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Internal Audits

MIS, Inc. conducts internal audits for Third Party Administrators by reviewing claims that are manually adjudicated as well as auto adjudicated by the claims system.  We provide a service by ensuring the TPA that the information is programmed correctly into the claims system and the examiners are providing quality work.  Our services also afford a comfort level to the TPA clients by providing an outside source to audit the claims.  The audits are certified by MIS, Inc. and are made available to the TPA client groups.  Because of our vast experience in conducting external audits for our clients, MIS, Inc. is able to advise the TPA of items that should be addressed prior to the review by the outside audit firm.

EXTernal Audits

The rising cost of medical care is forcing more employers and their consultants to become involved in their own employee benefit programs.  That involvement is changing both the patterns of obtaining benefits and the methods of funding them.

The employer is now finding it necessary to assume a larger portion of the risk.  Myriads of managed care health products have emerged to help the employer and their consultants control their health care expenditures.

Information has become the most powerful weapon in the war on escalating medical costs.  Utilization review programs, catastrophic case management, and data analysis packages all attempt to generate reports to help identify and analyze utilization patterns.

Employers and their consultants are relying on these reports to make crucial decisions about plan designs and cost containment measures.  The astonishing truth is that most of these decisions are made without ever questioning the integrity of the basic information used to generate the reports.  Millions of dollars are spent each year for the purchase of managed care programs.  Nothing is spent on auditing the credibility of the most basic source of information.

ppo comparison

Due to the high competition with Preferred Provider Organizations (PPO), self-funded employers are relying on the information submitted by proposals from the Third Party Administrators/PPO.


Our service provides the employer with a unique look at what the discounts would be for local providers and hospitals in their area if they were to award the contract to the Third Party Administrator(TPA)/Insurance Company.


This process makes the decision easier for our client prior to awarding the contract to the TPA/Insurance Company.

Internal Audits

Types of Internal Audits

  • Random daily audits of 2%-5% of claims processed per examiner

  • Performance Guarantee audits every month or through quarterly reporting

  • New examiner audits at 100% for the first 30 days      


  • New group audits in which the plan document is reviewed against the system programming

  • High Dollar payment audits

  • Audits for new system implementation

  • Focus audits by request

  • Disability audits

We schedule weekly conference calls to discuss any errors detected during the previous week and we offer suggestions to help with examiner performance.

A database is provided to all clients in which all audited claims are listed with the errors detected.  The database is capable of generating reports by examiner, group, location or supervisor.  Other reports are available by request.

Our clients have stated that their outside audits have improved dramatically due our internal audits addressing the errors on a daily basis.

External Audits

External Audit Process

Office Procedure Overview

The first portion of the audit involves an on-site interview to ascertain the number and credentials of personnel involved in processing the claims.  An overall claims procedure (from the time the claim is received until the final payment is released) is diagrammed and appraised.


Targeted Sample Re-ajudication

A selected random sample of claims from a specific period is totally re-adjudicated by our auditors.  This portion of the audit appraises payment and claims system.


Exit Review & Final Report

An exit meeting is held with the claims director to clarify our findings and insure the accuracy of our results.  The final report is formulated and forwarded to the client containing the following information:


  • A description and appraisal of on-site review and general narrative.

  • Itemization of erroneous claims with detailed explanation.

  • A complete statistical summary.


General Objectives & Goals

  • Evaluate the effectiveness of the administrative process.

  • Assess, based on a limited number of claims, the accuracy and consistency of claims processing.

  • Document control or processing errors noted during the course of performing the aforementioned procedures.

  • Measure turnaround time.

  • Assess claim processor compliance with cost containment program requirements.

  • Perform a general operational review to identify area of administrative efficiency that the TPA may wish to implement.

  • Identify areas for potential improvement.


About the Sample Claim Selection


 We select a random sample of 450 claims per audit paid/processed during the selected period to determine adherence to the plan's provisions.  The sample is selected by a formulated listing provided to us by the TPA.  The number of sample claims selected is based on a confidence level of 95% and a precision limit of 5%.

Claims System Review Objectives


  • Discuss the computerized claims system and observe a demonstration of the system.

  • Discuss the claims adjudication capabilities of the system with the claims personnel and document its functions and processes.

  • Discuss and observe the system's security features through discussion with and observation of claims personnel.

  • Comment on the security system based upon our observations in the claims administration industry.


Claims Office Review

Through discussions with claims administration personnel and through observation of claim office workflow and operation, we obtain and document an understanding of claim office procedures Then discuss with claims personnel the procedures in place to ensure quality control of claims processing and payment.

Claims Adjudication Process


  • Discuss with claims personnel the manual and computerized claims adjudication processes.

  • Define a claim sample item as an EOB.

  • Compare the documentation for the sample of claims selected for accuracy and adherence to the provisions of the plan.

  • Read documentation associated with each claim.

  • Compare claim documentation with claim payment produced by the system, according to plan benefits provisions.

  • Complete a claim review worksheet for each claim sample.

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