When it comes to getting better results from subrogation, forget everything you ever learned in kindergarten! Being unfair is…well, unfair; ignoring people is bad; and being pushy is rude.
But adopting a few “bad” habits actually can make your subrogation program stronger to drive better financial results and member feedback.
1. Be unfair
Not all subrogation cases are equal, so let’s not treat them that way. Some cases are worthy of more time and energy than others, so let’s find new and better ways to identify the right cases and use the most advanced methods to pursue them.
First, you have to be as certain as possible that a case has subrogation potential and this starts with the identification phase of your subrogation process.
For too long, the practice was to cast a wide net when looking for cases to subrogate. Anything that looked like a car accident or a slip-and-fall case ended up in the “verification” bucket. The problem with this “wide net” approach is that it funnels too many false positives into the process. Devoting time and resources to a case that has no recovery potential ties up your staff (which costs you time and money) and creates undue stress on members.
The last decade has seen advances in information science and technology that have allowed subrogators to more precisely identify cases that actually have third-party liability and can be expected to reach a settlement.
You can now mine claims data for details such as diagnosis codes and demographic data that signal a subrogatable case. In fact, ICD-10, which came out in 2015, has been beneficial for companies using data mining to zero in on claims with greater likelihood of having subrogation potential. Many health plans and vendors have adopted these techniques, which have allowed them to reduce false positives so they can use resources more efficiently and cost-effectively, while improving settlement ratios.
Recent years have seen the most aggressive health plans and vendors (including yours truly) begin to experiment with technologies that fall into the category of artificial intelligence, machine learning, and predictive analytics.
These emerging technologies allow us to build upon the improvements of the last decade by learning from subrogation results and automatically applying those learnings back into the case identification algorithms to become even more precise.
2. Ignore your members
Well, not really. But as you pursue the big business of subrogation for your health plan, keep an even bigger focus on your members’ experience. Remember that your members come first above all.
It has become clear to all of us in this business that we need to find more ways to verify the causes of injury and rely less on calling and mailing members repeatedly. The first line of defense for your members is the identification process (described in #1 above), which allows you to more accurately identify cases that actually have third-party liability. With this smaller net, you minimize false positives, which as a matter of course, reduces unnecessary outreach to those members.
Additionally, you can take advantage of external liability databases and other third-party data services to augment your detection methods and further minimize member outreach. One use case for this type of service is medical malpractice and personal injury claims, which can be difficult to find using traditional data mining techniques. These techniques can shorten the lifecycle of subrogation cases by as much as 90 days, while minimizing member outreach.
3. Be pushy
The previous two subrogation bad habits lend themselves to the third, which is to be pushy. When we’re aggressive about accurately and quickly identifying and verifying subrogation cases, we increase our chances of not only reaching settlement more quickly, but also reaching a settlement that is agreeable to us and/or our clients. How, you ask?
One way to get more aggressive is to prioritize cases by dollar values and “push” them to staff accordingly. Obviously, a case totaling $450,000 in claims demands more attention and resources than one totaling $4,000 in claims. Yet traditionally, all cases ended up in the same pile to be worked top to bottom. In subrogation, time is money.
The faster you act on a case, the better your chances of reaching a desirable settlement. But the faster cases pile up, and the more overwhelmed the team gets, the more this idea falls by the wayside.
Case management technologies can automatically drive prioritization methods throughout your subrogation process based on rules you define. As a result, you can get the timeliest and costliest cases pushed to the top.
Similarly, case management queues can assign specific cases to recovery specialists most suited to characteristics of the case. For example, if you can identify which team members are best at negotiating with difficult attorneys, then you can automatically push cases to those specialists.
Engage legal resources at the right time
Once you make it to the settlement phase of a subrogation case, it’s important to engage with your legal resources, whether internal or external, to aggressively pursue optimal recovery for the health plan.
Though settlement is typically the shortest phase in a subrogation case, it’s also the trickiest and most involved because it’s when you start talking about limited dollars available, you have to be articulate in legal arguments, you must have a strong understanding of the plan’s rights, and you must be able to aggressively negotiate to recoup dollars on behalf of the plan.
Subrogation lawyers and paralegals who are trained to manage these types of negotiations can navigate this complicated phase to quickly optimize your settlements.
Consider subrogation prepay cost avoidance
Health plans are showing a growing interest in identifying third-party liability before paying a claim. As health plans become increasingly adept at data integration for mining and analytics (either internally or through their vendors) they have more tools to inform pre-payment decisions.
If a plan is able to coordinate a third-party liability claim with a primary payer, it can avoid the cost without engaging in subrogation methods. Due to time constraints, pre-pay subrogation may prove to be more member intensive, requiring direct outreach to identify if there is another recovery source.
In the case of subrogation, as in most payment integrity functions, pre-pay cost avoidance has to be balanced with post-pay recovery. It’s never all or nothing. Even if the decision is to pay a claim because it appears that there is no liability or no other coverage available, the claim can be pended for potential post-pay subrogation.
Now is the time for subrogators to take a fresh look at the tools and techniques they use to identify, investigate, and settle third-party liability cases. Technology-enabled subrogation is the way to go, and fortunately for everyone, newer technologies are making it more possible than ever to narrow the focus on subrogatable cases, minimize member contact, shorten time to settlement, and maximize recoveries.
This post is part of an ongoing series about trends happening within the payment integrity space for healthcare payers. This series features contributions from Discovery Health Partners payment integrity experts discussing these trends, why they’re happening, and how they affect health plans. To learn more about all of the top trends, download our 2017 Payment Integrity Trends whitepaper.
Health plans see value in prepayment cost avoidance
Health plans are making a concerted effort to focus more of their payment integrity resources on avoiding inaccurate claims payments up front, rather than recovering erroneous payments on the back end. There is general agreement that this creates more value for a plan. When done successfully, prepayment cost avoidance allows the plan to avoid 100% of the claim cost (vs. the portion they can recover) and it reduces downstream administrative costs associated with recovery. I think we all can agree that having to work a claim multiple times is obviously more expensive than having to work it once.
In addition to financial benefits, prepayment cost avoidance can help health plans positively affect relationships with providers by reducing the burden on them to rework claims that are the responsibility of another payer. I recently saw a statistic that said providers incur an additional 20% – 30% of the cost of any claim they have to rework. Your providers would welcome a reduction in that cost.
Meanwhile, a focus on cost avoidance makes your members more accountable for ensuring that correct eligibility information is on file. Particularly in an area like coordination of benefits, members should feel more compelled to be proactive about providing the health plan with accurate, current information so their claims will be paid promptly without fuss.
Why the cost avoidance shift is happening now
In my experience, this is probably the biggest trend in the industry today. Why? Because of the vendor fees and administrative costs associated with recovering a claim that was paid incorrectly. At a time when health plans are very focused on reducing administrative costs and managing shrinking margins, executives are paying attention to every source of leakage.
While prepayment cost avoidance is not a new concept by any means, it requires a level of maturity within a health plan’s payment integrity operations that some plans are just now reaching. For one thing, more mature health plans typically have stronger data integration and analytics capabilities that allow them to look across multiple sources of information to make more accurate payment decisions quickly.
At the same time, their experience with postpayment recovery operations has given them some data to build a business case for the shift to cost avoidance. In my opinion, the largest barrier to cost avoidance until now has been the inability to justify the effort—cost, resources, technology, and vendors—in terms of a business case. There is no standard ROI or business model to work with, and every plan I’ve talked to uses a different approach. The fact is that health plans need to spend money to create a prepay cost avoidance capability and that means making sure the right people in the organization understand the value and business case for it.
While prepay cost avoidance should be part of a plan’s payment integrity strategy, postpayment recovery must remain part of that strategy as well. The ability to make a prepayment decision can be hindered by the availability of information and the dynamic nature of eligibility and primacy information. Information often isn’t available fast enough to decide if a claim should be held or pended, so prompt-pay rules dictate that the plan must pay.
Meanwhile, member eligibility status and primacy are moving targets and constantly change, so payments are based on outdated information. For some payment integrity functions, like subrogation, costs can be avoided only on part of the whole recovery. In that case, only the first-party liability costs can be avoided, while third-party liability costs have to be paid.
Finding the right balance for your plan
In our view at Discovery, prepay cost avoidance and postpay recovery have to coexist as an integrated solution so you can follow the transaction through the whole lifecycle. The goal should be to find the right balance for your organization.
As health plans consider the proper balance of prepayment cost avoidance and postpayment recovery across their payment integrity programs, it’s important to remember that this is largely a cultural decision. A plan has to be ready to adopt prepay solutions, and a lot goes into that decision—including regulatory issues, technology capabilities, data availability, subject matter expertise, and the business case.
Discovery Health PartnersPrepayment cost avoidance: A closer look at one of 2017’s top payment integrity trends
Data scientists bring fresh thinking to payment integrity processes
ITASCA, IL (August 1, 2018)—Discovery Health Partners, a provider of payment and revenue integrity solutions for healthcare payers, will host a webinar August 8, 2017, to share the principles of data science that are transforming the way payment integrity processes are managed, with measurable impact on recovery results. Titled “Payment Integrity: Using analytics to drive better results,” the webinar features Discovery healthcare payment integrity and analytics expert Steve Forcash, Vice President of Analytics.
The webinar will explore how principles of data science are being applied to real-world payment integrity processes and offer actionable steps for getting started with an analytics agenda:
Discovery Health Partners, a division of LaunchPoint, offers payment and revenue integrity solutions that help health payers improve revenue, avoid costs, and enhance the member experience. We offer a unique combination of deep healthcare expertise and analytics-powered technology solutions to help our clients improve operational efficiency, achieve financial integrity, and generate measurable results. More information about our solutions, including Coordination of Benefits, Eligibility, Medicare Secondary Payer Validation, and Subrogation is available at https://www.discoveryhealthpartners.com.
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Discovery Health PartnersDiscovery announces webinar on payment integrity analytics
As cost reduction continues to take center stage, healthcare payment integrity is in the spotlight. Increasingly, health plan executives are recognizing the power of payment integrity functions to add significant value to a health plan’s bottom line by improving the plan’s ability to recover or avoid improper claims payments and improve accuracy of premium revenue.
But, payment integrity is not always an easy landscape to navigate. Discovery Health Partners has had hundreds of conversations with health plans of every size and membership type across the country and a common theme that emerges is that while improving payment integrity is a priority, it is often one that is difficult to understand, manage, and achieve.
Over the last few months, Discovery has made a dedicated effort to understand what trends are shaping that complex payment integrity landscape. Our team of payment integrity professionals is experienced in not only identifying these trends, but also in understanding how they will impact health plans and shape financial performance and the member experience.
In a series of upcoming blog posts, Discovery will be exploring each of 2017’s payment integrity trends including:
Amplified focus on prepayment cost avoidance
Continued need for postpayment recovery
Heightened visibility around the importance of payment integrity with plan executives
Uncertainty about payment integrity performance by internal and vendor teams
Increased market consolidation and the impact on vendor selection
Growing interest in outsourcing the entire payment integrity function to a single vendor
Prioritization of business process outsourcing above software solutions
We also recently partnered with RISE to host a webinar on these trends. RISE, the Resource Initiative and Society for Education, is dedicated to ongoing outreach and education for health plans and providers. RISE offers complimentary webinars, white papers, a newsletter, peer user groups, and ongoing updates for plans and providers seeking the cutting-edge of healthcare information.
The webinar, now available on demand, features Discovery President, Paul Vosters, and VP of Strategic Development, David Grice, discussing each of our trends and answering the following questions:
Why should your plan increase the focus on payment integrity results?
How can your plan be on the cutting edge of these trends?
How can your plan mitigate some of the risks these trends present?