We get lots of calls from TPAs asking "What is the standard allowable error rate? In other words, is 95% accurate considered reasonable error rate?" The simple legal answer is that under ERISA, 0% (yes, zero) error rate is expected. That's why we laugh at consultants and others who pompously tell your clients that they should put into writing a demand that you be at least X% accurate. Such a document becomes the written evidence for DOL that the trustees would consciously accept less than 100% "prudent" correct administration. It is also unmeasurable since most of the laws that must be followed do not have final comprehensive guidance....or it changes.
So, who knows for sure what is the "right" answer on some claims. The 0% error rate is, of course, impractical and super-human, but that's the goal that the ultimate consumer protection law (ERISA) expects. TPAs who have privately checked their own operations tell us that their accuracy rate is in the 97%-99% range. OK, so what are the accuracy rates for Uncle Sam's medical claims processing? Well, CMS, which administers Medicare, often gushes with pride and bragging about their great improvement in accuracy. One sample year, they improved 45% from 2 years before estimates of accuracy. So how accurate are they? The CMS Inspector General found an error rate of 7.1% (92.9% accurate)...representing $12.6 billion in improper payments. It had been 14% error rate (86% accurate), representing $20.3 billion misspending. >>>>SPBA proud!