How Detailed Are Your Claims Bills?

By David R. Ginsberg, Esq.

Does your company have a large deductible or retrospectively rated workers’ compensation policy? If the answer is yes, then you likely receive a lump-sum invoice on a regular basis. Do the invoices tell you how much your insurer charged for medical bill review expenses? Or the amount of benefits paid for a particular claimant? If your invoice lacks any sort of detail, you are not alone.

Most insurers fail to provide a breakdown of various charges in their invoices. Nor do they show you the amount charged per claimant. Instead, insurers demand
a lump sum payment without any explanation of the how they came up with the invoice amount. It seems impossible that an insurer’s invoices would lack the transparency expected in this post-Enron world. But that is precisely how employers are invoiced today. Imagine a grocery receipt without a list of the food purchased, a telephone bill without a list of the calls made, or a legal bill without a description of the work done, and you get some idea of how an insurer invoices your business.

Many of these unaccounted for and mysterious charges are included as allocated loss adjustment expenses (ALAE). A large deductible or retrospectively rated policy contains an endorsement which allows for these charges. ALAE includes a variety of categories, such as arbitration and court costs, legal fees, expert fees, copy costs, deposition costs, medical examination costs to determine liability, and “all other compensation, fees, costs and expenses chargeable to the investigation or defense of a claim.”

“In today’s age, a business needs detailed bills to gauge its future expenses, and to monitor the quality of the coverage the insurer is providing.”

This last catch-all category allows for various charges not normally expected by an employer. For example, your company may have been charged for the use of a nurse case manager. A nurse case manager reviews the file and interacts with medical providers in an effort to contain costs and provide medical management. However, the nurse case manager may be doing the work of the adjuster. You are not billed for the adjuster’s work, but you are billed for the use of a nurse case manager. Your invoice probably fails to list nurse case manager fees.

When was the last time your invoice listed medical bill review charges? A medical bill review company may be able to reduce some of the claimants’ medical bills, but the reviewer may also be simply reducing medical bills to amounts allowed by statute. In other words, the medical bill review company is doing what the adjuster should have done—reduce medical bills to the amounts mandated by workers’ compensation fee schedules. Instead, the medical bill review company (who may even be owned by the insurer) is charging your company extra fees to reduce bills. Your invoice is not likely to tell you anything about these bill review charges.
 
Unlike the rest of the business world, workers’ compensation insurers seem to be stuck in an earlier age where detailed billing may have been less important. In today’s age, a business needs detailed bills to gauge its future expenses, and to monitor the quality of the coverage the insurer is providing. Unfortunately, there has been no movement by insurers to provide easy-to-understand invoices to employers.

At Roxborough, Pomerance & Nye, we are committed to determining whether or not your business has been paying too much to its workers’ compensation carrier. We will make transparent what is oftentimes a confusing and shrouded billing process. After all, you should know about the costs and fees your insurer is charging your business. Your insurer does.

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