3 Takeaways from the Ongoing Kraft Heinz Medical Benefit Lawsuit for Pharmacy Plan Sponsors

December 7, 2023

The Kraft Heinz Company is currently amid a $1.3 billion legal battle with one of their key healthcare vendors responsible for managing their medical benefit.  More specifically, the lawsuit claims the medical benefit vendor “paid millions of dollars in provider claims that should have never been paid dating back to 2012.”

While the case specifically pertains to the administration of the medical benefit, many parallels exist with the pharmacy benefit landscape at large. For plan sponsors, here are 3 key takeaways from the case to consider when administering and monitoring the pharmacy benefit:

1. Plan sponsors own their data, but are often restricted from accessing all of it

One of the main focuses of the Kraft Heinz suit involves a lack of accessibility to their own employees’ unaltered healthcare data. Without full access to all data fields, plan sponsors’ ability to develop meaningful long-term strategies and solutions to better understand and manage drug spending is hindered. Simply put, plans can only monitor what they can see.

The Kraft Heinz case outlines that the following key medical data elements were missing:

  • Amount paid to the provider
  • Prior authorization numbers and types
  • Coverage beginning and termination dates

 At HDS we have seen the same access limitations exist with pharmacy data. A few key data elements required for plan sponsors to adequately monitor their pharmacy benefit claims include:

Amount paid to pharmacy

While this field is rarely included, it is essential for plans with a pass-through pricing model to validate the PBM is not charging spread.

Basis of Reimbursement Determination (BORD)

This field is used to validate the appropriate application of the lesser-of-logic and to identify 340B claims.

Submission Clarification Codes (SCC)

This field is most important when determining appropriate classification of 340B claims at the pharmacy level. This data field impacts claim payments and subsequent rebates.

Prior Authorization (PA) Numbers and Types

PA data fields allow for plan sponsors to validate accurate administration of the plan design and impact on member utilization.

Retail/Mail Indicator

With the complexity of pharmacy networks and associated pricing guarantees, dispensing channel indicators are used to monitor the application of contractual pricing at the claim level.

Other Payer Amount

This field is used to monitor coordination of benefits to ensure plan sponsors are paying the appropriate cost share.

The good news is, many PBMs are already providing some of this data to the plan sponsor. HDS recommends plans ensure they have access to all necessary data fields and actively use them to monitor the appropriate administration of 100% of their pharmacy claims.

2. PBM contracts are highly complex and it is essential that plan sponsors understand them in their entirety

PBM contracts govern the adjudication of claims, plan design, and many other elements of benefit administration. As a result, these contracts can often be hundreds of pages long. While these documents are highly complex in nature, it is paramount that plan sponsors review and understand each element to ensure the benefit is set up as intended. In the case of Kraft Heinz, single elements such as the provider exclusion list played a negative role in their claims experience and prohibited them from monitoring claims from certain providers.

This experience is similar in concept to the pharmacy benefit. Definitions, drug lists, and contract exclusions impact both adjudication and subsequent attempts at reconciliation. Plans should strive to not only comprehend these key elements, but also ensure their contract enables claim-level monitoring to measure performance. A few important areas plans should monitor to ensure contract adherence include:

  • Brand/Generic/Specialty Definitions
  • Pricing & Rebate Guarantee Exclusions
  • Pharmacy classification criteria (Retail, Mail, LTC)

With favorable claims oversight allowances in the contract and the implementation of a continuous monitoring mechanism to review claims in real-time, plans can help minimize audit recoveries and prevent accidental overspending before it occurs.

3. Recovery of claim overpayments through retrospective audits alone is burdensome and inefficient

Retrospective claims audits are a standard industry practice on both the medical and pharmacy side of healthcare, but they are often ineffective when used in isolation due to variety of reasons. In the case of Kraft Heinz, their auditing process came with several vendor-directed limitations including:

  • Sample claim review (limited to only 250 claims or 0.25% of annual claims volume)
  • Vendor veto power on any Kraft Heinz selected auditor, and
  • Policies stipulating that any results from the audit sample could not be extrapolated across the rest of the claims population.

These restrictions limit transparency and make it difficult, if not impossible, for plan sponsors to identify all instances of claim error and overpayment. When errors are identified during an audit, a series of negotiations and settlements are needed to realize full or partial recoveries from previous plan years. With PBM audits taking anywhere from 12-18+ months to complete, the opportunity cost for plan sponsors can be significant.

In Conclusion

If partial claims data access and data restrictions are an issue for the fifth largest food and beverage company in the world, it is likely happening more broadly across the industry. As a result, many payers are at risk of significant overpayments and incorrect claim adjudication. Yet to date, very few payers have deployed comprehensive ongoing monitoring efforts to protect against these risks. Even with access to the appropriate data, the complexity of PBM contracts and limitations inherent to retrospective audits can leave money on the table. A more comprehensive approach to claim oversight is needed.

As a leader in the space for over 10 years, HDS advises all plan sponsors take an active role in managing data access, PBM contract oversight, and continuous claims monitoring. Doing so provides real-time claims visibility and empowers payers to identify and fix potential errors as they occur.

To learn more about HDS’ ongoing pharmacy benefit monitoring and industry leading pharmacy payment integrity product Claim Scan, click here.

Click here to schedule a demo to learn how Claim Scan could help you ensure access to 100% of your pharmacy data and better protect your drug spend.


  1. https://medcitynews.com/2023/07/kraft-heinz-aetna-lawsuit-fiduciary-claims-data-employers/
  2. https://www.scribd.com/document/657278136/Kraft-V-Aetna#
  3. https://www.benefitspro.com/2022/02/14/to-be-or-not-to-be-a-fiduciary-that-is-the-question-for-pbms/
  4. https://www.beckerspayer.com/policy-updates/an-industry-shifting-moment-employers-payers-tussle-over-claims-data.html#:~:text=’An%20industry%2Dshifting%20moment’,payers%20tussle%20over%20claims%20data&text=As%20insurance%20premiums%20continue%20to,fiduciary%20duties%20under%20federal%20law 
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