Understanding the Cost & Risk of Health Benefits

Rise of Self-Insurance

Most medium to large employers in the U.S. have self-insured health plans. They are cost-effective when managed properly, flexible and provide more control.

Outsourcing Administration

The vast majority of employers outsource plan administration to Third Party Administrator and  Pharmacy Benefit Managers. Plan administration is complex and error prone. Operating systems do not produce reports for employers to manage the cost and risk of self-insuring.

Risk and Compliance

Employers cede to the internal controls, policies and procedures of plan administrators resulting in  risks. Sarbanes-Oxley has a material effect on corporate health benefit programs requiring annual audits. The structure of employee health benefits often obscures the view of benefit costs and internal controls that the Sarbanes-Oxley Act demands.

Risks of Outsourcing Administration

• Payment of claims may not be made according to your Summary Plan Document,

• Relying on internal controls of TPAs and PBMs,

• Relying on policies & procedures of TPAs and PBMs may have cost implications,

• Discrepancies in funding,

• Lack of Stop-Loss management may result in overpayments,

• Recovered overpayments may not reach your account,

• Weak Other Party Liability monitoring may increase your exposure, and

• Contracted Care Management services may not result in ROI. 

HDM Best Practices

Best practices are based on HDM's  wealth of experience performing audits for some of the largest employer based health plans in the country. They include annual audits, vendor management, performance monitoring and reporting.

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Types of Audits

Medical Plan Audit Pharmacy Plan Audit Dental Plan Audit Hospital Bill Audit Eligibility Audits

Value by Department

Corporate Finance HR/Benefits Internal Audit IT Department Healthcare Vendors Consultants

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