Filed Under:Carrier Innovations, Technology Solutions

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.

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?

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.

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


  • 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:


  • 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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