Claim processing for large employer-funded health plans by third-party administrators (TPAs) involves advanced systems and performance guarantees. However, without independent medical claim auditing, it is impossible to verify their self-reporting. Regulatory requirements for periodic plan audits are in place, but many have found it beneficial to review claims more frequently. Conducting audits can lead to substantial cost savings by identifying overpayments or recurring mistakes. Flagging these issues and making system improvements to prevent them in the future is vital for containing costs. Although TPAs aim for precision in claim processing, the volume of work and introduction of new fees and services can lead to discrepancies.
Independent audit firms specializing in claim audits are able to identify cost and mistake trends early on. When TPAs input a plan's parameters into their systems, they may default to system settings, but auditors can identify these cases and recommend improvements to ensure necessary details and nuances are considered. With annual increases in medical and prescription bills, it is essential to ensure that claim processing systems remain current. The adoption of the 100-percent method by auditors has given them a competitive advantage in assisting plans in self-management. This method involves double-checking all claims against hundreds of data points, a significant departure from previous random sample audits.
With a more effective electronic review, less human involvement is needed, leading to time and cost savings while improving the quality of audit data. This shift has transformed claim auditing from a compliance issue to one of the most effective management tools available to sponsors, and it continues to improve year after year. Early detection of issues is critical, which is why implementation audits are typically scheduled 90 days after a new TPA begins handling claims. Independent review is the only way to verify performance and identify potential recurring issues early on to prevent them from becoming significant problems. Similarly, suggested system improvements can enhance accuracy and cost-effectiveness without increasing workload.
Auditing firms are invaluable consultants for employer-sponsored benefit plans. In conclusion, the role of independent audit firms in ensuring the accuracy and cost-effectiveness of claim processing for employer-sponsored health plans cannot be overstated. By identifying cost and mistake trends early on and recommending system improvements, auditors play a crucial role in containing costs and ensuring the integrity of the claims process. As the landscape of healthcare and insurance continues to evolve, the value of independent auditing will only continue to increase, benefiting both employers and employees alike.