1. Are health plans as TPAs also liable as fiduciaries? We were not quite sure what the question means so we will answer two questions: (1) If the health plan processes its own claims (acting as its own TPA), is the plan exposed to fiduciary liability? The answer here is YES – the plan fiduciaries are exposed to fiduciary liability whether they are doing the substantive work processing claims in-house or improperly supervising an external TPA performing claims handling. More likely, the question is (2) Are health plans that use TPAs exposed to fiduciary liability? The answer is most likely. ERISA (and trust law for non-ERISA plans) impose a duty to supervise anyone the fiduciaries (or trustees) delegate fiduciary authority to; that includes TPAs. The current time is an unfortunate predicament for many plan fiduciaries, as they have a duty to monitor TPAs but are unable to do so due to gag clauses and the general opacity of fees, costs, and payment arrangements between TPAs and providers that plan participants are subject to without knowing the details of.  The Consolidated Appropriations Act of 2021 (“CAA”) is aimed in large part at helping fiduciaries perform their monitoring function so they aren’t at the disadvantage I just explained and can actually properly supervise their TPAs and ensure they are adjudicating claims properly. We have a ways to go before the playing field is more leveled, however.

 

2. Can a TPA refuse to divulge full data to a health plan when the health plan intends to use a consultant or business associate for analysis? Section 724 expressly prohibits plan contract terms that restrict sharing of information with business associates. However, as written, the law does not say the TPA cannot refuse to divulge full data in these circumstances; it says the health plan is prohibited from entering into a contract with a TPA that will not allow the plan access to all of its data, and that the plan has to be allowed to share the data with the business associate of the plan’s choosing. Fixes to Section 724 are hopefully on the way with bipartisan legislation that has made it out of the House Committee on Education and Workforce. This issue is also currently being litigated in a case against Anthem in which Anthem refused to give a plan claims data because of the analytics firm the plan chose to analyze the data, as the firm was not on their “approved” list and was allegedly compensated on a contingency fee basis; the plans have argued that with our without ERISA Sec. 724, trust law has always required that plans be able to access their plan claims data when the plan requests it, and the plan has the right to choose the service providers of its choosing to review the performance of its TPAs, rather than use a vendor “approved” by the TPA.

 

3. Are restrictions in TPA agreements that prohibit a Plan from accessing the TPA's provider contracts (with hospitals/provider networks or for PBMS, rebate contracts with big pharma) considered a gag clause? Yes and no; restrictions in a TPA agreement or PBM contract that prevent the plan from accessing the payment terms contained in the TPA/PBM contracts with providers/drug manufacturers are gag clauses, but that does not mean the plans have a right to the actual contracts themselves. The exact language of ERISA Section 724 gives plans the right to electronic access, in addition to financial information regarding claims such as gross charges, negotiated rates, etc., any other claim-related financial obligations included in the provider contract. Therefore, any payment terms or financial obligations in the provider contracts must be disclosed upon request to the requesting plan. See the following from the Agencies’ FAQ 57, in response to Question No. 2:

 

For example, if a contract between a TPA and a group health plan states that the plan will pay providers at rates designated as “Point of Service Rates,” but the TPA considers those rates to be proprietary and therefore includes language in the contract stating that the plan may not disclose the rates to participants or beneficiaries, that language prohibiting disclosure would be considered a prohibited gag clause.

 

4. Do these rules apply to all employers, are there exclusions for size, etc? Not sure which exact rules this question refers to, but each of the CAA rules has different requirements.
   1. Gag clause removal—see response to FAQ 57 Question 8 for who must comply. The only entities that are not required to attest are:

• plans or issuers offering only excepted benefits
• issuers offering only short-term, limited-duration insurance
• Medicare and Medicaid plans 
• state Children’s Health Insurance Program (CHIP) plans 
• the TRICARE program
• the Indian Health Service program; and
• basic health programs plus
  2. Compensation Disclosures—As set forth in Field Assistance Bulletin (“FAB”) 2021-03, the Compensation Disclosure requirements apply only to ERISA covered plans, but they apply to pretty much all ERISA-covered plans, whether self-funded or fully insured, and to any service provider that expects to make at least $1,000 in direct or indirect compensation in relation to the covered plan. Only qualified small employer health reimbursement arrangements are exempted.
  3. Mental Health Parity NQTL Comparative Analysis—As set forth in the Agencies’ FAQ 45, this applies to all ERISA and non-ERISA health plans with more than 50 employees
  4. RxDC (prescription data collection and reporting)—As set forth in the Agencies FAQ 56, this applies to all health plans, including Federal Employee Health Benefits.

 

5. A plan may pay $200 for a blood test at a hospital outpatient lab when the same test is available for $10 at an independent national lab. The member may shoulder much of that difference. How does a plan deal with this? Transparency rules currently require searchable tools be made available to plan participants that show them the cost of care, including diagnostic testing, for in-network facilities. Best practices for plan fiduciaries and for overall plan costs for both the employer and participant is to affirmatively inform and even incentivize, if warranted, participants to utilize less expensive facilities (assuming they are  of similar or better quality as the high cost option), rather than passively allowing employees to just figure it out on their own. Many networks already incentivize (or disincentivize) using certain facilities – an example is that a colonoscopy performed at a hospital might cost 6x as much as one performed at an ASC and the plan has a higher separate limit deductible and/or copay for diagnostic colonoscopies done at hospitals while even potentially waiving the deductible/copay if an ASC is utilized. Plan and network design is something plan fiduciaries should be aggressively shaping to help their employees and employees covered’ family members receive the best possible care for the most reasonable price.

Karen L. Handorf is Senior Counsel at Berger Montague and a member of the firm’s Employee Benefits & ERISA practice group, where she represents the interests of employees, retirees, plan sponsors, plan participants and beneficiaries in employee benefit and ERISA cases in the district court and on appeal. Ms. Handorf brings four decades of ERISA knowledge to Berger Montague’s practice, where she will focus on emergent issues in health care, with a particular focus on the actions of insurance carrier TPAs that exercise fiduciary duties under ERISA-covered health plans. 

Julie S. Selesnick is Senior Counsel at Berger Montague and a member of the firm’s Employee Benefits & ERISA practice group, where she represents the interests of employees, retirees, plan sponsors, plan participants, and beneficiaries in employee benefit and ERISA cases in the district court and on appeal. Ms. Selesnick’s practice is focused on health care, where she brings more than a decade of insurance coverage experience to good use focusing on the behaviors of insurance carrier TPAs that exercise fiduciary duties under ERISA-covered health plans and counseling employers and other plan sponsors on provisions in their administrative service agreements that might cause them to unwittingly violate ERISA or other employee benefit laws.   

Jamie Greenleaf is the Co-Founder of  Fiduciary In A Box. She has spent her entire career acting in a Fiduciary capacity, helping employers design and implement retirement programs to create better outcomes for employees. In 2019, Jamie founded TILT, a health plan technology and consulting firm, to help employers fulfill their Fiduciary obligations by controlling cost and providing better health benefits. She recently turned her knowledge of the Fiduciary process into Fiduciary In A Box (FIAB). FIAB is a patent-pending platform that guides an employer through Establishing, Documenting and Maintaining a fiduciary process for the management of their health benefits plan. Jamie is a Specialty Leader (Health Care Plan specialization) with the Center for Board Certified Fiduciaries™ (CBCF), a group of fiduciary experts selected for their skills, best practices, and knowledge. 

Leah Binder is President & CEO of The Leapfrog Group, a national nonprofit representing employers and other purchasers of health care calling for improved safety and quality in health care. Under her leadership, The Leapfrog Group launched the Leapfrog Hospital Safety Grade, which assigns letter grades assessing the safety of general hospitals across the country. She has also fostered groundbreaking innovations in the annual Leapfrog Hospital Survey. She has served and led numerous national boards and councils, including the National Quality Forum, CMMI’s Accountable Care Action Collaborative, and AARP’s Champions for Nursing National Strategic Advisory Council.