Why Payment Integrity Is Now a Fiduciary Game Changer

Aug 13
5 min read

For a long time, payment integrity lived in the back office. It was a technical exercise that sat with claims administrators, rarely reached the plan sponsor, and almost never entered a conversation about fiduciary duty. That is changing in public view. When a national trade publication tells benefits advisers that independent payment integrity is a competitive advantage and a fiduciary safeguard, the idea has moved from vendor talking point to market expectation.

A recent Employee Benefit News piece put it plainly: forward-thinking advisers are increasingly connecting their self-insured employer clients with independent payment integrity to better comply with price transparency laws and to become better stewards of the benefits they offer. For plan sponsors who have wondered whether claims oversight is really their job, that framing answers the question. It is.

From cost control to fiduciary duty

Payment integrity combines technology, analytics, clinical expertise, and claims review to confirm that healthcare claims are paid accurately, and to identify and prevent fraud, waste, abuse, billing errors, and contract noncompliance. That work has always saved plans money. What has shifted is the reason it matters.

Speaking to Employee Benefit News, Stephen Carrabba, co-founder and CEO of ClaimInformatics, framed oversight of claims payment as more than a dollars-and-cents question. He described it as a fiduciary question, and drew the parallel he has been making for the better part of a year: the oversight standard that reshaped 401(k) plans is now arriving for health plans. The comparison is not rhetorical. Both are governed by ERISA, both hold named fiduciaries personally accountable, and both turn on whether the people running the plan can demonstrate prudence with plan assets.

“It is incredibly important to have oversight of how claims are paid, and it is not just important from a dollars-and-cents perspective, but also from a fiduciary perspective,” Carrabba told Employee Benefit News.

The eight duties behind the shift

Vetting who sits in the health benefits supply chain is central to understanding why payment integrity now carries fiduciary weight. Among the requirements a health and welfare benefits plan fiduciary faces under ERISA is the need to monitor service providers. Others include protecting plan assets, ensuring fees are reasonable, and confirming that plan documents are followed to demonstrate prudence and loyalty. These sit within the eight fiduciary duties that govern how a plan must be run, and none of them can be satisfied by a fiduciary who cannot see how claims are actually being paid.

That is the crux of the argument. A fiduciary cannot monitor what a fiduciary cannot see. When a plan sponsor has no independent line of sight into claims payment, the duties to monitor vendors, guard plan assets, and act prudently become difficult to evidence, let alone defend.

Where the data access problem lives

The trade coverage put an uncomfortable pattern on the record. Third-party administrators owned by Blue Cross Blue Shield, UnitedHealthcare, Cigna, and Aetna, the so-called BUCA plans, have been described as including provisions in their administrative-services-only contracts that restrict sharing health plan data with their self-insured employer clients, according to Jack Tartaro, director of health and benefits for Willis Towers Watson. Tartaro characterized that restriction itself as a red flag.

He also pointed to a figure that reframes the stakes. Many of those contracts, he noted, allow for a one percent error rate in adjudicating claims. One percent sounds small until it meets scale. On an employer spending one hundred million dollars a year on benefits, a tolerated one percent error rate is a large number if those claims are not being adjudicated correctly. Independent administrators, by contrast, are described as unencumbered by the potential conflicts of interest that come with a vertically integrated insurer owning its own TPA, stop-loss carrier, or pharmacy benefit manager.

Prepay is where the argument lands

The clearest signal in the coverage is directional. Payment integrity is increasingly emphasizing the need to adjudicate claims correctly on a Pre-Pay basis rather than chasing recoveries after the fact. The logic is simple. Recovering an overpayment depends on a carrier being willing to hand over the data and a provider being willing to give money back, and neither is guaranteed. Reviewing a claim before it is paid removes that dependency.

There is a structural reason BUCA arrangements struggle here. When the entity reviewing the claim is owned by the same organization that pays the claim, meaningful Pre-Pay review before payment is difficult to perform. That is not a knock on any individual. It is a description of what vertical integration does to independence. As Carrabba put it to the publication, independent payment integrity is arriving whether the industry likes it or not, and contracts are going to change as the tools that independent firms are building, coupled with ERISA attorneys pushing for accountability, force that change across employers of every size.

“If you have a lawsuit and cannot even tell them accurately how your money is being spent, that is not defensible in court.”

That line, delivered by Willis Towers Watson’s Jack Tartaro, is the fiduciary case for independent oversight compressed into a sentence. The defensibility of a plan’s decisions rests on the plan’s ability to show its work.

What plan sponsors and brokers should take from this

The trade-press framing matters because it is not coming from a vendor. When a benefits publication and a Willis Towers Watson leader independently describe independent payment integrity as a fiduciary safeguard and a broker differentiator, plan sponsors have external confirmation of what the fiduciary standard already requires.

Treat claims data access as a fiduciary right, not a courtesy. If an administrative-services-only contract restricts your access to your own plan’s claims data, that restriction works against your ability to demonstrate prudence.
Read the error allowance in your contract. A one percent tolerance is not neutral at scale. Know the number and what it means against your annual spend.
Ask whether review happens before payment. Pre-Pay review avoids the uphill battle of clawing back dollars a carrier or provider is not eager to return.
Favor independence. A reviewer with no ownership stake in the TPA, stop-loss carrier, or pharmacy benefit manager has no structural conflict when it flags an error.

Payment integrity became a game changer the moment it stopped being about savings alone and started being about defensibility. The publications and advisers now saying so out loud are describing a fiduciary standard that self-funded plan sponsors are already accountable to meet.

Payment Integrity Fiduciary Related Resources

See where your plan stands

ClaimInformatics provides independent, conflict-free payment integrity and fiduciary oversight for self-funded plans. A complimentary ASO review shows you exactly where your claims data access, error allowances, and Pre-Pay posture stand against your fiduciary duties.

Contact Stephen Carrabba, CEO and Co-Founder: s.carrabba@claiminformatics.com | (860) 761-9570