Insurance companies and self-insured employers have a host of resources at their disposal to deal with the rising cost of medical bills for their insured workers. Initially conceived to help contain healthcare costs and provide some level of control over the services performed, “Professional Review”, also known as Nurse Bill Review or Nurse Audit began back in the 1980’s when insurance companies had nurses appear on-site at healthcare facilities and complete desk audits where they reviewed charges, coding and utilization for relevance and appropriateness. Currently professional review is a standard component of most work comp payer systems and almost all large hospitals bills are put through some type of professional audit.
What is Professional Review?
To understand what professional review is and how it fits into the work comp medical bill payment equation, you must have a basic understanding of how medical bills are reviewed, reduced and ultimately paid. Most insurance companies and self-insured employers use some sort of bill review company or system to apply a series of payment reduction techniques to the medical bills they receive for their injured workers. These discounts vary in form and frequency of use, but the primary discount types are State Fee Schedule, PPO Contractual Discounts, Negotiated Settlements and finally “Other” reductions. Professional review is almost always found in the “other” bucket and this signifies that this reduction is not connected to the other statutory or contractual discounts being taken on the bill. These reductions are wholly focused on the type of treatment delivered, how appropriate that treatment or the charges are, and the connection between the services rendered and the compensability of the injury. We also see Utilization Review (UR) reductions in this bucket as well, but if we want to focus on the professional review reductions that payers take, knowing where and when they apply is critical.
How does Professional Review work?
When a bill is received from a payer and it routes through their bill review system and after all of the aforementioned discounts are applied, there is a proverbial “switch” that is thrown based on certain parameters that flag bills for a high level review; it could be a charge or payment threshold, or perhaps it’s a range of DRGs or even service-type based. Regardless of how the payer escalates, most large bills are sent to the professional review or nurse review team. These bills are examined by individuals (typically RN or peer MD) who assess the services that were rendered, review the medical record, scrutinize the doctor’s orders and the coding choices used on the bill and essentially make a case for a reduction or denial of charges as they deem appropriate. What’s shocking is that these reductions can often dwarf the State Fee Schedule and PPO discounts combined.
These reductions are frequently only explained with a 3 or 4 digit “reason code” at the end of the EOB and typically offer no further explanation as to the rationale the payer used. Payers apply these reductions with the same authority that they do for the state fee schedule or PPO contract and healthcare providers with little experience in work comp cost containment are left to wonder why they cannot reconcile payments for these bills.
What can Hospitals do?
Obviously, having a solid work comp billing partner is the best way to combat these types of denials, but barring that, the absolute first step is to train your staff to identify the reductions early in the process. Every revenue specialist at my company is trained to recognize these specific reductions and we have a system in place that looks for and escalates bills with a high likelihood of having professional review involvement.
But it’s not always easy to spot these reductions on EOBs and carriers are not really interested in having their professional review denials debated with providers or state boards of inquiry. Some payers have gone so far as to camouflage their professional review reductions by either lumping them in with other fee schedule reductions or with the PPO discount they are applying or both. This makes is nearly impossible to know what services payers are specifically paying for, and if a provider is not well versed in this tactic, allocating payments correctly and determining when and where you issue appeals is not possible.
Step two is to communicate with the payer and request a detailed account of the reduction justification. Some bill review companies will issue a Nurse Review statement or other document that describes why the professional reviewer made the choices they did. Others will offer to let you speak to the reviewer and ask questions as to their methodology. Regardless of how you gather the details, knowing what the professional reviewer is doing and why will allow you to get to the next step; appealing the decision.
Once you understand why the professional review nurse is making their reductions, you need to bring in your own clinical resources. This may be an in-house nurse or peer physician, but the absolute key here is that they have some experience with occupational injury. Unlike most other pay classes that focus on eligibility, workers’ compensation claims are all about compensability and relevant treatment so it’s important that your clinical partner understands how work comp works in dealing with a payer’s professional review nurse. Have your clinical resource review the reduction details and determine the credibility of the denial and whether or not an opportunity to appeal exists. If so, issue a clinical rebuttal quickly and make sure that the bill review company and carrier know that you disagree with their professional review findings. Don’t hesitate to enlist the help of your State Board of Workers’ Compensation or general counsel if the payer seems unwilling to listen to your reasons for appeal.
How big of a deal is this?
If you are provider who deals with work comp, then I can guarantee that you have experienced professional review on your bills whether you know it or not. My company handles $1.6 Billion in work comp bills annually, and I see professional review reductions on bills from almost every single one of our hospitals. It is truly a “hidden” fee schedule and payers treat it as such. Not only is it a massive cost-containment tool for employers, it is also a hugely profitable revenue generator for bill review companies. Whereas these companies may only be compensated at low per-bill rates for applying Fee Schedule reductions, employers will pay for professional review discounts at rates that are 100X, 200X, or even 500X higher. The profitability is staggering, and payers will invest significant resources internally to ensure they have skilled professional review teams that can produce big reductions on hospitals bills consistently and defend them if needed.
Here are a few real-world examples:
Getting paid correctly on work comp hospitals bills is a tough business. Insurance carriers, TPAs and bill review companies spend millions of dollars every year on effective systems and talented people to ensure that they can continue to deliver profitable payment reductions to their employer clients. Many of the reductions that we see from professional review are appropriate and warranted, but many more are overreaching or just plain incorrect. Hospitals should make dealing with these reductions a priority within their billing department and understand how to identify and resolve this unique and pervasive payment behavior.
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About Jesse:
Jesse Larrison is a 15-year veteran of the workers’ compensation industry. Having held leadership positions for one of the largest work comp payers in the country, Jesse now oversees Managed Care for EnableComp, a revenue cycle company for hospitals. Jesse lives in Nashville with his wife, son and twin girls.
About EnableComp:
EnableComp is the nation’s leading Hospital Revenue Cycle partner focused on complex claims. With over $1 Billion in total collections, EnableComp serves more than 800 hospitals and health systems maximizing revenue and removing the headache of complex claims billing.