Common Workers’ Compensation Misconceptions

Many of us here at EnableComp have worked for years on both sides of the provider/payer spectrum, and it has always surprised us how little each side knows about the other when it comes to medical billing and payment, especially with hospital bills. 

Colleagues in the insurance industry have plenty of opinions about hospitals and their exorbitant billing practices and schemes that they have concocted to swindle poor employers. Similarly, when hospitals are asked about their thoughts on the workers’ compensation payers in their market they usually respond with… (crickets, and more crickets).

So, it’s a one-sided game with a lot 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. 

As a leader in complex claim management, we understand both providers and payers; we bridge the gap. To that end, it’s time to shed some light on some common conceptions (and misconceptions).

Believe it or not, we have had more than one conversation with bill review managers and insurance reps who swear that a hospital they are dealing with is trying to game the system and take advantage of the workers’ compensation fee schedule with their charges. 

For almost every hospital, this is just not possible. Why?

• It is illegal for most hospitals to bill differently for workers’ compensation (CMS PRM, Part I, §2202.4), so hospitals always charge the same amount for each service to all payers (Medicare, Group Health, Self-Pay, Workers’ Compensation, etc.). 
• Hospital chargemasters are meticulously developed to address a hospital’s financial need for their largest pay classes, of which workers’ compensation is not one. 
• Workers’ compensation typically represents only 1-2% of a hospital’s annual revenue, so the concept of altering charges to somehow nefariously impact a workers’ compensation bill is unfounded.

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, so 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 of their bills through the lowest possible contractual discount is called “cherry-picking.” 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 workers’ compensation contracts — all at different rates, plus one really deep discount. When we looked at all of their network traffic before and after that deep discount rate went live, we found that a large portion 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.

Yes, you will find payers using pediatricians to give written opinions on work compensation 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 workers’ compensation medical bills. 

We had a case where an insurance company hired a UR firm to deny much-needed plastic surgery services for one of our serious burn cases. The firm used the opinion of a Las Vegas orthopedist to dispute the treatment decisions of a 15-year veteran and board-certified plastic surgeon. It didn’t make sense to us, and after some discussion, it didn’t make sense to the insurance carrier either, so they paid the bill in full.

Every industry has its good actors as well as the bad. What’s interesting is how the bad apples tend to 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 Workers’ Compensation 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 where 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.” 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.

Both providers and payers have secrets that they keep and tricks they use to gain 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 workers’ compensation associates.