THE CORPORATION Employee Beneficiary Association Plan Audit Program Audit Objective / Approach: The audit of the Employee

Beneficiary Association Plan is directed toward (1) ascertaining that procedures and controls used by the plan administrator (Employer's Health) are adequate to ensure that medical claims for eligible employees and beneficiaries are processed accurately and in accordance with current plan provisions and (2) ensuring that claims are subrogated where appropriate. The audit is conducted by randomly selecting a sample of paid medical claims and tracing the transactions through the plan administrator's claims processing system. Additionally, procedures are performed to determine that the plan administrator's records are accurate with respect to eligible employees, eligible beneficiaries and plan provisions. Due to the technical nature of the plan document and provisions, the audit is conducted with assistance from the Manager of Employee Benefits. Department Audited: Department Contact: Audit Procedures: Workpaper Reference

1.

Review and document claim processing procedures and controls. Some specific areas include: - organization of staff - mailroom procedures - verification of eligibility of the employee - verification of the claim - duplicate payment of claim - supervisory review and approval of payments - average claim processing time - pending claims Document how amendments to the plan are integrated into the claims processing cycle. Review amendments to the plan since the last audit to determine that the revisions have been integrated into the claims processing cycle. Review procedures for identifying and resolving claim overpayments / recoveries, specifically the records which are kept by the Plan Administrator and the follow-up procedures. Discuss any outstanding overpayments / recoveries and document the status of each. Trace five recoveries/overpayments through the system to ensure that proper credit was received.

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4.

Obtain from the Personnel Department or Employee Benefits a list of # employee termination's within the last three months and verify with the Plan Administrator's records noting the date of change and any claims paid after termination date. Include terminating dependents no longer eligible for coverage (i.e. dependents no longer full-time students). Obtain from the Personnel Department or Employee Benefits a list of # employee additions within the last three months and verify with the Plan Administrator's records, noting the date of change and any claims paid before eligibility date. (NOTE: Employees are not eligible for health benefits until XXX months from the date of hire.)

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Internal Audit Manager Approval __________________________________

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Obtain from the Personnel Department Employee Benefits a list of # recent coverage changes and verify with the Plan Administrator's records (include job shares and name changes in sample). Select # paid claims from the "Detail Claim Report" noting any special claims which could include: a. any problem claims identified by the Employee Benefits Department; b. hospital claims exceeding $; c. psychiatric or alcohol/drug abuse claims; d. claims for retirees 65 or older. For each of the claims selected, determine that: - basic claim information agrees with initial enrollment form obtained from Personnel Department or Employee Benefits - the employee is eligible for the benefits requested - the disability is covered by the health plan - there is adequate supporting data accompanying the claim - the correct charges according to the provisions of the health plan have been paid - the claim has not been submitted and paid previously (verify with claim processing system by looking at claims with same service date) - the new deductibles begin January 1, xxxx and that there was no carryover of deductibles (verify against claims paid from January 1, xxxx) - benefits are not covered for reimbursement under state, federal and other insurance programs (verify with enrollment form and claim information).

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From the sample of # claims, select # claims to verify that a canceled check supports each claim. Review procedures and controls regarding subrogation, particularly STD subrogation and methods used to forward the credits to The Corporation. Verify # claim payments over $ made directly to plan member by confirming with the provider of services and the plan member. Discuss the claim auditing procedures with local audit management. Document their selection and testing approach and how results are reported.

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