executive summary for companies 060609

Dependent Eligibility Verification Process for Companies

Executive Summary

Executive Summary-COMPANIES

Dependent Eligibility Verification Process™This process is being utilized by companies who want their HR Department to have the process and tools to perform their own audit as well as maintain eligibility compliance year-after-year. Many companies don’t want their personnel data leaving their network or decisions made by others. Maintaining dependent eligibility is not a one-time occasional task but a critical issue that needs to be continuously maintained. Maggio Solutions, Inc. has a complete, low-cost process, software, training, consultation and everything else you will need to add this capability to your company’s HR tool chest.

How Much Is Dependent Ineligibility Costing My Company? Before we address the total cost to your company of providing medical care to those you didn’t intend, let’s look at a few case studies. The national average for the cost of a dependent to an employer is $2,600/yr. In this first scenario, let’s assume that your employee has claimed three children as his step-children for five years where in reality two were his brother’s children and the third was his wife’s child whose previous husband had financial responsibility for their medical care by the divorce agreement. This was a cost to your medical plan in the past five years of $39,000. In a second scenario, consider two overage children who have attended school three years after high school but in reality only took one course per semester which does not meet the minimum requirements. This would have been a cost of $15,600. Also, carrying ineligibles increases the probability of a “large case” which could run into the hundreds of thousands of dollars. This simple process eliminates these costs and risks and can be accomplished in just a few months. If you are a publicly held company there is also the personal exposure to the Fiduciary under ERISA and SOX.

Now let’s look at the overall level of cost savings you could realize. Since the typical ROI for performing the Dependent Eligibility Verification Process™ ranges from 300–1000+%, it is probably one of the easiest financial decisions you will ever make. Subscribers have historically been on the “honor system” when claiming dependents which has resulted in significant errors over the years. It is a reasonable assumption that this is a high–payback opportunity. Industry trends have reported that between 5-15% of claimed dependents are ineligible either through “honest mistakes” or fraud. The opportunity for multi–year savings is unmistakable.

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Dependent Categories – It is surprising to realize how the complexity of defining dependents has increased in today’s society. In the past, intact families made it much easier to define a dependent. This makes it even more important to carefully define, communicate and verify if you are providing medical coverage to only those you intended. Today, it is much more complex as illustrated in the following figure:

INDUSTRY STANDARD APPROACH TO AN ELIGIBILITY AUDIT- The standard process consists of planning, amnesty, verification and closure phases. The Maggio Solutions Dependent Eligibility Verification Process™ is very flexible in how it can be implemented to match your company culture, HR staffing resources, and your goals. As an example, some companies may wish to just achieve compliance with few consequences for those who have falsely claimed dependents in the past.

Others may want to implement consequences for the more blatant degree of fraud which may range from recapture of past claims, removal from the plan until next open enrollment or even harsher remediation. Our process lets you decide and can implement any form of audit you decide is best for your company.

VARIATION OF STANDARD AUDIT REDUCES TIME AND COST BY HALF BUT LEAVES VIOLATORS WITH LITTLE CONSEQUENCES- While the industry standard is the four step process below, Maggio Solutions recommends a modification which will produce the optimum results with the least time and effort. This modified approach starts with detailed planning to customize the audit process. After

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this phase, we have combined the Amnesty Phase with the Verification Phase which reduces the audit time, mailing cost and labor by half. Overall time of the actual audit can be reduced from ten weeks to four. This variation sends the verification package to each enrolled employee with dependents, and clearly identifies the specific documentation that they must submit for review. They have four weeks to submit the documentation. Included in this Verification package is the Amnesty form. If during this four week period, and after reviewing the clearly written qualifications for eligibility requirements they decide that they may have made an error, they can voluntarily remove a dependent from the plan by simply placing an “X” in the “ineligible” box on the affidavit for the previously claimed dependent(s). For other dependents that they feel are eligible, they will return the required documentation along with the affidavit. This method provides an efficient and “One-Time” process which will increase voluntary removal and rapid completion of the audit. This variation will reduce the amount and cost of multiple home mailing and processing while also reducing the amount of effort required by your employees. The downside of this is that many who have been knowingly claiming ineligible dependents are let “off-the-hook”; however, it does achieve full eligibility verification with the least cost and effort.

THIS VARIATION IDENTIFIES ALL VIOLATIONS AND LETS HR DECIDE THE APPROPRIATE CONSEQUENCES- If you would like a plan that identifies all employees who have been claiming ineligible dependents, the same process is implemented but the verification package does not have an Amnesty affidavit. They must only submit the required documentation for those they have claimed. Violations,

will be clearly identified by the process. The degree of violation would then be clearly available for your HR department to determine the appropriate consequences. While this is a more heavy-handed approach, it does provide the benefit of identifying those individuals who have been knowingly “stealing” from the company.

OTHER OPTIONS FOR CONDUCTING YOUR OWN AUDIT- There are several other approaches to an audit that we can discuss in our private executive webinar that we can schedule at your convenience. These include dividing the audit into phases or groups by region, division, or percentage of total population. It is not necessary to complete a full audit at one time. Complete a third in the spring, a third in the fall and the balance next year. The important thing is to do something. Even if you do a smaller random percentage now, you create a company cultural awareness that this is important and is taken seriously by the company. If you would like to have help, we also have complete processes for your TPA which provides a team effort approach. Finally, Maggio Solutions has a network of TPAs which have

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our process that will give you better control over your audit as well a level of participation that you define. Sometimes you may want the option to make some decisions behind your closed doors. Our TPA process provides a “Red Flag” option which will move the eligibility decision to you for those special circumstances that may appear in an audit from extreme fraud, as well as cases where compassion, sensitivity and in certain circumstances exceptions may be appropriate. Nobody knows your employees and special circumstances of your company like you do.

Maggio Solutions- Dependent Eligibility Verification Process™Maggio Solutions offers the complete Dependent Eligibility Verification Process™ for your company to maintain compliance year-after-year with your current HR staff. Our process includes much more than the Dependent Eligibility Auditor™ software and other tools necessary to manage all the details of an audit. The comprehensive process books provide an extensive audit planning template which guides you in developing a custom audit plan specifically for your company culture and situation. It also presents “best practices” and “pitfalls “to avoid. The eighty-page planning template also drives your company towards a comprehensive audit plan and tests your decisions with various scenarios. This ensures that you have pre-decisions made for various outcomes, thus maintaining an even handed, standardized approach for all your employees. The process also includes a training manual for your auditors, HIPAA compliance guidelines, pre-audit employee communications, lunchroom posters, and everything else you will need to conduct a successful audit.

The engine behind the audit process is the Dependent Eligibility Auditor™ software. The DEA controls and manages all parts of the audit, develops “on-demand” reports of the audit status, provides capability for scanning all in-bound documents, prints automated mass letters, and manages every open action item. At the conclusion of the audit it produces a complete audit archive of every interaction with each subscriber and a scanned image of every document for future reference. Our client/server software can be integrated with your existing database system.

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Dependent Eligibility Auditor™© Software

Key Functionality of Dependent Eligibility Auditor™ Systems: Integrated with your company back-end database systems Imports your Subscriber/Dependent information from your existing HR database An audit dashboard provides a status display of the audit and real-time calculation of

savings achieved Auto-generation of all personalized out-bound correspondence Auto-generation of all out-bound correspondence in up to nine languages

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Auto-scanning of inbound documentation directly into database A large number of instant reports on a variety of topics in real time Full audit team role-based access permission security For large companies, capability for multiple, simultaneous audits by site, division, etc. Easy customization to meet specific needs Permits dividing a large audit into smaller groups to fit your staffing Review/Appeal Board dual screen display of all records and document images to improve

efficiency of the Review and Appeal processes Capacity to support 300,000 subscribers and associated dependents with links to all

documents and Helpdesk inquiries for ease of review and eligibility decisions Supports up to 15 simultaneous desktop clients - even in remote locations Outbound correspondence and inbound document scanning can be provided by our

HIPAA- approved fulfillment house (mass mailing centers)

Closing Statement- In closing, we believe that maintaining your benefit plan dependent eligibility compliance is an important component in reducing your annual benefits plan cost. The Dependent Eligibility Verification Process™ can be a key tool within your HR department to maintain eligibility compliance. Out-sourcing this important task to others means placing important decisions outside of your control. Call us if you would like more information. We also offer a free 30-minute executive webinar on the complete process as well as demonstrate the software..

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ABOUT MAGGIO SOLUTIONS, INC.Maggio Solutions, Inc. is a Benefits Process Solutions firm based in Thousand Oaks, California. Our focus is to identify process leaks that frequently occur in a benefits plan and develop point solutions to address them. Dependent ineligibility is a perfect example of an infrastructure leak that costs you year-after-year.

Maggio & Associates has just celebrated its 21st year. More information is available at our website at www.maggiosolutions.com.

Maggio Solutions, Inc.Benefits Process SolutionsP.O. Box 1978

Thousand Oaks, California 91358Phone: 805–230–2592 or [email protected]

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executive summary for companies 060609

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