Ensuring Accuracy and Accountability: The Role of Medical Claims Audits in Union Health Plans
For labor union health funds, accuracy in claim processing isn’t just an operational goal; it’s a financial necessity. With hundreds of thousands of medical claims processed each year, even small errors can quietly escalate into substantial costs.
This is why labor unions and benefit funds are turning to medical claims audits as a strategic tool to verify payment accuracy, enforce plan rules, and prevent unnecessary spending.
Business Situation & Client Profile
A client in the labor union market reached out to BMI Audit Services to conduct a comprehensive Medical Claims Audit of payments processed by its third-party administrator. The goal was to ensure that every claim was paid accurately, aligned with plan intent, and compliant with regulatory standards.
The audit aimed to:
Validate that all paid claims complied with the plan’s Summary Plan Description (SPD) and benefit design.
Detect systemic or manual processing errors contributing to claim inaccuracies.
Reinforce fiduciary oversight and ensure that healthcare dollars are managed responsibly under ERISA.
This engagement reflected the fund’s proactive approach to maintaining transparency, protecting members, and demonstrating fiduciary diligence.
Audit Methodology
To ensure accuracy, BMI utilized a focused healthcare claims audit methodology that combined advanced data analytics with detailed claim-level validation.
Scope and Metrics:
Total claims analyzed: 508,910
Total claim dollars audited: $171.6 million
Sample size: 150 claims valued at $5.48 million
BMI’s team of experts assessed claims payment accuracy and plan setup configuration using both automated and manual review. Each variance was audited collaboratively with the administrator to confirm findings, determine root cause, and recommend next steps.
Audit Findings
The audit uncovered key issues affecting payment accuracy, benefit interpretation, and administrative controls. These findings highlight the importance of regular medical claims audits for benefit funds seeking to minimize waste and uphold fiduciary standards.
Confirmed Overpayments
A detailed review revealed clear administrative errors resulting in confirmed overpayments across several benefit categories, including:
Acupuncture
Dental
Hearing Aids
Infertility Treatments
Non-Covered Routine Exams
These totaled $25,075.29 in confirmed overpayments. The administrator agreed with the findings and began corrective processing to recover the overpaid amounts.
Disputed Overpayments
BMI also identified $51,647.43 in potential overpayments where differences in plan interpretation required clarification between the fund and the administrator. These related primarily to:
Marriage and Family Counseling
Infertility Services
Foot Care
Findings reinforce the importance of aligning SPD language and administrative setup to ensure consistency and prevent future discrepancies.
Systemic Configuration Error
Beyond manual processing issues, BMI identified a systemic setup error in the TPA’s platform. The configuration permitted reimbursement for multiple pairs of custom orthotics per year, despite the plan’s one-pair-per-year limit. The administrator confirmed this setup error and began a comprehensive impact analysis, estimating potential exposure of over $300,000.
This emphasizes how claims system audits help detect structural weaknesses that can quietly generate significant financial risk over time.
Eligibility and Coordination Gaps
BMI’s review of eligibility data and coordination of benefits also revealed minor inconsistencies:
Five claims totaling $3,762.53 were paid for members after termination, due to delayed eligibility updates.
Several claims involving End-Stage Renal Disease (ESRD) required clarification regarding Medicare primacy.
To strengthen compliance, BMI recommended tighter eligibility data exchange and clearer coordination policies with third-party payers.
Outcomes & Next Steps
Following the audit, BMI provided the labor union health fund with a structured roadmap to correct identified issues and reinforce administrative accuracy.
Immediate Actions
To address the findings efficiently, BMI recommended:
Recovering confirmed overpayments and adjusting affected claims.
Aligning SPD language and system setup to ensure consistent interpretation.
Improving eligibility update timelines to within 1–2 weeks of member separation.
Completing the orthotics impact study and applying revised claim edits.
Ongoing Recommendations
For sustainable improvement and continued compliance, BMI advised the fund to:
Conduct a follow-up medical claims audit within 12 months to confirm corrections are operating as intended.
Implement quarterly internal claim accuracy reviews to monitor progress.
Initiate a dependent eligibility verification to verify member eligibility and strengthen fiduciary oversight.
These steps form a proactive strategy for healthcare cost containment and long-term claims accuracy.
Conclusion
This audit reinforced a critical principle for labor union health funds: accuracy equals responsibility. Through this Medical Claims Audit, BMI Audit Services helped the client uncover over $350,000 in potential financial exposure, identify system inefficiencies, and strengthen fiduciary controls.
Proactive healthcare claims auditing is not just about correcting errors, they’re about building a foundation for fiduciary responsibility, ensuring that plan decisions stand up to both regulatory and member scrutiny.
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