Managing a self-funded health coverage is more complex than ever, rendering it essential to use every capability your auditor provides. Medical claim and pharmacy benefit manager audits provide your most effective oversight when working with a third-party administrator (TPA) and PBM. Since claim payments represent the highest cost and main function of a self-funded health plan, accuracy is vital. Modern audit software's speed and precision have set higher standards for performance. Most top auditors now examine all claims, delivering more comprehensive and precise data than ever before.

Large health claim payments can easily hide major errors and costly overpayments. The recent pandemic caused a jump in medical claim costs not seen in recent years. Auditors stepped in after the fact, supporting plans to recover excess payments, fix mistakes, and find fraud and abuse. Providers often charged exorbitantly for basic testing and procedures, and only an audit could reveal the scale of the problem. Monitoring is necessary since medical costs and pharmacy benefit expenses are significant and can directly impact the balance sheet and influence quarterly financial results.

TPAs are often large organizations with their own internal policies and practices. They may process a plan’s claims using their standards, not the plan’s unique rules. Careful audits can identify these discrepancies and provide in-house teams with hard data for discussions with TPAs. This leads to improved service and performance for members. Delivering promised benefits is a core goal for any health plan, but managing expenses remains vital for employer-sponsors’ financial soundness. TPAs may also include extra charges for services, and detailed audits catch these.

More frequently, TPAs outsource tasks such as collecting overpayments. In these cases, you may be responsible for all or part of the vendor fees, which might not be included in your contract. For instance, subrogation or recovery commissions can run from 10 to 30 percent. These fees accumulate, and since the TPA’s error caused the overpayment, your plan ends up covering the costs of correction. Although overseeing every aspect is challenging, skilled auditors still deliver the strong oversight needed for your plan. Most employer-funded health plan now audit claims more frequently as oversight.