Self-funded corporate health plans have long been subject to routine medical claim and PBM audits to meet regulatory requirements. Ultimately, the company, as the plan sponsor, and its in-house management team assume significant fiduciary responsibilities. Today, organizations are auditing health plans more frequently, with some opting for ongoing monitoring of claim payments. This shift is largely due to the emergence of highly accurate, 100-percent audit methods As a result, employee-members receive improved service accuracy, and only appropriate fees are paid for promised benefits.
Initially, most audit firms relied on random-sample methods to review self-funded medical plans. These methods presented several drawbacks, including inherent inaccuracies and limitations that hindered meaningful plan improvement. Additionally, random sampling demanded considerable time and effort from in-house benefits teams. However, beginning in the 1990s, progress in audit software enabled the comprehensive review of 100 percent of claims. These 100-percent audits have transformed the industry, establishing a new standard of accuracy and transparency.
In large, publicly traded companies, senior management encounters pressure to deliver investor value. Major cost exposures, such as self-funded health plans can impact earnings reports and affect stock prices. Consequently, in-house health plan managers must closely oversee their programs and ensure that external claims processors are paying claims accurately. While total expenditures provide one perspective on healthcare costs, audits reveal the underlying reasons for spending and point out areas for improvement. Audits help prevent costs from spiraling out of control and harming the company.
By auditing 100 percent of medical and pharmacy benefit plan claims companies can quickly find and correct issues. Long durations without oversight allow errors to accumulate, resulting in considerable financial waste that may only become apparent as unexplained spikes in costs on financial statements. Real-time auditing facilitates proactive management, permitting leaders to react to anomalies and maintain control over healthcare expenditures. When costs increase, having immediate access to claim data allows for investigation and corrective action, protecting the organization’s financial soundness.