Tips to Improve Your Health Plan Claims Administration Audit

Are you planning to conduct an audit of your health plan claims administration next year? Consider incorporating these recommendations for a more effective engagement:

• Select an independent, multidiscipline audit team that has healthcare payer experience
• Take the time necessary to plan the audit to maximize engagement efficiency and success
• Engage your third-party administrator (TPA) early in the audit process
• Keep an open line of communication between all involved parties

Select the Auditor

The audit team can consist of internal and external team members, but they must all be independent of the auditee to ensure impartiality, provide integrity, and avoid conflicts of interest. Without this level of objectivity, you run the risk of bias or inappropriate influence.

Assembling a diversified team composed of a variety of subject-matter experts – led by an auditor with experience in health plan claims audits – provides a unique perspective and increases the value you receive from the audit. Look for team members with financial, legal or IT backgrounds, as knowledge of these disciplines will ensure all aspects of claims administration are analyzed.

Plan the Engagement

In the planning phase, use data analytics to identify areas of potential risk and to gain greater insight into your TPA. While this can slightly extend the engagement timeline, the value it brings will be well worth it.

Obviously, your audit team needs to have strong data analytics skills, but the quality and quantity of the data you receive is just as important to the ultimate success of your analysis. If your team has not performed this type of audit before, start by running basic queries against the data, then manually review the results to refine your query. Once you have a solid population of outliers, you can select your samples for testing. Duplicate claims, plan benefit limitations and exclusions, and patient liabilities are good places to start. Reverse engineering claim payment errors can also help you build rules-based algorithms.  Continue to build queries year after year, and soon you will have a robust set of algorithms that will pay healthy dividends.

Engage the TPA

Generally, any audit of this type should be a collaborative effort between the auditor, plan sponsor, and TPA. Engaging the TPA early in the process will help you avoid common pitfalls (e.g., scheduling delays, inadequate planning, and miscommunication). Before you contact your TPA, read your administrative service contract to understand your Right to Audit. In most cases, the TPA will request that the auditor send a scope letter – which clearly defines the project objective, scope and engagement procedures – before approving the project and scheduling fieldwork. If your audit falls outside of your Right to Audit clause, explain your reasons and your TPA may grant an exception.

Communicate Regularly

Like all projects that involve multiple entities and team members, communication is crucial during every stage of the engagement; this includes determining an overall strategy, planning and executing the audit, and creating the final report. It is vital to keep all parties informed about developments and changes throughout the engagement. An open line of communication with the plan sponsor and TPA increases the auditor’s credibility and fosters a collaborative environment.

Keep in mind, effective communication includes active listening and professional respect, all of which build trust between the auditor and auditee.

Incorporate these strategies into your 2023 audit for greater success and valuable, actionable results.

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