It is important that human resources leadership and corporate counsels be mindful of the growing efforts by disgruntled employees and employee advocacy groups to utilize ERISA regulations to initiate class-action lawsuits related to alleged failures to appropriately manage medical costs. Motivated by the escalating impact on employees and their families from annual increases in health insurance premiums, deductibles, co-insurance, and other cost-sharing obligations, legal actions are being pursued. These actions may target both self-insured employers and their third-party administrators (TPA’s). Horror stories abound.
No Surprises Act Requires Follow Up
Healthcare Horizons continues to find various overpayments, including systemic issues, that if reported in a legal complaint would appear quite egregious, including out-of-network surprise bills being paid 100% of billed charges. The No Surprises Act went into effect in January 2022 and established processes to address egregious out-of-network claims, including arbitration if necessary. As we have reported many times in our Lost Benjamins Award materials, overcharges and overpayments adversely impact employers and employees.
A recent study reported that employees contributed 22% of their health plan’s premium costs in 2021. As medical cost-sharing provisions continue to rise, resulting in employees paying greater out-of-pocket expenses, as much as 15-25% of an employee’s annual compensation may be consumed by healthcare expenses. Thus, it should be no surprise there is a growing focus on the integrity of such obligations. This environment has the attention of plaintiffs’ attorneys willing to pursue class-action lawsuits on a contingency basis.
Comprehensive Audit Meets Fiduciary Minimum Standard of Care
If an employer has not had an audit performed by an independent expert, it may face allegations of failing to meet a fiduciary’s minimum standard of care. Reliance on the employer’s insurance broker or TPA to meet this obligation may prove unfounded. If any audits are performed, they most likely are random sample audits on all plans, not a single employer’s plan. Such audits miss over 90% of overpayment amounts and can miss systemic errors readily detected by 100% claims audits.
Human resource leaders should act immediately to ensure their company does not remain exposed to this increasing risk. Engage a qualified expert to perform a 100% audit of medical claims.