In the coming years, we can expect a significant increase in medical and prescription drug costs. This trend places financial strain on employer-funded benefit programs, prompting many companies to conduct regular medical claim and pharmacy benefit manager audits. With most claims today being managed by third-party administrators (TPAs), the need for careful oversight is clear. Recent news has highlighted numerous cases of overpayments and inconsistencies in claims processing, with one major employer even suing its claims processor for billions due to alleged errors and mishandling.
Medical billing is notoriously complex, and the discounts and incentives associated with pharmacy transactions create a perfect storm for errors. While claim administrators assure clients that they self-report errors as part of their service, it is worth questioning the thoroughness of these checks. It is where independent auditing firms come into play. Ideally, you want to partner with a firm that not only specializes in claim auditing but also works within the industry daily. Each health plan has its own unique provisions, but having a general knowledge of where to investigate can offer a significant advantage.
Moving beyond random sampling to review all claims can also enhance the audit’s effectiveness. Pre-audit inquiries are a fantastic addition that helps staff focus their reviews on areas that warrant attention. Previously, recovery opportunities were primarily found in groups of claims with similar mistakes. Now, however, it’s possible to address individual errors to recover funds that may have been lost. Also, proactive oversight brings management value. Knowing that their work is being scrutinized encourages TPAs and pharmacy benefits managers (PBMs) to operate with greater accuracy.
Modern electronic systems further streamline the auditing process, bringing it closer to generating the final report. This capability means that organizations can save valuable staff time, where resources are stretched thin. While human involvement is crucial to any claim review, technology can speed up the process. The insights provided in audit reports can assist financial teams in understanding budget variances, especially as costs often exceed expectations. Regular audits with robust reporting contribute to improved financial health and allow organizations to navigate the complexities of rising expenses
