Employers increase use of eligibility audits for workers' dependents to reduce health care costs, survey finds

Employers are becoming more aggressive about checking the health coverage eligibility of workers' dependents as a way to reduce health care costs, according to a recent Watson Wyatt survey, the Pittsburgh Post-Gazette reports.

The survey of 489 employers for the National Business Group on Health found that audit reviews are the fastest growing change that companies are making in their health care programs, outpacing health risk appraisals or case management improvements.

Susan Helke, practice leader for Watson Wyatt Worldwide's Group and Health Care consulting practice, said that more companies are conducting eligibility audits because of their short-term need for money and that improvements in technology and administration make the audits faster, less-costly and more effective. An estimated 5% to 12% of employees' dependents are ineligible for employer-sponsored plans. Daniel Priga, a principal with Mercer consulting said the firm "conservatively" estimates annual savings of $1,900 for every ineligible dependent removed from health plans. Michael Browning of the consulting firm Chapman Kelly said, "We have completed dependent eligibility audits for over 50 employers and we have yet to have a case where the employer did not receive a return on investment of over 300% within one year. Many times it is well over 1,000%." He added that demand for audits "during the first three months of this year has surpassed the demand during all of last year."

According to Priga, the largest category of ineligibles found during audits are workers' children who are in their 20s and are not in school or have recently graduated. However, he said the error usually is inadvertent and "[o]ur results would not tend to show there is a lot of fraud going on."

The Watson Wyatt survey found that companies that have conducted eligibility audits within the past three years said they have been less likely to raise employee copayments, increase employee premium contributions or restrict eligibility (Twedt, Pittsburg Post-Gazette, 3/25).

A summary of the survey is available online.