Predictive Modeling and Health Care Audits
Continued efforts to mitigate health care costs have companies looking more closely at predictive modeling and health care audits. Predictive modeling is used to control short- and long-term health care costs by identifying employees "at risk" for high medical costs in the future. The strategy also includes a focus on total population and addressing the entire health care continuum; emphasizing long-term behavior change; supporting health plan designs with strong communication and incentives; and creating data-driven programs tailored to individual risk, health status, and learning agility.
Lowering health care costs for businesses by providing employers with a better understanding of what is emerging inside their health plans and using data to turn this information into actionable strategies enables employers to identify risks before they surface.
We have access to critical health data—allowing for proactive identification—and reduction of risk to manage health plans are vital to successful predictive modeling. Health risk assessment surveys are used to get snapshots of employees' overall health statuses to build comprehensive personal health records, which integrate information from a number of data sources to provide a multi-dimensional profile of an individual's health.
Predictive modeling is key toward improving productivity and health care quality and ensuring services are in place to help those who need them. Employers should expect predictive models to provide them with the ability to understand the current workforce and trends, so they can make more informed business decisions on future health care costs. Companies are able to mitigate excessive costs and medical benefit claims by analyzing and interpreting real data to determine methods that will improve employees’ health, encouraging preventative care, and letting employees manage existing conditions more effectively.,
Health Care Audits
A growing number of employers are using dependent audits to remove ineligible dependents from their health care rolls in an effort to cut health care costs. It is important that employers follow up these audits with tightened procedures, such as requiring supporting documentation from employees, to ensure that ineligible dependents are no longer enrolled. For employers who have already exhausted the more traditional areas of cost savings such as raising contributions, restricting benefits, changing the plan designs, and introducing wellness and disease-management programs, these audits can be a much needed source of savings to a health plan. In general, dependent audits can find that 5% to 10% of dependents are ineligible, although the total can reach as high as 15%. However, determining the total savings as a result of these audits will not be immediate as claims may not have been filed on behalf of the ineligible dependent.
Audits can help employers avoid potential liability as well. Under Employee Retirement Income Security Act’s (ERISA) exclusive benefit rule, it is the plan sponsor's responsibility to make sure claims are not paid for ineligible participants. Claims that are paid for ineligible participants create some exposure to liability for plan sponsors. Furthermore, publicly held companies are obligated to remove ineligible dependents under the Sarbanes-Oxley Act, which requires management to sign off on the accuracy of quarterly financial data. However, it is rare for chief financial officers to regularly coordinate with their firm’s HR or benefits departments regarding this issue, leaving the firm potentially liable under the Sarbanes-Oxley Act.
The best times to conduct an audit are before or after open enrollment,—not during. Employers can offer employees an amnesty period when they announce an audit, to encourage employees to come forward voluntarily about any ineligible dependents. Providing an amnesty period is an efficient and amicable way for employer and employee to come to an agreement.