Five Audit Facts

Datamethod helps is clients manage claims and compliance audits. Properly managed audits can help your health plan operate better, but setting up and managing claim audits can be challenging. There are five facts about claim audit that every health plan and payer needs to know.

Audit is Critical.
Audit = Opportunity.
Accuracy numbers are often not accurate.
Audits are not transparent.
Audits often lead to nowhere.

#1 Audit is Critical

Is audit a tool to build better service in your plan? Why audit claims? First because you’re required to. NCQA requires it. Many employers require it. Generally accepted accounting principles mandate it. Most important of all, members are increasingly involved in claims payment – and not just to fix authorization issues. With new consumer driven healthcare plans members are taking a much more active role in the payment process. Claim audit is not ‘going away’. Indeed, claim audit has become a significant tool to manage members, accounts, providers and, regulators. Turn claim audit in your plan into the tool that you can use to make your business perform better.

#2 Audit = Opportunity

50% of claims have at least one exception Paying claims is not easy. Claims is a dark and winding tunnel. And audits? Most are designed for the standard stuff. Depending upon your math, however, 50% of claims have some exception. Based on our industry benchmarks, five percent of your claims are dupes – at least. Another five percent are adjustments. Another ten percent are denials. Another five to ten percent are claims resubmitted from previous denials. Another five has to be coordinated with another carrier. And what really does happen when claims go through code review? Few auditors have the tools to look where the biggest problems exist – to look only at dupes or certain denials.

#3 Accuracy numbers are not accurate

As many as fifty percent of payment audits report questionable numbers. This is because payment accuracy audits are difficult. Common mistakes include

Not Random. Assuming first 100 claims in the spreadsheet are random is a common mistake – and one which means the audit result is not correct. A fully random audit is critical to an accurate audit.
Not Tabulated Correctly. How does one measure accuracy? Claims? Dollars? Accuracy is a tricky metric. Many plans operate with their own version.
Not Complete. As many as 25% of audits never get finished – and the results are tabulated from what did get finished.

#4 Audits are not transparent

How many audits are open in your plan -- right now? In today’s world, eighty percent of claim audits are set-up, managed, completed, and reported using a spreadsheet. How many audits are open in your health plan right now? Which ones are your priorities? What are the primary errors auditor have uncovered in the past 6 months? Audit transparency means: To see and manage audits which are in-process as well as to easily review completed audits. How and when claims get reviewed or tagged with errors is tracked – if at all – at a very high level.

#5 Audits often lead to nowhere

Finding a claim with a payment issue can be discouraging. If one claim was paid incorrectly, many similar claims are also likely paid incorrectly. How do you find them all? Identifying the claims that need fixing is not easy – and for that reason alone, errors often do not get systematically fixed.