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Make a Bigger Impact on Third Party Auto Claims

—September 13, 2016
Make a Bigger Impact on Third Party Auto Claims

By Norman Tyrrell Director, Product Management, Casualty Solutions Group

By Jackie Payne Vice President, Medical Management Services, Casualty Solutions Group

In just one year, the average bodily injury claim cost has risen about 4 percent, from $13,719 in 2014 to $14,280 in 2015. As medical costs increase, claims costs increase as well. Since there aren’t fee schedules applicable to third party injury claims, or access to traditional Preferred Provider Organization networks, payors need to look for other opportunities to help contain these rising costs. As bodily injury severity and utilization continue to rise, many insurance companies are using a suite of solutions including a few key cost containment methods outside of traditional bill review to reach the fairest price in the settlement of third party claims.

What’s Happening in Third Party?

Third party claim costs have been rising for quite some time. From 2011 to 2015, bodily injury severity rates have increased about 12 percent . In addition, we have seen utilization increase about 18 percent. These increases are due to several factors, including rising medical costs, a higher frequency of surgeries to treat injuries and more expensive diagnosis procedures. These medical trends are having a direct impact on third party claim costs.

The best way for payors to combat rising costs across the third party auto casualty market is to use a variety of cost containment services on both represented and unrepresented claims. In addition to bill review and demand package review services, many companies would also benefit from using nurse review and direct-to-provider negotiations as a part of their third party solution suite.

Direct-to-Provider Negotiations

Negotiating isn’t just for attorneys and adjusters. In the third party auto market, insurance companies should also be contacting a partner to negotiate directly with providers on unrepresented claims on their behalf. Many insurance companies don’t use any cost containment methods on these unrepresented claims, instead choosing to focus their employee’s time on negotiating demand packages for represented claims. Negotiation services are an easy-to-use solution that won’t add too much time to the third party workflow or take up valuable adjuster time. By using provider negotiation services with a prompt-pay model, payors can often start to see benefits like reductions compared to what they are currently paying, as well as increased consistency throughout the organization’s payments.

Companies that aren’t negotiating third party medical bills are often paying providers on unrepresented claims in full, since they don’t have a strong cost containment methodology that they use for these claims. By simply using a negotiation service just like they would for first party auto or workers’ compensation claims, companies can start to quickly and easily see major improvements on third party payments with minimal internal effort.

While many companies that do use direct-to-provider negotiations keep their negotiations in house, choosing to use a strategic partner is often the most efficient and fruitful option. A partner is set up to negotiate more accurately and efficiently than adjusters can, since they are equipped with the right tools and expertise. The strategic partner should be using a combination of a proprietary platform, expert negotiators and data from nearly every provider in the country.

If a negotiation service is set up this way, it’s much more efficient than in-house negotiations, and often produces much better financial results. In addition, a partner can help free up time for adjusters so they can focus on core tasks instead of spending time calling providers. When executed correctly, a strategic partner can often secure an average price reduction of 20-50 percent on each bill.

Negotiation services are a cost-efficient way to manage rising third party claims costs in all 50 states. Typically, there is no investment required to turn on the service, and insurance companies only have to pay once they start receiving discounts. A negotiation service is a low-cost way to improve third party claim outcomes while streamlining an insurance company’s operational workflows.

Nurse Review

Another area for increased impact in third party auto claims is the use of professional medical review services. A nurse review service provides adjusters with invaluable information to help them negotiate successfully with plaintiff attorneys, which saves insurance companies from overpaying on medical specials. With bodily injury severity on the rise over the past couple of years, many insurance companies are turning to nurse review to help combat these higher prices and overutilization of medical services.

Nurse review is most valuable when the service employs registered nurses who are familiar with trauma care and do a complete deep-dive review of the claimant’s current medical record. A nurse should personally look closely at all of the details of the claim and medical records instead of just doing a cursory review of the billing or using algorithms to do the job for them. When the nurse review services conduct their review in this manner, nurses are able to pull out the most important information in the medical record and the claim file and point to any discrepancies in the type and course of treatment, which can be used as negotiation points. When discrepancies are noted, detailed negotiation points can assist adjusters and defense attorneys with settling the claim for significantly lower amounts.

Another key benefit to using professional nurse review is that the review and negotiation points are clear, concise and in a format that helps facilitate negotiations. By receiving recommendations in an easy-to-understand layperson’s explanation, adjusters at all experience levels are able to not only understand the situation, but also explain and rebut key points with a plaintiff attorney more effectively. The document should contain an overview of the chronology of medical treatment starting with the mechanism of injury and continuing through all phases of treatment. The report should provide detailed rationale to support their recommendations making sure adjusters are prepared for the sometimes difficult negotiation process.

Along with an easy-to-read format, a nurse review service should also provide some training around how to use a nurse review report to its maximum potential and also include information around how to contact the nurse reviewer with any questions that may arise.

When a nurse review is executed correctly, it can help insurance companies achieve significant cost containment on third party claims. In fact, some companies using nurse review have avoided paying hundreds of thousands of dollars for treatments that are completely unrelated to auto accidents. Here’s one example: After a minor fender-bender, a claimant had symptoms of chest pain that led to a very costly workup and ultimately, open heart surgery. The hospital bill alone was almost $200,000.

Though the plaintiff attorney argued that the claimant’s heart issues were a result of the accident, the nurse who reviewed the case on behalf of the insurance carrier found many details of the claimant’s history that showed the conditions were long-standing and pre-existing. The adjuster was able to negotiate successfully that the condition was unrelated to the auto claim, and eventually it was determined that the insurance carrier would not be responsible for paying for any of the treatments, saving them from unnecessary payments.

By adding robust negotiation and nurse review services into their third party solution suite, insurance companies will be able to control costs on both represented and unrepresented claims. These services will not only improve adjuster efficiencies, but will also better ensure that companies are consistently paying the fairest price on third party claims and result in improved financial results.


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