All Dependent Eligibility Audits Are Not Created Equal

Response Rate is Crucial

As employers seek out money saving options in their health care plans, dependent eligibility verification audits have grown in popularity. Recent national studies show that 74% percent of employers plan to do a dependent audit in 2012, up from 69% in 2011. And there’s good reason to do so:  the 10-14 week process identifies bottom-line savings of 3-5% of annual health expenses without changes to carrier or plan design. 

More often than not, employers contract with third party companies in order to ensure that the audits run smoothly and securely, since verification is typically too time-consuming to do in-house. All dependent eligibility audits, however, are not created equal.  

As the Director of Operations for dependent audit at ContinuousHealth, I can tell you that horror stories abound. Clients often come to us saying that they attempted a project internally and overwhelmed their understaffed Human Resources department. Other clients say they used a third party and their Human Resources department was still bombarded because the communications weren’t clear. They cite experiences from other firms saying that employees were treated like criminals when they truly didn’t understand what constituted a dependent.

And, overwhelmingly, we hear about companies that drag verification on for months but still can’t get as much as 30% of the population to comply.

As Eric always says, “If the ship misses the harbor, rarely is it the harbor’s fault.” High response rates are a critical success factor for dependent audits. A dependent verification is not rocket science.* It should be based on a solid employee approach, one that educates and assists employees to complete, with multiple access points (mail, web, fax, phone and email) and hard-to-ignore communications. There needs to be consistent coordination between HR and a dedicated audit Account Manager, with the ability for the employer to track real time statistics. And above all, the external communication and contact with the employee must be such that response rates are driven into the 90% range.  The only thing that’s going to give your client credibility at the end of this is that the project was very, very thorough.

When we began doing these projects in 2008, at the request of one of our other advisor partners, we found 3 root causes of ineligibles:  lack of awareness of what constitutes a dependent (on family coverage; call this person “family”), timing (recently or not-so-recently divorced), and fraud.  We made a conscious decision to approach each employee as though his ineligible dependents are the result of a lack of awareness. This “Compassionate Compliance” approach has evolved into the leading method for high response/low disruption projects. In a project where the issue is a lack of awareness of the definition of a dependent, can you really trust the results if 10-20% of your population doesn’t respond?  The entire integrity of the project is compromised.  We’ve had clients who said that if fewer than 90% responded, they wouldn’t even drop the self-identified ineligibles. 

A dependent audit should not be an exercise in kicking undereducated or lazy people off the plan. If you do it right, you should be getting a 97% response rate consistently. We recently had a client finish the project in 8 weeks with a 99% response rate, another in 14 weeks with 100% (both had savings higher than a 3:1 return on investment). These results are feasible with the right audit company. 

It’s possible to design an audit where you find 20% ineligible, but we don’t think that’s the goal of most employers. When we initially designed our audit, we approached it with a marketing mindset: what does it take to get everyone to respond? Our job is to do the most thorough project we can, generating maximum compliance and minimal business disruption. We never want anyone to lose coverage because they were unaware of the verification.

Our company was one of the first to market with this product. We offer the industry’s leading response rate as well as the highest return on investment guarantee. If you’re like most of our consultant partners, you’re suggesting a dependent audit or ongoing eligibility maintenance to your clients this year.  There is a difference in the firm you choose and the approach they take. We would be honored if you would choose ContinuousHealth.

Kelly Hudson
Director of Operations
ContinuousHealth, LLC
http://www.continuoushealth.com

This article was first featured in the March 20th edition of our e-newsletter, Directions. If you'd like to receive that weekly email, contact directions@continuoushealth.com. (Your email will never be shared, sold, or otherwise distributed, and you will receive only the type of content for which you sign up.)

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