Filed Under:Claims, Claims Technology

Raising the Bar in Workers' Comp Claim Management

In workers' compensation today, the 800-pound gorilla is rising medical costs. It was not that long ago that the ratio of indemnity costs to medical costs was 60/40. It's now been flipped -- to 40/60, with medical costs representing the most expensive component. Moreover, that ratio is expected to change again, reaching 70/30 in 2016.

Therefore it's no wonder that today insurance payers are exploring every possible avenue of medical cost containment within their claim operations. No stone is left unturned, as they look at maximizing PPO/MCO strategies, specialty review, negotiation, and other managed care initiatives.

Of course, it's not as if companies haven't been seeking better ways to manage these costs, including medical management and utilization review (UR), for decades. Firms invest substantial resources in their medical management programs to ensure that injured workers get the appropriate medical care, and that claim dollars are spent wisely. Companies have engaged healthcare professionals with extensive expertise in workers' compensation, built strong utilization review teams and departments, and created processes that ensure that recommendations for key medical services are evaluated against evidence-based medical guidelines. Even so, it is difficult to document the effectiveness of these programs.

So, are these efforts successful? Are the investments in medical management and UR accomplishing the intended goals?

Unfortunately, the answer is "not as well as they should." There are many reasons for the leakage of medical and expense dollars within a managed care program. The solution is to plug the holes by honing and rightsizing the business rules that channel bills and claims into these programs, thus maximizing the ROI and effectiveness of the overall program. However, given the complexity of the matching process and the multiple UR and bill review systems that are interpreting coding schemes differently, this is easier said than done. The absence of a way to match these data points subverts the major goals of the UR program to begin with: getting the injured worker the appropriate care and using claim dollars cost-effectively.

Fortunately there are new solutions to resolve the leakage that occurs between agreed upon treatment plans (UR approvals) and the enforcement of those approved treatment plans in the bill review process. This article examines the scope of the problem, current industry practices, and how these new options can reduce or eliminate the leakage.

How Big Is The Problem?

Is the leakage due to the inability to match UR decisions with bill review significant enough to be of concern to payers? The answer is "yes," as the three forms of leakage occurring between UR and bill review can add up to substantial losses.

First of all, the cost of the UR is wasted if not applied accurately in the bill review process. URs cost from $95 to $125 per case, or perhaps more. If the review is done internally, then the cost of the nurse reviewer's compensation is in the range of $45 to $65 per hour, not including benefits. The potential for losses occurs when the recommendations made by these expensive, specialized resources are not followed.

Second, productivity -- and therefore labor costs -- are impacted by the time it takes for a bill reviewer to verify UR authorizations manually against all the bills for a claim. For example, a reviewer may be able to do only nine bills per hour as opposed to 16 bills per hour because the manual review is so time-consuming.

Finally, the most significant losses may occur when payers pay for services that were not authorized, fall outside the treatment plan, or are more extensive than the reviewer approved.

If just one in five bills is paid in ways that are not accordant with UR-approved treatment plans, then significant dollars are wasted.

Traditional Solutions and Results

The current practice of trying to match UR decisions with bills during the bill review process is, plainly speaking, ineffective.

Most methodologies employed by payers to apply UR to their workers' compensation medical bill review are inefficient manual processes. It is up to the bill reviewer to apply the UR decisions against the specific bill he or she is reviewing, as well as all of the other bills in history for that claim -- by hand.

This manual matching attempt can be compared to the archaeology team that painstakingly sorts the fragments of bone from an unknown species: sifting tons of sand and dirt, discovering and labeling each tiny fossil, and then spending long hours trying to fit the pieces together like a giant jigsaw puzzle that makes scientific sense.

Bill reviewers attempting to find the missing link between UR decisions documented weeks or months before, and the bill they are currently reviewing, face a similarly daunting task. With the manual review process that has been used to make these matches, here is what they are up against for each and every bill (using a visit-based example, such as physical therapy or chiropractic treatment):

  1. Write down the date range on the UR note or worse, the series of updated UR notes documenting the approved treatment plan.
  2. Write down and figure out the actual procedure code ranges that are referenced in the UR note(s).
  3. Count the number of visits on the current bill falling into the range that match the codes. Next, write down the DOS and the number of codes (modalities) on the current bill that meet the criteria for DOS.
  4. Repeat step three for every paid bill in history for the same claim.
  5. Total this information by DOS and put in date order chronologically.
  6. Review the totaled information from step five and determine which services on the current bill are within the approved treatment range and which ones are not.
  7. Disallow services on the bill in excess of the approved treatment plan and place the appropriate message on the line indicating the reason for non-payment of the service.

If reading these steps is confusing, then imagine the state of mind of the bill reviewer who must go through this process over and over again.

Not surprisingly, trying to follow these steps dramatically decreases the number of bills that can be processed by a reviewer manually. Not only is the process laborious, but the accuracy of the determinations is also highly questionable. Even worse, in many operations, reviewers skip this cumbersome matching process altogether. At best, there is substantial back and forth communication with the adjuster, especially if the bill already processed is changed after the fact to deny a service. Even if UR notes are automatically delivered to a screen, the process of matching these notes to specific bills and services must still be done manually by the time-consuming line-by-line comparison.

New Automated Options Are the Missing Link

Thankfully, this mind-numbing, manual comparison can now go the way of the dinosaur. Currently systems exist with capabilities that effectively automate the matching of the approved UR treatment plan with the medical bills flowing through the bill review process so that payers can finally realize the full value of their UR decisions.

Here's how the automated process works:

  • First, UR-approved treatment plans are imported into the bill review system with the right level of detail indicating the DOS range, code range, category, approved visits, and service/visit metrics.
  • As medical bills are also flowing through the workflow process within the medical bill review system, high powered business rules engines use powerful and flexible business rules to automate the matching criteria the payer wants to deploy.
  • The business rules place procedure codes into treatment groups or code families according to the types of treatment referenced in the approved UR record. These groupings are highly flexible to accommodate the differences between various systems and change in coding strategy over time.

  • Using advanced calculations embedded in the business rules, the UR-approved treatment can be automatically matched to the services on the bills. If what was approved in the UR treatment plan does not match the services that were billed, then the system can deny the services and apply the appropriate message indicating the reason for denial automatically. Not only is the UR decision captured accurately, the bill reviewer doesn't even have to see the bill.
  • Does this sound easy? Then why hasn't this solution been developed already? The answer is that the evolution of the automated solution needed three conditions to be present for it to manifest. The first condition is a strong desire by the payer community to stop the leakage and invest in highly functional software that eliminates wasted dollars and streamlines the payment process. The second condition is a level of experience in the medical management and UR fields to build rules that make sense for the payer, and that will work in the incredibly complex world of workers' compensation medical care.

    The third condition is a flexible platform with the capability to break information down by service (and by state) while allowing clients to customize the application of UR treatment plans their way. This flexibility had to include the capability to:

    • Focus on any trouble spots that clients may have (for example, surgical and therapy services in 14 specific states, as well as inpatient and outpatient hospitals in nine specific states).
    • Identify "soft" code matches -- for example, codes that may have a close relationship to the common CPT code or code family and which are either allowed or disallowed with that family of treatment.

  • Alter the base UR calculation methodology itself so the UR decision applied conforms to the policy of the payer. For instance, one payer may elect to offer providers a "grace period" and authorize one to two visits beyond the UR limit, whereas another payer may adhere strictly to the guidelines approved. A third payer may want to notify providers when the limits of the UR decision are being approached -- for example, when 80 percent of the visits have been billed. These customized policies need to be incorporated into the business rules of the automated system.
  • Thanks to the occurrence of these three conditions, today the automated option brings a true solution to the problem of UR and bill review leakage. As a result, payers have a vastly more efficient claim process that produces greater straight-through bill review, assuring that only approved treatment is allowed in the bill review process. They get the benefit of the investment -- the hard dollars -- that they invest in UR. They stop wasting money paying for services that were not authorized. Finally, efficiency improves in the bill review process, effectively lowering labor costs.

    With flexible automation handling the link between UR-approved treatment plans and medical bill review, the bar is raised for all claim management in workers' compensation. In addition, payers and claim professionals have a better weapon in the ongoing quest to manage rising medical costs.

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