Managing a company-funded health plan is a complex process. Today’s third-party administrators (TPAs) and pharmacy benefit managers (PBMs) have developed sophisticated systems to pay claims. However, TPA and PBM audits uncover irregularities that need attention. With the sheer volume of claims and the intricacies of medical billing, it’s clear why a thorough review of claim payments is essential. In recent times, auditors have enhanced their techniques, employing advanced technology. Their expertise in both auditing and medical billing knowledge informs how they approach claim reviews.

Historically, some employer-sponsored health plans paid claims internally, allowing direct oversight of payment processes. However, a shift toward outsourcing these functions has occurred, bringing both benefits and challenges. The rationale is the efficiency provided by large organizations, which have the infrastructure to process claims effectively. By relying on a centralized system, health plans can save on resources that would otherwise be spent on infrastructure. This standardization can yield advantages, provided that the processing systems are correctly aligned with the specific provisions of each plan.

Most TPAs and PBMs include performance guarantees related to accuracy and reliability. Nonetheless, the critical question remains: are these guarantees upheld? The only way to verify it is through an independent audit that scrutinizes payments. Many audit firms emphasize that it is common to conduct a claim review and uncover errors, highlighting the value of auditing as a management strategy. Firms that specialize in this field often have founders or executives with backgrounds in claims administration, many of whom have significant experience working within large health plans that operate as TPAs.

Firms with added expertise in auditing and medical billing do the best claim audits. Auditors maintain extensive checklists for their electronic reviews. Plan sponsors can supplement these checklists, and discussions of review items can occur during setup meetings. A comparison of an auditor’s findings with the self-reports provided by claim processors can offer valuable insights, especially since these self-reviews typically utilize the same system that handles the claims. By enlisting an external auditor to verify claim payments, health plans can ensure greater accountability in their financial operations.