How much right/responsibility does an employer have in verifying dates

[Guest CLKeown]

I think a terminating employee has submitted dental expenses for the 2000 plan year that were either:

a - incurred before the plan year began.

b - for service to be rendered after the termination date.

c - not submitted to the insurance company before submission for reimbursement, although the employee has dental coverage on our policy.

How far reaching is my responsibilty and authority to verify my suspicion?

Carole

[Lisa Hand]

Since reimbursements are only to be made for 1) expenses within the Plan Year; 2) for services rendered and 3) for amounts that are not going to be reimbursed from any other source, you have significant responsibility and authority to verify expenses, especially if you have reason to believe fraud is involved. This type of verification is why many employers out-source it to TPAs.

Given that we are only 7 days into the 200 Plan Year (assuming it is a calendar plan year) it is highly unlikely that insurance has processed the service if it was rendered in 2000.

[Guest CLKeown]

Lisa -

Thank you for your last post.

Unfortunately, the expense in question is a dental expense on a plan with a set co-payment schedule for services, so there is no claim denial.

When I requested proof of the dates of service, the dentist office sent to me a computer generated payment form with no signatures or other original marks. This form indicats that the employee and spouse both had extremely extensive dental work done on Jan. 7th (the same day the FSA claim was submitted).

The problem is that the employee was in the office by 11 am that day speaking normally. The procedure(s) listed on this form require local anesthesia for the entire mouth. And the procedure (usally performed one quadrant at a time) takes 1.5 - 2 hours per quadrant, yet she was only 2.5 hours late for work.

How much latitude is the employer or plan administrator allowed in investigating this type of scenario?

I can't help but feel that this claim is fraudulent, but I don't know how much I can do to prove it.

Carole

[GBurns]

I cant see why you are taking on the job of the insurer's claims dept. I have seen cases where people who persist with what you seem to be doing have been sued successfully. Be careful.

[Guest CLKeown]

GBurns -

We are a self administered plan, therefore the job of verifying the validity of a reimbursement claim does legally fall on our shoulders.

It is my understanding that in the event of an audit of our plan, if we do not have proof of date of service and proof of denial, we are liable.

Carole

[Greg Judd]

Let's step out of the courthouse for a moment to examine the situation:

Terminated employee submits specious healthcare FSA claim a few days into a new plan year. Based on the available facts, there's no way the work was done when indicated.

If employer, who happens to be the FSA claims processor, gives the person the benefit of the doubt, it is out the amount paid, because the terminated employee obviously isn't making further contributions.

If employer doesn't pay, saying the claim is n.g. based on the evidence, the former employee may a) provide more conclusive evidence the claim is good, b) drop the matter, seeing their ruse won't fly, or c)take some kind of legal action which will cost the person money with no certainty of recouping the cost. Employee contributions to the FSA aren't at stake - certainly not significant amounts; on the other hand, significant employer funds may be at stake. So, claimant may merely be trying for a benefits windfall, & if the 'hurdle' to getting it is too high, they merely move on to a new job, plan, etc.

Former employee has little to risk pressing the claim-unless employer makes him/her prove it, within reason; employer may have real $$$ at stake in paying without demanding further evidence - like some kind of record from the dental insurer/claims processor that it has received a claim & taken some action with it (there's going to be SOME kind of transaction record on their side that they give the participant, so why not ask for a copy?).

Now the employer's action decision is down to particulars: employer's assessment of the claimant's integrity, claimant's potential tenacity in pressing this questionable claim, employer's interest in taking a firm stand, etc.

No particular course of action entirely insulates you from a legal challenge; a person's right to his/her day in court (regardless the surface merits of his/her case) is part of what makes this a great country. So, making a rational business decision is about the best you can accomplish.

Obviously this is not legal advice in any way shape or form. File under 'business advice'.

In my view, this situation is a great example of 'real world' benefits management - "it's not the law, it's just the way it is."

[Lisa Hand]

Carole:

You need to contact the dentist office and explain the it is not when the payment is made but when the service is incurred and that you simply want to know if any pre-payments were included in the information they sent you.

And you are correct if you reimburse an item that is not in the period of participation the plan has a problem. This is one of the reasons many employers out-source these services so a TPA does the reviews and research for them.

[Guest CLKeown]

Greg and Lisa, thank you for your input.

So far the doctor's office is holding the line with the employee (it is a small office, with a personal relationship to the employee).

Lisa, I wholeheartedly agree that outsourcing FSA's is the only way to go. Unfortunately, I don't get to make that decision, so here I am trying to decide how big of a mess to make this.

The employee in question is being involuntarily terminated, which is not improving her disposition toward the company or this matter.

I think Lisa, I will try to call the Dentist office again. Hopefully, with an explanation to them I will be able to get more information.

Thank you again for your help. I am a "payroll person" stuck with a lot of benefit related duties. The help of everyone here has been invaluable.

Carole

[GBurns]

Carole ....You are self administered and also have an insurance company to whom you say the claim is to be submitted. How does this work and what does their claims dept do?

[Guest CLKeown]

GBurns -

Our Flexible Spending Plan is a self-administered plan. However, in order for a FSA reimbursement claim to be eligigle for reimbursement it must meet certain criteria.

One of these criteria is that the claim must not be eligible for reimbursement by the employee's health insurance carrier. This is to keep the employee for being reimbursed twice. Therefore, before a health care expense reimbursement claim can be paid, satisfactory documentation must prove that the service, treatment or equipment is not subject to reimbursement by the insurance carrier.

The employee is required (per our plan documents) to provide either a declination of benefits, written proof that the procedure is not covered by health insurance, or a copy of the insurance carriers co-payment schedule for services. Thus requiring that the services be submitted for health insurance reimbursement prior to submitting the expense for FSA reimbursement.

The insurance plan is administered by our insurance carrier, their claims department would investigate the legitimacy of the claim filed by the physician. The FSA Plan is self-administered, so we are responsible for ensuring that the reimbursements fall within federal and plan guidelines. The two functions are not related, outside of the requirement that the expense not be reimbursed by any health insurance company.

Carole

[GBurns]

Are you saying that your plan is pre-empting Treas Regs such as 1.125-2 Q&A 7 (5)?

I have never before seen a Plan Document that set the law.Am I missing something?

[Guest CLKeown]

GBurns -

I think you may be missing something. Our plan in no way pre-empts any federal regulations for FSA Plans. My question was in regard to the right and responsibility of the administrator (in our case, the company) to investigate possible and probable fraudulent reimbursement claims.

Our plan document does not 'set the law'. It does; however, set forth an explanation of the definition of eligible expenses as defined by federal regulations.

Our plan does set forth the stipulation that proof of eligibility be provided when the claim for reimbursement is submitted. For instance, we need a copy of the prescription receipt with the Rx number or drug name rather than a generic "cash register" tape showing a total for general merchandise to be sure that we are reimbursing for a Rx co-pay and not a bottle of Vitamin C. This stipulation is designed to expidite the process of the reimbursement. It also serves to ensure the legal compliance of our FSA Plan.

These stipulations are neither unusual or in violation of federal regulations. They are in fact, a common stipulation. In much the same way that most Dep. Care Plans require that you are submitting an expense paid to a licensed provider by requiring you to submit the provider's FEIN or SSN.

There is no federal regulation requiring an employer hire a third party administrator to oversee and administer their FSA Plan. As a self-administered plan, we are responsible for determining the eligibility of and investigating questionable claims in the same way that a third party administrator would.

I am sorry if you still have problems with this; however, I feel that I have explained everything as clearly as possible.

Carole