Hiring a vendor is a fiduciary decision. Keeping one without review is too.
Your duty does not end when the contract is signed. It extends to monitoring whether the vendors you pay deliver what they promised at a reasonable cost. We help you evaluate fees and services on a regular schedule and document that you did.
A fee is only reasonable compared with something.
Reasonableness is not a number in a regulation. It is a judgment about fees relative to services and the market, which means it needs a comparison and a record.
Every Dollar, Every Route
Vendors are paid through administrative fees, per-claim charges, network access fees, pricing spreads and payments from third parties. We list every route, because the fee on the invoice is often not the whole fee. Mapping every compensation route is the first step in a vendor fee review.
Services Actually Delivered
A contract describes services; reports show whether they happened. We compare the two, since paying for a program nobody used is a cost even when the fee looks fair. Comparing contracted services with delivered services is a core part of vendor oversight for any health plan.
Market Comparison
Periodic benchmarking or marketing shows whether your terms are in line with what similar plans pay. We time it so you can act on the result at the next contract date, not a year later. Benchmarking vendor fees on a set schedule supports a reasonable-fee finding.
Disclosures Reviewed
Brokers, consultants and certain other service providers to health plans must disclose their compensation. We collect those disclosures, ours included, and record that the responsible fiduciary reviewed them. Documented review of vendor compensation disclosures is part of a prudent health plan oversight process.
The contract decides what you can see, measure and recover.
Oversight depends on terms negotiated before the first problem. We read contracts for the clauses that make monitoring possible.
Data and Audit Rights
The plan needs its claims data and the right to audit, with a reasonable look-back and an auditor of its choosing. Terms that restrict either weaken every other protection in the contract. Data and audit rights are the foundation of vendor oversight.
Performance Guarantees
A guarantee is worth what it measures and what it puts at risk. We look for measures that match your plan’s priorities and fees that are actually returned when a guarantee is missed. Performance guarantees are only as strong as their measures.
Pharmacy Definitions
Pharmacy contracts carry definitions that decide how rebates and pricing flow, including what counts as a rebate and which drugs are generic. We read the definitions first, because the headline discount depends on them. Pharmacy definitions drive the real cost of a PBM contract.
A review that is not written down is hard to prove happened.
The record of oversight matters as much as the oversight itself. We keep it simple enough that it actually gets done every year.
An Annual Vendor Review
Each vendor gets a short annual review: fees, service results, issues raised and how they were resolved. The committee signs off, so the file shows the date and the decision. A written annual vendor review is the simplest proof that the plan monitors its vendors.
Issues Followed to Close
Problems found during the year are logged with the vendor’s response and the outcome. That log is the evidence an investigator looks for, and it makes the next negotiation specific. A vendor issue log turns problems into leverage at renewal.
Stay or Change, With Reasons
When you keep a vendor, the file says why. When you change, it records the comparison that led there. Either is defensible when the reasons are visible. Written reasons for each vendor decision are the core of health plan vendor oversight, whether you stay or change.
What employers ask about vendor oversight.
Does this apply to fully insured plans?
Yes, with less to monitor, since the carrier bears the claims risk and sets most terms. You still choose the carrier and the broker or consultant, and those choices deserve the same record. Carrier and broker selection is vendor oversight too.
How often should vendors be marketed?
No rule sets a fixed schedule. Regular benchmarking, with a full market review when terms look out of line or service slips, is a sound pattern; marketing every year for its own sake rarely helps. A steady benchmarking cycle keeps vendor terms current.
Who decides whether a fee is reasonable?
The responsible plan fiduciary does. We provide the comparison and analysis; where a question turns on legal interpretation, counsel weighs in. Documenting the fee comparison and the decision behind it is what shows the reasonable-fee review actually happened. Keep that record with the plan file.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
An independent employee benefits consulting firm. We look at the entire benefits program — cost, plan performance, risk and administration.
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