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Employer health plans with outside claim administrators commonly depend on medical claim auditing for needed oversight. When claims are paid out of the house, double-checking their accuracy and that of your processors is paramount. However, there are many efficiencies an auditor can recommend based on knowledge of the field. You want an audit customized to your plan but aware of industry "best practices" that can help you improve. Every medical and pharmacy plan aims to provide excellent care to members at the lowest price. When auditors confirm it's happening, you'll have greater confidence.
As you set yearly performance and budget goals, you might consider sharing them with your audit firm. If they are monitoring your claim payments weekly, monthly, or with quarterly audits, they can help you understand whether you're staying on track. Claim administrators can help, but their reports come from the base system. An audit firm checks independently with a fresh set of eyes and different criteria. They also review all processors' work and can give you insight into strengths and areas of improvement for each one. When you're armed with data and understanding, you're also in a stronger negotiating position.
Claim audits began with random sampling and have evolved to highly sophisticated electronic reviews running on proprietary systems. Today's standards are double-checking and reviewing every payment for all relevant data points. It provides an unmatched level of accuracy and can answer virtually any question about claims paid. Even as claim administers police mistakes and self-report about accuracy, auditors take the process a step further. They are an independent review and run their check with different software. The processor self-reporting originates from the system that made the errors.
Every health and pharmacy plan self-funded by a large corporate or nonprofit employer has specific provisions. They determine what gets paid and what doesn't. It's easy for large health plans acting as claim administrators to take a cookie-cutter approach and use their provisions while overlooking others. Knowing this tendency reinforces the rationale for frequent auditing to keep payments on track. It also meets fiduciary responsibilities and ensures all members are treated equally. When a claim is paid in error, it's common for one member to receive benefits while others don't. Accuracy levels the playing field.
Benefit plan claim payments, especially costly ones for health plans, need active oversight to watch for errors. Prescription and medical claims auditing is an excellent way to double-check payment accuracy and the work of claim administrators – third-party processors and pharmacy benefit managers. When
large employers self-fund benefit programs and outsource claim administration, there is significant financial exposure. In at least two recent instances, large corporations have gone to court against the health plans handling their claims alleging overcharges. Audits provide data and allow for oversight.
The concrete and factual information produced by a claim audit is also actionable in any way you, as the plan sponsor, see fit. You can use it for performance improvement conversations with your claim administrators or to recover overpayments. There is no substitute for the knowledge you gain with a well-run claim audit, and many plan sponsors continuously audit their payments for high-caliber oversight. The first time you read an audit report, it's eye-opening if your processor has self-reported and found no errors. The independent review from auditors double-checks the payments and reports.
Systemic errors were the only ones picked up in earlier random sample audits. Now that technology and systems allow for every claim to be checked, you can expect more complete findings and more opportunities to recover funds paid by mistake. It's a given that claim payments today are highly accurate, and error rates are customarily relatively low, but you may pick up other cost trends in an audit. When you work with a firm reviewing many plans, they bring experience and a trained eye. What they pick up can save thousands or more, and audits are revenue-positive because of recoveries.
It's also more common for employer-funded benefit plans to switch claim administrators today. If you do make a change, remember to schedule an implementation audit after 90 days. It's an excellent way to confirm things are running as planned and performance guarantees are being honored. It's easier to catch things before they get out of hand than to allow errors to pile up unresolved. While it might have been a common practice to audit periodically in the past, it's now wise to do it more often. Most plans have learned their lessons one way or another and more aggressively conduct oversight routinely.
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Employers covering benefits for their employees do so to attract and retain good talent. But the costs of benefit programs, especially medical and prescription drug coverage, continually increase. As self-funded plans struggle to contain costs, healthcare auditing companies can help. Their careful review of claim payments can flag costly errors and help prevent similar ones from occurring in the future. Their contribution to cost management has increased as technology has improved so that audits review 100 percent of claims paid. As a result, they help plans recover payments made in error.
Beyond the usual yearly escalations, some moments bring extraordinary increases in medical bills. A recent example was the coronavirus pandemic that put the healthcare payment system under once-in-a-lifetime stress. Novel tests and treatments had widely varying prices (some astronomical), and utilization spiked remarkably. One way to manage the crisis was to audit claim payments quickly to develop detailed data about what happened. It's common for claim processors to collect and report data, but auditors can look in greater or different detail. Seeing what happened is always helpful.
Every plan sponsor desires to provide excellent health care for covered employee members. When funds are drained because of overcharges or mistaken payments, it falls short of delivering the value plans have promised. A thorough claim audit can get things back on track and prevent errors from repeating in the future. It shores up finances, reduces budgetary pressure, and conserves funds for covered items provided and billed correctly. The importance of the correct system setup from a claim processor cannot be overstated. It's why implementation auditing is also always a wise idea.
When health and pharmacy benefit plans are designed, they necessarily contain thousands of provisions and details. As a result, processing and paying claims becomes a function of implementing those details. While claim administrators have their methods for achieving accuracy, having the independent review of an auditor is instructive. When administrators report their findings, they're policing claim payments using the same system that made them. Auditors have separate systems that can detect other issues. Comparing a processor's self-reporting to the findings of a professional auditor is enlightening.
Periodic audits are a must for the benefit plans offered by large employers, both corporate and nonprofit. Depending on the employee population, claims paid in error can cost hundreds of thousands or millions of dollars. Medical claims auditing and similar doublechecks of pharmacy benefit plans are budget-friendly. They lead to recoveries far more than the audit cost, sometimes up to four times as much. Another meaningful asset is having people on the audit team with knowledge of claim payments from inside large health carriers that handle the processing.
Large audit firms view taxes as their most significant area of focus, and although they may have systems that can audit claims, it's not their specialty. Smaller firms have come on the scene recently and made game-changing improvements. One of the most significant was software advances that allowed 100 percent of claims to be reviewed. Gone are the days when a random sample is the only option, and you check every claim; the chances of finding all errors improve. Anyone who has been in the field long enough to recall random sampling also remembers the staff time it took up checking the pulled claims.
The best audits focus on everything and flag all errors. But it depends on whether a payer or provider sponsors the review. On the payer side, you want to know about mistakes, overbilling, duplicate charges, and patterns of repeating errors. On the provider side, ensuring correct codes were entered and all services billed is generally the priority. Accurate payments better serve members, providers, and plan sponsors' needs, and audits keep things on track. Some companies go as far as to monitor their claim payments continuously so that errors are always reported.
Self-funded benefit plans have stepped up their use of auditing since processing and payments have moved out of house to third-party administrators. The agreements for processing services generally include performance guarantees, but only periodic oversight can confirm it's happening. Given the claim costs, sponsors need to keep tabs on payment activity and ensure it remains as accurate as possible. Each claim can be reviewed for hundreds of checkpoints and error patterns corrected before becoming million-dollar problems. It's one of the best plan cost management tools.
When health and pharmacy plan sponsors switch to a new third-party claim administrator or pharmacy benefit manager, it's vital to schedule an implementation audit at the 90-day point. You need independent verifications that claim payments are off to a smooth start and your plan's interests are managed well. New TPA and PBM relations customarily come with many promises about better service – but the only way to know if it's happening is to audit. It's also crucial to review 100-percent of claims with sophisticated audit software capable of picking up each detail. It's a complex process. medical claim auditing services.
If you're deciding about timing, veteran claim auditors have found that 90 days is the ideal point for the implementation review. It's before any error patterns have become million-dollar problems and long enough after the start for there to be sufficient data. TPAs and PBMs have complex systems required by the fine details of claim processing, and your plan has its specific description. Making sure your parameters are added to their system correctly requires careful auditing. Even if your service agreement has accuracy guarantees, only an independent claim audit will verify them. It's your budget and plan on the line.
When expert auditors flag set up issues, there's no debate about what's happening. It's concrete oversight data you can use to bring quick action and corrections. Even when TPAs and PBMs have a plan's best interests at heart, it's not always a simple process to program every detail into their systems – and their internal oversight runs on the same system and may miss what an auditor picks up. Today's claim audit software is more sophisticated than ever, and it instantly picks up things you'd be surprised it could detect. Errors tend to repeat and become ever more costly, which can cause budget issues.
Most self-funded employer benefit plans cover large groups of employees. It's why small mistakes can become significant issues given the plan's size. There are also more significant opportunities for savings when claims are paid accurately and agreements honored. Once you are up and running and past the implementation audit phase, you may want to consider continuous monitoring. It runs on the same software and gives you real-time updates about your claim payments. If there are errors or changes, you can recover overpayments more quickly and with fewer questions than when they are long in the past.