How to wake up from subrogation nightmares

"Be afraid...be very afraid." (The Fly)Causes of subrogation terror

Healthcare subrogation can be terrifying! Health plans are “afraid…very afraid” of what high costs and low settlements do to their bottom line. They’re frightened of member backlash about questionnaires and phone calls asking for details about injuries they’ve suffered.

Let’s face it, we’ve all endured subrogation nightmares that keep us awake at night feeling anxious and dreading the dark. From case overload and staffing issues to non-responders and negotiation horrors, it seems that something scary is always lurking, waiting to throw us off track.

In this article (using more than a bit of tongue-in-cheek nods to some famous spooky movies), we’ll explore typical subrogation horrors and how advances in data and technology are helping us overcome the fright and emerge victorious.

"You're gonna need a bigger boat" (Jaws)What happens when case identification goes overboard?

Does your subrogation rely on broad case identification parameters? Do all identified cases flow into the investigation process? Do you find your team being eaten alive by case inventory backlog? If you said yes to these questions, “you’re gonna need a bigger boat.”

It has long been common practice to attempt to maximize subrogation recoveries by casting a “wide net” to identify suspect cases – often based mainly on diagnostic codes. Yet these loose identification standards produce too many false positives (unrecoverable cases), which when they make their way into the investigative stage, can drown recovery teams in excess work. The team either has to grow or it becomes overwhelmed and backlogs start to build up. In either case, it costs plans time and money without producing proportionately greater recoveries.

Meanwhile, the investigation of false positives can lead to unnecessary member outreach in the form of calls and questionnaires, which can confuse and frustrate members needlessly. With fierce competition among payers today, none can afford member abrasion.

Best practice is to avoid over-identifying subrogation cases. It’s a delicate balance between identifying too many cases, resulting in false positives, and identifying too few cases, resulting in missed opportunities.

"We're not in Kansas anymore" (Wizard of Oz)Three trends shaping the future of subrogation

Like the transformation from a drab landscape to a technicolor dreamscape, the last decade has seen dramatic advances in technology that can transform the subrogation operation from a dreary manual process to one driven by advanced technologies and automation.

From cloud-based storage and applications to data proliferation and predictive analytics, we now have faster, cheaper access to technology that can help us:

 

  • Leverage more sources of data from multiple internal and external sources
  • Identify subrogation-worthy cases faster and more accurately
  • Make pre-payment decisions about other party liability
  • Prioritize cases for investigation by scoring them based on multiple factors
  • Match cases to team members according to various factors such as workload and skill
  • Manage communications, including generating outgoing letters and uploading incoming letters
  • Capture information about relevant parties, including insurers, providers, and attorneys
  • Track and report on case progress for your whole inventory

To operate more efficiently, reduce costs, and improve recoveries, health plans should consider three trends that are taking shape in subrogation operations, both within health plans and subrogation vendors.

Trend #1:

“They’re heeere” (Poltergeist)“They’re heeere!” More data sources, that is!

It may sometimes feel like a terrifying spirit lurking within your walls, but don’t fear data! It’s your biggest asset and it’s all around you. With the abundance of internal and external data sources available today, you should be using all possible investigative tools to more accurately identify and investigate subrogation cases that have recovery potential.

First, it’s critical to ensure you’re maximizing all the data currently available to you. Then seek supplemental external data sources that can fill in context without member contact. Finally, use all this data to learn from past experiences and continuously improve your processes.

Traditional data sources contain valuable information

Traditionally, subrogation cases are identified based on diagnostic data from the member’s claim file. While this is an appropriate starting point, it’s important to go beyond diagnosis codes. By analyzing them along with demographic information, procedure codes, revenue codes, and other data elements, you can identify the relationships that lead to recoveries and that allow you to prioritize recovery efforts.

And when you continuously analyze these codes in connection with varying demographics (age, location, presence of other medical conditions) compared against the data on recoveries achieved, you can constantly refine which combinations are more likely than not to result in a recovery.

External data adds context

Meanwhile, external sources of data about motor vehicle accidents, liability, litigation, and workers’ compensation can provide valuable insight about claims, which can speed up case identification and investigation.

In recent years, these types of third-party data have become increasingly affordable and are available fast and electronically, so they can easily be incorporated into your systems. Data such as court documents, police reports, ambulance run reports, and litigation databases is extremely useful in the decision to open a case. It reduces your reliance on Incident Questionnaires and may allow you to sidestep member outreach altogether.

Additionally, some data sources can point to unique subrogation cases, such as malpractice or mass tort, which can be difficult to identify through normal data mining algorithms. In this case, eligibility information can be matched up to court case databases. As an example, a cancer diagnosis code does not necessarily indicate an injury, but it could be the result of negligence on the part of a company that has been named in a mass tort case.

By now, you may be thinking “easier said than done.” Maybe not. Read on to learn how Trend #2 enables plans to access and integrate internal and external data sources to simplify case identification as well as investigation and recovery.

Trend #2:

“It’s alive! It’s alive!” (Frankenstein)“It’s alive! It’s alive!” On-demand applications bring sluggish subrogation operations to life

Software-as-a-service applications are alive! On-demand subrogation software offers web-based access to data integration, case management, forecasting, and reporting. These applications allow you to integrate multiple data sources (without relying on internal IT) and leverage built-in analytics to identify cases more accurately. Case management features guide investigation and recovery processes with powerful tools such as diaries, contact databases, and letter generation engines.

These applications allow you to see the big picture across your subrogation operation. They maintain an ongoing record of all activity and correspondence for each case so that anyone with proper access can see the status of the case and any activity associated with it. If you’re able to use the application internally and extend access to your subrogation vendors, you’ll be able to measure performance across all delivery teams. This can provide valuable insight about worker productivity, process effectiveness, and overall financial performance.

Increasingly, application vendors are incorporating machine learning (a form of artificial intelligence) into their products. What this means is that over time, the system will continuously learn from the data and use what it learns to refine identification algorithms.

Trend #3:

"Whatever you do, don't fall asleep." (Nightmare on Elm Street)“Whatever you do, don’t fall asleep.” Prepayment cost avoidance and other tips to be proactive

Avoid subrogation nightmares with pre-payment solutions

What better way is there to maximize your bottom line than to know in advance of paying a claim that it’s another party’s responsibility?

Traditional subrogation models seek to recover funds after a payment on the claim has already occurred. But pre-payment subrogation decisions are now a real possibility, thanks to the availability of data and the technology that quickly integrates and analyzes it for us.

It makes sense for plans to begin exploring pre-payment capabilities, as it allows them to avoid 100% of the claim cost as well as the cost to recover after payment has been made. By quickly analyzing multiple types and sources of data, it is possible to determine much more quickly whether a) an injury is the result of another party’s fault and b) a claim has been filed by another carrier that would have primary responsibility for payment.

The key is to have the data and technology in place. Whether you are graced with a supportive IT team that develops these capabilities with you, or you acquire the applications externally, it’s critical to have fast access to data from multiple systems.

When implementing a pre-payment subrogation strategy, think strategically, review state requirements and your policy language. There are nuances to pre-payment but by engaging with your IT, legal and contracting teams, it can be successful. Additionally, keep in mind that pre-payment cost avoidance should be coupled with post-payment recovery for a holistic approach that follows the transaction through the whole lifecycle. Despite the efforts to acquire the right types of data, you won’t always get what you need fast enough for a pre-payment decision. Traditional post-payment subrogation augments pre-payment and serves as a safety net to catch any claims that you aren’t able to make a determination on within timely filing limits. Some erroneous payments will continue to be made, requiring post-payment evaluation.

Be alert for opportunities to optimize post-payment processes

The term “time is money” is very relevant to subrogation. The faster a case is handled, the better the plan’s chances are of maximizing the settlement. Therefore, it’s critical to be proactive throughout the post-payment subrogation process. Again, data and technology are key to making more informed decisions and automating complex tasks. Below are some tips:

  • Prioritize cases. Dollar value tends to be the most used metric for prioritization, but it shouldn’t be used alone. As mentioned earlier, multiple pieces of data can be used to determine recoverability, so teams can focus first on those cases that are more likely to settle.
  • Align case complexity with skills. When the most complex cases are assigned to the most skilled resources, they are likely to reach a settlement faster. This requires a definition of the elements of case complexity, as well as a method of evaluating skill levels.
  • Legal oversight. Legal resources should be engaged during the settlement phase of a subrogation case to aggressively pursue optimal recovery for the health plan. Though settlement is typically the shortest phase in a subrogation case, it’s also the most complex. With limited dollars available, legal negotiations must be articulate and based on a strong understanding of the plan’s rights.
  • Track and measure consistently. Measurement of subrogation performance is critical to knowing what works and where to make improvements. Plans should insist upon robust reporting and analytics across their subrogation inventory to quantify recovery efforts, view real-time and historical case data, forecast recoveries, and get regular reimbursement reports.

"This is not a dream! This is really happening!" (Rosemary's Baby)Causes of subrogation elation

Besides our references to horror movies, the common theme here is that data and technology are helping subrogation organizations maximize financial results for their plans more effectively than ever. Now is the time to take a fresh look at the tools and techniques used to identify, investigate, and settle third-party liability cases. Work with your IT organization, talk to your vendors, and evaluate the subrogation software available today. Our white paper on Transforming subrogation operations with data, technology, and analytics explores how 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.

Heather RodemannHow to wake up from subrogation nightmares

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