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Managing Health Care Costs
March 3, 2008 The current discussions about uninsured coverage in the Presidential primaries has caused many law firms to be concerned about the cost of ineligible participants in their plans. In fact, it is estimated by the insurance industry that 10 percent of dependents covered by the plan are ineligible. As a result, firms are considering audits to assure that all participants in their health insurance plan are in fact appropriate participants. However, routine verifications can be annoying to participants, particularly partners. Therefore, here are some tips on conducting an eligibility audit:
- Make sure that an audit is really necessary. A firm that has been diligent about requiring verification of eligibility during open enrollments may not have a significant problem. One test is to audit a sample group to determine the level of ineligibility found.
- Check the insurance company’s information. Frequently, changes in coverage are never transmitted to or recorded by the vendor. Making sure records between the employer and the insurer match is an easy first step before deciding to conduct an audit.
- Over-communicate the benefits of the audit and the fact that reduced ineligible participants may help reduce participant’s health care costs. Some firms explain the eligibility criteria and then offer a grace period during which employees can drop ineligible members with no questions asked.
- Review the administrative process. Law firms that have reviewed the work of third party administrators sometimes find large numbers of claims from terminated employees and their dependents.
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