Everyone has heard of an insurance copay — a fixed fee that insurers require their employees to pay for services rendered. They are most often applied to prescriptions and office visits, but vary from plan to plan based on policy parameters. It’s these variances that can contribute to incorrect copayment during the claim adjudication process.
It’s not uncommon for employers providing self-funded insurance to share coverage costs with members through these copayments. Unfortunately, it’s also not uncommon for TPAs to incorrectly apply them. But how does this happen and what kind of effect does it have on your policy and its members?
Why are copays a big deal?
Here’s an example. During set-up meetings, most administrators try to get self-funded clients to agree to their standard processes and procedures to simplify their end of the adjudication process. Often, the employer wants to customize their plan by excluding certain procedures or charging a different copayment (for example, a specialist office visit charge of $50 instead of a $20 standard). As a result, this customization of plan parameters may not be set up correctly when it’s keyed into their automated adjudication systems. This could be because a piece of data was missed or because the administrators didn’t take the time to adjust the copayment parameters, allowing your members to pay only $20 for their office visits instead of the required $50. This works out well for your employees, but it also means that your business has to pick up the extra $30 every time members visit the specialist.
In this scenario, it’s easy to see how quickly the extra payments add up and why they take valuable dollars away from your business and its members.
Real life example.
CTI found claims during a recent audit where a hospital copayment wasn’t being applied at all. As a result, the employer became the sole charge bearer, costing them thousands of dollars in treatment charges. We also found that general practice copayments were being applied for specialty providers and urgent care facilities rather than the prescribed copayment. For example, a copayment for a general practitioner set at $25 when the member should have been charged $45 for a specialty visit. The TPA also applied a $20 member copay when the patient was provided for in an urgent care facility, which was supposed to have been a $50 copay. Overall, CTI found incorrect copayments that resulted in $250,000 in these types of errors alone.
Fix the problem.
Taking the time to perform a comprehensive audit will help you find even the most minute errors. This is a basic component of your plan adjudication process that is mostly automated, but still relies on manual processes to input plan parameters from the start. If they are entered incorrectly the first time around, it becomes much more difficult to trace every claim to recover your lost dollars. Every administrator incorrectly applies copays to varying degrees. How often does your administrator apply incorrect copayments to your self-funded group plan?
Every administrator incorrectly applies copays to varying degrees. How often does your administrator apply incorrect copayments to your self-funded group plan?
To schedule a call with our industy-leading medical health care claims audit experts, contact us here. To see a CTI client's real-world audit results, click the graphic below.