Self-Funded Medical Plan Audits: What They Improve
A lot of financial responsibility rests on the shoulders of anyone who manages a self-funded in-house medical plan. Unexpected cost increases can affect a company's balance sheet and quarterly earnings, so careful management is essential. It's why auditing claims with a 100-percent review approach or using a continuous monitoring approach has gained so much popularity in recent years. Thanks to the steady improvement of software and technology, it's possible to detect trends in their infancy. When increases are better understood before they become significant expenses, they're much easier to manage if needed.
Most self-funded plans employ third-party administrators (TPAs) in the form of large health plans to handle their claim payments. While these TPAs have significant expertise and experience in the field, their priorities may be quite different from those of your company when you add the oversight of thorough audits and monitoring the playing field levels when you have a concern. It lets you bring factual data to conversations and be as well informed as the TPA on any unfolding cost increases. Most contracts have performance guarantees, but there are a lot of details in claims administration.
The fine print of plan descriptions needs to govern claims payments to keep a plan functioning well, and it's a specific job. When you add pharmacy claims to other medical claims, there are hundreds of details to be applied in claim reviews. Success relies on gathering actionable data and reviewing it carefully. One of the most significant needs is applying rules consistently and paying all similar claims in the same way. In a surprising number of cases, it turns out similar claims were paid in different amounts, or some were rejected while others were paid. In fairness to members, there needs to be a uniform payment system.
As market analysts apply ever more rigorous financial reviews to public companies in general, they need to be more stringent in internal cost management. Employee benefit plans, most notably health and pharmacy benefit plans, are significant cost exposures prone to substantial yearly increases. The improvements brought about by better audits and monitoring put company management in a stronger position than ever before to control costs. There is also the desire to serve employee members well and make sure that every dollar spent funds excellent care. It's a win-win when it works well.
