Surviving a Claims Audit (Part 1)
By Kevin Quinley
For any claims manager, supervisor or adjuster, claim audits are inevitable. They are also about as much fun as a root canal. Claim audits need not be frustrating or mysterious, however, if the claim staff has prepared properly. What follows is a discussion to help you prepare for a claim audit, anticipate what the auditors may need, and develop a procedure for handling claim audits.
DEFINING FOUR KEY ROLES
In any claims unit, a minimum of roles must be defined ahead of an audit. In small companies or in small claim departments, one person may hold multiple roles.
For any audit, there should be a most responsible person. This may be defined by the hierarchy of the insurance company, TPA or claim department. The most responsible person is the individual with the most accountability for claim operations. The critical function of this role is to provide leadership and to communicate to the auditor or constituency that the company or claim department intends to comply with all rules and regulations.
Another role, one that must be chosen in advance, is the escort. This role may be key to the success of an audit. The escort should be familiar with the everyday operation of the claim department, know who will have answers to the auditor's questions, and understand the company's policies regarding specific situations. The escort should be prepared to accompany the auditors at all times. The escort's job includes meeting the auditor’s needs, guiding the auditor to appropriate subject matter experts (SME’s) and communicating internally within the insurance company, TPA or claims department as to how the audit is progressing.
When an auditor has asked for something that the claims team is not prepared to provide, best practice is to have defined ahead of time a person who can explain the company's policy on such matters.
Additionally, one or more subject matter experts should be identified. These are specific individuals who may be called upon to answer or questions from the claim auditors. A list of all subject matter experts with their areas of expertise and authority should be created and updated as claims personnel change. Role-playing before a claims audit help prepare subject matter experts for the kinds of questions they are likely to face. Preparing subject matter experts and ensuring that the list of subject matter experts is accurate or some of the most highly leveraged preparation activities in which a claims unit can invest.
It may also be necessary to have one or more designated “runners.” Among other duties, runners locate documents, find subject matter experts and tell them when to appear, and notify department managers if the auditors are going to enter their area. It may be less difficult to recruit a runner once you sell the fact that they will be “in the know” about the claims audit.
When a claim on order contacts you to notify of an upcoming visit, you may or may not have the ability to negotiate timing. Nevertheless, let auditors know if there is some extraordinary event about to occur, such as an all-day meeting occupying the entire claim team, a huge renewal, office move, change in computer operating system, etc. The auditor may then change his or her plans, or may not.
A winning football team has clearly defined roles. Same with a winning claims team. Assign these four roles in advance of a claims audit to apply some pain-killing Novocain to the claims equivalent of a root-canal!