Issue: Health insurers make a surprising number of errors on claims.
Risk: Those mistakes can drive up your organization's premiums and claims costs.
Action: Identify money-wasting holes in your health plan with a full audit or a simpler checkup.
If you're like most U.S. employers, you probably overpay some health care claims and provide coverage to employees or dependents who shouldn't receive it. That's because health insurers make more processing and payment errors than you'd expect.
Twenty-four percent of health insurers incorrectly paid at least 5 percent of employee health insurance claims in 2005, according to the Segal Co., a benefits consulting firm. Such mishandled claims increase premium and claims costs across the organization.
Example: Goodyear Tire's health care audit discovered that the company was paying health insurance for 4,100 ineligible dependents. That cost the company about $8 million a year.
Small companies typically can't afford full-blown health plan audits, which help identify money-wasting holes in health plans.
Advice: While your organization can hire a firm to perform a full-blown claims audit, you can obtain a less costly snapshot of claims quality by requesting information from health plan administrators that details how accurately they process your organization's claims.
The Sarbanes-Oxley Act requires insurers to provide information about internal audit controls to their business customers in audit standard reports, called SAS 70 reports. SAS 70s include two key sets of data: an overpayment activity report and a report on claims-processing error trends.
SAS 70 data can help you determine whether insurers make mistakes on claims, such as:
- Entering incorrect hiring and termination dates.
- Making payments to ineligible dependents, such as former spouses and children who no longer qualify.
- Listing incorrect or outdated fee rates and service dates.
- Charging the wrong coinsurance payments, deductibles and benefit maximum coverage.
Final tip: Remind employees to review their medical bills and benefit paperwork, and report any mistakes to you or the insurer.