It’s no secret that medical expenses are spiraling out of control, costing the Worker’s Compensation insurance industry millions, if not billions of dollars each year. Most companies have controls in place to mitigate these costs and have implemented bill-auditing systems to address this issue, but are they effective?
Let’s look at one example, which includes bills submitted to a Workers Compensation carrier for treatment of an injured worker’s left wrist. These bills, which include several office visits and an MRI, go to the Bill Auditing system for review to ensure the bills are reasonable and customary for the procedure and the geographic region. They are processed and the carrier receives the results.
On the surface, it looks like good news for the carrier. There is a 9% reduction due to a write down, and so the carrier thinks it has secured good savings and pays the bills. However, after a closer review of the entire claims file, the carrier discovers that the injured worker’s claim pertains only to a lower back injury from lifting a heavy item. There is no mention of a left wrist injury at all. The bills were not part of this claim and not owed.
Instead of savings, the company has paid almost $1,300.00 dollars in error. This occurs not because the Bill Auditing system didn’t do its job, or that the claims management system (CMS) didn’t have the proper information, but because these two systems are not integrated and did not “talk” to each other.
This is a major issue for insurers, with a recent report estimating that this sort of a problem is costing the Workers Compensation Industry over $2 billion dollars annually. With this kind of money involved and the amount of potential leakage being lost on an annual basis, it is now even more important that you are fully utilizing your entire universe of claims data. By integrating your bill audit results with the information and data stored in your CMS prior to payment, you can quickly identify treatment that has not been authorized or does not match up to the injury sustained in the loss. This allows you to pay the bills that make sense in a timely manner while completing additional investigation into questionable bills.
In the above example, an analysis of data would have indicated that the treatment incurred was based on an ICD-9 code that corresponds to the patient’s left wrist. Unfortunately, all of the information in the CMS, from the injury description field to the nurse case manager’s notes and treatment authorization records, pertained only to the injured person’s lower back. This discrepancy should have been caught and kept the payment from being made, notifying the claims handler to look into it further to determine if payment was owed.
Having the ability to review each bill for reasonableness of charges and to confirm each bill for its relationship to the loss occurrence is critical to reducing the amount of incorrect bills that are paid. Once the money is out the door it is almost impossible to get it back. By utilizing the power of Trillium’s Claims Data Quality solution, you can harness your full universe of data to pull these disparate systems together in order to gain new insights and minimize the likelihood of this scenario happening to your company.
Insurance Solutions Principal Consultant, Trillium Software
Michael Chochrek advises insurance companies on enhancing the quality of claims data and more effectively managing key business processes. He has more than 25 years of experience overseeing insurance claims management and metrics, as well as managing claims teams to ensure the integrity of protocols and best practices. Mike has worked at several national insurers including Allstate, MetLife and Liberty Mutual where he's held multiple positions including Multi-Line Claims Representative, Bodily Injury Road Adjuster, Claims Supervisor and as Claims Director for Commercial GL claims.