A survey conducted by Kroll and Internal Audit Foundation, concluded “80% of Internal Auditors face barriers while getting Involved in Fraud Risks Management”; this applies as much to health insurance segment as well.

The internal / external compliance audits of healthcare and insurance companies are treated like a routine physical check-up or yearly flu shots. Although, it evaluates process compliance, the crucial part of rationality of admissible claims does go undetected and that is what affects the bottom line.

The fraud in the health insurance sector has been on the rise in the past five years is a foregone conclusion. The most cited reason is that majority of the internal auditors’ face barriers while getting involved in fraud risk management. It has been evident that healthcare organisations that rely wholly on internal checking and auditing irrespective of how effective they may see can face significant pitfalls. The audit companies may lack expertise to conduct forensic medical audit – a must for containing fraud and abuse.

They may fail to uncover coding and billing improvement areas, compliance pitfalls, or even deserved revenue that is not getting captured. Here are a few key points why an independent external entity should be considered for medical audit to ensure the ICR and claim pay-outs are as per the established benchmarks or rational and customary standards.

One of the biggest advantages is that independent auditors are not affiliated or influenced by any obligations. Although internal staff may have the best intentions or are honest they might not be in the best position to bring the errors to light. The information provided to the internal staff may be limited to information given as per the set procedure. There can also be a case of a vested interest to protect a decision erroneously made by a colleague or themselves. The external auditor does not have any such compulsions looming over them and are in better positioned to display actual picture.

External assessors/ auditors have a specific set of skill set to carry out the auditing task. They are also up-to-date and in sync with the industry-wide issues and practices. The home-grown procedures for auditing may be narrow to identify problem areas. The external auditors are also fully informed and have the necessary external resources available to get to the bottom of the issue. For example – most auditors should have industry practices to compare, knowledge of industry trends, government guidelines and prevalent Standard Treatment Guidelines. Furthermore, to having access to industry resources, third party (external) auditor has knowledge of ever-changing regulatory landscape which assists them to perform the job better than office staff who also have other duties and responsibilities.

The external auditor will be entirely focused on the audit process. He or she is not likely to get distracted performing other duties as part of their everyday job. They will also apply their broad-based knowledge and resources to the specifics of your functions. Using an external auditor will also allow the staff to continue with their normal duties thus running the day-to-day practice efficiently and protecting it from any revenue loss due to interruption of everyday business activities.

The external auditors are in a better position to bring the finding to the management’s attention and command the required level of attention. They can also suggest a process improvement which has proven successful in similar practice environments. Their experience and expertise will help save you days of effort and help you drive away from ideas which may seem like a solution that has been tried elsewhere and proven ineffective. The external auditors can also assist in implementing a change of policies and processes successfully by testing the implementation by follow up (re)audit, which helps stabilise the new processes and policies developed to fill in any gaps exposed in the audit.

There is practically no disadvantage to engaging with a third party to conduct a medical audit. The audit will expose present or brewing issues you need to attend or simply validate that your current system is working well. An audit from the external entity provides you with creditability with the board and investors. Mostly it assures you that your compliance programs and revenue channels are being managed effectively.

INCHES Healthcare Pvt. Ltd understands the pain points of the insurance industry and has pioneered medical audit since 2010, successful analyzing over 2.2 million cases and manually auditing over 95,000 cases. With a judicious mix of technology, analytics and medical intelligence, INCHES offers solutions towards effective risk mitigation and loss containment.