Dependent Eligibility Audit Completed

ERS has a fiduciary responsibility to manage health care costs and control fraud. Ineligible dependents increase the cost of health care to the State; therefore, removing ineligible dependents from the Texas Employees Group Benefits Program (GBP) saves the state money in contributions and claims costs. Our members agreed; a dependent audit of the GBP was one of the most common suggestions during our 2010 member survey.

In February 2010, a Request for Proposal was issued to solicit bids from qualified auditing firms for a 100% dependent eligibility audit of GBP participants. ERS awarded the contract to Hewitt Associates L.L.C. (Hewitt) for a customized dependent eligibility audit, designed to deliver a fair, efficient, and accurate verification process. 

To help members prepare for the audit, ERS began sharing audit information in June 2010. ERS launched the Dependent Eligibility Audit in four phases between March 16 and June 24, 2011.

Based on prior audits, Hewitt estimated that members would voluntarily drop 1 to 3% of their enrolled dependents during the audit’s amnesty period. Hewitt also projected that the audit would find another 5 to 15% of dependents ineligible.

As of November 1, 2011, roughly 11,530, or 5.3% of dependents covered previously, are no longer part of the program. They were either voluntarily or involuntarily removed from the health plan because they did not meet the eligibility requirements. 

The audit has a rate of return of about 5.7%. The health care cost for the individuals dropped was about $25.5 million. The GBP will lose the contributions from these individuals, however, which totaled about $10.7 million, meaning the overall value of this audit to the plan was about $12.2 million of net expense.

Preliminary results show a 3 to 1 return on the $2.5 million investment in the audit.