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When large corporate or nonprofit employers sponsor their employee benefits, they put millions of dollars on the line. Healthcare plans are among the most expensive, and it's why medical claims auditing and pharmacy claim reviews matter so much. There is a fiduciary responsibility to pay claims accurately, and with outside firms handling it, auditing is the most effective way to conduct oversight. It provides an objective third-party review of all payments and their accuracy, or not. Given the many factors affecting plans today, it's easy to see why beefing up oversight is imperative.
When you're working on plans and budgets for medical and pharmacy plans, claim audit reports are insightful. Compared to self-reporting from administrators, they complete the picture and provide independent confirmation. Today's sophisticated audit software can answer most questions you can pose about plan performance. It can also find opportunities for savings and serving plan members better. You can quickly see why plan sponsors audit their claims more frequently and double-check their payments monthly. Auditors can run their systems unobtrusively in the background continuously.
Pre-audit planning allows you to have an information exchange with your audit firm. You can bring up areas of concern and listen to their suggestions about places of interest based on experience and past work. Electronic claim reviews today are more sophisticated than ever and powered by advanced systems that quickly bring the audit to the finish line. They also render easier-to-read (and understand) reports that give clear insights into the findings and analysis. Having factual performance data for meetings and negotiations with your claim administrator also informs that process.
If you audit claims only when required for regulatory compliance, you're missing opportunities and may work farther in arrears than is optimal. Timely reviews that flag errors and irregularities shortly after they have occurred can facilitate easier recoveries if there are overpayments. Finding repeating mistakes earlier also means correcting systems and more easily avoiding million-dollar problems later. It adds value if you're looking at auditing from a compliance, cost containment, fiduciary best practices, or member service standpoint. Double-checking claims always returns more money than the service's price.
Employer-funded health plans have made news twice recently in the legal arena. Some sponsors have taken their claim administrators to court, and class action lawsuits on behalf of members are planned. In each case, a healthcare audit may figure into the causes for action of defense against them. An independent review of claim administration and payments is essential to confirming reports from third-party administrators or pharmacy benefit managers. As they pay thousands of claims weekly or monthly, errors can occur, even with the most advanced systems. Auditors can flag each one for correction.
There is no doubt that claim payment error rates have been driven to low levels. However, health care and medicine costs are high, and even a small number of mistakes can add up to significant numbers. Keeping processing systems fine-tuned matters, and auditors have a role to play. When you hire a firm staffed with people experienced in claim payment systems, their auditing abilities can be more advanced. They can electronically review thousands of claims for all the relevant data points in minutes, checking for irregularities and overpayments. As software and systems have advanced, audit accuracy has improved.
Regulations from ERISA and Sarbanes-Oxley remain, to name a few, and require periodic auditing. But today, there is a far more compelling plan-management (and cost containment) rationale to be made for frequent claim audits. Given the complexity of medical billing, the opportunities for hard-to-detect errors are significant. In the days of random-sample auditing, only large error patterns would be uncovered. Today, flagging individual errors, each correctable and recoverable if it makes financial sense, is common. Correcting claim administration systems to avoid repeating those errors is beneficial.
There can be benefits to working with the same auditor over time as they can compare current and past periods to evaluate performance. But there's also value in interviewing other firms to determine whether their systems and methods go beyond what you already use. For example, if you work with a large audit firm bundling its services and including claim reviews, they may be less advanced than a specialist firm concentrating in the area 100 percent. Their expertise can work on your side, and when their rates are competitive, it can be the wisest way to go. You see short and long-term improvements in the audit.