Managing Costs

Bill Review and the Commodity Myth

Do your homework when choosing a workers' comp bill review provider. One size does not fit all.
By: | April 25, 2016 • 5 min read
Magnifying glass on money background

Bill review is often touted as a “commodity.” But having done scores of detailed workers’ compensation bill review audits, I can tell you that the quality of bill review is not consistent across the board. If you’ve seen the work of one workers’ comp bill review vendor, you have not necessarily seen them all.


In fact, even when two different companies use the same bill review software, you will not necessarily get the same result. Based on audits I have completed, you could be missing up to 12 additional percentage points in savings.

Given the 50 state nature of the current workers’ comp system, our industry, in order to keep our medical costs under control, must rely upon vendor partners to reprice medical bills based upon all the different state medical provider fee schedules, or an accepted source of usual and customary (U&C) provider charges.

If you’ve seen the work of one workers’ comp bill review vendor, you have not necessarily seen them all.

While our lives would be much easier if medical providers/facilities billed according to state fee schedules or U&C recommended amounts, it is unrealistic to expect providers to handle these very complex and ever-changing jurisdictional rules given that workers’ comp medical care still accounts for a very small slice of the total U.S. health care system (<3 percent).

It appears that workers’ comp bill review is here to stay. So how can you be sure that you’re getting the best service and not sacrificing good quality, aggressive medical cost-containment for a less expensive, less effective alternative?

Let’s talk about what drives the differences between bill review service providers.

You might think that you can rely on the software in today’s world to handle the jurisdictional differences, but that’s not the case. Fee schedules and the jurisdictional rules that surround them are extremely complex and require knowledgeable interpretation. Having jurisdictional subject matter experts is a vital part of accurate, aggressive bill review. Some rules just can not be automated.

In addition, there is constant change within fee schedules and rules requiring constant monitoring and updating as well as appropriate workarounds should they be necessary due to time constraints. Check to see if your partner has dedicated compliance and jurisdictional experts to ensure you are in the best hands.

Most bills arrive with documentation, yet I have found that not all reviewers look at the attachments. I have seen bills paid for the wrong injured worker, bills for initial office visits (more comprehensive and more expensive) paid several times on the same claim from the same provider, bills paid for services never rendered, bills that include inappropriate modifier codes (making the bill more expensive), and bills without the appropriate modifier codes for an assistant surgeon or physician assistant when the documentation clearly notes who performed the procedure.

Does your bill review service provider train reviewers to utilize the documentation? Do they identify bills requiring clinical review?


You need to expect quality review from your bill review partner. You want to be sure that they have solid quality assurance processes in place for:

  • Their data capture process/vendor
  • The bill review application
  • Timeliness of the updates per jurisdictional guidelines
  • Testing of fee schedule and application updates prior to live processing
  • Testing accuracy of business rules processing
  • Bill review processors
  • Quality performance standards/reviews for staff
  • Evidence of ongoing processor training
  • Service level agreements with vendors ensuring compliance/quality

You want a bill review partner who is invested in your medical cost containment, i.e. one who understands your needs for quality, coverage and cost savings.

This involves an understanding of your key jurisdictional and loss cost drivers and integration of bill review with the “right” PPO networks and ancillary providers who will best meet your specific needs.

There are many different network contracts out there so be sure you are not paying a network-discounted fee above the state fee schedule. You should expect constant vigilance regarding these additional cost containment tools and an accurate accounting of their results as well.

You should also expect your bill review service provider to offer the option to measure the performance of providers in your networks and a method to direct to these “best providers.”

Have you had a discussion with your bill review partner about how aggressive you want to be in your key jurisdictions? If not, then you are not necessarily receiving the provider bill review you intended.

Talk to your service provider to make sure you are involved. Are you taking advantage of usual and customary reductions prior to PPO discounts in the appropriate states? Do you want to zero pay unlisted or invalid codes? How much provider pushback are you willing to tolerate? Get involved in the decision-making process regarding your workers’ comp bill review.

Bill review savings can be calculated in a variety of ways and comparing bill review service companies on savings alone is most likely an apples to oranges comparison.

Ask your vendor how they compute savings? What do they do with zero pay bills (pharmacy, pay in full or pre-arranged bills)? How about resubmissions and duplicates? If these types of bills are included in the savings calculation, your “savings percentage” will be inflated yet your ultimate paids the same. To avoid the game playing, ask questions of your vendor.

If you think about the medical encounter data we collect in bill review, you will understand why we should utilize this vast store of intelligence about our claims and the medical providers to truly enhance performance and outcomes.

We need to know the “real” impact bill review and other vendors are having on overall claim outcomes, what we and they can do to laser focus our resources and dollars on those areas where we are experiencing the most “pain.”


You need a bill review vendor partner who knows that delivering raw data is no longer good enough, that will take the time to turn that data into information and actionable intelligence and then drive the program fine-tuning and customization.

Don’t be fooled by the “bill review is a commodity” myth. Look for the differences and find your “right” partner who will deliver the very best value.

Maddy Bowling is a principal in Maddy Bowling Consulting, Inc., a WC consulting firm. Bowling has 35 years of broad-based executive management experience within operating, corporate and consulting environments. She can be reached at [email protected]
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Self-Insuring Workers' Comp

Take Control of Your Costs

For hands-on employers, there are myriad benefits to self-insuring your workers' compensation program.
By: | April 25, 2016 • 2 min read
Stethoscope and money

Ever asked why would you self-insure your workers’ comp risks? I can think of two reasons.

First, if done right, it will provide better care for your employees and save money. Self-Insurance is a great way to accomplish the twin goals of the grand bargain, taking care of people and taking care of business.


Many employers also self-insure to align their workers’ compensation programs with their corporate values. They know that no vendor will have the same feel for their employees, their workplace or their business as they do. For the employer with the will to make the investment in time, the ROI is substantial.

Self-insurance is not an opt out plan. Rather, it is an alternative way for the employer to work within the workers’ compensation law, have some control over how their employees are handled in the system, and still retain exclusive remedy and common law defenses.

A self-insured employer is the carrier for workers’ compensation claims and can specify how, within the law, claims are handled. While most self-insureds use a TPA to administer claims, they can ensure their employees are treated with dignity and respect and can do away with many of the administrative frictions that irritate injured workers and employers alike.

Self-Insurance is a great way to accomplish the twin goals of the grand bargain, taking care of people and taking care of business.

This is for the hands-on employers, the ones who want to manage their business and reap the rewards. Like the rest of workers’ compensation there are several moving parts to self-insurance.

The employer’s investment is primarily the time it takes to manage their workers’ compensation program. Depending on the size of their organization, this can be an additional duty or a full-time position, but must be at a decision-making level to be fully effective.

Self-insured employers have a great deal of flexibility in structuring their programs. They can choose the level of exposure, who administers their claims, and vendors such as utilization review, bill review and case management.

Companies with a moderate to large number of employees will always pay their workers’ compensation losses over time. Premiums and experience modifications exist to make sure that happens.

The self-insurance option can sound a little scary, and many employers don’t really understand how it works. After all, premiums are a known cost and losses are a risk.

There is help available on the nuts and bolts through self-insurance associations in most jurisdictions. Information on who to contact about qualification and referrals to other companies currently self-insuring will be available for employers who want to explore this alternative.


Desire is the first step. Information is the second. If it sounds like a good idea for your company, do a little research and talk to other self-insureds. If you decide its right for you, your broker or an outside consultant can help you set up a program.

Many employers are just dissatisfied with the value proposition of how their injured employees are treated vs. the cost of insurance and lack of control.

Self-insurance can address all of those issues and put the success of the program squarely in the hands of the employer.

Sam McMurray is the Executive Director of the Texas Self Insurance Association and the Texas Certified Self Insurers Guaranty Association. McMurray has 22 years' experience managing a global workers' comp program for Lockheed Martin. He can be reached at [email protected]
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Sponsored: Liberty Mutual Insurance

To Better Control Total Workers Comp Costs, Manage Physical Medicine

The time is ripe to consider physical medicine to better manage the total cost of risk.
By: | April 4, 2016 • 6 min read

Soaring drug prices get all the attention in the workers comp space. Meanwhile, another threat has flown under the radar.

More than 50 percent of lost time workers compensation claims involve physical medicine — an umbrella term encompassing physical therapy, occupational therapy, work conditioning, work hardening and functional capacity evaluation.

Spending on physical medicine accounts for 20 to 30 percent of total workers compensation medical costs, a percentage set only to increase in the coming years. Despite the rapid growth of this expense, very few employers are engaged in discussions around how best to manage it.

“Now is the time to take a look at physical medicine and think about how it impacts total cost of risk,” said Frank Radack, Vice President & Manager, Liberty Mutual Insurance, Commercial Insurance – Claims Managed Care. “Employers should investigate comprehensive solutions to keep costs manageable and to deliver quality, evidence-based care to injured employees.”

Liberty Mutual’s Frank Radack defines physical medicine and why it is so important in managing total workers compensation costs.

Cost Drivers

Upswings in both pure cost and utilization of physical medicine are driving the spending surge. State fee schedule changes are largely responsible for increases in cost. California, for example, has increased the cost of physical medicine services by 38 percent over the past two years, and will increase it a total of 64 percent by the end of 2017. North Carolina changed its approach to its fee schedule effective June 1, 2015, resulting in an almost 45 percent increase in the cost of the average physical therapy visit.

Increased utilization compounds rising prices. Low severity claims like soft tissue injuries typically involve physical therapy, especially when co-morbid conditions threaten to slow down recovery.

“When co-morbids are present, like obesity, more conditioning is necessary for recovery from injury,” Radack said. “With people staying in the workforce longer, we see these claims more often because these types of injuries and co-morbid conditions become more common as people age.”

De-emphasis on surgery also bolsters physical therapy prescribing as patients seek less invasive treatments that might enable a faster return to work, even in a light or transitional duty role. Sometimes, patients with a minor injury might seek out physical therapy on their own as a precaution after an injury or under the mistaken belief it will hasten recovery, even if evidence-based guidelines don’t call for it in every treatment plan.

LM_SponsoredContent“Now is the time to take a look at physical medicine and think about how it impacts total cost of risk. Employers should investigate comprehensive solutions to keep costs manageable and to deliver quality, evidence-based care to injured employees.”
–Frank Radack, Vice President & Manager, Liberty Mutual Insurance, Commercial Insurance – Claims Managed Care

“Without proper claims management procedures, some physicians might be inclined to prescribe physical therapy as a palliative measure, even when it doesn’t provide much benefit to the patient,” Radack said.

Building Solutions

Brokers and buyers may not be able to do much about fee schedule changes, but they can partner with an insurer that better manages utilization through a multi-faceted claims system, qualified network vendors, data analytics, and peer interventions.

The keys to better managing the soaring cost of physical medicine.

“There is an opportunity to move physical medicine spending into network solutions and partnerships,” Radack said. A strong, collaborative network is key to maintaining direction over treatment decisions.

Liberty Mutual uses a proprietary data analytics program to study its providers’ prescribing and referral patterns and their outcomes. It then builds a network of point-of-entry general practitioners with a proven track record of optimal outcomes.

“The treating physician is a gatekeeper to other services, so it’s important to start there in terms of establishing a plan and making sure evidence based guidelines are followed,” Radack said.

Radack and his team use similar data analysis and partnerships to deploy networks pertaining only to physical medicine, so it can identify physical therapists who understand the occupational space and are focused on effective Return-to-Work (RTW). A provider who doesn’t understand RTW, or even know that the employer of an injured worker has a modified RTW program, may over-utilize PT. Getting employees with soft tissue injuries back into the work place is critical for delivering the best possible medical outcome and a timely recovery.

These therapists know the value of adjusting a treatment plan based on a patient’s progress, which often cuts unnecessary appointments and therapies.

“Our data analytics program is built internally by people who are aligned with the claims organization,” Radack said. “These insights drive our ability to shape networks and direct injured workers to providers with proven outcomes.”

Peer-to-peer interventions also play a big role in adjusting provider behavior and ensuring adherence to evidence-based guidelines. Liberty Mutual’s in house regional medical directors can bring their expertise to bear on challenging claims and discuss how to redirect treatment to meet these guidelines. Liberty Mutual also partners with experts to build networks of physical medicine and physical therapy providers who deliver quality outcomes cost-effectively and to asses a patient’s progress, working with providers to identify and resolve treatment issues.

Sharing information and measuring performance in these settings helps to change the environment around physical medical care. For example, interventions that steer physical therapists back to  established, evidence-based medical treatment guidelines often reduce the use of passive therapy treatments, like hot and cold packs, which are not as effective and can slow down recovery.

“Active therapies that get people moving often help them get them back to work faster and at a lower cost,” Radack said. Utilization review also helps to identify unnecessary treatments and signals the insurer to communicate evidenced-based expectations with the therapist or prescribing physician.

Solutions in Action

Physical therapy offers great value in spite of rising prices — but only if it’s managed carefully.

An example of the benefits of managing physical medicine.

Take for example the case of a worker with a shoulder injury. In an unmanaged situation, a physical therapist may prescribe 12 appointments, and the injured worker will go through all 12 sessions with no pre-approval of the treatment plan and no interim checkup.

In a managed situation, the physical therapist may only prescribe eight sessions, because she understands the benefits of a faster return to work and sees that guidelines don’t dictate a full 12 sessions for this injury. Halfway through the eight sessions, she checks in on the patient’s progress and determines that only two more sessions are necessary given the recovery and the medical guidelines; and so adjusts the treatment plan to a total of six sessions.

In this scenario, managed care saves the cost of six sessions over the unmanaged situation, and the employee gets back to work faster with a healthy shoulder.

Ultimately, workers comp buyers can achieve cost savings by making treatment decisions that optimize patient outcomes, rather than cut pure cost. To achieve that, every player — point-of-entry physicians, physical therapists, medical directors, claims managers and patients — need to shoot for the common goal of shortening recovery time by following evidence-based medical guidelines.

“When medical experts and network vendors work in concert with each other, along with data analytics and research to back them up, we can drive down utilization while improving outcomes,” Radack said. “All of these working parts together are the solution to managing physical medicine costs.”

To learn more about Liberty Mutual’s Workers Compensation solutions, visit



This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty Mutual Insurance. The editorial staff of Risk & Insurance had no role in its preparation.



Liberty Mutual Insurance offers a wide range of insurance products and services, including general liability, property, commercial automobile, excess casualty, workers compensation and group benefits.
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