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 is doing it who is not us.
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 worker's compensation claims. Just ask anyone who has to do it on a semi-regular basis.
Make no mistake: worker's comp is a wonderful safety net for employees and employers. Prior to its introduction between the two Roosevelts (Teddy and Franklin) if a worker got hurt on the job and required expensive medical care, his primary option for compensation was to sue his employer. No explanation is needed on why that wasn't good for anyone. Workers' Compensation avoids that unpleasantness, and puts the indemnity and healing processes in a different, safer arena for both the worker and employer.
Yet while it sounds simple and straightforward in theory, in practice Workers' Compensation claims processing is anything but. Instead it presents a complex set of rules, regulations and requirements at the state level, that appear to be designed to ensure claims are rejected and providers are penalized for not performing up to standards.
It's not so bad for the healthcare payers that offer Workers' Compensation insurance, by the way; they helped write the rules, and their administrative burden is relatively simple.
For providers, however, it can be a real struggle to get these claims paid correctly, and in a timely manner. 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 all of their Workers' Compensation 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.
- There is no single set of rules. With commercial health insurance, while there may be minor variances here and there, providers basically work with 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.
- Completely separate from standard health insurance. Worker's comp is very specialized. Health plans that offer it don't sell commercial health insurance, and commercial plans don't offer worker's comp (with rare exceptions). Failure to understand this could lead to a Workers' Compensation 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 worker's 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. Worker's 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' Compensation regulations. It's no wonder there are frequent problems.
- Still a paper-based process. While there are a few exceptions, for the most part Workers' Compensation claims must be filled out on paper, with the right attachments, 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 that must be followed. State statutes lay out intricate fee schedules that explain exactly what will and will not be covered by worker's 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, 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, as well as likely denial of payment.
- 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 payment to ensure 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 worker's comp claims and 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 works with Workers' Compensation as a specialty 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 they don't have to be done internally. By moving Workers' Compensation 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.
Daniel A. Schulte, MBA, CHFP, joined HGS, Inc. as Senior Vice President of Provider Healthcare, and is responsible for Operations and Client Development of all services HGS delivers to providers of healthcare, across the full spectrum of healthcare. He can be reached at firstname.lastname@example.org.