The collaboration between large health insurance providers and employer-sponsored medical plans for processing claims can be incredibly beneficial, but it also introduces complexities. Central to managing the relationship are meticulous medical and pharmacy benefit manager audits, which serve multiple purposes. They ensure compliance with regulatory requirements and guarantee that the payments made by the plan sponsor are accurate. Also, audits can uncover hidden costs that deserve closer examination. These expenses can accumulate, becoming obscured amidst the figures involved.
A well-executed audit can clarify these financial intricacies, bringing them into sharp focus. In recent years, technological advancements have revolutionized the realm of claim auditing for medical plans. Unlike previous methods that relied heavily on random sampling and manual reviews—making the process slow and less reliable—modern technology has dramatically enhanced efficiency. Now, audits can examine 100% of claims swiftly, reducing the human effort necessary and improving accuracy. It is why many plans opt for audits more frequently than mandated by government regulations.
For managers working at large organizations with self-funded medical and pharmacy benefit plans, participating in a claim audit can be quite illuminating. They are impressed by the thoroughness of the audit reports and the valuable insights they reveal. These reports provide actionable data that enables effective decision-making, creating numerous opportunities for financial improvement. Given that dozens, if not hundreds, of factors are considered electronically for each processed claim, the potential for errors is significant. Thus, audits play a key role in driving systemic accuracy enhancements.
Another surprising aspect for many is that TPAs often outsource certain functions, which can result in costs that fall to the plan sponsor. The fees and commissions charged by subcontractors to fix mistakes made by the TPA can range from 10% to 30%, depending on the plan's size, and can add up. Armed with this cost data, plan sponsors have the leverage to question these charges and negotiate for their recovery. In an era where healthcare expenses are skyrocketing, the importance of diligent claim auditing has never been greater, making it a critical focus for anyone managing these plans.