Work Comp Bill review, part 2

Yesterday was the beginning of a review of workers comp bill review vendors; today we’ll continue with a look at FairIsaac, a firm that provides software and performs bill review and Coventry.

FairIsaac was founded in the mid-1950’s by an engineer and a mathematician. Now based in Minneapolis, the company is best known as the developer of the widely-used FICO credit scoring technology. FI’s current bill review application, SmartAdvisoris (SA) is the latest version of the ‘old’ HNC platform, a technology that was acquired by Fair Isaac some years ago (which was based on the ‘older’ CompReview technology, acquired by HNC in 1999). SA’s rules engine, Capstone, is reputed to be pretty user-friendly in that it can be manipulated and ‘programmed’ at the business analyst level. This capability enables clients to modify rules instead of relying on programmers at the vendor, speeding up the process and possibly reducing cost as well.
Current customers include the State Compensation Insurance Fund of California and Texas Mutual. While Texas Mutual and FI have had a rather contentious relationship, indications are that the FI-SCIF partnership is going well.
Word on the street (actually among the cubicles) is that FI is looking for buyers for the WC bill review business. This marks a change in strategy, as the company had been acquiring other bill review businesses including TPA Ward North America’s bill review entity, Spectrum Managed Care, and another bill review firm, Diversified. Indications are that this may be the result of a change in senior leadership earlier this year, and a desire to focus on core strengths.
FI has long based its business model in part (some would opine in large part) on the provider network access fees the company charged its customers. Several sources indicate Coventry has notified FI of its intent to cancel or non-renew Fair Isaac’s network access contract. This may be a negotiating ploy on the part of Coventry as the firm is widely reported to be increasing access fees for many customers.
Coventry is the largest player in the bill review business, with the company’s Concentra subsidiary operating on Ingenix’ PowerTrak while the First Health business is on a proprietary bill review application known by the rather un-sexy name of 4.0. Genealogically speaking, the four-dot-oh application started life back in the mid-nineteen-eighties as an HMO-PPO-indemnity processing application going by the equally un-sexy title of TOPS (triple option processing system). TOPS was a product of Jurgovan and Blair, an HMO systems company (which was subsequently acquired by AIG, which spun off the systems unit, which went public, and I won’t bore you with the rest).
Current customers include Liberty Mutual and AIG, both of whom lease the application for use by their own staff.
Up until early this year, the application itself was owned, maintained, and serviced by EDS, which ‘sold’ it to Coventry. (Word is the actual transaction may have been a very-long-term lease – regardless, Coventry effectively owns it now)
At First Health, bill review was viewed as a way to get network business. Bill review was priced very competitively, and possibly as a result FH may not have invested much in the application. Users were typically large or very large WC payers, many of which had business needs that required extensive customization of their bill review function. The combination of demanding customers, the customer-to-First Health-to-EDS service chain, and low revenues from bill review likely contributed to long development cycles and high levels of frustration among key clients.
At this point it isn’t clear whether Coventry will look to shift all customers from Ingenix to 4.0. Now that they own the application that shift appears to make business sense, but the work entailed in continuing to develop and improve and customize an application that is not generating high margins may make this unattractive to senior management. Coventry’s senior folks are not national-account oriented; high-maintenance clients are not their forte. Tellingly, bill review is listed as part of the company’s WC Networks on the Coventry website.
It is difficult to compare 4.0 to other systems as it tends to be highly customized and integrated with payer applications. Coventry has invested in document management, scanning, and related improvements, investments that may lead to a greater ability to auto-adjudicate bills.
Time to get to work – we’ll look at more systems later this week.