Medical Leakage Can Be Significantly Influenced By Your Adjuster

Medical leakage is a popular topic on insurance blogs. Over the past 10 years medical costs have continued to rise even though the number of claims has decreased. Medical costs comprise more than half of the total cost of claims.

It is common for a bill to be paid accidentally, or for a procedure to be performed that should not have been performed. This is all medical leakage and your adjuster holds the key to authorization of these payments.

Top Causes of Medical Leakage By Your Adjuster:

1. Injury Coding Errors

Upon setup of a claim, most claim software allows placement of the body part that is injured. Oftentimes you can place two, three or five body parts that are considered “authorized” for the bill payers to process payments once bills are received. For instance, if a worker has an arm injury, an adjuster may place upper arm, lower arm, elbow, and wrist as approved treatment areas if indeed this is where the treatment is being performed.

The problem with this is that the coding somehow misses being updated from time to time. Maybe it should only be the elbow, and not the rest of the arm. Injured workers use a common tactic of saying their “whole arm hurts” instead of focusing on a specific area. Maybe they had prior wrist surgery that was non-occupational in nature. So the physician focuses on treating the entire arm, when really only the elbow should have been deemed compensable. Therefore, any treatment outside of the elbow is medical leakage.

2. Adjuster Not Looking at Entire Medical Record, Only Treatment Plan

So how could you stop the medical leakage for an injury coding error? The only way the adjuster would pick up on this error is to read the entire medical record. And not just one record, but every one that comes in. Every doctor has their own dictation style, some wordy and some brief. But to be thorough, an adjuster must read the medical record to make sure the accepted body part injury is being treated, and not other body parts deemed unrelated to the injury. If you fail to catch errors in treatment, then how could you update the body part injury coding? If all the adjuster looks at in the medical notes is “Continue physical therapy for 6 more weeks and come back for a re-evaluation” then the adjuster really has no idea what is going on. They failed to see that the claimant’s pain went from being a 3 out of 10, to an 8 out of 10. If this person is not working, why would their pain sharply increase?

3. Medical Bills Are Paid Without Supporting Medical Records

If all that is sent in the mail is a bill, with no attached notes, then you should never pay the bill. Providers do this is order to get paid quicker, as dictation notes often lag behind the billing process. Even when an adjuster calls and requests the notes, it can take a week or two, or even a month to receive the actual dictation. This results in countless calls to the provider requesting notes. Even though they promise to fax them as soon as they arrive, they rarely will. The adjuster moves into babysitting mode, and the bill sits in their queue to be paid for all of those weeks.

The challenge is performance auditing for the adjuster. Insurance carriers love to have fast turnaround time records that track the time it takes to receive a bill, to the time a check is cut and the bill is considered paid. So now, this lone bill has become a burden to the adjuster. It has caused countless phone calls, auditing issues, and lag time for the billing turnaround process. So, in order to avoid this, the adjuster just pays the bill without the notes, in order to avoid making 13 extra phone calls, and a few emails to their supervisor explaining why the bill is sitting in the billing queue.

4. Adjuster Views Medical Bill as Not Important to Overall Claim

Carriers often focus on only the indemnity portion of the claim, and the associated costs that indemnity puts on the file. What’s the big deal if a bill gets paid here and there in error? It is not like the money is coming out of the adjuster’s paycheck. It’s not their money, so no big deal. Chances are it is related to the claim anyway.

Unfortunately this is the mindset of today’s adjuster. Which is a shame, because it should not be the case. Thinking on the macro scale, if every adjuster paid 10 bills in error on a few of their claims, and this is happening in every state, at every carrier, month after month, then you are talking about a substantial amount of money that is being thrown away. Money thrown away for really no reason other than to avoid having to do the extra work associated with putting the time in to do the proper investigation on the billing. Blame adjuster workload, blame automated bill payment software, blame lack of utilization review, blame it on not having an assistant that should be doing this for the adjuster. Blame it on whomever you want; the bottom line is the adjuster assigned to the claim is the one responsible. It is their job to do the needed investigation of what this bill is for, and how it relates to their claim.

5. How Do We Correct This From Happening?

Medical leakage is a very real problem that does not have a silver bullet fix. Challenges to the solution include adjuster workload, and the emphasis on auditing as being the key issue related to adjuster job performance. If an adjuster has 175 active claims, that means they are receiving a ton of bills. Every bill has to be viewed, labeled, and processed for payment or denial. The truth is an adjuster could spend all day reviewing medical records, calling providers for medical notes, and authorizing payments.

One improvement to this situation is using a dedicated adjuster. A dedicated adjuster is an adjuster who works exclusively for one employer. Another option is a designated adjuster – adjusters who handle all the claims for one employer, but also handle claims for other employers. You can establish a close working relationship with this individual and ensure they are following best practices in regards to your claims.

Summary

Medical leakage is going to happen at some point in time. Claims work involves a lot of financial aspects other than just the indemnity. But medical billing should be viewed and held in the same high regard as the indemnity aspect. All of these little and moderately sized bills paid in error add up to significant dollars.

Author Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. www.reduceyourworkerscomp.com. Contact: mstack@reduceyourworkerscomp.com.