There's No Insurance to Protect Against the Shocking Lack of Health Plan Oversight

Situation and Complication

Surprisingly, many self-insured employers do not have standard financial controls in place to verify expenses, cross-check contract terms, monitor guarantees, maximize credits, and hold their health plan partners accountable. Why not? After all, employee healthcare is now most employers' second largest fixed expense. Healthcare is not a new category like cryptocurrency (although the lack of oversight and control is frighteningly similar).

It isn't for lack of ambition. The primary challenge for employers is that health plan vendors do not proactively provide the necessary information to execute standard financial practices. Finance teams are expected to fund escrow accounts to pay health care providers with limited supporting detail. When employers request more information, they are often met with delays and reasons why the detail cannot be supplied.

Substantial regulatory efforts are underway to reduce the barriers to information and provide more transparency in health care. In the meantime, there's nothing preventing employers from implementing the requisite controls today. Of course, this is easier said than done, given the arcane nature of healthcare payment systems and the substantial data management challenges, but it's necessary given the expensive mistakes that regularly occur.

Examples

This is the abbreviated (!) list of errors recently uncovered by Wellnecity's ProActive Oversight.

• Ineligible members
  A client was billed $300,000 in claims for a member who was no longer on the health plan.
• Inaccurate claims
  Administrators regularly have error rates (i.e., not following standard payment rules) greater than 6% by $ value.
• Errant administrative fees
  Invoices do not reflect updated administrative fee terms.
• Unsigned contracts
  Many times the ASA (Administrative Services Agreement) governing the services provided by the administrator is not fully executed.
• Missed stop-loss payments
  Sometimes Rx spend is not appropriately accrued and payments are missed or miscalculated.
• Uncaptured Covid reimbursements
  Many employers failed to account for Covid-related expenditures which could be reimbursed by the government.
• Unrequested credits
  Contractual credits are often forgotten after the agreement has been inked because no one is tracking and asking for the credits that are due. We have often recovered more than $3 PMPY (per member per year).
• Erroneous Stop Loss reimbursements
  Through our verification of underlying medical and Rx data, one client received $70,000 more in stop loss payments.

Solution

Deploy internal resources – or partner with Wellnecity – to obtain claims data and execute requisite controls. ERISA requirements will be more actively monitored by government agencies in response to recent regulations, and up-to-date information will help self-insured employers fulfill fiduciary responsibilities. In our experience, the savings gained from implementing good financial control will offset the expenditure ~3:1.