Glossary
Activate
To cause something to start.
Activated Fiduciary
A fiduciary who has the knowledge and authority to make informed and prudent decisions on behalf of plan participants by performing an ongoing, documented fiduciary process.
Administrative Service Agreement
A contract where one party hires another to provide administrative services. Examples are payroll, HR, or financial planning, in exchange for compensation.
Attestation
The process by which a health plan fiduciary provides proof of their good faith compliance effort as it applies to the gag clause prohibition requirement under CAA.
Attestor
Someone who attests. As related to the CAA this would be the Plan Sponsor Fiduciary or a third party on behalf of the Plan Sponsor with regards to Gag Clause Prohibition.
BUCAH or BUCA
BUCAH is an acronym which stands for the big five health insurance providers: Blue Cross/Blue Shield, UnitedHealthcare, Cigna, Aetna, and Humana.
Bundled Self-Insured
A type of self-funding where the insurance company bundles all the component pieces – administration, stop loss, and claims – into a convenient monthly premium the employer pays.
CAA
Consolidated Appropriations Act of 2021 that amends ERISA, with the legislative intent of mandating transparency of provider costs to health plans and requiring plan sponsor/fiduciaries to establish a fiduciary process on behalf of plan participants.
Cash Pay / Self-Pay Rate
Self-pay patients are those who must pay all or part of the cost of the care. To assure access to health care services, uninsured or full payment self-pay patients will receive a discount on charges based on the individual or family income. This can be referred to as the Cash-pay rate.
Chargemaster
A comprehensive list of charges for each inpatient and outpatient service or item provided by a hospital. Chargemaster rates are the health care market equivalent of Manufacturer’s Suggested Retail Price (MSRP) in the car buying market.
CMS Reimbursement Rate
The Centers for Medicare and Medicaid (CMS) sets reimbursement rates for all medical services and equipment covered under Medicare. When a provider accepts assignment, they agree to accept Medicare-established fees. Providers cannot bill you for the difference between their normal rate and Medicare set fees.
Conflict of Interest
(COI) is a situation in which a person or organization is involved in multiple interests, financial or otherwise, and serving one interest could involve working against another. Typically, this relates to situations in which the personal interest of an individual or organization might adversely affect a duty owed to make decisions for the benefit of a third party.
Direct Contracting
An arrangement between an employer and a healthcare provider where the employer contracts directly with the provider for healthcare services. This typically yields a much lower cost of care and medicine, removing intermediary cost layers.
Direct Pharmacy Procurement
The process of purchasing drugs directly from manufacturers rather than through wholesalers or distributors. As with Direct Contracting, removing the intermediaries from the pharma supply chain reduces unit costs paid by the plan and members of the plan.
Discounted Fee for Service Network (PPO)
A type of health insurance plan that allows members to see any doctor or specialist they choose without a referral.
DOL
Department of Labor.
Duty of Loyalty
The duty of loyalty is often called the cardinal principle of fiduciary relationships but is particularly strict in the law of trusts. In that context, the term refers to a trustee ‘s duty to administer the trust solely in the interest of the beneficiaries and following the terms of the trust.
Educate
The act of teaching and learning to become smarter on a topic or topics.
Educated Fiduciary
A fiduciary who has been trained and educated on their responsibilities to perform recurring, documented fiduciary process and duties.
Employee Benefit Advisor
A professional who provides advice and guidance on employee benefits to employers. Brokers are not consultants, and Consultants are not brokers, this is a hybrid term. Compensation is commonly Fee and Commission.
Employee Benefit Broker
A professional who provides advice and guidance on employee benefits. Often focused on employers with fewer than 150 employees. Generally, Commission based compensation model.
Employee Benefit Consultant
A professional who provides advice and guidance on employee benefits to employers and plan sponsors Often Direct Fee Based compensation model.
ERISA
Employee Retirement Income Security Act of 1974 is a federal law that regulates employee benefit plans in the private sector to provide protection for individuals in these plans.¹
Exclusive Benefit Rule
The Exclusive Benefit rule requires that fiduciaries discharge their duties solely in the interest of plan participants and beneficiaries, and for the exclusive purpose of providing benefits to those participants and beneficiaries as well as defraying reasonable plan administration expenses.
Fiduciary
A party who is directly or indirectly designated by the health plan to exercise discretion with respect to administration of the plan and management and disposition of plan assets, on behalf of plan participants. Plan fiduciaries include, for example, plan trustees, plan administrators, and members of a plan’s investment committee. Fiduciaries who do not follow these principles of conduct may be personally liable to restore any losses to the plan, or to restore any profits made through improper use of plan assets. Courts may take whatever action is appropriate against fiduciaries who breach their duties under ERISA including their removal.²
Fiduciary Duty
The legal duty of a fiduciary to act in the best interests of the beneficiaries of a health plan, aka employees.
Fiduciary Liability
Fiduciary liability is the responsibility and legal liability of fiduciaries, who are people or entities involved in the administration or management of employee benefit plans, such as retirement or health plans. Fiduciaries are expected to act in the interest of plan participants and can be sued for errors, omissions, or wrongful acts in handling the plans. BUCAH: An acronym for Blue Cross Blue Shield, United Healthcare, Cigna, Aetna, and Humana.
Fiduciary Process
A formalized and documented plan for compliance with the fiduciary requirements for health plan sponsors.
Fiduciary Team
A group of individuals responsible for ensuring a plan is being managed according to ERISA law, and to the exclusive benefit of participants.
Fully Insured
Health insurance is being purchased from an insurance company (either by an employer or by an individual) and the insurance company will be the entity responsible for paying for medical care.
Gag Clause
A provision in a contract or administrative agreement that prevents one party from speaking out about certain topics, accessing health-plan data, comparing outside data sets to plan data de code pricing. In CAA regulations, “Gag Clause Prohibition Compliance” refers to clauses in administrative agreements between employers (plan sponsors) and TPA’s, PBM’s and Provider Network Administrators that limit benchmarking. All three functions are commonly provided by BUCAH’s, each with their own Admin Service Agreement. Per CAA, gag clauses that prohibit fiduciaries from performing their fiduciary duties, are non-compliant contract provisions. Once discovered, the plan sponsor and fiduciary teams are compelled by ERISA Law to have the Gag Clauses removed or change vendors to those with CAA compliant agreement language. Summary: A fiduciary cannot be party to a contract that prevents them from performing their fiduciary duty.
Gag Clause Prohibition Compliance Attestation (GCPCA)
The gag clause prohibition in the CAA prohibits health plans from entering into contracts that restrict access to specific data and information that a plan can make available to another party. The first attestation is due by December 31, 2023, and subsequent attestations will be due by December 31 of each year thereafter.
Good Faith Compliance Effort
The standard to which a health plan fiduciary is held to on behalf of plan participants. It requires behavior equal to or greater than that of a prudent person and a reasonable interpretation of the law.
Health Plan Data
Data that provides insights into how health plans are performing and how they can be improved.
MHPAEA
MHPAEA is an acronym for the Mental Health Parity and Addiction Equity Act.
Health Plan Pricing Transparency
A Law / CAA rule that requires most group health plans (BUCAH’s) and issuers of group or individual health insurance to post pricing information for covered items and services.
HHS
Health and Human Services.
High Performance Network
A network of providers that have been selected based on their quality and cost-effectiveness.
Hospital Pricing Transparency
A CAA Law / rule that requires hospitals to provide clear, accessible pricing information online about the items and services they provide in two ways.
IRS
Internal Revenue Service.
Level Funded
A type of self-funding where the insurance company bundles all the component pieces – administration, stop loss, and claims – into a convenient monthly premium the employer pays.
National Health Plan
A top five health plan that provides health care coverage, administration, stop loss, claim processing, etc. With its own PPO provider network across the country.
Pharmacy Benefit Manager (PBM)
Companies that manage prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, large employers, and other payers.
Pharmacy Rebates
Discounts offered by drug manufacturers to PBMs (Pharmacy Benefit Managers) in exchange for preferred placement on formularies or other benefits.
Plan Benchmarking
Benchmarking is the practice of comparing business processes and performance metrics to industry bests and best practices from other companies. Per CAA, Plan Sponsor fiduciaries (aka employers) must benchmark the internal components of a health plan including the PBM, TPA, Network, down to the cost per unit of care or medicine. There are four types of benchmarking against independent metrics: Internal, External, Performance, and Practice. Fiduciary teams must meet to assess the analysis, data, and cost results for reasonableness. Negotiating your annual medical plan renewal with your carrier or broker is not benchmarking.
Plan Sponsor
The employer who creates the health plan on behalf of its employees. The plan sponsor is always a plan fiduciary.
PPO
A type of health insurance plan that allows members to see any doctor or specialist they choose without a referral.
PPO Discounts
Insurance company-negotiated discounted rates with a group of “preferred” medical providers. These are also known as network or in-network doctors and medical facilities. The discount is typically applied to the Chargemaster Rate for Hospitals or Billed rates for doctors and other non-hospital entities.
Prudent Man (Person) Rule
A rule giving discretion to a fiduciary and especially a trustee to manage another’s affairs and invest another’s money with such skill and care as a person of ordinary prudence and intelligence would use in managing his or her own affairs or investments.
Qualified Payment Amount (QPA)
The QPA is the median cost of services paid to network providers for a particular item or service in the relevant geographic area.
Self-Insured
A company provides all the funds to pay for expected claims.
Spread Pricing
The difference between what pharmacy benefit managers charge employers for prescription drugs and what they pay pharmacies for those drugs.
Stop Loss Insurance
Insurance that protects against catastrophic or unpredictable losses.
Third-Party Administrator
An organization that processes insurance claims or certain aspects of employee benefit plans for a separate entity. National Health plans or BUCAH’s perform the TPA function of processing claims. Independent TPA’s pay claims in unbundled self-insured arrangements.
Third-Party Health Solution Partner
A company that provides solutions to health plans that are embedded in the plan itself. Examples are Out Network Re-pricers, Third Party Subrogator’s, Group Purchasing Entities, Payment Integrity vendors, data analytics vendors, and more. These vendors are embedded by the TPA and often invisible to the plan sponsor and their fiduciaries paid with health plan assets not disclosed.
Transparency
Designed to make health care price information more transparent for plan participants, specifically:
- Making certain cost and claims data available through posted machine-readable files
- Establishing an internet-based, self-service tool to allow members to get real-time, accurate estimates of cost-sharing liability for specific services, furnished by specific providers, at specific location.
Unbundled Self-Insured
A type of self-funding where employers pay for each component separately.
Intercompany Eliminations
An accounting technique to prevent double counting revenue when a subsidiary of a company sells a product or service to another subsidiary of the same company.
The intercompany elimination allows health insurance carriers to make profits over and above the ‘Medical Loss Ration’ (MLR) of 85% because the MLR only applies to the health insurance subsidiary, not the ‘healthcare and pharmacy services’ subsidiary.