Overview

Let’s face it. No one likes to hear the word “audit.” You’d probably be hard-pressed to find anyone other than an actual, bona fide auditor who wakes up every day excited about the prospect of digging into reams and reams of someone else’s data, records, and personal health information. You’d probably be even less likely to find someone who looks forward to being the entity responsible for having to provide all of that data and all of those records. Yes, audits usually come under the category of life events we call “necessary evils.”

But if you’re responsible in any way for any part of your company’s employee health plan, you also know that audits — at the very least — are a critical tool for meeting your fiduciary responsibilities for medical, dental, vision, FSA (Flexible Spending Account), and COBRA plans. You also know audits, when done well, can help you reduce your costs and ensure that your plan is running smoothly. For example, uncovering processing irregularities, determining if your plan is accurately programmed, and ensuring that claims are paid correctly are just three ways a proper health plan audit can help you. All of which is generally why you expect to undertake health plan audits, and why they should occur on a fairly regular basis. But why should you settle for that?

Looking Beyond the Routine

Why should you wait for your plan administrator, carrier, or vendor to not only set the schedule for an audit, but also dictate (or at the very least recommend) what the audit should look into? What if it’s something going on with how they administer the plan that deserves looking into, but isn’t a practice that you would readily know about? We’re not saying these practices are illegal or unethical. We’re asking, who is looking out solely for your best interests as you navigate an industry landscape that’s incredibly challenging, complex, and constantly shifting?

Based on our more than 35 years of health plan auditing — conducting 218 audits for 170 clients last year alone — we’ve identified four trends in the way health plan administrators, carriers, and vendors are responding to some of the financial and regulatory changes in the world of health insurance that should raise red flags for you. They’re all identifiable with the proper kind of health plan audit looking for specific twists and turns into how claims are handled. 

1. A Confusing Mix of Coverage for Preventive Care

Among the sweeping changes as a result of the Patient Protection and Affordable Care Act (the Affordable Care Act) were new requirements around preventive care. The details are too complex for this article; however, the point here is that although the law outlines what should be considered preventive care, there is room for interpretation that allows carriers to handle preventive claims differently from one another. And the way your administrator handles preventive health claims can affect your plan costs as well as how much your employees pay out-of-pocket. On the other hand, the law allows plan administrators to manage these kinds of preventive care claims in a way that could save you and your workers money.

Global Maternity Billing — or Not

For example, some administrators split apart what are called “global” maternity charges (prenatal, delivery, and postnatal care) to pay only one portion as preventive. Others keep the global maternity charge as billed and do not apply any preventive care benefits. Which approach do you think will save you and your employees money? Which approach would cost you and your employees more but be more efficient and involve less coding and manual intervention for the plan administrator?

Coverage If Not a Listed Preventive Service? Maybe.

Looking at other pieces of the preventive care puzzle, some plan administrators are paying any type of medical care as preventive if it has a screening diagnosis on the claim — even if the service is not on the USPSTF (United States Preventive Services Task Force) list. Why? Again, it’s more efficient (and therefore faster and less costly) for the plan administrator to cover the claim this way.

What does that mean for the employer? For certain procedures, you may be paying more than you should (especially since you are likely paying 100% of eligible preventive care).

Coverage for Non-Preventive Reasons? Sometimes.

Here, too, some carriers will automatically pay certain procedure codes as preventive (increasing your costs), regardless of whether the service is actually being performed for preventive reasons.

2. Out-of-Network Services

Similar to the patchwork of coding and paying for preventive services, out-of-network care has gotten increasingly varied over the last few years. And like preventive services coverage, the differences here can amount to variance in costs for you and your workforce.

Each of these examples can potentially cost the plan more than if they were paid the other way around, because you — and potentially your employees — will pay a higher rate for out-of-network care.

Diagnostic Services Paid Based on the Ordering Physician’s Network Status — or Who Knows What

Some plans pay out-of-network diagnostic services at the network benefit level if the ordering physician is in-network. Some follow the same practice if there is a related network claim within 30 days of the service date for out-of-network care. We have even seen instances where employees went out-of-network for advanced imaging services — and the claim was paid at the network benefit level.

Come Fly Away (With Out-of-network Air Ambulance Charges)

Some out-of-network air ambulance vendors charge excessive fees for services that are more of a convenience than a necessity; they transfer patients from one hospital to another (instead of using ground transportation), with very little medical care or monitoring in flight.

Some administrators pay billed charges for such services since they do not have contracts in place with ambulance vendors, while others may deny such charges as not medically necessary or appropriate. In either scenario, one party (either the employer or employee) is paying more than expected. Plan administrators should be conducting data mining of claims to ensure that these practices don’t occur or are ended. An independent, third-party audit can shed light on how the administrator handles ambulance claims and their oversight process to address excessive charges.

Out-of-network Assistant Surgeons at Network Rates

Some out-of-network assistant surgeons charge as much as the surgeon for the same operative procedures, and administrators may reimburse the assistant surgeon at 100% of the billed charges. This happens because surgeons and assistant surgeons can legally be employed by the same medical practice, but to get around the system of low contracted allowances utilize an out-of-network physician as the assistant surgeon.

Confused? We understand. The point is that an audit looking for these discrepancies will be more likely to uncover a higher amount of charges being paid (as network benefits and at billed charges). The result is greater cost for the employer.

3. Office Consultations

Seemingly arbitrarily, one plan administrator we audited denies charges for office consultations if a referring physician’s information or an NPI (National Provider Identifier) number is not included on the submitted claim.

This is probably more information than you need, but the plan administrator explained that they are following a Centers for Medicare & Medicaid Services protocol on this matter. We, however, have not seen this with other plan administrators.

If you don’t know about this payment practice, your employees may be spending more than they should and experiencing a higher level of frustration in trying to get their claim paid.

4. Shared Savings Programs

In a typical shared saving program, the carrier will reduce the allowed amounts for out-of-network providers via agreed-upon discounts with the providers. They use these programs to achieve savings or discounts on out-of-network claims.

The carrier will typically keep a higher percentage of the savings through these arrangements, which means they are less vigilant with respect to steerage of patients to network providers. Again, if you’re unaware this is happening, it could be costing you money.

So, Audits Can Be Trendy

More than 60% of U.S. workers who get health coverage at work are covered by plans that are either completely or partially self-funded. Most employers utilize third-party vendors to administer their self-funded plans, and these carriers or administrators are all looking for ways to increase revenues and reduce costs in a constantly shifting environment.

Keeping up with the trends can save you and your employees money — if you have someone on your side who knows where to look.