McSweeney Advises Actuaries to
Think More Like Health Plan Auditors

HDM, Inc. COO David McSweeney advised attendees at the Spring 2009 meeting of the Society of Actuaries in Toronto to think more like auditors and to think less about cash flow and more about client liability.

Actuaries who assist with their client's health plan, generally visit clients once each year. McSweeney’s contention is that actuaries should visit clients quarterly to assist with key health plan decisions such as establishing Cobra rates and helping assure that reserves are properly established to account for claims that have occurred but have not yet been paid by a plan administrator or PBM.

McSweeney emphasized that actuaries can help prevent the health plan waste that occurs with errors, misinterpretations and outright fraud.

To illustrate an example of how an error can result in health plan waste, McSweeney cited a publicized case where the benefit managers in Maryland failed to get contract-required PBM discounts totaling $10.8 million.

His example of errors that can be avoided involved the co-pay confusion that can result from the difference in co-pay policy for doctors who are located on a hospital campus versus doctors who are located off-campus.

The most dramatic example McSweeney gave involved fraud and a $600,000 scam that occurred with a state government health plan. The fraud involved out-of-state and out-of-country claims.

McSweeney also cited the 11 economic and legislative cost escalators HDM has identified as reasons for actuaries to spend more time with their clients to assure the health of the their client’s health plans.