Fighting Fraud with a Health Claims AuditBondBeebe
Linh T. Crider, CPA, CFE, Senior Manager
Health claims audits are essential tools for preventing and detecting fraud in health & welfare plans. Additionally, these audits can help to uncover inefficiencies and find opportunities to streamline operations. Ineffective or inaccurate claims processing can lead to significant losses and, with the sheer volume of plan claims, fraud can often go on undetected for quite some time.
Our forensic accounting team is frequently called on to perform health claims audits and investigations for health & welfare plans. OurEmployee Benefit Plan blog recently provided insights into how we perform claims audits and when claims audits should be employed to detect fraud and inefficiencies. As discussed on that blog, there are a number of warning signs that signal potential fraud and that should be investigated with a health claims audit:
Plan Design Changes. If you have changed the design of your plan, it is essential to perform an audit to ensure that your claims processing system aligns with these changes. Ideally, this audit would be performed in a simulated environment, before the changes take effect, but an audit can still be a useful tool after changes are implemented to ensure benefits are being paid as the plan directs.
Volume Increases. An increase in certain types of claims is often a warning sign. During audits, we look for increases in denied claims, which could mean the system is erroneously denying claims, as well as COBRA claims increases to ensure proper beneficiary eligibility.
Payment Increases. If your plan is paying more, but participant levels or high-dollar claims have not increased, that is often a warning sign. A claims audit can determine if you are paying duplicate payments or providing payments for ineligible members and/or dependents.
In our recent case study, we detail a health claims audit we performed due to an unexpected and unexplained increase in payments. After performing audit procedures, we determined that the plan was paying duplicate payments due to human errors in the claims processing system.
For further information, I recommend reading our employee benefit plan blog’s full list of reasons to conduct a health claims audit. It is essential to regularly monitor your plan’s data in order to see trends and changes that could be signs of underlying issues. Even if there are no warning signs, an audit can help determine processing inefficiencies and suggest tactics for streamlining and improving your plan’s operations, saving your plan money in the long-run.