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Benefits and Pensions MonitorClaims Payment Audits - Good Plan Governance By: Susan Bowyer When are two benefit programs with equal coverage not equal? It’s at the time of claim payment. Plan coverage descriptions may be the same but the actual handling of claims can differ from administrator to administrator. A move from one to another could uncover significant changes affecting payment experience and overall plan costs. Most sponsors place a considerable amount of importance on the selection of an administrator to meet the design and service needs of their benefit plan at a competitive cost. The decision to move the plan to a new administrator is not made without thoughtful consideration – the advantages must exceed the disadvantages of switching. But, once all of the plan design, underwriting, services, and costs are finalized, what have you actually purchased? The most important service that your plan administrator provides is the payment of claims. Greater Emphasis On Claims Needed Aggregate claims experience data and financial statements are audited and analyzed on a regular basis. Even with a greater emphasis on plan governance and accountability, however, how often are plan sponsors auditing the main cost driver, the underlying claim payments? Thorough, accurate claims adjudication requires:
Audits of claim payment practices have found that some administrators make coverage decisions that are outside the terms of the contract – and often without plan sponsor approval. Often described as the administrator’s ‘standard handling’ practices, they may include:
Claims are paid not only by your administrator, but also by organizations to which they sub-contract services (pharmacy benefit managers, data entry providers, out-of-country claim adjudicators). Most plans with a drug card are sub-contracted to a pharmacy benefit manager, but some plan sponsors will be surprised to learn that claims for services such as ambulance, vision, equipment, and paramedical practitioners may also be sub-contracted. When an administrator conducts its own internal audits and gives assurances of accuracy standards and quality controls, does it include these sub-contracted claims?
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