Tony Schy January 22, 2009

Paying claims for members that are no longer eligible is more common than most organizations realize. Timely management and communications of enrollment data can present major challenges. While some processes are tightly managed and produce virtually no overpayment, others are poorly defined, loosely managed and have no built-in checks and balances. Because of this, you should read carefully the language in your ASO Agreement related to the management of eligibility data. In particular there are three things to closely examine.

It is common for an administrator to restrict retroactive terminations to 60 days prior to when they are notified. However, you need to parse out this restriction cautiously. First, when you notify the administrator of a retroactive termination, they should back-date the eligibility of that member to whatever day you specify, regardless of how far back. This will ensure that in the event that there are pended claims, or claims not yet filed, you will avoid paying for claims for ineligible participants.
If based on information that you supply, there are claims paid when the member (based on the new information) was not eligible, then there needs to be a mechanism to recover the payment. Be sure that the wording will also encompass retroactive terminations that are less than 60 days prior. Since the administrator can reasonably claim that they are not responsible for the overpayment, they may request or require compensation for their effort.
The 60 day restriction should be limited to refunding, if applicable any administrative fees or premium paid when the member was ineligible. This would only be applicable if the termination was for the employee and all dependents, or for the termination of dependents leading to a tier change when your administrative fees or premium varies by tier.