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Many U.S. employers that offer employee health plans have failed to take even basic steps to perform the duties expected of health plan fiduciaries—and to save themselves money. This is the conclusion of Barak Richman and three other researchers, who published employer survey data in a new paper posted on the SSRN.com website.
The federal Employee Retirement Income Security Act of 1974 (ERISA) requires employers with health plans and retirement plans to act as fiduciaries, meaning the employers should perform their plan oversight duties “solely in the interest of plan participants” and “with the care, skill, prudence, and diligence” that a “prudent man” would use in a similar situation.
Richman, a Duke University law professor, and his colleagues organized an employer survey to explore how well U.S. health plan sponsors are meeting fiduciary requirements. An outside firm helped the researchers get responses from 221 firms. All the participating employers have at least 50 employees, and they are active enough to participate in a health benefits survey, yet 37 percent of the survey participants said they do not compare the cost of their health coverage with the cost of health coverage from competing insurers. Meanwhile, about 33 percent of the employers fail to request coverage offers from multiple coverage providers.
“On this basis alone, we find that more than one-third of surveyed employers are likely in violation of ERISA,” the researchers write.
Most participating employers said they review their plans every year, but “very few employers employ industry-standard performance measures,” the researchers report. “And most employers do very little to measure employee experience.”
Richman worked on the paper with Amy Monahan of the University of Minnesota, Sara Singer of Stanford University, and Jeffrey Pfeffer of Stanford. The researchers suggest that many of the employers participating in their survey would have a hard time fending off ERISA suits. “Comparison shopping and price negotiation may be difficult due to provider consolidation, but this alone does not relieve employers of their duty to make informed purchasing decisions,” they write.
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From: BenefitsPRO
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