Large corporations and nonprofit organizations that self-fund employee benefits carry significant risks, particularly concerning medical and pharmacy claims. They expect accuracy and fairness when they engage third parties for claims processing. One effective approach for oversight is medical claim auditing, which ensures that claim processing adheres to the stipulated agreements. A notable corporate employer has initiated a lawsuit against its claim administrator, accusing the processor of not adhering to various components of its contract for paying the plan's claims.

The alleged non-compliance has reportedly led to excessive expenses for the plan sponsor, and the legal proceedings have drawn attention from industry observers. Many service agreements between employers and processors outline performance guarantees, setting clear expectations regarding both parties' responsibilities and the accuracy of claim payments. However, the real question is whether these provisions are honored. An independent external audit can assess compliance with these agreements, ensuring that members are treated well and needs are sufficiently met.

Audits can bring to light other important queries about the overall plan performance. The measures of a plan's performance are numerous and vital, as well-functioning plans ultimately enhance member service while controlling claim costs. Auditors can also track shifting trends in the prices of medications and services and utilization rates. Relying solely on the reports from claim processors leaves plans at risk; while many of these reports are accurate, there are notable exceptions. The current lawsuit highlights concerns over whether the processor properly enforced discounts and cost reductions,

The lawsuit alleges the health plan sponsor paid millions more than necessary for services over several years. Increased auditing could have identified discrepancies early on. Furthermore, implementation audits are crucial when transitioning to a new claim processor. For plan managers changing vendors, scheduling a claims review within the first 90 days is essential. This timely assessment can help catch errors before they escalate into costly issues. When healthcare providers know that audits will be conducted, they tend to be more meticulous in their billing practices.