Title: Health plan auditing: 100-percent-of-claims vs. random-sample audits

Authors: George P. Sillup, Ronald K. Klimberg

Addresses: Pharmaceutical & Healthcare Marketing Department, Haub School of Business, Saint Joseph's University, 5600 City Avenue, Philadelphia, PA 19131 USA. ' Decision & System Sciences Department, Haub School of Business, Saint Joseph's University, 5600 City Avenue, Philadelphia, PA 19131 USA

Abstract: The objective of this study was to examine the relative efficacy of two different methodologies for auditing self-funded medical claim expenses: 100-percent-of-claims auditing versus random-sampling auditing. Multiple data sets of claim errors or |exceptions| from two Fortune-100 corporations were analysed and compared to 100 simulated audits of 300- and 400-claim random samples. Random-sample simulations failed to identify a significant number and amount of the errors that ranged from $200,000 to $750,000. These results suggest that health plan expenses of corporations could be significantly reduced if they audited 100% of claims and embraced a zero-defect approach.

Keywords: auditing; healthcare expenditures; health plan performance; six sigma; zero defects; electronic healthcare; e-healthcare; medical claim expenses; self-funded claim expenses; random sampling; 100 percent auditing; health plans; health plan expenses.

DOI: 10.1504/IJEH.2011.039058

International Journal of Electronic Healthcare, 2011 Vol.6 No.1, pp.47 - 61

Published online: 14 Mar 2011 *

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