Twenty-four percent of health insurers incorrectly paid at least 5 percent of claims in 2005, according to the Segal Co., a benefits consulting firm. Such mishandled claims drive up premium costs for you and your employees.
Example: Goodyear Tire recently performed a health care audit and discovered that the company was paying health insurance for 4,100 ineligible dependents. That cost the company about $8 million a year.
Overpayments also hit smaller businesses. But small companies typically can’t afford full-blown health-plan audits, which help identify money-wasting holes in health plans.
Advice: One thing you can do is request information from health-plan administrators that shows how accurately they process your company’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 70 includes two sets of data that you can request from insurers: an overpayment activity report and a report on claims-processing error trends.
SAS 70 data can help you determine whether insurers make mistakes such as:
• Entering incorrect hiring and termination dates.
• Making payments to ineligible dependents, such as former spouses and children who no longer qualify.
• Entering incorrect or outdated fee rates and service dates.
• Charging the wrong coinsurance payments, deductibles and benefit maximum coverage.
Final tip: Notify your health plan when employees depart or the status of dependents changes. Remind employees to review their medical bills and benefit paperwork, and report any mistakes.
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