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Medical bill review firms compete on their prowess to detect problems in medical treatment and billing. Managing this exposure requires more than tweaking software code. In fact, a network within the workers' compensation industry needs to emerge to assist the many players.

It would help to retire that baroque term "fraud and abuse," which amounts, in my mind, to nothing more than a kind of verbal tic, and begin to talk more accurately about a dense matrix of medical reimbursement issues. I offer the notion of bad bills.

Also, the vast majority of bills are likely without problems. Who has the data expertise to validate all of this?

Providers send to workers' compensation payers some 80 million bills each year. First, a bill review organization examines them. Software hunts for aberrations from accepted practices.

This bill checking is hardly perfect. For example, a tenth of payments made are estimated for services that had not been preapproved by the payers' own utilization review team.

Payers can assign even more specialized automated reviewers to re-examine what they already paid. These reviewers can identify screening errors by the primary reviewers. They can independently confirm the rationale of a denial by the primary reviewer. And when they sweep through paid files from multiple payers, they can build more credible profiles of treatment and billing practices of individual providers.

But bill review today suffers from severe fracturing of focus, and virtually total absence of public reporting on the actual state of the challenge.

To truly control fraud, you need continuously to address the entire spectrum of bill review and the complex community of bill reviewers.

A networked solution is emerging, with the increasing capacity of organizations to examine and reexamine tens of millions of bills from many payers. A business opportunity lies open for a bill review vendor, possibly a second line reviewer, to offer a universal service that addresses all aspects of bad bills.

Tuck School of Business Professor Ron Adner, in his recent book on innovation strategy, notes that an innovation that needs to touch many players, such as fraud detection, prospers only when all key parties in the product's "ecosystem" see that they gain from it. He says Steve Jobs got this right in product design and launch.

Fraud detection will not be successful until every individual in the bill review business thinks that fraud detection enhances his or her own agenda.

When we reach this point it will become evident that networking of bill review is an extremely valuable asset.

Not one reliable overview has been published on bad bills in the workers' compensation field. Contrast this dearth of analysis with many penetrating studies of other claims issues by workers' compensation research organizations.

More transparency about medical bill problems and collaboration among the players, will move medical fraud and abuse to the solved column.

PETER ROUSMANIERE is an expert on the workers' compensation industry. He can be reached at riskletters@lrp.com.

December 11, 2012

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