By Bill Frack, Chief Product Officer
The Consolidated Appropriations Act (CAA) of 2021 brought significant changes for self-funded health plans, emphasizing transparency and accountability for ERISA fiduciaries. This increased scrutiny is evident in the recent lawsuit against Johnson & Johnson, whose plan management is under fire for alleged mismanagement of prescription drug benefits. Failing to be well managed as defined by CAA could land you on the top of the trial lawyer’s target list. Are you safe?
Here are 3 precautions to take so the CAA doesn’t land you in hot water:
- Control your data: The CAA mandates active oversight of health plan performance. Having your data managed by the carrier or PBM does not qualify. Having your CAA filings completed by your carrier or PBM does not qualify. Asking your broker for copies of your vendor contracts does not qualify. Relying on vendor annual self-reporting does not qualify. Having a data warehouse that is unused, and when used, provides limited management insight does not qualify.
- Avoid blind trust: While TPAs and PBMs play a vital role in plan administration, you, as the fiduciary, ultimately hold the responsibility for compliance. Solely relying on them to handle CAA reporting without actively overseeing and verifying the accuracy of the data can be risky. Inaccurate or incomplete data, even if unintentional, could lead to legal repercussions. Don’t put yourself at risk!
- Lift the pharmacy fog: TPAs and PBMs often aggregate data by state or market, which can mask the true picture of your pharmacy spend. This lack of transparency makes it difficult to identify cost drivers, negotiate better deals, and potentially leads to overpaying for medications.
So, what can you do to ensure CAA compliance?
Seek expert guidance: Consult with legal and compliance professionals who can help you understand the CAA’s intricacies and develop a robust compliance strategy.
Invest in proactive health plan management: Look for solutions that can integrate all your health plan data, ensure accuracy, and provide clear insights into your plan’s performance.
Strengthen vendor oversight: Establish clear communication channels with your TPAs, PBMs, and ancillary vendors. Regularly review their reporting processes and data, asking questions and seeking clarification when needed.
Promote transparency within your organization: Educate your employees about the CAA and their rights as plan participants. Encourage them to ask questions and report any concerns they might have about the plan’s administration.
Remember, the CAA’s goal is to protect plan participants and ensure they receive fair value for their contributions. By taking a proactive approach to compliance, you can not only avoid legal trouble but also optimize your plan’s performance and ensure its long-term sustainability.
Have comments? I look forward to hearing from you at b.frack@wellnecity.com.