Claim Audit Case Studies

Case Study #1

The Project

The client, a major automotive manufacturer, included performance guarantees in each of its four ASO agreements with three commercial insurance carriers administering medical (HMO, Indemnity and PPO) and dental claims on behalf of the client’s self-funded health plan. The client wishes to determine if the administrators were meeting performance guarantees for financial accuracy, claims processing accuracy and claim payment turnaround time. Trilogy performed a random, statistically valid claim audit of each type of plan administered by the three insurance carriers and measured actual performance against the performance guarantees in the contract to determine if penalties were due the client.

The Findings

The initial audit performed by Trilogy determined that none of the carriers met any of the performance guarantees and that the client was due the maximum penalty of 7% of administrative fees. Trilogy has subsequently performed nine annual performance guarantee audits on behalf of this client and has continuously worked with the carriers to improve the quality of claims administration provided to the client.

Case Study #2

The Project

The client, a large hospital system, wished to determine if its third party administrator’s (TPA) performance met or exceeded industry standards in anticipation of possibly changing administrators. The client also wished to insure the highest level of discount was pursued by the TPA for admissions to facilities other than its own hospitals. Trilogy performed a benefits management operational review, a highly statistically valid random claim audit and a focused claim audit of all out-of-network hospital claims with over $10,000.00 in charges.

The Findings

The operational review performed by Trilogy identified several opportunities to tighten the administration of the plan and reduce costs. The results of the random audit confirmed the TPA was not meeting industry standards in the areas of financial accuracy, claims processing accuracy and claim payment turnaround time. And finally, the focused audit of large dollar claims identified significant overpayments due to the TPA’s failure to properly coordinate benefits with other insurance coverage, failure to pursue or correctly apply discounts, and failure to apply the limitations and exclusions of the plan.

Case Study #3

The Project

The client, a self-administered union health and welfare plan, requested Trilogy perform a claims audit to assess its performance in the administration of its plan. Trilogy performed an operational review, a statistically valid random claim audit and focused audits of multiple claim payments in several categories of error-prone claim types.

The Findings

Trilogy’s review found surgery benefits paid at the incorrect benefit percentage and issues with the administration of the plan’s well child care and physical therapy benefits. Issues were also identified in the administration of dental and vision claims. Recommendations were made to improve administration in several operational areas including coordination of benefits investigation procedures, training and quality assurance. The statistically valid random audit found that financial accuracy met the industry standard but, claims processing accuracy and turnaround time were below industry standards.

Case Study #4

The Project

The client, a large Midwest manufacturing firm, requested Trilogy perform an annual baseline claims audit to assess the performance of its administrator. The client also requested Trilogy perform a focused audit of several claim types to determine if the administrator’s system had been updated to reflect recent plan changes.

The Findings

Trilogy’s audit of a statistically valid random sample of claims confirmed the administrator did not meet industry standards in the areas of financial accuracy and claims processing accuracy. Claim payment turnaround time exceeded the industry standard. The audit identified that the system was not correctly recalculating deductible and coinsurance accumulation subsequent to adjustments, the administrator was not applying commonly accepted NAIC rules regarding calculation of benefits secondary to other insurance, and precertification for outpatient surgery was not performed as required by the plan. Each of these issues increased claims expenses to the client. Findings from Trilogy’s focused audit indicated that recent plan changes had also not been programmed by the administrator and claims were not being administered in accordance with the client’s revised summary plan document.

Case Study #5

The Project

The client, a union health and welfare Fund, requested Trilogy perform a baseline claims audit to assess the performance of its third party administrator. Trilogy initially performed an operational review, a statistically valid random claim audit, a focused audit of retiree Medicare secondary claims, a focused audit of large claims and a review of eligibility records.

The baseline review was followed up with second review to confirm that corrective actions had been implemented and to validate that claims were being processed in accordance with the plan's intent.

The Findings

In the baseline review, Trilogy's statistically valid random audit confirmed that the administrator was not meeting industry standard in the area of claim processing accuracy. The audit identified that the administrator's system was not programmed to correctly apply deductible to the retiree plan claims, that retiree surgery and inpatient hospital claims were programmed with the incorrect coinsurance level, that plan limitations applicable to therapies, chiropractic and mental health limitations were not applied accurately and that durable medical equipment was programmed to adjudicate at the incorrect benefit level. The operational review component of the baseline review found that the administrator was not pro-actively investigating and updating coordination of benefits information, nor was it investigating potential third party liability opportunities.
The follow up review confirmed the administrator had implemented procedures for the proactive investigation of coordination of benefits information and potential third party liability opportunities. The review also confirmed that the system programming for the benefits identified with issues had been corrected and overpayments were being recouped.

Case Study #6

The Project

The client, a transportation and supply chain management company, requested Trilogy perform a claims audit of its administrator, a commercial insurance carrier administering medical claims on behalf of the client's self-funded health plan. Trilogy performed an operational review, statistically valid random claim audit and a focused audit of large dollar and accident claim payments.

The Findings

The audit identified issues in the consistent application of copayments to multiple claim types, issues with application of the out-of-pocket for re-adjudicated claims, issues relating to the administrator’s vendor’s handling of subrogation claims and issues with the consistent investigation of other insurance. Trilogy's statistically valid random audit confirmed the administrator was far below industry standards in the areas of financial accuracy, claim processing accuracy and claim payment turnaround time.

Case Study #7

The Project

The client, a self-funded union health and welfare plan, requested Trilogy perform a baseline claims audit to assess the performance of its third-party administrator. Trilogy performed an operational review, a statistically valid random claim audit and a focused audit of multiple categories of claims including high dollar, out-of-network, disability and accident claims.

The Findings

Trilogy's review identified errors with the administrator’s investigation of other insurance procedures, payment of preventive services, payment of chiropractic claims, payment of disability claims and application of the Medicare allowable rate to out-of-network claims. Trilogy also found incorrect application of discounts resulting in several high dollar overpayments. The statistically valid random audit determined that while the administrator was meeting industry standards in the areas of financial accuracy and turnaround time, claims processing accuracy fell far below industry standards. Recommendations were also made to improve administration in several operational areas including subrogation administration, HIPAA compliance, cost containment and quality assurance.

Case Study #8

The Project

The client, a non-profit consumer operated and oriented health plan established through the Affordable Care Act, requested Trilogy perform a claims administration review and medical claim audit of its healthcare claims administrator. Trilogy performed an operational review, a statistically valid random claim audit and focused audits of large dollar claim payments, outpatient and ambulatory surgery facility claims, and professional claims.

The Findings

Trilogy's statistically valid random audit confirmed the administrator fell below industry standards in the areas of financial accuracy and claim processing accuracy. The audit confirmed that the administrator met industry standards for turnaround time. The operational review provided recommendations related to staff training, the structure and standards of the quality assurance program, the administrator's standard procedure for the recovery of overpaid claims and the administrator's procedure for the investigation of potential coordination of benefits. The claims audit identified issues related to the application of copayments, the payment of laboratory expenses, the payment of observation room expenses, the application of repricing amounts, the calculation of the allowance for anesthesia services and the payment of routine wellness expenses.

Case Study #9

The Project

The client, a self-administered union health and welfare plan, retained Trilogy to perform an operational review and claims audit to assess its claims administration performance. Trilogy performed an operational review, a statistically valid random claim audit and focused audits of high dollar claims, behavioral health claims, Medicare supplement claims, COB claims, accident claims and adjusted claim payments.

The Findings

Trilogy's statistically valid random audit confirmed the client was not meeting the industry standard in the area of claim processing accuracy. The claim audits identified errors related to the incorrect application of the emergency room deductible. Due to the manual application of the emergency room deductible, additional claims outside the audit sample were determined to have been paid incorrectly. The review of high dollar inpatient hospital bills identified overpayments related to the incorrect application of the private room limitations and the incorrect adjudication of hospital claims with other primary insurance coverage. Procedures for investigation of accident-related claims required revisions to properly identify opportunities for third party liability and recovery. The review of behavioral health claims identified plan provisions and procedures in violation of the Mental Health Parity Act (MHPA) of 1996. The operational review identified opportunities for improvement in the areas of claims training, the quality assurance program, increased auto-adjudication and revisions to subrogation procedures to contain costs going forward.

Case Study #10

The Project

The Findings

Trilogy’s review discovered issues with the administration of preventive service claims and the inconsistent application of the emergency room copayment. Trilogy also identified numerous overpayments due to the incorrect coordination of benefits with Medicare. Recommendations to improve administration in several operational areas including training and quality assurance were offered. While the statistically valid random audit found that claims turnaround time was excellent, it also identified that financial accuracy and claims processing accuracy were below industry standards.