Claims and Dependent Eligibility Audit Combination Exceeds Expectations

Business Situation

As part of a comprehensive risk management program, this client engaged BMI to conduct an audit of their third-party administrator to validate compliance and an audit of all enrolled dependents to verify eligibility.

Client Profile

  • School District

  • 272 Employees Covering 693 Dependents

Claims Audit Finding

  • Medicare claims paid as primary when they should have been paid as secondary

  • Duplicate claims, improper coding and modifiers

  • Payment for non-covered services and procedures

  • Incorrect application of copayments

  • $177,000 in potential future savings by making plan language revisions

Dependent Eligibility Audit Finding

  • 14 dependents (2% of total) failed to confirm eligibility.

  • Reasons for ineligibility included unreported divorces and voluntary removal.

Audit Outcome

Immediate savings achieved following both audits exceeded $65,000. These savings will continue to increase as both the third-party administrator and client now have mechanisms in place to prevent future losses.As a result of the dependent eligibility audit, the client will ask for more eligibility documentation at the time of hiring and consider quarterly or annual audits of enrolled dependents in the future.Many issues uncovered through the claims audit were attributed to system errors where the claim did not pend for processer intervention. The third-party administrator agreed to correct the issue and increase the type and number of internal quality audits as a prevention.

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