Financial responsibilities are significant when large corporate or non-profit employers fund their health plans. Outsourcing claim administration is standard practice and brings efficiencies and the need for oversight. It's where medical claim audits come in because reviewing claim payments independently verifies accuracy and flags errors. Third-party administrators commonly make performance guarantees and ascertaining their compliance matters. Today's auditors can make a clear difference in many ways, adding value for plan sponsors and helping even out and improve member service in the long run.
Audit improvement trends of the past 10 to 20 years have all favored self-funded plans. The advances in software and technology have ushered in numerous improvements, and the most notable is reviewing 100 percent of claims. It's a big difference from the prior random sampling methods that caught significant systemic errors but had little impact in flagging individual errors. With the high cost of medical services, even more, minor things can add up over time. Plan sponsors began to see vastly improved results when all claims were reviewed. When audits cover medical and pharmacy benefit plans, it's more helpful.
The efficiencies it achieves make it wise to outsource claim administration. But it's a rare business scenario when one company controls another firm's checkbook. It's essentially what happens with third-party administrators and pharmacy benefit managers. They have performance guarantees and are generally trusted organizations with integrity, but no one is perfect. Independent auditing can reveal errors of many kinds, some systemic and others individual. Paying health plan claims is a complex endeavor, and even today's most sophisticated systems can make errors. Therefore, oversight is helpful.
Recovering overpayments is often the biggest moneymaker after a claim audit. But the value of preventing future errors should also be considered. The most efficient way is to pay all claims accurately the first time and keep things from slipping through the cracks. Your plan has special provisions, and claims are paid on another company's system. It means the setup makes all the difference. Auditors can check to see if things are working right and suggest improvements for some areas. The price of an audit is always a fraction of the recoverable errors it flags. Therefore, it's a budget-improving process that's worth it.
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