Historically, for many companies with self-funded medical plans, the impetus for conducting audits was government regulations -- ERISA, Sarbanes-Oxley, etc. But the increasing accuracy of today's 100-percent medical claims auditing firms gives financial incentives that go far beyond fiduciary responsibilities. It's now common, and a good management practice to audit more frequently than required, and many companies have auditors review their claim payments continuously. No matter how many promises claims administrators make, there is no substitute for checking their work.
The leap ahead in the value of audits and continuous monitoring came with the introduction of the 100-percent method that replaced random sampling. When each claim is reviewed, it produces an unmatched level of accuracy to improve plan performance. The arrival of more sophisticated software during the 1990s set off the changeover to 100-percent claim auditing. Ever since, it has been enhanced and perfected to the level of performance that's available today. The great advantage is the concrete, actionable data they provide to plan managers. The goal is to control costs and boost plan performance.
From an upper management perspective, employee benefit plans bring significant cost exposures to large publicly traded companies. Therefore, closely monitoring and managing medical claim payments is crucial. The recent coronavirus pandemic and its associated costs during a challenging business year was a powerful reminder of these needs. When in-house plan managers have access to real-time data covering 100-percent of claim payments, they can manage proactively. It's why continuous monitoring in addition to periodic audits is increasingly favored by well-managed companies in all sectors.
With continuous monitoring and closer plan management in place, every self-funded plan and its employee members will benefit. Quickly detecting errors and problems while still small stops overpayments and allows for systemic fixes to stop them from recurring. More frequent oversight keeps plans running smoothly and means information about clam payments is always available. If large sums hit the balance sheet, thorough explanations from management help manage the situation. Catching and correcting errors in real-time also helps with management comments about plan performance.