In the International Foundation’s latest episode of Talking Benefits, host Justin M. Held spoke with Chelsea Ryckis, president of Ethos Benefits, on what it means to view your health plan through the eyes of a fiduciary and how that perspective can lead to increased savings and improved benefits for plan participants.

Fiduciary Duty and the Consolidated Appropriations Act

While the Employee Retirement Income Security Act (ERISA) established fiduciary duties over fifty years ago, it is necessary at times to revisit these core tenants. What is a missed opportunity for many fiduciaries is the responsibility to engage service providers, monitor their performance over time, and ensure the plan is paying only reasonable fees for necessary services. Reasonable fees are a big question mark in health care, and this is where the Consolidated Appropriations Act (CAA) of 2021 comes in.

This bill empowered employers to make better decisions by giving them access to information they needed to ask better questions. It included multiple elements, including:

1. Compensation disclosures

Best practice: Consider fee-based arrangements and performance-based compensation.

2. Gag clause removal

Best practice: Look in your contracts for key words like “proprietary,” “confidential” or “prohibited”—This may mean a gag clause is present.

3. RxDC reporting

Best practice: Get a copy of the report and inspect it to ensure you are getting the most cost-effective options possible.

4. Mental Health Parity and Addiction Equity Act

Why Now?

While the Consolidated Appropriations Act (CAA) of 2021 sparked a slew of ERISA lawsuits for health plans, we are also living in times of economic uncertainty. There is much risk in terms of unknowns within health care pricing, making this a perfect time to reevaluate your fiduciary process and de-risk as much as possible by controlling what you can.

The Fiduciary Framework

1. Establish a Fiduciary Committee

Select three to five people, including representatives from human resources (HR), finance and management if possible. It is ideal to have a set of diverse perspectives and individuals who ask different questions. Once the committee has been selected, they must:

• Acknowledge their acceptance of being on the committee
• Sign the charter
• Disclose any conflicts of interest with any service providers on the plan
• Hold regular meetings (monthly or quarterly) to discuss plan and vendor performance and accountability
• Record all meeting minutes.

2. Indemnify Committees From Fiduciary Risk

To avoid being named in any potential lawsuits, it is important to protect your fiduciary committee members. There are a variety of ways to indemnify, including:

• Fiduciary liability insurance
• Directors and officers (D&O) insurance
• Errors and omissions (E&O) insurance
• Fidelity bond

3. Organize ERISA Plan Documentation

Once you have established and indemnified your committee, you need to create a fiduciary file for all ERISA compliance documentation. This file should include a Summary of Benefits and Coverage (SBC), Summary Plan Description (SPD), Summary of Material Modifications (SMM) and Summary Annual Report (SAR).

4. Begin a Total Vendor Management Overhaul

You may be in a situation where you feel like you have a decent vendor evaluation process, but your premiums continue to rise, leaving you feeling stuck. Or you may see clear signs of mismanagement. What is needed is a proper procurement process, which includes asking potential vendors really good questions, like:

• Are you willing to operate as a fiduciary?
• Are you willing to disclose all indirect and direct compensation?
• Do you have cybersecurity insurance? Fiduciary insurance?
• Do you have open and active litigation?

Once you choose your vendors, conduct a benchmark of their compensation, ensuring it is indeed reasonable. Vendors must disclose what their compensation should be, and if it ever changes, they have 60 days to update you.

Dig into your contract and review policies, looking for red flags such as gag clauses and claw back fees. Finally, set key performance indicators (KPIs) for plan success and be prepared to hold your vendors accountable if they fail to deliver.

5. Dive Into Plan Strategy

As members of a fiduciary committee, you are legally obligated to at least learn about multiple plan options and document your decisions. Ask yourselves: What have we explored? What haven’t we seen? Show that you have done your part and are working to secure the best option(s) for your plan participants and beneficiaries.

Want to learn more and hear how Chelsea arrived in the health plan lawsuit space? Listen to the full episode of Talking Benefits wherever you find podcasts.