Data Transparency In Benefit and Retirement Plans
It’s important for every business to have access to timely, transparent data—especially in regard to employee benefits plans. Not only will you have insight to provide your employees the best plans with such access, you are protecting yourself from possible legal headaches in the future.
Consider the following.
The Department of Labor (DOL) oversees businesses’ employee benefit plans. Under the Employee Retirement Income Security Act of 1974 (ERISA), you are responsible for acting in your employees’ best financial interest when selecting your plans, how your plans are set up, and how they are administered. In other words, you are legally required to act as a fiduciary for your plan’s beneficiaries. Non-compliance with these requirements can result in fines, penalties, and lawsuits, depending on the violation.
What Are Your Fiduciary Responsibilities?
As previously stated, employers and advisors are required by law to act in the best financial interest of their plans’ beneficiaries, and to monitor the plan’s administration with adequate knowledge. This obligation is not limited only to pensions and 401(k)s—employers and plan sponsors must meet the same fiduciary duty when it comes to healthcare benefits and other employee benefit plans.
Ideally, a prudent administrator would ask questions such as:
- How does our plan compare to plans of companies similar to ours?
- In what ways can we continue finding cost savings while improving quality of care for our employees and their families?
- How can we measure our plan’s efficacy?
- What are factors within our employee population that would affect our plan’s expenditures?
This high focus on fiduciary responsibility may lead you to believe that ERISA violations are the result of plan administrators who put their interests before the beneficiaries’ interests. However, this is usually not the case. Most violations are due to errors in administering the plans, which includes monitoring performance of the plans in terms of cost, quality, and efficacy.
A $50,000 Mistake Caught by Prudent Monitoring of Plan Performance
As the saying goes, “ignorance of law excuses no one.” ERISA violations are no exception. Due to the complexity of benefit and retirement plans, some companies don’t have the resources to monitor these plans in line with their fiduciary obligations. In addition, a large majority of companies don’t have access to the detailed data their plans generate—this lack of access prevents companies from verifying that plan funds are being spent as beneficially as possible. Without your company’s detailed healthcare and benefits data and the ability to analyze it, you won’t be able to easily identify areas for improvement or derive a more detailed understanding of your medical, prescription, workers’ compensation, and other benefit plans. You also won’t know if the root of the problem lies with the healthcare provider.
Here’s a case of note: in August of 2016, a self-funded employer with more than 40,000 covered lives in Western Pennsylvania integrated its data with Innovu. Automatic analysis identified end stage renal disease (ESRD) as one of the client’s top two costliest chronic conditions.
Innovu’s benefits experts knew that Medicare becomes the primary payer for ESRD patients 30 months after diagnoses, so they dug deeper to see if our client was paying for claims that Medicare should have been paying. We discovered that our client continued to pay for services for a claimant after the 30-month eligibility period had passed.
We alerted the client and their benefits advisor to the issue. We then provided the advisor with the claimant’s name and information needed to approach the carrier. In the end, the carrier issued a reimbursement check for $49,600 to Innovu’s client.
In the above case, it was the employer’s responsibility to recognize that they were overpaying for their medical claims. Without Innovu’s services, this mistake would have cost them nearly $50,000 in unnecessary expenses that could be better applied to delivering new programs or containing costs to minimize future insurance cost increases.
Demand Your Data
As an employer or advisor, it’s your fiduciary responsibility to monitor whether plan funds are being spent in the most beneficial manner on an ongoing basis. What can you do to ensure that your company is complying with ERISA and—more importantly—ensure that your beneficiaries are not overpaying for their plans?
First and foremost, you and your advisors must have unfettered access to your plan’s detailed data. This access gives you the foundation to develop the insight to proactively identify and take action where your plan may not be running in the best interest of your beneficiaries. You will also be able to identify and mitigate risks in your plan by leveraging the knowledge and experience of your advisors who now have better access to your critical data across all programs.
However, accessing your data is not as easy as it sounds.
You might not be allowed to see your own data due to restrictive provisions in an administrative services only (ASO) agreement with your plan administrator. Furthermore, your business associates are typically required to sign non-disclosure or confidentiality agreements (NDAs) before they can access your data on your behalf. These NDAs limit how the data can be used, including prohibitions against data aggregation and the combination of provider and financial fields. Without access to and the use of your data, you are prevented from improving your beneficiaries’ access to better benefits; you also are not able to easily identify and mitigate your plan’s risk. Your limited access to data hinders you from carrying out your legal responsibilities as defined under ERISA.
In order to best comply with ERISA and effectively improve your employees’ access to better healthcare and benefit plans, you must demand data transparency. In other words, you must ensure that you have unrestricted access to your detailed data. To accomplish this, you should include broad data access provisions in your requests for proposals and in any ASO agreements. Establishing ownership and access to your own data are critical elements in making sure that your plans are being administered in the best interests of your beneficiaries.
Let Innovu Empower You
Data transparency puts you in control of your program costs by allowing you to monitor and maximize your program assets—all of which will lessen the chance of hefty fines due to fiduciary mismanagement. Let Innovu empower you through better data access with our EmployerLens solutions.
EmployerLens helps you meet your fiduciary responsibility by enabling you and your advisors to access your data, monitor performance, and address changes in trends that could be missed. Our solutions effectively allow you to make strategic decisions that affect the cost, efficacy, and quality of your benefit and risk programs.
You can learn more on the EmployerLens product page.