What whistleblower Joe Vincoli got right (and wrong).
What I got right:
1) How much an ERISA regulated self-funded hospital decides to pay itself is subject to ERISA scrutiny. While the courts did not rule on the question, it appears that the question of how much a self-funded hospital pays itself for services provided to its employees (aka, 'domestic care') is a fiduciary matter and not a 'plan sponsor' matter.
2) The question of whether or not a hospital that owns its own TPA must report domestic care 'at cost' or 'at market' was the subject of a recent CMS audit (MTN695838). The public records document stream for that audit ends with the contracted auditor stating that the hospital's claim to meet the exemption appears to have been 'voided' because the transaction in question is 'domestic care' (a transaction between the hospital as medical provider and the hospital as plan sponsor, not 'claims administration services'), and he asks CMS for guidance.
3) Public records obtained by Senator Budd reference an Office of Audit Services audit that determined that there was a financial impact to Medicare when a hospital paid itself at 'market rate' for domestic care services rather than 'at cost'.
What I got wrong:
1) I thought that the CMS regulations required self-funded hospitals to have an independent fiduciary (a good idea and one I proposed to Senator Dana Jones of NC as it relates to the 'governmental entity'/hospital authority known as Atrium/CMHA).
I did not realize, though, that, as with all things CMS, there's a catch. The rule only applies if the amount of money in the health plan's fund represents more than 10% of the hospital's reserves (or something like that). The point of regulation (from the perspective of CMS) is to prevent the hospital from putting itself at financial risk. Most (all?) self-funded hospitals exceed the 10% threshold. The CMS regulation requiring an independent fiduciary appears, then, to not be intended to ensure that hospital employees are not overcharged for the medical services they receive from their 'employer/medical provider'. Rather, the point of the regulation appears to be to ensure that the hospital does not put itself in financial peril.
2) I thought federal judges would hold that if a hospital owns the claims payer then that claims payer can't be a 'third party administrator'. That seemed pretty obvious to me. Five federal judges twisted themselves in knots to rule, 'we're not sure'.