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June 1, 2017

Claims and Dependent Eligibility Audit Combination Achieves Savings

Business Situation:

As part of an effort to reduce overall health care costs, this client engaged BMI to conduct an audit of their third-party administrator  to validate compliance and an audit of all enrolled dependents to verify eligibility.

Client Profile:

  • Non-Profit Organization
  • 718 Employees Covering 1,414 Dependents

 Claims Audit Finding:

  • Reimbursements allowed without submission of proper coding
  • Incorrect application of copayments
  • Duplicate payments
  • Payment for certain procedures above plan limits
  • $1.4 million in potential future savings by making plan language revisions

Dependent Eligibility Audit Finding:

  • 105 dependents (7.43% of total) failed to meet the plan’s definition of an eligible dependent.
  • Reasons for ineligibility included overage dependents, voluntary removal and unreported divorces.

Audit Outcome:

Many issues uncovered through the claims audit were attributed to errors made by a claim processor no longer with the company. The third-party administrator agreed to coach staff, reprocess incorrect claims and initiate recovery of over $140,000 in errant claims payments.

As a result of the dependent eligibility audit, the client removed 105 dependents from coverage to achieve an annual savings of $420,000.

The initial savings identified above will continue to increase as both the third-party administrator and client now have mechanisms in place to limit further risk of incurring unnecessary health care expenses.

Please visit here to learn more about claims audits or here to learn more about dependent eligibility audits.