Many large employers with self-funded medical plans were driven to conduct audits primarily due to government regulations like ERISA and Sarbanes-Oxley. However, today, a 100-percent medical or Rx audit will cover every claim processed and paid. As a result, the data generated has more use than merely regulatory compliance. It’s becoming standard practice—and a smart management strategy—to perform audits more frequently. Many companies now employ continuous reviews of their claim payments. Regardless of the assurances given by claims administrators, verifying their work is essential.
The advancement in audit effectiveness and ongoing monitoring took off with the adoption of the 100-percent auditing method, which replaced random sampling. Reviewing each claim offers unparalleled accuracy that enhances overall plan performance. The introduction of more advanced software in the 1990s prompted this shift to comprehensive claim auditing, which was continually refined to achieve the high level of performance available today. This approach provides concrete data that aids plan managers in controlling costs and enhancing plan effectiveness. It also helps meet fiduciary responsibilities.
From the perspective of upper management, employee benefit plans represent significant financial risks for large publicly traded companies. Thus, diligent oversight of medical claim payments is essential. The recent coronavirus pandemic has underscored this necessity, reflecting the financial challenges faced in a difficult business climate. When in-house plan managers can access real-time data on all claim payments, they can take proactive management steps. It is why continuous monitoring and regular audits are increasingly preferred by well-managed firms with self-funded plans across all industries.
Implementing continuous monitoring and tighter plan management not only benefits every self-funded plan but also its employees. By swiftly identifying and addressing errors early, companies can prevent overpayments and implement systemic solutions to avoid future issues. Increased oversight ensures that plans operate efficiently, with constant access to information on claim payments. If substantial amounts affect the balance sheet, having explanations for management helps navigate the situation. Correcting errors in real-time also aids management in discussing plan performance more effectively.
