questions could be just the opposite. When a broker writes an RFP it should be just that: a customized document that includes all aspects of the request for information and capabilities regardless of the administrator. If more than one RFP needs to go out to accomplish this, then each RFP should be written separately for an insurance company and/or be a TPA.
Writing and submitting RFPs is not a matter of copy and paste. It needs to be a serious thorough document that an employer or client can rely on to understand the capabilities of the vendor that they’re evaluating and reflect exactly what they are looking for.
As a former broker I remember getting all types of RFPs directly from employers that sometimes ask completely irrelevant questions. It’s very obvious that they too have copy and pasted questions from other RFPs, simply to go through the exercise of sending them out, but not really have a desire to make any change with their current broker.
I have seen RFPs with questions that are several pages, and RFPs that are a simple paragraph. Public sector RFPs are different from the private sector, and each vendor is different. If your broker is writing a RFP for you, make sure you ask to see it.
Unfortunately the brokerage business is one that is overpromised and under delivered. You don’t know what you don’t know.