United States

Special consideration for health and welfare plan provider agreements

FINANCIAL REPORTING INSIGHTS  | 

We have learned that certain health and welfare claims administrators have added provisions to their provider agreements indicating that once the employer changes providers or terminates the agreement for other reasons, the administrator no longer will be required to provide claims data after a specified period of time (e.g., three or six months).

In connection with a recent audit, we found that our health and welfare plan auditee had a clause in its service provider agreement that allowed the administrator to stop providing claims data three months after the auditee changed providers. The plan changed providers well over three months before year-end, and the auditee has not been able to get the claims data necessary for our firm to audit the obligation or claims payments.

Auditees should annually evaluate their contracts with claims administrators, amend language that may limit the scope of an audit, and recognize that they may need to plan ahead before changing providers or otherwise terminating the agreement with the provider.