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The big picture.

Opaque pricing leave employers with little choice and negotiating power when negotiating contracts with providers, often resulting in annual cost increases of 5-20%. As a fiduciary, employers must ensure they are paying fair prices for the health care services provided within their plans and have the appropriate oversight in place to mitigate lawsuits under ERISA for breach of fiduciary duty related to excessive fees.

Four steps to take right now.

• Establish a separate formal health and welfare benefits committee. Many companies have a benefits committee which oversees both retirement and health and welfare benefits. A risk of having a combined committee is that most of the time is spent on retirement plans. While this was safe in the past when health and welfare benefits did not face as much fiduciary scrutiny, as more benefits lawsuits crop up, this is no longer the case.  (Find a sample committee charter in the Guide.)
• Amend contracts with vendors to make them contractually responsible for compliance with federal rules and law. The guide provides sample contract language, with input from the Health Transformation Alliance (HTA).
• Use transparency data to better negotiate contracts.The increased availability of hospital price data gives employers an opportunity to compare prices across plans, services, hospitals, and Medicare. Analyzing claims data provides years of pricing data and, when combined with current pricing data, allows employers to more accurately predict future spending.
• Promote health literacy among employees. Adults with low health literacy have four times higher health care costs and more hospital stays than those with proficient health literacy. Ensure your communications surrounding health benefits are easy to understand and provided via multiple avenues (website, text, email, etc.) and take advantage of concierge health navigators to help employees make smarter decisions regarding care.