Employers who sponsor health plans typically utilize administrators, like pharmacy benefits managers, to facilitate those plans. But, that doesn’t mean those intermediaries have to act in the best interest of the plan sponsors. A Senate committee approved a bill Wednesday that would change that.
Under Senate Bill 3, these business relationships would require what is called a “fiduciary duty” — meaning the intermediaries would be obligated to act in the best financial interest of the plan sponsor.
This would apply to any third party administrator, pharmacy benefit manager, employee benefit consultant or insurance producer acting on behalf of an employer.
Matt Bell, with Hoosiers for Affordable Healthcare, said the legislation creates more confidence throughout the health care system.
“Employers are left with a lot of questions today,” Bell said. “When I'm presented with the product, is it because this is the right product for me? Or is it because it is in the interest of some other entity?”
Joey Fox represents the Association of Health Plans and the Pharmaceutical Care Management Association. He said the bill will have a number of unintentional consequences, including limiting the ability for intermediaries to negotiate.
“We want to make sure that in our conversation on the fiduciary duty to the plan sponsor, that we're not inadvertently causing an increase in costs because it would hurt negotiating volume,” Fox said.
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Indiana Health and Family Services Secretary Gloria Sachdev said the legislation allows a plan sponsor the ability to seek recourse.
“They can go back at least and say, ‘You advised me, you are my advisors, my trusted advisors, and you didn't advise me in my best interest,’” Sachdev said. “It gives them some legal recourse. Right now they don't have it.”
Sachdev said employers currently have a fiduciary duty to their employees to manage their health plan assets, which comes from the money that is taken directly out of the employee’s paycheck. She said that led to more transparency.
The author of the bill, Sen. Justin Busch (R-Fort Wayne) said Washington, D.C., and 12 other states have adopted similar legislation.
“I do believe this bill right now would be the most broad in the nation the way it stands right now,” Busch said.
