In today’s competitive business landscape and complex regulatory environment, effective management of vendor relationships and benefit program costs is crucial. One often overlooked area where employers of all sizes can support healthy benefits governance is conducting regular benefit claims audits and service assessments. These practices can uncover key opportunities for better employee experience, cost management, regulatory compliance and process improvements.

Claim audits involve a detailed review of claims submitted and the corresponding payments made by insurance providers or third-party administrators. Vendor service assessments dig deeper into reviewing contract commitments, the employee experience with each benefit and overall outcomes of the vendor service being provided. Both types of evaluation offer the following three compelling advantages to employers.

1. Cost Management

Benefit costs, including claims and vendor fees, represent a substantial expense for most businesses. By overseeing vendor services and auditing claims, employers can ensure the proper use of funds and mitigate unnecessary or erroneous costs. Auditors can detect errors in claims processing, including incorrect coding, duplicate claims or billing for services not rendered.

2. Plan Fiduciary and Regulatory Compliance

Employers are subject to regulations concerning insurance claims and service providers. An audit can help ensure compliance, minimizing the risk of legal issues and associated penalties. Employers are then equipped with information to anticipate potential risks, allowing them to adjust policies or procedures accordingly.

3. Improving Processes

Regular vendor oversight and audits generate data that can inform strategic decisions, reveal process inefficiencies and enhance transparency between employers, employees and service providers. These valuable insights support employers in their business case in implementing improvements. By identifying administrative challenges, these initiatives can lead to streamlined operations, freeing up valuable HR resources.

Audits at Work: A Real-World Example

One example of how Brown & Brown helped an employer is an audit initiative we completed for a large public entity. Our goals of this initiative were to:

• Validate that the customer’s administrator had followed contract terms and had paid claims according to plan provisions
• Determine if members were eligible at the time of service
• Identify any systems or processes needing improvement

As a result of our audit, we found almost half a million dollars in duplicate payments. Issues of similar monetary value were found regarding excluded services, like hearing aids and acupuncture and millions of dollars were found incorrectly paid to claims outside of the plan limitations.

In addition, this audit reviewed compliance with state and federal laws. Our audit found the administrator was applying cost-sharing incorrectly to members for Breast Cancer Genetic (BRCA) Risk Assessment and BRCA screening, which are considered preventive and, therefore, should be free for members.

After conducting the audit, we met with both the customer and administrator to address the areas of concern, recuperate costs as appropriate and discuss the next steps for mitigating errors going forward. These audit services not only assisted our long-standing customer in identifying millions in plan savings, but also helped improve the administrator’s processes. To date, there has been a downward trend in the errors identified within subsequent audits.

Looking Beyond Return on Investment

The importance of conducting audits and assessments extends beyond immediate return on investment. They can help to support the long term outlook of the employer’s benefits program and overall business. A proactive approach to benefits governance can strengthen an employer’s relationships with service providers while improving employee trust by ensuring payment for services is accurate and fair.

Benefit audits are not just a compliance measure; they are a strategic tool for employers looking to optimize their benefit program expenses and enhance their overall operations. Investing in a benefits audit or a service assessment can yield valuable returns, making it a vital practice for responsible business management.

Randall Brandt

Executive Vice President

Mary Desrosiers

Principal

Tammy Miller

Vice President