A lot of financial responsibility rests on the shoulders of anyone who manages employer-funded health plans. Unexpected cost increases can affect a company’s balance sheet and quarterly earnings, so careful management is essential. It’s why medical claims and PBM audits with a 100-percent review approach have gained so much popularity in recent years. Thanks to the steady improvement of software and technology, it’s possible to detect trends in their infancy. When increases are better understood before they become significant expenses, they’re much easier to manage if needed.
Typically, self-funded plans rely on third-party administrators (TPAs)—often large health insurance providers—to process and pay medical claims. Although TPAs bring considerable expertise, their objectives may not always align perfectly with the employer’s. Implementing rigorous audits and ongoing monitoring helps employers maintain oversight and ensures transparency, equipping them with data-driven insights to discuss and address concerns on equal footing with the TPA. While most TPA contracts include performance guarantees, the complexity of claims administration requires oversight.
A well-designed plan description must dictate how claims are paid to ensure the plan operates smoothly. Including pharmacy benefits managers (PBMs) with medical claims compounds the complexity, introducing hundreds of variables to the review process. Success depends on collecting actionable data and conducting meticulous audits. Consistently applying the plan’s rules is essential—similar claims should receive equal consideration and payment. However, inconsistencies are common, with cases arising where comparable claims are paid differently or denied inconsistently.
With increasing scrutiny from market analysts, public companies must be especially diligent with cost controls. Employee benefit plans—particularly health and pharmacy benefits—pose major fiduciary responsibilities each year. Enhanced audits and monitoring have given company leaders more tools than ever to proactively manage these costs. Beyond the financial benefits, there is a strong commitment to ensuring employees receive high-quality care, maximizing the value of every dollar spent. When executed effectively, this approach benefits both the organization and its employees.
