5 Strategies Insurers Use to Reprice Medical Bills (And How to Combat Them)
Insurance companies have long employed various strategies to reduce or eliminate medical damages owed to claimants. A medical bill review is one of the more common approaches. In this article, we’ll discuss tactics used in medical bill reviews to limit medical damages and what you can do to fight back.
1) Improper sources used in establishing reasonableness. This is probably the most common method employed. Here, insurers will reference databases that are not comparable to the bills being analyzed. For example, when analyzing the reasonableness of an outpatient hospital charge, they may use a physician’s fee schedule like Optum360’s National Fee Analyzer. Physicians bill their services very differently from hospitals so this data does not serve as an adequate resource to establish reasonable value.
It’s also common to see insurers and their reviewers use paid or reimbursed amounts to compare to billed charges. These amounts are often lower than billed charges because providers accept discounts from payers in exchange for prompt payment, access to provider networks, increased patient volume, and other significant benefits. When examining a bill review analysis, always be sure to investigate what sources they use to establish reasonableness.
2) Conflation of “allowed” and “reasonable”. This tactic is also widely used. Here insurers use a “lesser of” methodology where they reprice each line item of a bill to be the lesser of the reasonable value or the actual amount charged. Insurers often have language reflecting this in their auto policies for first-party claims, but that doesn’t mean it’s correct to apply in third-party cases. By using this method, they are virtually guaranteeing that the bills will be found, in total, to be unreasonable.
For example, if one provider’s bill is $25 higher than reasonable value and every other bill is $1,000 lower than reasonable value, the analysis will still conclude that the bills, in total, are unreasonable. It’s easy to spot this tactic by comparing each line item of their analysis to the amounts on the bills. If all amounts are equal to or less than the charges on the bills, the analysis should be corrected to show the actual reasonable value of each charge. The totals should then be compared in aggregate to determine reasonableness.
3) If they can’t measure it, it doesn’t exist. All too often we see bill review reports where the reviewer doesn’t have sufficient information on a code to establish a reasonable value. When this happens, they often simply mark it as “n/a” and thereby excluding it from the sum total of their analysis. Just because their systems are inadequate doesn’t mean your client’s damages should be reduced. When you see this happen it’s important to remind them that the charge itself is in fact some evidence of reasonableness. A simple statement from the provider stating that these charges are typical for the services performed will begin to build a basis of reasonableness.
4) Suppression of critical information. Just like grade school, if you don’t show your work you don’t get credit. We see reports all the time that have a couple pages of summarized analysis, no underlying data, no supporting work, sometimes not even a mention of methodologies. What are they hiding? When you see these you should ask for supporting information before their reports are even entered for consideration.
5) Application of irrelevant third-party payment terms. This tactic is a bit more nuanced, but nonetheless effective. When payers establish payment terms with providers, they’ll often bundle CPT codes together and pay for one code and not another. A common example is when Medicare pays surgery centers an increased amount for the first level of a facet injection (code 64490) but nothing for additional levels (codes 64491 and 64492). This would not apply in self-pay situations and therefore should not be applied in medical review analyses. When you see codes rejected in analyses you can quickly check with the provider’s billing department to see if the edit is appropriate or only within certain payers reimbursement terms.
Have you seen other tactics? We’d love to hear about them. AccuMed would be happy to answer any questions you may have as you receive medical bill reviews and point out weaknesses or omissions in the reports. At the end of the day we strive to help you get full credit for your client’s medical damages.
Note: “CPT” is a registered trademark of the American Medical Association. CPT codes and descriptions are copyrighted by the American Medical Association and used herein for explanatory purposes only.