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The McLellan Consulting Services Total Plan Audit is targeted to achieve four goals for the Plan Sponsor:

  1. Determine if the Plan Administrator is meeting the Plan Sponsor’s expectations with respect to timeliness, accuracy and cost control in claims:

  2. Determine if the Plan Administrator’s initiatives designed to control and reduce medical and pharmacy expense (i.e., provider networks, utilization management programs, claims cost control programs, pharmacy contracts and drug utilization review programs) are having the desired effect;

  3. Identify areas where the relationship between the Plan Administrator and Plan Sponsor should be strengthened to improve the performance of the health benefit plan; and

  4. Using reports provided by the Plan Administrator as well as observations from the audit of medical and pharmacy claims, provide the Plan Sponsor with recommendations for changes in benefit philosophy and future plan design


Operational Review

MCS will schedule at least one half day for the Operational Review, which will be completed through a tour, interviews with management and staff, and observation of work-flows.  MCS has reviewed the Operations of well over 200 administrators and maintains a “best practice” database with which the Plan Administrator’s operations will be compared. 


Our review, which is conducted along the lines of a SSAE 16 review, will include a focus on areas which are not necessarily always visible via a Claims Audit, including:

  • Processing staff qualifications;

  • Limits of processing authority and management oversight of processing;

  • Communication with covered individuals and providers related to additional information needs and delay in processing beyond Department of Labor Standards (30 days);

  • Methodology and effectiveness of managing claims aging;

  • Use of internal or external specialty resources for claims review, including medical necessity, third-party liability and appropriateness of charges;

  • Quality assurance (audit programs and adjustment tracking/trending); and

  • Role of the Special Investigation Unit. 

Pharmacy Benefit Audit

We will obtain a file of all claims paid by the Pharmacy Benefit Manager (PBM) during the review period.   Each claim will be analyzed and validated through our proprietary software program based on the Plan Document and the PBM contract in place for the review period.  This will validate whether pricing committed by the PBM has been used in the adjudication of claims and invoicing by the PBM.  Additionally, our analysis will provide suggestions on cost savings opportunities, including negotiation of the contract, plan enhancements and clinical improvements.

High Dollar Claims Audit

We will identify the 25 highest cost claims from the file received from the Plan Administrator.  These will be subject to a focused review of the clinical appropriateness of services and accuracy and level of billed charges. 


For each claim, the itemized invoice and operative report (if applicable) will be obtained and a line-by-line review completed by a consulting Medical Director.  Clinical concerns are identified, as well as comparing line item and total billing against pricing benchmarks to identify unbundling and excessive “mark-ups”.


Finally, the discount gained from the Plan Administrator or PPO will be evaluated against the findings of the Focused Claims Audit and other industry accepted pricing benchmarks.  Inappropriate payments can be recovered and guidelines for future processing communicated to the Plan Administrator.

Stratified Claims Audit

MCS will obtain from the Plan Administrator a report detailing all claims paid during the review period.  A stratified sample of at least 250 claims will be selected for audit. Stratification is used to ensure that the sample includes an adequate mix of in-network and out-of-network claims, various service types, various payment amounts and various providers.  Each claim in the sample will be audited in detail, including the following:


  • Validation of enrollment records through comparison of enrollment records provided by the clients with enrollment maintained in the Plan Administrator’s system;

  • Review of the EDI record or original claim documentation to verify that all data has been uploaded or entered accurately;

  • Review of provider coding, use of modifiers and application of clinical editing criteria to ensure the claim has been handled based on AMA standards and CMS Correct Coding Initiatives (CCI);

  • Review of amounts billed for reasonableness of charges, clinical appropriateness of services and appropriate application by the PPO network of contracted pricing;

  • Review of claims for appropriate documentation of authorization requirements and penalties where required authorization has not been documented;

  • Review of claims cost control procedures, including systematic application of UCR limits, review of claims for third-party liability and facility and other high cost service bill review;

  • Application of deductibles, coinsurance, copayments and out-of-pocket limits;

  • Handling of adjustments on claims including an audit trail and appropriate accounting of payments to providers and member accumulators;

  • Tracking of claims turnaround, from the date received to the date finalized;

  • Review of the patient’s claims history to validate there are no duplicate payments and to view the clinical reasonableness of the services billed versus recent claim activity for the patient;Application of calendar year and lifetime maximum benefits; and

  • Review of the remark codes included on the Explanation of Benefits to the patient and Explanation of Payment to the provider to ensure accuracy and adequacy of explanation.

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