That’s a question I’m hearing more often these days, often one of the first voiced by payers wondering why their medical cost trends are escalating. I’m not sure that’s the right question to ask in most instances, but the answer can provide insights and direction into what’s happening with your costs, and why. For now we’ll leave aside the issues inherent in using BR savings as a ‘standard’ and focus on how- and why – vendors ‘game’ the numbers.
There are bill review benchmarks from national vendors, estimates provided by companies competing for your business, and ranges long viewed as industry standards. These ‘benchmarks’ can be gamed, inflated, distorted – and often are – but in the absence of any national public database, they’re all many have access to.
Bill review savings are reported as a percentage below the applicable fee schedule or usual and customary in non-fee schedule states. One would think this is an objective result, and therefore there should be little variation, and in an ideal world, one would be right. However, there is almost always a bit of judgment involved in determining what the ‘right’ fee schedule amount is and what state rules apply. The complexities are many, and the justifications, while often thin, are given to payers unequipped to refute the vendor’s statements.
The fact is, different vendors often deliver very different results processing identical bills from the same jurisdiction, with some showing deep reductions from applying FS and others not. Without getting bogged down in the niceties of methodologies – the ‘how’ , let’s look at the ‘why’ vendor BR savings vary.
Simply put, follow the money.
Most BR these days is priced on a flat charge per line or per bill; the days of BR fees based on a percentage of savings below billed charges are pretty much over – and good riddance. The results from my firm’s 2009 survey indicated fees run about $7-9 per bill (we’ll do another survey and publish results this summer). Most BR vendors also charge for additional ‘value-added’ services on a percentage of savings basis – typically 25% of savings delivered on top of fee schedule/UCR cuts. That’s where the…variation usually lies.
The financial motivation is obvious; the vendor gets the same fee for processing a bill whether they deliver $1 or $1000 in BR savings, but their compensation for the ‘value-added’ services is based on the savings that are delivered – the higher the ‘savings’, the greater the fees for the vendor.
Therein lies one explanation – perhaps the most significant one – for the wide variation in BR savings percentages. In my consulting practice I’ve had access to reports from several of the larger BR vendors, and the variation can be as much as 300 percent from vendor to vendor. Yes, you read that right – one vendor’s ‘bill review’ savings in a state can be three times higher than another’s.
Almost always the vendor with the lower FS savings delivers great results from ‘nurse review’, ‘complex bill review’, ‘coding edits’, ‘unbundling and upcoding review’, or whatever they call it – suffice it to say that the savings delivered from these ‘extra, value-added’ services – when added to the ‘standard’ bill review reductions – are usually only a bit higher than other vendors who don’t have all those extra, value-added add-ons.
That’s not to say that some savings can – and should – be derived from careful and professional review of bills – coding and clinical reviews are often helpful. One of my clients, FairPay Solutions, does a terrific job doing just that for facility bills in many states, delivering savings far above those provided by standard bill review. But these additional savings shouldn’t come from most – or even many – bills, and their contribution to total savings percentage should be in the single digits.
If they’re not, start asking questions and making comparisons.
What does this mean for you?
In bill review, you don’t always get what you pay for. Sometimes, you pay far too much for what you get.

Good friend and colleague Bob Laszewski once used an analogy that has stuck with me -“It’s like the dog chasing the school bus; what’s it going to do if it catches it?
I’m often reminded of Bob’s aphorism when state reporting of workers comp medical information is the subject.
Several states (Texas, California, Florida, Oregon among them) require workers comp payers to send electronic files with extensive detail on all medical bills received, processed, and paid. This has created an entire industry – or more accurately, a sub-industry – of vendors specializing in providing this service for bill review companies, PBMs, and other payers who don’t want to – or can’t – do the filing themselves.
I’ll make a wild guess and estimate workers comp state reporting adds $5 – 10 million in ongoing additional admin cost to the system; much more if one adds start up costs.
What does the system – employers, injured workers, providers, payers – get for their millions? To answer that, one has to know what the various states do with the information. Texas has used the data for various studies, some of which have been useful and others less so.
I’ll have to admit I’m not entirely clear on what each and every state does, but I do wonder if all the effort is worthwhile – if the benefit to society and the stakeholders is commensurate with the cost.
I’m interested in hearing what value readers see from the work – how is state reporting benefiting the industry, premium payers, and injured workers?
Responses are welcome at infoAThealthstrategyassocDOTcom.