Key Takeaways from Health Strategy Associates bill review survey

Monday, June 8, 2009 | 0

By Joe Paduda


The two overarching issues in work comp bill review are state reporting and the non-connect between utilization review/medical management and bill review.

Bill Review
Workers' comp payers spend hundreds of millions of dollars each year on medical management - pre-cert, utilization review, peer review, case management, clinical guidelines, and the variations and permutations thereof. Dozens of companies from mom-and-pops to regional players to industry giants like Coventry and Genex employ highly trained professional medical personnel to watch over the care delivered to injured workers, carefully reviewing and approving or not approving thousands of medical procedures.

Then, the medical bills come in to the payer. The frightening/amazing/unconscionable truth is that many non-approved medical treatments actually are performed, and billed for, and likely paid - because those determinations are not automatically fed into the bill review system's database, and/or the bill review system can't link the determination to the bill/provider/claimant.

How much of this actually occurs on a national basis is impossible to say, and there's no doubt some payers have the links in place to ensure most if not all medical management determinations are linked to the right claimant/provider/event.

But many payers do not have this link in place and/or it doesn't work very well and/or it requires a human to make the link, dramatically increasing the opportunity for error.

I've seen anecdotal evidence of this non-connect in audits performed for payer clients, but this is the first evidence I've seen of an industry-wide issue.

Implications
There are a number of potential implications, starting with the obvious how much are payers spending on treatments that have not been authorized or were actually non-authorized? How much are payers spending on medical management programs/services that are not delivering results due to the bill review linkage issue? Which systems/vendors have these links in place, and how well are they working?

State reporting
State reporting is another issue; friend and colleague Peter Rousmaniere has long proved his ability to cut right to the heart of the issue and he did it again in a recent e-mail wherein he asked the question that is likely on many bill review/IT managers' minds: What exactly are states doing with all the data they are forcing payers to send to them? Are they doing anything? If so, what, and how will that benefit the industry, employers, society? When?

These are both vitally important issues, albeit for different reasons. But at their core, the question we should be asking about both is the same; what are we getting for our expenditure of time, effort, intellectual capital, and money?


The recession and health reform

Let's look at the recession's impact on reform initiatives.

There are two obvious effects of the recession — fewer folks with insurance, and lower revenues for providers. The latter has been well-publicized, with physicians seeing fewer patients. Hospitals are also suffering.

Colorado hospitals delivered 29.2% more charity care in the first half of 2008 than in the same period in 2007, bad debt was up 6% and in total uncompensated care grew by 18.7%.

Hospitals in Pennsylvania saw a 12% increase in uncompensated care in 2007, and it is a safe bet that there was an even greater rise in 2008.

Minnesota's hospitals saw uncompensated care almost double, a change that contributed to a decline in overall facility profitability from a 4.8% return in Q3 2007 to a loss of 2.5% in Q3 2008.

And that's not even getting into the states with real problems — New York, for example.

There is a direct link between higher rates of the number of uninsured and the financial fortunes of providers. But there's also a more subtle issue — the increase in the number of individuals and families with high deductible plans is likely as big a factor in the problem as the number of uninsured.

Although the high deductible plan members ostensibly have insurance, in reality they don't have coverage unless they have funded their deductible accounts. And it appears that many, if not a majority, have no money in those accounts. As a result, providers aren't getting paid, because their patients don't have the money.

This will get worse. I projected there would be more than 50 million uninsured by the end of this year, and the latest data indicates that may be slightly low - Health Affairs is looking for 52 million to be without coverage in 2010.

This vicious cycle is accelerating. There are fewer workers with coverage who still need care, providers are looking to recoup lost revenue by cost-shifting to those patients with insurance, thereby driving up costs for the payers left in the game.

One study reports insureds are paying more for their health insurance. "That so-called "hidden health tax" in 2009 was $1,017 for a family policy and $368 for an individual...The uninsured who sought treatment in 2008 received about $116 billion in care, the study said. Of that, they paid for about 37% of the costs and government programs and charities paid for another 26%"

The rest, about $42.7 billion, was uncompensated care that was passed on to the insured in the form of higher prices for their care.

While I (and others whose opinions I respect) have issues with some aspects of the report, the overall picture for providers is grim. The current system is fragile at best. Providers' reimbursement is directly tied to the fortunes of the business community, and when that community drops insurance, the impact is broad and deep.

One solution adopted by creative folks looking for care is to head south — to Mexico.

But for the rest of us — prospective and current patients and providers alike — the recession provides a stark reminder of the fragility of the U.S. health care system and its dependence on employment-based health insurance.

What does this mean?

Two things. First, providers' financial difficulties may well force them to make concessions they otherwise wouldn't even consider. The current situation is bleak, but the outlook long term is worse if we don't solve the health care problem - and providers are terrified of the what-if scenario. They may just be scared enough to bend far enough to get something meaningful passed. That's a big 'maybe'.

Second, I've said, and still say, that the reform package that eventually passes (if one does, (which is still suspect) will build off the current employment-based system. The recession won't change that, but may result in Congress drafting legislation that provides a much stronger safety net/alternative coverage vehicle for employers and their workers who can't/won't pay for coverage via the employer market.


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Joseph Paduda's blog, managedcarematters.com, focuses on managed care for group health, workers compensation, auto insurance, cost containment, health policy, health research, and medical news for insurers, employers, and health care providers. Paduda is the principal of Health Strategy Associates.
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