Demonstration of Health Plan Fiduciary Duty Achieves Success

Business Situation

A city government with 7,000 employees engaged BMI to conduct an independent audit of claims paid by their third-party administrator (“TPA”). The primary reason for the audit was to help demonstrate fiduciary responsibility over the plan’s benefits and expenses on behalf of participants.

Solution

Utilizing our experienced staff and proprietary AUDiT iQ™ software, BMI set the following objectives:

  • Analyze 100% of all medical drug claims paid by the TPA during a 12-month period.

  • Test claims against plan compliance, eligibility and  areas of possible fraud, waste, or abuse.

  • Audit a sample of claims based on the analysis.

  • Present detailed findings and specific cost-savings recommendations based on the data and audit results.

Audit Findings

  • Claims paid months after a plan participant’s termination from the plan

  • Outpatient sleep studies paid without required prior authorizations

  • Payment for out of network services not covered by the plan

  • Failure to investigate certain claims for possible other party liability.

Audit Outcome

The TPA agreed to initial overpayment amounts close to $30,000 and to conduct further review to evaluate any additional financial impact. Several of the issues identified were attributed to manual adjudication error or timely notification. Additionally, the audit uncovered several opportunities to clarify plan intent of existing documentation on file for members and the TPA.

At the audit’s conclusion, BMI assigned a specialist to walk through a variety of recommendations including additional short and long-term solutions in order to prevent these types of errors and other plan discrepancies from continuing to occur.

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