Planning to conduct a dependent eligibility verification (DEV) audit at your company? Good idea. Verifying the eligibility status of your employees’ dependents makes sense at the start of a new year, especially if there are changes to your insurance plan that can impact coverage or cost.
An eligibility review of all dependents enrolled on your plan(s) can potentially reduce your healthcare spend by 3 to 5% by identifying those not eligible for coverage—an average of 5 to 8% of enrolled dependents.
To achieve an accurate outcome, you need to develop a plan and strategy for your audit, just as you would do for any other company undertaking, to ensure that the data is gathered properly and without causing any unnecessary friction or apprehension in your workplace.
Step One: Decide who will conduct the DEV audit
While some companies may rely on their HR people to handle the auditing process, there are inherent drawbacks to that decision, from morale issues to time and labor factors. With fewer staff people and no secure system in place to handle all the information and communication required to effectively perform this process, keeping it in-house presents significant challenges.
A wiser choice is to hire an outside firm to conduct your audit. However, do your due diligence before handing over your employee files. Here are some important aspects to consider:
Experience—Your employees are the most important asset of your organization. Experience and knowledge are critical when providing the highest level of support. You want an auditing firm with a proven track record of working with multiple organizations and all types of employees, and whose core business is DEV, with a range of services that improve your bottom line. Since the firm will serve as an extension of your HR department, your benefits team should feel confident that the company knows how to work with the employees and the work environment.
Results—The firm you choose should demonstrate measurable, sustainable, documentable results in key areas: effective communication, responsiveness, support, first call resolution, and adaptability to unique employee situations. A results-oriented program is one that balances employee relations with audit compliance.
Data security—The company should have the appropriate technologies to protect the privacy and confidentiality of sensitive data. Verify the firm’s qualifications and certifications, especially the SSAE 16 SOC 2 Type II and HIPAA Compliance certifications, and that it has been annually re-certified and has undergone an annual review from an independent auditor to ensure it is in full compliance. Most importantly, verify the firm that you select actually meets all of the requirements and can effectively carry out all of the terms of the Business Associate Agreement.
Step Two: Implement best practices methodology
When performed correctly, annual cost savings from a DEV audit could potentially reach into the millions for a company with more than 3,000 employees. Even for those with fewer employers, the amount saved can be substantial.
But to achieve that ROI, the audit itself must follow best practice methodology. Employee and plan sponsor experience with the process is just as important as cost savings. You should measure your DEV auditor’s ability to produce effective communication, responsiveness, support, first call resolution, and adaptability to unique employee situations.
Communication—There is no such thing as over-communication. Instead of a generic, one-time communication, you need continual, trustworthy communication in all forms: letters, email, phone and online. Your auditor’s DEV communication campaign should support a series of additional, as-needed print communications—introduction letters, disposition letters, letters for non-response and appeal related letters. Customized and co-branded letters ensure employee engagement and trust.
Secure employee portal—Employees should be able to simply and securely upload their verification documents via a co-branded website and customized secure employee portal. E-communication makes the process easy on your employees and attributes to higher participation rates.
U.S.-based call center and audit center support —A domestic operation is preferred, from a quality control and data security perspective, with a U.S.-based center providing employees with the confidence and peace of mind knowing their documents are handled safely and securely. Given the sensitivity of the process, all information exchange—call center, mailing, auditors—should be conducted by personnel located within the US and not by those gaining access to the data from outside of the organization or the country. An organization centered process includes audit service representatives who understand the nuances of U.S. healthcare regulations, like HIPAA.
Sufficient response time—There’s no magic number when determining employee response time. While 30 to 45 days may be adequate for some businesses, other businesses may need up to 90 days to accommodate those working outside of standard business hours. Ideally, the schedule should ensure employees have sufficient time to complete the paperwork, while not so extended as to encourage them to wait until the last minute. Your DEV auditor should be flexible to adapt to your unique corporate dynamics.
Adequate appeals phase—The appeals phase, typically 30 days, is for those determined to be non-respondents. This gives employees a final opportunity to respond to the audit and have their dependents reinstated. Few employers want to carry the burden of handling all the appeals at the end of the process, and prefer to have the auditor take on that responsibility as well.
The last step of the dependent eligibility verification audit process is planning for the next one. This type of audit isn’t a “one and done” deal, but rather one that needs to be done continuously as new dependents are added to the plan(s). Ongoing verifications maintain plan integrity, ensuring those who are eligible for insurance receive the coverage they are entitled to and eliminating from the plan those who are not qualified.
Once the initial verification is performed, all newly added dependents should be reviewed as they join the plan, and a periodic, i.e. 18-24 month cycle, review of spouses that have been enrolled since their last verification. This is primarily driven by the fact that employees do not always report their divorces.
Having a best practices methodology in place further protects the plan’s assets, which will be the topic for a future blog post.
For more information, download our “Seven Things You Should Know Before Hiring a Dependent Eligibility Auditor” white paper.