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February 2017
EOC Validation Helps Avoid Costly Errors
Lisa Winternheimer, Practice Director

Many payers have been expanding their business through additions of new lines of business (e.g. Marketplace, Medicaid, Medicare) and/or new geographies. They often find themselves driving towards very aggressive dates and, in some cases, with unfamiliar products. 

Once the new business is in production, organizations must ensure that the supporting business operations are executing appropriately. For example, are claims attributing the correct member financial responsibilities and provider payments? Incorrect calculations can result in issues with member and provider satisfaction. 

Conducting a full "regression test" once an organization is up and running with new business is generally not feasible due to cost and time constraints. An audit may not identify all of the issues incurred during the implementation. Another, more effective, option is to conduct an "EOC Validation" initiative.

Using the Evidence of Coverage (EOC) as the focal point for validation provides several benefits including:
  1. The EOC, which is provided to the member, can be validated to ensure that it is consistent with contracts (e.g. with CMS for Medicare Advantage) and regulatory requirements.
  2. Once the EOC itself is validated, it can be used to outline the specific areas of operations that should be validated to ensure members, providers, and the plan itself aren't being adversely impacted by processing errors.
"Valida tion" blends testing techniques and audit techniques which reduces the overall costs (vs. full regression testing) while providing a higher-level of confidence than auditing. The trick is understanding which areas should be tested vs. audited. The determination for what should be tested is based on understanding the areas that are typically problematic within a specific line of business (e.g. Medicare Advantage vs. Medicaid) and understanding areas where the plan is currently struggling. Audit techniques are typically reserved for areas where there is a higher confidence level that the results are correct or processing rules are relatively straightforward.

An EOC validation is an effective approach to determine systemic issues with root causes. It addresses key questions, such as: 
  • Are documents supplementary to the EOC correct, for example, schedules of benefits or quick reference cards?
  • Does the EOC accurately reflect the benefits contemplated in the design?
  • Is the payer system transacting business in accordance with the EOC?
  • Are member financial responsibilities being calculated correctly, with the correct deductible, coinsurance, and copayment calculations described in the EOC?
  • Do EOBs accurately follow the EOC?
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