To combat workers' comp fraud, why not make it standard operating procedure to send claimants an Explanation of Benefits, as health insurers routinely do now to catch crooked medical care providers in the act?
The EOB idea was fleshed out during a fraud panel that was part of the National Trends program I put together for the annual Workers' Compensation Educational Conference in Orlando earlier this month.
The concept is really straightforward. After a worker is injured, send them an EOB that reviews what doctors they visited and which treatments were provided, along with the cost paid by the insurer. The claimant is politely asked to call a toll-free number if they see any providers, tests or other services listed that they don't recall.
Why bother? Fraud is the biggest reason. If a worker hurts his shoulder and gets a simple x-ray to make sure there's no fracture, then sees on an EOB that an MRI was supposedly performed and multiple visits made to a phantom physical therapist, he can alert his insurer or employer that there's some monkey business afoot.
Actually, this doesn't necessarily mean fraud was involved. In fact, the panelists acknowledged that an EOB can help carriers identify and correct honest billing mistakes.
But in many cases, outright fraud is being perpetrated, which is no surprise when you consider the fact that claimants are not even aware of what services their workers' comp insurers are paying for.
Certainly, a carrier or self-insured that keeps on top of claims management might independently pick up on such mistakes or blatant frauds on their own. But adding an EOB to their arsenal gives insurers another weapon to thwart those whose incompetence or greed drives up workers' comp costs.
There are other benefits. The panelists said an EOB gives injured workers a head's up about how much their employer is spending to heal them and get them back on the job. It adds transparency to the workers' comp treatment process. And it deters would-be frauds, who are more likely to avoid trying to rip-off insurers and employers who keep their claimants in the loop in terms of test- and treatment costs.
Insurers are reportedly hesitant to employ EOBs for a number of reasons. One is the expense involved, particularly the upfront investment to generate such reports. Second is skepticism over whether claimants will pay any serious attention to the EOBs, or be able to make sense of them if they do.
I want to thank Dennis Jay, executive director of the Coalition Against Insurance Fraud, for putting the panel together, and for alerting me to the potential benefits of EOBs. His panel included:
• Steven Piper, director of investigative services at Travelers, which is running an EOB pilot test.
• Laura Clifford, executive director of the Employers Fraud Task Force in Anaheim Hills, Calif.
• David W. O'Brien, a retired California workers' comp judge and chair of the Appellate Department at Floyd, Skeren & Kelly in Los Angeles, who is a passionate advocate of EOBs, and who went so far as to suggest that insurers may not want to bother with the expense because they don't really care about fraud!
"They just build the cost [of fraudulent claims] into their premiums, and we all end up paying for it," he lamented.
I doubt insurers don't care about fraud. But if they truly do, it seems to me the potential return on EOBs would be worth the investment. What do you folks think?
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