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September 5, 2013

Health Plan Audits – Immediate Recoveries & Long-Term Corrective Action

Business Situation:
Facing rising health care costs, our client engaged us to conduct an audit of medical claims paid over a two year period by their third-party-administrator. Consistent with the client’s objectives we:

  • Reviewed 100% of all claims paid during the audit period using our proprietary software AUDiT iQ.
  • Tested claims against Summary Plan Descriptions and enrollment records.
  • Identified areas of possible fraud, waste, and abuse.
  • Confirmed appropriate coordination of benefits.
  • Audited a sample of claims on-site at the third-party-administrator’s location.
  • Presented detailed findings and specific recommendations based on the audit results.
  • Assisted in recovery and implementation of corrective action.

Audit Finding:

While on-site, our auditors discovered payment errors that included, but were not limited to the following:

  • Payments for infertility and vision related services excluded by the plan.
  • Payments without documentation of credible coverage for services rendered within the pre-existing period.
  • Duplicate payments.
  • Payment for services rendered after the patient’s termination date from plan coverage.

Carrier/Third-Party Administrator Action and Response:

With BMI’s post-audit assistance, the claims administrator agreed to credit the plan for the total amount of payment errors that were made and reprogram the client’s plan setup.  The claims administrator also agreed to identify any errors whose causes may have been systemic and request financial impact reports.

Financial Error:

The client was credited over $40,000 immediately for payment errors made on 59 audit samples.  This credit far exceeded the cost of the audit. In addition to immediate recoveries, future payment errors were avoided through the third-party-administrator’s corrective actions.