Statement on Fiduciary Responsibilities

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Wednesday, June 13, 2012 1:20:00 PM Categories: Tools of the Trade

Statement on Fiduciary Responsibilities

There are many positive reasons for conducting claim and enrollment audits with Health Decisions.  Typically, the opportunity for economic return through recoveries receives the most attention.  However, there are other, equally compelling, reasons for performing these audits that relate to legal and managerial responsibilities faced by all self-funded health plan fiduciaries and executives.

All Plans

All self-funded health plans are overseen by plan fiduciaries that have the legal responsibility for assuring that all plan expenditures are warranted and that plan assets are not misspent.  Third-party administrators (TPA) and plan payers are not fiduciaries.  Most explicitly disavow any such role.  Fiduciary responsibilities fall squarely on employers authorizing the plan and/or trustees overseeing the plan.  These responsibilities are explicitly addressed in federal law.

Audits done on a routine or other basis are one of the most direct steps a fiduciary can take to show that they have met their legal obligations.  In this context, even audits that produce no financial return have value.  The real risk faced by a fiduciary is not having audits done and having someone else find errors or fraud that went undetected due to lack of basic oversight.

Publicly Traded Companies

The passage of Sarbanes-Oxley has added a further reason for corporate executives to audit plan expenses.  Executive responsibilities now include attesting that financial statements are based on accurate information.  With health plan costs among the largest and fastest growing non-payroll expenses faced by all employers, plan costs do have a material effect on corporate financial statements.   To be certain that their attestation of accuracy can be supported, corporate executives should not rely on cursory reviews of plan invoices but require the type of in-depth audit done by Health Decisions.

Public Sector Employers

Public employers do not face the same regulatory requirements as private employers.  However, they do face a higher level of accountability to the voters and taxpayers.  Assuring that public funds are expended in an appropriate and non-wasteful manner is among the most basic responsibilities of any elected official, appointee, or public administrator.  Failure to exercise adequate oversight has resulted in embarrassing and damaging exposure in the media resulting in loss of employment and elections.  The best way to avoid such consequences is to include thorough audits as a routine part of public sector management of health plan expenses.

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