When employers self-fund medical and pharmacy benefit plans for their employees, cost increases are the most significant challenge the plans face. It's why a healthcare claims audit is of crucial importance to plan sponsors. Claim auditing is the best way to review expenditures to catch errors, recover overpayments, and make sure members are treated equally. The first step is to audit a plan year and review the findings. It often leads to audits of other years and possibly the start-up of continuous monitoring service. Optimal audits examine 100-percent of claim payments to produce a high level of accuracy.
Auditing health and pharmacy claims shortly after they are paid improves the opportunities for recovering overpayments. It also leads the system improvement process to avoid more of the same mistakes in the future. Claim payment oversight often returns up to four times the cost of an audit and prevents costly errors. Given the significant cost exposure of medical and pharmacy plans, auditing has moved from a regulatory compliance matter to a strategic management tool. Most plan sponsors today schedule audits with an increasing frequency. Experience has shown them it is wise.
One of the reasons claim payments bring the risk of errors is the complexity of each plan's description and the overwhelming complexity of medical expenses. Most processing is handled by third-party administrators that are large health plan companies. They set up a self-funded plan on their system, and it's easy for defaults to override unique rules. Auditors now are scrupulous in setting up their systems with each plan's nuances allowing them to pick up inaccurate payments. Even when TPAs (or pharmacy benefit managers) include performance guarantees, only oversight confirms they are being met.
Independent claim auditors are the best bet, and the leading firms have proprietary software and systems that are highly accurate. When they add a level of human review to check the electronic audit, accuracy levels improve even more. If you're in-house at a plan sponsor running oversight on TPAs and PBMs, you'll be impressed by today's clearer audit reports. They help meet fiduciary responsibilities and are excellent cost management tools. It can be beneficial when you have the same audit software running in the background for continuous monitoring. You'll see emerging cost trends.