As annual health care premiums continue to increase and companies search for ways to hold down costs, health benefit audits are becoming an indispensable tool for agents. By helping clients identify faulty medical claims and coverage errors, an agent can establish a reputation as the go-to person for smart health benefits management.
But how do you know which auditing solution to choose? What features should you look for that will assure you that your client is getting the most out of the auditing process?
Most importantly, what audit benefits can you highlight that will demonstrate to your clients that you are their best source for understanding the ins and outs of the options available to them?
While pharmacy and medical audits may look alike in terms of their promised outcomes, there are differences in how they perform. For example, pharmacy auditing system find errors in, on average, 3 to 5 percent of claims across the nation. Some, however, have a track record that is closer to 8 percent -- a higher rate of success based on a different approach.
By looking at three key areas when you compare pharmacy auditing systems, you can select one that offers your clients a more comprehensive review and a better return on their investment.
The argument for benefit audits
First things first: Why should you tell your customers they need a benefit audit?
Each year, millions of dollars in health care spending are wasted because of fraud and errors. The actual extent is unknown, but is certainly immense, as indicated by estimates from a number of sources:
- The Office of Inspector General of the U.S. Department of Health and Human Services found that 6.3 percent of Medicare payments -- totaling $12.1 billion -- in 2001 should not have been paid because of erroneous billing, inadequate provider documentation, or outright fraud.
- The National Health Care Anti-Fraud Association attributes 3 percent of all health care outlays to fraud, wasting $51 billion.
- The Medical Billing Advocates of America believes that at least $10 billion of the $51 billion is due to billing errors. For instance, the organization says its members, who audit health care claims, typically find multiple errors in 8 out of 10 hospital bills.
While the direct cost of billing errors comes out of the insurer's pocket, the company that buys the insurance also suffers. Since future health premiums are pegged to claim trends and loss records, companies have a stake in keeping payments as low as possible. Since billing mistakes also often impact the out-of-pocket costs for employees covered by the benefits, companies can position themselves as defenders of their workforce when they tackle claim payment issues.
What kinds of mistakes can an audit find? Recent examples from a pharmacy auditing firm include a 700 percent markup of dispensing fees for common drugs like Motrin because the provider was set up as a specialty-drug pharmacy; average overpayments of 50 percent when the computerized system was set up improperly and no co-payments were collected; and incorrect supply limits entered into the system that allowed members to get 100 days worth of drugs for a single co-payment that would normally cover 30 days.
Picking the right auditing tool
Once your customer understands the value of auditing, the next step is to help them find the most effective solution. Look for these three advantages in pharmacy audit programs:
- Review of multiple elements. The difference between an audit that identifies a 3 percent error rate and one that yields a 7.6 percent error rate can usually be explained by looking at what is being audited. For example, a good tool may look at drug costs; a better one, however, will examine the charges against the quarterly changes in the maximum allowable cost program to be sure that pricing is consistent. A pharmacy auditing program should -- at the very least -- examine pricing, dispensing fees, claims basis, claims summary, drug cost, administrative fees, copayments, contractual exclusions, eligibility, prescriptions filled too soon, unsupported therapy, and maximum daily dose.
- Clinical-based review. In their simplest form, health benefit audits are typically designed to compare what a doctor ordered against the prescriptions that have been dispensed. A better auditing tool will be based on clinical judgments about factors such as reasonable dosage, proper drug selection, and other utilization criteria. Such an audit will need to be backed by clinical expertise, such as on-staff medical and pharmaceutical doctors.
- Solution-oriented service. All audits strive to identify what has happened retrospectively. Many will also help users recover amounts that have been paid for invalid claims. The best audits, however, combine the functions of looking at the past and negotiating in the present with a concern for the future. These audit services provide solutions to keep errors from recurring and help users improve their benefit management processes.
The right auditing program can be a powerful tool for health benefit purchasers who are looking for ways to control rising costs -- and their insurance agents are the logical place to turn to for advice on how to choose the best audit solution. By comparing the depth and breadth of the various auditing programs available, you can position yourself as the kind of expert that your customers will value and return to.
Samuel H. Fleet is president and CEO of AmWINS Group Benefits. He can be reached at sfleet@nebenefit.com.
