claims cost

Claim costs have hit record highs due to factors like the aging workforce, ongoing labor shortage, rising medical provider rates and  soaring technology costs. Older workers are more likely to have co-morbidities associated with higher disability payments and medical treatments. Home health and nursing staff shortages have driven higher wages due to demand. And with technological advances in medical items like power wheelchairs and prosthetics, production costs and overall value have increased.

“Workers are not receiving the same level of training with nationwide labor shortages, which creates more serious, costly injuries,” said Ashlie Ott, Medical Cost Manager at Safety National. “The resulting claims could remain open for an injured worker’s lifetime since medical costs cannot be settled in some states. But some strategies can address rising costs, depending on state requirements and the injured worker’s needs.”

The following cost mitigation strategies are helpful once a claim has occurred:

1. Consider utilizing a direct source instead of a vendor.

In some cases, there is a $20-per-hour savings for home health services by using an agency directly, rather than a third-party vendor. This will not cause any disruption of service, as the vendor provides the caregivers and manages all scheduling. Changes will occur in bill preparation, and the agency will become the payee. This strategy can also be used for large purchases like handicap-accessible vans, prosthetics and power wheelchairs. Working directly with a manufacturer can sometimes equate to more considerable savings.

2. Negotiate rates for long-term rehabilitation or a nursing home when an injured worker requires it.

Make every attempt to negotiate based on an all-inclusive, per-diem rate instead of a percentage of billed charges. Negotiating a per-diem rate means there will not be any surprises once a bill is received.

3. Review facility bills for duplicate or “included” charges.

One example could be receiving charges for mattresses or pulse oximetry while also billing an ICU room fee. Nursing services, such as pulse oximetry monitoring, are included in the daily rate that facilities bill. In some cases, certain supplies are also charged under multiple codes for the same supply or implantable device, creating a duplicate charge.

4. Ensure that the correct fee schedule is being applied.

If the injured worker is treated in one state, but uses a provider in another, research which fee schedule should be utilized. Each state’s requirement varies, and figuring out which fee schedule applies can be a complicated task.

5. Utilize multiple sources for usual, customary and reasonable (UCR) reimbursement calculations.

Multiple states do not have fee schedules or only have fee schedules for specific services. In the absence of a fee schedule, a percentage of total billed charges, or a UCR calculation, can be used. The UCR rate is the amount paid for a service in a geographical area based on what other providers are charging for the same services. Bill review providers access these rates through various databases, so reimbursement rates can vary by hundreds of thousands of dollars depending on the database used and the service type. It is best practice to keep a record of what providers are usually paid by service type in a geographical region.