Bill review companies –solution to high cost workers’ compensation?

Recently there has been much discussion regarding the failings of the workers’ compensation system.  What is the cost of the system on a worker’s life and on the employers who pay the high cost of workers unable to perform their jobs?   Claims claim administrators are tasked with saving money on each claim file.  Many “cost saving methods” add to the both time and expense cost to the claim.  This post is devoted to bill review companies that re-price medical bills with the goal of “discounting medical bills”-- a retroactive review.

 

Bill review companies orate that they are specialty bill review organizations and often tout their network affiliations.  The goal of all of these “parts” is to discount the workers’ compensation medical bills.  Most workers’ compensation networks do not demonstrate better medical care by their physicians.  They don’t advertise better medical outcomes. 

The business of medical bill review is to “slash” the medical bills retrospectively.  Each medical bill review vendor has its own business model and advertising strategy. Each may take a slightly different approach to the common goal of medical bill reduction.  Bill review does have a purpose in workers’ compensation, but one size does not fit all. 

For many years bill review has been a commodity.  (I anticipate every bill review company will object to this terminology.)  Each company tries to differentiate them self from their competitors, but most of their clients are looking only at the cost of the service.  Thus, there is increased automation, auto-adjudication, streamlining and off-shoring of at least a portion of the bill review process.  None of these processes are “bad” and all will decrease the cost of the bill review, but do nothing for the quality of medical care and often delay the payment of the medical bill due to the lengthy grievance process and the slow turn-around of many vendors.  This is the reason that “balance billing” of the injured worker is often banned by workers’ compensation statutes as it stays the injured worker from being referred for collection.

Many bill review companies will emphasize their goal of ensuring their clients pay the appropriate amount and no more.  This goal has been somewhat lost in the shuffle.  Automation, speed and strong competition have not always ensured an equitable solution of fair payment of appropriate medical bills.  An overzealous bill review company will deeply discount bills only to find that the review does not stand up to appeal and/or scrutiny and their client will often have to pay additional money to the provider of the medical care.

Most medical bill review companies have a per bill charge, usually called a “header charge”.  This is a small amount charged per bill which covers the data entry required for each bill.  It is common in the industry then to charge a percentage of savings.  This type of savings is realized by the bill review in several different ways and varies within the industry.

Network “savings” is billed as a percentage of the discounted amount.  The network savings is incurred most often by retroactive re-pricing of the billing without upfront steerage to the “network” providers.   As an onlooker of this process, I find this an area of conflict between medical providers and their payers--the providers are often not aware that they are a member of these networks.  For more information look at the many articles on “Silent PPOs” written over the last decade. 

Some states do have preferred networks for Workers’ compensation and the injured worker is required to a certain degree to access these network providers.  In this case the networks often do not discuss the quality of the care over the price of the care.  Many excellent providers are not in these networks and may prove critical to a good outcome for a particular injured worker.

 Savings is also calculated by the amount of billed charges that are reduced down from the state fee schedule.  Bill review clients beware:  this may be over stated and the full discounted price of the billed charges may be taken rather than the difference of the reduction below the state fee schedule. 

Another way that bill review companies realize savings on a medical bill is to analyze the medical records and compare them to the billing statement to determine if the billing is based on the actual services rendered.  This is often done by a nurse who is not a certified coder, or a certified coder that has no billing experience or auditing experience. 

The conversation so far has pointed out many areas of concern with regard to the success or failure of medical bill review companies on the evaluating the medical care as it relates to appropriate billing.  This is not entirely the bill review vendors' fault. Their client’s bear much of the responsibility as they engage the vendors in competitive bidding wars to find the lowest cost for the bill review services. 

Bill review as a commodity comes with a cost that neither saves money nor ensures appropriate medical care.  Some of my thoughts and observations are listed below to delineate some of the short-comings I have seen in the current bill review system.

·         For some procedures, the amount reimbursed is dependent on modifier codes.  The modifiers must be entered and are often overlooked as the data entry quotas become unattainable.

·         A nurse audit may be separately charged at a higher rate than other types of bill savings typically charged to the client.  The payer would be well served to see that a nurse review was completed and the impact on the bill documented. 

·         More often than not the payer pays the bill review vender for all bills big and small.  A 100 dollar bill and a 5000 bill without “savings” found are both charged the same header fee.  Is it necessary to review every bill?  Would a Vendor review of the bills and a selection of bills referred for bill review be prudent?  This may especially be true in fee schedule states when the bill is from a provider that has been paid many times in the past.

·         It is now becoming more prevalent that the bill review client must now approve the vendors recommended payment to the provider.  This author feels that process may be in place to decrease the conflict between payer and provider.  Is this cost necessary if the bill review company is making sure the payers pay what they owe?

·         A question every bill review client should consider asking is:  does bill review vendor depend only upon their system to reduce the bills or if they employ certified coders for data entry so the data is being input correctly?

·         Off shoring part or all of the process may be of interest to some bill review clients.  This practice is not always advertised by bill review venders, but at least some of the venders employ this at some point in the process.

·       Payers need and want national solutions bill analysis.  It is important for the file handlers and/or the employers take the time to understand some of the state-specific as some of the state-specific billing can dramatically influence costs. The bill review vendor’s automated system may or may not be able to pick up on the state differences.

·        Preferred provider networks are important not only in cost control, but in appropriate medical services.  An example of this is an MRI provider.  Preferred provider networks do not always save the payer money as they do not always provide high resolution films that enable appropriate diagnoses.  The image quality of an MRI depends on signal and field strength.  Many networks include MRI vendors who have low signal and/or field strength resulting in poor films.  The need for a second MRI due to poor film quality not only delays medical treatment and increases the claim cost. 

·        Network providers may extend a discounted rate by offering a different level of care. Do the injured workers see physical therapy assistants rather than certified physical therapists?  Do the injured workers see a physician or a nurse practitioner?

·      Preferred provider networks are not created equally.  The providers in the network are credentialed with regard to current unimpeded licensure.  The question is are the network providers known for their expertise and positive medical outcomes?

In conclusion, insurance companies/TPAs have been able to cut their medical bill costs, but the question is whether or not the price they are paying is greater than or less than the reduction in their in-house administrative expenses.

My thought on the current trend:  Carriers, TPAs and self-insured employers rely on accessing networks for cost reduction.  Bill review is a necessary way to get bills re-priced to network rates, and a source of data for state reporting.  This may lead to the bill review venders charging a flat rate per line or per bill.  This in turn moves the bill through an automated system and removes the incentive for bill review venders to find billing discrepancies and the original purpose of bill review is no longer realized.