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Dependent Eligibility Audit: El Camino Hospital

In 2009, El Camino Hospital partnered with HMS to conduct a review of all enrolled dependents in their health and welfare plans. Learn how they were able to recoup the investment cost in 11 days.


El Camino Hospital Elects to Perform a Dependent Audit
In 2009, El Camino Hospital elected to conduct a review of all enrolled dependents in their health and welfare plans. Understanding the time involvement and additional resources it would take, El Camino chose to partner with HMS for this audit. The objective of the audit was to ensure that all dependents enrolled in the plan as of January 1, 2010 met the definition of an eligible dependent by requiring employees to provide documentation to verify eligibility.

The objective of the program was to validate eligibility of dependents of active employees with one or more dependents covered under medical, dental, and/or vision.

The hospital also requested that HMS collect Social Security Numbers for dependents where one was not already on file with El Camino Hospital. The hospital understood the benefits of conducting such an audit. They wanted to ensure compliance with governmental requirements for plan sponsors and contain health care costs by ensuring all plan participants are eligible.

HMS’s Program Approach
Utilizing HMS’s proven four-phase approach, we completed a comprehensive dependent verification review that included:

  1. Experience-based Planning
  2. Verification
  3. Reporting
  4. Ongoing Reviews

 

The audit began with a Planning Phase where El Camino provided HMS with the initial data showing 1,501 employees with 3,164 dependents enrolled in their health plan. After a solid understanding of El Camino’s Summary Plan Documents (SPDs), HMS was able to tailor the communications that were sent to employees throughout the program.

HMS provided clear and concise communications to each employee, had a dedicated dependent eligibility call center available Monday through Friday, and offered a 24/7 web tool to aid employees and their dependents in the review process.

Over the course of the audit, HMS found 85 (6.5%) of enrolled spouses to be ineligible for coverage on the El Camino health plan.

Strong Results
Over the course of the program, HMS found 7.6% (or 242) ineligible dependents. This resulted in a cost savings of $1,430,704* for the first year. The return on investment for El Camino was 3,077%.

In other words, El Camino was paid back on their initial investment within just 11 days!

Continued Savings through Ongoing Reviews
El Camino Hospital has elected to have HMS continue services by performing ongoing reviews of:

  • Dependents who enrolled after the initial audit in mid-2010; and
  • Employees who changed or added dependent coverage in January 2011.

 

In addition, El Camino Hospital has committed to have HMS conduct another review of added dependents following their November 2011 open enrollment period. In the follow-up review in mid-2010, HMS found 16.22% of audited dependents (30 dependents) to be ineligible, which led to El Camino Hospital’s cost avoidance of $177,360*.

The 2011 ongoing reviews found 21.98% of audited dependents (111 dependents) to be ineligible and have resulted in $591,075* in savings for the Hospital.

*Based on El Camino Hospital’s average annual cost per plan participant

“ ...we were impressed by HMS Employer Solutions’ employee communications and tracking process. Once we had completed our first audit, the Hospital realized an annual savings of $1.4M. We found HMS Employer Solutions adaptable to meet our changing needs. HMS Employer Solutions has been an effective partner in helping El Camino Hospital control benefits costs." —Julie Johnston, Compensation & Benefits