Medical Claims Audit Uncovers $155K in TPA Errors for Financial Industry Employer

When healthcare costs rise unexpectedly, a Medical Claims Audit can uncover the root cause often buried in TPA claims processing errors and system misconfigurations. 

Business Situation 

A statewide association of financial institutions engaged BMI Audit Services to conduct a comprehensive Medical Claims Audit of their member’s health plan, which was administered by a Third-Party Administrator (TPA). 

The client flagged unexpectedly high medical costs and suspicious activity, raising concerns about TPA claims processing accuracy and potential billing errors impacting the plan’s financial performance and fiduciary compliance. 

Solution 

BMI utilized a combination of our proprietary AUDiT iQ™ software and the team of experienced staff to execute a targeted Healthcare Claims Audit. Key objectives included: 

  • Analyzing 100% of all paid medical and pharmacy claims processed by the TPA over a 17-month period 

  • Validating claim accuracy against Summary Plan Description (SPD) rules, eligibility criteria, and potential fraud, waste, and abuse (FWA) indicators 

  • Selecting a focused sample of flagged claims for in-depth review 

  • Delivering audit findings with actionable cost-savings and compliance improvement recommendations 

Key Audit Findings 

The TPA performance review revealed multiple systemic claims administration errors: 

  • Inconsistent application of plan year vs. calendar year deductibles, resulting in incorrect deductible tracking 

  • Payments made for services specifically excluded by the plan document 

  • Duplicate claims paid, contributing to inflated costs and inaccurate plan reporting  

Audit Outcome & Impact 

The audit identified over $155,000 in TPA payment errors. The administrator acknowledged initial overpayments totaling nearly $40,000 and agreed to conduct a broader impact analysis to determine the full financial exposure caused by misconfigurations and manual processing errors. 

Root causes cited by the TPA included: 

  • Incorrect system configuration 

  • Human error during claims adjudication 

To close out the audit, BMI assigned a claims resolution specialist to guide next steps offering both short-term remediations and long-term process improvements aimed at reducing future risk, improving claims accuracy, and ensuring ongoing plan compliance. 

Conclusion 

This case demonstrates how a targeted medical claims audit can uncover hidden processing errors, strengthen plan sponsor oversight, and support the integrity of self-funded health plans. In this instance, the audit uncovered over $155,000 in claims payment errors, including nearly $40,000 in confirmed overpayments acknowledged by the TPA. The findings also revealed three major categories of systemic issues, deductible misapplication, payments for excluded services, and duplicate claims. 

These errors, if left unchecked, could have continued to drive excess costs and compromise plan compliance. For organizations managing complex benefits programs, these results reinforce the importance of routine audits to validate TPA performance, protect plan assets, and ensure claims are paid accurately and fairly.

Medical Claims Audit, Healthcare Claims AuditRobert Temples