The following case studies briefly illustrate some of the benefits that have been achieved, ranging from substantial rebates to significant fee reductions to the establishment of more advantageous contract provisions to the comfort of knowing that the company health plan won't turn up sick due to Sarbanes-Oxley. The common denominator throughout is that HDM validates and expands the promise of self-insured health plans, giving employers greater efficiency, economy, and accountability.

Client Problem:	A leading manufacturing company's internal audit department asked HDM to perform an audit to assure compliance with Sarbanes-Oxley requirements.
Audit Approach:	The customer had multiple healthcare vendors including medical plans and a pharmacy plan. HDM performed a comprehensive audit of each vendor that included a claims audit (paid and denied), business process review and financial reconciliation for each plan administrator. An operational audit was conducted to evaluate the control environment and assess the risk of fraud or error, the adequacy of internal control policies, and the potential of irregularities. Contract compliance audit was conducted to determine if administrator was paying claims according to the SPD.
Significant Results:	HDM found multiple instances of non-compliance with the Summary Plan Document. HDM found annual maximums not being administered properly and an Other Party Liability process did not adhere to NAIC rules, resulting in excessive and erroneous payments.
Implementation of Recommendation:	HDM worked with our client and plan administrators to correct the problem and established performance standards and quality assurance measures for contract renewal. HDM agreed to perform an ongoing service to monitor performance and compliance of the vendors.
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Client Problem:	An HDM customer had experienced an increase in total health benefit expenses that averaged over 20% over a four year period. They asked HDM to measure the performance of healthcare suppliers.
Audit Approach:	Test and measure against national and regional benchmark data. Measure inpatient, medical & surgical utilization, member utilization and two year trend data. Analyze provider contract and discounts for cost savings.
Significant Results:	Analysis of the client's prescription drug cost showed that utilization and expenses were not being managed by the PBM. Retail costs were being influenced by Brand Drug utilization, and not the use of generic substitutions. Mail order utilization had not been managed or increased, resulting in lost savings and reduced rebate opportunities.
Implementation of Recommendation:	HDM recommended a formulary design and plan to emphasize generic utilization and incentives to increase consumption of mail order benefits. Savings were projected to reduce drug spend by double digits annually.
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Client Problem:	A Fortune 500 firm was receiving complaints from employees experiencing claims errors. HDM was asked to determine if the plan administrator had sufficient audit and quality assurance programs in place. HDM was asked to identify and assist in recovery of overpayments.
Audit Approach:	HDM performed analysis on 100% of claims for a two-year period to determine if claims were being paid according to the Summary Plan Document and industry standards. HDM performed analysis onsite at the administrator to validate findings from the claims analysis.
Significant Results:	HDM determined that claims overpayments exceeded a significant percentage of paid claims. The administrator had a program in place to recover overpayments, but recoveries were not being posted to the employer's account and credits were not reflected on billing statements to client.
Implementation of Recommendation:	HDM negotiated recovery of overpayments for the customer. The administrator implemented a quarterly financial statement, reconciliation, associated banking statements analysis designed by HDM to show recoveries and their credits.
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Client Problem:	Employees were receiving EOBs (Explanation of Benefits) that were not consistent with plan design. Third-party administrator was paying claims not in compliance with the Summary Plan Document?
Audit Approach:	Test for non-covered benefit payments (e.g. cosmetic surgery exclusion, limits on chiropractor) and coverage limits (co-pays and deductibles).
Significant Results:	Coding issues and manual adjudication of benefits created errors and inconsistencies. No internal quality assurance testing and no SAS-70 to assure contract adherence or performance measures.
Implementation of Recommendation:	Created reporting that measured adjustments and customer service issues to monitor compliance. Established performance standards and independent verification to assure compliance with performance standards.
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Client Problem:	A Taft-Hartley group experienced significant swings in weekly paid claims funding and asked HDM to determine why it happened.
Audit Approach:	HDM performed a financial and funding reconciliation, utilizing administrator financial reports and customer banking records. HDM also performed an operational review. HDM reviewed weekly funding requests and reconciled all funding and payment banking records. HDM measured inventory levels, auto adjudication and paid claims over an 18 month period.
Significant Results:	HDM determined that claims inventory had built up due to system upgrades and modifications. The result was claims delays and inconsistencies in payments.
Implementation of Recommendation:	HDM recommended the administrator notify our client of business process changes and system enhancements. Our client implemented HDM's recommendation of quality assurance standards with economic penalties for failure to meet standards.
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Client Problem:	A large employer group had an agreement with one of the large pharmacy benefit managers to administrate it's pharmacy benefit program. As part of that agreement, the PBM would share rebates that come from the drug manufacturers. Our customer saw fluctuations in quarterly rebate check and asked HDM to investigate.
Audit Approach:	HDM performed analysis on 100% of drug claims to support a rebate audit. The rebate audit verified the methodology used by the PBM in determining how the rebate dollars were calculated. HDM used findings from the claims analysis and an onsite review of drug manufacturer agreements to verify that paid rebates were calculated correctly.
Significant Results:	HDM found that quarterly rebate were calculated incorrectly and negotiated recovery of under reported rebateable claims.
Implementation of Recommendation:	HDM recommended ongoing review of rebates to determine that the correct dollar amount is being shared with our customer.
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Client Problem:	Our customer has an ASO arrangement with a TPA that includes a contract for care management services (case management and disease management). Our customer asked HDM to measure the economic value of these services and determine if the TPA was providing these services in accordance to contract terms.
Audit Approach:	HDM performed analysis of 100% of claims to extract cases where likely intervention should occur. As a result of an onsite review of cases we tested and reviewed case management reports and ROI analysis/savings reports.
Significant Results:	HDM was able to verify that contracted services were being provided in the majority of cases, but that some cases required intervention that was not present. HDM was able to test the administrator's reports of cost reduction and calculation of ROI.
Implementation of Recommendation:	Ongoing analysis to measure performance of care management program and ROI.
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