The self-funded medical and pharmacy benefit plans of large and mid-size employers in the U.S. exist for good reasons and bring substantial management responsibilities. Claim payments need to be the most closely managed area because they are where the cash goes out the door. If ever there was a question about the value of a healthcare claims audit, the year of the coronavirus pandemic put them to rest. It brought unexpected and extraordinary increases in medical and pharmacy claim costs straining budgets as never before – and it occurred during a year when sales were uneven at best.
Independent claims audits by firms specializing in the function are a self-funded plan's optimal method of oversight of third-party administrators. Nearly all TPAs in their agreements make performance-quality guarantees, but there are thousands of claims and millions of dollars on the line. With claims and expense volume so high, even a finite number of errors can add up to significant sums. When 100-percent of claims are reviewed using sophisticated (and often proprietary) software backed up by a human review, the findings can be surprising. It's why well-managed plans embrace frequent auditing.
The history of healthcare claim audits for self-funded benefit plans goes back to government regulations under ERISA and Sarbanes-Oxley. However, in the years since, large corporate and nonprofit employers have learned that more frequent audits than the government required ones make excellent sense. Today it's routine for a 100-percent audit to flag recoverable overcharges and processing mistakes with a value of four times the audit's cost. They make it plain that routinely auditing if not monitoring claim payments continuously is essential oversight that helps control skyrocketing costs.
