March 11, 2014

Claims Audits – Immediate and Long-term Cost Reduction

Business Situation:    
With costs per each individual enrolled increasing steadily over the last 2 years, this client engaged us to conduct a retrospective audit on 100% of their medical claims plan for 13,396 enrolled members. 

 Audit Finding:

Following the on-site portion of the audit of 220 claims samples, errors identified included:

  • Billing components of a procedure or service as separate when they were, in fact, one service.
  • Lack of documentation to support medical necessity for cosmetic procedures.
  • Duplicate payments.
  • Payment for pregnancy –related claims for dependent children which the plan excluded.

Third-Party Administrator/Carrier Response:
The third-party administrator agreed to claim payment errors on 54 audit samples. Detailed explanations of how the errors occurred and action plans to prevent the same type of errors from occurring again were provided following completion of the on-site visit. 

Sources of errors BMI’s audit identified included:
  • Incorrect edits
  • Claim examiner error
  • Auto adjudication flaws

Audit Benefits/Outcome:
The audit identified over $92,000 in errors for the samples BMI reviewed.  Additional errors were subsequently agreed to and corrected going forward through BMI’s post-audit resolution management process with the third-party administrator and client. Had these errors not be identified through an audit and addressed immediately, claim costs would continue to have increased at a higher rate each year.