Best Practices for Complex Liability Claims

8/13/2019 Best Practices for Complex Liability Claims

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Provider Best Practicesfor Complex Liability Claims

Educate | Navigate | Connect

APA Results


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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 analysisin an administrative wayto 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 classificationshospitals 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 boardwith 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

MedPayprovision 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 ofinsurability (either patients 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 hospitals 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

Workers 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 mmpeople

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 Workers 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.


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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 goawry.


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5. During the patients evaluation, the physician isresponsible 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 individuals employment.

7. Billers identify payer, speak with claims adjuster,

and ship bill and records to correct address.

Lifecycle of a Medical Claim, Briefly


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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, cont inued


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Best PracticesOverview 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 atpatient encounter,

call insurancefor service

authorization assoon as possible


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Policyholder of vehicle

Role of patient (driver, passenger, cyclist,pedestrian)

Patient address and main phone number

Date of Accident

Where/How injury occurred

Insurance company known?

Drivers auto insurance company name

Other partys 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

patients home for accident and

insurance details

Do not default financial class to Self

Pay


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MVA: Secret Coverage to Obtain

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Registration:Personal Injuries


Geographic location of injury (address ofwhere injury occurred) -the key to liability isif the injury occurred NOTat patients own

home; although sometimesthere could beliability propensity on leased property.

How injury occurredExamples: neighborspitbull bit patient, or slip/fall at grocery store

Patient address and main phone number

Owner/Entity Contact Data

Date of Accident

Health plan as secondary (Plan B option)

Attorney data if patient has hiredrepresentation


Gather data from next of kin asappropriate

Request ambulance or police report (iffirst responders were on the scene)post-discharge

Place call/send questionnaire topatients home for accident and

insurance details

Do not default financial class to Self

Pay


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Tricky ExamplesShout Out Your Answers

Elderly woman suffers a herniated disc while liftinga bag of soup cans at her church food pantry.

Liability or Medicare? Both? Neither?

A man riding a dune buggy flips over and suffersa broken rib and collarbone.

Motor Vehicle or Health plan? Both? Neither?

A woman riding a motorcycle oversteers and grazes the side of her body, andsuffers road rash.

Motor Vehicle or Health plan? Both? Neither?

A man transferred from another facility has MS and old orthopedic injuriesfrom his job as a postal worker.

Workers Compensation or Health plan? Both? Neither?

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The Significance of Clinical Documentation

Substantiates services

Charges will be understood at the insurancecompany

Validates necessity of treatment

Speeds up bill payment when packagedtogether particularly for WC claims

Nurses notes

Physicians 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 ofProtection to attorneys that request medical records toensure they are aware of medical charges in advance offinal settlements*3. Issue your invoice for medical records where allowedby state law and hospital policy

Therapy:

Physical

Behavioral

Speech

Durable Medical Equipment

Implantable Device Invoices

Itemization of all services rendered


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At the Insurance CompanyBehind 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 forreadabilityensure legibility

Fax Directly to Insurance Adjuster

Note:Always indicate

in your host

system the

submission date

and location ofwhere the bill

and records were

sent. This

includes the

specific

adjusters name.

Work Comp Claim Submission Methods


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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 claimnumbers ondocuments beforemailing saves anaverage of 21 days ofprocessing at theinsurance company(really!)

2. If no claim numberwas opened or found,claim will be rejectedas such.

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Medical bills (claim forms)

Red paper is scanned

Red lines are dropped out by scanners

pixel interpretation

Raw data is automatically fed to billreview systems

Less errors, but still imperfect

Black and white bills are manually dataentered

Slower processing time

Prone to more errors in data entry

Always double check EOBS forinsurance- rep errors.

Data Centers, continued


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Example UB


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Resulting EOB with errors


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Determination

Adjuster Reviewand/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


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Managed Care departments exist

in the Property/Casualtyinsurance environment!

Line-by-line re-pricing of billsoccurs using various methods

PPO contracts

Fee schedule

Usual and Customaryguidelines

Nurse case management

DRG (not line-by-lineanalysis; rather a fixedcode)

Many other methodologies

A Few Words on Silent PPOs

When a claim is paid, anExplanation of Benefits (EOB)is issued with the check

The rationale of paymentshould indicate if a contractual

agreement was accessed fordiscounts

Does your facility have acontract in place with thepayer mentioned on the EOB?

Challenge the insurer if not!

Bill Review and Pricing


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Reimbursement MethodsHow 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 FeeSchedules

All methodologiesoperate under

various contracts,policies, and

guidelines, that alldepend on stateand 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


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

are medically related, with respect to diagnosis and treatment. They are statisticallysimilar in length of hospital stay. Its a lump-sum, fixed-fee based on diagnoses. Fees aremade by a research team, which determine national averages. DRG numbers go from001 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 reimbursementfor 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


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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 categoriesof 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.



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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 dont 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.



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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: adetailed history; a detailed

examination; and medical decision

making of low complexity.

Physicians typically spend 30minutes face-to-face with the

patient and/or family.

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Usual and Customary Explanation


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Workers Compensation DetailsAnalyzing 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 workers 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 workers 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


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Two types of coverage:

Federal compensation lawspaid by US Department of Labor

Applies to miners, maritime workers, postal workers, and

government workers

State compensation lawspaid by self-insured businesses, insured

employers, or state insurance funds

State and private business employees

Types of Coverage


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Employers pay for medical expenses directly instead of insurance premiums

Precertification is importantthe 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 regulatedis under federal jurisdiction

90-day payment timeline. Employers may violate thisthere are no

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

Self-Insured Employers


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The Beginnings ofWorkers 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.


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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 Workers Compensation Reform Did


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Preauthorization for major operations and expensive tests

Caps on vocational rehabilitation

Development of fee schedules

Medical bill reviewpayer examination of duplicate claims and billing

errors

More Reform Measures


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Employee has an accident occurring within the course and scope ofemployment. Accidents can result in physical or mental injuries, but again, mustbe within the scope of employment.

Employee is treated at a healthcare provider.

The accident must be reported by the employers 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 alsomay 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, medicalrecords, and bills in order to make judgment and pay the claim.

The ProcessIn Brief


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Out-of-State Claims

Follow all regulations from the jurisdiction in which the injured was hired, andnot the state where the injury occurred

Companies with employees that travel must have policies that cover out ofstate injuries

If a patient seeks treatment out of state, referralrequirements must be met

Unauthorized care holds the patient responsible inthese states:

Note:Maritime employeesdo not fall under state

workers compensation

laws. Example: Cruise shipemployees injured at seaoften have their medical

bills paid in full, ornegotiated with a maritimecompany that works with

the cruise line.

.

Alabama Alaska Arkansas

New Jersey North Dakota Ohio Washington West Virginia Wisconsin


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Billing ProblemsSolutions 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 patients name as it is on

valid ID and insurance cards

Send corrected claims and appeals to thecorrect addresseeit can get lost in the

shuffle at any point

Correct dates

Send W-9 to Insurance


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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)

doesnt 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


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Number of hospital days for room

charges must match number of

inpatient days

Missing unitsmany 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


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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 ofCorrections? Will Medicaid pay?

Is the municipality self-insured, or insured bya carrier?

How did the burn occur? Source is importantto determine payment!

Industrial Accident

Home

MVA

Crime Victims Compensation

Unique Situations


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Coordination of BenefitsWhos on First, Second, Third

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All Workers Compensation plans are

inherently no-fault

The injured worker is not responsible for

payments

The workers compensation carrier that

insures the employer will absorb liability and

pay

If the employer is self-insured, they will pay

Workers Compensation COB

Note:ONLY if a claim

ultimately ends upNOT being a true

workers compensation

situation, then it willbe: A health planresponsibility, or

A self-pay claim, if nohealth plan is active


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Sometimes, a patient will opt out of the Workers 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

Workers Compensation Tort Cases


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Motor Vehicle COB

In a No-Fault state, COB looks likethis:

PIP (Personal Injury Protection)

pays first

Patients health plan payssecond

At-fault third party pays third

Co-pays and deductibles can

kick into patients MedPayif

funds are available

At-fault settlement reimburses

health plans; satisfies

outstanding provider residuals

In a Tort state, COB looks like this:

- Patients MedPay pays first OR

at-fault Bodily Injury plan can

also be pursued

- Patients health plan pays second- At-fault settlement reimburses

health plans; satisfies

outstanding provider

residuals

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Note: Governmental payers are the payersof last resort

Note: Double check your health contractsfor any specific COB language with lien

filing and liability settlement pursuit


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Challenging InsurersMaximizing Reimbursement and Speeding up Payments

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Affirm with the carrier that a cleanclaim 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 servicesare 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 dont get

anywhere

Delinquent or Slow Pay Claims


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An Explanation of Benefits (EOB) is sent either electronically or by mail to thehealthcare 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:


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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 ourposition 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 thistreatment. As a participating provider, we feel the following contractual language or fee schedule reference isapplicable to this claim and justifies additional payment:

{Insert potentially applicable contractual language. Reference the page number or attach copy from contractto add as an attachment to appeal.}

Our review of the provider contract does not reveal any language justifying the current level of payment. Inorder to assess the accuracy of payment, we request your response regarding how the payment wascalculated ,and what portion of the fee schedule was utilized. It is our position that if terms of the contract arein direct conflict, the higher reimbursement should be allowed. As you are likely aware, many courts haveruled that managed care contracts are contracts of adhesion and that the organization responsible for draftingthe 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 thismatter.

Sincerely,Appeals Specialist


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Summary & Training OpportunitiesWhat Weve 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


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FeedbackClaudine Nesheiwat

Director of Operations, Liability Services

Phone: 804-272-6001 x227

E-mail: [email protected]

Documents

Best Practices for Complex Liability Claims