I have been on the west coast at a series of meetings with employers and insurers as well as managed care firms. A meeting earlier this week with a very large self-insured employer group highlghted some of the significant problems that still exist in work comp managed care. And these problems are not limited to California.
This group is self insured with a high deductible; the insurance, claims service, and managed care services are all provided by a top ten WC insurer. A common name, a fairly well-respected insurer.
This insurer is charging for medical bill review on a percentage of savings basis – that is, they get to keep 20% of the difference between what the provider bills and what is actually paid. Most of the providers in California bill way over the state fee schedule, which is all insurers legally have to pay in Ca. But this insurer wants to get paid an outrageous sum just for doing its job – for applying the law.
The right way to pay for bill review is on a flat rate basis – between $6 and $9 per bill.
Why? Simple – the percentage of savings method of pricing for bill review is costing this group five to ten times more than it should.
Note – I met with two gentlemen in FL last week who had a client with the identical problem – ridiculously, outrageously high charges for managed care – costs that were well in excess of the claims admin expense! This is not a rare occurence…
For more on this read my article on unintended consequences.
I bring this to your attention to encourage all to review how they are being charged for managed care, to scrutinize bills, referral rates, nurse case manager charges, and the like. Managed care has become a huge money maker for insurers and TPAs, and employers who fail to pay attention to this are being hammered.
What does this mean for you?
Hopefully not much – but if you aren’t paying attention you better start now.
Jan
19
Why pay attention to your bill when you can just pass your costs through to the employee? I can’t wait for associational health insurance plans to come to pass. At that point, the pernicious link will be broken. You’ll be able to get health insurance from the Lions club but if they mismanage it, you can join the Elks plan without making any changes to work conditions or salary. Once lock-in is broken, insurance plans that aren’t managed well will simply wither and die.
I would agree that if the carrier or managed care partner is charging a percent of savings on the fee schedule reduction than they are indeed overcharging their client. A true managed care partner does or should do so much more than simply apply a fee schedule reduction for which they are not entitled to compensation. PPO discounts and reductions are legitimate savings, unraveling of mystical coding practices, discovery of unbundling of hospital charges, inappropriate treatments, and professional review are all legitimate reductions and ones that a true managed care partner would bring value and is entitled to receive compensation. But I think we all agree that charging for fee schedule reductions is not a fair practice to a client.