In a regulatory environment increasingly focused on transparency and accountability, plan sponsors are now expected to approach their health care vendors with the same fiduciary rigor traditionally reserved for retirement plans. But what does it really mean to be a prudent fiduciary in a health and welfare context — especially when cost transparency is more elusive than ever?
Transparency rules exist, but are they enough?
The Consolidated Appropriations Act of 2021 ushered in a new era of health care cost transparency. Among its provisions are requirements that health plans disclose detailed compensation information for brokers and consultants and make pricing data more accessible to plan participants.
In theory, these changes empower both employers and employees to make more informed decisions. In practice, however, they have raised more questions than they’ve answered. Many plan sponsors are struggling to determine what ‘reasonable’ broker compensation looks like, how to evaluate opaque vendor pricing structures, and whether they could be doing more to control costs on behalf of their participants.
Brokers, benchmarks, and the illusion of control
At the heart of the issue is a fundamental challenge: health care costs often appear arbitrary, even when armed with data. Research from the Peterson Center on Healthcare and the Kaiser Family Foundation found that the cost of common procedures like MRIs can vary by thousands of dollars within the same city. Why? Because participants typically follow their doctor’s referral or use the facility located in their provider’s building regardless of price.
Innovative tech firms are working to bridge this gap by helping employers identify high-cost outliers and negotiate better rates with providers. But those models work best in localized workforces where care is concentrated around specific health systems. For national or distributed employers, the landscape is far more fragmented.
That leaves plan sponsors wondering: are we responsible for ensuring employees always pick the lowest-cost provider? And if we’re not steering them toward cheaper options, are we failing in our fiduciary duties?
The answer, at least for now, is no. While fiduciary expectations are evolving, they don’t require plan sponsors to micromanage participants’ medical decisions. What they do require is a thoughtful, well-documented process for selecting service providers and reviewing fees.
Cost isn’t everything, but transparency is
When SBA conducts broker of record searches, we often find that sponsors aren’t necessarily looking for the lowest bidder. They’re looking for value, defined as a combination of cost, service quality, alignment with organizational goals, and, increasingly, transparency.
One of the most impactful questions a sponsor can ask during a broker RFP process is, “What are we really paying for?” Brokers should be able to clearly articulate the services they provide, disclose all sources of compensation (including overrides and commissions), and demonstrate how their work benefits the plan and its participants.
But that kind of transparency isn’t something most sponsors can validate on their own. Too often, fees are buried in contracts or spread across multiple vendors, making it difficult to gain a complete picture of what’s being paid and to whom.
A call for pragmatic oversight
The truth is, even the most engaged plan sponsors can only exert so much control over health care costs. What they can control is how they evaluate and monitor their vendors. And that starts with putting the right questions on the table:
- Are our broker’s fees commensurate with the services provided?
- Are we conducting regular market checks to ensure competitiveness?
- Do we fully understand how our broker is compensated and by whom?
- Are we relying on data and benchmarks when making decisions?
Transparency alone won’t solve health care’s cost problems. But it can shed light on inefficiencies, reveal better alternatives, and give plan sponsors confidence that they are acting in the best interest of participants.
At a time when fiduciary scrutiny is only increasing, that clarity is worth pursuing.
Reprinted with permission from BenefitsPRO © 2026 Arc network, LLC. All rights reserved.