This experience is consistent with what I've heard from hundreds of benefits leaders at self-insured companies: While health care benefits remain the second-highest expense after payroll, the tools and methods used to manage these costs haven't kept pace with the complexity of the problem.

The Compliance Challenge

ERISA regulates coverage for around 139 million Americans in 2.5 million self-insured health plans.

Benefits cost management is more than a financial issue: It's also a legal one.

Studies show that up to 80% of medical bills contain errors, and the risk extends far beyond the bottom line. Self-insured employers are essentially stewards of their employees' health care funds. Failure to ensure payment accuracy could mean breaching fiduciary duties under ERISA.

Related: Fiduciary-minded benefits: the roles and responsibilities of advisors 

The Limitations of Traditional Approaches

Today's approach is outdated and hasn't kept pace with the number of claims that need review. Most organizations review only 1% of their high-value claims, leaving a massive blind spot in their cost-management efforts.

Yes, catching errors might help reduce (some) costs, but that's on a small scale.

There's a growing need for systematic, comprehensive oversight to handle the scale and complexity of modern health care billing while meeting regulatory requirements.

How AI flips the script

When organizations successfully audit medical bills and uncover savings, it raises an obvious question: "Why aren't we reviewing all of our claims?"

The answer is simple: Traditional auditing is an exhaustive, manual process.

Properly reviewing even a single claim requires cross-referencing multiple complex documents: plan agreements, billing guidelines, and regulatory requirements. That makes comprehensive auditing practically impossible using conventional paper-based methods.

This is precisely where AI can transform the process and help organizations move well beyond basic error detection.

To meet these challenges, benefits leaders must adopt a new framework that combines technological capability with regulatory compliance.

The traditional approach of reviewing only high-value claims and addressing issues isn't efficient or effective in today's complex health care landscape.

Instead, organizations should look for a comprehensive system that analyzes all claims for errors and fraud.

This means implementing proactive measures that prevent billing errors before they impact employees rather than detecting them after the fact.

By leveraging advanced analytics, benefits leaders can identify patterns and opportunities for systematic improvements that benefit both the organization and its employees.

These efforts must also align with ERISA requirements and fiduciary duties, ensuring that cost-management strategies serve the best interests of plan members.

Benefits leaders will be more secure in protecting their organizations while also ensuring that employees receive the full value of their health care benefits without unnecessary costs or administrative burdens.

David Talinovsky is the CEO of Bluespine, a firm that provides health care cost tracking, analysis and management services for for self-insured employers.