October 4, 2018

Claims Audits – An Immediate and Future Cost Reduction Strategy

Business Situation 

This county government client approached BMI to conduct an audit of medical and prescription drug claims for cost reduction purposes after a significant rise in insurance expenditures.



Utilizing our experienced staff and proprietary AUDiT iQ™ software, BMI set the following objectives:

  • Analyze 100% of all medical and prescription drug claims paid by the third-party administrator during a 12 month period.
  • Test claims against Summary Plan Descriptions, contracts and eligibility records.
  • Identify areas of possible fraud, waste, or abuse and confirm appropriate coordination of benefits.
  • Audit a sample of claims based on the analysis.
  • Present detailed findings and specific cost-savings recommendations based on the data and audit results.
  • Provide guidance and assistance post-audit.


 Audit Findings

  • Plan exclusionary language in the SPD was not followed for various services/procedures.
  • Duplicate medical and prescription drug claim payments.
  • Payments made for dependents over the limiting age to receive benefits.


 Audit Outcome

The third-party administrator agreed to initial overpayment amounts exceeding $70,000 and the cost of the audit.  BMI assigned a point person directly following the audit to help facilitate correction action and resolve any outstanding issues identified between the client and third-party administrator such as plan intent.


Coinciding with the audit, BMI analyzed plan designs against the claims data resulting in over $35,000 in potential future annual savings by making suggested plan language revisions to consider going forward. Areas in the analysis contained observations where the plan is silent, lacking limitations or overly broad.

Visit here to learn more about how claims audits can be a cost reduction strategy.