Strategies for Effective Medical Lien Resolution

Tuesday, February 15, 2011 | 0

By Jon Pease and Devora Brainard
WellComp Managed Care Services

In workers’ compensation, rising medical costs have been a nationwide issue, but in California, insurance companies and claims administrators must deal with a unique factor that further escalates medical costs—and that’s the fact that medical providers can file a lien against payers at any time during the life of a claim, even after a case has closed.

The financial and administrative burdens are significant. A recent study by the California Commission on Health and Safety and Workers’ Compensation (CHSWC) indicated that medical liens are one of the largest unnecessary cost drivers in workers’ compensation.

Based on the commission’s analysis of medical liens filed and the rate of growth seen over the last two years, it anticipated that over 350,000 liens would be filed for 2010, and projects over 470,000 will be filed for 2011. Its recent “Liens Report” estimates that California employers and insurers spend approximately $200 million every year on loss-adjustment expenses to handle medical lien claims.

In order to effectively resolve and defend against medical liens, it’s important that a claims and medical management team have key best practices in place.

<b>The Problem: Erosion of Medical Cost Savings</b>

Medical liens are a long-standing problem. Every managed care decision—whether related to bill review, utilization, or the medical provider network (MPN)— could ultimately lead to a provider waging a lien dispute against the payer and putting an employer’s hard-won managed care savings at risk.

Many payers, administrators, and managed care companies may not have a comprehensive lien defense and resolution strategy in place. Employers end up paying for managed care services that render no real value in the end, as savings can be lost in the lien litigation and settlement process.

<b>Resolution Strategies</b>

To avoid this scenario, payers must develop a lien resolution strategy to ensure there’s a structure and system to defend against those lien filings. Medical decisions must be justified and documented throughout the course of a long-standing workers’ compensation claim. If a payer is not organized, it will be at significant disadvantage in defending against those disputes.


<b>An Integrated Approach</b>

First, it’s critical for claims professionals to work in close partnership with managed care, as it’s the medical management staff who understand and can justify why money may not be owed to a provider, or why funds should, in fact, be paid. Their expertise makes disputes easier to resolve, negotiate, and settle. In fact, a managed care representative should ideally stay involved with a claim until a file is closed. In this way, the managed care professional can provide background as to why certain actions were taken, and provide the documentation that supports those medical decisions. When a case goes to trial, these representatives can also serve as expert witnesses to defend medical cost-containment actions. The claims and medical management teams should also work with specialists skilled in lien resolution and experienced in defending managed care decisions. In the end, a good team will have a high percentage of liens resolved in their favor.

<b>Dealing with Common Medical Lien Disputes</b>

According to CHSWC, 37% of liens filed arose out of disputes with providers being authorized to treat and a belief that the amount reimbursed for medical treatment was not accurate. These two issues are quite different and require two different strategies:

Medical Provider Network (MPN). To address the issue of providers “not authorized to treat,” a strong defense starts with having the right doctors in your MPN. An administrator must ensure proper implementation of an MPN for new employer clients, and once established, consistently direct injured employees to obtain care within the network. Strong use of the MPN ensures the claimant and applicant attorney cannot gain control over medical treatment, and drive up costs or open the door for potential liens to be filed later in the life of the claim. When an MPN is too large, payers cannot effectively direct care. A network should be highly targeted and refined to only include the providers who have been thoroughly vetted and trained so they have the right background, qualifications, and understanding of statutory treatment guidelines within workers’ compensation. Data on providers should regularly be analyzed to assess whether they have filed liens against your organization, and if these liens are unsubstantiated, then these providers should be removed from the MPN. 

Bill Review. As discussed, a significant percentage of liens are related to fee disputes. More than 37,000 liens filed in 2010 would not be necessary if the amount paid for medical treatment was swiftly and unequivocally determined—this speaks to having an efficient and effective medical bill review process. A quality administrator will have established a systematic approach for fee schedule determination and re-pricing to ensure timely and accurate fee determinations.

According to CHSWC, 29% of liens filed were due to disputes in treatment authorization.

Utilization Review. To guard against these types of filings, payers and administrators must have strong utilization review practices in place to assess whether treatment was appropriate based on nationally recognized guidelines. Evidence-based medicine has helped to reduce the medical lien problem, making it easier to substantiate medical treatment decisions. As more research is performed and evidence becomes available, the better off the industry will be. Claims adjusters and managed care staff should be thoroughly trained in evidence-based medicine, so they can ensure treatment adheres to established treatment protocols.
Proactive & Collaborative Approach for Future Resolution Success

An effective approach to preempt medical liens is to establish a systematic process by which you make and document your managed care decisions. By substantiating your actions, you’ll be able to significantly mitigate your medical lien exposure, settle disputes more quickly, and proactively safeguard the medical savings your claims and managed care professionals have worked so hard to achieve. In the end, these integrated best practices—inspired by teamwork, collaboration, and open communication—are important ingredients to effective lien resolution. In the end, these factors help to significantly reduce additional costs brought on by filed disputes and lien litigation.

<i>Jon Pease is president and Devora Brainard is vice president of managed care and development for WellComp Managed Care Services, a division of York Risk Services Group.</i>