ERISA Compliance in Direct Contracting for Healthcare: Challenges for Employers and Providers

Description

The rise in healthcare costs has forced employers to consider contracting directly with healthcare providers to minimize expenses and improve the member experience associated with health benefits. Direct contracting arrangements can be complicated and require counsel and advisers to consider all legal ramifications to assist employers and providers.

Direct contracting agreements offer an opportunity for employers and healthcare providers to work together, eliminating the need for some of the services provided by a third-party administrator (TPA). This approach can provide both parties with substantial benefits and a means of taking on and understanding the functions of the payor, administrator and provider in the absence of a TPA. Furthermore, employers and providers negotiating direct contract agreements must ensure compliance with ERISA and other federal and state regulations.

Employer and provider arrangements inclusive of plan administrative services and the assumption of specific responsibilities by the provider are subject to ERISA rules governing service provider contracts and fiduciaries. These direct contracting arrangements must ensure that plan provisions and actions do not run afoul of the prohibited transaction rules or any fiduciary duties under ERISA.

Negotiations must involve careful consideration of the rules and limitations of HIPAA, the Affordable Care Act and other regulations. Counsel must be knowledgeable of federal and state regulations to structure the direct contracting arrangement to secure the benefits to employers and providers as well as avoid compliance claims.

Listen as our panel discusses the federal and state law challenges associated with direct contracting for health benefits, practical and legal considerations in negotiating and drafting agreements, and planning methods to ensure compliance.