Claims Audits

A Routine Checkup

Claims audits need to be performed routinely to ensure that a plan’s claims payer has adequate controls in place to effectively administer the plan and pay claims in a timely and accurate manner. Under a self-funded arrangement, plan sponsors, not insurers, assume the risk. An ongoing claim audit program not only enables plan sponsors to satisfy their fiduciary obligations, but also to monitor costs and potentially identify areas for savings.

Auditing Benefit Payments

Lindquist has professional staff members who work exclusively in claims auditing and related areas involving the improvement of efficiency and control of claims processing. Our claims auditors have 60 years of combined experience performing and supervising audits of benefit claims. We are highly knowledgeable in auditing claims, reviewing claims systems and analyzing internal controls. Our experience with numerous third-party administrators and insurance carriers has given us exposure to many claims processing systems.

Unique Claims Audit Approach

Our comprehensive claims audit approach is based on an on-site review of actual claims files and documents and re-adjudication of the selected claims, as opposed to a computer-based review of plan limits or a “tick-and-tie” approach in which limited approvals are the subject of the audit.

We determine our claims audit procedures and processes only after gaining a thorough understanding of your plan and its operations. Our flexible approach enables us to target specific issues, such as significant accounts and potential high-risk areas.

Claims Audit Sample Selection

The first step in a claims audit engagement is sample selection, which depends on the needs of the plan, the desired confidence level and margin of error, and, if applicable, the performance guarantees in place with the third-party administrator or carrier. Options include statistically valid random samples, statistically valid stratified random samples, and non-statistical or targeted samples.

Claims Audit Objectives

The basic objective of a claims audit is to determine that payments were made for eligible participants, for covered benefits and for the correct amount. Our claims audits include:

  • Review of the benefit calculations against any scheduled benefits or usual, customary and reasonable allowances, proper deductible and/or coinsurance application, as well as other plan limitations. 
  • Review of the claims history for any possible duplicate payments. 
  • Identification of possible fraudulent activity, such as provider abuse, altered bills or large-dollar benefit payments issued to an employee. 
  • Focus on specific issues such as coordination of benefits, subrogation or effectiveness of utilization review. 

Our claims audits also include an analysis of internal controls, during which we document our understanding of the claim payer’s internal claims processing control structure. This allows us to assess whether the systems are properly designed to pay claims in accordance with plan provisions and industry standards.

After the Claims Audit Fieldwork 

After concluding fieldwork and obtaining additional information from the administrator or carrier, as necessary, we issue a final report, which presents our findings and the nature and extent of any errors. The report also includes any recommendations for the improvement of claims payment procedures and/or the improvement of any internal control weaknesses that may be noted during our work. If requested, we will also present the report.

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Lindquist’s claims testing services include:

  • Medical claims audits
  • Dental claims audits
  • Rx / Pharmacy Benefit Management (PBM) audits
  • Behavioral health plan audits
  • Stop loss / reinsurance audits
  • Internal audits for third-party administrators and insurance companies
  • Verification of the accuracy of negotiated rates transmitted by the plan’s preferred provider network

The firm serves:

  • Large corporations
  • Small to mid-size companies
  • School districts
  • Municipalities and public sector entities
  • Non-profit organizations (including hospitals and churches)
  • Collectively bargained / union / Taft-Hartley health & welfare funds
  • Administrators and insurance companies (as internal auditors)

Lindquist performs far above its competitors. Their audit staff has a strong knowledge of claims. This allows them to work independently and also give their clients assurance that their dollars were well spent by selecting Lindquist

Heidi Campbell

Welfare & Pension Administration Service, Inc.

Thought we would ask...

How often does your self-funded health plan conduct claims testing?

A Routine Checkup

Claims audits need to be performed routinely to ensure that a plan’s claims payer has adequate controls in place to effectively administer the plan and pay claims in a timely and accurate manner. Under a self-funded arrangement, plan sponsors, not insurers, assume the risk. An ongoing claim audit program not only enables plan sponsors to satisfy their fiduciary obligations, but also to monitor costs and potentially identify areas for savings.

Auditing Benefit Payments

Lindquist has professional staff members who work exclusively in claims auditing and related areas involving the improvement of efficiency and control of claims processing. Our claims auditors have 60 years of combined experience performing and supervising audits of benefit claims. We are highly knowledgeable in auditing claims, reviewing claims systems and analyzing internal controls. Our experience with numerous third-party administrators and insurance carriers has given us exposure to many claims processing systems.


Lindquist’s claims testing services include:

  • Medical claims audits
  • Dental claims audits
  • Rx / Pharmacy Benefit Management (PBM) audits
  • Behavioral health plan audits
  • Stop loss / reinsurance audits
  • Internal audits for third-party administrators and insurance companies
  • Verification of the accuracy of negotiated rates transmitted by the plan’s preferred provider network

Unique Claims Audit Approach

Our comprehensive claims audit approach is based on an on-site review of actual claims files and documents and re-adjudication of the selected claims, as opposed to a computer-based review of plan limits or a “tick-and-tie” approach in which limited approvals are the subject of the audit.

We determine our claims audit procedures and processes only after gaining a thorough understanding of your plan and its operations. Our flexible approach enables us to target specific issues, such as significant accounts and potential high-risk areas.

Claims Audit Sample Selection

The first step in a claims audit engagement is sample selection, which depends on the needs of the plan, the desired confidence level and margin of error, and, if applicable, the performance guarantees in place with the third-party administrator or carrier. Options include statistically valid random samples, statistically valid stratified random samples, and non-statistical or targeted samples.

Claims Audit Objectives

The basic objective of a claims audit is to determine that payments were made for eligible participants, for covered benefits and for the correct amount. Our claims audits include:

  • Review of the benefit calculations against any scheduled benefits or usual, customary and reasonable allowances, proper deductible and/or coinsurance application, as well as other plan limitations. 
  • Review of the claims history for any possible duplicate payments. 
  • Identification of possible fraudulent activity, such as provider abuse, altered bills or large-dollar benefit payments issued to an employee. 
  • Focus on specific issues such as coordination of benefits, subrogation or effectiveness of utilization review. 

Our claims audits also include an analysis of internal controls, during which we document our understanding of the claim payer’s internal claims processing control structure. This allows us to assess whether the systems are properly designed to pay claims in accordance with plan provisions and industry standards.

After the Claims Audit Fieldwork 

After concluding fieldwork and obtaining additional information from the administrator or carrier, as necessary, we issue a final report, which presents our findings and the nature and extent of any errors. The report also includes any recommendations for the improvement of claims payment procedures and/or the improvement of any internal control weaknesses that may be noted during our work. If requested, we will also present the report.


The firm serves:

  • Large corporations
  • Small to mid-size companies
  • School districts
  • Municipalities and public sector entities
  • Non-profit organizations (including hospitals and churches)
  • Collectively bargained / union / Taft-Hartley health & welfare funds
  • Administrators and insurance companies (as internal auditors)

Lindquist performs far above its competitors. Their audit staff has a strong knowledge of claims. This allows them to work independently and also give their clients assurance that their dollars were well spent by selecting Lindquist

Heidi Campbell

Welfare & Pension Administration Service, Inc.

Thought we would ask...

How often does your self-funded health plan conduct claims testing?