Contract and Claim Analysis: Helping Fiduciaries Manage Plan Assets Appropriately

The J&J class action lawsuit is at the top of the watch list for many self-insured plans and their benefits consultants. Fulfilling fiduciary duties to manage the plan assets in the participants’ interests means asking a tough question: was money spent appropriately?

To judiciously answer this question, self-insured plans need to evaluate how their pharmacy contract compares to market rates and how each claim cost compares to fair market value. As the fiduciary, did you spend more than needed?

Contract Value

At the most basic level, many benefits experts claim to meet fiduciary duties by comparing a plan’s pharmacy contract to a handful of similar programs. Perhaps the broker pushes to preferred contracts, carved-in, carved-out coalitions, that fall under the brokerage. While keeping a market comparison “in-house” may simplify the process, it may result in additional liability to the plan sponsor due to the evaluation’s limited scope.