Large employers, both corporations and nonprofits, can serve their employee's health care needs well with a self-funded medical plan that also can be cost-effective. More and more, claim payments are handled by third-party administrators (TPAs) that often are large health insurance carriers. Given the high stakes and dollars on the line, medical claim audit companies play essential roles in the relationships between the two. As cost containment continues to be a significant priority, auditing and continuous monitoring using sophisticated software allow plan sponsors to manage claim payments.
Plan audits began to meet government regulations and, as they have become more accurate, have evolved more into strategic plan management tools. It is why continuous monitoring after an audit has gained popularity as in-house plan managers sharpen their oversight. It helps company managers fulfill their fiduciary responsibilities and gives real-time data about claim payments and plan costs. It only takes one unexpected event, such as the recent coronavirus pandemic, to bring a spike in medical expenses. When such an event occurs, there is no substitute for being able to double-check claims paid.
Often driven by technology, expectations increase for management oversight of all significant cost centers within a corporate or large institution. Shareholders and nonprofit boards ask pointed questions and expect management to have thorough answers at the ready. A health plan audit prepares management to reply, and with TPA claim payment error rates commonly falling in the two to six-percent range, there are many financial reasons for close oversight. In large self-funded plans, those percentages can quickly add up to significant amounts that impact the bottom line. While TPAs put effect into compliance and regulatory issues, often it falls to the plan sponsor to keep tabs on the error rate.
The performance standards common in the agreements between health plans and their TPAs commonly include performance guarantees, and most have provisions to address sub-par performance. But a plan's best defense against these is outside, independent audits that flag errors, reports on plan performance, and confirmed whether or not performance standards are being met. It's easy to find cases where a TPA will report 100-percent performance, yet an audit will show it is 96-percent or less. The is no substitute for oversight to verify the performance claims made by TPA to their clients.
