A regional public transportation system engaged AIM to do a comprehensive audit of the financial accuracy and claims processing accuracy of its medical claims administrator which had been administering the Client’s self-funded employee medical plan for many years. AIM performed a statistically valid, random sample claim audit, supplemented with – at the Client’s request – a focused audit of a sample of claims identified as potential duplicates.
The AIM claims audit revealed that the Claims Administrator was meeting the industry benchmarks for claims processing accuracy and financial accuracy. However, the audit also identified a number of serious errors in claims adjudication, including:
- The Claims Administrator charged the Client a TPL contingency fee (“attorney fee”) of $7,600 for recovered funds from an MVA claim – even though the Administrative Services Agreement precluded such a fee. Upon reviewing the Client’s account history, it was determined some $50,000 had been charged to the Client for such contingency fees during the audit period.
- Pension Group members were incorrectly coded as “active employees” in the Claims Administrator’s system (these groups had been set up to accommodate early retirees), which caused issues with coordination of benefits when the early-retiree Pension Group members aged into Medicare. The financial impact of this finding was estimated at $1.4 million unnecessarily paid by the Plan, and ultimately resulted in a confidential financial settlement between the Claims Administrator and the Client.
- In the focused audit of a potential duplicates. AIM found five confirmed duplicates among the sample of 25 claims, with overpayments ranging from $350 to $2,800. This finding suggested that the Claims Administrator’s system protocols for identifying and rejecting duplicate claim submissions were not as “tight” as they could be to effectively identify potential duplicate claim submissions before final adjudication.
- As a result of AIM’s detailed review, the Claims Administrator returned to the Client some $50,000 in improper contingency fees.
- For the Pension Group issue, the Claims Administrator’s systems were corrected to account for pensioners aging into Medicare, thus enabling the Plan to avoid an estimated $500,000 in inappropriate claim payments every year.
- For the duplicate payment issue, additional examiner training was provided and additional system edits were installed to prevent future duplicate payments of the type found in the audit.
AIM continues to work with the Claims Administrator to improve the quality of claims administration provided to the Client.
For more information contact your AIM representative at 1-866-284-4995.