subject: Why Employer-Funded Benefit Plans Need Audits [print this page]
A sudden surge in claim costs quickly captures the attention of medical and pharmacy plan sponsors, as demonstrated by the coronavirus pandemic. In its aftermath, health plan and PBM auditing services are now examining the impact on plans that lacked steady oversight of claim payments. The pandemic introduced numerous new variables, especially as testing and treatments soared to unprecedented levels. Utilization rates increased across all plans, and historic costs emerged in areas experiencing widespread hospitalizations. This environment created an increased risk for billing errors.
Events like these spotlight the critical value of real-time claim auditing. Without real-time oversight, plan sponsors must rely primarily on assurances from third-party administrators and pharmacy benefit managers, with little immediate verification. Periodic audits conducted for regulatory compliance often occur too late, limiting the potential for recovering overpayments or implementing timely system improvements. Consequently, well-managed plans choose to audit themselves frequently or continuously, carefully monitoring payments and essential service and financial indicators.
Overcharges and overpayments can appear in any area, but audits are especially effective at detecting certain issues. Lab testing and imaging are prime examples where unnecessary costs often occur. Auditors can identify redundant tests, which frequently result from poor coordination among providers. While third-party administrators may promise to minimize duplications, only a thorough, comprehensive claim audit verifies that these promises are upheld. Physician fees and charges exceeding reasonable and customary rates should also be subject to careful audit review.
Pharmacy claims present another range of opportunities for effective auditing. Initial reviews should focus on ensuring prescriptions adhere to the plan’s formulary. It is common for brand-name drugs to be dispensed when generics are available, but the cost-saving potential of generics is only realized if they are prescribed as outlined in the plan documents. Auditing should also include reviews of usage patterns, for example, monitoring monthly maximums, refill frequencies, and similar factors. Also, audits need to verify that any rebates offered by drug manufacturers are correctly received by the plans.
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