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.


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.