Community Forum

In the years following the pandemic, auditors with expertise in benefit plan claim reviews took center stage. Many self-funded health plans rely heavily on third-party administrators (TPAs) for claim administration, making medical claim auditing essential oversight. As healthcare costs ballooned due to new treatments and extended hospital stays, large employers shouldered significant financial burdens through their employee benefits plans. While TPAs often have performance guarantees outlined in their contracts, the only way to ensure these are met is through meticulous audit oversight.

Given the substantial amounts involved, auditing has become a priority for many plans. When a high volume of claims and cash outflows occurs, it becomes easier for processing errors and overcharges to go unnoticed. Conversely, when claim volumes are lower and patterns are more consistent, mistakes tend to stand out more clearly. To counter these issues, self-funded plans are increasingly hiring audit firms equipped to analyze 100% of claim payments. These audits integrate electronic reviews and human follow-ups to verify findings, making them a critical aspect of managing healthcare expenditures.

Audits that started as compliance measures have evolved into a management tool. Most TPAs work alongside large health plans that boast extensive provider relationships and established claims processing protocols. However, they are not without flaws. When TPAs know that audits are in place, they tend to become more vigilant in self-policing for errors. Each self-funded plan has a unique set of covered services. Still, there's often a risk that TPAs may handle these claims as they would for their own insurance policies, leading to discrepancies that can inflate costs and affect budget allocations.

For in-house plan managers, accurate oversight is critical, relying on detailed data tracking of all claim payments. Moreover, TPAs often outsource various related services to external vendors, which can add unexpected costs. These vendors usually charge fees or take a percentage of the funds they recover, leading to situations where self-funded plans end up paying both the TPA and its contractors. It is especially prevalent in areas like subrogation and overcharge recovery, where vendor commissions can range from 10% to 30%. Such rising costs highlight the importance of conducting claims audits.