Comp Claim Billing Review Flaws May Cost Firms Millions, Says Study

NU Online News Service, June 10, 1:29 p.m. EDT

A lack of electronic integration between firms performing workers' compensation bill review and medical management operations may be costing businesses millions, a consultant said.

The finding by Madison, Conn.-based Health Strategy Associates (HSA) was contained in the company's first Annual Survey of Workers Compensation Bill Review.

HSA said the lack of connectivity means that many non-approved medical treatments are performed and reimbursed simply because the system cannot link the determination to the bill, provider or claimant.

"Comp payers spend hundreds of millions of dollars a year on medical management and a significant portion of that money may be wasted due to a lack of effective electronic integration," commented Joseph Paduda, HSA principal, who conducted the survey.

However, HSA noted that the situation may be changing as several vendors and at least one third party have developed technological solutions addressing the issue: a sophisticated business rules engine that greatly streamlines processes, increase the number of bills that are automatically adjudicated and enforces best practices.

As connectivity improves, Mr. Paduda predicted bill review will become more sophisticated and viewed by payers as less as of a commodity and more of a strategy tool.

Mr. Paduda conducted the survey, soliciting opinions about the role of bill review in workers' compensation from a wide variety of payers. It explored pricing, vendors, internal-versus-outsourced bill review processing, and other aspects of the industry that determines reimbursement for $30 billion in workers compensation medical care each year.

In addition to the issue of electronic integration, the other major issue to emerge from the study was "a sense that the industry is generally mediocre," said Mr. Paduda.

Overall, respondents said they felt the industry focuses more on processing speed and throughput than on effective medical management and it is more reactive than innovative. However, they also noted there have been several vendor acquisitions, mergers and management changes that could improve BR performance.

Difficult as it is to believe, Mr. Paduda said, very few bill review systems are fully and seamlessly connected with medical management systems and processes, such as utilization review, pre-certification, case management, or networks.

HSA said the 24 respondents in the survey were executives at 23 workers compensation payers, including insurance carriers, third-party administrators, large employers, state funds and managed care firms. The firms surveyed represented a broad cross-section of the industry, geographically and in company size. Telephonic surveys were conducted by Mr. Paduda and data aggregation and analysis was performed by Yvonne Guibert, marketing consultant.

HSA serves insurers, employers and health care providers specializing in helping clients control health care costs in workers compensation and group health. HSA said it is currently conducting its Sixth Annual Survey of Prescription Drug Management in Workers Compensation and will conduct a survey of provider networks later in the year.