In the past, audits for self-funded health plans were often viewed as a regulatory obligation rather than an tool for plan management. However, the perspective has shifted significantly. Nowadays, plan managers recognize the vital role that a medical and Rx audit plays in enhancing overall management practices. With most claims now processed by third-party administrators (TPAs), the need for oversight has grown, particularly as the complexities of claims administration have increased and processing is outsourced. Events with performance guarantees require oversight for claim administrators.

One major lesson for self-funded plans is the substantial impact that unexpected events, such as the coronavirus pandemic, can have on medical expenses. The pandemic disrupted budgets and altered the landscape of claims payment, resulting in a surge in hospital expenses and other healthcare costs. As claim volumes spike and associated costs appear on intricate bills with numerous line items, the potential for errors and overcharges becomes quite pronounced. To address this, many plans have implemented regular audits and continuous monitoring services to analyze the situation post-pandemic.

While some may have exploited the pandemic for fraudulent purposes, particularly within pharmacy benefit plans, auditors equipped to analyze 100% of claim payments have proven essential in detecting such patterns of fraud and misuse. The necessity for auditing has gained more attention as plans strive to normalize their payment processes and operational strategies in the wake of the pandemic. Ongoing monitoring services from auditors not only support risk management but also serve as a strategic asset for internal managers, providing real-time data that facilitates informed decision-making.

The ongoing advancement of audit software has empowered auditing firms specializing in medical claim reviews to enhance their offerings. These firms possess extensive experience in scrutinizing claim payments within self-funded plans involving TPAs. They can swiftly identify errors that are often overlooked in traditional random-sample audits, which were more common in the past. Importantly, modern audits typically yield recoveries from overcharges and mistakes that significantly outweigh their costs—often returning four times the audit fee and providing an excellent return on investment (ROI).