Managing Self-Funded Plans (and How to Fix Them Before Renewal)

There’s a quiet crisis unfolding in employee health plans across America’s mid-market.

It’s not the cost of care rising—though it is. It’s not new mandates or the post-Trump healthcare overhaul—though those matter, too. It’s the simple fact that CFOs are unknowingly overspending by hundreds of thousands, even millions, on self-funded healthcare plans due to three correctable, but commonly overlooked mistakes.

If your organization is self-funded—or considering it—read on. This could be the most financially impactful 5-minute read of your year.

Mistake #1: Treating Health Plans Like a Static Line Item Instead of a Controllable Business Unit

You wouldn't hand your vendor or contractor a blank check, yet that’s exactly what many employers are doing with their healthcare spend.

For CFOs used to scrutinizing P&Ls, there’s often a cognitive blind spot when it comes to medical and pharmacy benefits. Why? Because the plan feels “outsourced” to the broker, carrier, or TPA.

But under ERISA, fiduciary duty doesn't end with delegation. The DOL and recent FTC enforcement activity—especially post–Trump’s “One Big Bill”—makes it clear: CFOs are responsible for understanding what’s under the hood.

✅ Solution: Treat your health plan like a business unit. Ask: Who are our top vendors? What are their margins? Where are incentives misaligned? Use AI-driven plan audits (we can help) to expose hidden markups and excess spread.

Mistake #2: Letting PBMs Operate in the Shadows

You’ve heard about spread pricing, rebates, and formulary manipulation—but what does it look like on your plan?

A recent OVD-led audit of a mid-market manufacturer revealed:

• Over $400K in rebates unpassed

• Generic drugs priced 6x higher than market average

• An opaque PBM contract with no fiduciary oversight clause

Your pharmacy benefit manager (PBM) may be the largest source of unnecessary waste in your plan—and you won’t know it until you lift the hood.

✅ Solution: Demand contract transparency with your PBM or carve-out vendor. Use a PBM Fiduciary Readiness Scorecard (like the one OVD developed for our clients) to know what red flags to watch for. Don’t wait for your renewal to “ask around.”

Mistake #3: Relying on Broker Commissions Instead of Independent Plan Performance Metrics

Many brokers are paid more when your costs go up. That’s not an insult—it’s a structural reality of most commission-based arrangements. And while brokers play an important role, CFOs need a performance framework rooted in data, not premiums.

We’ve seen:

• $1M+ overspend in network fees buried in ASO contracts

• “National account” discounts that were worse than RBP or DPC options

• Brokers receiving compensation from vendors they recommended—without client disclosure

This isn’t just inefficient—it’s potentially a fiduciary risk.

✅ Solution: Ask your advisor how they’re paid. Then ask for a quarterly performance review of your plan using independent benchmarks (not carrier-supplied dashboards). Tools like OVD’s

Reform Toolkit give CFOs a starting point.

Act Now: A Mid-Year Course Correction Is Still Possible

If you’re a CFO or CHRO reading this in July, the good news is that there’s still time to course-correct before your next renewal—whether it’s January, June, or somewhere in between.

Start with a mid-year plan audit. Ask for:

• Your top 10 claims and conditions

• Network repricing efficiency

• PBM contract review + rebate tracking

• Broker compensation disclosure

Better still? Ask us at OVD Insurance to walk you through our Fiduciary Fire Drill Scorecard—a 7-question tool to uncover blind spots in 30 minutes or less.

Final Thought

Healthcare costs are no longer just an HR issue—they are a core business strategy issue.

Smart CFOs are leading the charge by understanding where their dollars are going, what incentives are misaligned, and how to reclaim control from intermediaries profiting off opacity.

Don’t let another renewal go by without lifting the hood. If your self-funded plan feels “good enough,” that’s usually a sign there’s serious money being left on the table.

Download the Reform Toolkit & Fire Drill Scorecard →Visit www.ovdinsurance.com/resources or message Herb directly for a walk-through.

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