Claims Audit Reveals Underlying Systemic Errors Made by TPA

Business Situation

An employer in the automotive industry with over 10,000 employees engaged BMI to audit and verify the accuracy of medical claims paid by their third-party administrator (“TPA”). The employer had not previously conducted an audit despite being with the TPA for several years.

Solution

Utilizing our experienced staff and proprietary AUDiT iQ™ software, BMI set the following objectives:

• Analyze 100% of all medical claims paid by the TPA during a 24-month period.

• Test claims against plan compliance, eligibility and  areas of possible fraud, waste, or abuse.

• Audit 250 sample claims based on the analysis.

• Present detailed findings and specific cost-savings recommendations based on the data and audit results.

Audit Findings

The audit identified several types of errors in the medical claims processing and payments, including:

• Eligibility Errors - Payments made for services after a participant had terminated from the plan.

• Fraud, Waste, & Abuse - Issues like duplicate claims and upcoding.

• Other Party Liability - Incorrect coordination of benefits and potential other party liability.

• Systemic Errors - Misconfigured benefits, such as incorrect copayments, personal convenience items being covered, and limitations on certain therapy visits.

• Other - Overpayment, incorrect application of modifiers, unbundling issues, and medical necessity concerns.

Audit Outcome

The TPA agreed to overpayment amounts totaling over $50,000 and to run additional impact reports to identify any other claims impacted by the systemic issues uncovered. The TPA acknowledged many of the findings were caused by manual processing errors and misconfigurations within their systems.

At the audit’s conclusion, BMI assigned a specialist to walk through a variety of recommendations including additional short and long-term solutions to prevent these types of errors and other plan discrepancies from continuing to occur.