Self-funded health plans, which operate under the federal Employee Retirement Income Security Act (ERISA), have certain fiduciary responsibilities to their members and beneficiaries. A health plan that takes any of the following actions is most likely violating both ERISA regulations and its fiduciary responsibilties by operating imprudently:

•  The health plan maintains that it has an absolute obligation to pay hospital bills simply because the bills are presented to it for payment.

•  The health plan routinely fails to have hospital bills that are large enough to be audited cost-effectively audited to determine whether or not the charges contained in them are valid and accurate.

•  The health plan routinely pays hospital bill charges that its hospital bill auditor has disputed as invalid or inaccurate and whose validity or accuracy the hospital is unwilling or unable to verify.

•  The health plan routinely pays hospital bill charges about which the hospitals absolutely refuse to entertain questions raised by the health plan's hospital bill auditor (this refers primarily to charges for routine cost items that hospitals are not supposed to bill separately to the patient, i.e., non-reimbursable, unbundled charges).

•  The health plan routinely pays hospital bills that its hospital bill auditor is unable to audit because the hospitals refuse to provide the health plan with either the itemized bills or medical records or both that are required for the bills to be audited.

•  The health plan routinely pays hospital bills that the hospitals do not allow to be audited except on their unlawfully restrictive terms -- requiring all audits to be done at the hospital, preventing the health plan's auditor from seeing any medical records before an audit takes place, requiring nearly all of a bill to be paid before scheduling an audit of the bill, requiring an audit fee to be paid before an audit takes place, and so forth -- with which the health plan's hospital bill auditor refuses to comply.

A health plan cannot avoid the obligation to have its large hospital bills audited by pointing to the long period of time that it often takes for a hospital bill to go through the auditing process. Because hospital bills can be audited after they have been paid, a health plan can comply with the prompt payment statutes found in many states, can secure the prompt payment discounts offered by many hospitals and can still have its large hospital bills audited.

A hospital that threatens to cancel or that actually cancels a health plan's prompt payment discount if the health plan has the hospital's bills audited is a hospital that is begging to be sued by the health plan and investigated by a number of governmental agencies. The same is true of a hospital that tries to enforce an unlawful audit policy or that refuses to deal in whole or in part with audit findings submitted by a health plan's hospital bill auditor.

A health plan that fails to assert its rights is acting imprudently and most likely violating ERISA regulations, which are enforced by the Employee Benefits Security Administration, a division of the U.S. Department of Labor. If it becomes necessary to prosecute a health plan for violating ERISA regulations, the prosecution is handled by the U.S. Attorney having jurisdiction over the area in which the health plan is located.

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