April 13, 2012

BMI Audit Finding of the Month: Audit Finds Prior Authorization Not Provided Prior to Claims Payment

Audit Issue:
The audited health plan required prior authorization for Durable Medical Equipment (DME) charges exceeding a stated amount.

Audit Finding:
We used AUDiT iQ to select sample DME claims for on-site review.  While on-site at the Administrator’s payment location, we confirmed that prior authorization was not provided prior to processing several large DME claims.

TPA/Carrier Response:
The claims administrator acknowledged that its systemic edits were programmed to trigger a prior-authorization request only for specific hard-coded HCPCS DME codes and had not been subject to periodic updating.

Financial Error:
The administrator agreed to financial errors amounting to more than $13,500.00 for the three samples we reviewed.  They also agreed to thoroughly investigate past claims history to assess the total financial impact of similar errors.