# Health Plan Fiduciary Duty Starts With the Employer. Alden Bianchi on ERISA exposure. Source: https://ethosbenefits.com/podcast/health-plan-fiduciary-duty-alden-bianchi Type: Podcast episode Series: The Business of Benefits, Episode 65 Published: 2025-10-03 Duration: PT47M28S Hosts: Donovan Ryckis, Founder and CEO, Ethos Benefits Guests: Alden Bianchi, Compensation and benefits attorney Publisher: Ethos Benefits Cite as: "Health Plan Fiduciary Duty Starts With the Employer. Alden Bianchi on ERISA exposure.," The Business of Benefits, Episode 65, Ethos Benefits, https://ethosbenefits.com/podcast/health-plan-fiduciary-duty-alden-bianchi, 2025-10-03. **Summary:** An employer that sponsors a health plan is a fiduciary under ERISA, whether or not it has named one. ERISA attorney Alden Bianchi and Donovan Ryckis explain who the fiduciary is, why broker compensation disclosures are only a baseline, how health plan lawsuits stood at the time of recording in 2025, and where an employer should start. ## Key takeaways - Alden Bianchi says an employer that sponsors a health plan is a fiduciary by default under ERISA, and the HR leader who manages the plan is often a functional fiduciary with personal exposure. - He suggests a fiduciary committee, or a board vote designating a senior HR officer as the plan fiduciary along with an indemnity, so someone is clearly paying attention. - Both speakers treat Consolidated Appropriations Act compensation disclosures as table stakes and recommend asking separately about override commissions, referral fees and other indirect payments. - Donovan Ryckis suggests employers ask for broker or consultant compensation as the bottom line of every renewal option, because it varies by carrier. - Alden Bianchi argues that health plan fiduciaries now need to work with claims and machine-readable file data, using Medicare and reference-based pricing as benchmarks. - At the time of recording, health plan fiduciary suits over PBM and ASO arrangements had stalled on legal standing, though Alden Bianchi expected plaintiffs to find a way around it. ## Chapters - 00:00 Health plan fiduciary duty: episode preview - 02:49 Alden Bianchi on Massachusetts health reform and ERISA practice - 05:10 Are health plan lawsuits following the 401(k) pattern? - 07:59 ERISA fiduciary standards for welfare plans and CAA transparency rules - 10:12 Why broker compensation disclosures fall short - 15:30 What to ask a broker beyond the CAA disclosure - 18:54 Who is a fiduciary of an employer health plan? - 21:56 Should the board designate a health plan fiduciary? - 25:40 Why health plan fiduciary lawsuits have failed on standing - 29:45 Employer health costs, wages and Medicare rates - 36:55 Where a mid-size employer should start fixing its health plan - 42:09 Hidden broker compensation in non-ERISA lines ## Quotes > If you've got a 401k committee, I see no reason why you shouldn't also have a fiduciary committee. Alden Bianchi, Compensation and benefits attorney > I don't understand why employee dollars matter in the 401k but they do not matter in healthcare. Donovan Ryckis, Ethos Benefits > So I look at the CAA disclosures, that's your baseline. Alden Bianchi, Compensation and benefits attorney ## In this episode. Donovan Ryckis, founder of Ethos Benefits, talks with ERISA attorney Alden Bianchi about health plan fiduciary exposure: who the fiduciary is, why compensation disclosures still fall short and what an employer should do first. Alden Bianchi speaks for himself, not his firm. The conversation was recorded in 2025. Rules, pending bills and the status of the lawsuits discussed may have changed since then, so treat the regulatory details as a snapshot from that time. - **Every employer is a fiduciary.** Under ERISA's default, the employer is the fiduciary unless someone else is named, and the HR leader who runs the plan can be a functional fiduciary too. A [health plan fiduciary committee](https://ethosbenefits.com/benefits-101/health-plan-fiduciary-committee) or a board designation puts structure around that duty. - **Disclosures are a baseline.** The [broker compensation disclosure](https://ethosbenefits.com/benefits-101/broker-compensation-disclosure) rules are table stakes; override commissions, referral fees and compensation on non-ERISA lines still need to be asked about directly. - **Fiduciaries need data.** Claims data and machine-readable files, compared with Medicare and [reference-based pricing](https://ethosbenefits.com/benefits-101/reference-based-pricing), are how a fiduciary checks what the plan pays. - **Litigation was early.** At the time of recording, [ERISA health plan lawsuits](https://ethosbenefits.com/insights/erisa-health-plan-litigation) had stalled on standing, and remedies under ERISA remain a second hurdle. - **Where to start.** Governance first, principled advisors and a transparent product, with a [stop-loss captive](https://ethosbenefits.com/benefits-101/stop-loss-captive) as one option for some smaller employers. ## About the guest. Alden Bianchi is a compensation and benefits attorney who has worked on ERISA, fiduciary duty and employer plan compliance for decades. He helped craft the Romney administration's version of Massachusetts health care reform, now focuses on large employer sponsored health plans, and advises benefits consulting firms of all sizes. He shares his "be on the lookout" items for plan fiduciaries in regular LinkedIn posts. ## Guests - **Alden Bianchi**, Compensation and benefits attorney. Alden Bianchi is a compensation and benefits attorney who, beginning around 2004, helped the Romney administration craft its version of Massachusetts health care reform, work that led to testimony before the Senate Finance Committee. He now focuses on large employer sponsored health plans and advises benefits consulting firms of all sizes. ## Related guides - [The health plan fiduciary committee](https://ethosbenefits.com/benefits-101/health-plan-fiduciary-committee) - [Broker compensation disclosure](https://ethosbenefits.com/benefits-101/broker-compensation-disclosure) - [Who is subject to ERISA?](https://ethosbenefits.com/benefits-101/who-is-subject-to-erisa) - [ERISA health plan litigation](https://ethosbenefits.com/insights/erisa-health-plan-litigation) - [What is reference-based pricing?](https://ethosbenefits.com/benefits-101/reference-based-pricing) - [Stop-loss captives explained](https://ethosbenefits.com/benefits-101/stop-loss-captive) - [Transparency in Coverage final rule](https://ethosbenefits.com/insights/transparency-in-coverage-final-rule) - [A CFO's fiduciary playbook](https://ethosbenefits.com/insights/cfo-fiduciary-playbook) ## Frequently asked questions ### Is an employer a fiduciary of its health plan? Yes, according to ERISA attorney Alden Bianchi. If no one else is named, the employer is the fiduciary, which means the board for a corporation, the managers for an LLC and the partners for a partnership. Anyone who actually runs the plan, such as an HR leader who manages the vendors, can also be a functional fiduciary, and he notes that exposure is personal. ### Does a health plan need a fiduciary committee? Alden Bianchi sees no reason a company with a 401(k) committee should not also have one for its health plan. He adds that a committee is not the only route: a board vote designating a senior HR officer as the plan fiduciary, paired with an indemnity, can also work. In his view, that designation changes who has to answer detailed questions about the plan if it is ever sued. ### Are CAA broker compensation disclosures enough? Alden Bianchi calls them a baseline, or table stakes, rather than the full picture. He suggests writing disclosure requirements into the contract and asking separately about override commissions, referral fees and payments an ASO provider may route through self-funded plans. Donovan Ryckis describes reading a 16-page disclosure without finding a dollar amount he could calculate. ### How can an employer compare broker compensation across renewal options? Donovan Ryckis suggests asking the broker or consultant to show its compensation as the bottom line under each carrier option in the renewal. He explains that this pay varies by carrier and is not tied to the services provided. Seeing it side by side shows whether the recommended option is also the best paid one. ### Have health plan fiduciary lawsuits succeeded? At the time of recording in 2025, Alden Bianchi said fiduciary claims over PBM and ASO arrangements had so far failed on legal standing, based on a 2020 Supreme Court decision in a retirement plan case. He predicted plaintiffs would eventually get their claims before judges and juries, and said ERISA's limits on remedies are a further hurdle. The status of these cases may have changed since the episode was recorded. ### Where should a mid-size employer start fixing its health plan? Alden Bianchi's first step is governance: someone has to be paying attention. He then points to principled advisors and finding a transparent product. For some smaller employers, he sees a medical stop-loss group captive working well, roughly in the 100 to 500 employee range in his estimate. ### Where else can broker compensation be hidden? Alden Bianchi says compensation on products outside traditional major medical, such as minimum essential coverage plans, fixed indemnity and other excepted benefits, is often a mystery. Donovan Ryckis says he has seen compensation shifted into non-ERISA lines that do not require disclosure, including 15% on a private state unemployment line. Both suggest employers ask about every line, not only the medical plan. ## Full transcript [00:00] Alden Bianchi: If you are an employer, you are a fiduciary, full stop. So the broker disclosure rules, which I hate to say this, those rules are a joke. They are an absolute joke. [00:10] Donovan Ryckis: Family of four, employer sponsored health care average costs 35,000. You read that and you're like, what world are we in? [00:17] Alden Bianchi: I don't care if you're covered or not. I need that information and write that right into the contract. [00:21] Donovan Ryckis: I don't understand why employee dollars matter in the 401k but they do not matter in healthcare. [00:29] Alden Bianchi: 30 grand a year for family coverage? Does that sound like a tax in there somewhere? [00:36] Donovan Ryckis: You know, Ethos Benefits was born from a registered investment advisory with the fiduciary standard. And that's kind of what we've been trying to bring over to healthcare. So future or fool. Welcome to the. [00:53] Announcer: Business of benefits is your no bs, no sales guide to real solutions, no. [00:58] Donovan Ryckis: Gimmicks, just the truth about how to take control, transform your benefits and care for your most valuable asset, your people. [01:05] Announcer: If you're tired of the same old sales pitch and you're ready to rethink your benefits, this podcast is for you. The truth is out there. Are you ready to hear it? [01:18] Donovan Ryckis: I'm Donovan Ryckis, founder of Ethos Benefits, and this is the Business of Benefits podcast. The show where we cut through the industry noise, expose the conflicts and talk real fiduciary leadership. Employer sponsored healthcare. Today, on the business of benefits, we're bringing on someone who has shaped more of the healthcare regulatory landscape than most people realize, Alden Bianchi. He isn't just a comp and benefits attorney. He actually also helped architect the original Massachusetts Healthcare Reform act under Governor Romney, which is a precursor to the ACA. He's been in the weeds of ERISA, fiduciary duty and employer plan compliance for decades. He's the person benefits consultants call when the questions are too weird, too technical, or legally just too dangerous for anyone else to answer. [02:04] Donovan Ryckis: Today we're diving into fiduciary exposure, the CAA of 2021, machine readable files, PBMs, compensation disclosures, and why they're still a joke and what employers actually need to do right now to get their fiduciary house in order. Without further ado, let's get into it with Alden Bianchi. Hey Alden, thanks for joining us on the Business of Benefits podcast. How are you doing today? [02:29] Alden Bianchi: Terrific. How are you doing? [02:32] Donovan Ryckis: Great, man. I'm excited to have you on. I've been following your LinkedIn posts for the longest and I go through them every time. Why don't we get started by giving the listeners kind of a 90 second intro into your background and what you're currently working on. [02:49] Alden Bianchi: Sure, sure. Happy to do it. I'm fond of telling people I'm a lowly comp and benefits lawyer. I've been doing it for a very long time. But back in about 2004 or so I got retained by the Romney administration in Massachusetts as they were getting ready to do some major healthcare reform. And I worked with the governor and his staff and we crafted the administration's version of then health care reform which led to testimony before the Senate Finance Committee. And therefore I think my focus has really been on health benefits and welfare benefits and certainly the ACA, that's been almost the 10 year or 12 year arc of the Affordable Care act that we're now witnessing, or more so, that has brought me to where I am. [03:39] Alden Bianchi: And these days I principally focus on large employer sponsored health plans and also do a lot of work advising benefits consulting firms of all sizes. They'll reach out for usually a strange or unusual question that gets by their internal compliance and somehow ends up on my desk. Those are some of my more enjoyable engagements, to get into some of that and figure stuff out for them. And of course our firm has got a very large presence in healthcare and healthcare financing so we spend a lot of time with the various hedge funds that are in this space. I do want to make clear today though that my comments are mine alone. I'm not speaking for my firm. I'm here at your invitation. I'm happy to be here and happy to tell you what I think. But it certainly doesn't bind our firm at all. [04:36] Donovan Ryckis: Understood, understood. So this is obviously like a changing landscape. I think obviously you mentioned ACA. I mean I think a lot of things in the employer sponsored healthcare market really started to take off in a negative way with that, things certainly kind of sped up, and then more recently the CAA of 2021. But what kinds of things are you seeing that are really affecting the employer sponsored healthcare market and kind of where did it start? What was the genesis and where is this all headed? [05:10] Alden Bianchi: Yeah, I think that the focus on the employer group health market has really been a function of just the year over year increases in costs that are traditionally and almost universally exceeding real growth of our domestic GDP. And as those numbers get bigger, employers start to pay more attention and so does the plaintiffs class action bar among others. It's a problem that the numbers have become astronomical, which has brought more focus onto these plans. And now we're seeing a little bit of a repeat of what happened in the 401k world back in 2006, 2007 or so, that same focus on fiduciary exposure. And are the fiduciaries really doing their job? Do they even know it's their job? Do they even know that they're fiduciaries in the 401k world? [06:05] Alden Bianchi: The answer to that is clearly yes now, but it's yes as a result of what's happened in 20 years. The good news is that the 401k side has taught us a lot. It has taught us about fiduciary governance, about structure, about how it's consultant driven, rightly so, to keep it on track and how you organize a fiduciary committee. Oftentimes some of the pushback I'm getting now is why would you want a fiduciary committee in even a medium sized company? Well, do you have a 401k committee? Many do, some don't, but more do. If you've got a 401k committee, I see no reason why you shouldn't also have a fiduciary committee. But either way, the fiduciary obligations are out there. They're causing more attention. [06:53] Alden Bianchi: They've gotten off to a rocky start because of standing issues, but the 401k lawsuits got off to a rocky start. If folks remember that first wave of a dozen suits that were filed back in 2007 didn't amount to much, got pretty poor treatment, particularly in the 7th Circuit. And now you fast forward 20 years and it's a cottage industry that seems to take on a life of its own. [07:17] Donovan Ryckis: Yeah, agreed. I mean to your point about committees and the importance of all this, that's something I didn't understand. I came from the security side. You know, that was back in 2014-ish. I was working with plan sponsors on like a combination of DB and DC plans. [07:34] Alden Bianchi: Yeah. [07:34] Donovan Ryckis: And just kind of accidentally got exposure to healthcare plans and I was blown away. I mean, no data, no decision making process, no KPIs, no measurements. Right. Like none of the things that you would expect coming from the security side. And to me I was like, I don't understand why employee dollars matter in the 401k but they do not matter in healthcare. [07:59] Alden Bianchi: Well, coming from the investment side gives you a really unique experience because you understand fiduciary duty writ large. If you understand it in the investment context, you understand it in every context because fiduciary duty is fiduciary duty. ERISA doesn't distinguish between pension and welfare plans in its fiduciary standards. They are the same thing. When it comes to metrics, two things to keep in mind. The first is that it really is a different set of metrics that you're paying attention to. The 401k side, it's focused on the investment product itself. The returns, the loads and all of that stuff. Are you getting what you paid for? Is this a prudent choice? Does it need to be monitored, all of that? [08:49] Alden Bianchi: On the welfare side, it's claims processing, claims adjudication, pre authorization, all the things that go into making the medical system operate. And it's here that I think the Consolidated Appropriations Act 2021 is a real game changer because now for the first time, you're starting to see some important transparency rules, I think a dozen in all. The troubling thing about the way the ACA is structured is because ERISA regulates plans, the transparency requirements are largely imposed on plans and don't directly affect the service providers. I think that's got to change. [09:28] Alden Bianchi: I know Congress understands that, and I understand from my folks on the lobbying side and government relations side that Congress is working on kind of a, I won't call it a major, but kind of an omnibus healthcare bill that might be teed up for the end of the year that might involve some important changes to the transparency rules. Right. And one of those, I think the machine readable files are just not getting enough attention. You know, there are actually three sets of machine readable file rules. One for hospitals, then there's a transparency and coverage rule that was enacted in 2020 by regulation. And then there's the CAA transparency rules that look a lot like, but are not exactly the same as the TIC rules. [10:12] Alden Bianchi: The first problem there is that the hospital rules report data in a very different way and focus on different data sets than the other two rules. A good process would include the ability to cross reference those data sets as a way to double check one another. I think that we might get something like that. I think Congress is aware of that. Then there's also the broker disclosure rules, which I hate to say this, those rules are a joke. They are an absolute joke. Unless you're clearly a consultant, one of the big consulting houses. Yeah, they almost have to cop to being consultants under the rule. Everybody else says, no, we're not covered by that. [11:07] Alden Bianchi: The ASO providers, we're not that. PBMs, we're not that. Well, I think the simple answer there, I'm not waiting for Congress in the process of negotiations. We simply said, I don't care if you're covered or not, I need that information and write that right into the contract. But you got to wait, you got to get to the next renewal to do that. [11:26] Donovan Ryckis: I think you made a great point. So like the CAA I think was a good starting point in the sense that it laid out like, hey, these are the basics, these are the minimum. I look at them as like, these are the minimum things you need to do to be a prudent fiduciary, which I think is good. But to your point, it didn't focus on the service providers. It also didn't focus on the brokers or consultants. So it really didn't move the market. So these plan sponsors are kind of out there with the least education in the healthcare supply chain, trying to navigate data that they're not getting and, you know, advice that's conflicted and those minimum things. I mean, I think at least the attempt to get compensation disclosures is a good measure. [12:14] Donovan Ryckis: But you know, here we are, what, three, four years later and those compensation disclosures are a joke still. And it's because it's not mandated on the people who actually have licenses from the state to sell this stuff. Like we are not mandated to give it, but the client is mandated to get it. So I think that piece could really use some focus to where it's like, no, in order to have your insurance license, you need to disclose every case, every time, especially in the employer sponsored healthcare market, a 408(b)(2). Right. And say, here's all my direct, indirect conflicts, all that kind of stuff. [12:58] Alden Bianchi: Well, and by the way, I want to be a little careful here. I referred to the rules as a joke and they by and large are. There are some folks out there that are actually at least doing a credible job. I'll use an example. I think [company removed] has a basic outline of its disclosures that's very good. I mean, but it's only a basic outline. I think it starts as a template that folks are then working from. But then in each individual case you've got to go in and say, so for example, I think I encountered one recently where no override commissions were disclosed. And so you go back and you ask for it, you know, all right. [13:39] Donovan Ryckis: So how is it good? [13:42] Alden Bianchi: Well, because I think at least, I mean, you have to look at it employer by employer and what they're actually selling. They would say, you know, here's the products we're offering, here's what the loads are. They were all spelled out pretty clearly, the basic structure. [14:02] Donovan Ryckis: I just went through one of theirs, it was 16 pages and after reading all of it in the fine print, I could not determine any amount of compensation that they were receiving. Enhanced carrier compensation, which is undisclosed, undetermined. When, why, how much. Market service revenue, undisclosed, undefined, undetermined. Equity interest in the carriers they represent. Like that one right there killed me. So we go through 16 pages, all this fine print. There's no dollar amount that you could decipher when you get to the end of it. And also they do clearly lay out their disclosures and their conflicts, but not in a measurable way that the client could understand. Like, oh, I see, you don't own equity interest in all the carriers. You own equity interest in a few. And that's why I'm seeing a few options. [14:59] Donovan Ryckis: And that's why when I ask you for a PBM RFP, I'm not getting one. So like, what could be done and stuff like that. Because like, to me, I've always been kind of advocating for the idea and the concept of bringing that fiduciary designation that we have in securities over to employer sponsored healthcare. At the very least, like it's probably not going to be addressed to the whole 215 life insurer. But again, if we're focused on employee dollars, shouldn't we be raising our standards? [15:30] Alden Bianchi: Yeah, well, first of all, just because CAA did not make brokers and consultants fiduciaries, these are still arm's length transactions. So I look at the disclosures as kind of a baseline. Those are table stakes. And I've realized I as the fiduciary need to ensure that I get the basic requirements that are set out in the CAA. But then there are a number of things that you need to ask for in addition. So in my daily LinkedIn posts over the last couple of years, I call these BOLOs. I think I've got nine of them now. Be on the lookout. So I'll give you some examples. Override commissions is a clear be on the lookout because they're not going to be typically disclosed. Referral fees. [16:14] Alden Bianchi: And they are out there, I don't know how common they are among the very largest brokerage firms. But you get into the intermediate market and yeah, there are some referral fees being paid out there. I'd like to know about that. I'd like to know, for example, if an ASO provider has built a network and they've said here's what we're going to pay, but instead of paying the network rates, they pay probably a premium because they made a guarantee for an annual amount for a particular provider. They haven't gotten there yet. It's easier to pay that out of your self funded book and not to ding your book. So that's another thing to look out for. As I say, I think I've got nine of them. Those are the three that come to mind. So I look at the CAA disclosures, that's your baseline. [17:00] Alden Bianchi: You put that in your contract and then you go back and ask for whatever else you need. But it really is the fiduciary that's got to go in and do that. Now, to the extent that a broker or consultant or anybody is actually hiding something, that's another thing entirely. And I think over time you're going to see litigation on that score. But I'm not even sure what the remedy is. Even if you find them operating in bad faith, is there a common law cause of action and is that preempted by ERISA? Those are all questions. We have no idea yet. But from the perspective of the fiduciary, to get back to your original question, you know, what's different? Well, number one, you've really got to be focused on the data. [17:48] Alden Bianchi: I did a post I think two days ago where I said fiduciaries have become quants. Now it's going to be the machine readable file data. You're going to be digging into those. I suspect that you will see some robust AI tools that'll start digging into a lot of issues. But think about it, what's your training data set? Well, before 2020 there is no data set because you didn't have access to that data. Post 2020, at least in the large employer or in the fully insured market, public, private sector, your data could be all contaminated. But where are you going to find good data? Medicare, Medicaid and reference based pricing plans. Yeah, so. [18:31] Alden Bianchi: But I think you're going to find either the capacity to do a deep quantitative dive on machine readable file data is going to grow organically in the consulting firms or you will see a cottage industry of new advisors coming along, specialty advisors who do just that. And obviously those people are out there and some of them are very good. [18:54] Donovan Ryckis: I feel like we should have got to this first. But can you give your simplest definition or answer for the people listening of who is a fiduciary on the healthcare plan? [19:06] Alden Bianchi: Yeah, sorry, I think I saw this yesterday. If you are an employer, you are a fiduciary, full stop. Don't even think about it. You are a fiduciary. So let's answer that question in two or three steps. What's the default? ERISA's default. Who's the fiduciary? Well, there's a named fiduciary and there's a functional fiduciary. The named: if you say nothing, the employer is the fiduciary. Well, who's the employer? If you're a corporation, you're a board of directors. If you're an LLC, it's your managers. If you're a partnership, it's your partners. And if you are a sole proprietor, it's you and no place else to hide. But if you are an employer and you do nothing else, that's who the fiduciary is, full stop. Functional fiduciary, it's the person who actually does the stuff. [19:55] Alden Bianchi: Now the one place where the two rules kind of differ, on the investment side there's a separate fiduciary status for somebody who actually advises on investments, so you get financial advice. You don't have that so much on the... oh, I suppose you could. I mean if you've got a VEBA trust, a large VEBA trust that's actually doing investments, you don't see that too often, but it happens. But those are who the fiduciary is. So if you're the senior HR person for a mid sized company and you're the one who's calling up the vendor and managing the group health plan, you are a fiduciary. You're it. And by the way, that exposure is personal. [20:36] Donovan Ryckis: Yeah. [20:36] Alden Bianchi: You really want somewhere to get an indemnity. [20:39] Donovan Ryckis: That's kind of how I address it as well. You know, if I'm doing talks like, you know, next week I have HR Florida and then Arizona SHRM as well. And the way I kind of address it is like if you found it interesting to come into this session, it's because you have some kind of discretion over the administration of your healthcare plan. Congratulations. You're a fiduciary to it, right? [21:04] Alden Bianchi: Yeah, I'd give a quick shout. I think SHRM as an organization does a terrific job. Full disclosure, our firm is a member, but so is everybody else. [21:13] Donovan Ryckis: Yeah, we are as well, for sure. All right, so we know who is the fiduciary. We've talked about the CAA a little bit. I'm sure you're dealing with a lot of the pushback that plan sponsors get when they're trying to faithfully kind of execute their duties under the CAA. They're obviously all important. What do you see as, like, the challenges and the common remedies for some of the stuff they're trying to get, whether it be, you know, gag clause disclosures, you know, RxDC reporting, comp disclosures. What are the common battles and what's kind of the most important starting point for employers? [21:56] Alden Bianchi: Well, God, there's probably many layers to that question. Let's start at the highest level. If you are an employer and you are clearly a fiduciary, what attention are you paying and what are you doing? For many employers, particularly the very large ones, the goal of the senior HR staff at all costs: keep the CFO off the witness stand. All right, that's job one. All right. Yeah, I know. We get this fiduciary duty of the plan. Yeah, that's good. But my job is to keep the CEO and maybe some other folks in senior management off the witness stand. And you can do that. It's not that hard. But there are clear steps you have to take. Simply establishing a fiduciary committee may not get you there, but there are other ways to do it. [22:45] Alden Bianchi: We could talk about it depending on how much detail you want to get into. But at the end of the day, the challenge is at least paying attention. And you might not need a fiduciary committee. You might designate your senior HR manager as fiduciary. I think that's a very good idea. What does that look like? It's a board vote to designate the VP of HR, the office, as the fiduciary of the plan, blah, blah. And there should also be somewhere in there an indemnity of that person if the plan gets sued. Now what happens? Here's a little bit of a tricky explanation. But it's incredibly important. What's the difference between those two things? When you get sued, A, you do nothing or B, you have a vote designating your director of HR. [23:33] Alden Bianchi: In the second case, if you get sued on a fiduciary claim, the claim is against the fiduciary, the VP of HR. All right. And that person will then in depositions have to answer substantive questions about the operation of the plan. If the board of directors is also subpoenaed, they could be brought into a deposition. But the only questions they have to answer is what oversight did you exercise? Right. They don't have to answer questions about the substantive oversight of the plan. But if they haven't made that designation, haven't established the senior HR person as the fiduciary, if you say nothing and the company is the fiduciary, you get to bring every member of the board in, depose them and put them on a stand and ask them substantive questions about how the plan operates. You can imagine how embarrassing that can be. [24:34] Alden Bianchi: Yeah, it's a huge difference and one that really needs to seep into the collective consciousness of the folks involved in the administration of group health plans. [24:45] Donovan Ryckis: So from a legal perspective, I could see how that could be beneficial in the instance of getting to that point. I think from a decision making process, it certainly disadvantages the company to not have somebody with some serious P and L oversight also questioning these processes and these claims, which I think is where a lot of the current litigation has really come from. With the current kind of litigation that's out there against plan sponsors for their healthcare plan, what do you see? I think most of them are still ongoing. I know there was a dismissal, but it kind of got resubmitted and I believe all are still active and I'm sure they'll be drawn out. What do you see with the current stuff going out there, and kind of feel free to catch our listeners up to those cases. [25:40] Alden Bianchi: I'm smiling because almost every one of your questions could be a whole hour long. I mean, there really is a lot here to unpack. So let's see if we can start at a high level. The fiduciary claims involving PBMs and ASOs so far have failed on the issue of what's called legal standing. It's a fairly technical legal argument. It resulted from a 2020 Supreme Court decision in the retirement plan context. I forgot the name of the bank. Now that's embarrassing. Anyway, what the Supreme Court said is that in a defined benefit plan, because the amount promised to the employee sometime in the future has not changed, there's nothing to argue about. Now, that argument, and I have a post, I think I called it Thole. You know why Thole? [26:39] Alden Bianchi: Why the Supreme Court's decision in 2020 in Thole is stupid and why it matters in 2025. Under that reasoning, if Bernie Madoff is managing my pension plan and his Ponzi scheme hasn't imploded yet, I can't question it. I've got to wait till the thing falls apart. That's just wrong. Here's my prediction. I think the plaintiffs bar, these are very smart lawyers, and the stakes are very high. We will get around that. They will get the substance of their claims in front of judges and juries at some point. It's coming. So far that hasn't happened. But there's some other problems. Even if you get over that bar, there's a whole other question about what remedies you can get under ERISA and this we could do a whole morning program on just this one question because it's so convoluted. [27:35] Alden Bianchi: I think what happened, if you look back to the drafting of ERISA, wind the tape back to May, June, July 1974, when they were actually drafting it, the drafters slipped in the words equitable remedies. They qualified the remedies in a handful of sections, saying equitable remedies. I know what they meant. We all know what they meant. But 40 years later, even now, some of the drafters are saying, we really screwed up. Because even if you show that there's absolute liability on the part of the fiduciary or whoever, there are instances where what you can sue for, what you can be awarded for damages has been severely impaired, and the Supreme Court has tied itself in knots. So over the last 40 years, there's been major scholarly articles. [28:37] Alden Bianchi: There's a fellow at Yale, John Langbein, who's one of the leading commentators on ERISA, principally the preemption rules, but has written extensively on it. And he thinks the problem's with the courts, not with the drafters. I've studied this now for 40 years, and I really do think that the drafters probably slipped up a little bit. But so even if we get by the current hurdle and we get into court and before a judge or in front of the jury, we're still not exactly sure about what we get to fix things. So it's going to be a long tortured road. Yeah. [29:12] Donovan Ryckis: And I think, you know, I think any plan sponsor could tell you better because like fundamentally I think it's a misunderstanding of how health care plans work. [29:20] Alden Bianchi: Because if we're agreeing to pay. [29:22] Donovan Ryckis: Out claims, that's next year's premium. Right. And also like the idea, I mean obviously employees share greatly in those expenses and all it takes is a single PBM repricing study to see how much it could impact both sides. I'm super excited to see where this stuff goes. [29:45] Alden Bianchi: Well on that last point, I think it was KFF or Health Affairs. Just a brief article yesterday that just drilled that point home. If you look at the, I mean this was data driven. Very short but very useful. In fact I'm going to probably link to it in today's, I haven't written today's LinkedIn post but I think it might be about it today. How it has depressed wages long term. And the other frustrating thing, and I don't know if it's part of today's topic, but the article also points this out: the reimbursement rates that employer sponsored health plans pay compared to Medicare. [30:31] Alden Bianchi: It's awful because what's happening is that employers and employees are subsidizing the rest of the country and now we, you know, we get into some dangerous political waters talking about Medicare for all. And of course the minute you mention it people will say oh, the increase in taxes. Well, 30 grand a year for family coverage. Does that sound like a tax in there somewhere? I don't know, don't get me started. I was having a good day. No, it's a struggle. [31:02] Donovan Ryckis: It's certainly got to a breaking point. I mean this year, you know, I think it was KFF, a family of four employer sponsored healthcare average cost 35,000. [31:11] Alden Bianchi: It was a 35. Yeah. [31:13] Donovan Ryckis: $119. Like you read that and you're like how, what world are we in? Like how is that okay? And how did we get here? Right? Like we have to start remedying it. And I love the references to reference based pricing or network replacement. That's something we do a lot. And I think once plan sponsors actually see these requests for reimbursements from hospitals that, you know, every day is 5x Medicare and then occasionally, you know, once a month we'll get 12x, 16x, 18x Medicare. [31:44] Alden Bianchi: Oh I've never seen it that high. [31:45] Donovan Ryckis: Oh yeah, I have, I've gotten I think 21x Medicare. [31:51] Alden Bianchi: Charge master rates. Nobody expects to pay that unless you're uninsured and then you're going to go bankrupt. [32:06] Donovan Ryckis: Yeah. And one of them actually went into kind of an elongated negotiation process. But yeah, it's just wild to see that. And once you see that there's no going back, like there's no putting the blinders back on for that employer. Now they understand kind of what has been happening and why premiums have been increasing. [32:29] Alden Bianchi: Yeah. And then there's also the question, well, first of all, you're almost afraid, at least in my position, I'm almost afraid to use the phrase reference based pricing in polite company. [32:43] Donovan Ryckis: It is. [32:44] Alden Bianchi: But I think in the end I suspect that might be the only thing that's going to save employers. [32:49] Donovan Ryckis: Yeah. [32:50] Alden Bianchi: Here's the other thing to keep in mind. When we were doing Mass health care reform, I happened to be at a fundraiser where I was talking to then Senator Moore who was one of the folks driving the whole effort, and I said, what would happen if in the United States instead of spending 17% of GDP on healthcare, we spent 11? What could we do with those extra dollars? And he said to me, what do you think would happen to all of our major cities if we did that? You would hollow them out. Because healthcare is such a large part of the spending base of our major cities, you would hollow out the economies of major cities. [33:29] Alden Bianchi: Which by the way, I think in large part explains why the goal of Obamacare was not to reduce costs, but to bend the proverbial cost curve so that the rate of medical inflation stayed within the growth of real GDP. It was just a tacit admission that we're not going back to the next largest. Canada, I think at the time was the second highest expenditures among the developed world for healthcare. And they were 11, we were 17. What would you do to the surrounding economy? It's like what would happen if you cut the defense budget in half? You would hollow out the economies of many US cities. [34:09] Donovan Ryckis: I've heard it referenced as a fifth of the economy and I'm not sure exactly what we're including, I'm sure we're including, you know, insurance costs and everything and also all health care providers, all Rx, all, you know, medical goods, but certainly a large piece. [34:27] Alden Bianchi: I do remember, this was another vignette from around the time that we were doing it, when Obamacare was happening. The fellow who was at the time the director of what became the Massachusetts Connector made a comment at lunch one day. He said, you know, everybody's trying to blame the insurance companies. He said if you took away all the profits from the insurance companies on running health care, you'd run the US economy for three days. He says, you know, they're cost plus. Yeah, they're skimming a little bit here and there, but at the end of the day the underlying drivers are just very high medical costs under the hood. I don't know, I can't speak to that. [35:08] Alden Bianchi: I'm not an economist, I've not studied that, and I'm reporting one person's opinion, whether or not he was correct. But the other thing, and this was also addressed in this KFF article yesterday, the claim was that the hospitals are perpetuating a myth that they are being underpaid by Medicare so they have to overcharge somebody else. And they said that's just crazy. The claim there was that a well run hospital can certainly survive on Medicare rates. [35:43] Donovan Ryckis: Yeah, agreed. No, I think all these are great points and the difficult thing for myself when I'm having conversations, and I think also for a lot of the people listening, there is so much. I think inherently we know all parts of the system are questionable at best. We know we pay more for care than any other country in the world. Probably we're one of the few countries, maybe the only country, where this is the employer's responsibility as well, on top of wages and everything else, which is also certainly troublesome. And what is the starting point for employers? [36:18] Alden Bianchi: Right? [36:18] Donovan Ryckis: Like where would you recommend that employers start from? You know, being maybe with a BUCA, maybe being on an ASO self funded plan, everything's vertically integrated with the same insurance carrier and a broker. And like where do they start getting information to start making decisions because often they go to the broker who tamped down any idea of innovation, of measurement of data, of claims. Right. Like where's the starting point here? [36:55] Alden Bianchi: Wow. You know, and that really is the bottom line question, isn't it? So we've talked about what the environment looks like and where all the problems are. But what does the employer do given that backdrop? Yeah. A couple of things come to mind. First of all, you got to pay attention. That's why fiduciary governance, however minimal, somebody's got to be paying attention to this stuff. Two, I think the brokers and consultants are at the front line of this and there are principled, really good principled folks out there in all sizes of brokerage firms. I've seen them in some of the smallest, I've seen them in some of the largest. But the incentives have got to be. Hopefully the industry gets better at incentives and I think they will because they are the people that understand, they have the product knowledge. [37:43] Alden Bianchi: Then the third layer is I think then it depends on the size of employer. I think the smaller employers, you get in a small group market and your options suck and costs keep going up and something has got to be done, and any possibility or option that I mention is going to be fraught with political baggage. Do you allow greater use of association health plans? Well, I happen to be a huge fan of that but we all know that the opportunity for fraud and abuse is rampant. So they've got to be properly regulated. But, you know, you're starting to see some alternatives that work pretty well. The medical stop loss group captive for example, you've got the right size group, that's a very transparent. [38:29] Alden Bianchi: And you see as an employer you've got wide latitude in plan design and you see everything, you know, everything that's going on under the hood. But you've got to be, you know, you pick your number, minimum 100, 200, 150, whatever. I think it works best, brokers might be better at this than me, but I think, you know, 100 to 500, somewhere in there you got a company that size, that structure works really well. But I would love, I know Congress, there is a bill now, the folks at CC Lauren policy have put this together and they're working on it. It's before both the House and the Senate. I think it's called the Association Health Plan act. Not a very original name but yeah. [39:16] Alden Bianchi: It would allow employers to band together in ways that they could create a group of small employers to get together and create a self funded plan but then get the transparency. I think transparency is essential. But there's a flip side to transparency. You got to pay attention to the data, the transparent data that you're getting. And that's why I come back to my claim that fiduciaries of group health plans have become quantitative analysts, whatever that means. [39:47] Donovan Ryckis: Like you addressed earlier, not having it from the service provider side. And then your only comparison, and it should be a great comparison, is Medicare. But getting claims for plan sponsors is hard enough and then getting someone to compare it to anything that means anything is more difficult. Like so often we see these claims reports that carriers want to release and they categorize things by body part. Heart. [40:20] Alden Bianchi: Yeah. [40:21] Donovan Ryckis: Spine. It's like what does that mean? That I spent a quarter mil in spine. Right. So it is certainly difficult to kind of continue that conversation to figure out what does this mean and what can be done with it. [40:31] Alden Bianchi: Well, one of the things that can be done, I think a lot of the regulatory proposals that you see surrounding healthcare focus on ERISA and the Internal Revenue Code and all of that. They might be focusing on the wrong place. And this is true both of PBMs and ASO providers. What if instead you focused on the market? It's market concentration among the providers that is driving up prices in most cities now, even large cities, there's one dominant healthcare system that owns it all. And maybe it's an antitrust issue rather than a health plan issue. Same thing with PBMs. I mean a lot of states now are coming in and they're trying to regulate PBMs and regulate their networks. Why not focus on the market? [41:18] Alden Bianchi: I think one state, I can't remember which one, Michigan perhaps, is now treating this as a market issue. Of course the downside is that some states now are just enacting protectionist legislation for their own local pharmacies. So they've gone the other way. But maybe the problem is not a benefits problem, maybe it's an antitrust problem. [41:41] Donovan Ryckis: No, I agree, that makes a lot of sense. [41:43] Alden Bianchi: But to go back to your question about what does an employer do? Find your way to a transparent product, number one, job one. And that's the problem. If you're in the small group market right now, you're screwed. You're not going to get it. You're either going to go without it or you're going to have a fairly expensive product. I can't help you there. All right, but if you're anything else. [42:09] Donovan Ryckis: I'd say first, you know, with the broker consultant, that transaction needs to be transparent. And one of the things I say, because, you know, the CAA says that you should have your compensation disclosure before decisions are made. [42:25] Alden Bianchi: Right. [42:26] Donovan Ryckis: I think the easiest measure for plan sponsors to get there is say, hey, when you show me my renewals and my options, carrier A, carrier B, carrier C, I think the bottom line should be broker advisor, consultant compensation. Right. Because it does vary by carriers, it's not tied to the services they're providing for you. Right. And wouldn't you know it, most of the time column one is going to be highest compensation for the broker consultant. Yeah. [42:58] Alden Bianchi: You know there's another dynamic here. We're talking about the canonical form of major medical group health plan, the kind you encounter in ACA exchanges and the like. And then the brokers and consultants that serve that space, we pretty much know, well this might be an oversimplification, but we kind of know what the compensation is, what the market has demanded, what it will bear. I think post CAA, there probably is some transparency there. It could be better. There's a whole other world of benefits that fly under the radar. And these are things like the so called MEC, minimum essential coverage, preventive services only plans, hospital fixed indemnity, excepted benefit arrangements. And there's a shadowy world of self funded plans that promise a physician, a pharmacy discount card and you cover a couple office visits. [44:05] Alden Bianchi: Those things there, no one knows what the compensation is. It's a total mystery. And because they're not insured, you don't have the requirement to provide essential health benefits. So you can design all kinds of things. And then there's the truly abusive arrangements. You know, you're seeing the double dipping schemes out there. But until the regulators and Congress get their act together, those are going to continue because there's no incentive to push back. [44:42] Donovan Ryckis: Yeah. I've also seen a shifting of compensation into the non ERISA lines that don't need disclosure. I've seen a lot of that work. [44:52] Alden Bianchi: Good. [44:54] Donovan Ryckis: You know, it's just hide it, right? Hide the compensation, move it, push it somewhere else. I've seen 15% on like private state unemployment lines. It's like that is a line of insurance that has no service, no negotiation, no work. Right. And it's just absurd and it's just a measure of kind of pushing it around. [45:15] Alden Bianchi: That'll be one of my other BOLOs, I think. And that goes to my point of treat the CAA disclosures as table stakes and then educate yourself as the fiduciary on what else you need to be asking for. That's a perfect example of that. The other one is using excess compensation from one line to subsidize some other service or benefit. I have no problem with that but you darn well better disclose it. [45:48] Donovan Ryckis: Yeah, agreed. Well Alden, I really appreciate this really enlightening talk. I love this topic. I'd love to have you on in the future as more things develop with these lawsuits. Any kind of parting thoughts for our plan sponsors out there? [46:03] Alden Bianchi: Yeah, I think, aside from getting your fiduciary house in order, look for transparency, and let's watch in the coming months whether or not Congress does something major in the healthcare space. If they do it could substantially enhance the transparency rules and fix some of the holes there. We didn't get into no surprise billing but those rules have just crashed and burned. I mean they just don't work. So yeah, I think there's a lot coming. Personally I'm watching the association health plans stuff with fingers crossed. I'd love to see it work out but thank you so much for having me. I talk about this stuff all day. I guess I do because, yeah. [46:55] Donovan Ryckis: Would recommend anybody follow Alden on LinkedIn because he's posting these BOLOs, these thoughts, these updates as things come out. They're usually quite long but I read through them. I find them really interesting. [47:06] Alden Bianchi: Well, LinkedIn limits me to like what, 1400 words or something like that. [47:11] Donovan Ryckis: I don't know, for LinkedIn posts most people are putting out like 50. Yeah, I know, but obviously I'm not going to go read a whole legal argument or a legal article. So it is a short form version of that, gets me all the stuff I need to know. So I always appreciate it. Thank you. [47:28] Alden Bianchi: Oh thank you so much. I appreciate it. Thanks for having me.