Dependent Eligibility Audits

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					Background on Dependent Eligibility Audits
   Dependent eligibility audit services ensure that individuals receiving health benefits are
   eligible plan participants. In recent years, employer-sponsored health plans as small as 200
   employees to the largest Fortune 500 companies and state governments have begun to
   conduct these type of audits to deal with rapidly rising healthcare costs.

   Coverage for ineligible dependents can impose a significant financial burden on plan
   participants as well as the plan itself. HMS’s experience demonstrates that typically 3-6%
   of dependents in employer-sponsored health plans do not meet the plan’s eligibility
   definitions. These percentages reflect employers who have met the Health Care Reform
   requirements regarding coverage for children age 18 to 26.

   Over the last 2 years, an average of 8.4% of dependents audited were found to be ineligible.

   Ineligible dependent breakout:
           ► Spouse: 24%
           ► Children 18 and under: 42%
           ► Students/Children 19 and over: 40%
           ► Other: 1%

Sample list of HMS Dependent Eligibility Audits Clients:
          ► Commonwealth of Kentucky                            ►   Disney
          ► State of Iowa                                       ►   Iron Mountain
          ► State of Maine                                      ►   Hartford Financial Services
          ► Volvo                                               ►   Fidelity Financial Services
          ► T-Mobile                                            ►   Lexmark
          ► Anheuser-Busch                                      ►   LifePoint Hospitals
          ► The New York Times                                  ►   Agilent Technologies
          ► Martin Marietta Materials                           ►   The Brink’s Company
          ► NewPage Holding

Benefits of Dependent Eligibility Audits
   ►   Immediately contribute to the management of healthcare costs and plan compliance in a
       manner that is business-oriented and innovative
   ►   Ensure that dependents are eligible to receive healthcare benefits
   ►   Produce results that are easily measured and generate an exceptional ROI
   ►   Complement existing and future strategies to contain healthcare costs
   ►   Provide guaranteed savings throughout clients’ benefit cost structure including health,
       prescription drug, dental and vision plans

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Return on Investment (ROI)
HMS’s experience in performing dependent eligibility audits typically generates an average of
400%-1000% positive ROI on all full audits.

The Commonwealth of Kentucky Employee Health Plan (KEHP) followed our recommended
best practices and achieved one of the highest response rates ever recorded for a dependent audit
of a state plan. More than 96% of state employees completed the audit within the time
frame allotted for the project, which is slightly above our average response rate across all
clients. The project provided the state government with an estimated one-year ROI of

Sample results from HMS Dependent Eligibility Audits Clients

                             % ineligible dependents
       Client                discovered vs. covered       Savings               ROI
                             dependent population
       Kentucky              5.6%                         $6,000,000            1,185%
       Maine                 9.7%                         $1,070,000            1,156%
       Anheuser-Busch                                                           911%
                             8.2%                         $2,155,000
       Fidelity Financial                                                       821%
                             3.2%                         $4,636,816
       T-Mobile              9.4%                         $10,175,000           3,704%
       University Systems                                                       3,175%
                             7.8%                         $9,217,500
       of Georgia

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Additional Services for Government and Commerical Employers
In addition to dependent eligibility verifications, HMS performs a variety of other program
integrity and cost containment services to our government and commercial employer clients. The
additional services outlined below could enhance the Federal government’s ability to fund
benefit programs while controlling spending.

   ►   Subrogation Recovery – Most employer plans have right of subrogation upon its injured
       members’ right to recover from liable third parties. The Plan’s objective is to recover
       medical expenditures incurred by the Plan where a third party is liable for the care. The
       recovering of such expenditures will ensure the financial viability of the Plan and allow it
       to continue to provide cost-efficient health care coverage to all of its member.
          Sample Results: HMS provides subrogation services to the North Carolina State
          Health Plan, which insures over 664,000 state employees, teachers, retirees, current
          and former lawmakers, state university and community college personnel, state
          hospital staff and their dependents. Since 2005, HMS has recovered over $28M for
          the state’s health plan.

   ►   Claims Auditing – Retrospective identification of overpayments is another area that
       employers can leverage for cost containment. HMS’s average ROI for claims auditing
       is 450%. Specialized audit filters target areas where overpayments occur. Standard
       specialized filters include the following:
          Identification of ineligible employees,
          Duplicate payments,
          Coordination of benefits,
          Provider contractual overpayments,
          Assistant/co-surgeon/bi-lateral surgery payments,
          Timely filing, coding errors, and benefit parameters such as proper application of
          Deductibles, limitations of services, or non covered/excluded services.

   ►   Pharmacy Benefit Management (PBM) – Pharmacy claims audits determine whether
       the PBM has correctly adjudicated pharmacy claims based on the benefit designs and
       other criteria contracted with the PBM. The audit verifies pricing, copays, contracted
       services, performance guarantees, and other aspects of clients’ pharmacy benefits. HMS
       performs compliance reviews and rebate processing reviews, in addition to claims
       processing reviews. We have discovered significant recoveries for our clients including
       the Employees Retirement System of Texas.

          For additional information about Dependent Eligibility Audits please contact:
           Michele Carpenter, Senior Vice President/ManagingDirector, IntegriGuard
                          703.759.0389 or
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