Honesty is the first chapter in the book of wisdom
-Thomas Jefferson
In the digital age, ‘transparency’ has become a word that we typically encounter several times daily in both our professional and personal lives. It’s use varies widely, and in the realm of employee benefits it seems at times even more-so to those of us in the industry. Before diving deeper, it may help to frame this discussion with the applicable definition found in The Business Dictionary:
- Lack of hidden agendas and conditions, accompanied by the availability of full information required for collaboration, cooperation, and collective decision making.
- Minimum degree of disclosure to which agreements, dealings, practices, and transactions are open to all for verification.
- Essential condition for a free and open exchange whereby the rules and reasons behind regulatory measures are fair and clear to all participants.
It would seem that insurance carriers, third party administrators (TPA’s), prescription benefit managers (PBM’s), healthcare facilities and all other service providers in the food chain should gladly adhere to these basic business principles. We are, after all, talking about healthcare which comprises almost 18% of the U.S. economy and touches every single one of us at various stages of our lives. In fact, with something this robust and personal, one would think that no stone would be unturned before these massive amounts of dollars are exchanged. Yes, most of the service providers in the industry claim to provide transparency in one form or another, but are they actually doing it?
Self funded plan sponsors should be aware that ERISA considers those that manage the plan fiduciaries, and thus have set forth standards of conduct for managing the plan and its assets. In fact, the Employee Benefits Security Administration has a great publication posted on the Department of Labor’s site titled ‘UNDERSTANDING YOUR FIDUCIARY RESPONSIBILITIES UNDER A GROUP HEALTH PLAN.’ If you haven’t read this, I suggest you familiarize yourself with it.
One of the key charges for a fiduciary? Hiring a service provider such as a TPA. Not only does the plan fiduciary have to ensure that the plan is “paying only reasonable plan expenses,” but they should compare and evaluate the service providers on an ongoing basis. Given this, it is imperative that service providers administering the plan are able to provide sufficient data to the plan sponsor and it’s fiduciaries in order for them to fulfill their obligations. Further, given the definition of transparency, specifically ‘lack of hidden agendas and conditions,’ the service providers should not have internal or external conflicts of interest that could limit their ability to act prudently.
I could drone on and on with examples of service providers unwilling to provide what many would consider reasonably transparent reports, typically those that are also insurers, but the bottom line here is quite simple. If a plan’s service providers are not acting in a transparent fashion and providing the data required for the fiduciary to effectively mange the plan, it is their obligation to find one that does. As a result, the plan sponsor then holds the keys to driving further plan savings from competitive stop loss contracts and effective claims management programs.
Inviktus 