What Happens in a Health Care Claim Audit?

Employee health plans that provide medical and prescription coverage for large corporations and nonprofit organizations face significant cost exposures. Running a medical claim and PBM audit is one of the most effective strategies available to plan sponsors to manage expenses and ensure consistent service for members. The widespread use of third-party administrators (TPAs) and pharmacy benefit managers (PBMs) has shifted the claims processing function outside the organization, bringing both cost efficiencies and specialized expertise. However, this outsourcing also means that oversight is crucial.

The accuracy of an audit depends on multiple factors and varies for medical and pharmacy plans. When reviewing medical claims, auditors must identify physician charges that seem excessive for certain services and compare the costs of tests against the reasonable and customary standards. This includes detecting code pair tests that should not be billed together, as one procedure may render the other unnecessary. By flagging such overcharges, plans strengthen their position to negotiate rebates and refunds from providers. Often, the financial recoveries from audits outweigh their costs.

Pharmacy claim audits involve additional, unique considerations. Auditors must ensure claims are paid according to the plan’s formulary, with particular attention to generic medications due to their substantial cost-saving potential. They also examine quantity limits, early refill requests, and rebate processing. Drug utilization reviews are crucial, ensuring members receive appropriate medications that are covered by the plan. Achieving cost efficiency depends on monitoring these details closely, and audits play a vital role in identifying discrepancies so they can be addressed in the future.

Timely auditing offers numerous benefits, including greater success in recovering overpayments and strengthening accuracy. Advances in software and technology have enabled auditors to review more information with greater speed and accuracy. Audit methods now adapt to the specific requirements of both medical and pharmacy benefit plans, each of which must be evaluated using distinct criteria. As healthcare costs continue to rise, plan sponsors are under increasing financial pressure, making frequent and thorough auditing an essential practice for maintaining plan integrity and managing expenses.