When Accuracy Matters Most: $183K in Claims Reviewed for Compliance and Risk

Risk mitigation is essential to comprehensive health plan management. Even minor errors in processing prescription claims outside the intent of the Summary Plan Description (SPD) can result in significant financial exposure and compliance risk. A prescription claims audit helps plan sponsors identify discrepancies, uncover potential systemic issues, and take timely corrective action. Incorporating this as a best practice protects both plan integrity and fiduciary compliance.

Municipal Healthcare Plan Seeks Clarity and Compliance

BMI Audit Services conducted a prescription claims audit for a client in the public sector to assess administrative accuracy and mitigate financial risk. The client sought to confirm if claims were being administered in compliance with their Summary Plan Description (SPD) and identify any areas of financial exposure. With fiduciary responsibility and ERISA compliance in mind, the audit focused on verifying the proper application of benefit exclusions, prior authorization requirements, and eligibility status.

Audit Methodology

To achieve these objectives and deliver an accurate assessment of claims administration, BMI applied a focused audit methodology that combines 100% electronic analysis with expert manual review.

Approach

• BMI analyzed 100% of claims within the defined audit period using our proprietary software, AUDiT iQ™, to identify potential discrepancies

• Each claim was evaluated across key administrative categories: Eligibility, Plan Design, Fraud/Waste/Abuse, Member Liability, and Cost Control

Sample Selection

• 50 claims selected and reviewed in detail

• The sampled claims for manual review represent $183,231.18 in total payments

• Key focus areas: Eligibility, Refill Policies, Anti-Obesity Medications, Impotence Agents, OTC Medications, and Prior Authorizations

 

BMI collaborated closely with the plan’s pharmacy benefits manager (PBM) to review claim details and supporting documentation. This comprehensive review gave the client a transparent look at how accurately their plan is being administered and opportunities for improvement.

Audit results were categorized for clarity:

  • 8 claims were marked as Agreed Errors, with both BMI and the PBM confirming that processing did not align with plan terms.

  • 16 claims were categorized as Disputed Errors, where the PBM relied on internal protocols that differed from the SPD’s requirements.

  • 26 claims were validated as No Errors, having been processed in full compliance with the plan documentation.


Findings

The audit revealed several key areas of administrative risk, highlighting both systemic issues and isolated discrepancies:

  • Confirmed Systemic Error: A misconfiguration led to the improper payment of weight loss medications that were excluded under the SPD, resulting in the overspending of $464,714. The PBM acknowledged this as a systemic issue, indicating that the misconfiguration impacted a broader set of claims beyond the audit sample, therefore increasing the potential financial exposure.

  • Disputed Errors: Several claims such as those involving impotence agents, over-the-counter drugs, and compound medications lacking prior authorization were processed based on internal rules rather than SPD guidelines, prompting disagreement between the administrator and BMI.

  • Eligibility Lapses: A subset of claims was paid after member terminations, due to lag times of up to six months in transmitting eligibility updates to the administrator.

  • Refill Policy Violation: One claim was flagged for violating the plan’s 75% usage rule, having been refilled at 73% utilization, contrary to SPD requirements.

These findings formed the basis for strategic next steps, many of which were time sensitive.


Outcomes

Based on the audit findings, BMI recommends the following short-term and immediate actions to mitigate risk and improve plan accuracy:

  • Initiate resolution discussions with the plan administrator to address:

    • Delays in eligibility update transmissions

    • Administrative discrepancies where internal processing policies were applied instead of SPD terms (e.g., OTC medications, impotence agents, and compound drugs)

    • Correction and potential recovery of weight loss drug payments tied to the confirmed systemic error

  • Review and update the SPD to eliminate ambiguity and ensure alignment with actual administrative practices

  • Clarify coverage intent for all disputed drug categories and claims processing rules

  • Adjust claims where overpayments have been identified and agreed upon

  • Evaluate the need for SPD amendments, particularly around prior authorization requirements and excluded drug classes

Conclusion

A prescription claims audit is not just about cost savings or compliance; it is a strategic move to protect your plan’s future and ensure members are receiving benefits, as promised.

In this case, BMI’s focused audit approach uncovered errors and administrative breakdowns that could have gone unnoticed. As a result, the client is now better positioned with clearer documentation, reduced financial risk, and improved oversight of their prescription benefits.

Ready to protect your health plan?
Contact BMI Audit Services to discuss how a healthcare claims audit can prepare for compliance and reduce risk.

Pharmacy Claims Audit, Healthcare Claims AuditCrystal Wolfe