It’s not uncommon for self-funded groups to exclude certain types of benefits — and it’s not uncommon for third party administrators (TPAs) to pay claims for non-covered items. How does this happen? Shouldn’t your administrator’s system be sophisticated enough to know when an exclusion is being processed? The answer isn’t quite so simple. Not all TPAs invest the time and resources needed to customize their claims processing system for every plan they administer.
Is it really what you wanted?
During plan benefit and set up meetings, most administrators suggest that self-funded clients agree to their standard processes and procedures, which may be in direct conflict with the plan’s original intent. Let’s say you don’t want to pay claims for long term care (LTC) but your administrator’s standard practice is to do so. When your plan is drafted, this language is left out of the plan, leaving these claims flagged as “payable” under your plan parameters. This translates to paying for benefits that you clearly didn’t intend to pay.
Some other examples of typical plan exclusions might include: cosmetic surgery, experimental or investigational medical treatments, services that are not medically necessary, and/or marriage counseling.
Every self-funded employer plan is different. Because of that, your auditor should thoroughly review your plan documents to identify excluded benefits. This gives them the parameters needed to set up an electronic screening process to meet your plan needs specifically, and provides auditors with a point of reference when examining your claims.
What does this look like?
CTI’s screenings identify excluded benefits, ensuring no proverbial stone is left unturned. During a recent audit, CTI found claims that had been paid for hearing exams, genetic testing, impotency, weight loss treatment and dental procedures — all of which were excluded by the plan. Through our screening and testing process, we identified a potential of $317,150 in overpaid claims due to excluded benefits paid by the administrator. This was just one of many types of errors our experienced auditors identified throughout the course of this audit.
Are you leaving money on the table?
Every administrator pays for benefits that are excluded to varying degrees. An audit will help you find these errors, recoup overpayments if possible and, with continuous quality improvement processes, ensure that your plan and its adjudication are carried out as intended. How often does your administrator pay excluded benefits on behalf of your self-funded group? 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 coordination of benefits to see how you can stop the leaks.