Another Lawsuit Exposes BUCA Spread Pricing

by Chris Deacon

On the eve of Independence Day, I am conflicted as I share the news of yet another self-funded employer suing its TPA for breach of fiduciary duty.

The Kraft Heinz Company is alleging that Aetna breached its duty as a functional fiduciary when it engaged in spread pricing by paying providers less than it collected from the self-funded plan, engaged in cross plan offsetting, used dummy codes to extract additional fees, applied more stringent payment integrity protocols on its fully insured book of business and failed to deliver all of the plan sponsors’ healthcare claims data.

This lawsuit reads like several others that have captured the attention of the industry. And it validates the position, shared by many, that ultimately we will need to rely on litigation and the courts to stop the type of abuse and overreach alleged in this complaint.

So why the internal conflict?

I feel uneasy about cheering on a lawsuit that has the potential to upend lives and will undoubtedly subject real people on both sides of the lawsuit to immense stress and emotional angst. But it has come to this.

It feels like we are witnessing the awakening of a sleeping giant, the power of which we have grossly underestimated. This under-estimation was a direct result of the giants’ over-reliance on conflicted third parties that never prioritized the clients’ best interests – why would they, when it would contrary to their own financial benefit? To some degree, there may have been a level of complicity, but that could be very easily explained away by the lack of information and access to data that hindered their ability to see what was occurring under their noses and on their watch. No longer.

The winds of transparency and a torrent of data available to plan sponsors is causing some employers to stir, some to eagerly standby, and some to take a bold stand and say “no more.”

This Independence Day, I would also ask those of you in the healthcare industry to consider your own independence and your ability to stay true to your moral compass. We can reflect upon the role we play in this system upon which we will all rely over the course of our lives.

Regardless of profit motive or status, the healthcare industry must embrace a renewed commitment to business ethics and some sense of morality, recognizing the pivotal role we play in safeguarding patient well-being, ensuring equitable access to care, and preserving the dignity and autonomy of every individual.

*copy of Complaint can be found at