Best Practices For Handling Complex Liability Claims

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Take a proactive position to reduce claim costs and secure optimum benefits. This presentation will help you know the best practices for handling the complex liability claims.

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Best Practices For Handling Complex Liability Claims

  1. 1. Provider Best Practices for Complex Liability Claims Educate | Navigate | Connect
  2. 2. • Overview • Industry Dynamics • Action steps to take beginning at the point of registration on employment injury claims • The impact of state and federal laws • Why facilities and providers may not be maximizing recoveries on liability claims • 2 Training opportunities for liability claim handling © 2013 Advanced Patient Advocacy Content
  3. 3. Liability claim processing boils down to the following elements: • Training up-front data acquisition staff • Classifying accounts correctly upon point of service • Identifying administrative inefficiencies with insurance claim handling practices that create financial loss • Garnering insurance details of each injury encounter • Using forensic analysis – in an administrative way – to resolve open claims for injured patient • Working with patients, next-of-kin, employers, insurance companies, and attorneys to take a medical claim and do all the legwork to get it paid by a liability-based insurer 3 © 2013 Advanced Patient Advocacy Overview
  4. 4. 4 © 2013 Advanced Patient Advocacy Industry Dynamics
  5. 5. Industry Conditions High Self-Pay = Growing Trend for Facilities • Self-pay and bad debt are often difficult classifications – hospitals genuinely want to avoid these areas. They often become default zones for patients who present with no coverage at time of encounter. • Hospitals often have multiple collections vendors on board – with only an 8-25% rate of return (high-end estimate). • Self-pay percentages of overall revenue should not go beyond 20% of overall hospital A/R, but often does • Increased education of liability claim handling assists facilities across the board 5
  6. 6. No-Fault States: Advantages Tort States: Advantages • • Personal Injury Protection provision aside from true “no-fault” states exists on policies, in addition to MedPay provision as purchased by Comprises the remainder of the country • motorists Individual must be found “at fault” in an accident = multiple avenues of – Florida, Hawaii insurability (either patient’s own policy, – Kansas, Kentucky or at-fault policy, with insurance – Massachusetts, Michigan subrogation to occur behind the scenes.) – – New Jersey, New York – Pennsylvania hospital can achieve strong – 6 Minnesota, North Dakota Utah returns. • More investigation; more coordination; but with skilled follow-up, the © 2013 Advanced Patient Advocacy State Negligence Rules: Motor Vehicle Accidents
  7. 7. Reimbursement Rates Employment Rates • • Each state WC Board determines reimbursement rates statistics in each region is helpful to – Outpatient Fee Schedules are understand local WC demographics and patterns around 60-65% reimbursement nationally – Inpatient payment structures are Researching top employers and safety • Employability is a big factor; for example, Florida may have more MVAs than often reasonable and achievable -- Worker’s Comp. However, large with appeals and close follow-up employers in FL will very often have more between hospital and payer WC accidents: – Escalating to the state WC Board works to the hospital’s advantage – Timeliness rules vary state to state 7 – Wal-Mart – Publix Grocery – Home Depot © 2013 Advanced Patient Advocacy Overall Conditions for WC Policies
  8. 8. United States Injury/ Hospital Outlook Fatality Rate • Reduced reimbursements: CMS • • Expanded future coverage through PPACA • Aging population increasing • Declining birth rate; future generations Total uninsured: 16.7% = 50.7 mm people • MVA injuries: 2.22 mm injuries (2011) • MVA fatalities: 32,367 (2011) • WC injuries: 2.9 mm injuries (2011) • WC fatalities: 4,609 (2011) • Personal injuries – – – Falls: 200,000 children – 8 Dog bites: 800,000 med visits Falls: 2.3 mm older adults (2010) bearing increased CMS costs • Immigrant population showing trends of declining birth rate • Commercial health payers increasing deductibles and out-of-pocket expenses © 2013 Advanced Patient Advocacy Macroeconomic Environment
  9. 9. The Present and Future 9
  10. 10. Times Have Changed • Insurance companies want to know the thought processes physicians use to reach medical decisions. • Payments for liability injuries, such as Worker’s Compensation injuries, are rarely paid without medical justification. • Clinical documentation and well-completed forms can assist providers in meeting complex insurance and state-driven requirements.
  11. 11. High Touch Claims = High Cost Claims • Anytime a reduced payment or no payment is received, the cost for billing the services rises dramatically. • These extra costs reduce the profit for the service. • The basic process to correctly fill out a claim form and submit to any insurance company is fairly similar, but each payer can be very specific in their individual needs and policies.
  12. 12. © 2013 Advanced Patient Advocacy Lifecycle of a Liability Claim 12
  13. 13. Lifecycle of a Liability Claim 1. Patient presents to physician with chief complaint 2. The collection of data for a medical claim begins at this time during check-in 3. Frontline representatives collect and document insurance information 4. The most important aspects of the medical claim cycle occur between the time the patient arrives at the provider and the time the medical claim is generated. It can be the shortest part of the entire revenue lifecycle, but also the most important. Note: Many points exist in the cycle for a claim to get lost or go awry.
  14. 14. Lifecycle of a Medical Claim, Briefly 5. During the patient’s evaluation, the physician is responsible for documenting the details of the encounter. 6. Coders assign numeric codes for chief complaint, other diagnoses, external forces if applicable, and procedures rendered. (Example: 847.0 for neck sprain; E812.0 for motor vehicle accident that may occur.) Note: MVAs may occur in the course and scope of an individual’s employment. 7. Billers identify payer, speak with claims adjuster, and ship bill and records to correct address.
  15. 15. Lifecycle of a Medical Claim, continued • The quality and accuracy of billing information and clinical documentation (as it flows through each department) has the single greatest impact on the quality of the claim. • Payer follow-up is critical to reimbursement – Receipt of claim and accompanying records – Adjudication – Payment determination – Exceptions escalated – Denials explained clearly and justified by payer
  16. 16. Best Practices Overview on Claim Handling to Achieve Greater Performance 16
  17. 17. Registration: On-the-Job Injuries Data elements to garner: • Employer name pertinent to injury • Employer address and main phone number • Date of Accident • Basic Injury, Body Part(s) affected • Employer HR/Manager/Foreman name and number NOTE: If insurance carrier is known at patient encounter, call insurance for service authorization as soon as possible Patient unable to communicate: • If patient was brought in with coworkers or supervisor, gather same data • Employer must file accident report with insurance carrier and state industrial accident board • Do not default financial class to Self Pay
  18. 18. Registration: MVAs Data elements to garner: • Policyholder of vehicle • Patient unable to communicate: Role of patient (driver, passenger, cyclist, pedestrian) • Gather data from next of kin as appropriate • Request police report post-discharge • Place call/send questionnaire to • Patient address and main phone number • Date of Accident patient’s home for accident and • Where/How injury occurred insurance details • Insurance company known?  Driver’s auto insurance company name • Do not default financial class to Self Pay  Other party’s auto insurance name  Own health insurance as secondary plan  Attorney data if applicable 18
  19. 19. MVA: Secret Coverage to Obtain 19
  20. 20. Registration: Personal Injuries Data elements to garner: • Geographic location of injury (address of where injury occurred) - – the key to liability is if the injury occurred NOT at patient’s own home; although sometimes there could be liability propensity on leased property. • How injury occurred – Examples: neighbor’s pitbull bit patient, or slip/fall at grocery store • Owner/Entity Contact Data • Date of Accident • Health plan as secondary (Plan B option) • Attorney data if patient has hired representation • Gather data from next of kin as appropriate • Request ambulance or police report (if first responders were on the scene) post-discharge • Place call/send questionnaire to patient’s home for accident and insurance details • Do not default financial class to Self Pay Patient address and main phone number • Patient unable to communicate:
  21. 21. Tricky Examples – Shout Out Your Answers • Elderly woman suffers a herniated disc while lifting a bag of soup cans at her church food pantry. – Liability or Medicare? Both? Neither? • A man riding a dune buggy flips over and suffers a broken rib and collarbone. – Motor Vehicle or Health plan? Both? Neither? • A woman riding a motorcycle oversteers and grazes the side of her body, and suffers road rash. – Motor Vehicle or Health plan? Both? Neither? • A man transferred from another facility has MS and old orthopedic injuries from his job as a postal worker. – Worker’s Compensation or Health plan? Both? Neither? 21
  22. 22. The Significance of Clinical Documentation • • Substantiates services • Charges will be understood at the insurance company  Physical  Behavioral • Validates necessity of treatment  Speech • Speeds up bill payment when packaged together particularly for WC claims • Nurses’ notes • Physician’s report – History and Physical • Lab reports • Radiology reports * Denotes Where allowed by state/county law; ensure signed authorization on file by patient Therapy: • Durable Medical Equipment • Implantable Device Invoices • Itemization of all services rendered Tips: 1. Marry medical records with bills for WC claims 100% of the time at first submission 2. Send liens, lien letters, or request Letters of Protection to attorneys that request medical records to ensure they are aware of medical charges in advance of final settlements* 3. Issue your invoice for medical records where allowed by state law and hospital policy
  23. 23. Behind the Curtain: What Happens to the Bill Form and Records 23 © 2013 Advanced Patient Advocacy At the Insurance Company
  24. 24. Work Comp Claim Submission Methods • Electronic submission (secure 837-5010 format) – Mandated/encouraged states:  Texas  California  Minnesota  Illinois  New York – Dependent on payer capability  Some are set up to accept electronic submissions • Paper Submission – Red 1500s or UBs – Black and White forms acceptable; sometimes rejected for readability – ensure legibility • Fax Directly to Insurance Adjuster Note: Always indicate in your host system the submission date and location of where the bill and records were sent. This includes the specific adjuster’s name.
  25. 25. Insurance Company Data Centers Many major Property and Casualty insurers have standalone data centers • Central mailing point  Mail opened and categorized by type  All mail is scanned into their system  Claim numbers found if not on documents  Document sent electronically to each appropriate adjuster across the country Critical tips: 1. Having claim numbers on documents before mailing saves an average of 21 days of processing at the insurance company (really!) • Sometimes data centers are within the US or off-shored 2. If no claim number was opened or found, claim will be rejected as such. • It is not customary to contact data centers directly for claim status . Employer must file accident report.
  26. 26. Data Centers, continued Medical bills (claim forms) • Red paper is scanned • Red lines are “dropped out” by scanners’ pixel interpretation • Raw data is automatically fed to bill review systems  Less errors, but still imperfect • Black and white bills are manually data entered  Slower processing time  Prone to more errors in data entry  Always double check EOBS for insurance- rep errors.
  27. 27. Example UB
  28. 28. Resulting EOB with errors
  29. 29. Adjudication • Determination – Adjuster Review – and/or – – Automated Rules Engine • Based on accident report and severity of injury, adjuster will set up rules that will automatically “OK to Pay” certain services, taking the human element out of manual examination • Usually done with lower balance, less complex claims • The role of the adjuster is threefold: – Own claim from start to finish – Examine claim validity and any evidence of fraud – Reduce insurance loss by predicting value of overall claim
  30. 30. Bill Review and Pricing Managed Care departments exist in the Property/Casualty insurance environment! • Line-by-line re-pricing of bills occurs using various methods  PPO contracts  Fee schedule  Usual and Customary guidelines  Nurse case management  DRG (not line-by-line analysis; rather a fixed code)  Many other methodologies A Few Words on “Silent PPOs” • When a claim is paid, an Explanation of Benefits (EOB) is issued with the check • The rationale of payment should indicate if a contractual agreement was accessed for discounts • Does your facility have a contract in place with the payer mentioned on the EOB? • Challenge the insurer if not!
  31. 31. Utilization Review • As many hospitals have UR  They examine clinical departments, insurance companies do too. • documentation against services listed on the bill Nurses and doctors are retained  They have conversations with on staff to investigate medical hospital physicians to question or necessity and claim validity, dispute certain services and tests especially for high balance and complex situations  They reduce insurance loss by disputing or denying coverage  Medical decision making must be clear in documentation
  32. 32. How a Claim is Paid (or Not) 32 © 2013 Advanced Patient Advocacy Reimbursement Methods
  33. 33. Types of Reimbursement: National Overview • All methodologies operate under various contracts, policies, and guidelines, that all depend on state and federal laws. APCs • Flat Rate • Capitation • Per Diem • Case rate • • DRG Managed Care stop loss outliers • Day Differentials • Service Differentials • Fee Schedule and Timely Pay Fee Schedules – Case based outliers – Reinsurance stop loss – Percentage stop loss • At Charges • Sliding scale discounts
  34. 34. Breaking the Methodologies Down Diagnosis-related groups: A classification system that categorizes patients who are medically related, with respect to diagnosis and treatment. They are statistically similar in length of hospital stay. It’s a lump-sum, fixed-fee based on diagnoses. Fees are made by a research team, which determine national averages. DRG numbers go from 001 to 900. Variables in DRG classification: • Principal Diagnosis; Secondary diagnosis (up to eight) • Surgical procedures (up to six) • Comorbidity (pre-existing conditions) and complications • Age and sex • Discharge status • Number of hospital days for a specific diagnosis Day Differential: First day paid at higher rate, cascading down each following day. Service Differential: Hospital receives a flat per-admission reimbursement for the service. A prorated payment can be made (e.g., 50% ICU, 50% medical services) Services are defined in the contract Courtesy: Marilyn Fordney; Medical Administrative Procedures
  35. 35. Breaking the Methodologies Down Ambulatory Payment Classifications (APCs): Based on PROCEDURES, not diagnoses. Services are assigned a group code: • Surgical • Significant procedures • Medical • Ancillary • Note: Modifiers are important to clarify multiple services! Capitation/Percent of Revenue: Reimbursement to the hospital on a per-member, per- month basis regardless of hospitalization. Percent of Revenue is a fixed rate of payment. Case Rate: Averaging after a flat rate for a service has been given to certain categories of procedures. Specialty procedures may be given a case rate (e.g., graft surgery). Bundled case rate is an all-inclusive rate for institutional and professional services connected with the procedure.
  36. 36. Breaking the Methodologies Down Fee schedule: list of charges based on procedure codes. Fee-for-service basis. Flat rate: A set amount per hospital admission regardless of cost of actual services Per diem: single charge for a day in the hospital, regardless of actual charges or costs Managed Care stop loss outliers: • Case-based stop loss: A mechanism of hospital and insurance carrier sharing loss. It is a payment of a percentage over a certain dollar threshold (e.g., 65% of excess billing over $100,000.) • Reinsurance stop loss: The hospital buys insurance to protect against lost revenue and receives less of a cap fee. The amount they don’t receive helps pay for the reinsurance. Example: A case reaches $100,000. The plan may allow 80% of expenses in excess of that figure for the rest of the year. • Percentage stop loss: A percentage paid of charges when a certain threshold is met.
  37. 37. Usual and Customary Explanation 99203 = $136 by XYZ Insurer • Office or other outpatient visit for the evaluation and management of a new patient, which requires these three key components: a detailed history; a detailed examination; and medical decision making of low complexity. Physicians typically spend 30 minutes face-to-face with the patient and/or family. • A percentile is defined as a value on a scale of 100 that indicates the percent of a distribution that is equal to or below it. For example, the 75th percentile means that 75 percent of all fees for CPT code 99203 fall at or below $136. It also means that 25 percent of all fees for CPT code 99203 fall at or above $136. Data is analyzed by ZIP code by the insurer. 37
  38. 38. Analyzing the Process 38 © 2013 Advanced Patient Advocacy Worker’s Compensation Details
  39. 39. A Very, Very Brief History • Workers in the late 1800s had it tough. For injuries and deaths, the legal processes were uncertain. Negligence had to be proven by the employee, and very often there was little recourse. • In 1911, the first worker’s compensation laws were adopted by several states. The laws allowed injured workers to receive medical care without first taking employers to court. • All states currently have worker’s compensation laws. They vary from state to state. • This coverage is the most important coverage written to insure workplace accidents.
  40. 40. Types of Coverage Two types of coverage: • Federal compensation laws – paid by US Department of Labor  Applies to miners, maritime workers, postal workers, and government workers • State compensation laws – paid by self-insured businesses, insured employers, or state insurance funds  State and private business employees
  41. 41. Self-Insured Employers • Employers pay for medical expenses directly instead of insurance premiums • Precertification is important – the self-insured employer is very mindful of treatment costs • Self-insured employers are covered by ERISA (Employee Retirement Income Security Act.) – Mandates reporting – Not state regulated – is under federal jurisdiction – 90-day payment timeline. Employers may violate this – there are no penalties for violation. Courteous but aggressive pursuit is a must.
  42. 42. The Beginnings of Worker’s Compensation Reform • By 1994, dysfunction Work Comp systems were costing companies more than $65 billion annually in many US cities. • Insurers began denying coverage to businesses. • Some businesses began relocating to states allowing lower premiums. • Widespread legal and medical corruption and abuse evolved throughout the system.
  43. 43. What Worker’s Compensation Reform Did • Antifraud legislation and increased penalties for fraud. • Anti-referrals that restricted physicians referring patients for diagnostic studies to sites where the physician has financial interest. • Proof of medical necessity for treatments, as well as appropriate medical documentation arose. Payers may refuse to pay the entire bill without medical documentation.
  44. 44. More Reform Measures • Preauthorization for major operations and expensive tests • Caps on vocational rehabilitation • Development of fee schedules • Medical bill review – payer examination of duplicate claims and billing errors
  45. 45. The Process – In Brief • Employee has an accident occurring within the course and scope of employment. Accidents can result in physical or mental injuries, but again, must be within the scope of employment. • Employee is treated at a healthcare provider. • The accident must be reported by the employer’s HR/administrator to both the state and insurance company. Failure to report may be against state law. • The healthcare provider must supply comprehensive information, and they also may have to report information to the state, depending on the law. (For instance, New York has a very involved state reporting process.) • The insurance company must receive accident reports, medical records, and bills in order to make judgment and pay the claim.
  46. 46. Out-of-State Claims • Follow all regulations from the jurisdiction in which the injured was hired, and not the state where the injury occurred • Companies with employees that travel must have policies that cover out of state injuries • If a patient seeks treatment out of state, referral requirements must be met • Unauthorized care holds the patient responsible in these states:  Alabama         Alaska Arkansas New Jersey North Dakota Ohio Washington West Virginia Wisconsin Note: Maritime employees do not fall under state worker’s compensation laws. Example: Cruise ship employees injured at sea often have their medical bills paid in full, or negotiated with a maritime company that works with the cruise line. .
  47. 47. Solutions to Common Issues, and Avoiding Underpayments and Denials 47 © 2013 Advanced Patient Advocacy Billing Problems
  48. 48. Billing Problems • Lack of medical records  Send documentation • Incorrect patient name  Investigate patient’s name as it is on • Duplicate statements • Illogical dates valid ID and insurance cards  Send corrected claims and appeals to the correct addressee – it can get lost in the – Date of service prior to date shuffle at any point of accident  Correct dates – Birthdate in the future  Send W-9 to Insurance • Facility Name & Address incorrectly or not linked to facility Tax ID
  49. 49. Billing Problems • Gender error  Correct gender • Missing principal diagnosis code  Add diagnosis • Missing revenue codes on UB  Add revenue codes • Missing CPTs on 1500 or outpatient UB  Add CPTs • Missing Physician name and ID  Add Physician name • Type of bill third digit (billing sequence)  Correct Type of Bill to correspond doesn’t correspond to statement coverage dates with dates  Note: Resubmit corrected claims with new Type of Bill
  50. 50. Billing Problems • Number of hospital days for room  Always match inpatient days charges must match number of  Add value codes wherever applicable inpatient days  Always, always input units. Insurance • Missing units – many times defaulted to “1” at insurance company if missing on claim! companies pay by units. Anesthesia is paid by minutes. (Surgical time is examined.)
  51. 51. Unique Situations • Undocumented workers  Discuss with employer how claim will be paid • Incarcerated individuals • Municipal workers • Burn liability claims  Is a contract in place with local Department of Corrections? Will Medicaid pay?  Is the municipality self-insured, or insured by a carrier?  How did the burn occur? Source is important to determine payment!  Industrial Accident  Home  MVA  Crime Victims’ Compensation
  52. 52. Who’s on First, Second, Third… 52 © 2013 Advanced Patient Advocacy Coordination of Benefits
  53. 53. Worker’s Compensation COB • All Worker’s Compensation plans are inherently no-fault • The injured worker is not responsible for payments • The worker’s compensation carrier that insures the employer will absorb liability and pay • If the employer is self-insured, they will pay Note: ONLY if a claim ultimately ends up NOT being a true worker’s compensation situation, then it will be: A health plan responsibility, or A self-pay claim, if no health plan is active
  54. 54. Worker’s Compensation Tort Cases • Sometimes, a patient will opt out of the Worker’s Compensation plan entirely, and outright sue their employer for damages • Settlement money will be owed to the hospital • Conduct regular follow-up with the attorney representing the patient
  55. 55. Motor Vehicle COB In a No-Fault state, COB looks like this: • PIP (Personal Injury Protection) pays first • Patient’s health plan pays second • At-fault third party pays third • Co-pays and deductibles can kick into patient’s MedPay if funds are available • At-fault settlement reimburses health plans; satisfies outstanding provider residuals In a Tort state, COB looks like this: - Patient’s MedPay pays first OR at-fault Bodily Injury plan can also be pursued - Patient’s health plan pays second - At-fault settlement reimburses health plans; satisfies outstanding provider residuals Note: Governmental payers are the payers of last resort Note: Double check your health contracts for any specific COB language with lien filing and liability settlement pursuit 55
  56. 56. Maximizing Reimbursement and Speeding up Payments 56 © 2013 Advanced Patient Advocacy Challenging Insurers
  57. 57. Delinquent or Slow Pay Claims • Affirm with the carrier that a clean • claim was sent are being denied, and which insurance companies are doing the denying – Precert/Preauth done – Documentation received Track all denials to learn what services • Send all high-dollar claims by certified mail • Follow up in a timely manner (every 28 days) • Open a grievance with the State Insurance Department if you don’t get • Send in written tracer forms that ask where the claim is at in the adjudication process anywhere
  58. 58. Payer Response • An “Explanation of Benefits” (EOB) is sent either electronically or by mail to the healthcare provider for each claim. • Payment is enclosed with the EOB. • The remarks on the EOB are the first indication of whether follow-up procedures are required for the claim. • In many underpaid/unpaid cases, the next action is to correct the claim information and either re-bill the claim, or file an appeal.
  59. 59. Example of Appeal Letter: Contractual Reduction Dear Director of Claims, It is our understanding that your company has released a partial payment on the referenced claim. It is our position that this claim has still not been reimbursed correctly and that additional benefits are due. Please be advised, it is our position that contractual provisions stipulate a higher level of payment for this treatment. As a participating provider, we feel the following contractual language or fee schedule reference is applicable to this claim and justifies additional payment: {Insert potentially applicable contractual language. Reference the page number or attach copy from contract to add as an attachment to appeal.} Our review of the provider contract does not reveal any language justifying the current level of payment. In order to assess the accuracy of payment, we request your response regarding how the payment was calculated ,and what portion of the fee schedule was utilized. It is our position that if terms of the contract are in direct conflict, the higher reimbursement should be allowed. As you are likely aware, many courts have ruled that managed care contracts are contracts of adhesion and that the organization responsible for drafting the contract wording can be responsible for unclear and ambiguous terms. Based on this information, we ask that this claim be reviewed. We appreciate your prompt attention to this matter. Sincerely, Appeals Specialist
  60. 60. What We’ve Learned Today and Steps for the Future 60 © 2013 Advanced Patient Advocacy Summary & Training Opportunities
  61. 61. Training Opportunities • Always educate the patient and take the stance of patient-friendliness • Have the patient fill out Assignment of Benefits forms consistently • Terms to Remember: – Adjuster – Adjudication – Utilization Review – Silent PPO • Basic coding training includes locale (industrial premises; highway) of injuries, which will help identify accidents • Keep a paperless “paper trail” by notating every detail of the claim cycle. Every detail helps. – Appeal
  62. 62. Feedback Claudine Nesheiwat Director of Operations, Liability Services Phone: 804-272-6001 x227 E-mail: cnesheiwat@apallc.com

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