Sharpen the focus of your next medical plan audit
Mercer
Healthcare is expensive, and the last thing plan sponsors and members need is to pay more than they’re supposed to. That’s where audits come in.
Ideally, self-funded medical and pharmacy plans will be audited every two or three years. If the results aren’t satisfactory, it makes sense to conduct a follow-up audit once the vendor has made corrections and conducted remediation. In these instances, it’s not unusual for a plan to ask the vendor to fully or partially fund the second audit. Other plans, such as dental and vision, don’t need to be audited as frequently since the results are generally satisfactory, and less money is at stake.
What should be on your radar screen during your next audit? For pharmacy programs, we recommend regular monitoring for errors in:
- Administration of preventive drugs and the cost sharing and deductibles associated with them. It’s common for nonpreventive drugs to bypass the deductible and have $0 cost sharing.
- Administration of deductible and out-of-pocket accumulators. Errors include failure to cross-transmit with the medical plan accurately. In some cases, members overpay due to timing issues associated with claims payment, and these overages go unnoticed or unreported.
- Rebate invoicing. Invoices sent to pharmaceutical manufacturers often fail to properly reflect plan design, formulary, member cost sharing, utilization and other factors. Ensuring that rebates are calculated accurately is critical to maximizing plan dollars.
Billing practices for out-of-network medical claims can be problematic too. The common practice of balance, or “surprise” billing — when patients receive unexpected charges for out-of-network services — has received a lot of negative press recently. These charges can be egregiously high. Permitting the reimbursement of an out-of-network assistant surgeon’s services at a level of up to 500% more than that of the network surgeon actually performing the surgery could be considered egregious. While some administrators are attempting to address the egregious billing of out-of-network providers, most are more liberal in their administration. During audits, administrators should not only evaluate the reasonableness of billed charges but also the rates of reimbursement.
Plan sponsors should also conduct implementation audits to ensure vendor and plan changes, even small(er) ones, are implemented quickly and correctly. Incorporating an audit schedule into your plan management process will ensure you don’t leave plan dollars on the table and are meeting your fiduciary obligations.
-By Lisa Oswald and Lori Wilmsen