In a way, it's an unusual paradigm when a large health insurance carrier processes claims for a self-funded medical plan. The organization releasing the funds isn't the one whose bottom line the payments hit. As a result, health plan auditing services provide vital oversight. Third-party processors guarantee ultra-low error rates and often do an excellent job meeting their promises. But given the costs involved, having specialized auditors double-check is essential. For the largest plans, even a 0.25 percent improvement in the error rate can add up to a significant sum. Therefore, frequent audit oversight is the industry norm.
Consistently paying claims and paying them accurately meets fiduciary responsibilities and serves members more equally and, therefore, better. Today's audits that review every claim paid down to minor details have unprecedented accuracy and produce clear, actionable reports. It's also true that as audit accuracy improves, the cost of the service decreases because it flags more recoverable overcharges. The more extensive a claim audit is, the more chance it has of helping to recover significant sums of money. Audits also point out systemic irregularities that can be corrected to prevent future errors.
With the improved results and increased recoveries, it's routine for large employer-funded plans to keep auditors working continuously. Their software runs unobtrusively in the background as claims are paid, and reports are monthly. It's one of the best ways to keep a plan on track financially because there is an ongoing analysis of claim expenses. If you're the manager, you can make adjustments and give details on cost trends and other financial issues to management. It's a comfort level never imaginable in the days of random sample audits conducted infrequently – it makes short and long-term improvements.
When each plan's special provisions are added to a claim audit system, every possible contingency is covered in the review. It's also routine for final human oversight to catch things flagged initially in an electronic sweep of claim payments. Anything suspicious can be rechecked and examined to a finer level of detail. Patterns of mistakes sometimes go undetected by processors' systems, and audits discover them later. It also makes a case for more routine auditing, so million-dollar problems rarely pile up. The oversight process can enhance collaboration as everyone works together to correct errors.
