State Requires Self-Insurance Programs to Conduct an Audit
Business Situation
This municipality was located in a state that requires all local governments who self-insure medical coverage for their employees to obtain a claims audit every three years at a minimum.
Audit Finding
Following an on-site visit to the third-party administrator’s claims payment facility, BMI identified 37 different categories of error types. Examples of the types of errors uncovered included:
Unsupported procedure codes
Lack of documentation to support medical necessity
Payment for excluded services such as some methods of birth control, foot care, therapies and immunizations
Claims not reviewed for coordination of benefits
Unbundling and upcoding
Third-Party Administrator Response
The claims administrator agreed to claims payment errors and committed to provide additional coaching and training to staff on the account. They also agreed to aggressively pursue recovery of overpayments.
Audit Outcome
Total errors identified and recovered exceeded the cost of the audit itself and further prevented the errors from continuing into the next plan year.
In addition to errors identified and corrected directly through the audit, BMI identified more than $300,000 in potential future savings in areas where the plan was silent, lacking limitations and or overly broad.