The Settlement of Medical Liens Without Litigation

Saturday, August 26, 2006 | 0

The following column is republished from the WorkCompCentral Professional Forums.

By Pete Park

As we process the "past" medical liens for another 12 to 18 months, most of the medical liens don't have to litigate, granted UR issues are understood. I learned that med-legal cases are based on fact versus emotion, because emotion will only get you so far. A lien claimant's (LC) primary objective is to illustrate as much proof to settle the case and optimize their return, and each case will have to define their equilibrium.

This is a typical dialogue:

DA: Your client billed above the OMFS and didn't cascade properly! Your client is outrageous!

Me: You're arguing about the 5% reductions here and there?

DA: 5%? The chiropractor treated excessively according to our bill review.

Me: Let's use the Law of Averages, apply the 68% - 75% multiple arbitrarily and start the negotiations. Let's look at the medical facts of the case and make a deal.

DA: Your client didn't properly cascade their bill. My bill review says that we only owe you 33%.

*We argue over the numbers, because the DA has a point. It's hard for her/him to negotiate an arbitrary figure if there's no proof. Their job is to represent their client adequately.

Judge: What's the issue?

Me: Your honor...we have a discrepancy over the outstanding amount, and I'm applying a 68% - 75% multiple to my client's outstanding bill.

Judge: Which "line items or transactions" are you disputing? You need to show the defendant your proof.

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From early 2004 - late 2005, I was able to negotiate, argue and yell, using the Law of Averages line over and over. I had my laptop at all the hearings and was able to generate a complex financial report to show the defendant. However, one judge finally put his foot down, and said, "Pete, I don't want to hear the Law of Averages argument anymore. You need to prove the line item/transaction amount outstanding from now on...and make sure that it's clear to the all judges so that they could comprehend the numbers."

I've shifted my focus from being a lien mercenary to a mediation/bill review company, and I still have lien cases to process. My focus is operating as a bill review company, primarily for medical specialties that are required to follow the OMFS. Yet, DAs or payers can always get a second opinion from us. Instead of meandering down the road of work comp insanity, I made a decision to buck the trend and create my own solution. My company developed a bill review system that analyzes the billing statement from the provider and generates a report according to the OMFS, cascading and a graph that illustrates the key metrics of the treatment.

It's full of factual evidence, because the numbers are pulled from the multiple OMFS repositories. We have all the OMFS rules embedded into the system and coding and claims consultants who could explain the basis of the case to a lien claimant or a CA, DA or BR. The new solution has been working like a charm. I haven't had to go to the WCAB for six months, because I'm able to generate the reports and settle my cases via email or phone. Surprisingly enough, we're normally about $200 - $500 within the BR's amount after any adjustments needed per the CIC, e.g. AME report.

Several CAs appreciated the report, because it mirrors their bill review / EOBs. For this reason, I helped save time, money and energy by avoiding litigation. Self-insured employers and payers need to watch their legal fees, because if the lien claimants use a bona-fide bill review analysis they can resolve the medical lien directly with the CA amicably, with no emotion. On the same note, LCs want to feel the full satisfaction that they fought for their money.

My conclusion is that most private practices and billing companies use billing systems that are not adequate to handle the various versions of the OMFS and the cascading. As petty as it sounds, this is key to negotiate any medical lien or to prove your financials at trial. In addition, I realized that anyone can yell and get emotional at the WCAB to prove a point, which is a lot of wear and tear on your body and mental state. However, if the case is suitable to negotiate the financials (I know some need to litigate), then there is no reason to go to the hearing in the first place.

Generally, a medical lien enters the WCAB whirlpool because the claims adjuster (CA) or bill review (BR) were not convinced by the lien claimant's financial calculus, their argument was weak. Almost all of the financial statements generated by the billing systems today are a total sham. If I were a DA, CA or a BR, I would rip it apart to shreds. Moreover, I would send a crate of Dom Perignon to those practice management/medical billing software CEOs for selling a solution that left hundreds millions of dollars on the table in which the private practices could not collect.

I could find so many holes with that type of financial report. This is what happens when private practices cut corners on their software and use antiquated billing systems that don't embrace new laws and regulations. Their short-term rationale is that they don't have to pay for a proper software solution, yet the long-term reality is that they left hundreds of thousands of dollars to the payers. This is the problem with small business owners who don't understand the value of investing into proper technology. Although I've been asked to join the defense on a couple occasions, I haven't worked for them. I enjoy working for the underdogs, yet it's extremely difficult to work with people who don't listen to you. Remember, the onus is on the lien claimant to "prove" the financials.

There's no reason why a CA would just hand you money if you didn't work for it. You need to show the calculus in order to gain their trust and confidence. That's like a professor giving an A to the laziest student who never completed or submitted their homework. This unfounded sense of entitlement sabotages the entire logic in any industry or society.

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