Years ago, when large employers set up their self-funded medical and pharmacy benefit plans, there were regulatory requirements to schedule audits periodically. The plans complied, and auditing claims was standard practice. But as the years have gone past, audit software and methods have improved, and the reporting has become more accurate and detailed. The early techniques audited a random sample of claims and went no farther. Now that audit software has become more sophisticated, and it's possible to review 100-percent of claim payments with less human involvement. It's changed the game entirely.
When every claim is reviewed and overcharges are flagged along with errors, the savings add up quickly when a medical and pharmacy benefit plan is reviewed. Today's management protocols involve more frequent audits, and some companies have even moved to audit their claim payments continuously. It means real-time data on costs and immediate flags on anything needing review. It's been a revelation for in-house plan managers who need to perform oversight of a TPA (third-party administrator) as a part of their jobs. The ability to review claim payment accuracy is vital to them.
The savings achieved with 100-percent claim auditing are significant for any medium or large plan, and the higher the claims volume, the larger the potential. Member service is a fundamental goal in all audit activities. Plans need to be equitable with members, and when a claim is paid inaccurately, it may avail some members of different treatment than others. For those with high-deductible plans, the need for accuracy is two-fold. They are plan members and rely on accurate payments to meet their deductibles and pay for services as described in the plan description. Accuracy has many benefits.
Rising medical and prescription costs for years have given plans reasons to audit their claims routinely. But the coronavirus pandemic and the higher costs associated with it exponentially increased the value. It's routine for audits to result in savings of four times the fee for the service. The horror stores that made news during the early days of the pandemic about astronomical overcharges weren't fake. They posed genuine challenges to many large employers' budgets for medical claim costs. Rooting out those overcharges and quickly bringing them to the forefront allowed them to be recovered and stopped.