CEO/CFO– Don’t let your auditors forget the cash back bonus!
When a company acquires another the purchaser generally does so assuming all of the company assets and liabilities. One of the hot areas to find fast cash is going back and auditing the workers compensation claims. Where overcharging has occurred the company can recover money back and in the case of a merger you have two companies to “check the cushions” so to speak. Not small change once you find out you can go back multiple years and it can be 10% or more of a given year.
If your third party administrator (TPA) is not very efficient [and how do you know really if you don’t check it with an independent third party source,] the recovery figure can raise to 20% of total claims in a given year.
Businesses have seen costs rise in everything healthcare related and there can be welcomed relief in doing an independent claims audit. Most of the software used by many doesn’t have the efficient capabilities to cover all the issues: Areas like out of date fee schedules; as most states are updated annually, some are even semi-annually. Ineffective interpretation of fee schedules, they can be complex and lengthy. Data/coding mistakes, incorrect jurisdiction -Example: a worker employed in Illinois is injured in Iowa. Incorrect reimbursement of modifiers, carve-outs not removed –Example: Some fee schedules require special reimbursement for implants.
If your company has been on the acquisition bandwagon this is another way to get cash back to the bottom line. Important note to remember: If you’re planning to sell a division, audit before you sell in order to get your best deal before you’re headed out the door. Depending on the size of the company you can have ALL the money recovered within 120 days of project start.
These audits are generally done on a contingency basis and you pay your recovery fee out of the money returned. Doing it this way takes a higher skill set, but you have no capital outlay, so you carry no financial risk. If you’re administrator is handling everything efficiently, then you have nothing to pay out, and know your system has a clean bill of health so to speak, but the answers are in the analytics, you have to look at the numbers. But for the internal auditors this is simply found money, so don’t walk away from it. There are lots of new companies with great ideas to drive down the cost of claims, seeking them out to make sure you were not overcharged is worth the effort. Don’t cheat your company or your stock holders; look at the numbers.