Allowing someone else to write checks from your checkbook would sound shocking. But it's what employer-funded health plans do with their medical plan claim administrators. Given the financial exposure, it's easy to understand why health plan auditing services are so important. They provide a detailed, objective look at a plan's performance regarding its claim payments. In the early days, audits were a regulatory compliance need that evolved into a strategic plan management tool. The oversight function is essential as healthcare costs skyrocket and claim processing is outsourced.
The 100 percent audit method that replaced random sampling is a factor in the more widespread use of audits for oversight. They're vastly more accurate and insightful, meaning plan sponsors count on the data to work with their claim administrators. Given the complexity of medical claims, mistakes can occur in various ways. As a result, only a system that works with a detailed approach will catch all of them. There is "low-hanging fruit" in the form of easy-to-spot error patterns that repeat. But the opportunity also exists to flag individual errors that add up and are recoverable.
Implementing auditing is also significantly valuable when switching to a new claim processor. The system setup has much to do with accuracy, and when you check all the payments after the first three months, you have an accurate picture of where to improve. Today's promise is to keep processing error rates in the low single digits, which matters. Fluctuations of even one or two percent are meaningful financially, and you want to keep things on track. Members are also served better when everyone's claims are paid correctly and consistently. It's the best and right thing to do.
Once you've audited, should you monitor claim payments consistently? The answer is yes for many plans, and the monitoring price is generally less than the value of the errors it flags. Filing compliance reports is also easier when your plan is tightly run. In any data-driven situation, having a firm grasp of your numbers is always the preferred approach. For anyone old enough to recall working during the random sampling days of yesteryear, the audit reports of today are impressive. They take any guesswork out of the process and keep things factual. You can thank the advances in audit systems.
