Posted by Dan Schulte
This blog is the first of a two-part series covering the ever-evolving workers’ comp landscape for both providers and payers. This blog represents the provider perspective, and Part Two will focus on the service scope from a payer point of view.
One of the staples of reality TV over the last few years has been shows about people who do difficult, dangerous, and dirty jobs that most of us wouldn’t dream of doing. “Dirty Jobs,” “Deadliest Catch,” “Ice Road Truckers,” and others make most of us glad that someone else is doing it. If they ever add “World’s Most Aggravating Jobs” to the mix, one that you can bet will be on the list is working with workers’ compensation claims. Just ask anyone who has to do it on a semi-regular basis. Make no mistake: workers’ comp is a wonderful safety net for employees and employers. Prior to its introduction between the two Roosevelts (Teddy and Franklin) if workers got hurt on the job and required expensive medical care, their primary option for compensation was to sue their employers. No explanation is needed on why that wasn’t good for anyone. Workers’ comp avoids that unpleasantness. Yet while it sounds simple and straightforward in theory, in practice workers’ comp is anything but. Instead it presents a Byzantine set of rules, regulations, and requirements that appear to be designed to ensure claims are rejected and providers are penalized for not performing up to standards. For providers , however, it can be a nightmare, with so many rules and processes that must be followed to the letter, and so many resources required to manage the program, that by the time it’s all said and done, providers might end up actually losing money on the claims. It is why more and more providers are beginning to turn over all of their workers’ comp business processing to outside organizations that focus on this very specialized area of insurance. Here are some of the many reasons you may want to consider doing the same.
- No single set of rules. With commercial health insurance, while there may be minor variances here and there, you’re basically working with the same processes, procedures, and rule sets. Not so with workers’ comp. Each state sets its own complex statutes and fee schedules, which must be adhered to exactly or the claim will likely be rejected.
- Completely separate from standard health insurance. Workers’ comp is very specialized. Health plans that offer it don’t sell commercial health insurance, and commercial plans don’t offer workers’ comp (with rare exceptions). Failure to understand this could lead to a workers’ comp claim being submitted to the wrong payer or third party administrator (TPA), delaying reimbursement and risking a violation of state filing requirements.
- Initial authorization must be verified. Before a provider can file a claim under workers’ comp, it must obtain an employer’s letter of protection or first report of injury. Not obtaining this pre-authorization confirming the employer believes the employee’s injury occurred on the job could severely impact the entire claims and reimbursement process down the road.
- Combination of high expertise and low volume. Workers’ comp is very difficult to manage, requiring a high level of expertise. Yet it typically accounts for only 3–5 percent of a hospital’s accounts receivable (A/R). Despite the risks, most organizations find it makes little financial sense to hire an internal expert, relying instead on personnel with minimal training in workers’ comp. It’s no wonder there are frequent problems.
- Still a paper-based process. While there are a few exceptions, for the most part, workers’ comp claims must be filled out on paper and mailed to the insurance carrier. That is a slow, labor-intensive process that takes internal personnel away from higher-value work. It is also more costly than electronic filing since every line must be filled in every time. And, if just one piece of paper is submitted out of order, the entire claim can be sent back, starting the process all over again and delaying reimbursement.
- Intricate fee schedules must be followed. State statutes lay out intricate fee schedules that explain exactly what will and will not be covered by workers’ comp for a given type of injury. Failure to understand what is allowable could lead the provider to deliver services that will not be reimbursed, either in part or in full.
- State reporting requirements. Providers are required to submit regular reports to the state in a timely manner documenting initial treatment, follow-up treatments, and any discussions between the provider and payer regarding the treatment and other issues. These reports are not standardized, however, as each state has its own specific reporting requirements. Again, failure to deliver exactly what is needed, in exactly the format specified, or within the timeframe allotted, creates more headaches and delays.
- Incessant follow-up needed. Even when everything is submitted properly and on-time, it does not guarantee reimbursement will be prompt. Providers often must follow up frequently to ensure claims are being processed and that there are no issues holding them up. Again, this is a specialized area. Untrained account representatives may not know how to make these calls and spur action. If claims are rejected, more follow-up is required to determine the cause and potentially file an appeal, taking up even more staff time.
- Reimbursements must be verified for accuracy. Even after reimbursement is received, the work isn’t over. Providers must check each one to ensure there is no under-payment or over-payment. That includes checking that the workers’ comp payer is basing payments on the current fee schedule for that state. If not, an appeal must be filed, again on a timely basis.
The bottom line is that there is a lot of work (and expertise) required to ensure impediments to reimbursement from workers’ comp claims are removed and no money is left on the table. The ratio of volume to value makes it difficult to justify attempting to manage it all internally. A good business process outsourcing (BPO) partner that works with workers’ comp all day, every day, will have the knowledge and procedures in place to ensure every statute is met, every contingency is covered, and everything is exactly as it needs to be, removing the bottlenecks to reduce the costs and improve revenue flow. Even the most aggravating of jobs must be done. But they don’t have to be done internally. By moving workers’ comp claims and collections to a BPO partner, you can minimize problems for the organization as well as free up internal resources for more meaningful work.