Having worked for years on both sides of the Provider/Payer spectrum, it has always surprised me how little each side knows about the other when it comes to the medical billing and payment, especially with hospital bills. Usually when I speak with colleagues in the Insurance industry they have lots of opinions about hospitals and their exorbitant billing practices and schemes that they have concocted to swindle poor employers. Similarly, when I ask hospitals about their thoughts on the work comp payers in their market they usually respond with… (crickets… and more crickets).
So, it’s a one-sided game with lots of focus on hospital charges by the insurers, and a whole lot of unfamiliarity on the part of the providers with regard to how employers actually pay bills. To that end, I think it’s time for a “confessions” blog to shed some light on common misconceptions.
“This hospital is charging me way more because it’s a work comp claim!”
Believe it or not, I have had more than one conversation with bill review managers and insurance reps who swear that some hospital they are dealing with is trying to game the system and take advantage of the work comp fee schedule with their charges. For almost every hospital, this is just not possible. First and foremost, it is illegal for most hospitals to bill differently for work comp (CMS PRM, Part I, §2202.4), so hospitals always charge the same amount for each service to all payers (Medicare, Group Health, Self-Pay, Work Comp, etc.) Hospital chargemasters are meticulously developed to address a hospital’s financial need for their largest pay classes, of which work comp is not one. Work comp typically represents only 1-2% of a hospitals annual revenue, so the concept of altering charges to somehow nefariously impact a work comp bill is ridiculous.
“I know we shouldn’t cherry-pick PPO discounts, but we do. All the time.”
It’s not a well-kept secret, but most large employers have access to multiple discounts to a given hospital via Preferred Provider Organization (PPO) contracts that overlap. To that end, they have the ability to choose which discount they would like to apply to a medical bill from that hospital. Can you guess which one they go with? That’s right – funneling all their bills through the lowest possible contractual discount is called “cherry-picking” and while it is universally frowned upon in the industry and actually illegal in some jurisdictions, it happens all the time. A few years ago, we ran an analysis on a large hospital system with multiple work comp contracts all at different rates – plus one really deep discount. When we looked at all their network traffic before and after that deep discount rate went live, we found that a huge chunk of their business immediately dropped to the lowest discount rate, even among employers that were previously paying higher rates from a different contract. They all jumped to the lowest discount at the same time because that discount was being cherry-picked.
“My Utilization Review company uses all kinds of folks to review these hospital claims… but an MD is an MD, right?”
Yes, you will find payers using pediatricians to give written opinions on work comp treatment! If the UR group they are using is “certified” that’s usually good enough for most carriers to accept the opinions of a third party doctor or nurse in the denial or reduction of work comp medical bills. I published a case study several months ago where an insurance company hired a UR firm to deny much needed plastic surgery services for one of our serious burn cases and they used the opinion of an orthopod in Las Vegas to dispute the treatment decisions of a 15-year veteran and board-certified plastic surgeon. It didn’t make sense to me, nor our clinical review team, and after some discussion, it didn’t make sense to the insurance carrier either and they paid the bill in full – but this stuff happens all the time.
“I’m not sure if my Bill Review vendor can justify their reductions, but that’s their problem, not mine.”
Every industry has their good actors as well as the bad. What’s funny is how the bad apples thrive in areas where they are largely unchecked. Jurisdictions like Louisiana, which has in the past issued harsh penalties against unscrupulous bill reviewers, as well as states with strong Work Comp Divisions like Florida, Tennessee, and Texas are largely devoid of the handful of bill review vendors out there that are known for their outlandish and indefensible bill review reductions. Unfortunately, there are plenty of pockets around the country that these “experts” can operate without oversight. Either by design or sheer incompetence, they make ridiculous underpayment recommendations to the insurers that hire them and when they are eventually made to account for their payment rationale, they divulge little or no reason, often citing “proprietary methods”, etc. What is unfortunate is that carriers will often use these Bill Review vendors as a way to obtain greater-than-usual discounts on medical bills, while limiting their own liability for potential bad faith.
In the end, both payers and providers have secrets that they keep and tricks for getting an edge over the other. Sometimes catching a glimpse of what the other side is doing “behind the scenes” helps us make better decisions about our business. It can also help clear up conflict and make us all more efficient if we can identify and understand the true intent of our fellow work comp associates.
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.
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.