What Self-Insured's Need To Know About Workers Comp Medical Bill Review

Saturday, April 8, 2006 | 0

By Janet Jamieson, Ph.D. Director Health Policy & Research, Medata Inc.

Medical care accounts for approximately claims costs, and medical decision-making can assert a significant influence on the duration of disability, hence indemnity cost. In this primer I pinpoint what corporate risk managers and workers compensation directors need to know about how claims operations control medical costs, from review of an individual medical providers' bill to discovering trends in medical care. This is a timely topic as I see exciting transformations underway. In my twenty years in the workers compensation field, this technology investment is one of the most important advances I've participated in.

Let's examine the short but curious life of a medical bill, that small yet important piece of paper. I will describe how things work now - and reveal how they are about to change.

Initially, a medical provider, having delivered a unit of medical care, prepares and mails a bill. A few days later it arrives at the claims administrator's mail room, where people sort and send it on to different processes to adjust the charges; evaluate the appropriateness of care, and note exceptions that they then take out of the normal workflow for special handling. Exceptions can include high expense billing, unusual treatment, and suspicion of fraud or abuse. This review and decision process can take over a month if poorly coordinated. The claims operation eventually pays or denies the bill. The current average elapsed time from the day the medical provider issues it bill to when it receives payment is about sixty days.

Technology is transforming this process into a streamlined workflow, which reduces the overall time to less than two weeks. The entire workflow of medical information, from the moment it is entered into the doctor's office computer through when a medical bill is paid, is emerging into a single comprehensive electronic workflow process.

Thanks to dramatic reductions in the cost of paper conversion and optical scanning, when bills arrive at the mailroom many are being scanned and then distributed electronically. This still leaves the first leg of the bill's voyage using 19th Century technology - the Postal Service. However, here as well, change is underway. An expanding number of TPAs and insurers are now able to accept electronic submission of medical bills and documents. These submissions are fast, secure and quality-controlled.

You now have access to a new generation of electronic system, set to control the flow of medical information from the earliest possible point, all the way through payment and trend analysis. There are four key elements in this new workflow: pervasive use of workflow controls; analyses of trends and exceptions; auto-adjudication; and people to manage the integrated system. These elements will come together in the core medical bill review software system, the foundation of the entire transformation.

The net effect of this transformation is to reduce the costs of many tasks by up to 99% through the extensive use of technology, yet at the same time improve our ability to do what we are set out to do: control medical costs. Employers and claims adjusters remain very much in the picture. In fact, you become a "customer" of a finely tuned system that manages information behind the scenes while serving up information you want. This is very similar to how you and your family use online customer-centric services such as Amazon, Expedia, and e-Bay work.

You can demand much better analytical reports from these new bill review systems. For instance, you can get reports on how initial visits are distributed among types of medical providers, instances of rare or highly unusual medical care, or frequencies of specific kinds of surgeries.

Electronic workflow management (WFM) is a key element in the evolving start-to-finish systems. WFM is an optimized combination of computer-based and manual tools designed systematically to ensure that standard tasks are performed correctly, on time, by the right party, and in an efficient manner. WFM uses "business rules", which are events triggers to invoke a procedure according to plan.

You and your claims administrator can use WFM tools to transfer information between costs containment services, implementing provider e-billing, building electronic files, and moving data between decision points electronically. You, the employer, are a decision-point. Depending on your preferences and governing privacy rules, you may be able to receive messages and to look up directly the status of invoices.

The time from the bill receipt to payment will tighten dramatically. This is important to you for several reasons. Faster payment of medical bills sharply reduces the risk that the medical provider, not having been paid, duns your injured employee - a leading source of employee complaints, and one reason why injured employees retain attorneys. Second, it removes the risk of the claims administrator, and perhaps you the employer, from violating prompt pay rules that many states have implemented in response to complaints from medical providers about slow reimbursement.

Expect to hear a lot more about "auto-adjudication" of your medical bills. When you have streamlined electronic audits, you do not have to manually inspect every bill! In some scenarios I have estimated that well over half of all medical bills can be processed without a human ever looking at them - with no effective loss of savings.

You need to have a WFM capacity to include a significant number of edits that can be set up to "flag" bills that need to be manually reviewed. You also need to use only knowledge based edits, or flags, that are defensible. You will have to review your flags constantly, and adjust them state-by-state. I have personally done this enough times to know the current trends in medical care. You can save the most in money and time.

Medical cost containment, in summary, is going through a historic transformation. You will now be able, through the use of technology, to have effective tools to control your medical costs.

Janet D. Jamieson,, Pb.D., is the Executive Director Health Policy & Research for Medata, Inc.

She can be reached at telephone number 707-294-0759, or via email at jjamieson@medata.com.

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