Recent Cases Highlight Potential Issues With Cross Plan Offsetting

Over the past few years, federal courts have responded in different ways to cross plan offsetting and the question of whether it constitutes a breach of fiduciary duty under ERISA. In general, cross plan offsetting occurs when (a) one health plan ("Plan A") overpays a provider for services, (b) the provider declines to reimburse the overpayment and (c) an insurer or third-party administrator recoups the overpayment by paying that provider less when a different participant from a different plan ("Plan B") receives services from the same provider. The provider is paid less for the subsequent service to offset the previously overpaid amount, and each plan's account is debited/credited accordingly. This Client article examines recent court cases involving cross plan offsetting to highlight the potential issues employers should consider.