Equal Fiscal Protection for Your Company

Companies that self-fund their healthcare plans have a fiduciary duty to ensure that those plans are being administered properly – even if that administration is done by a third-party administrator (TPA).

Your company deserves the same fiscal protection from your TPA that the TPA provides to its fully insured clients. ERISA requires plan sponsors to file government reports, provide information to participants, protect plan assets, and deliver benefits to participants.[i] The only way to know that you are protecting assets and delivering benefits is by ensuring that your claims are being processed correctly.

TPA Fiscal Protection Pop Quiz

QUESTION: Would a TPA that fully funds a healthcare plan randomly choose which claims to audit?

ANSWER: NO! It is common sense that random sampling is not as effective at catching claim errors as a comprehensive audit. So why are too many companies accepting random sampling language in their service agreements with the payer? Allowing a TPA that manages claim payments of your plan (and doesn’t fund them with their own dollars) to only audit a few random claims is like letting the fox guard the henhouse.

QUESTION: What testing performance guarantees protect my company?

ANSWER: Not many. Performance guarantees are stacked against you if random sampling is used. It comes down to math.

Let’s say the guarantee is 98% accuracy in filed claims. Your company files 50,000 claims per year. Even if 1,000 of those claims are processed in error, the company meets its guarantee. HOWEVER, in random sampling, only 250 to 400 claims are usually analyzed. The likelihood that those few claims contain errors is a gamble the TPA is willing to make. Are you?

QUESTION: Our TPA found an error through random sampling, so the process is working, right?

ANSWER: Even a blind squirrel finds a nut every now and then. Finding errors and returning overpayments to your plan fund is the primary objective of any audit. However, if you don’t fix the source of the problem, you are likely to continue to lose money through systemic or repeatable errors. Comprehensive audits not only find the claim errors but will identify systemic issues that are causing continued mistakes.

QUESTION: Did your TPA tell you their audit language is standard and must stay in the agreement?

ANSWER: THIS IS NOT TRUE.  It’s your plan, your money, your employees, your responsibility! Change the audit language to ensure the fiscal protection of your company’s bottom line, as well as the pocketbook of your employees.

The Fiscal Protection Bottom Line

If your service agreement only allows for limited TPA-provided audits, don’t sign it. In a random sample audit, the claim picked to be analyzed might be correct but be sandwiched between unexamined errors, costing your company thousands of dollars. Demand that language be included that gives you YOUR right to work with other companies to conduct comprehensive audits.

To put it succinctly, a TPA will most assuredly look at EVERYTHING if fully insuring a plan versus managing a self-funded plan.  Your self-funding company deserves the same coverage they give themselves.

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Healthcare Horizons is a leading expert in providing healthcare claims audit services, identifying overpaid or erroneous claims through its 100% Difference model, recovering millions of dollars for clients’ bottom lines with uncompromising ethics and accuracy. Since 1999, the Knoxville, Tennessee-based company has provided superior healthcare claims audits for some of the world’s largest self-insured employers, involving all national and most regional payers. We have successfully identified and facilitated the recovery of millions of dollars of overpaid claims for employers.

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[i] Tiaa.org