Two patients are waiting in the emergency room at Harmony General Hospital, both with seemingly broken arms. Joseph fell off a ladder at work, landing on his arm when he fell. Across from him in the waiting room is Brian, who fell and hurt his arm while playing street hockey with his children.
Which patient will be more expensive to treat? Joseph and Brian have similar injuries, but Joseph will be using his workers’ compensation insurance, while Brian will be using his private employer-sponsored insurance. In many cases, such as this one, it is more expensive to treat the work-related injury than it is a regular injury.
If you have seen cases similar to this in your hospital, you may be wondering: Are we losing money on our hospital managed care contracts? To put it simply … yes. The disparities in the cost of treating these two patients reflect the complexities of healthcare pricing and revenue cycle operations — and underscore the challenges that hospitals face when seeking reimbursement on workers’ compensation claims.
The Benefits — and Costs — of Managed Care Contracts in RCM Healthcare
When treating work-related injuries, hospitals must refer to the workers’ compensation fee schedule, which is a predetermined list of maximum allowable charges for medical services provided to injured workers. For example, a workers’ compensation fee schedule might state that the maximum reimbursement for treating Joseph’s broken arm is $1,000. This means that, regardless of the actual cost of the treatment, the workers’ compensation insurance company will reimburse the hospital only up to $1,000 for the entire treatment — including the examination, X-rays, casting and any follow-up appointments.
However, in addition to adhering to workers’ compensation fee schedules, many hospitals find themselves locked into contracts with managed care organizations (MCOs). MCOs manage and coordinate healthcare services for injured workers and negotiate rates for these services with healthcare providers.
As a revenue cycle leader or managed care leader, you may chuckle at “negotiate.” Negotiating fair rates in workers’ compensation managed care contracts can be a challenge, and hospitals are often put in a position where they lack the bargaining power to secure favorable terms. As a revenue cycle leader or managed care leader, you have likely dealt with challenges such as:
- Discrepancies in price. Often, these negotiated rates don’t align with workers’ compensation fee schedules, leading to discrepancies in price and hospitals giving managed care discounts on top of the predetermined fee schedule cost, which is already discounted. The interplay of fee schedules and managed care contracts can put hospitals in a precarious financial position when it comes time to seek reimbursement for workers’ compensation claims.
- Negotiating multiple contracts. Very rarely do hospitals deal with only one payer or MCO. Negotiating these contracts and securing fair rates with each payer or MCO can be a tedious and time-consuming process.
- Complex regulatory requirements. Workers’ compensation is not federally regulated. Every state manages workers’ compensation claims differently, meaning hospitals — especially those that treat patients from multiple states — must stay informed about changes in regulations and compliance requirements. Even hospitals that operate in just one state must deal with the ever-changing regulations and changes to workers’ compensation fee schedules. Revenue cycle teams must stay up-to-date on these changes and adjust negotiations accordingly.
Get Paid for the Work You Do
Hospitals want to provide care and help all people who need it — but unfair reimbursement rates can affect their ability and/or willingness to do so. Hospitals lose more money on workers’ compensation claims because of unfair managed care contracts and discrepancies in price than for any other reason. Tack on the administrative burden of paperwork, coordination with payers and contract negotiations, and this group of tedious claims can drain your team’s resources. Workers’ compensation claims may represent only 5% or less of your hospital’s annual revenue — but that can amount to millions of dollars.
Outsourcing workers’ compensation claims to an outside partner can bring specialized expertise to the table. You want a vendor that:
- Understands the intricacies of managed care contracts
- Aggressively pursues underpayments and denials
- Continuously monitors and analyzes your claims
- Has technology capabilities to streamline processes and enhance efficiency
- Prioritizes data security and compliance with healthcare regulations
- Understands the legal and regulatory requirements unique to workers’ compensation
- Pushes for fair reimbursement rates and ensures maximum ROI for your organization
With decades of intelligent automation and specialty RCM expertise, our powerful platform streamlines and optimizes your workers’ compensation claims.
Our Managed Care Team works with your hospital’s revenue cycle team or managed care department to review, negotiate and advocate for the best rates and reimbursements for your workers’ compensation claims. Here’s how.
- We have strong relationships with regulatory agencies, hospital associations and trade groups in multiple states, as well as with large MCOs and payers. These relationships mean we can help ensure your contract is fair.
- Our E360 RCM™ platform is the most powerful and comprehensive workflow engine built for specilaty revenue cycle management — updating in near real-time with all state and payer fee schedules to make sure your reimbursement rates are up-to-date and accurate.
- E360 RCM™ also allows us to continuously monitor and analyze your claims. If we notice something is amiss, we’ll make recommendations to get you on the right path.
- There’s no need to worry about various state regulations. We know, and keep up with, the rules for each state so you don’t have to.
Learn More
To learn more about how EnableComp handles workers’ compensation claims for the highest yield and best-in-class outcomes in less time, download our free eBook, Taking On Workers’ Compensation Claims: A Healthcare Provider’s Guide to the Process and Its Risks available here.
