While employers are beginning to grasp the savings resulting from health care audits, they are trying to get a handle on their involvement in the auditing process.

“Audits do take time and energy on employers' part, but vendors take as much off their plate as possible,” said Mark Rucci, senior vp for Gallagher Benefit Services Inc. in Princeton, N.J.

Employers' involvement in auditing processes typically occurs upfront. Dan Priga, principal and national business leader for Mercer Health & Benefits L.L.C.'s performance audit group in Pittsburgh, said medical claim audits require employers to collect and make certain documents and financial information available to auditors for review.

For dependent eligibility audits, Mr. Rucci said employers must set parameters and goals for a project, as well as provide dependent data that is the baseline for audits.

Keith Bird, vp of sales for Impact Interactive, an audit company in Suwanee, Ga., said an employer, along with the auditor, should analyze the explanation of its medical plan's provisions and how it operates so everyone is in agreement.

Companies also need to communicate with their employees about upcoming dependent eligibility audits because employees could be adversely affected if they don't follow instructions, Mr. Priga said. Their dependents could lose coverage or employees could be terminated for providing false information. Auditors often will help clients design and implement these communication plans and even provide call centers that employees can contact with questions.

Another critical role for employers during the initial auditing process is thinking ahead and establishing guidelines about handling the many potential complex issues surrounding individuals' circumstances that could stem from audits, Mr. Priga said.

“There are a lot of considerations that need to be taken and decided upon before you even begin the audit so that you have a plan laid out for what you're going to do in those situations,” Mr. Priga said. “You don't want to be making those decisions on the fly.”

Following these steps, auditors typically take control of the auditing process, collecting data and using their exclusive technology.

Traditionally, dependent eligibility audits have been paper-intensive, requiring employees to provide documentation—tax forms, marriage licenses birth certificates, etc.—to substantiate their dependents' eligibility for health care benefits. Although such documents often still are required, they typically supplement the technology now used for audits.

Some auditing companies use Web-based systems for dependent eligibility audits that take into account a plan's eligibility rules while surveying employees about their families and dependents. The systems then correlate the rules with the employees' responses and determine who is eligible for benefits. Software for claim audits is used to select an unbiased audit sample and measure things such as whether claims are processed correctly or other parameters put into the program, Mr. Rucci said.

Once the audits are complete and auditors report the results, employers become involved again—for example, removing dependents who don't fit eligibility requirements or holding their TPAs accountable for whatever results were found in claim audits.

Experts said audits aren't worthwhile if employers don't follow up afterward by creating standards and processes to address issues that come to light. After an independent claim audit, employers need to ensure their administrator responds to any problems with a remediation plan, said Greg Mansur, national leader for the claim audit practice at Watson Wyatt Worldwide in Los Angeles.

“Staying on top of your TPA really lets them know you care,” Mr. Rucci said. “Some employers will just write them a check and (TPAs) never hear from them again. The level of service employers will get from their TPA is related to the amount of audit activity they do and how well they stay on top of their vendors.”

Following dependent eligibility audits, employers should change enrollment procedures for incoming employees or new dependents going forward so the health care rolls don't become tainted again, he advised.

“It makes no sense to do an audit and not change your ways,” Mr. Rucci said, “because as soon as it's over, the results will just erode again.”

—By Kristin Gunderson Hunt