Auditing Claim Administrators Pays Off

[TFGPartners]

Large corporate and nonprofit employers providing medical and prescription plans for their employees have significant financial stakes in ensuring the accuracy and efficiency of their claims processing systems. Given the magnitude of financial transactions involved, it becomes evident that medical claim auditing services are vital components when onboarding new claim processors. These services, often referred to as implementation audits, play a crucial role in evaluating the accuracy of the claims processing system and assessing its initial set-up. It's always better to catch and correct issues early.

By providing oversight for management teams, implementation audits confirm the accuracy of the claims processing system at its inception. When selecting auditing firms, specialists capable of reviewing 100% of claims and scrutinizing each for hundreds of factors are deemed the optimal choice. Most industry recommendations suggest planning an implementation audit about 90 days after the commencement of work by new TPAs and PBMs. Notably, reputable vendors committed to excellence should openly welcome audits as evidence of their accuracy and commitment to delivering quality work. 

On the contrary, any resistance to audits could raise concerns about the vendor's practices. The primary value of implementation audits for plan sponsors lies in their ability to identify mistakes and process irregularities early, thus allowing for prompt rectification and recovery of overpayments. Such audits serve as effective mechanisms for catching and addressing systemic processing errors, preventing the escalation of potential million-dollar problems. The actionable and factual data provided by audit reports, free from dispute, further underscores the significant oversight value they offer sponsors. 

While there is a greater incentive for larger employers with a higher number of plan members to conduct audits, mid-size employers are also exposed to cost-related risks, and the potential savings derived from conducting audits often far exceed the costs. As a result, medical claims auditing is increasingly recognized as a budget-neutral activity preferred by plan. What began as a regulatory compliance activity has now evolved into a management tool with financial significance. Notably, the shift towards implementing 100% auditing methods has improved things over random sampling.