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School districts across five counties saved $2.2 million in health care costs following a recent dependent verification audit.
Some 38 districts, including all those in Wayne and Ontario counties, Wayne Finger Lakes BOCES and Finger Lakes Community College, in the Non-Monroe County Municipal School District Program averaged a savings of $20,000 to $25,000 per district after the audit confirmed 1,100 dependents were ineligible for the benefits they were receiving. Those dependents have been removed at an estimated cost savings of $2.2 million.
The program, a health insurance consortium, seeks contracts from health insurance providers to bring its members the best coverage at the best price. Currently the program carries a contract with Excellus, bringing the insurance provider almost 12,000 enrollees. Headed by Steve Smola, owner of Smola Consulting out of Rochester, the audit examined some 11,400 contracts where dependents were listed on the policy and employees were asked to show proof of eligibility for each dependent. Any employee who refused to comply ran the risk of losing their health insurance.
“This was not meant to find ineligibles, but to make sure everyone is eligible,” Smola said. “The intent is to say, ‘Hey, there’s rules.’”
Industry standards expect a 5 to 8 percent return on such audits. The consortium came in at 7 percent, Smola said.
“To me it’s a pretty staggering number,” Smola said of the results. “In one sense I’m happy to see it — it’s a pretty substantial money savings.”
The consortium as a whole reports $100 million in claim expenses annually. The audit’s findings and subsequent savings are based on 2010 claims with the assumption that the dependents removed would have been ineligible for the entire year, Smola said.
The audit found that the most common abuse was divorced individuals who continued to carry their spouse. Considering school districts pay 80 to 90 percent of premiums, the audit’s findings exceeded expectations.
“It’s a huge amount of money for the whole consortium,” said Lyons School Superintendent Rick Amundson, who is also a consortium board of directors member. “It was the right thing to do. It’s paid for itself and actually exceeded my expectations.”
Smola said above all else, the audit accomplished what it was intended to by ensuring eligible employees are covered and taxpayers aren’t paying for ineligible dependents. The audit also produced one standardized enrollment process for the entire consortium to ensure employees are enrolled properly from the start. Smola said health care reform will simplify enrollment further and many ineligibles who were removed during the audit will become eligible again when open enrollment begins in July due to changes in health care laws, which raised the age for dependents to 25.
The findings will also reduce next year’s rate increase slightly. Lower premiums will be a further savings to the members of the consortium.
Overall, Smola is satisfied with the audit’s results.
“At the end of the day, we think that district premium rates will be reduced about 1 percent,” he said.
School districts across five counties saved $2.2 million in health care costs following a recent dependent verification audit.
Some 38 districts, including all those in Wayne and Ontario counties, Wayne Finger Lakes BOCES and Finger Lakes Community College, in the Non-Monroe County Municipal School District Program averaged a savings of $20,000 to $25,000 per district after the audit confirmed 1,100 dependents were ineligible for the benefits they were receiving. Those dependents have been removed at an estimated cost savings of $2.2 million.
The program, a health insurance consortium, seeks contracts from health insurance providers to bring its members the best coverage at the best price. Currently the program carries a contract with Excellus, bringing the insurance provider almost 12,000 enrollees. Headed by Steve Smola, owner of Smola Consulting out of Rochester, the audit examined some 11,400 contracts where dependents were listed on the policy and employees were asked to show proof of eligibility for each dependent. Any employee who refused to comply ran the risk of losing their health insurance.
“This was not meant to find ineligibles, but to make sure everyone is eligible,” Smola said. “The intent is to say, ‘Hey, there’s rules.’”
Industry standards expect a 5 to 8 percent return on such audits. The consortium came in at 7 percent, Smola said.
“To me it’s a pretty staggering number,” Smola said of the results. “In one sense I’m happy to see it — it’s a pretty substantial money savings.”
The consortium as a whole reports $100 million in claim expenses annually. The audit’s findings and subsequent savings are based on 2010 claims with the assumption that the dependents removed would have been ineligible for the entire year, Smola said.
The audit found that the most common abuse was divorced individuals who continued to carry their spouse. Considering school districts pay 80 to 90 percent of premiums, the audit’s findings exceeded expectations.
“It’s a huge amount of money for the whole consortium,” said Lyons School Superintendent Rick Amundson, who is also a consortium board of directors member. “It was the right thing to do. It’s paid for itself and actually exceeded my expectations.”
Smola said above all else, the audit accomplished what it was intended to by ensuring eligible employees are covered and taxpayers aren’t paying for ineligible dependents. The audit also produced one standardized enrollment process for the entire consortium to ensure employees are enrolled properly from the start. Smola said health care reform will simplify enrollment further and many ineligibles who were removed during the audit will become eligible again when open enrollment begins in July due to changes in health care laws, which raised the age for dependents to 25.
The findings will also reduce next year’s rate increase slightly. Lower premiums will be a further savings to the members of the consortium.
Overall, Smola is satisfied with the audit’s results.
“At the end of the day, we think that district premium rates will be reduced about 1 percent,” he said.
