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Employers that are looking to reduce their workers compensation medical costs can combine claim utilization and bill reviews, but the ability to do so often depends on automated processes.
Companies may deny unnecessary treatment or medications for workers comp claimants during utilization reviews, but then pay for them when bill reviewers are unaware of the utilization denial, experts say.
“So many services that are delivered in workers comp or delivered to workers comp claimants really aren't medically necessary or appropriate for the workers (comp-related) condition,” said Joseph Paduda, principal of Madison, Conn.-based consulting firm Health Strategy Associates L.L.C.
By automatically integrating data for the utilization and bill review processes, employers can reduce unauthorized medical expenditures, said Niel Simon, senior vice president of strategic partnerships and managed care at Itasca, Ill.-based third-party administrator Gallagher Bassett Services Inc.
“Without the integration of (utilization review) with bill review, you're allowing a known potential for (medical cost) leakage to persist,” Mr. Simon said.
Experts say most claims-handling organizations provide some form of combined review for medical utilization and bill payments in workers comp, but also say some reviews are less efficient than others.
The least effective method requires claim adjusters to manually compare utilization review notes with their own bill review processes to determine if they should deny payment for a service.
Manual reviews can make it difficult to determine if the adjuster also should approve or deny payment for related services that typically come with surgery and other procedures, said Mike Farrand, Radnor, Pa.-based national technical director for workers comp medical cost containment at Willis North America Inc.
If the claim adjuster has to wait for a utilization review to determine whether a bill should be paid, that could increase the duration and cost of a comp claim, Mr. Farrand said.
“Potentially, this injured worker could not be getting any care during that period of time,” he said of manual utilization and bill reviews.
The biggest cost savings are realized by using an automated process to integrate bill and utilization review data, experts say.
That could include an employer working with the same service provider for both types of reviews, in which the provider combines billing and utilization determinations using its software. Or the employer could use separate firms for utilization and billing reviews, but generate data that can be readily combined to flag payments that should be denied.
“Where we're seeing the industry want to move” is absorbing “that set of (utilization) rules within bill review itself so that (we're) no longer talking about the need for utilization review as a discrete thing,” said Mr. Simon, who said Gallagher Bassett performs automated bill and utilization reviews.
Automating the bill review and utilization review process has reduced workers comp medical costs by about 20% for Safeway Inc., said William Zachry, president of risk management for the Pleasanton, Calif.-based supermarket chain.
The company performed a study of its comp claims several years ago that showed about one-quarter of Safeway's workers comp medical bills were being inappropriately paid after certain treatments were denied by utilization reviews.
“We were paying for something that had not been authorized and was not approved and was not medically appropriate for that particular injury a lot of the time,” Mr. Zachry said.
Safeway sought a provider that performed utilization and bill reviews as part of the same system, rather than having a claim adjuster manually compare notes of the separate reviews.
The combined process has produced “huge” savings for Safeway, Mr. Zachry said.
Erica Fichter, Sunrise, Fla.-based senior vice president of medical management at Broadspire Services Inc., said the TPA began offering automated bill and utilization reviews for workers comp a year ago to meet growing client demand.
The move aligned with an update of Broadspire's software platform, which was unable to provide such combined processes, Ms. Fichter said.
“It hasn't fully hit the marketplace as something that the clients have on their radar,” Ms. Fichter said. “However, I do see, as we have more conversations around the integration between (utilization review) and medical bill review, how critical it will be for clients to start asking for more of an automated process to handle that integration.”
Medical bill review services that audit hospital bills to identify errors and overcharges can help self-funded employers reduce their health benefit costs.