Yes; it is imperative. ERISA requires employers sponsoring health benefit plans to conduct audits from time to time. Plans also continue to change, and even the most accurate claims processing systems continue to produce significant error rates. An audit is the only way to make sure your employees receive precisely what your benefits plan calls for and the company is not paying for adjudication errors or uncovered benefits.
Cost of a 100 percent audit are similar to the cost of a sample based audit. However, net cost of the 100 percent audit are much lower: most 100 percent audits pay for themselves in actual recoveries while large employer experience savings that are a multiple of the audit cost.
Traditionally, our clients have realized recoveries of claims paid in error in excess of 2-3 times the cost of the audit. Savings over time, from cost avoidance through process improvements, will be much higher.
There are no set standards for audit frequency. Most clients prefer to audit every other year, or in the case of larger employers, annually and in some cases quarterly, for continuous quality improvement.
It depends on your objectives. TFG’s 100 percent audit uses computer technology to re-adjudicate and review every single claim, making sure all payments comply with specific plan rules, and identifying all exceptions. Accordingly, we are able to select a strategically focused sample of claims for on-site validation. Tests have shown that we are able to help our clients identify 4 times as many error categories this way and up to 14 times as many overpayments, compared to random sampling. Knowing what went wrong, by individual claim, allows us to determine what can be done to prevent future overpayments and can also help us guide you toward significantly higher recoveries.
By comparison, random sampling is accomplished by applying a statistical selection methodology to the claims data, providing only a statistically valid understanding of the error types and rates, which creates a reasonable estimate of the percentage of claims that have been incorrectly administered. This statistical methodology, therefore, does not provide any practical or detailed information to make significant process improvements and has significant recovery limitations.
As the fiduciary of your plan, you have the right to choose the type of audit you want. Many administrators try to impose their own rules and limitations, mostly to limit the number of claims reviewed on-site, and staff time needed.
TFG Partners understands the reasons for these rules and has overcome these limitations, and built a reputation for both efficiency and accuracy. We have successfully audited all major carriers, using the 100 percent claims review audit process.
Our average audit takes approximately 4-5 months in elapsed time, from the moment our auditors receive the data.
Most clients spend no more than 2-4 days (not consecutively) interacting with us. We pride ourselves in limiting your burden to only those tasks that are absolutely necessary for a quality audit. We do a lot of work behind the scenes to ensure this level of efficiency.
Audits should not affect employees at all. All overpayment recoveries are at the discretion of the employer. As a result, we typically work with the administrators to recover only at the direction of the employer, such as recoveries from Medicare, and other COB and duplicate payments to providers.