Auditing self-funded corporate medical plans has always been a requirement under ERISA, Sarbanes-Oxley, etc. The fiduciary duty of companies and their internal managers necessitates regular audits. Today, the significance of medical claim auditing covering 100 percent of payments has prompted many self-funded plans to increase the frequency of their audits and implement monitoring of claim payments. This approach enables these plans to ensure they pay only the appropriate fees and enhances member service. While claim administrators may assure accuracy, diligent oversight is crucial.
The modern audit methodology that evaluates 100 percent of claims paid marks a significant advancement over the random-sample techniques previously employed by most auditing firms. Random sampling often had inherent limitations and frequently failed to yield accurate insights essential for genuine plan improvements. Advances in powerful software beginning in the 1990s have enabled comprehensive audits, a continually evolving trend. These complete audits have transformed the industry, offering a new level of precision and providing plan managers with actionable, reliable data.
With top management at public companies facing mounting pressure regarding share prices, significant expenses like self-funded medical plans require scrutiny. Health care claims can be unpredictable, with sudden increases—such as those observed during the recent pandemic—significantly impacting financial reports. One effective strategy is for in-house plan managers to monitor claim payments' accuracy closely. Routine 100-percent audits and continuous monitoring services are among the most effective methods to achieve this. Without accurate claim payment data, unexpected issues can arise.
Companies that regularly conduct audits and monitor claim payments tend to perform better in managing their plans. They can identify errors and address them before they escalate. Prolonged periods without audit oversight can lead to compounding errors, resulting in substantial problems down the line. Large amounts on the balance sheet without adequate management insights raise concerns for senior management. However, when discrepancies are identified and resolved in real-time, and data is both reliable and precise, any financial increases can be effectively understood and managed.