Third-party administrators that process claims for large employer-funded health plans have advanced systems and make performance guarantees. But without independent medical claims auditing, there's no way to verify their self-reporting. It is why there are regulatory requirements for periodic plan audits, but most have learned to review claims more frequently. There are substantial cost savings opportunities from audits that flag overpayments or mistakes that repeat through many claims. Flagging those and making system fixes to avoid them in the future is a crucial cost-containment activity.

TPAs often set out to be precise in claim processing, but the sheer volume of the work and new fees and services can throw things off. Independent audit firms specializing in claim audits are in the trenches every day and identify cost (and mistake) trends in their infancy. When TPAs load a plan's parameters onto their systems, they tend to revert to system defaults. Auditors can find those cases and suggest improvements and re-sets ensure details and nuances are required. Medical and prescription bills increase every year; making sure claim processing systems keep up is always vital.

What's given auditors a sharpened edge in helping plans manage themselves better has been the 100-percent method. It means all claims are double-checked against hundreds of data points. It's a vast departure from the previous random samples, and with a more effective electronic review, less human involvement is required. It saves time and money at the same time to the quality of the audit data is improved. It also explains why claim auditing has evolved from a compliance issue to one of the most effective management tools available to sponsors. It gets better each year, and plan oversight improves.

Early detection of issues is crucial, and its why implementation audits are commonly scheduled 90 days after a new TPA begins handling claims. The only way to verify performance is an independent review that checks for everything. When potentially recurring issues are flagged early on, there's less chance that they multiply into significant problems. The same is true for suggested system improvements, which the best auditors customarily make. They can help improve accuracy and cost-effectiveness with no increase in work. Auditing firms are among the most valuable consultants for employer-sponsored benefit plans.