By ARCHIE ANDERSON, president of Options & Choices Inc. (OCI), a Denver-based data integration and software business serving the human resources, employee benefits and property/casualty risk management markets
It's a given to assume that most or all employers do not integrate the information from their workers' compensation and group health plan programs. Yet doing so may reveal some interesting findings and savings, especially in the tough economic times we are currently living in.
According to a recent analytic study conducted by my company, greater than 4 percent of all workers' compensation claims have a duplicate bill sent by the medical provider to a group health plan. The study showed there is a prevalent occurrence of duplicate billing on the exact same workers' comp claim, same date of service, same ICD-9, same billing codes and same medical provider also billing to group health.
The results indicated that more than half of the medical providers who billed duplicates received payment, and that one-third of the payments were for more than the amount billed. These payments resulted in approximately $1.2 million dollars in duplicate payments for a single employer, on whose data this study was conducted.
The study was completed on an aged claims analysis, meaning all the payments had been made to the medical providers and sampled from the data of a large company with more than 100,000 employees and 11,000 workers' compensation claims annually. These findings should cause concern in the entire workers' comp, risk management and employee benefits arenas.
The National Academy of Social Insurance estimates that the total cash and medical benefit costs of workers' compensation in the United States is approximately $54.9 billion, and that medical benefits make up at least 55 percent of the total spend, or $30.2 billion. One could surmise from these findings that, if only 1 percent of the claims in the U.S. workers' compensation market have duplicate bills being produced to group health, then this would be a $300 million exposure for employers. And this study's findings point to a higher prevalence rate than 1 percent.
Given the current recessionary economic environment, this possibility of overpayments on duplicate billing points to a real cash exposure for employers that self-fund all or part of their workers' compensation and group health benefits programs.
THE ROOT CAUSES
The purpose of our study was not to determine why duplication billing occurs, nor could the cause of duplication be determined from the data. It is reasonable to assume, however, that the problems may be related to billing mistakes by medical providers, poor communication between group health and workers' compensation administrators, or possibly even fraud--although our analysis does not suggest fraud.
The findings do indicate there is at least some abuse in the system--intentional or mistakenly. Regardless, why would a medical provider bill two different payers (i.e., customers) for the same service? For example, when my own company bills for services we provided to Customer A, we don't create a duplicate of that invoice and also send to Customer B. Why would any medical provider do the same?
Additionally, the data shows that up to 40 percent of the duplicated payments were associated with high-risk claims (defined as claims with complex or subjective injury types, one or more prior lost-time claims and other combinations of multiple risk factors).
This 40 percent is significant, considering that only 28 percent of nonduplicated payments were associated with high-risk claims. To identify high-risk claims, we conducted a deep risk score analysis built on a proprietary claims complexity scoring methodology. When risk scores were compared to ICD-9 distribution, it was found that 6.5 percent of the employer's employee population had duplicate payments for multiple claims, and 23 percent of those claims repeaters went to providers who were duplicate billers.
Although the numbers are not large, this does show that individuals who are categorized as high-risk claimants are associated somewhat with medical providers who show a propensity of filing duplicate bills more than once.
Ninety-two percent of the duplicate billers submitted billing on only one employee, while 8 percent of the medical providers who filed duplicate bills submitted those duplicate bills for multiple employees. The duplicate billers represented only 5 percent of the total medical providers in this study, thus proving an extreme example of the Pareto rule (20 percent of the problems drive 80 percent of the costs).
These figures stress the importance for an employer to proactively integrate its workers' compensation, healthcare billing and claims data, as well as to perform risk score analyses. Data Integration and risk scoring can provide the employer with the ability to identify those employees who are at a higher risk and stop payments before they are duplicated.
Identifying patterns of duplicate billing by providers and claimant types allows both employers and payers to better target potential duplicate payments and recover overpayments sooner. Once duplicate bills and payments are uncovered, an employer should enlist assistance from their insurance carrier or third-party administrator to pursue recovery of any overpayments made.
To integrate medical and medical billing data from separate systems, federal and state privacy laws must be kept in compliance to ensure that individuals are not inappropriately identified and their personal health data is kept strictly confidential. Yet the employer responsible for paying for the services has a right to make sure they are paying for appropriate services and at fair rates.
Other challenges an employer may encounter include marshalling resources internally within their own IT organization to facilitate internal data collection and procuring the necessary data from healthcare and workers' compensation payer sources. An effective data integration and analysis strategy should always include the issuance and execution of a well-crafted "business associate agreement" with each data source, which outlines how the confidential data will be used and kept secure.
The data collection and integration processes may sound daunting to an already overextended risk management or employee benefits team. Employers can seek out help from a business with data integration expertise to simplify the data management processes while ensuring compliance with all federal and state privacy laws.
Integration of these distinctly disparate sets of workers' compensation and group health data is the key to finding duplicate billing and overpayments, which could be costing employers millions, without them even knowing it.
Read more at the WORKERSCOMP ForumTM homepage.
March 18, 2010
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