Accurate budgeting for anything is a combination of forecasting and understanding past experience. It works the same way for employer-funded health plans; many rely on medical claim auditing for insight. Claim audits remain a regulatory requirement but add value in many ways. With outside processors handling claim administration for good reasons, plan sponsors need other ways to gain perspective for their budget planning. A thorough report from an accomplished claim auditor provides an independent plan performance assessment. It also shows areas where costs can be managed.

Today, claim audits run on human-programmed electronic systems that increasingly operate independently. As a result, the staff time required for an impressively thorough claim audit is less every year. With greater accuracy, the value of claim auditing increases because it catches and flags more errors, many of which are correctable or recoverable. The number is always significant with medical and prescription medicine bills; correct claim payments are necessary. It's also the most reliable way to treat members equitably. The goal is to pay everyone's claims consistently and correctly over time.

Continuous monitoring with the same audit software can be an excellent mid-year management tool. There's no better way to confirm why (or why not) your plan is staying on track according to budget forecasts. Auditors can also help claim administrators report on their experience if unforeseen events occur. Oversight is an excellent management tool and one that shouldn't be underestimated. The extraordinary value becomes evident when an audit finds recoverable errors that are as much as four times its price. In-house managers can also have more meaningful meetings with outside vendors.

Consider auditing if you've had past or ongoing budgeting complications for a self-funded health plan (medical and pharmacy claims). You might need to increase the level of your audit service or consider a firm that can provide more data. If you know your claim payment error rates are ultra-low and every year's budget stays on track, you've found the right solution. But if not, consider making changes. Other plans and their firms are having favorable experiences, and the same can occur for your plan with the proper audit and management setup. It's often worth checking around for new options.