Auditing Health Plan Claims Session – 3:00pm Friday May 7 th , 2010 Presenters:
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Transcript of Auditing Health Plan Claims Session – 3:00pm Friday May 7 th , 2010 Presenters:
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Auditing Health Plan Claims
Session – 3:00pm Friday May 7th, 2010
Presenters:
Steve Gasparich, Audit Director, Providence Health & Services Teri Long, Senior Audit Manager, Kaiser Permanente Chrisna Meckler, Assistant Director, Regence Robert Thieling, Director Audit Services, Group Health Cooperative
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Objectives Meet Other Health Plan Auditors
Identify Common Risks Associated with Claims Processing Risk-Focused Audit Approach
Provide Tools for Audits of: Claims Adjudication Claims Performance Monitoring / Quality Assurance Recoveries and Adjustments Third Party Claims Processing
Computer Assisted Audit Techniques (CAAT’s) / Data Analytics
Auditing Health Plan Claims
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Introductions
Name and Title
Type of HealthCare Entity
Size of Entity, # of Health Plan Members, Geography Covered, Etc.
Attendee Introductions
Auditing Health Plan Claims
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Claim Processing Risks Insurance rates and premiums are built upon
inaccurate claim history Contracting with employers and other groups is
built upon inaccurate claim history Claims are paid that others should be paying for
(coordinating) Fines and penalties are levied by regulators for
untimely processing Fraudulent claims submitted are not detected and
get processed
Auditing Health Plan Claims
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Risk Focused Audit Approach
Approach Used by NAIC for Financial Examinations Focus examination on high residual risk area Justification required for testing of low residual risk
items Assessment and reliance on work of Internal Audit
and other Functions Value in Internal Audit having a parallel approach
Talk the same language Identify mitigation strategies Help formulate residual risk
Auditing Health Plan Claims
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Risk Focused Audit Approach (continued)
Elements of a Risk Focused Audit of Claims1. Identify key functional areas/activities within claims
processing (Mailroom claim capture)2. Document risks for each activity (Mailroom: limited
capacity of mailroom result in multiple days before claims are opened and distributed for processing)
3. Document likelihood and impact to achieve and overall inherent risk assessment. (low likelihood but high impact, so medium overall inherent risk)
Need to establish criteria for measuring likelihood and impact
Auditing Health Plan Claims
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Risk Focused Audit Approach (continued)
Elements of a Risk Focused Audit of Claims4. Identify any risk mitigation strategy/controls5. Calculate residual risk6. Based on residual risks determine which activities
to examine in detail and those not to examine
Auditing Health Plan Claims
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Risk Focused Audit Approach (continued)
Example Risk Matrix
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Risk Assessment Matrix
1a
Phase 1 Phase 5 Phase 6 Phase7
1d 2a 2b 2c 2d 2e 3a 3b 3c 4a 4b 4c 5 6 7
1b – Overall Risk
Risks Other than Financial Reporting
Financial Reporting Risks
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Risk Identificatio
Inherent Risk Assessment
Risk Mitigation Strategy/Control
Residual Risk Assessment
Phase 2 Phase 3 Phase 4
1c – Analytical
Key Activity
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Claims Adjudication
Claims Capture – Mail Room
Contracts With Facilities
Claims Adjudication
Claims Quality Assurance
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Recoveries and Adjustments
Recoveries and Adjustments
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Third Party Claims
Coordination of Benefits
Subrogation
Third Party Liability
Other IBNR
Auditing Health Plan Claims
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Computer Assisted Audit Techniques (CAAT’s) / Data Analytics
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Why use Computer Assisted Audit Techniques (CAAT’s) / Data Analytics
Better Samples - By focusing on the areas of concern we increase the coverage and efficiency of our samples.
Quantification - Utilizing data analysis auditing techniques to identify and quantify control gap exposure, operational improvements and cost savings
Complete Understanding - Greater insight and understanding into key business operations through tracing the data and doing reconciliations
Earlier identification - of risks and trends
Better Comments - Making insightful recommendations to management for enhancing operational efficiency, including development of continuous monitoring techniques for management
Risk Focused - Designing top-down analyses to identify higher risk entities or locations for more focused audit procedures
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– Data Quality procedures to verify/reconcile data
– Standardized sampling methods applied
– Non-standardized documentation provided to teams
- “Reactive” approach to identifying & implementing data analysis in the review
- Procedures involve data extraction for use, but no formal procedures for identifying and performing data analysis
– Involvement in planning sessions
– Documented requirements & data requests
– Reconciliation procedures performed prior to data analysis
– Documented data analysis logic & logs
– Continuous monitoring of select controls
– Efficient execution of automated controls testing
– “Proactive” approach to identifying & addressing control issues
– Sustainable compliance processes
Ad Hoc Analysis
ContinuousMonitoring
Repeatable
The following scale represents various stages of data analysis in controls. The desired future state is to achieve a division-wide, repeatable process with respect to the use of data for continuous controls monitoring
Division-Wide
– Standardized documentation requirements
– Formalized data analysis team structure
– Process in place to manage the technical infrastructure supporting data analysis
Continuous Monitoring Capability
Data Extraction
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CAAT’s / Data Analytics Approach
1- Raw Data• Member Enrollment• Group Contracts• Claims Payment• Claim Intake• Member Refunds
3rd Party Data
2-Business Process• Flow• Controls• Individuals Involved• Policies
4-Report and Sampling
3-Analysis
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CAAT’s / Data Analytics – Claims Intake
Test Objective Test Procedure
Understand the efficiency of the claims intake process and identify outliers
Calculate number of days from claims receipt to claims being scanned into the system (monthly, weekly etc..)
Identify duplicate submitted claims Identify duplicate submitted claims, sort on unique tracking identification number, date of submittal
Identify claims causing potential delays in processing
Identify claims submitted with missing tracking identification numbers, dates, etc..
Run statistics on number of claims rejected
Identify higher than average rejected claims, trend by submitted provider
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Test Objective Test Procedure
Recalculate Annual / Lifetime maximums by member
Summarize total paid claims by member (1 – 2 years) and compare to benefit maximums
Recalculate Stop Loss provisions
Identify and summarize high dollar submitted claims by member to determine is stop loss (reinsurance) limits were triggered
Identify duplicate paid claims
Identify duplicate paid claims by sorting by member number, service date and paid amounts ; service date, amount, member number
Identify non-covered services
Obtain line item detail and query upon common non covered services – plastic surgery, chiropractic services etc…
Identify claims processed and paid for ineligible members
Compare member claims paid dates against member eligibility dates
Identify inaccurate payments to providers
Recalculate payments to providers to contracted DRG, APC or billed charge rates
CAAT’s / Data Analytics - Claims Processing
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CAAT’s / Data Analytics – Claim Aging and Denials Test Objective Test Procedure
Determine if “clean” claims have been paid within timelines specified in contract
Run an aging test comparing claims paid date to claims received date
Understand claims denial activity Summarize and trend (by date, denial code etc..) denials. Sample test to determine if claims denials were appropriate within contractual guidelines
Determine accuracy of interest paid on claims paid past “due” dates
Identify claims paid past established required numbers of days and recalculate interest owed - compare to actual interest paid
Understand delays in claims processing Trend interest paid (monthly, by service etc..) to determine if there are potential problems within claims processing
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CAAT’s / Data Analytics – Fraud / Compliance
Test Objective Test Procedure
Identifying anomalies in claims payment that may lead to potential fraud
Using digital analysis via Benford’s Law to identify statistically unlikely occurrences in data sets
Identify providers sanctioned by federal agencies
Download providers, employees and vendor information from federal websites and compare to provider / vendor records
Identify potential upcoding of medical procedures
Compare provider submitted coding (i.e. E/M) to one another or national benchmarks to determine if providers are inappropriately routinely submitting higher reimbursed / expensive procedures
Identify potential misuse of dependent benefits
Compare claims submitted for dependents against enrollment data; number of dependents, overage dependents etc..
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Resources List of Today’s Attendees
Audit Program Handouts
(NAIC Evaluation) Risk-Focused Surveillance Framework Update found at www.iowaactuariesclug.org/library/riskassessment.p
pt or
Search NAIC Financial Condition Examiners Handbook revisions
AHIA.ORG
Auditing Health Plan Claims
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Questions ?
Auditing Health Plan Claims