Fiduciaries and service providers should act now to mitigate the legal risks associated with lawsuits alleging health plans paid unreasonable and imprudent fees and expenses.
The following actions will make plan fiduciaries, their plans and plan service providers less attractive targets for litigation or at least increase the chance of an early court ruling in their favor in cases filed against them.
Health plan fiduciaries should:
- Obtain direct and indirect compensation and fee disclosures from service providers and take advantage of the tools provided in ERISA Section 408(b)(2) if disclosures are not forthcoming.
- Assess how their plans’ fees and expenses compare with market rates and act to lower costs, if needed. This can be done through solicitation of requests for proposals from new vendors, review of Form 5500 service provider data and using consultants with access to benchmarking data.
- Utilize—and ask service providers and consultants to utilize—the price comparison data contained in the new transparency tools to compare and evaluate plan costs and service provider compensation.
- Ensure contracts with service providers clearly address access to sufficient claims and financial data to allow for fiduciary monitoring of plan expenses, service provider compensation and service provider performance.
- Engage in meaningful oversight of service provider performance and compliance with plan and contract terms, including conducting plan audits.
- Prioritize review and analysis of plan costs and service provider compensation by establishing cost review committees with responsibility for monitoring costs and fees and for developing policies and procedures for that purpose.
- Document all activities taken to review, compare and manage health plan costs and service provider compensation and performance