Learn the Basics of Workers Comp Medical Bill Repricing Cost Containment

Medical bill repricing is often thought of as a mundane, boring, and difficult area of workers’ compensation claims, and it’s true. Risk managers need to be very alert when medical bill repricing is discussed as these discussions are very beneficial.

Medical bill repricing is one area where the insurer or self-insured is able to control some of the medical cost of the work comp claim. Medical bill repricing reduces the amount paid to the medical provider without reducing the medical care provided to the employee.

Most jurisdictions either have a state mandated workers’ compensation fee schedule or allow the insurers/self-insureds to join provider networks able to negotiate their own fee schedule to obtain provider discounts. The fee schedules have a maximum amount or cap that can be a charged for each service provided by the medical provider. A few of the states with a state fee schedule also allow insurers and self-insureds to join negotiated fee schedule/ provider networks with payments to medical providers lower than the state fee schedule.

Medical bill repricing is simply correcting the amount billed by the medical provider to match the amount allowed by the state mandated fee schedule or the provider network fee schedule.

The problem with both state mandated fee schedules and network fee schedules is their complexity. The fee schedules become long and complex because of the numerous parts to a human body multiplied by the various medical treatment(s) each body part can receive.

In the “good ole days” before computers, you had an army of medical bill reviewers matching up the medical bill with the work comp claim, comparing each line of the medical provider’s bill to the fee schedule and correcting any deviations above the fee schedule (deviations below the fee schedule were accepted just as they are today). A revised statement showing the medical provider what was paid for each service was produced and sent with the payment. The insurer or self-insured could either have its own army of medical bill reviewers or subcontract the medical bill repricing out to a company specializing in this service.

Today with scanners, optical character recognition and electronic data interchange, the manual process has mostly been eliminated, but the results are the same — the medical provider’s bill is corrected to the fee schedule amount. Even with computers there is the occasional bill which has to be reviewed by a human being because it does not fit anywhere on the fee schedule.

Medical providers who treat work comp claimants on a regular basis either (a), have the fee schedule built into their computerized billing, or (b), [the much larger group] ignore the fee schedules and bill their regular office charge for every service knowing the medical bill repricing will correct each line of their bill. The medical providers also know on occasion their bill will inadvertently be paid their regular office charge by the adjuster trainee or their bill will go to a self-insured who has not joined one of the networks.

Negotiated provider networks reprice the bills for the insurers and self-insureds, saving the insurers and self-insureds on the cost of the medical care. In return, either the networks are paid a percentage of the reduction in the amount billed, or they are paid a set amount per line item they reduce. Unfortunately, it is hard to know which method provides the greater savings. Ask your networks if they will show you comparisons of what your service fees would be using each method.

Negotiated network fee schedules may vary in the same jurisdiction. Usually the larger the network, the greater their buying power and the better the fee schedule they can arrange for their members. These discounts provide incentive for insurers and self-insured employers to join the networks. The medical providers are willing to join the networks as they can expect a steady stream of business and prompt payment for the services they render.

The primary drawback of negotiated fee schedule networks is it limits the choice of medical providers to those in the network. If the best medical providers are not in the network, the employee’s medical care and speed of recovery can be adversely affected. Normally, the larger the network the more options for available medical care. Prior to joining a network, the insurer or self-insured should thoroughly review the medical providers in the network to verify that it provides the types of medical care most likely needed by the employees.

The medical bill repricing service provides the insurer or self-insured with a statement showing the amount billed, the amount the bill was reduced to and the amount saved. The repricing service also provides monthly, quarterly, and yearly summaries of the total dollars billed, the total of the corrected billings and the total of the amount saved, along with showing how much was billed for the repricing service.

Some of the medical bill repricing services will advertise they save the insurers or self-insureds 30% or more. While savings of that magnitude are possible, the greater probability is the savings will be in the 20% to 25% range, especially after the medical bill repricing fees are taken into consideration. Even if the savings is only 20%, it is definitely in the risk manager’s interest to be sure his/her insurer or his/her self-insured program is taking advantage of the medical bill repricing services available.

Insurers and self-insureds/employers in states without a mandated fee schedule can increase their savings on medical bill repricing by shopping the different networks for the best deal. In the states allowing the employer to select the medical provider, the employer can obtain a directory of the network’s participating providers and direct all employees to doctors who agree to the fee schedule of the network.

Most risk managers know medical bill repricing will reduce the cost of work comp claims. The smart risk manager will take it a step further and investigate the different provider networks to find the network providing the greatest savings to the company.

Author Rebecca Shafer, J.D. Consultant, President, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. She can be contacted at: RShafer@ ReduceYourWorkersComp.com or 860-553-6604.
WC Calculator: http://www.reduceyourworkerscomp.com/calculator.php

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers’ comp issues.

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