QUESTION: How can a broker use health benefits audits to their advantage?
ANSWER: As the cost for health insurance continues to rise, the relationship between a benefit professional and a customer looking for affordable health care benefits can become strained. Cost containment will often result in skimpier coverage options. However, despite the tough times, a broker who can provide a silver lining will stand out from the competition as a credible, valuable consultant. One way to do this is by offering customers the opportunity to conduct a health benefits audit to help a business reduce costly billing errors that drive up the price of health insurance.
Millions of dollars are wasted each year due to erroneous healthcare claims that occur because of faulty technology systems, human error and misunderstood benefit rules. For example, auditors nationwide have found that 3% to 5% of pharmacy benefits claims are processed incorrectly.
Errors are also prevalent in billings for medical procedures and hospitalization. The Washington Post quoted one medical billing reviewer as saying that she finds multiple errors in 8 out of every 10 hospital bills reviewed. Consumer Reports surveyed 11,000 people and found that 5% discovered major mistakes after examining their bills.
What kinds of errors can be uncovered? Take one example of the person who was charged for having six colonoscopies within one week, based on the procedure codes charged by multiple physicians. The reality: one colonoscopy and follow-up reviews by five consulting physicians – a far less expensive medical event than the billings indicated.
Many self funded companies believe that any errors on medical bills will be caught by the carrier, but this is a common misconception. Carriers and TPAs deal with such large volumes of claims that they may put more effort into bargaining for discounts than finding errors. Since healthcare costs are closely linked to claim trends and loss records, it is critical for self-funded companies to regular monitor billings in order to keep payouts as low as possible.
These days, companies can rely on software tools that are designed to conduct audits of medical claims by automatically scanning records to find anomalies and identify suspicious trends. From eliminating fraud and waste to ensuring faster, more accurate claims processing, automated auditing software is a tool that every broker should have in his or her portfolio.
If you’re a broker with tough questions, I’m here to provide unbiased answers and feedback to help you take the next step in adapting your business. Feel free to leave your question in the comments.
Fleet is president of AmWINS Group Benefits, a wholesale broker of comprehensive group insurance programs and administrative services.He can be reached at asksam@amwins.com.
