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Auditing Benefit Payments
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.
Lindquist LLP’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
- Dependent eligibility 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)
Claims Audit Expertise
Lindquist LLP has professional staff members who work exclusively in claims auditing and related areas involving the improvement of efficiency and control of claims processing. The personnel within this department have close to 100 years of combined experience performing and supervising audits of benefit claims. They are highly knowledgeable in auditing claims, reviewing claims systems and analyzing internal controls. Their experience with numerous third-party administrators and insurance carriers has given them exposure to many claims processing systems.
Unique Claims Audit Approach
Lindquist LLP’s 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 where limited approvals are the subject of the audit.
Lindquist LLP’s claims professionals determine their claims audit procedures and processes only after gaining a thorough understanding of a plan and its operations. The firm’s flexible approach enables its claims auditors 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. Claims audits should 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.
Claims audits should also include an analysis of internal controls, during which the auditor documents his or her understanding of the claim payer’s internal claims processing control structure. The auditor can then 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, Lindquist LLP’s claims auditors issue a final report, which presents their 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, representatives of the firm will also present the report.
