Let the Games Begin

The latest development in the (not) greatest healthcare in the world™ is that employers are suing health plan administrators for increasing, and increasingly opaque, fees and other costs from insurance administrators.

Note that this is about self-funded plans, which is what applies to most medium and large employers, where the company pays the benefit, and essentially rents access to the insurers networks.

I figure that this is going to go a lot like the asbestos legislation, nothing at all for a while, then suddenly all at once, followed by bankruptcies.

Then again, I'm an optimist:

Lawsuits by employers against insurers that administer employer health plans are beginning to mount, and workers could soon join the fray with litigation against employer-sponsored health plans.

Kraft Heinz Co.‘s employee benefit plan filed a suit June 30 against Aetna Life Insurance Co. in the US District Court for the Eastern District of Texas, accusing the insurer of mismanaging the company’s health and dental plans by pocketing undisclosed fees and paying millions of dollars in claims that shouldn’t have been approved.

Employers that provide health benefits for employees are increasingly expected to ensure that claims paid and fees charged are reasonable, and they are becoming more aware of those fees as a result of data that hospitals and insurers are required to provide under the Consolidated Appropriations Act, 2021 (Public Law 116-260) and the transparency in coverage rule issued in 2020.

………

Lawsuits also have been filed against Elevance Inc. and against Blue Cross Blue Shield of Massachusetts. The suits allegebreach of fiduciary duty by plan administrators in not providing adequate claims data to employers so that they can review whether the plans are being properly administered, she said.

Moreover, plaintiff’s law firm Schlichter Bogard LLP appears to be scouting on LinkedIn for employees to be plaintiffs against Target, State Farm, and PetSmart regarding the companies’ health plans—actions that could open the door to employees alleging company breach of fiduciary duty, [Christin] Deacon [of VerSan Consulting LLC] said.

………

In their lawsuits, a major point of contention is the alleged failure of plan administrators to provide employer plans with claims data.

In its lawsuit, Kraft alleged that Aetna approved false, fraudulent, and improper claims, including thousands of duplicative claims. Kraft asked Aetna to turn over its claims data in 2021 so it could investigate these matters, and the company responded by producing only “self-selected” and incomplete data, Kraft said in the suit.

These plan administrators make their money by extracting monopoly rents.

If companies administered the plans and benefits on their own, then they would be paying full price on every procedure done for their employees, so there is no alternative for them, and the plan administrators take every opportunity that they can to extract money from the companies and their employees.