Transparency in healthcare isn’t just about revealing costs; it’s about empowering employers to navigate a complex system, save on inflated expenses, and truly prioritize their employees’ well-being. In this episode, Jamie Greenleaf discusses the complex world of fiduciary responsibilities within healthcare plans. She dissects and reveals the challenges faced by plan sponsors, CEOs, CFOs, and HR directors. Wendy emphasizes the importance of transparency in healthcare and how tools like Fiduciary In A Box are changing the way we navigate these complexities. Learn the surprising discoveries about secret payments, higher prices, and the deliberate tricks in the healthcare system. Tune in now!
—
Listen to the podcast here
Putting The Big “F” In Fiduciary: The Impact Of The CAA Of 2021 On Group Health Plans With Jamie Greenleaf
I’m excited about this episode. We have a great guest, Jamie Greenleaf. She’s the Cofounder of Fiduciary In A Box. She’s a Specialty Leader, which is a healthcare plan specialization with the Center for Board-Certified Fiduciaries. I’ll have her explain what that is and everything. I’m going to, without further ado, bring Jamie in. Jamie, how are you?
I’m good. How are you?
Awesome. This is my silly show that I created by accident for HR leaders and business leaders. I’ve been in the business for quite a long time, and I realized that HR leaders are often not aware of a lot of the fiduciary responsibilities that they have surrounding their healthcare plans. They might be more familiar with their fiduciary responsibilities with their pension plans.
As we will probably discuss, it’s going to be very similar. A lot of the things that swept through the pension world over the last few years have now made their way to the health and welfare side of the business. I did a brief introduction of you. If you want to introduce yourself and Fiduciary In A Box a little bit more for the audience, that would be great.
Thanks for having me. I love podcasts, especially when I’m on any type of long commute. I’m able to plug them in and get some information. Hopefully, we can help with some of the questions you may be having as we go through this. I grew up in the retirement industry. My mother founded a firm back in 1981, and that’s when the code 401(k) was written. My past 30-plus years have been helping employers establish a fiduciary-sound retirement program with better outcomes.
Years ago, I got interested in what was going on in the healthcare space. Healthcare has always been under ERISA. I wondered why when my employer said to me, “How come our healthcare plan doesn’t run like our retirement plan? We can’t control costs and understand where our employees are going to get care and improve their outcomes.” I said, “It’s an ERISA-based plan. You should be running a fiduciary process on it as you do on your retirement program.” I quickly realized that they weren’t able to do that because they didn’t have information and/or access to it but that changed with the CAA 2021. That’s a great place to start because that has put the big F in Fiduciary.
Having been a general agent for many years and owner of an agency always specializing in benefits, it wasn’t until a few years ago, in the wake of the Affordable Care Act, that I realized how little we knew about healthcare, health insurance, pricing, and transparency. We took for granted that insurance carriers in the healthcare system were working in the best interest of their members, using their leverage to create better prices and quality.
If you go to all of their websites, that’s what they claim to be doing, but that’s not what they’re doing. They’re trying to generate as massive of a profit as they possibly can and keep the consumer in the dark. I’ve had clients over the years who thought I was their fiduciary. They thought I was the administrator because there wasn’t much awareness. It’s not as though you get a postcard in the mail from the Department of Labor that says, “Here’s your checklist. Make sure you get these things done.”
ERISA has been around for years. Most benefit advisors, insurance carrier reps, and HR leaders will probably fail a simple quiz on ERISA. I was impressed. To let the audience know, I met Jamie at a conference in Wilmington, Delaware. It was a healthcare and transparency conference. I can’t remember if it was day 1 or day 2. We were going through some education, and I was blown away by the depth of responsibility and complexity of being a fiduciary for your plan.
I would dare to say that 99.9% of employers out there probably aren’t in compliance. Maybe we can get into that in a little bit, simple things like COBRA compliance or filing of 5500s or 1094 and 1095 forms. Although we’re not compliance experts, we’re still generating new business because we can support some of those things. That’s why we leave you with your technology and other HR advisory firms out there to help our clients. Could you, if you want to, elaborate a little bit on what you meant about the CAA of 2021? I would guess that most of the audience may not even be aware of what that is.
Unfortunately, you’re right. Let’s take a step back because it’s important to understand the opportunity. We’re going to talk about the work that’s required, but it’s important to understand that there is an opportunity for improvement and cost reduction through a fiduciary process. If you think about the old defined benefit plans, when an employer offered a pension plan, the expense was born by the employer, and they were going to provide a benefit to the employee when they left the workforce.
Those benefits became unsustainable. There was a running joke that General Motors ran a DB plan and made cars on the side. It was an unsustainable business. I read an article that said that Starbucks is paying more for health insurance than they are for coffee beans. That shouldn’t make you wake up and realize that the defined benefit plans went by the wayside and moved into a defined contribution space, which meant that an employee had to contribute dollars.
That’s why ERISA came into play because now, that plan sponsor had a fiduciary responsibility to make sure that the dollars that were being spent out of the employee’s paycheck were being spent prudently. That’s what happened in the healthcare space. We have seen this shift where an employer is paying a portion of the expenses, and the other money is being paid by the employee. ERISA now stepped in and said, “You have employee dollars. You have to be a prudent steward of those dollars.”
The unfortunate thing was they didn’t have access to information to provide that fiduciary process. The CAA 2021, which was signed in 2020, did two interesting things. One is they required employers to remove all of their gag clauses from their covered service providers’ contracts. What is a gag clause? That is usually the first question. It’s any language that prohibits you as the employer from receiving information and using that information on the cost or quality of your plan. This is your data as an employer.
Employers have to attest by December 31st that they have removed all of their gag clauses from their covered service providers’ contracts. This is interesting because, as you and I both know, a very large segment of the market doesn’t even recognize or realize that the CAA is in effect, let alone that they’re going to have to sign an attestation form at the end of the year.
That’s one. That now gives an employer all this information to be able to use and benchmark, look at quality and costs, and do a prudent fiduciary process on their plan. The second important thing is that the CAA also required covered service providers to provide compensation disclosures, both direct and indirect compensation. Most employers may know what the direct compensation is. Either they’re writing out a check, or it could or could not be on the 5500 form, although some of them are a mess.
It’s the indirect compensation that most employers are unaware of, and those are things like retention bonuses from providers. It could be that they’re receiving dollars from prescriptions. There is a lot of indirect compensation that is going around under the different players in the healthcare space. Once an employer has that information, their responsibility under 408(b)(2) is to deem that compensation is reasonable. As they do in their retirement plan, they’re going to have to do a benchmark on compensation.
This has opened this can of worms that has stepped us up into this true fiduciary status on the healthcare plan. That’s where the opportunity is because when we applied it in the retirement space, and transparency came to the retirement space, there was a reduction in fees and an enhancement in benefits. Ultimately, the goal is to enhance the benefits offered to the employees and reduce and control the costs.
We are very comfortable that if you look at what we’re spending as a nation, it’s $4.3 trillion a year in healthcare costs. When you look at the waste, fraud, and abuse in the system, which they say is $0.25 to $0.30 on the dollar, and when we did the math, it’s about $160 billion that employees have in waste, fraud, and abuse coming out of their paycheck. That’s a risk for an employer. These new regulations are now allowing them to provide that fiduciary procurement process on their plan.
If you’re an HR leader, you probably are going to defer to your trusted insurance carrier or your advisors and assume, which is very risky, that they’re helping you comply with this or that they’re doing the work behind the scenes to comply with it. What we have seen so far in the fully insured world is that the insurance carriers will step in. To elaborate, you have your service providers. When you have a health insurance plan, you have your medical carrier if you’re fully insured. You think of them as the network that you’re using. There are dozens of companies behind the scenes within that contract.
Aetna, Oxford, and United Blue Cross don’t do everything behind the scenes. They’re working with many different companies that they solely control who they contract, including the pharmacy benefit manager, which is outlined as one of the service providers and mental health providers if you have one, and then it says, “Other service providers.” I don’t know where you stop with that because you have companies behind the scenes that are third parties that are brought on by the insurance carrier to handle utilization management review and all of these things with a lot of potentially sensitive information.
What we have seen is that the fully insured cares are stepping in and saying they’re going to handle it for their plan sponsors. There’s a website. I was on it because we were assisting one of our groups that’s self-insured. It’s not complex. You’re attesting that you’re doing it. Your insurance carrier can go in there and say, “We’re testing for them,” but they still have a responsibility to confirm. They’re supposed to be capturing a document or some letter from their service provider indicating in writing that the gag order was removed from that contract.
A prudent fiduciary will trust but verify. If I’m a fiduciary, and at the end of the day, the buck stops with me, and somebody is telling me that they’re going to attest on my behalf that I am in compliance with this component of the CAA, I better have something in writing that says they have done it and they are in compliance, not only that they attested but that they are truly in compliance.
If the DOL comes knocking or the litigators, which is probably more likely to come knocking, I want to be able to say as a prudent fiduciary, “I wasn’t able to do that attestation because my carrier said they were doing it for me but here is the attestation, and here is the email or something that states that the carrier says they’re in compliance with the CIA.” Honestly, if I were a sponsor of a healthcare plan, I wouldn’t have anybody else attest except myself, and I would make sure that I understood that all of my contracts had the gag clauses removed, which unfortunately, is probably a big challenge for employers. That’s part of the problem.
Those companies that are jumping in so willing to help are the companies that are causing a lot of waste, fraud, and abuse within the prices, the claims, and the contracts. They’re making money behind the scenes from providers that employers aren’t even aware of. The best way to test this, probably in 2024, is to go back out to your carrier. Let’s ask for some reports that, in the past, they have refused to give us because they said, “That’s protected under the gag order.”
I’m pretty certain that we’re going to attempt to do that. We have asked in the past for reports that we know would be beneficial for us from a marketing standpoint for going out and getting competitive rates and truly understanding what’s happening within that population of employees that is driving the cost. Where is that waste within the plan? The healthcare system makes it very complex. You have these two behemoth entities, the insurers and the healthcare system. Neither one wants to give up control. It means keeping the consumer in the dark. They don’t know what the prices are. They don’t understand that the price for the same service could be substantially different from one location to another.
It’s complex. You would have to admit. This is very complicated. It has been deliberately made complicated for 30 years. The consumer hasn’t been able to see much of any data to ask them to wake up and say, “We understand what that data can help them with.” It’s my job as an advisor to explain that and show them what is so useful about the data. The RX reporting was a requirement.
That’s all part of the CAA. It’s a new report on RX. It was for the years 2020, 2021, 2022, 2023, and going forward. Mental health parity reporting was also required under the CAA. There’s a lot of new reporting that needs to be done. I caution employers because they may be getting a lot of data from their brokers, TPAs, and PBMs. They need to understand that data. What does it say? What does it mean? What do they do with that data? Otherwise, what happens is they’re documenting all the deficiencies in their plan, and they’re not setting out to have any action associated with it. That could be problematic.
Having access to your data means you now have to have a fiduciary process. What do you do with that information? That’s where employers are saying, “We don’t even know where to start.” To me, you have to start at the beginning. Starting at the beginning is to acknowledge that you’re a fiduciary, put together a fiduciary committee, and determine how you’re going to make your decisions that are unbiased, repeatable, and in the best interest of your participants. That’s where you start. When you start to receive that data, there will be some type of action plan. Your valued partners, consultants, TPAs, and PBMs could be sitting at the same table with you, but make no mistake. They do not sit on the same side of the table as you. They are not fiduciaries, and that is a big difference.
Having access to your data means you need to establish a new process for how you handle that information. Click To TweetThat was why I was so impressed when you did the Fiduciary In A Box demo for me because before, I had sat through your presentation. I was blown away. Your depth of knowledge was incredible. I don’t have the capacity to take on all of the compliance. I’m very involved with Health Rosetta, which is a community of advisors, clinicians, and third-party solution partners like you who want to help.
The resources that are starting to come to the forefront are amazing but plan sponsors are intimidated by them. Do I open up this can of worms? From this standpoint, you can’t hide from this part of the compliance end of healthcare. You can try to. You can have comfort. Ignorance is bliss. That’s an expression I use a lot of the time. When you get that very intimidating letter from the Department of Labor that says, “For whatever reason, ERISA covers a broad range of different things.”
You could have a complaint or something that triggers a Department of Labor audit that encompasses a ton of things. I’ve seen the letter. I haven’t seen it for a few years. I’m sure there’s probably an extra page or two these days that says, “You’ve been selected for an audit. We’re going to be there in the next week or two. Here’s what we’re looking for. This is what we’re looking to collect.”
It’s something as simple as COBRA, which isn’t simple at all. It’s like, “What do we do?” Few companies are truly in compliance with COBRA because they don’t understand the general rights letter, all of the distribution rules, and also the accounting for it, “Where are the forms? When did you send them? How did you send them? How did how did you track it?”
When we did the demo, what I was most excited about was that it started at the beginning. It’s step-by-step. It takes that person through the process so that they can understand and build upon the knowledge as you’re moving forward through it. You don’t get to step one and say, “This is overwhelming. I can’t do it.” It explains and has all the links and descriptions, “Why is this important? Why are we doing this? Here are the sample letters.” It gives you the capacity, “Here’s where you store the information as you are going through it.”
I’m excited about trying to roll this out. It’s Q4 now. We have been super busy with renewals, but this, to me, is another service. At the core of what we do, we want to help elevate the IQ of what I call the American healthcare consumer, which is employers and their members. This is a great way of doing it if you are concerned about your liability as a business but also the people at the company who are the common sense fiduciaries, whether they want to admit it or not. There’s someone who’s a fiduciary. Who determines that if the company itself doesn’t determine it?
Fiduciaries are not set by title. It’s set by function. Who has discretionary authority over the control and administration of that healthcare plan? Typically, even though most will not recognize this until it’s too late, your CFO, CEO, and HR benefit director are all potentially considered fiduciaries on their plan. They need to act in the best interest of the participant, providing an exclusive benefit at a reasonable expense.
That’s why that compensation disclosure is so important, especially because I don’t think most fiduciaries understand that if there is a fiduciary breach, they can be held personally liable for that breach. That’s why many employers will purchase fiduciary insurance to protect that committee. That committee is those individuals who are making the decision around the healthcare plan, the point solutions they’re using, and the consultant they’re using. It’s important to take this seriously.
We saw millions of dollars in settlements in the retirement space throughout the years. They’re close to about $9 billion in settlements from the beginning of the lawsuits. We have seen the same players that have done the lawsuits in the retirement space now bubbling up in the healthcare space because it’s a rinse-and-repeat. It’s excessive fees. It’s poor quality. You may not have been able to control it before because you didn’t have access to your data. You now have access to your data, and you have to act in a prudent manner.
FIAB or Fiduciary In A Box was built to help employers have a risk management platform that focuses on the fiduciary process and documenting that process for them. Somebody like you can help an employer walk through the program. It’s like TurboTax. I’m not an accountant. I don’t know how to file my taxes, the questions I need to ask, and the forms I need to fill out, but if I walk through TurboTax, I can get that done. It’s the same with FIAB. If you walk through the process, it asks you the questions that you need the answers to. If you don’t have them, then you know who you need to ask.
Employers are in point solution fatigue because there are so many new point solutions coming to the market but until they establish that fiduciary process, it’s like going to the grocery store and not knowing what you’re going to cook. How do you know? Do I buy fish, chicken, or beef? FIAB is the recipe. We give you the recipe. You walk into the grocery store, and you know that you have to buy fish. Your fish could be halibut, salmon, or trout, but the reality is you have to buy fish.
There are so many new point solutions coming to the market. But until they establish that fiduciary process, it's like going to the grocery store and not knowing what you're going to cook. Click To TweetThat’s where employers are struggling, “Where do we start? What questions do we need answers to? How can we do it in a way that we don’t have to be a prudent expert, which is what is required under ERISA and your fiduciary duties?” This gives them the ability to ask the right questions, trust the vendors they’re working with, and verify because, at the end of the day, they are the fiduciary, and they’re the ones that will be on the hook should there be any fiduciary breach.
A third party can’t be made responsible. When you mention something like compensation disclosures, it’s easy for an employer or a plan sponsor to say, “I didn’t get that from my broker.” It’s not the broker’s responsibility to give that to you. A forward-thinking advisor or broker would be aware of it. They would feel that it’s their responsibility to share a lot of what’s happening behind the scenes with their plan sponsors, but ultimately, it’s not their responsibility to provide it. It’s the plan sponsors’ responsibility to obtain it. If they’re not going through some process and aware, they’re going to be the ones holding the bag at the end of the day. You could turn around. We have been submitting our compensation disclosures to our clients. It was December ’22 when it became mandatory.
It was mandatory starting in 2020, but you needed to have it for your plan for the year 2021 and going forward. Most were receiving it for 2022.
We started sending them out to our prospects with an explanation in a pretty lengthy letter, “Here’s a copy of our comp.” No one knew what it was. What I liked is that it started a conversation because we sent out a blast email and then started sending it out individually. We sent them out again. The ones that were receiving them are familiar with it now. They received them. I can’t remember exactly the month it started. I love the process because it got us involved in a conversation with our clients and prospects.
This is why it’s important. It’s a simple document. It doesn’t say a lot, but it does open up the door like the pharmacy thing. The problem with a lot of these things is being in compliance is great, but understanding how useful the data can be is even more important. You can have a lot of laws. These are regulations. You have some responsibility. Some plan sponsors might go through the process to help them avoid the potential for penalty, but the power of that data is what’s going to help change the trajectory of the cost and quality of benefits. It’s not the forms themselves.
2023 is my 32nd year in benefits. In the first 25 years, I was a general agent. It was almost entirely fully insured plans with the big national carriers. When I left that world and got much more involved with larger groups of my clients and prospects, we started going through the process of doing the prescription analysis and the pharmacy spend analysis and asking BUCA for reports that I never asked for before. I was blown away by the analysis that was coming back from these independent pharmacy benefit managers until I saw the numbers and the power of the potential for savings.
That’s a report. We won a Rosie Award from Health Rosetta for Oradell Animal Hospital. The initial analysis was that it would be a 50% savings in pharmacy spending and things like spread pricing, rebate fees, and all of those things that were hidden within pharmacy spending. There are twenty columns on that dataset when you go out to it. It was self-insured already with Aetna. We moved it to an independent TPA, which allowed us to use an independent PBM.
We beat the expectations. It wasn’t exactly 100% the same scripts, but their cost dropped 56% year over year. That didn’t even account for the rebates that came in. A little bit like three months in arrears, there was another $100,000 in rebates that previously were going to the carrier, and the client never knew it. No one wants to put these big insurance carriers out of business, but we do want them to be acting in the best interest of their members.
They should use their size and leverage, which they only get from their plan sponsors, members, and premiums. They should be using that to work in their best interest because if you go to their websites, that’s what’s all over page one of their website, “This is what we’re about. This is our mission. It’s to create better healthcare and work on behalf of our members.”
A lot of that, unfortunately, is BS. It should say, “We’re trying to keep our shareholders happy.” Let’s be honest. It’s business, and I get that, but we can hold them accountable. We can get them to open up their doors, open up the data, and share it with the members. They will always attempt to find new ways to generate profits. They’re already doing it by becoming the healthcare system themselves.
That’s the next phase of what’s happening in health insurance. They’re becoming the providers. They’re going to pay themselves with your premium dollars. They’re not becoming providers, so they can drop the price. They’re becoming providers so they can pay themselves very well with your claims, and they’re going to hide it over here under this different corporate entity or this umbrella company. It’s the fastest-growing division of many of the health insurance companies.
That’s why when you walk through Fiduciary In A Box, we ask questions, “Are you aware of the ownership relationship that this provider, whoever your provider is, has? Have you received a conflict-of-interest disclosure?” In the retirement space, if you wanted a Fidelity Fund, a Vanguard Fund, or an American Fund, you had to be on their platform to receive that and have access to that.
When transparency came to the market, all of these mutual fund companies decided, “We can be on anybody’s platform.” You can have access anywhere you are regardless of the record keeper that you’re with, but if you were on Fidelity’s platform as a record keeper and you used Fidelity’s fund, you now understood that there was a potential conflict of interest there. As a fiduciary, you did a prudent process to determine why it was prudent for you to use Fidelity’s funds even though they were on Fidelity’s platform. That’s the same thing that’s going to happen.
Fidelity has some great funds, and perhaps it was in the best interest of the participants to do that, but you needed to have a process for that. That’s the same thing that’s going to happen here. Once you start to peel the onion back and understand the relationships and the inherent conflicts that exist in some of these relationships, it doesn’t mean that you can’t continue to be with them. It means that you have to have a process to deem that most appropriate for your population.
That’s where plan sponsors are falling short. They didn’t understand what was going on in the healthcare space. Not only did they not understand the relationships, but they didn’t have any type of process to deem it in the best interest of the participants. That’s what I’m so excited about. While I said that there’s going to be some work, if you are a fiduciary on your retirement program, it’s a rinse-and-repeat in your healthcare space. People are going to tell you, “It’s not the same. It’s much more complex.” It is the same process. The players and the names are different. The questions may be a little bit different, but in reality, the process is the same.
That’s where you have to start with the process. Hopefully, Fiduciary In A Box will provide people like you who are trying to help an employer with this process and be able to walk them through something. We made it so that it was something that employers could do on their own, or they could use a valued consultant, TPA, or other partners that were going to help them manage this risk associated with their healthcare plan.
I was glad that you enjoyed the demo. We’re getting great feedback from the market. We have had a number of employers walk through it with us and say, “I feel so empowered now. I can sit at a strategic meeting, ask questions, and document that I asked this question. Why aren’t we looking at a captive? Why haven’t we done a PBM carve-out?” Maybe it’s not appropriate for you, but at least you have the ability to start asking the questions. We’re hoping that it’s helpful. We have made it so that it’s very cost-effective. We will hopefully add some transparency to the process, which is what most employers are most excited about.
It’s so in line with what we’re trying to accomplish here at BritePath, which is helping our consumers and plan sponsors elevate their IQ and understanding. We have conversations all the time with CFOs, CEOs, and HR directors. Unfortunately, still too often, they’re intimidated. We try to simplify the conversation as much as possible. It is pretty scary what’s been allowed to happen behind the scenes for so long, how in the dark most plan sponsors are, and the narrative that the insurance carriers and the healthcare system have created.
As benefit providers, we didn’t have the data. We assumed that premiums always went up because the healthcare system was always trying to get more money out of them. They were trying to negotiate those fees, and the insurance carrier couldn’t disclose what those contracts look like. There’s an ugly one going on between Mount Sinai and UnitedHealthcare. Years ago, you would never be involved as the consumer but now what’s happening is Mount Sinai is sending out letters to all their patients.
They’re trying to make Oxford UnitedHealthcare look like the horrible one in this process, “They don’t want us in the network anymore,” but then very interestingly enough, to counter UnitedHealthcare, Oxford sent out emails and has a dedicated website to this saying, “This is why Mount Sinai wants a 50% increase.” You would have never seen that one statement not long ago because it was confidential. They’re playing hardball.
We have some clients who are upset because they think the prospect of losing this healthcare system from the network is upsetting them but then I remind them, “They’re not asking Oxford UnitedHealthcare for a 50% increase. They’re asking Oxford UnitedHealthcare to approve your 50% increase. What happens to your premiums?” There’s no room in that. Oxford UnitedHealthcare doesn’t absorb that increase.
You need to know. Maybe it’s super important for that to be in your system if you are a fiduciary, and you said, “We’re willing to pay more money for this because we need to have Mount Sinai, and we can’t have this alternative that’s 15% less that doesn’t have that healthcare system. That doesn’t work for us.” Maybe that’s part of your process to determine that you’re willing to pay more.
I’m sure that you feel the same way. If you’re an HR director, CEO, or CFO, and you can master this, if you can get involved, not run away from it, go through the process, and elevate your ability to negotiate better prices, you’re going to have a skillset that’s going to make you very powerful and attractive to employers. If you can go to that next employer when you put your resume out and say, “I helped my company not only comply with all their fiduciary responsibilities but in doing so, that helped me reduce our company’s healthcare costs by 10% to 20%,” that’s going to set you apart from your counterparts that still are at the mercy of their brokers and the healthcare system and don’t understand any of this.
You’re not going to run away from it at this point. No one is going to turn around and say, “Forget it. We don’t mean it. This is too tough. We’re not going to enforce whatever happened in the pension world in healthcare.” This is going to evolve over time and create a completely different world of healthcare and health insurance. I don’t think the CEOs and CFOs are going to be able to stay out of this for very long because HR directors aren’t.
I would encourage them not to because the opportunity to cut control costs and enhance benefits is significant, but they do have to become proactive. This is a risk. This is usually the second-largest item on their P&L, and it’s time for them to start to be bold and have those difficult conversations. Hopefully, the tools that we have brought to the marketplace gives them the power to feel comfortable that they can do that, but they can’t turn a blind eye to it any longer because the risk is too great.
Look at what the settlements have been in the retirement space. Honestly, the dollar amount is much greater in the healthcare space. At the end of the day, there’s a great opportunity here to bring money back into your organization, cut that waste, fraud, and abuse, enhance the programs that your employees have, and reallocate those dollars into other opportunities for our employees to be successful, whether it’s salary increases, new benefit programs, or more contributions into their retirement plan.
As a CFO or CEO, everything you purchase, you have a process around for the most part but in healthcare, you’ve been in the dark, and the status quo has been the high bar, and now you have the opportunity to take control of it. It’s time. Hopefully, we can help you help them. I look forward to seeing how we can change the market for the better.
Are the penalties similar to what the penalties in the pension space were if you failed to act?
There are lots of different types of penalties, and I’m not sure exactly which ones you’re talking about. If you don’t attest by the end of this year, there is potentially $100 per day per affected individual. If you have a company of 200, and you have 250 people that you’re covering, that’s 250 times 100 per day for every day that you’re out of compliance.
I wouldn’t be concerned with the Department of Labor. They will get to you eventually. It is the litigators that are going to come up fast and hard. While they’re figuring out some of the things, they have the basic gist of what fiduciaries need to do to be prudent. To be able to show that there was a lack of a fiduciary process is going to be fairly easy for them because most employers don’t even have a fiduciary committee set up. They’re going to start at the beginning. We tell our employers, “Start at the beginning.” The litigators are going to do the same.
I’m not involved with pensions and that world at all. When you have your property casualty insurance and liability insurance in place, when this swept through the pension world, did those policies start excluding coverage for this?
They didn’t because most employers didn’t have fiduciary insurance at the beginning. They didn’t realize that there was risk associated with running the plans. Most employers hopefully have fiduciary insurance for their investment committee on their retirement plan. Those policy premiums have gone up because of the litigation. The question is, “Do they have fiduciary insurance on their new committee that may be different from their health and welfare plan?” That’s where I tell employers, “You need to make sure you have that and understand what it covers.” For a fiduciary breach, you could be held personally liable, but they would have to prove that you had malicious intent. That said, I still, as a fiduciary, would want that insurance policy as I have it on retirement.
It’s important for the consultants and brokers out there who are on the property casualty side or the clients to check with those policies to make sure that there’s no exclusion on the health and welfare side. Is there a need to add a rider that would cover that? That’s another phase of it. Having the process in place to avoid that potential cost is going to be super important. Is there something similar to Fiduciary In A Box that’s exclusive to the pension? Does Fiduciary In A Box address the pension side, too? Is it completely dedicated to health insurance?
Fiduciary In A Box doesn’t have a retirement component to it. It will. That’s slated for 2023. On the retirement side, you have great consultants out there who act in a fiduciary capacity. They can act as a co-fiduciary, a 321, a 338, or a 316. There are ways for employers to surround themselves with people who have skin in the game on the retirement side.
They don’t have that same option on the healthcare side. I believe there’s one organization out there that is saying that they’re acting in a fiduciary capacity. We know that some of the PBMs will say that there will be a fiduciary on that component of it but in that compensation disclosure that you should be receiving, it will tell you if that provider is a fiduciary or not, and most of them are checking the box. They are not a fiduciary.
We know that firsthand now because we’re getting the email saying, “We will file. We won’t file. We’re not a fiduciary, but we have agreed to do the filing.” It’s evolving. It’s going to evolve very quickly. I wanted to get involved with it. We personally logged in and created the account. It wasn’t overly complicated but it does drum up some questions in your mind, “How do you confirm that this is taking place if someone is doing it for you?”
Going through the process and filing it on behalf of the plan sponsor, I was the tester but I wasn’t the signer. That was the word. It ultimately sent an email to the plan sponsor asking them to confirm it. I went through, completed the fields, answered some questions, and then let them know to be on the lookout for an email because, ultimately, they’re the fiduciary, not me. I could have signed it if I wanted to be the fiduciary, but at this time, I was not prepared to take that step. I don’t think my E&O insurance company would be thrilled if I did that. There’s a lot to understand. This is great. Is there anything else that you wanted to add? Is there any surprise that came out of building this tool or this platform?
The surprise to me was when I first started in the business in the retirement space, employers didn’t understand what the fiduciary standards looked like. That is not true now. Employers understand what a fiduciary standard is. The conversations are easier to have, “You need to take your ERISA-based healthcare plan that you’ve always been a fiduciary on and step up your process because you now have access to your information.”
When we go through the process with an employer, that light bulb goes off. They all knew something was awry but they couldn’t put their finger on it. They can go through and say, “I wonder why this is happening.” They’re getting answers to the questions that they didn’t know they should be asking. You don’t know what you don’t know. There are a lot of great consultants, PBMs, and TPAs out there who are trying to do the right thing, but there are a lot of bad actors, too. This hopefully gives an employer the ability to tell the difference between the two.
There’s so much of that hidden compensation that’s not reported to the plan sponsors, especially very large companies and publicly traded companies. It’s hard to walk away from. It’s hard to replace. You have this misaligned incentive. It’s a phrase we use a lot in my world these days. There’s this misaligned incentive. The individuals who work for these organizations, the closest to the client, have the relationship, but they also have someone who’s their boss who says, “This is fantastic, but if you mention that, you’re fired.”
Transparency is good, but not for everybody.
It’s not necessarily good for the powers that be. It’s about time that this happened. It has been a long time coming. It’s amazing that 30 years of managed care have been allowed to take the path that it did, and a lot of it is because it’s deliberately so complex, but when you unravel it piece by piece, which the Fiduciary In A Box does, it allows that plan sponsor or whoever the fiduciary person is to connect the dots and understand where the opportunity is.
You mentioned so many times the savings, and someone might not understand what that means, but when you have the data that shows that those discounts that you’re getting from your health insurance carrier, whether it be medical claims or pharmacy claims, aren’t discounts at all, they’re completely artificial. They’re discounts taken from prices that are inflated significantly.
You can see with this data. You were part of the 4C Digital Health presentation that I was at. You can see how the healthcare system manipulates the consumer and sends the patient to where the lowest value care is. It’s where it makes that healthcare system the most money. When you understand how you can circumvent that, avoid that, and get your employees better care at a fair price, that’s the opportunity. A plan sponsor might think, “I’m going to save money. That must mean I’m getting lousy care.” The answer is no. We’re providing better care. We’re providing a resource not through your tool but through the other tools that now can become the process.
You had Mark Galvin on from Talon. That’s a great example. He is providing transparency around the cost of care. What you find is that the cheapest is not necessarily the best or the worst. The price has nothing to do with it. When an employee finds out that they had an MRI that costs $3,000, and they could have gotten the same high-quality MRI for $250, that is problematic. What all of these rules and regulations are set up to do is to shine that light into an environment that has been dark.
I’m excited about the opportunities. There is some work for employers to do, and there is liability associated with running these benefit programs but the opportunity to move away from health insurance and move back to healthcare, productivity with your employees, and all the things that will help you recruit, retain, and reward your employees are now in your control. It’s time for employers to take control of it. It’s an awesome opportunity, but they have to act quickly. There’s a lot going on. Hopefully, they will look to you, and you will look to us to help you walk them through that process.
We have a few January 1st renewals that we’re getting through, and we have already told them, “As soon as the dust settles on that open enrollment, the next thing is let’s talk about this because this isn’t part of the insurance purchasing decision.” We get through open enrollment. We’re excited about helping them get into this next phase and use this tool. That will allow us to do the great things that we can do for some of our plan sponsors. It’s just a matter of getting them to give us the time to explain how this all lines up and where this can take them on a brighter path. The name of our agency is BritePath. The path that most companies are on is pretty dark and bleak.
For the employers, this is not your fault. Admitting that you have this problem within your plan is not detrimental. It’s not something you could have controlled. It was hidden from you but you do have an obligation to be part of the solution now. If you aren’t part of the solution, then the consequences could be significant. Hopefully, this sheds a little light on what you should be thinking about. The opportunities for success are within your reach but you have to acknowledge that you’re a fiduciary. If you start there, that’s a great starting place.
You must be part of the solution now. If you are not, there could be significant consequences. Click To TweetThank you so much. If you want to get in touch with Jamie, please visit her on LinkedIn and connect with her if you want. If you’re a plan sponsor, their tool is extremely affordable. Reach out to them. If you’re a plan sponsor who wants to talk to us, we’re more than happy as well. From our standpoint, this tool helps us to have a conversation about optimizing your healthcare spending for your employees. It’s amazing. I’m sure that you would be happy to do a demo for plan sponsors that are out there.
You will be blown away. The interface and everything about it was designed so well to save documents to go one step at a time, look up, get guidance, get support, and understand the language there. You’re not speaking to people at a level that they can’t understand. I love the analogy used with TurboTax. I haven’t tried to use that. My tax is a little bit complicated, but I know a lot of people who do. That is very complex. Taxes are as complex as this, but when you have the right resources, anything is possible. Thank you so much for being our guest. Have a wonderful holiday season. We will talk soon.
Thanks. You too.
Important Links
- Fiduciary In A Box
- Mark Galvin – Previous episode
- LinkedIn – Jamie Greenleaf
About Jamie Greenleaf
Jamie Greenleaf is the Co-Founder of Fiduciary In A Box (FIAB). 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. In 2020, after the Consolidated Appropriations Act (CAA) was signed into law, Jamie co-founded Fiduciary In A Box to support employers and their partners to establish the foundation and framework of a Fiduciary process and mitigate the risk for the plan sponsors.
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. She is regularly invited to speak at industry conferences, is a sought¬ after presenter for many continuing education sources, such as Pensions and Investments, HR.com, and SHRM University Conference Services, and is an adjunct lecturer in the Plan Sponsor University certification program for UCLA’s Anderson School of Business-Executive Education.