Claim Auditing Helps Contain Medical Costs

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Company Medical and Benefit Claims Auditing | TFG Partners

With the never-ending increases in health care costs, self-funded medical plans must explore ways to manage expenses. Medical claims auditing is increasing because it is revenue neutral (or better). More specifically, 100-percent claim auditing of medical and prescription medicine plans usually pays back the audit cost as much as four times over. It's earned the notice of managers overseeing mid and large-size self-funded health care plans. The larger the plan, the bigger the potential for audits to lead to significant overpayment recoveries. Every plan can benefit from it.


With third-party administrators (TPAs) handling claim processing for virtually all employer-funded plans, oversight takes on greater importance. TPA agreements contain performance and accuracy guarantees, but relying solely on self-reporting opens up plans to unreported errors. More than one plan manager has been significantly surprised by audit findings substantially different from what a TPA was self-reporting. Error patterns can quickly add up to tens of thousands of dollars or more. Correcting them and recovering overpayments is an opportunity. Systemic fixes can prevent more in the future.


With costs rising so quickly and sometimes unpredictably as during the coronavirus pandemic, more frequent auditing is becoming widespread. The days of plans auditing themselves only often enough to comply with Sarbanes-Oxley or ERISA are long gone, given the potential upside. Oversight and closer plan management by sponsors has a myriad of benefits that reach members. Consistency of claim payment practices for all members is well served by auditing. TPAs may have the best intentions, but everyone makes errors, and sometimes those closest to the situation don't see them. 


Clear reports based on an auditor's data leave little room for question, and they can inform negotiations for future TPA service agreements. TPAs and Pharmacy Benefit Managers (PBMs) are on the front lines on medical cost containment, and giving them audit backup guides their work. Everyone benefits from efficient and effective claim processing, and independent auditing firms are allies for all. When looking for a claim audit firm, make it a priority to find an entirely independent one. They have unique expertise and work in the field every day. When you have their experience working on your side, you'll get results.

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