May 6, 2013

Multiple Audits Result in Over $500,000 in Savings and Achieves a 2,000% ROI

Business Situation:
As a cost-containment best practice, our client engaged our firm to validate its TPA’s compliance with the Administrator Services Only (ASO) agreement and Summary Plan Description (SPD) for its self-insured plans.  Our client was also seeking a firm to audit its employee’s 8,600 covered dependents to ensure they were eligible for benefits according to plan language.  Our client had a strong preference to engage a firm capable of conducting both audits simultaneously.

Audit Finding:

While on-site for the claims audit, auditors confirmed payment errors on 3 different plans including but not limited to the following:

  • 771 minutes for anesthesia charged during a procedure that lasted for 58 minutes
  • Payment for TMJ appliances, hearing aids, and vision hardware excluded by the plan
  • ER copays not applied correctly
  • Routine follow-up care included with surgical charge was charged separately.

At the conclusion of the dependent eligibility audit, 105 dependents (1.22% of total) failed verification, while 180 dependents (2.09%) did not confirm dependents were eligible.

 Audit Benefits:

The combined savings on conducting both the claims and dependent eligibility audits amounted to over $500,000 just in the first year alone. This resulted in an over 2,000% ROI.   Savings each year following the corrective actions and removal of ineligible dependents will continue. BMI was also engaged to conduct ongoing verification audits of newly enrolled dependents as well as bi-annual health plan audits.