Jump to content

Health claims audit


Guest Al Burkhart

Recommended Posts

Guest Al Burkhart

Our internal audit department is entertaining a proposal from a claims audit firm (BMI Audit Services) to audit our health plan. I am somewhat opposed to the audit because I don't want our employees to be chased down to repay monies that may have been paid to them in error. BMI says they are not paid on a recovery basis and that they focus on corrective actions that need to be taken as a result of their audit findings. Has anyone been through a claims audit? Anyone used BMI for the audit? Results? Am I worried about nothing?

Link to comment
Share on other sites

Have you asked them to put you in contact with at least 3 of their cliants so that you can find out what their experience was? I'd start there. If employees have been overpaid because their health care provider overbilled, or billed in error the employee should repay the plan and then get reimbursed from the health care provider. Nothing wrong with that.

Link to comment
Share on other sites

Guest Al Burkhart

Thanks Kip. I met with our internal audit manager and he shared reference information with me. We have no issues with the competency and effectiveness of the auditor. Their references checked out remarkably well. I still have an issue with the audit itself, however. I understand that our TPA is likely making errors. They employ humans. As much as we would like to minimize those errors (thereby minimizing our rising health plan expenses), I am worried that our employees will not appreciate the fact that we are scrutinizing payments made to them as much as a year ago or longer. Have you or anyone else out there been through such an audit? If so, how did it turn out? Did employees object to the audit? Thanks for your response.

Link to comment
Share on other sites

  • 2 weeks later...
Guest Jenny Littlejohn

Al, we often recommend claims audits to our larger self-insured clients because we feel somewhat accountable to them if we recommended the TPA. Audits make sense. We have not heard complaints from clients saying that their employees were intimidated or offended by the audit. I think that can happen if the intent of the audit is to go back to them and recover large sums of money already paid to them. Most of our clients use the audit to keep the TPA on their toes and to make sure that they have a very good understanding of the plan and are making the right interpretations. The results have always been positive. We have recommended a company called HCBR (www.hcbr.com) for audits. They did a nice job, but took a little longer than we sometimes thought it should take to complete the audit. We have also endorsed BMI Audit Services (www.bmiaudit.com) and have been very satisfied with the job they have done. Occasionally, we have used Claim Technology, Inc. (no website located). We tried working with a few others who work on a contingency basis. We have never been satisfied with the contingency fee audits. Hope this helps!

Link to comment
Share on other sites

The audits that I have seen had the purpose of ensuring the integrity of the claims adjudication process, thereby keeping the TPA on its toes and also subtly warning the employees and providers not to pay claims.

It seems the prudent thing to do when considering fiduciary issues.

There should be no need to think of it or to cause the employees to think of it as being targeted at them. In fact the most likely result is that there will be much more that was improperly paid to service providers, either directly or through bad COB, than was paid to the employees.

I suggest that you verify with the Audit firm the most frequent outcome of their audits, that should put your mind at rest by showing that there will be little effect on the employees. In fact you might discover that the amount related to the employees will be small enough to write off.

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

Link to comment
Share on other sites

  • 2 weeks later...
Guest sdussault

A claims audit is usually a good thing. The biggest thing that you will find, and highest expectation of recovery to the plan, is in misadministration of subrogation and/or coordination of benefit rules. In this case, other insurers are typically the party that owes your plan money.

Another major lapse that will be found will be in hospital claims. Hospitals are wonderful providers of care and service, but their billing abilities are horendous! Very often, insurers and TPAs are presented with bills that are inaccurate for a number of reasons. TPAs should be geared toward this contingency, but often, these slip by. In an audit that I had done once, we recovered tens of thousands of dollars JUST in hospital claims.

I have never been sorry for conducting a claims audit. In each case, the cost of the audit was well overshadowed by the recovery of plan assets spent erroneously. I have not used this auditor that you are looking at, but if all their references checked out, I'd recommend you go for it.

Good Luck!

Link to comment
Share on other sites

I agree completely with the audit of the subrogation and coordination of benefits. In that regard, the relevant provisions of the plan should be reviewed by competent ERISA counsel to verify that they contain language that comports with the recent decisions regarding subrogation (which generally have been unfavorable to the plan).

Kirk Maldonado

Link to comment
Share on other sites

  • 2 weeks later...
Guest Al Burkhart

I appreciate the feedback. Question for Jenny Littlejohn and any others who might have related experience--Why have you been so dissatisfied with a contingency fee audit? In the process of evaluating this audit process, we have been approached by 2 firms who work solely on a contingency basis, and I must admit, I am a bit intrigued. It seems to me that if they don't find any errors, we don't have to pay. What am I missing?

Link to comment
Share on other sites

I have asked the same question of large clients in related issues and the answer is always that they have always paid their Big 5 and other such consultants on either a flat fee or per hour basis.

No one has ever evaluated the value or quality of the work done.

It reminds me of mindless sheep.

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

Link to comment
Share on other sites

  • 9 months later...
Guest Scott Reed

The main objective of a contingency audit is to maximize recovery for the plan sponsor and the recovery firm The recovery firm runs algorythyms on paid claims and looks at high amount claims to find the maximum amount of overpayments. The objective is to find the maximum amount of recoverable dollars.

The objective of a performance audit is to improve plan performance and to help the TPA become a better business parnter for the plan sponsor. A performance audit attemtps to identify systemic problems that are associated with plan administration. A performance audit should evaluate a statistacally valid sampling of claims in order to identify the performance issues. The results of a statisticallyvalid sampling can also be used to identify perfomance guarantee issues from the past as well as performance guarantee changes for future contract years.

2 very different services:

Contingency recovers overpayments - Retrospective

Performance identifies and corrects problems - Prospective

As for the recovery efforts against employees. Most audit firms do not collect against plan participants. The collection efforts are limited to providers. If the provider wants to chase the participant that is their business.

Link to comment
Share on other sites

What sort of algorithm could you possibly use to determine claims maximum overpayment (whatever that is)?

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

Link to comment
Share on other sites

Guest Scott Reed

Algorithm logic is mostly proprietary but some of the obvious things that audit firms look for are:

Duplicate claims payments

CPT codes that do not match a DRG

Rounding Errors

Link to comment
Share on other sites

There is no algorithm usage in what you have outlined, all that you outlined are simple matching of the data within a field and not the use of a formula or procedure for solving a problem, which is what an algorithm is and does.

The use of the term seems like sales hype to make something seem more complex or important thereby commanding a higher price. All fluff no substance makes me wonder about the quality or effectiveness of the work.

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

Link to comment
Share on other sites

Guest Scott Reed

Algorithm - a step by step procedure for solving a problem or accomplishing some end especially by a computer.

The claim audit work that I have seen seems to use algorithms as defined above but if you say no - that's OK with me.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...