Health Care Costs and Claim Audits

As health care costs continue to rise, company health care plans are under pressure to control expenses. One highly effective strategy gaining traction is comprehensive medical claims pharmacy benefit manager audits. Unlike many other cost management tools, claims auditing is often revenue-positive: a thorough audit of medical and prescription drug claims frequently recovers overpayments that can exceed the audit’s cost by as much as fourfold. This compelling return on investment has made claim auditing an essential consideration for managers of mid-sized and large self-funded health plans.

Most employer-funded plans rely on third-party administrators (TPAs) to process their claims, which makes oversight absolutely critical. Although TPA contracts often include performance and accuracy guarantees, depending only on the TPA’s self-reporting introduces risk. It is not uncommon for audits to uncover errors and payment discrepancies that went unreported by the TPA. These errors, if left unchecked, can accumulate into unnecessary costs. Auditing presents an opportunity to recover these funds and flag patterns that, when corrected, lead to improvements and prevent similar errors.

The rapid and sometimes unpredictable escalation in health care costs has driven the need for more frequent and rigorous audits. Gone are the days when plans limited audits merely to satisfy regulatory requirements such as Sarbanes-Oxley or ERISA. Today, proactive sponsors recognize that regular, independent audits deliver a range of advantages. Auditing ensures the consistency and fairness of claim payments, helping all members receive equitable treatment. Even the most diligent TPAs can make mistakes, and independent audits can reveal issues missed by those closest to day-to-day operations.

Comprehensive, data-driven audit reports provide plan sponsors with clear, actionable insights and support more effective negotiations with TPAs and Pharmacy Benefit Managers (PBMs) in future contract cycles. By supplying TPAs and PBMs with objective audit findings, sponsors empower these partners to improve their cost-containment efforts and claim accuracy. Ultimately, the system benefits from accurate claim processing. When selecting an auditor, it is vital to choose one that is independent, with deep experience and specialized expertise in this complex and ever-changing field.