by Jennifer Spiegel Berman, JD, MBA, CEO of MZQ Consulting | jen@mzqconsulting.com
Money Matters, But It's Not the Only Thing That Does
The requirement to monitor plan expenses is a traditional focus of compliance efforts surrounding fiduciary duties. Substantial regulatory regimes have arisen in both the retirement and health plan context to ensure that fiduciaries have the appropriate information to make sound financial decisions on behalf of their plans. These transparency rules are largely designed to allow fiduciaries to ensure that they are spending plan funds wisely. How can you ensure compensation is reasonable without knowing what it is?
While much time and attention has been spent on the issue of compensation, fiduciaries are required to think more broadly. Money matters, but quality matters too. In selecting, service providers, fiduciaries are NOT required to "engage in an objective process designed to elicit information necessary to assess the qualifications of the provider, the quality of the services offered, and the reasonableness of the fees charged in light of the services provided." Thus, your job is to measure value.
Decision, Decision...
So, how exactly are you supposed to make a good decision in this context? The first step is making sure you have good options. You can't just assume that the insurance carrier or network with the biggest name is the best and sign on the bottom line. Nor can you just pick the cheapest option on the market. The law (and basic prudence) require a real investigation into the options available.
In evaluation these options, the DOL directs fiduciaries to:
(1) Compare firms based on the same information.
Pick your metrics and stick to them. These can include services offered, experience, cost, quality assessments, etc. Don't forget to also consider a firm's financial condition and its experience with health plans like yours.
(2) Evaluate quality.
Quality comes in many shapes and sizes. Factors you should consider include:
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- The identity, experience, and the qualifications of the professionals who will be handling the plan or providing the medical services.
- Any recent litigation or enforcement action taken against the service provider.
- The service provider's experience and performance record.
- Ease of access to medical providers and information about the healthcare provider's operations.
- The procedures in place to timely consider and resolve patient questions and complaints.
- The procedures for patient record confidentiality.
- The methodology used to ensure that any required licenses, ratings or accreditations are up to date.
It's also not enough to just think about these issues. Really, even evaluating them in depth isn't enough. In the legal world, it's not real until it's documented. It is therefore critical that you document your evaluation process. This doesn't necessarily mean you need to run a full request for proposal every time you hire a vendor. But it does mean you need to engage in a process, and you need to maintain records of that process.
Once you make your decision, you aren't quite done. You also need to make sure that your relationship with your vendor is codifies. Yes, you need a contract—preferably before services commence. The DOL states this point clearly and succinctly: "Read, understand, and keep copies of all contracts." If you read these words and can't help but think, "I'd rather stick needles in my eyeballs"—you aren't alone. There is nothing preventing you from getting help. In fact, there are scores of healthcare advisors, consultants, attorneys, etc. who actually like this stuff. Find them, engage them, take them to dinner, send wine—they've got your back, but only if you let them help.
This post includes an excerpt from Chapter 6 from the book Life and Death Decision in the C-Suite. To purchase the full book, click here.
