Many self-funded groups have members with insurance coverage outside your policies. This “secondary coverage” can be through a spouse’s insurance plan or through Medicare. A secondary plan covers charges incurred after the primary plan’s payment has been processed. Though this is a somewhat common setup among employees, it requires a lot of attention from TPAs to process claims correctly and efficiently. Adjudicating claims improperly can lead to non-recoverable funds lining the pockets of your employee’s providers.
Why does this happen?
Despite living in an age of technology, coordination of benefits remains a highly manual process. As a result of this lack of automation, many TPAs rely heavily on the manual work of claims processors. It’s not uncommon for administrators to coordinate with the other insurers incorrectly or overlook the secondary coverage altogether. When this happens, you’re leaving money on the table that is often difficult to fully recover. Read on to see what you can do to ensure that you’re keeping as many of your hard-earned dollars as possible.
Time and money at TPAs.
Coordination of benefits requires a hefty amount of time and resources for TPAs to automate the adjudication process completely and correctly. As a result, the system might not be fully customized at the time of setup to match the benefits exactly for every client and plan they administer.
Assuming that secondary insurance coverage is recognized by the TPA, there are a number of ways this type of benefit can still be misappropriated. Despite notification of other insurance information indicated on the claim received by your TPA, the administrator could be improperly coordinating benefits.
What does this look like in practice?
Despite the written procedures that are usually in place, adjudication inconsistencies in the claims process happen frequently. During a recent audit, CTI found 4 out of 110 claims — over 3.5% — that included other insurance information on the claim form that wasn’t taken into consideration when it was processed and the payment made. This resulted in a $15,000 overpayment of benefits during this particular audit due to incorrect coordination of benefits.
What does this mean for me?
When your administrator is not proactively investigating and pursuing other insurance information, and claims are being paid without taking it into consideration, incorrect payments result for self-funded groups. While a provider may return the overpayment if the error is caught, a credit balance will often remain on the their books, barring a credit balance recovery audit firm identifying the error and returning the money to the TPA. Even if the error is caught, however, your company will rarely recover the full amount of overpayment because of the commission fees charged by the auditing firm before the amount is returned to the TPA.
What can I do?
Every employer should perform an audit on their self-funded benefit package with incorrect coordination of benefits in mind. Only a comprehensive auditing process with an experienced firm will recognize this type of error, and implementing continuous quality improvement services will help you fix the problem to make sure it’s coordinated correctly in the future. It’s no secret that every administrator incorrectly coordinates benefits to a certain degree. The question is, “How much of your money is sitting in your provider’s credit balance?"
Contact us to find out.
It’s a fact...every administrator makes mistakes. The five basic errors with which we find significant discrepancies discussed in this series will include: plan limitations, duplicate payments, exclusions, incorrect coordination of benefits and incorrect copayments. Be sure to check back for next week’s blog on incorrect copayments to see how you can stop the leaks.