Two patients sit in the emergency room at Harmony General Hospital, each cradling an injured arm.
Joseph fell off a ladder at work, landing hard on his arm – his treatment will be covered under his employer’s workers’ compensation insurance. Across from him is Brian, who fractured his arm while playing street hockey with his kids and will rely on his private, employer-sponsored insurance.
At first glance, both cases seem identical. But when it comes to reimbursement, they couldn’t be more different. Joseph’s work-related injury will be billed under a state-regulated workers’ compensation fee schedule, which often reimburses hospitals at rates well below commercial payers. When hospitals also participate in managed care contracts for workers’ compensation, additional negotiated discounts can push reimbursement margins even tighter – sometimes below the actual cost of care.
That’s why, in many cases like this, hospitals may find they’re losing money on their workers’ compensation managed care contracts. The combination of strict fee schedules, contractual discounts, and complex billing requirements makes it difficult to recover the full cost of treatment –even for seemingly straightforward cases like Joseph’s.
The benefits and challenges of managed care contracts in workers’ comp RCM
When treating work-related injuries, hospitals must follow workers’ compensation fee schedules – predetermined lists of maximum allowable charges for services provided to injured workers.
For example, a fee schedule may cap reimbursement for treating a patient like Joseph, who fractured his arm at work, at $1,000. This amount must cover everything – the exam, X-rays, casting, and follow-ups – regardless of the actual cost to the hospital.
Managed care contracts add another layer
Many hospitals are also bound by contracts with Managed Care Organizations (MCOs). MCOs manage and coordinate care for injured workers and negotiate rates with providers.
But “negotiation” in this space can be challenging. Hospitals often lack bargaining power, leaving them with terms that may not align with fee schedules or fully cover the cost of care.
As a revenue cycle or managed care leader, you’ve likely seen these challenges first-hand:
- Pricing discrepancies: Negotiated rates may stack discounts on top of already-limited fee schedules, creating razor-thin margins and financial strain on hospitals.
- Multiple contracts: Hospitals rarely deal with just one MCO. Coordinating rates and terms across several payers can be time-consuming and administratively burdensome.
- Complex regulatory requirements: Workers’ comp is state-regulated, and each state manages claims differently. Teams must track fee schedule changes, regulatory updates, and compliance requirements – even within a single state.
Why fair reimbursement matters
Workers’ comp claims may make up a small portion of total revenue – often 5% or less – but the financial impact can still reach millions. Unfair contracts, pricing discrepancies, and administrative burdens can drain hospital resources and reduce willingness to accept work comp cases.
Outsourcing workers’ comp claims for maximum ROI
Partnering with a specialized vendor can help hospitals capture the revenue they deserve. The right partner will:
- Understand the intricacies of managed care contracts
- Aggressively pursue underpayments and denials
- Continuously monitor and analyze claims
- Leverage technology to streamline processes and improve efficiency
- Maintain strict data security and regulatory compliance
- Navigate state-specific legal and regulatory requirements
- Push for fair reimbursement rates and maximize ROI
How EnableComp helps
With decades of specialty RCM experience and intelligent automation, EnableComp helps hospitals optimize workers’ comp claims.
Our Managed Care Team works alongside your revenue cycle or managed care team to review, negotiate, and advocate for the best rates and reimbursements.
- State & payer expertise: We maintain relationships with regulatory agencies, hospital associations, trade groups, and large MCOs across multiple states to ensure your contracts are fair.
- E360 RCM® platform: Our workflow engine updates in near real-time with state and payer fee schedules, ensuring reimbursement rates are accurate and up to date.
- Continuous monitoring: We analyze claims, data and flag issues quickly, providing recommendations to keep your revenue cycle on track.
- Regulatory peace of mind: We stay current on rules and changes across all relevant states, so your team doesn’t have to.
Workers’ comp claims are complex, but hospitals don’t have to navigate them alone. EnableComp’s platform and expertise ensure you get paid for the care you provide–every time.
Learn more
Contact us today to learn more about EnableComp’s Workers’ Compensation solutions.
