Podcast

budget planning

Why Your Budget Needs to Include Audits

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Have you ever gotten a notice saying that you might have unclaimed money from a refund, settlement, or inheritance? What was your first reaction? Most people think about what they would do with this “surprise” windfall. But guess what? It was always your money! You just didn’t know it was missing. It’s time to put it back in your budget!

As the 2nd biggest expense for most self-funded companies, healthcare plan line items should be an area of particular focus. In medical claims audits, we find errors 100% of the time through our comprehensive audits. Simply, if audits are not in your annual budget, you are throwing away YOUR money. Including a comprehensive medical claims audit in your annual budget is money well spent. It’s like the old adage: you have to spend money to make money.

Cost Containment Protects the Company Budget

Including comprehensive audits in the annual budget is a proactive cost containment strategy. With healthcare costs rising each year, and more high-value claims filed and paid by self-funded plans, it is no longer enough to assume your third-party administrator can catch every error.

The numbers tell the story. Each year, Americans file 232 MILLION healthcare claims!

Even if only 1% of the claims are incorrect, that is more than two million mistakes! In fact, the industry average is almost 3% in errors. Put a low average dollar amount of $1000 to every mistake and plans could be overpaying healthcare claims by more than TWO BILLION dollars!

Here are some examples of how ignoring mistakes in data claims would have cost companies thousands of Lost Benjamins but were thankfully caught through a comprehensive audit.

High-Value Claims are a Leading Cause of Error

In data compiled prior to the Covid-19 pandemic (2019 compared to 2015), high-value claims increased by double-digit percentages. (Information below summarized by Stop Loss Insurance Brokers.) These costs lead to higher premiums for the insurer and higher out-of-pocket expenses for the insured.

  • In 2019, 7 out of every 100,000 employees had a claim exceeding $500,000, up from 37.1 in 2015. That’s a four-year increase of 82 percent and an average annual percentage increase of 13 percent.
  • 9 out of every 100,000 employees had a claim exceeding $750,000, up from 13.8 in 2015. That’s a four-year increase of 66 percent and an average annual percentage increase of 10 percent.
  • Eleven out of every 100,000 employees had a claim exceeding $1 million, up from 6.3 people. That is a four-year increase of 75 percent and an average annual percentage increase of 8 percent.
  • 3 out of every 100,000 employees had a claim exceeding $2 million, up from 1.0 in 2015, a four-year increase of 130 percent, and an average annual percentage increase of 21 percent.

Our comprehensive audit system analyzes every claim. Our trained experts spot inconsistent trends in claims data, which occur in all claims, but have bigger negative repercussions the larger the claim amount. While a high-value claim on its own isn’t going to automatically have errors, the ones that do exist cost companies and employees deeply. Identifying these claims, particularly the systemic errors that occur when numerous claims are being made for one illness, saves companies thousands, and sometimes millions, in reclaimed overpaid dollars.

Comprehensive Audits Protect Your Budget and Bottom Line

Overpaid dollars, through inaccurately filed claims, can cost your healthcare plan thousands of dollars. Using our unique 100% difference auditing process, we find these errors and flag them for recovery. Incorrect claims impact not only the current claim but also the affordability of your plan. When it is time to renew your policy, the amount paid out is a key factor in determining your policy price. You do not want to pay for incorrect claims that falsely inflate the payout number.

So, back to our original question: How would you spend dollars that you suddenly weren’t spending on healthcare? With the money you save by including medical claims audits in your annual budget, you have options for your company. You might fund:

  • Additional training
  • Raises
  • Employee appreciation programs
  • Technology upgrades
  • THE LIST IS ENDLESS!

Remember, the provider of a healthcare plan (that’s YOU, the employer) is responsible for errors in medical payments. It is your fiduciary responsibility to ensure that claims are not overpaid and that your company’s bottom line stays healthy. We can help. Contact us now to talk about the cost and savings you can expect by performing a comprehensive audit so that you can include it in next year’s budget.

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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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3 Things Benefits Managers Told Us at SHRM

clown on stilts at shrm conference for benefits managersThe SHRM conference in New Orleans this year was spectacular (ending the event with a Brad Paisley concert was icing on the cake!). It was wonderful talking with friends in the Human Resources world – in person – and meeting many benefits managers eager to find ways to contain costs in their employee benefits plans. In listening to these HR professionals, we learned three things:

  1. Most benefits managers think their brokers or TPAs handle all the auditing of their healthcare plans.
  2. Some were unaware that they should be reviewing audit rights in the ASO agreements.
  3. All worry about how much work it would be for them to do an audit and how much stress it would cause them.

Don’t Assume Your TPA is Looking Out for You

Your third-party administrator is tasked with one job: to process your medical claims in the most efficient manner. As benefits managers for self-funded employers, you trust your TPA to process the healthcare claims correctly so that you are not overfunding healthcare payments.

Unfortunately, even though so much of the process is automated, humans are still involved in the process. And humans make mistakes. Mistakes fall into one of two broad categories: one-off or systemic. (You can see a more detailed breakdown of the types of errors in our recent blog: Mistakes happen. Ignoring them could cost you.)

One-off errors are mistakes that, once fixed, shouldn’t happen again. These can include transposing a number in the claim code or misspelling a patient’s name. But just because these are “simple” mistakes, don’t think the financial hit can’t be significant! (Here is one example.)

Systemic errors are embedded issues within the claims process. These mistakes can cost a company hundreds of thousands of dollars over time. Typically, these errors occur because a mistake was made in setting up the plan. Examples include claims being filed through a location instead of a provider (as in this example) or a treatment being capped at a certain amount due to being categorized as out-of-network, when it actually is in-network.

The TPA has little incentive to look for these errors and recover overpaid monies.  Why – because they are paying with your money not theirs. While most TPAs are excellent at what they do and truly do want to process claims mistake-free, it’s impossible to do so at 100%. In fact, estimates show that up to 80% of claims data has an error. Not all of these errors have a financial impact, but many do. If your TPA, through your service agreement, is telling you they will perform an audit and that they guarantee a 98% success rate, you should ask for more details. Is the audit a random sample selection of claims for review? If so, it is highly likely they won’t randomly select the claim with the mistake. Are you willing to take that chance?

Your Company Does Not Have to Settle for the Standard Audit Language

In any negotiation, the first offer is probably not the best. The same is true for the audit rights language in most TPA service agreements. While the agreement says that you have audit protection, the language is typically very restrictive. For instance, does the agreement say that you cannot work with an outside audit firm? Make sure you are negotiating for comprehensive, independent audits. Not sure what to look for? Read this blog for tips. Additionally, we offer a no-cost audit language assessment to determine the effectiveness of the audit system in place for your company.

HealthCare Horizons Does the Work for Benefits Managers

HR professionals are busy. Our audit process involves you as much – or as little – as you want. Once you set the process in motion by giving us access to your medical claims data, we only need to involve you to decide which claims you would like to pursue for recovery. We provide clear communication on the impact the recovery will make (hint: it isn’t just the amount of dollars reimbursed!) and we will work with your TPA to move forward. If there is a systemic error, we will also explain in detail where the breakdown in the setup occurs so that your TPA can correct the problem.

As for stress? The only stress involved will be if you DON’T have regular comprehensive audits. Now that you know that there are most assuredly mistakes in your data set, the idea of losing money that could be returned to your company’s bottom line will cause sleepless nights.

The Only Bad Mistake is the One You Don’t Address

We say it often, not finding mistakes will do more long-term harm to your company, and potentially your credibility, than having an audit discover errors. Finding the claims errors and recovering dollars from overpaid medical claims means more money for your company’s bottom line. As the benefits manager, that is your responsibility. That money can go toward other valuable programs within your organization. Not to mention the money you save employees. Now you know. So now is the time. Contact us to start your medical claims audit. Cause the Effect.

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. We have successfully identified and facilitated the recovery of millions of dollars of overpaid claims for employers.