A Healthesystems publication

Spring 2014

Top Challenges of Managing Ancillary Medical Services

Unique issues related to coding, processing and program management make it difficult for payers to know exactly what ancillary medical products and services are provided to injured workers and at what price.

It can be especially challenging for workers’ compensation payers to control and manage ancillary medical services. Unique issues related to coding, processing and program management make it difficult for payers to know exactly what products and services are provided to injured workers and at what price.

Payers often do not have a clear understanding of how much is spent for durable medical equipment, home health, transportation, translation and language services due to lack of detailed codification. Transportation services are a good example. Many payers use inconsistent methods to capture transportation billing. Some claims professionals may authorize bill payments off the claim as an expense, while others will send bills through bill review.

Control starts with detailed coding

If a payer is able to identify spending in each service category, the next challenge is to understand exactly what services and products are provided in that category and at what price. Codes for services are often applied inconsistently. Many are billed with a miscellaneous code; others may be billed using different codes for the same type of service. When ancillary medical services are paid in bill review, confusion frequently contributes to between one-third and one-half of bills being denied — often due to bill duplication, lack of relationship to the claim and lack of prior authorization. When product-specific codes and detailed descriptions are applied on referrals and bills, payers gain a clear understanding of the products and services delivered and the price charged for each.

Top ABM Challenges

Coding Processes Program Management
Lack of transparency Bill disputes No mechanisms to measure
vendor performance
No product-specific codes & descriptions Overutilization No control over utilization, costs & quality
No defined units of measure  Wasted time  No process improvement
Use of miscellaneous codes  Increased costs  
  Referrals, authorizations &
billing not integrated
 
  Lack of proper authorizations  

Lack of Detailed Coding Can Be Costly

Mileage charges related to transportation services are often billed under code A0425, regardless of the type of transportation provided. Use of detailed coding gives payers greater transparency. 

Cost per mile

Advanced Life Support Transport $$$$$$$$$$$
Basic Life Support Transport $$$$$$$$
Stretcher Transport $$$$$
Wheelchair Transport $$$
Ambulatory Transport $

Integrated processes reduce costs

The second set of challenges are related to processes involved with referrals, authorizations and billing. When these processes are clearly defined and integrated with one another, the correct services and products can be delivered at the right time and at the correct price. Ancillary medical services delivered outside of an integrated and fully managed program often lack proper authorization. This can lead to bill disputes, overutilization, wasted time and increased costs. When prior authorizations are linked systematically to bill processing and payment, payers gain control over utilization and costs. This process also eliminates overpayments and underpayments.

Program management ensures quality and efficiency

Even when coding and billing is accurate and utilization is well controlled, payers face the challenge of maintaining quality and evaluating the performance of individual vendors as well as the overall program. Metrics can be established for every vendor and every aspect of an ancillary benefit program. Analytics can evaluate performance across like vendors and serve as a blueprint for process improvements if needed. Payers can use hard data to determine if a change of vendors may be needed. The more aspects of quality and performance that are measured, the more control payers can have over utilization, quality and costs of ancillary medical benefits. 

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