Claim Auditing and The Latest Fiduciary Breach Lawsuit

Catch and Correct Problems with
Continuous Monitoring Before Your Plan is Sued

Anyone involved in health care plans and payments today is aware of the growing number of fiduciary breach lawsuits, some of them sprawling class actions. Each new one reminds corporate plan sponsors about the value of medical and pharmacy claim auditing.

Increasingly, not only the plan sponsor but also the individual plan benefit managers are held personally accountable if they do not act as fiduciaries on behalf of the plan members.

In the simplest terms possible, in many cases, a TFG Partners claim audit will identify issues of concern, enabling you to require PBM action long before the issues spark a lawsuit. Our goal is always to keep your medical and pharmacy plans on track and operate cost-effectively while delivering optimal care.

Lawsuits Underscore Why Claim Auditing Matters

One of the latest lawsuits, this one filed by former employees, claims a mega bank wasn’t dutifully managing its benefit costs as a fiduciary must. This complaint zeroes in on the price paid for specific medicines with claims where the plan’s pharmacy benefit manager (PBM) paid itself more than readily available pharmacies were charging.

Employer-funded plans carry significant responsibility – and legal exposure.

Interestingly, while the bank and its health plan are being sued, the PBM is not named as a defendant, placing the responsibility squarely on the plan’s shoulders and accusing it of lacking appropriate oversight. Again, one of the chief functions of claim audits is overseeing your plan’s third-party vendors, like PBMs.

Details on What Sparked the Latest Case

The bank employee pharmacy plan being sued allegedly paid nearly $10,000 for a generic multiple sclerosis pill, available at a supermarket pharmacy for $648. According to the complaint, this drove up plan members’ premiums and out-of-pocket costs.

Other items included in the lawsuit are allegations the plan sent employees to a mail-order pharmacy that charged higher prices than national drugstore chains. One example was a generic medication billed at $70,000 from the mail-order pharmacy and sold for under $4,000 at a national chain pharmacy.

The former employees also claim the bank overpaid for plan administration, with higher per-employee prices than other plans. When employees are responsible for part of their premiums and out-of-pocket costs, their employers’ plans’ service agreements determine the prices they pay. The expectation is that company plans are vigilant about finding the best prices and high-quality services.

Fiduciary Breach Lawsuits are a Trend

When instances like the $10,000 versus $648 pill come to light, they increasingly lead to legal action. In this case, the former bank employees are requesting certification for a class action. It’s a trend that medical and pharmacy plan sponsors are being taken to court over contract management and oversight.

Earlier this year, a pharmaceutical company employee brought similar claims against the health company and drug manufacturer in federal court. The company is trying to dismiss the suit amid questions about standing because the employee was not prescribed the specific medications in question.

Audit Claims to Find Conflicts, Hidden Fees, Etc.

Employers sponsoring health plans often rely on brokers, third-party administrators, and pharmacy benefits managers to create and run their plans. However, as recent lawsuits demonstrate, that system is ripe for conflicts of interest and hidden fees that increase costs and draw the ire of employees.

A TFG Partners prescription claim audit checks for medication prices being paid and reports if they are out of line compared to the contract — and our market check services can compare and check what others pay. The audit also determines whether promised discounts or rebates are credited with analytic services to determine whether lower-priced generics are dispensed as soon as they hit the market.

To truly stay on top of your plans, we now offer Continuous Monitoring services that review all claims in a near-real-time mode, providing the plan sponsor with ongoing reports on their medical plan administrator or pharmacy benefit manager. It helps identify issues during and not after the plan year so they can be addressed as they occur and assure that plan members receive the benefits they have signed up for while the plan better meets compliance requirements, avoids overpayments, and eliminates the need of having to negotiate over reimbursements long after the plan year has closed.

We customarily detect and flag mistakes and overcharges far more than the price of our services, and now, equally importantly, the problems we help you fix will keep your plan out of court.