by Daniel A. Schulte, Senior Vice President of Healthcare at HGS
Workers’ compensation is a wonderful safety net for employees and employers. For many healthcare providers, however, workers’ comp claims processing is anything but simple. While all hospitals and practices deal with claims processing as part of their everyday workflow, workers’ comp claims present uniquely complex challenges that can lead to high rates of denials and unpaid reimbursement for services rendered.
The claims package itself can be onerous. The jumble of electronic and paper documentation that includes the claim, the patient’s medical record, prescribed treatments and progress notes have to be submitted in such a way to meet the often stringent liability and workers’ comp statutory rules enforced by the state.
This complication is even more burdensome for those that provide healthcare near state borders. For example, if a New Jersey resident is injured, but treated in a hospital in New York, providers need to understand which state’s rules apply. Additionally, the denial rate for claims is high—as much as 40% in some states. The appeals and resubmission process can quickly compound the already significant administrative burden associated with building, submitting and tracking a workers’ comp claims package.
There are 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. This is why more and more providers are beginning to turn over their workers’ compensation business processing to service partners that focus on this very specialized area of insurance. Here are some of the key reasons you may want to consider outsourcing your Workers’ Compensation patient accounts receivable.
1. There is no single set of rules for workers’ compensation claims.
With commercial health insurance, although there may be minor variances here and there, providers basically work within the same processes, procedures and rule sets -- not so with workers’ compensation. Each of the 50 states sets its own complex statutes and fee schedules, reports and treatment plans, which must be adhered to exactly or the claim will likely be rejected.
2. Workers’ comp is completely separate from standard health insurance.
Workers’ comp is very specialized. Health plans that offer it routinely do not sell commercial health insurance, and commercial plans don’t routinely offer workers’ comp. If a provider doesn’t capture the correct insurance information, a workers’ compensation claim could be submitted to the wrong payer, or to a third-party administrator (TPA), delaying reimbursement and risking a violation of state filing requirements.
3. The 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. Failure to obtain this pre-authorization confirming that the employer believes the employee’s injury occurred on the job could severely impact the entire claims and reimbursement process.
4. 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% of a hospital’s accounts receivable (A/R). Despite the risks associated with failed claim processes, most organizations see little financial value in hiring an internal expert, relying instead on personnel with minimal training in workers’ comp regulations. It’s no wonder providers encounter frequent problems.
5. The Workers’ Comp process is still a paper-based process.
Although there are a few exceptions, workers’ comp claims must be filled out on paper, with the right attachments, and mailed to the insurance carrier. This 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 item must be filled in every time. And, if just one piece of paper is submitted out of order the entire claim may be sent back, starting the process over again and further delaying reimbursement.
6. 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 throughout the process could lead the provider to deliver services that will not be reimbursed, either in part or in full.
7. There are state reporting requirements.
Providers are required to submit regular reports to the state in a timely manner documenting initial treatment, followup treatments, 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, and within the timeframe allotted, creates more headaches and delays, as well as likely denial of payment.
8. Regular follow up is needed.
Even submitting everything properly and on time does not guarantee timely reimbursement. 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.
9. Reimbursements must be verified for accuracy.
Even after reimbursement is received the work isn’t over. Providers must check each payment to ensure that there is no under-payment or over-payment. That includes checking that the workers’ compensation payer is basing payments on the current fee schedule for that state. If not, the provider must file an appeal, again on a timely basis. The bottom line is that there is a lot of work (and expertise) required to remove impediments to reimbursement from workers’ comp claims to ensure that 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 specializes in workers’ compensation will have the knowledge and procedures in place to ensure every statute is met, every contingency is covered, every report submitted correctly and on time, 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 these jobs don’t have to be done poorly, or incompletely. By moving workers’ compensation claims and collections to a trusted BPO partner, the successful provider can increase cash flows, minimize problems for the organization, and free up internal resources for more meaningful work elsewhere in the organization.
Featured in in FOCUS Magazine - HFMA, NJ