February 1, 2019

Savings Follow Audit of Client’s Third-Party Administrator

Business Situation 

BMI was engaged to audit this manufacturer’s new third-party administrator for both their medical and prescription drug plans to ensure benefits were being paid appropriately and to evaluate overall administrative effectiveness.



Utilizing our experienced staff and proprietary AUDiT iQ™ software, BMI set the following objectives:

  • Analyze 100% of all medical and prescription drug claims paid by the third-party administrator during a 24 month period.
  • Test claims against Summary Plan Descriptions, contracts and eligibility records.
  • Identify areas of possible fraud, waste, or abuse and confirm appropriate coordination of benefits.
  • Audit a sample of claims based on the analysis.
  • Present detailed findings and specific cost-savings recommendations based on the data and audit results.
  • Provide guidance and assistance post-audit.


Audit Findings

  • Claims paid for dependent pregnancy and genetic testing despite exclusionary plan language.
  • Duplicate claim payments for same service/procedure.
  • Incorrect prior authorization allowing Specialty drug prescriptions to be filled at retail.


Audit Outcome

The third-party administrator agreed to initial overpayment amounts exceeding $95,000 and to implement additional claims examiner training in many cases.  BMI assigned a specialist directly following the audit to help facilitate necessary corrective actions and resolve any outstanding issues identified between the client and third-party administrator.

Coinciding with the audit, BMI analyzed plan designs against the claims data resulting in over $33,000 in potential future savings by making suggested plan language revisions to consider going forward. Areas in the analysis contained observations where the plan is silent, lacking limitations or overly broad.

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