HMS Healthcare January 29, 2013
Members of the National Governors Association spoke recently about broad policy changes facing states in 2013 — including healthcare. Some governors are hoping the federal government will be flexible and allow states to submit their own innovative solutions to healthcare reform implementation. Others acknowledged that a one-size-fits-all approach would not be appropriate and encouraged states to keep their citizens’ needs in mind when developing a healthcare reform solution.
HMS Healthcare January 24, 2013
There are two main reasons employers choose to conduct a dependent eligibility audit – compliance and cost containment. Cost containment is the most popular reason, and with good cause: a health plan can experience significant savings — up to $3,000 annually per dependent for self-funded plans — by removing ineligible dependents from the plan. This notable savings potential is a big driving force for self-funded plans to hire vendors to complete a dependent eligibility audit.
What is often overlooked is the fiduciary responsibility that employers have to offer health coverage only to dependents who are eligible for the plan. By conducting a dependent eligibility audit, fully insured employers can make sure they are in compliance. They may also achieve substantial savings as tier shifts occur when ineligible dependents are removed. Although fully insured employers won’t likely see the 1,000-1,200% ROI that self-funded employers typically achieve, a 200-500% ROI is certainly within the realm of possibility. The savings and compliance potential make dependent audits a smart choice for fully insured plans.
HMS Healthcare January 15, 2013
One of the greatest misconceptions in the dependent market is that employers can get a dependent audit for free. In this day and age nothing is free, and the notion that a voluntary benefits (VB) firm will provide the same offering as firms that specialize in dependent audits is misguided.
A VB firm’s main objective is to sell employees voluntary benefits – this is where their revenue comes from. Because dependent audits are a secondary concern for VB firms, employers should think hard about how detailed the firm will be when conducting a free dependent audit onsite; the security measures they will put in place to ensure employees’ sensitive information is secure; and what happens when the employee only submits partial information required as part of the audit.
A good VB firm will outsource to a third party that is an expert in dependent audits. This partnership would be the best approach for both the employer and employees. When making a decision about who to partner with for a dependent audit, consider the following:
- Are dependent audits the VB firm’s primary line of business?
- How will the firm secure documentation?
- Can they direct employees on where and how to obtain documents?
- Do they have multilingual representatives?
- Do they give employees options for responding to the audit (such as by faxing information to a toll-free number, mailing information in a business reply envelope already provided, uploading documentation via a secure web portal, etc.)?
- How will the VB firm resolve an issue when an employee says he or she provided the information and the VB rep has not received it?
There are many other reasons why a “free” audit may not be in your or your employees’ best interest. Before making a decision, always consult a reputable firm that specializes in dependent audits to receive all the facts needed to make an informed decision.
HMS Healthcare January 2, 2013
One of the basic premises of healthcare reform is to expand coverage to individuals who are currently uninsured. Ultimately, this will result in higher costs to employers/plan sponsors who provide health benefits to their employees. As such, employers need to find ways to help offset this additional cost increase that is essentially over and above the typical healthcare cost increases that seem to occur every year. One way to do this is by implementing a working spouse provision (WSP) into your plan.
WSPs can be constructed in a number of different ways, but the main focus is to reduce (or possibly eliminate) the cost of covering an employee’s spouse if other coverage is available. One of the more popular versions of a WSP is the spousal surcharge. With this version, employees who elect to cover spouses who are employed elsewhere and have access to their own employer’s health plan are charged an additional premium amount each month over and above the normal share of the total premium.
Having this type of provision in your plan makes a lot of sense from a cost-containment standpoint. However, it’s not very effective unless it’s regularly policed because many employees will often claim not to understand the provision in order to cover their spouse with the least amount of out-of-pocket cost. Regular audits of this provision (either internally or with an outside vendor) will keep compliance in line and help the employer realize maximum savings from this very valuable cost effective plan provision.
HMS Healthcare December 11, 2012
You’re considering a dependent audit on your company health plan. Great idea! Here are three key tips that will get you moving on the right track:
1.) JUST DO IT! Don’t back out now. Ineligible dependents are costing your plan money every day. This is slowly eroding the quality of coverage you can offer and quietly raising the out-of-pocket costs your employees must bear. The best time to do a dependent audit is as soon as possible.
2.) FINISH WHAT YOU STARTED! Do you have a spousal provision? Is your plan grandfathered? There are other savings to be had besides finding ineligible dependents. You may have people on your plan who should be getting primary coverage elsewhere. As long as you’re doing this audit, do it right and maximize the benefit for your company and your employees.
3.) FOLLOW THE CROWD! Choose a vendor with extensive, focused experience and make sure the vendor has great references. You want to know that your audit will go smoothly and that your employees will be in great hands. The way to be sure is to choose an auditing organization that has traveled miles of road with throngs of happy customers in the rearview mirror.
You can revitalize your health plan without compromising the integrity of the coverage available to your valued workforce by conducting a dependent audit. So what are you waiting for?
HMS Healthcare December 4, 2012
On average, 4 – 8 percent of dependents enrolled in an employer’s health plan are not truly eligible for coverage. Dependent Eligibility Audits are a proven tool for verifying that all enrolled spouses, domestic partners, children, and other dependents are eligible according to plan guidelines. By ensuring that only eligible dependents are covered, companies can save hundreds of thousands of dollars each year; preserve employees’ benefits without raising their out-of-pocket costs; and enhance compliance with ERISA and Sarbanes-Oxley.
The popularity of this type of audit has increased substantially in recent years, and many new vendors have begun offering the service to meet the growing demand. A new white paper from HMS Employer Solutions outlines best practices in dependent eligibility auditing to help employers choose a vendor that will meet their specific needs. Topics covered include:
- The stages necessary for an effective audit
- How to prepare a workforce for an audit
- Factors that could impact savings
- Issues to consider when selecting a vendor
HMS Healthcare November 13, 2012
Healthcare cost containment has become a legitimate focal point for many employers. Self-insured employers are especially dedicated to this because of the direct responsibility and liability that the employer assumes.
Many employers see claims auditing first and foremost as a vehicle to recover money. It is true that almost every claims audit leads to some type of direct recovery, credit, or off-set. However, the real value of the claims audit goes well beyond this.
As plan parameters and billing procedures become more and more complex, even the most diligent HR staff has a nearly impossible task when it comes to identifying and correcting systemic issues.
TPAs continue to refine their own internal adjudication processes to keep up with what truly is a moving target. Nonetheless, studies tell us that claims’ processing at all levels is fraught with error.
Self-insured entities are practicing sound business and compliance measures by having an independent auditor examine all sides of the adjudication process.
Something as simple (yet difficult to detect) as an incorrectly loaded co-payment can have a very tangible negative effect on an employer’s bottom line. Imagine the impact of a $20 error that is repeated hundreds of times in a calendar year, year after year.
Employers often discover that there is a wide gulf between their original plan design intent and the practical execution. A common example might look something like this: an employer wants to limit total chiropractic expenses to $500. The administrator only recognizes certain codes as chiropractic (maybe adjustments only)—the net result being claims paid beyond the initial limit. Or, in another example, perhaps an employer intends to pay for services that will diagnose infertility, but not treatments to assist in pregnancy. Both of these scenarios are common.
Many times the fault behind identified errors cannot be clearly attributed to the TPA or the employer. The responsibility is shared. Nonetheless, identifying and correcting these issues moving forward is critically important—even if this does not result in immediate recovery. Ultimately these improvements, clarifications, and corrections will lead to much greater value when they are systemically implemented.
Medical claims expense represents one of and in many cases the single largest expense that an employer will deal with on an annual basis.
Employers choose to self-insure their medical plans to maximize flexibility and the impact of each dollar. Without routine auditing, how can an employer really know that the millions being spent are being leveraged to the fullest? The errors are there, and they will not correct themselves.
HMS Healthcare November 1, 2012
Taking control of healthcare dollars is an important initiative for all employers. A medical claim audit is an effective tool that can help you gain a better understanding of how your healthcare dollars are spent. But before committing to performing a claim audit, here are three things that you should be aware of:
- ASO Agreements can impact the scope of the audit. Many employers are surprised to learn that their ASO Agreements with their claims administrator impose limitations on the claim audit process. These limitations include the number of claims that can be reviewed, the time period that an employer can review (typically 12-24 months), and often the methodology used to select the audit sample. Knowing your rights and negotiating terms in favor of your plan is an important first step when deciding to perform a claim audit.
- Discussing your objective with your vendor upfront is crucial to the success of your audit. Whether your goal is to recover overpaid plan dollars, exercise plan oversight, or both, communicating the objective of the audit with your vendor will help the vendor determine the sample size, scope, and methodology necessary to achieve the results you’re looking for.
- Communicating known issues with your vendor provides direction for the audit. Claim payment issues can arise at any time. An issue can be as simple as an increased claim spend from one year to the next or a spike in a given month, or as complex as major plan changes being implemented from year to year. Sharing these known issues with your vendor during the planning phase of a claim audit not only identifies targeted areas of concern for the vendor, but also provides insight into where the claims administrator’s process may be fractured.
The most successful audits are those that identify very few errors. This means that the client is getting a good return on their claim dollars. In order to get to that point, employers need to engage in cost containment activities to identify and resolve issues before they turn into costly problems.
HMS Healthcare October 30, 2012
Many organizations experience an ROI of 1000+% the first year after conducting a Dependent Eligibility Audit of dependents on their health plan. On average, 4-8% of dependents are found not to qualify for coverage based on a plan’s eligibility rules. Imagine how much an organization could save if those ineligible dependents were never added to the health plan in the first place.
The Point-of-Enrollment (POE) solution is a relatively new approach to dependent eligibility auditing that can help employers achieve more ongoing, real-time savings. With POE, when a new employee joins a company or an existing employee adds a new dependent, the dependent’s eligibility is verified during the initial completion of enrollment data (i.e., the Waiting Period). If new dependents are found to be ineligible, they’re not added to the plan, saving the employer approximately $250 per month—what an ineligible dependent would cost the health plan (assuming an average annual cost of $3,000 per member for medical and prescription coverage).
Given the 4-8% ineligible rate, a 10,000-employee company could save, on average, $540,000 a year (assuming an annual 20% rate of employee turnover and 5% rate of family status changes). With a cost of $15 for each employee who adds a dependent, the POE solution is well worth the approximate investment of $22,500 needed to reap these savings.
HMS Healthcare October 18, 2012
As a result of the Affordable Care Act (ACA), group sponsored health plans are now required to extend coverage to more individuals and loosen eligibility requirements. For this reason, ensuring that covered dependents are eligible under plan guidelines is as critical as ever, if not more so. Health plan costs are soaring, and employers must use every tool available to protect their plan(s) from unnecessary claim expenditures.
Our data shows that 8-10% of all dependents audited may be ineligible, which typically results in more than a 2,000% ROI for employers. With the complexities of the eligibility rules around “grandfathered” plans and more employers adding working spouse provisions, we have seen an increase in the number of dependents removed as a result of an audit.
Here are some “before and after ACA” statistics to consider:
|Enrolled Dependents||Unverified Dependents||Voluntarily Reported Ineligible Dependents||Unverified Dependent Savings||Voluntarily Reported Ineligible Dependents Savings||Total Savings|
- 10,000 enrolled dependents audited with a 95% total response rate
- Unverified dependents do not complete the process; 1-3% may appeal and return to the plan
- Voluntarily Reported Ineligible Dependents are reported during the audit process
- Savings are based on $3,000 annual cost per dependent
- Savings are annualized
The simple fact is, the eligibility rules governing your plan—regardless of how strict—are not what determine whether or not ineligible dependents are enrolled. It is the way those rules are interpreted and administered that puts your claim expenditures at risk.