With a self-funded plan, employers aren’t cutting a check for the same amount every month to cover health claims. Instead, the total they pay is based on how much their member claims actually add up to on a month-by-month basis. This creates a lot of incentive for them to take a closer look and make sure everything is billed accurately.
So how do third party administrators (TPAs) play a role and help employers avoid overpayment on claims and identify some big savings opportunities? Instead of following a simple “process and pay” approach, many TPAs (like Cypress) have dedicated staff who scrutinize claims and go through items line by line.
These claim review specialists often uncover coding errors, duplicate entries, overcharges and charges for services that were never received … mistakes that can add up quickly and cost a health plan a lot of extra money.
I could give you countless examples of how this vigilant claims review regularly pays off for self-funded employers. One instance is when we recouped nearly $79,000 on a single claim. A veterans hospital had charged $101,000 for a member’s four-day stay. Since these facilities don’t typically negotiate rates or accept Medicare reimbursements, our team went a step further. It looked at the Diagnosis Related Group (DRG) rate and provided comparable rates for two area hospitals. The result? The bill was negotiated down to less than $23,000.
While savings of this magnitude don’t happen every day, our team is constantly recovering smaller dollar amounts that were wrongfully charged. In fact, we find an average of $1,391 in savings with every file.
This careful claims analysis does take some extra work, but when you consider how much money can be saved, it’s definitely worth the end result.