This article was first published on Claims Journal.
Every year, organizations pay out millions of dollars in settlements for workers’ compensation claims for services they often shouldn’t. I’m not talking about insurance fraud but rather an unseen problem that routinely balloons out of control.
It is vital to understand how medical cost projections are calculated in Medicare Set-Asides (MSAs) in order to pinpoint the root cause of this significant and often inflated area. Let’s explore.
Calculating future medical costs for MSAs is done by estimating the future treatment likely to be required over the claimant’s remaining lifetime for their workers’ comp injuries as well as any illnesses or conditions accepted under or exacerbated by that injury. It entails figuring out what treatment is likely to be required — the number of office visits, diagnostic testing, surgeries, medications, braces, basically anything that could pertain to a specific injury — and is typically calculated by reviewing and summarizing the past two years of medical records.
Once the person charged with conducting the analysis — usually a nurse, an attorney, a claims person, or someone with a managed care background — receives the records, she reviews them and generates a summary of two to three pages outlining the nature of the injury; history of medical treatment; and any recommendations for specific types of treatment, such as surgeries, hospitalizations, or spinal cord stimulators. From there, a treatment table is developed, outlining everything the claimant will need for the rest of their life as per the expectations of the Centers for Medicare and Medicaid Services (CMS).
In general, CMS expects the following for any symptomatic body part paid for under the workers’ comp claim: X-rays every three to five years, MRIs every five to seven years, and 12 physical therapy sessions. And this is just the basic care; any recommendations or provision for future surgeries for these body parts will increase the costs considerably. Based on this information, all future predicted care is priced out according to the current workers’ comp fee schedule within the jurisdiction of the claim. Although a time-consuming process, it seems simple enough. But there is always a catch.
Data Hiding in Plain Sight
Suppose an adjuster is reviewing a summary of a low back injury. The expectation would be to see treatment services related to the lumbar spine in the claimant’s medical records. Then, all of a sudden, the adjuster comes upon treatment being rendered for the knee. It may be a legitimate part of the treatment plan, and the knee may be accepted under the workers’ comp claim, but what if it’s not?
It’s become more obvious over the past ten years — particularly with the advent of increasing recovery efforts from the Commercial Repayment Center (CRC) and Benefits Coordination & Recovery Center (BCRC) — that treatment for body parts or conditions is being paid for under workers’ comp claims to which it doesn’t pertain. The treatment has not been accepted under the injury claim, and justifiably, insurance carriers don’t want to pay for it. Yet additional, out-of-bounds care often slips through the cracks and is paid for and now documented in the claim. This is problematic because from the MSA standpoint, once a single payment is made for a condition, the payer has effectively bought it and all future medical care that comes with it. That knee is now part of the low back injury claim for the duration of the claimant’s life expectancy and will have to have future medical services included in the MSA.
How does this happen? It is actually very easy. Right now, adjusters often manage a desk of 150 claims at any given time. They spend most of their time talking to injured workers, to medical doctors who are working on their respective cases, and any managed care people involved in the claim. In addition, adjusters have a high volume of medical bills flooding in that need to be approved for payment. Adjusters can’t feasibly scrutinize all the information coming in on medical bills and think “Is this injection actually connected to this claim?”
In the best of all worlds, the medical bill review teams, whether internal or an external vendor, would catch what has been accepted under the claim versus what’s being billed by the provider, but in reality, charges of this nature still routinely slip through the cracks.
Fixing the Problem
New technologies that leverage artificial intelligence (AI) to “read” medical records are on the horizon. These systems can analyze all of the body parts and conditions being treated and compare that against the medical bill payment data. As such, smart systems are becoming the new front line for establishing exactly what gets paid under the claim and alerting claims adjusters to anything that doesn’t seem quite right. The adjuster can then take a look and discuss with the physician’s office the reasons for inclusion of the treatment before the bill gets paid and the abnormality becomes part of a future MSA, generating costs associated with lifetime care for the body part or condition.
For example, it won’t be long until applications can generate reports showing an additional alleged body part is now being treated under a claim. Alerts can be automatically generated to adjusters showing the scope “creep” as what started as a low back claim has now expanded into the neck and shoulders. The injured worker is now also having problems with hips and knees, and three new medications have been added that the adjuster may not have been aware of. Applications can identify all of these vitally important nuggets hiding in the data and place them into context, allowing a wealth of information to be delivered to the adjuster’s fingertips in real time.
AI-based applications show tremendous potential for flagging issues that get missed. Machine learning fills in the blanks by understanding how things fit and how they don’t, even when it’s a little murky. The cost savings, as well as the time saved in managing claims, will be tremendous. Hidden data will finally be brought into the light so that people can make more informed decisions about what to pay and why. This is an exciting new frontier for MSAs, as medical payments are limited to only those body parts and conditions accepted under the claim, allowing the MSAs to be based on the most accurate, up-to-date information available, while holding down potential costs.