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Market Research Group

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The Frequency of Claim Auditing Matters


The demand for meticulous oversight of medical and pharmacy benefit plans has recently seen a noticeable surge. Large employers sponsoring health plans increasingly recognize the importance of conducting thorough medical and Rx audits to ensure the accuracy of claim payments made by external processors. The practice of outsourcing claim processing, which has been prevalent for many years, has contributed to the rise in the need for the oversight function. The historical basis for auditing self-funded benefit plans included compliance with ERISA and Sarbanes-Oxley requirements. 


However, with the advancement of software, the shift towards 100 percent audits has revolutionized the accuracy and comprehensiveness of the data produced. Therefore, plans have reaped substantial benefits from these audits, uncovering significant savings and recoveries that have far exceeded the audit costs. The financial exposure is considerable given that large employers process thousands, if not millions, of claims annually. It has placed mounting pressure on C-suite executives to exercise greater control over costs and provide detailed explanations when budgets are exceeded. 


Audits and monitoring present opportunities for oversight, offering a clearer understanding of where expenditures are being made. Claim audits have become increasingly vital in an era characterized by heightened accountability for all cash outflows. Audits certify the accurate work of third-party administrators and pharmacy benefit managers, furnishing invaluable insights for planning future years. Auditors from smaller independent firms specializing in claim auditing bring a unique perspective and substantial technological understanding, contributing enormously to precision and reliability.


Given claim audits' many performance and plan management benefits, it's easy to see why their use is rising. In the post-pandemic world, companies and large nonprofits sponsoring plans are under increasing financial pressure. Keeping closer tabs on cash outflows and the member service improvements tighter management brings is necessary. It's a given that claim processing error rates today are in the low single digits. But there's always room for improvement, and given the high costs and greater scrutiny of fiduciary best practices, auditing and monitoring payments are good practices.

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