P&T
Our
Other
Journal
MediMedia Managed Markets

 

Many Not Eligible For Benefits Get Them Anyway

MANAGED CARE May 2004. © MediMedia USA
News and Commentary

Many Not Eligible For Benefits Get Them Anyway

MANAGED CARE May 2004. ©MediMedia USA

While small, innovative entrepreneurs across the nation certainly make their contribution, the U.S. economy is still very much influenced by those giant standbys, the Big Three car manufacturers, which have been known to come up with a few innovations of their own.

That's why it might behoove health plan executives and others to pay attention to the tens of millions of dollars saved by Ford and DaimlerChrysler as a result of auditing the health claims of employees.

What the companies found was thousands of former spouses and too-old children being provided employer-sponsored health coverage.

Ford began auditing employee health care claims in 2000 and has found about 50,000 ineligible dependents.

DaimlerChrysler began auditing in 2001 and has uncovered about 20,000 ineligible benefit recipients.

The Detroit News uncovered the audits when a Ford employee complained about deductions from his paycheck.

It turns out that the worker didn't know that his children, who were no longer entitled to benefits because they had turned 19, were still receiving health care subsidized by Ford.

The Wall Street Journal picked up the story from there, reporting that audit programs often find that between 10 percent and 15 percent of employees have an ineligible dependent on a plan.

"Most people aren't trying to beat the system," Michael Watson, vice president at Budco, a company that conducts audits, tells the WSJ. "The majority just don't understand the rules."

But some of it is out-and-out fraud, as Ford's experience helps illustrate. The company announced an amnesty period to allow any employees to examine their benefit package and eliminate dependents who are no longer eligible.

This helped cut a lot of ineligible people from the list. After the amnesty period, Ford began to perform random audits.

There's no discernible method to the audits but company spokeswoman Becky Bach promised that "eventually everyone is audited."

Employees who are caught face expulsion from the health plan and sometimes a huge bill for back premium payments. Some employees face both penalties.

The Ford employee mentioned above, for instance, must pay back $10,000 over two years.

"They passed out a letter and told you when to call to get everything situated," Herb Hibbs, vice president of United Auto Workers Local 862, tells the Detroit News. "Everybody in the whole Ford system had to send in something."