Jump to content

Hospital's health plan


Guest plh

Recommended Posts

Can a hospital that sponsors its own self-funded medical plan direct its employees to the employer hospital through lower copays or deductibles without violating the fiduciary rules of ERISA?

Link to comment
Share on other sites

What is the difference to having 2 insurance plan choices, 1 with a high co-pay and deductible and a large network of providers (including multiple hospitals) and the second plan with low cpay and low deductible but a very small network of providers (and only 1 hospital)? Or any combination of the above.

This is what almost every large employer provides whether deliberately or by default. If this is not a violation of rules etc why would the plan you are outlining be treated differently?

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

Link to comment
Share on other sites

The prohibited transaction tax under IRC 4975© only applies to qualfied plans and IRAs. I dont know if the prohibited transaction provisons of ERISA 406 would prohibit the furnishing of goods, services and facilities between the plan and an employer which is a hospital. There is a exemption for health insurance contracts issued by an insurer to cover its own employees under ERISA 408(B)(5).

mjb

Link to comment
Share on other sites

I've seen several health plans that are set up this way. Also, a lot of insurance carriers are now setting up tiered hospital plans. The more expensive the hospital, the more money that will come out of your pocket.

On a side note, you just want to be careful that you aren't violating any privacy laws under HIPAA when streamlining your employees into your own netowrk. Since you are self-insured, you probably have a TPA and this isn't an issue, but I thought I'd throw it out there.

Link to comment
Share on other sites

Thanks for your responses. In looking at ERISA, it seems that the employer's use of its position to direct business to itself would violate ERISA section 406(a) and/or 406(B). The exemption referred to I think involved Emery University but Emery was one of many in a network set up by an unrelated fiduciary. I don't think my situation will fit under the exemption. I hear that other hospitals direct their employees to their own facilities with incentives. I wonder if they've found an exception or are just taking the risk of a fiduciary breach. Any thoughts?

Link to comment
Share on other sites

The hospital is the sponsor of the plan it is not the plan. The services are provided by the provider network not by the plan and not by the hospital.

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

Link to comment
Share on other sites

  • 9 years later...
Guest cohenochs

What about a hospital, as plan administrator for its own employees' group health plan, choosing itself and related entities for inclusion in its network of providers? The Emory University individual prohibited transaction exemption IPTE 93-62 seems awfully limiting, as does some of the language appearing in PWBA Information Letter 02/19/1998 to Diana Orantes Ceresi. The latter does not address the precise issue raised here, but indicates that the process of selecting health care providers for a group health plan may be a fiduciary function, which should "avoid self-dealing, conflicts of interest or other improper influence." EBIA concludes from the Information Letter that the selection of health care providers is not a settlor function in the DOL's view.

These pronouncements make obvious that a hospital choosing itself as a network provider for its group health plan is potentially fraught with fiduciary difficulties, yet it seems this must happen all the time. It is hard to believe that a hospital cannot offer its employees access to the hospital's own facilities and physicians through its group health plan without the onerous conditions laid out in the Emory University IPTE (i.e., at least 50% of the physicians and 50% of the hospitals included in the network are not affiliated with Emory, the selection of the providers is made by an independent fiduciary, etc.).

It's not entirely clear, but are these conclusions limited to situations involving only the disposition of "plan assets" and therefore not of concern if the group health plan is not deemed to hold plan assets? If no plan assets are involved, is the hospital free to choose itself as a network provider for its plan even to the exclusion of a competitor facility without any fiduciary concerns?

Link to comment
Share on other sites

  • 1 month later...
What about a hospital, as plan administrator for its own employees' group health plan, choosing itself and related entities for inclusion in its network of providers? The Emory University individual prohibited transaction exemption IPTE 93-62 seems awfully limiting, as does some of the language appearing in PWBA Information Letter 02/19/1998 to Diana Orantes Ceresi. The latter does not address the precise issue raised here, but indicates that the process of selecting health care providers for a group health plan may be a fiduciary function, which should "avoid self-dealing, conflicts of interest or other improper influence." EBIA concludes from the Information Letter that the selection of health care providers is not a settlor function in the DOL's view.

These pronouncements make obvious that a hospital choosing itself as a network provider for its group health plan is potentially fraught with fiduciary difficulties, yet it seems this must happen all the time. It is hard to believe that a hospital cannot offer its employees access to the hospital's own facilities and physicians through its group health plan without the onerous conditions laid out in the Emory University IPTE (i.e., at least 50% of the physicians and 50% of the hospitals included in the network are not affiliated with Emory, the selection of the providers is made by an independent fiduciary, etc.).

It's not entirely clear, but are these conclusions limited to situations involving only the disposition of "plan assets" and therefore not of concern if the group health plan is not deemed to hold plan assets? If no plan assets are involved, is the hospital free to choose itself as a network provider for its plan even to the exclusion of a competitor facility without any fiduciary concerns?

Healthcare providers can, and do this all the time. It can be done via insured or self-funded.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...