This is where medical bill review (MBR) becomes an essential part of any effective workers’ compensation cost containment strategy. When done well, MBR doesn’t just reduce expenses—it brings transparency, consistency, and accountability to the complex world of medical billing.
Let’s go behind the scenes to understand how it works—and how employers can better partner with their TPA or network to protect their bottom line.
The Language of Medical Billing: CPT and ICD Codes
Every medical diagnosis and procedure is assigned a numerical code for billing purposes:
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ICD (International Classification of Diseases) codes identify the diagnosis.
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CPT (Current Procedural Terminology) codes identify the treatment or service provided.
For example, a broken ankle might be diagnosed with ICD code 824.8, while an X-ray would be billed under CPT code 73610. This coding system allows standardized billing—but it also opens the door to upcoding (charging for more complex services than were actually delivered) or unbundling (charging separately for services that should be billed together).
That’s where expert review comes in.
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The Role of Medical Bill Review: More Than Just Discounts
Contrary to popular belief, medical bill review is not just about applying a fee schedule discount. True MBR involves:
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Clinical and coding accuracy checks
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Comparing charges to state-mandated fee schedules or “usual and customary” rates
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Verifying appropriate use of CPT and ICD codes
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Identifying red flags like duplicate charges or excessive units of service
An experienced MBR team—made up of nurses, coders, and physicians—scrutinizes bills line by line to flag any irregularities. Savings can be substantial, especially on high-cost services like surgeries, implants, and hospital stays.
DRG Audits: Spotting Overcharges in Hospital Bills
Hospital billing introduces another layer of complexity through Diagnosis Related Groups (DRG). DRGs are used to classify hospital stays into categories based on diagnosis, procedures, and other characteristics. Each hospital stay receives one DRG code, which determines the amount the hospital will be reimbursed.
DRG audits are critical because:
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Hospitals may “upcode” to a higher-paying DRG by overstating the severity of a condition or adding unnecessary secondary diagnoses.
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Inaccurate or incomplete documentation can result in misclassification and overpayment.
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Without the hospital’s full medical record, DRG validation becomes guesswork.
That’s why your TPA or bill review vendor should obtain complete hospital records and rely on certified DRG auditors to validate accuracy. This is where major savings—15% to 35% of charges—can be realized.
High-Risk Areas: Where Overcharges Hide
While billing errors can happen anywhere, certain areas are particularly vulnerable to abuse or misinterpretation:
1. Surgical Procedures
Surgeons may bill for multiple procedures, but operative reports often show fewer were performed. Reviewing these reports is key to validating each CPT code.
2. Implants and Devices
Implants are a major cost driver. Overbilling occurs when markup is applied excessively or when vendors inflate costs. Ask your network how implant charges are verified and whether a specialized review process is in place.
3. Unlisted CPT Codes
When no specific CPT code exists for a service, providers may use an “unlisted” code and assign a price of their choosing. These should always be reviewed by a medical expert to determine appropriate reimbursement.
4. E/M Codes (Evaluation & Management)
These codes describe office visits, and higher codes mean higher reimbursement. If a bill includes a level 4 or 5 E/M code, ensure the documentation supports the complexity.
How Employers Can Strengthen the Process
Even though your TPA or insurer handles bill review, employers should stay engaged. Here’s how:
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Establish criteria for which bills should be reviewed (e.g., all hospital bills, outpatient surgeries, high-cost imaging).
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Request reporting on savings achieved through bill review—including savings beyond basic fee schedule adjustments.
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Ask how the TPA handles implant reviews, unlisted CPT codes, and E/M coding scrutiny.
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Insist on DRG audits for hospital stays above a certain threshold.
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Coordinate with your safety and HR teams to track trends and use billing insights to inform prevention efforts.
Conclusion: Billing Accuracy Is Risk Management
Medical bill review might not be glamorous, but it’s one of the most powerful levers for controlling workers’ comp costs. By catching errors and inappropriate charges before payment is made, employers can prevent claim inflation, reduce litigation risks, and stay compliant with fee schedules and state regulations.
In a world where every line item counts, investing in a robust bill review process is not just good oversight—it’s smart business.
Michael Stack, CEO of Amaxx LLC, is an expert in workers’ compensation cost containment systems and provides education, training, and consulting to help employers reduce their workers’ compensation costs by 20% to 50%. He is co-author of the #1 selling comprehensive training guide “Your Ultimate Guide to Mastering Workers’ Comp Costs: Reduce Costs 20% to 50%.” Stack is the creator of Injury Management Results (IMR) software and founder of Amaxx Workers’ Comp Training Center. WC Mastery Training teaching injury management best practices such as return to work, communication, claims best practices, medical management, and working with vendors. IMR software simplifies the implementation of these best practices for employers and ties results to a Critical Metrics Dashboard.
Contact: mstack@reduceyourworkerscomp.com.
Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/
Injury Management Results (IMR) Software: https://imrsoftware.com/
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