Author: tfgpartners

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Doing an excellent job of managing employee benefit plans relies on information and data. It explains why medical claim auditing services are crucial in helping plan sponsors stay on track. With claim administration outsourced to third parties, it leaves some exposure, even when they perform well. Adding an audit function that runs frequently, if not continuously, closes the loop. Nothing substitutes for an auditor’s independent review. Error rates have been driven down to the low single digits, which is excellent, but medical and prescription costs are at all-time highs, meaning any mistake is too much.

There’s also a trend of class-action lawsuits against plans over their fiduciary responsibilities. Claim auditing is an excellent way to improve management and oversight. In the unfortunate event your plan becomes the target of a lawsuit, defending will be more straightforward when you have years of claim audit data to prove excellent performance. Plans that lack data and oversight leave themselves much more exposed. The lawsuits can be costly and shake members’ confidence in plans. Avoiding both is the best route and taking steps to do it is intelligent. Like everything, performance expectations increase.

Having fresh claim audit data before you begin your annual budgeting process is also helpful. It gives added perspective to what your third-party administrator and pharmacy benefits manager are targeting. Adding opinions and perspectives always makes the process more informed and accurate. When you have the routine annual increase in health care prices coupled with general inflation, it strains budgets as never before. There is no way to manage many cost increases, but finding savings elsewhere can help, especially when it’s realistic and will happen. Overall, you want your plan to come in on budget.

Customizing audits to suit a plan’s end sponsor’s needs is crucial. It’s also vital to review every claim paid. Gone are the days of random sampling, which only caught repeating errors. When every payment is reviewed and analyzed, the results are more accurate and insightful. Managing a function as complex as health care payments requires daily vigilance and active oversight to double-check for errors. Things can still fall through the cracks with the best systems, and even they need their work reviewed routinely. We’re in a new era of accountability with high prices and higher expectations.

Finding another category with as many price variables as prescription medicines would be challenging. Name brands, generics, discounts, and rebates are all factors, and you can quickly see why an Rx audit makes sense for employer-funded plans. With thousands of claims going through the system daily, the chance for errors is obvious. When you add promises for discounts and rebates and the need to check they are credited, it’s a multi-faceted system deserving double-checking. Pharmacy benefit managers (PBMs) continually improve their systems, but things can always fall through the cracks.

Auditors who review pharmacy claims know where to look for irregularities, and when they add your plan’s formulary to their system, it’s specific to your needs. Plan sponsors relying on PBMs to self-report and correct errors have added confidence when auditors take an independent look. Audits are required for regulatory compliance, but checking more often makes financial sense. It also helps with fiduciary responsibility and member service goals. What’s notable about claim audits is how they improve the bottom line. It’s routine for them to find savings exponentially more than their price.

The improvements in all types of benefits claim auditing, including pharmacy, come thanks to technological advancement. Today’s electronic reviews can check for any potential variable with virtually instant answers. It’s a revolution compared to the random sampling days where results varied depending on the sample you checked, and the method was ineffective for individual errors that collectively can be worth recovering. You can use your pre-audit meetings to bring up questions relevant to your plan and have auditors check them. The process runs smoothly and requires little of your time.

Although auditors and PBMs maintain cordial relationships, there is a “keeping them honest” dimension to the auditor’s work. They are the last line of defense for plan sponsors against costly errors. It can be as simple as name-brand medications being dispensed when generics are available. Or uncredited rebates that are buried deep in unanalyzed claim data. It also makes a case for using specialist auditors who know the ins and outs of pharmacy claims. The more focused their systems are, the better they flag irregularities. The audit firm’s expertise works to your plan’s advantage.

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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. 

The one thing that’s certain about medical and pharmacy claims is that they increase in price yearly. That’s why scheduling a healthcare audit routinely is such a wise idea. It easily falls under the fiduciary best practices umbrella and is a plan management benefit. Thanks to advanced software and systems, electronic claim reviews can check each claim for thousands of provisions and report actionable data. When those powerful and often proprietary systems double-check hundreds of thousands of claims daily, they can flag hundreds of irregularities. It’s the quickest way to find mistakes and overpayments.

Because the costs and numbers are high for medical and pharmacy claims, it’s become standard to audit them routinely, if not monthly. Specialist auditors can easily prove the exceptional value of their service by demonstrating that recoveries exceed their fees – routinely by as much as four times. The COVID-19 pandemic clarified what can happen when unexpected and extraordinary events occur. Utilization spiked, and new tests and treatments suddenly came onto the market. Urgent medical situations and the rush to treat the sick meant the healthcare system had little time to set and agree to their pricing.

Health care claim auditing was thrust into the spotlight as large employer-sponsored medical plans were with extraordinary cost increases. Taking an analytical look meant dissecting each claim paid and seeing if there were charges to question. Thanks to the efficiency of today’s claim reviews, very little falls through the cracks and escapes examination. It also informally plays a “keeping them honest” role with providers when they know large plans are reviewing payments. It’s a level of oversight that goes beyond what claim administrators conduct when making the payments, creating a two-layered system.

Looking back in history, only a few years, you’ll see that random sample audits to meet regulatory requirements were most of what was happening. They played some role in controlling costs but provided nowhere near the level of review feasible today. When electronic claim reviews handle the lion’s share of the process and reduce human time commitment, there are efficiency gains. The entire equation revolves around delivering the proper care at the most reasonable price attainable. Therefore, it’s clear why claim auditing for health and pharmacy plans is increasingly popular.

Company Name- TFG Partners, LLC

Address- 437 Grant St #1020, Pittsburgh, PA 15219

Contact Number: (412)-281-2228