A fun and fiery Tuesday afternoon session at the 2023 NAPA Fly-In Forum titled “CAA: The New Fiduciary Frontier” featured three high-profile industry personalities in a rapid exchange about the healthcare opportunities and threats for plan advisor and sponsors contained in the Consolidated Appropriations Act of 2021 (CAA).
“Why in the world are we here at a retirement forum talking about healthcare?” moderator Jeffrey Cullen, CEO of Strategic Retirement Partners, rhetorically asked at the discussion’s outset. “Simple. We know how to protect fiduciaries.”
While an increasingly hot topic among advisors, the law requires, among other things, a determination of the “reasonableness” of vendor fees and services for healthcare, as well as prescription drug reporting for plan years 2020, 2021, and 2022 (due Jan. 21, 2023).
Failing to comply with CAA requirements leaves employers vulnerable to fines and class-action lawsuits. But most employers are still in the dark, believing their broker or TPA will handle compliance on their behalf or that it’s simply “not a big deal.”
It’s attracted the attention of ERISA litigation lawyer Jerry Schlichter, who took to social media to hunt for potential employee plaintiffs for a new brand of fiduciary litigation.
Yet, it’s a road retirement plan advisors have tread for some time, panelist and Wagner Law Group COO Tom Clark noted, and healthcare transparency is something they should address now before their competition does.
“Healthcare providers are more Mafia than anything else,” he said, before warning, “We in the retirement plan space are fighting over basis points, yet healthcare costs come right from the top of EBIDTA. Your competition will walk in the side door and save your client $2 million. Suddenly, you’re no longer the CFO’s favorite person.”
While Clark argued that it’s a fiduciary issue for plan sponsors, David Levine, Principal at Groom Law Group, advised caution when using the term.
“If you work at a firm that offers retirement and healthcare plans, be careful when saying it’s a fiduciary breach [under the CAA] because that could be used against you in other areas,” Levine said. “It’s better instead to position it to the plan sponsor as ‘We will save you money.’”
Cullen noted the four CAA parts that affect plan sponsors; mental health parity, employer reporting, gag clauses, and 408(b)(2).
The third topic, gag clauses, generated a significant amount of discussion from the panelists. The CAA requires the removal of all “gag clauses,” which are agreements between healthcare providers, third-party administrators (TPAs), and other vendors not to release data and information related to healthcare pricing.
“The companies can all share this information with each other, but not with [the consumer],” Clark said, noting it’s now the subject of a Kraft Heinz lawsuit against Aetna and the first of its kind.
Kraft Heinz alleged that Aetna, who supposedly served as a TPA for the Kraft plans dating back to at least 2007, breached its fiduciary duties in approving and paying “false, fraudulent, and improper claims” and for withholding information that would allow a review of those practices.
More insidiously, former ARA Chief Content Officer Nevin Adams recently wrote that the suit also alleged that its manager of human resources compliance had his access to an Aetna information portal blocked—and when access was restored, reported that various types of financial information relevant to the plans had been deleted.
Similarly, access through Kraft Heinz’s benefits broker (Willis Tower Watson) to Kraft Heinz’s data was allegedly blocked after Aetna invoked a provision in their contract that prohibited data sharing. The suit said Kraft Heinz attempted to access data via “various clearinghouses” but could not do so.
