Best Practices For Handling Complex Liability Claims

Provider Best Practices

for Complex Liability Claims

Educate | Navigate | Connect

Content

• Overview

• Industry Dynamics

• Action steps to take beginning at the point of registration on

employment injury claims

• The impact of state and federal laws

• Why facilities and providers may not be maximizing recoveries on

liability claims

• Training opportunities for liability claim handling

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Overview

Liability claim processing boils down to the following elements:

• Training up-front data acquisition staff

• Classifying accounts correctly upon point of service

• Identifying administrative inefficiencies with insurance claim handling practices that

create financial loss

• Garnering insurance details of each injury encounter

• Using forensic analysis – in an administrative way – to resolve open claims for

injured patient

• Working with patients, next-of-kin, employers, insurance companies, and

attorneys to take a medical claim and do all the legwork to get it paid by

a liability-based insurer

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Industry Dynamics

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Industry Conditions

High Self-Pay = Growing Trend for Facilities

• Self-pay and bad debt are often difficult classifications – hospitals genuinely

want to avoid these areas. They often become default zones for patients who

present with no coverage at time of encounter.

• Hospitals often have multiple collections vendors on board – with only an

8-25% rate of return (high-end estimate).

• Self-pay percentages of overall revenue should not go beyond 20% of

overall hospital A/R, but often does

• Increased education of liability claim handling assists facilities

across the board

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State Negligence Rules: Motor Vehicle Accidents

No-Fault States: Advantages

• Personal Injury Protection provision

exists on policies, in addition to

MedPay provision as purchased by

motorists

– Florida, Hawaii

– Kansas, Kentucky

– Massachusetts, Michigan

– Minnesota, North Dakota

– New Jersey, New York

– Pennsylvania

– Utah

Tort States: Advantages

• Comprises the remainder of the country

aside from true “no-fault” states

• Individual must be found “at fault” in

an accident = multiple avenues of

insurability (either patient’s own policy,

or at-fault policy, with insurance

subrogation to occur behind the

scenes.)

• More investigation; more coordination;

but with skilled follow-up, the

hospital can achieve strong

returns.

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Overall Conditions for WC Policies

Reimbursement Rates

• Each state WC Board determines

reimbursement rates

– Outpatient Fee Schedules are

around 60-65% reimbursement

nationally

– Inpatient payment structures are

often reasonable and achievable --

with appeals and close follow-up

between hospital and payer

– Escalating to the state WC Board

works to the hospital’s advantage

– Timeliness rules vary state to state

Employment Rates

• Researching top employers and safety

statistics in each region is helpful to

understand local WC demographics and

patterns

• Employability is a big factor; for example,

Florida may have more MVAs than

Worker’s Comp. However, large

employers in FL will very often have more

WC accidents:

– Wal-Mart

– Publix Grocery

– Home Depot

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Macroeconomic Environment

United States Injury/

Fatality Rate

• Total uninsured: 16.7% = 50.7 mm

people

• MVA injuries: 2.22 mm injuries (2011)

• MVA fatalities: 32,367 (2011)

• WC injuries: 2.9 mm injuries (2011)

• WC fatalities: 4,609 (2011)

• Personal injuries –

– Dog bites: 800,000 med visits

– Falls: 200,000 children

– Falls: 2.3 mm older adults (2010)

Hospital Outlook

• Reduced reimbursements: CMS

• Expanded future coverage through PPACA

• Aging population increasing

• Declining birth rate; future generations

bearing increased CMS costs

• Immigrant population showing trends of

declining birth rate

• Commercial health payers increasing

deductibles and out-of-pocket expenses

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The Present and Future

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Times Have Changed

• Insurance companies want to know the thought processes physicians use to

reach medical decisions.

• Payments for liability injuries, such as Worker’s Compensation injuries, are

rarely paid without medical justification.

• Clinical documentation and well-completed forms can assist providers in

meeting complex insurance and state-driven requirements.

High Touch Claims = High Cost Claims

• Anytime a reduced payment or no

payment is received, the cost for billing

the services rises dramatically.

• These extra costs reduce the profit for

the service.

• The basic process to correctly fill out a claim form and submit to any

insurance company is fairly similar, but each payer can be very

specific in their individual needs and policies.

Lifecycle of a Liability Claim

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1. Patient presents to physician with chief complaint

2. The collection of data for a medical claim begins at this

time during check-in

3. Frontline representatives collect and document

insurance information

4. The most important aspects of the medical claim cycle

occur between the time the patient arrives at the

provider and the time the medical claim is generated. It

can be the shortest part of the entire revenue lifecycle,

but also the most important.

Lifecycle of a Liability Claim

Note:

Many points

exist in the

cycle for a

claim to get

lost or go

awry.

5. During the patient’s evaluation, the physician is

responsible for documenting the details of the

encounter.

6. Coders assign numeric codes for chief complaint,

other diagnoses, external forces if applicable, and

procedures rendered. (Example: 847.0 for neck

sprain; E812.0 for motor vehicle accident that

may occur.) Note: MVAs may occur in the course

and scope of an individual’s employment.

7. Billers identify payer, speak with claims adjuster,

and ship bill and records to correct address.

Lifecycle of a Medical Claim, Briefly

• The quality and accuracy of billing information and clinical documentation

(as it flows through each department) has the single greatest impact on

the quality of the claim.

• Payer follow-up is critical to reimbursement

– Receipt of claim and accompanying records

– Adjudication

– Payment determination

– Exceptions escalated

– Denials explained clearly and justified by payer

Lifecycle of a Medical Claim, continued

Best Practices Overview on Claim Handling to Achieve Greater Performance

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Data elements to garner:

• Employer name pertinent to injury

• Employer address and main phone number

• Date of Accident

• Basic Injury, Body Part(s) affected

• Employer HR/Manager/Foreman name and number

Patient unable to communicate:

• If patient was brought in with coworkers or supervisor, gather same data

• Employer must file accident report with insurance carrier and state industrial

accident board

• Do not default financial class to Self Pay

Registration:

On-the-Job Injuries

NOTE:

If insurance

carrier is known at

patient encounter,

call insurance

for service

authorization as

soon as possible


• Policyholder of vehicle

• Role of patient (driver, passenger, cyclist,

pedestrian)

• Patient address and main phone number


• Where/How injury occurred

• Insurance company known?

Driver’s auto insurance company name

Other party’s auto insurance name

Own health insurance as secondary plan

Attorney data if applicable

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Registration: MVAs


• Gather data from next of kin as

appropriate

• Request police report post-discharge

• Place call/send questionnaire to

patient’s home for accident and

insurance details

• Do not default financial class to Self

Pay

MVA: Secret Coverage to Obtain

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Registration:

Personal Injuries


• Geographic location of injury (address of

where injury occurred) - – the key to liability is

if the injury occurred NOT at patient’s own

home; although sometimes there could be

liability propensity on leased property.

• How injury occurred – Examples: neighbor’s

pitbull bit patient, or slip/fall at grocery store

• Patient address and main phone number

• Owner/Entity Contact Data


• Health plan as secondary (Plan B option)

• Attorney data if patient has hired

representation


• Gather data from next of kin as

appropriate

• Request ambulance or police report (if

first responders were on the scene)

post-discharge

• Place call/send questionnaire to

patient’s home for accident and

insurance details

• Do not default financial class to Self

Pay

Tricky Examples – Shout Out Your Answers

• Elderly woman suffers a herniated disc while lifting

a bag of soup cans at her church food pantry.

– Liability or Medicare? Both? Neither?

• A man riding a dune buggy flips over and suffers

a broken rib and collarbone.

– Motor Vehicle or Health plan? Both? Neither?

• A woman riding a motorcycle oversteers and grazes the side of her body, and

suffers road rash.

– Motor Vehicle or Health plan? Both? Neither?

• A man transferred from another facility has MS and old orthopedic injuries

from his job as a postal worker.

– Worker’s Compensation or Health plan? Both? Neither?

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The Significance of Clinical Documentation

• Substantiates services

• Charges will be understood at the insurance

company

• Validates necessity of treatment

• Speeds up bill payment when packaged

together particularly for WC claims

• Nurses’ notes

• Physician’s report

– History and Physical

• Lab reports

• Radiology reports

* Denotes Where allowed by state/county law;

ensure signed authorization on file by patient

Tips: 1. Marry medical records with bills for WC claims 100%

of the time at first submission

2. Send liens, lien letters, or request Letters of

Protection to attorneys that request medical records to

ensure they are aware of medical charges in advance of

final settlements*

3. Issue your invoice for medical records where allowed

by state law and hospital policy

• Therapy:

Physical

Behavioral

Speech

• Durable Medical Equipment

• Implantable Device Invoices

• Itemization of all services rendered

At the Insurance Company Behind the Curtain:

What Happens to the Bill Form and Records

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• Electronic submission (secure 837-5010 format)

– Mandated/encouraged states:

Texas

California

Minnesota

Illinois

New York

– Dependent on payer capability

Some are set up to accept electronic submissions

• Paper Submission

– Red 1500s or UBs

– Black and White forms acceptable; sometimes rejected for

readability – ensure legibility

• Fax Directly to Insurance Adjuster

Note:

Always indicate

in your host

system the

submission date

and location of

where the bill

and records were

sent. This

includes the

specific

adjuster’s name.

Work Comp Claim Submission Methods

Many major Property and Casualty insurers have

standalone data centers

• Central mailing point

Mail opened and categorized by type

All mail is scanned into their system

Claim numbers found if not on documents

Document sent electronically to each appropriate adjuster

across the country

Employer must file accident report.

• Sometimes data centers are within the US or off-shored

• It is not customary to contact data centers directly for claim status

Insurance Company Data Centers

Critical tips:

1. Having claim

numbers on

documents before

mailing saves an

average of 21 days of

processing at the

insurance company

(really!)

2. If no claim number

was opened or found,

claim will be rejected

as such.

.

Medical bills (claim forms)

• Red paper is scanned

• Red lines are “dropped out” by scanners’

pixel interpretation

• Raw data is automatically fed to bill

review systems

Less errors, but still imperfect

• Black and white bills are manually data

entered

Slower processing time

Prone to more errors in data entry

Always double check EOBS for

insurance- rep errors.

Data Centers, continued

Example UB

Resulting EOB with errors

• Determination

– Adjuster Review – and/or –

– Automated Rules Engine

• Based on accident report and

severity of injury, adjuster will set up

rules that will automatically “OK to

Pay” certain services, taking the

human element out of manual

examination

• Usually done with lower balance,

less complex claims

• The role of the adjuster is

threefold:

– Own claim from start to finish

– Examine claim validity and

any evidence of fraud

– Reduce insurance loss by

predicting value of overall

claim

Adjudication

Managed Care departments exist

in the Property/Casualty

insurance environment!

• Line-by-line re-pricing of bills

occurs using various methods

PPO contracts

Fee schedule

Usual and Customary

guidelines

Nurse case management

DRG (not line-by-line

analysis; rather a fixed

code)

Many other methodologies

A Few Words on “Silent PPOs”

• When a claim is paid, an

Explanation of Benefits (EOB)

is issued with the check

• The rationale of payment

should indicate if a contractual

agreement was accessed for

discounts

• Does your facility have a

contract in place with the

payer mentioned on the EOB?

• Challenge the insurer if not!

Bill Review and Pricing

• As many hospitals have UR

departments, insurance

companies do too.

• Nurses and doctors are retained

on staff to investigate medical

necessity and claim validity,

especially for high balance and

complex situations

They examine clinical

documentation against services

listed on the bill

They have conversations with

hospital physicians to question or

dispute certain services and tests

They reduce insurance loss by

disputing or denying coverage

Medical decision making must

be clear in documentation

Utilization Review

Reimbursement Methods How a Claim is Paid (or Not)

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Types of Reimbursement: National Overview

• APCs

• Capitation

• Case rate

• DRG

• Day Differentials

• Service Differentials

• Fee Schedule and

Timely Pay Fee

Schedules

All methodologies

operate under

various contracts,

policies, and

guidelines, that all

depend on state

and federal laws.

• Flat Rate

• Per Diem

• Managed Care stop loss

outliers

– Case based outliers

– Reinsurance stop loss

– Percentage stop loss

• At Charges

• Sliding scale

discounts

Diagnosis-related groups: A classification system that categorizes patients who

are medically related, with respect to diagnosis and treatment. They are statistically

similar in length of hospital stay. It’s a lump-sum, fixed-fee based on diagnoses. Fees are

made by a research team, which determine national averages. DRG numbers go from

001 to 900. Variables in DRG classification:

• Principal Diagnosis; Secondary diagnosis (up to eight)

• Surgical procedures (up to six)

• Comorbidity (pre-existing conditions) and complications

• Age and sex

• Discharge status

• Number of hospital days for a specific diagnosis

Day Differential: First day paid at higher rate, cascading down each following day.

Service Differential: Hospital receives a flat per-admission reimbursement

for the service. A prorated payment can be made (e.g., 50% ICU, 50%

medical services) Services are defined in the contract

Courtesy: Marilyn Fordney; Medical Administrative Procedures

Breaking the Methodologies Down

Ambulatory Payment Classifications (APCs): Based on PROCEDURES, not

diagnoses. Services are assigned a group code:

• Surgical

• Significant procedures

• Medical

• Ancillary

• Note: Modifiers are important to clarify multiple services!

Capitation/Percent of Revenue: Reimbursement to the hospital on a per-member, per-

month basis regardless of hospitalization. Percent of Revenue is a fixed rate of payment.

Case Rate: Averaging after a flat rate for a service has been given to certain categories

of procedures. Specialty procedures may be given a case rate (e.g., graft surgery).

Bundled case rate is an all-inclusive rate for institutional and professional

services connected with the procedure.


Fee schedule: list of charges based on procedure codes. Fee-for-service basis.

Flat rate: A set amount per hospital admission regardless of cost of actual services

Per diem: single charge for a day in the hospital, regardless of actual charges or costs

Managed Care stop loss outliers:

• Case-based stop loss: A mechanism of hospital and insurance carrier sharing loss. It is

a payment of a percentage over a certain dollar threshold (e.g., 65% of excess billing

over $100,000.)

• Reinsurance stop loss: The hospital buys insurance to protect against lost revenue

and receives less of a cap fee. The amount they don’t receive helps pay for the

reinsurance. Example: A case reaches $100,000. The plan may allow 80% of expenses

in excess of that figure for the rest of the year.

• Percentage stop loss: A percentage paid of charges when a certain

threshold is met.


• A percentile is defined as a value

on a scale of 100 that indicates

the percent of a distribution that is

equal to or below it. For example,

the 75th percentile means that 75

percent of all fees for CPT code

99203 fall at or below $136. It also

means that 25 percent of all fees

for CPT code 99203 fall at or

above $136. Data is analyzed

by ZIP code by the

insurer.

99203 = $136 by XYZ Insurer

• Office or other outpatient visit for

the evaluation and management

of a new patient, which requires

these three key components: a

detailed history; a detailed

examination; and medical decision

making of low complexity.

Physicians typically spend 30

minutes face-to-face with the

patient and/or family.

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Usual and Customary Explanation

Worker’s Compensation Details Analyzing the Process

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• Workers in the late 1800s had it tough. For injuries and deaths, the legal processes were

uncertain. Negligence had to be proven by the employee, and very often there was little

recourse.

• In 1911, the first worker’s compensation laws were adopted by several states. The laws allowed

injured workers to receive medical care without first taking employers to court.

• All states currently have worker’s compensation laws. They vary from state to state.

• This coverage is the most important coverage written to insure workplace accidents.

A Very, Very Brief History

Two types of coverage:

• Federal compensation laws – paid by US Department of Labor

Applies to miners, maritime workers, postal workers, and

government workers

• State compensation laws – paid by self-insured businesses, insured

employers, or state insurance funds

State and private business employees

Types of Coverage

• Employers pay for medical expenses directly instead of insurance premiums

• Precertification is important – the self-insured employer is very mindful of treatment

costs

• Self-insured employers are covered by ERISA (Employee Retirement Income Security

Act.)

– Mandates reporting

– Not state regulated – is under federal jurisdiction

– 90-day payment timeline. Employers may violate this – there are no

penalties for violation. Courteous but aggressive pursuit is a must.

Self-Insured Employers

The Beginnings of

Worker’s Compensation Reform

• By 1994, dysfunction Work Comp systems were costing companies more

than $65 billion annually in many US cities.

• Insurers began denying coverage to businesses.

• Some businesses began relocating to states allowing lower premiums.

• Widespread legal and medical corruption and abuse evolved throughout

the system.

• Antifraud legislation and increased penalties for fraud.

• Anti-referrals that restricted physicians referring patients for diagnostic

studies to sites where the physician has financial interest.

• Proof of medical necessity for treatments, as well as appropriate medical

documentation arose. Payers may refuse to pay the entire bill without

medical documentation.

What Worker’s Compensation Reform Did

• Preauthorization for major operations and expensive tests

• Caps on vocational rehabilitation

• Development of fee schedules

• Medical bill review – payer examination of duplicate claims and billing

errors

More Reform Measures

• Employee has an accident occurring within the course and scope of

employment. Accidents can result in physical or mental injuries, but again, must

be within the scope of employment.

• Employee is treated at a healthcare provider.

• The accident must be reported by the employer’s HR/administrator to both the

state and insurance company. Failure to report may be against state law.

• The healthcare provider must supply comprehensive information, and they also

may have to report information to the state, depending on the law. (For instance,

New York has a very involved state reporting process.)

• The insurance company must receive accident reports, medical

records, and bills in order to make judgment and pay the claim.

The Process – In Brief

Out-of-State Claims

• Follow all regulations from the jurisdiction in which the injured was hired, and

not the state where the injury occurred

• Companies with employees that travel must have policies that cover out of

state injuries

• If a patient seeks treatment out of state, referral

requirements must be met

• Unauthorized care holds the patient responsible in

these states:

Note: Maritime employees

do not fall under state

worker’s compensation

laws. Example: Cruise ship

employees injured at sea

often have their medical

bills paid in full, or

negotiated with a maritime

company that works with

the cruise line.

.

Alabama

Alaska

Arkansas

New Jersey

North Dakota

Ohio

Washington

West Virginia

Wisconsin

Billing Problems Solutions to Common Issues,

and Avoiding Underpayments and Denials

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Billing Problems

• Lack of medical records

• Incorrect patient name

• Duplicate statements

• Illogical dates

– Date of service prior to date

of accident

– Birthdate in the future

• Facility Name & Address incorrectly or

not linked to facility Tax ID

Send documentation

Investigate patient’s name as it is on

valid ID and insurance cards

Send corrected claims and appeals to the

correct addressee – it can get lost in the

shuffle at any point

Correct dates

Send W-9 to Insurance

• Gender error

• Missing principal diagnosis code

• Missing revenue codes on UB

• Missing CPTs on 1500 or outpatient UB

• Missing Physician name and ID

• Type of bill third digit (billing sequence)

doesn’t correspond to statement coverage

dates

Correct gender

Add diagnosis

Add revenue codes

Add CPTs

Add Physician name

Correct Type of Bill to correspond

with dates

Note: Resubmit corrected claims

with new Type of Bill

Billing Problems

• Number of hospital days for room

charges must match number of

inpatient days

• Missing units – many times defaulted

to “1” at insurance company if missing

on claim!

Always match inpatient days

Add value codes wherever applicable

Always, always input units. Insurance

companies pay by units. Anesthesia is

paid by minutes. (Surgical time is

examined.)

Billing Problems

• Undocumented workers

• Incarcerated individuals

• Municipal workers

• Burn liability claims

Discuss with employer how claim will be paid

Is a contract in place with local Department of

Corrections? Will Medicaid pay?

Is the municipality self-insured, or insured by

a carrier?

How did the burn occur? Source is important

to determine payment!

Industrial Accident

Home

MVA

Crime Victims’ Compensation

Unique Situations

• All Worker’s Compensation plans are

inherently no-fault

• The injured worker is not responsible for

payments

• The worker’s compensation carrier that

insures the employer will absorb liability and

pay

• If the employer is self-insured, they will pay

Worker’s Compensation COB

Note:

ONLY if a claim

ultimately ends up

NOT being a true

worker’s compensation

situation, then it will

be: A health plan

responsibility, or

A self-pay claim, if no

health plan is active

• Sometimes, a patient will opt out of the Worker’s Compensation

plan entirely, and outright sue their employer for damages

• Settlement money will be owed to the hospital

• Conduct regular follow-up with the attorney representing the

patient

Worker’s Compensation Tort Cases

Motor Vehicle COB

In a No-Fault state, COB looks like

this:

• PIP (Personal Injury Protection)

pays first

• Patient’s health plan pays

second

• At-fault third party pays third

• Co-pays and deductibles can

kick into patient’s MedPay if

funds are available

• At-fault settlement reimburses

health plans; satisfies

outstanding provider residuals

In a Tort state, COB looks like this:

- Patient’s MedPay pays first OR

at-fault Bodily Injury plan can

also be pursued

- Patient’s health plan pays second

- At-fault settlement reimburses

health plans; satisfies

outstanding provider

residuals

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Note: Governmental payers are the payers

of last resort

Note: Double check your health contracts

for any specific COB language with lien

filing and liability settlement pursuit

• Affirm with the carrier that a clean

claim was sent

– Precert/Preauth done

– Documentation received

• Follow up in a timely manner (every 28

days)

• Send in written tracer forms that ask

where the claim is at in the

adjudication process

• Track all denials to learn what services

are being denied, and which insurance

companies are doing the denying

• Send all high-dollar claims by certified

mail

• Open a grievance with the State

Insurance Department if you don’t get

anywhere

Delinquent or Slow Pay Claims

• An “Explanation of Benefits” (EOB) is sent either electronically or by mail to the

healthcare provider for each claim.

• Payment is enclosed with the EOB.

• The remarks on the EOB are the first indication of whether follow-up procedures

are required for the claim.

• In many underpaid/unpaid cases, the next action is to correct the claim information

and either re-bill the claim, or file an appeal.

Payer Response

Example of Appeal Letter:

Contractual Reduction

Dear Director of Claims,

It is our understanding that your company has released a partial payment on the referenced claim. It is our

position that this claim has still not been reimbursed correctly and that additional benefits are due.

Please be advised, it is our position that contractual provisions stipulate a higher level of payment for this

treatment. As a participating provider, we feel the following contractual language or fee schedule reference is

applicable to this claim and justifies additional payment:

{Insert potentially applicable contractual language. Reference the page number or attach copy from contract

to add as an attachment to appeal.}

Our review of the provider contract does not reveal any language justifying the current level of payment. In

order to assess the accuracy of payment, we request your response regarding how the payment was

calculated ,and what portion of the fee schedule was utilized. It is our position that if terms of the contract are

in direct conflict, the higher reimbursement should be allowed. As you are likely aware, many courts have

ruled that managed care contracts are contracts of adhesion and that the organization responsible for drafting

the contract wording can be responsible for unclear and ambiguous terms.

Based on this information, we ask that this claim be reviewed. We appreciate your prompt attention to this

matter.

Sincerely,

Appeals Specialist

Summary & Training Opportunities

What We’ve Learned Today and Steps for the Future

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• Always educate the patient and take the stance of

patient-friendliness

• Have the patient fill out Assignment of Benefits

forms consistently

• Basic coding training includes locale (industrial

premises; highway) of injuries, which will help

identify accidents

• Keep a paperless “paper trail” by notating every

detail of the claim cycle. Every detail helps.

• Terms to Remember:

– Adjuster

– Adjudication

– Utilization Review

– Silent PPO

– Appeal

Training Opportunities

Feedback

Claudine Nesheiwat

Director of Operations, Liability Services

Phone: 804-272-6001 x227

E-mail: [email protected]

Best Practices For Handling Complex Liability Claims

Health & Medicine

Transcript of Best Practices For Handling Complex Liability Claims