Self-Funded Employer FAQs

 

Vendor Management & Accountability 

1. How can HR and Total Rewards leaders coordinate multiple vendors so the plan operates as one system?

Most self-funded plans run on unbundled ecosystems—TPA, PBM, navigation, wellness, point solutions, and specialty programs. The key is a unified data hub that consolidates claims, pharmacy, and engagement data and drives coordinated workflows.

With a single source of truth, HR can align vendors around shared metrics, ensure timely interventions before costs escalate and eliminate conflicting or siloed actions. 

2. What should self-funded employers include in PBM and TPA performance guarantees—and how do we enforce them?

Stronger guarantees include: 

• Transparent pass-through pricing and fee disclosure 
• Rebate/retention transparency down to NDC 
• MAC list clarity 
• Clinical program performance standards 
• Claims accuracy and turnaround times 
• High-cost claimant escalation requirements 

HR must enforce guarantees with clean data, monthly monitoring, and audit-ready reporting—not just annual reviews. 

3. Which vendor KPIs should appear on a quarterly executive scorecard?

A defensible scorecard includes metrics across: 

• Cost: PEPY, trend vs. benchmark, avoidable spend 
• Quality: evidence-based care compliance, chronic condition control 
• Access: network performance, steerage success 
• Experience: engagement, satisfaction, navigation efficiency 

These KPIs help align HR, Finance, vendors, and leadership on the same priorities.

 

Cost Control Without Cutting Benefits 

4. How can employers control PEPY without shifting costs to employees?

True cost containment comes from plan optimization, not cost-shifting.
Key levers include: 

• Reducing waste and low-value care 
• Early high-cost claimant intervention 
• PBM optimization and specialty drug management 
• Steering to high-quality, lower-cost providers 
• Improving vendor performance and alignment 

These actions protect employee affordability while lowering total spend 

5. What early-warning signals in claims help prevent avoidable high-cost care?

Signals to monitor include: 

• Rising specialty pharmacy utilization 
• ER visits without follow-up 
• Multiple prescribers or drug interactions 
• Gaps in chronic condition management 
• Non-adherence to evidence-based pathways 
• Missed preventive screenings 

Timely alerts help HR intervene during the care journey, before small issues become catastrophic spend. 

6. How can HR evaluate ROI on GLP-1, oncology pathways, or other high-cost programs?

Evaluation should include: 

• Total cost of care before/after enrollment 
• Adherence and clinical outcomes 
• Avoided hospitalizations or complications 
• Trend vs. benchmark populations 
• Vendor promises vs. actual results 

Using client-specific, claims-based evaluation ensures ROI is real—not vendor-modelled.

 

Data Transparency & ROI 

7. What does continuous monitoring look like for a self-funded employer?

A strong cadence includes: 

• Real-time alerts for threshold breaches 
• Monthly variance reporting 
• Quarterly strategic reviews 
• Annual vendor scorecards 
• Corrective action plans when performance slips 

This ensures HR stays ahead of risks—and ahead of Finance’s questions. 

8. How should HR quantify ROI from plan optimization?

ROI should include: 

• Reduced waste 
• Avoided high-cost claims/events 
• Trend compared to local and national benchmarks 
• Clinical improvements 
• Engagement and satisfaction gains 
• Total cost of care impact over time 

Finance-ready ROI builds trust with CFOs and supports data-driven budgeting. 

9. What data-access clauses protect HR and ensure transparency across vendors?

HR should secure: 

• Full access to claims, pharmacy, and fee data 
• No gag clauses or restrictions on analysis 
• Real-time eligibility and claims feeds 
• Portability across TPAs, PBMs, and point solutions 
• Cooperation clauses for data sharing 

This ensures transparency and continuity—even when vendors change.

 

Fiduciary Responsibility & Compliance 

10. What steps must HR take to meet the ERISA duty of prudence when selecting and monitoring vendors?

Core steps include: 

• Objective vendor evaluations (Don’t rely on vendor self-reporting) 
• Reviewing alternatives and fees 
• Regular performance monitoring 
• Documenting all decisions and rationales 
• Holding vendors accountable to measurable outcomes 

Documentation and transparency are key to fulfilling fiduciary obligations. 

11. How do we document a defensible vendor oversight process?

A defensible process includes: 

• A formal committee structure 
• A defined meeting cadence 
• Scorecards and KPIs 
• Annual reviews and corrective actions 
• Minutes and decision logs

This protects the organization—and HR leaders personally. 

12. What constitutes reasonable PBM fees and rebate transparency, and how do employers validate them?

HR can assess reasonableness by requiring: 

• Pass-through pricing 
• Rebate breakdowns at the NDC level 
• MAC list disclosure 
• Spread and fee reporting 
• Annual independent audits 

Transparency is non-negotiable under fiduciary standards. 

13. How do CAA/NSA requirements impact vendor contracts and HR workflows?

CAA/NSA introduces requirements for: 

• RxDC reporting 
• Gag-clause attestations 
• Machine-readable files 
• Advanced EOB 
• Surprise billing compliance 

HR must ensure contract language and workflows support these obligations. 

14. What should be included in BAAs and security due diligence to protect PHI?

Minimum requirements include: 

• Encryption standards 
• Access controls and logging 
• Breach notification timelines 
• Right-to-audit 
• Subcontractor oversight 
• Data retention and destruction policies 
• Use and disclosure requirements 

Security diligence is part of fiduciary governance. 

15. How do HR leaders prevent misalignment between plan documents, SPDs, stop-loss, and vendor contracts?

Consistent definitions across all documents are essential. HR should ensure alignment on: 

• Eligibility 
• Exclusions 
• Accumulators 
• Coordination of benefits 
• Stop-loss provisions 
• Vendor obligations 

Misalignment leads to denied claims, disputes, and fiduciary exposure.