Friday, September 2, 2016

Small Group Achieves Big Savings Investing in Dependent Eligibility Audit

Business Situation:
This client approached BMI to conduct a dependent eligibility audit after reading about the savings obtained from a similar sized organization in a previous Audit Finding of the Month.
 
Client Profile:
  • Manufacturing
  • 223 Employees Covering 456 Dependents
 
Audit Finding:
The client achieved a 98% employee response rate to the dependent verification process which resulted in:
  • 32 dependents (7.02% of total) failing to meet plan eligibility requirements. (More than half voluntarily requested removal due to ineligibility.)
  • Reasons for removal included the inability to prove an eligible relationship or because the dependent was eligible for coverage through their own employer. 
 
Audit Outcome:
The client decided to terminate coverage immediately for the 32 dependents who were identified by the audit to be ineligible.  Additionally, coverage for 24 dependents who did not respond completely prior to the audit deadline was terminated.
 
First Year Savings Calculations

Average Annual Cost per Dependent:
                                  $3,500
Estimated Annual Savings:
                                  $196,000
Return on Investment:
                                  Over 2,000%

Tuesday, August 2, 2016

Claims Audit Reduces Fiduciary Risk and Future Expenditures

Business Situation:
Faced with potential increased scrutiny of fiduciary responsibility by the Department of Labor, this client engaged BMI to conduct an audit of their self-insured medical plan to demonstrate due diligence.
 
Solution:
Utilizing our experienced staff and proprietary AUDiT iQ™ software, BMI set the following objectives:
  • Review 100% of all claims paid during a two year period.
  • Test claims against Summary Plan Descriptions, contracts and eligibility records.
  • Identify and analyze areas of possible fraud, waste, and abuse.
  • Confirm appropriate coordination of benefits.
  • Audit a sample of claims on-site at the third-party administrator’s payment facility.
  • Present detailed findings in addition to specific cost-savings recommendations based on the data and audit results.
  • Provide post-audit guidance and assistance.
 
Audit Finding:
  • Claims paid without appropriate coordination of benefits where other insurance was primary
  • Payment for non-covered services
  • Duplicate claims, improper coding and modifiers
 
Audit Outcome:
Initial adjustment amounts due to incorrect adjudication totaled $30,000.  A majority of the errors were attributed to auto adjudication where the processing system should have pended the claim for processor review. A dedicated Post-Audit Support Coordinator was assigned by BMI to coordinate resolution of the issues identified as a result of the audit.
 
Coinciding with the audit, BMI analyzed plan designs against the claims data resulting in over $250,000 in potential future savings by making suggested plan language revisions. Areas in the analysis contained observations where the plan is silent, lacking limitations or overly broad.

Thursday, July 7, 2016

Dependent Eligibility Audit Results in Over 3 Million in Annual Savings.

Business Situation:
This client approached BMI to conduct a dependent eligibility audit due to limited internal resources and to gain better understanding their plan’s eligibility requirements.
 
Client Profile:
  • Health Care
  • 4,579 Employees Covering 9,902 Dependents
 
Audit Finding:
The client achieved a 97% employee response rate to the dependent verification process which resulted in:
  • 563 dependents (5.68% of total) failing to meet plan eligibility requirements.
  • Reasons for ineligibility included overage dependents, lack of documentation of legal custody, unreported divorces, and eligibility for other coverage through other employment.
 
Audit Outcome:
The client decided to terminate coverage immediately for the 563 dependents who were identified by the audit to be ineligible.  Additionally, coverage for 387 dependents who did not respond completely prior to the audit deadline was terminated.
 
Immediately following the audit, BMI was engaged by the client to perform dependent eligibility audits on a quarterly basis.


First Year Savings Calculations

Average Annual Cost per Dependent:
                                  $3,500
Estimated Annual Savings:
                                  $3,325,000
Return on Investment:
                                  4,034%

Wednesday, June 1, 2016

Pre-Implementation Audits – An ounce of prevention is worth a pound of cure.


Business Situation:
After making changes to benefit plan design from the prior plan year, this employer engaged BMI to conduct a pre-implementation audit to verify that the claim administrator’s system was programmed correctly.
 
Solution:
After reviewing plan documentation, auditors reviewed and set up over 85 test scenarios focusing on overall plan provisions such as deductibles, coinsurance maximums, plan limits or exclusions. Multiple claims were often used to test various benefits which included claims covering different procedures, diagnoses, types of providers, age and gender. Testing was performed in a WebEx environment.
 
Audit Finding:
  • Out-of-network provider set to pay at in-network coinsurance levels.
  • Travel immunizations weren’t denied despite being excluded.
  • Routine colonoscopies and mammograms paid at 100% without deductible regardless of age.
  • Incorrect application of copay when a member saw more than one physician in the same clinic on the same day.
 
Audit Outcome:
Through independent testing this client was able to catch potential costly mistakes and avoid future claims adjudication headaches by verifying the claim administrator’s system set-up before actual claims were paid.
 

Monday, May 9, 2016

Dependent Eligibility Audits: Real Findings Equate to Real Savings

Business Situations:
A national retailer, small manufacturer, large city government, hospital, and Fortune 500 Company were all looking to reduce their overall health care costs in a variety of different ways, yet all of them reached the same conclusion: A dependent eligibility audit performed by an experienced outside organization was the most effective way to achieve immediate measureable results while also reducing compliance risk.

Audit Findings:
The findings below are taken from actual audits BMI conducts every day and are not uncommon:
  • An employee insured a spouse, but was never married.
  • Multiple employees were insuring ex-spouses from unreported divorces occurring in 1993 – 2009.
  • An employee enrolled a domestic partner that was married to another individual.
  • An employee enrolled a stepchild and then reported the dependent as a foster child, but was unable to prove the relationship.
  • An employee insured a spouse and two stepchildren, but was not married resulting in removal of 3 enrolled dependents.
Audit Benefits:
These clients decided to terminate coverage immediately for any dependents who were identified by the audit to be ineligible.  Additionally, a majority of these clients also removed coverage for those who did not respond completely prior to the audit deadline.
 
Based on annual enrolled per dependent costs ranging $3,000 - $4,500, most clients achieved a return on investment that exceeded 2,000%.

Tuesday, April 12, 2016

Claims Audits – Immediate and Long-term Cost Reduction Strategy

Business Situation:
Our client’s employee benefits consultant engaged us to conduct an audit of their client’s third-party administrator to ensure medical and prescription drug claims were being paid appropriately.
 
Solution:
Utilizing our experienced staff and proprietary AUDiT iQ™ software, BMI set the following objectives:

  • Review 100% of all claims paid during a two year period.
  • Test claims against Summary Plan Descriptions, contracts and enrollment records.
  • Identify and analyze areas of possible fraud, waste, and abuse.
  • Confirm appropriate coordination of benefits.
  • Audit a sample of claims on-site at the third-party administrator’s payment facility.
  • Present detailed findings in addition to specific cost-savings recommendations based on the data and audit results.
  • Provide post-audit guidance and assistance. 
     
Audit Finding:
  • Incorrect application of copays and deductibles.
  • Duplicate claims and improper coding.
  • Failure to establish medical necessity for durable medical equipment.
Audit Outcome:
Initial reimbursement amounts were calculated at over $23,000.  A majority of the errors were attributed to the claims processor no longer assigned to the account. BMI also assigned a dedicated Post-Audit Support Coordinator to walk the client through the findings and coordinate resolution of the issues identified as a result of the audit.

BMI’s analysis of plan designs and claims data also identified over $380,000 in potential future savings by making suggested plan language revisions. Areas in the analysis contained observations where the plan is silent, lacking limitations or overly broad.

Thursday, March 3, 2016

Investing in a Dependent Eligibility Audit Produces Big Returns

Business Situation:
This client provides a comprehensive medical benefits package to employees and their families, but wished to avoid payment of claims for ineligible dependents. To accomplish this, the client hired BMI to conduct a dependent eligibility audit. 
Client Profile:
  • Retailer
  • 331 Employees Covering 742 Dependents
 Audit Finding:
The client achieved a 96% response rate to the verification mailing campaign which resulted in:
  • 31 dependents (4.18% of total) failing to meet plan eligibility requirements.
  • Reasons for ineligibility included lack of documentation of legal custody, unreported divorces, eligibility for other coverage through other employment, and voluntary removal of ineligible dependents.
 Audit Benefits:
The client decided to terminate coverage immediately for the 31 dependents who were identified by the audit to be ineligible.  Additionally, coverage for 49 dependents who did not respond completely prior to the audit deadline or extended deadlines was terminated.

First Year Savings Calculations

Average Annual Cost per Dependent:
                                  $3,500
Estimated Annual Savings:
                                  $280,000
Return on Investment:
                                  2,800%