Renewal Season Reminder: Be Prudent with Shared Savings and Cross-Plan Offsetting To Ensure ERISA Compliance
- mriemer5
- Oct 14
- 2 min read
As renewal season unfolds, fiduciaries face a critical opportunity to align contracts with their ERISA duty: act solely in the interest of participants and prudently manage plan assets. Too often, renewal agreements include provisions that appear beneficial but, in practice, expose self-funded plans to conflicts of interest, hidden fees, and fiduciary liability.
Two of the most common offenders? Post-pay shared savings programs and cross-plan offsetting.
🚩 Shared Savings Programs: The Illusion of Value
Many TPAs and networks market “shared savings” programs—especially post-pay arrangements—to show value. But the math rarely works in the participants’ favor.
Why Shared Savings Programs are risky
Conflicts of Interest – TPAs earn more when claims are inflated because their “savings” revenue is a percentage of the overpayment.
Perverse Incentives – Instead of preventing errors up front, these programs reward excessive charges that slip through.
Lack of Oversight – Fiduciaries must monitor providers; agreeing to such programs undermines that duty.
Illusion of Savings – Discounts off inflated charges aren’t real savings—they’re manufactured, after-the-fact write-downs.
💡 Bottom line: Post-pay shared savings arrangements create a paper trail that your plan chose to overpay first, only to give a portion back to the vendor.
🚩 Cross-Plan Offsetting: A Hidden ERISA Compliance Liability
Cross-plan offsetting occurs when a TPA withholds payment owed under one employer’s plan to recoup an overpayment it made under another employer’s plan.
Why Cross-Plan Offsetting is problematic
Misuse of Plan Assets – Funds from Plan A are effectively used to settle obligations of Plan B. That is not what Plan A’s assets are for.
No Fiduciary Consent – Fiduciaries of Plan A never agreed that their plan would subsidize another employer’s errors—unless this allowance is buried in your ASO, which is common, so watch out for it.
Court Scrutiny – The Eighth Circuit in Peterson v. UnitedHealth Group found that cross-plan offsetting raises serious ERISA concerns and may breach fiduciary duty. Courts have questioned whether the practice benefits participants or reduces the TPA’s administrative hassle.
💡 Bottom line: Cross-plan offsetting primarily serves the TPA’s convenience, not the plan’s participants. Opting out ensures that your plan’s assets stay reserved for your participants—period.
✅ Renewal Checklist for Fiduciaries
As you head into renewals, protect your plan and participants by:
Eliminating post-pay shared savings arrangements and prioritizing pre-payment accuracy instead.
Formally opting out of cross-plan offsetting in administrative agreements.
Documenting your monitoring efforts — prove that you’ve evaluated vendor practices for conflicts and misaligned incentives.
🔒 The Fiduciary Imperative
Renewal season is not just about pricing—it’s about prudence. Fiduciaries who reject conflicted practices and vendor-friendly shortcuts send a clear message: participant assets always come first.
As fiduciaries head into renewal season, contracts often hide risks under the guise of “shared savings” and “cross-plan offsetting.” These provisions may appear to be cost containment strategies, but in reality, they create conflicts of interest, misuse plan assets, and expose employers to ERISA liability. Now is the time to eliminate post-pay shared savings, opt out of cross-plan offsetting, and document oversight practices.
ClaimInformatics empowers fiduciaries to protect plan assets and participants by auditing claims, uncovering hidden risks, and ensuring compliance—so you can enter renewal season with confidence.
Comments