Amid the growing complexity of the benefits landscape, self-insured health plans increasingly depend on third-party vendors to administer and manage essential services, from claims processing and pharmacy benefit management to stop-loss coverage and health center operations. For plan sponsors and trustees, these vendor relationships are governed by contracts that carry significant legal, financial, and operational consequences. For plan sponsors, ensuring these agreements are both legally sound and operationally aligned with the plan’s goals requires one key ingredient: collaboration between the plan’s attorney and its consultant.
Too often, legal counsel and benefit consultants work in parallel, reviewing and revising agreements from their respective vantage points but without active coordination. The attorney focuses on legal risk, indemnification, and dispute resolution; the consultant focuses on pricing terms, service guarantees, and data access. When these perspectives are not integrated, it creates gaps that can weaken oversight, limit enforceability, or result in misaligned expectations.
Avoiding the Pitfalls of Working in Silos
When plan sponsors allow legal and consulting reviews to happen in isolation, they risk missing key protections or creating ambiguity in important provisions. For example, an attorney may ensure there is an audit right in the agreement, but the consultant understands what data is required to perform a meaningful audit. A consultant may negotiate performance guarantees, but without attorney involvement, the remedies for missed metrics may lack enforceability. Legal counsel may address HIPAA obligations broadly, while the consultant can ensure operational details like data file transfers or system access are addressed.
Without collaboration, these disconnects can surface only after issues arise when it is too late to renegotiate.
The Value of Cross-Functional Collaboration
By bringing the plan’s attorney and consultant together during contract drafting and negotiation, plan sponsors can ensure that each agreement is:
- Comprehensive, addressing both legal protections and operational mechanics;
- Aligned with fiduciary duties including appropriate oversight, audit, and accountability provisions; and
- Enforceable and measurable ensuring that performance guarantees are tied to specific metrics, with remedies that are practical and enforceable.
Each party brings valuable expertise to the table. The attorney advises on compliance with ERISA, HIPAA, and other applicable laws, and negotiates clear terms for liability, indemnification, and dispute resolution. The consultant understands the service-level expectations, operational workflows, industry standards, and how the vendor’s systems function. Together, they ensure that the contract protects the plan and its participants in both theory and practice.
Key Contract Elements That Benefit From Joint Input
Some of the most critical areas in vendor agreements are best developed through collaboration:
- Audit Rights and Data Access: Consultants know what data is needed and how vendors typically provide it; attorneys ensure the language is strong, enforceable, and protects confidentiality.
- Performance Guarantees: Consultants negotiate the right metrics and targets; attorneys ensure the remedies for failure are clearly defined.
- Pricing and Transparency: Especially with PBMs, consultants can benchmark pricing and ensure transparency; attorneys can ensure definitions (e.g., "pass-through pricing") are contractually sound.
- Termination and Transition Provisions: Consultants anticipate operational disruptions; attorneys make sure the contract protects the plan during and after termination.
- Oversight and Monitoring: Consultants help define reporting and accountability mechanisms; attorneys ensure the contract includes enforceable obligations.
When attorneys and consultants collaborate on these key provisions, contracts are not only more complete, but they are also more effective. Each party brings a distinct lens to the table, and when their insights are combined, the result is a contract that is operationally workable, legally defensible, and aligned with the plan’s objectives. Without this joint input, plan sponsors risk gaps in oversight, ambiguous responsibilities, and limited recourse when issues arise.
Why This Does Not Happen More Often
In practice, many plan sponsors still operate in silos despite the growing recognition of the benefits of aligning legal and consulting expertise. This happens because legal counsel and consultants often work on different timelines, report through different channels, and are engaged at different points in the process. As a result, important decisions are made without full input from both perspectives. In some cases, legal is brought in only at the end to “review the contract,” long after key terms have been negotiated. In others, consultants assume legal will handle risk and enforcement without understanding how specific provisions will work in practice. These disconnects are rarely intentional, but they can have real consequences.
Best Practices for Plan Sponsors
To get the most value from legal-consulting collaboration, plan sponsors should:
- Engage both parties early in the procurement or renewal process.
- Facilitate open communication between legal and consulting teams.
- Ensure both review all drafts, especially final redlines.
- Document agreed-upon roles to prevent gaps or duplication.
- Debrief post-signature to align on monitoring and compliance.
By following these practices, plan sponsors can ensure their contracts reflect both legal protections and operational realities. More importantly, they create a foundation for stronger vendor relationships, clearer accountability, and improved outcomes for plan participants. In an environment where fiduciary oversight is under increasing scrutiny, this kind of coordination is essential.
Key Takeaways
Vendor contracts are more than legal documents, they serve as operational roadmaps that define how services will be delivered and managed. For self-insured health plans, aligning legal and consulting perspectives during contract negotiations is not just best practice, it supports prudent oversight and strengthens fiduciary governance. Plan sponsors who foster collaboration between attorneys and consultants are better positioned to safeguard the plan, ensure vendor accountability, and support long-term success.
Contact Us
For more information on this topic, please contact a member of Withum’s Self-Insured Health Plan Advisory Services Team.
