3 Ways Your Hospital is
Leaving Money on the Table

Maximizing Revenue from Workers’ Compensation in Pennsylvania

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By Sean P. Audley

Hospital administrators are always challenged to find ways to generate revenue from their hospital. Nearly every function in your facility can generate revenue, yet many are leaving money on the table, particularly when you’re dealing with workers’ compensation. Whether you outsource your workers’ compensation accounts to a vendor or handle them in house, it’s highly likely you are missing out on significant revenue from these accounts.

The payment of work-related medical bills is controlled by the Pennsylvania Workers’ Compensation Act and regulations are enacted under its authority. While most claims are not complicated to resolve, some pose roadblocks to payment. These outlier claims are often high dollar accounts and are often contested by employers. They can take months to resolve, tying up valuable staff time. Not understanding the intricacies of the law regulating these claims can result in missed deadlines or lost opportunities for payment.

As a result, your facility may be writing off accounts or settling for a reimbursement amount that is less than what you are entitled to receive. One way you can be more proactive in trying to maximize the revenue from these accounts is to partner with an experienced attorney well versed in workers’ compensation. This will not only increase your recoveries on these cases, but allow your staff to devote their time to less complicated claims, thereby increasing revenue on those as well.

Here are three common areas where hospitals tend to lose revenue from a workers’ compensation case if they are careless: Fee Reviews, Liability Disputes and Settlements.

Fee Reviews

The Workers’ Compensation Act allows medical providers who dispute the amount paid, or seek interest on claims that have not been paid in a timely manner, to contest those decisions. You can file an Application for Fee Review with the state to attain every dollar that you are due. If you’re dissatisfied with their decision, you can request a review by a workers’ compensation judge. Challenges to the amount paid usually involve carriers who pay fee schedule amounts for expenses exempt from the fee schedule because they are related to trauma or burn care. The Act requires carriers to pay “…the provider’s usual and customary charges…” where the care is provided for an urgent or life threatening injury in a trauma center and when the care is for serious burns treated at a burn unit. The difference between the fee schedule payment and the provider’s charges can be enormous.

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Oftentimes, hospitals accept the carrier’s payment determination or fail to meet the strict timely filing guidelines for fee review applications, which is the later of 30 days from the date the disputed payment is made or 90 days from the original billing date. You may also miss the timely filing deadline by waiting for the promised additional payment or for the claim to “reprocess,” the Fee Review deadline expires, leaving you with no recourse to challenge the payment. Also, far too often, a hospital will accept the administrative decision and fail to request review by a judge. However, the administrative review provides a hospital with no opportunity to argue their position; it is simply a paper review of the payment rendered by an employee of the state. Conversely, carriers have the opportunity to tell that employee their position before a decision is rendered. Not surprisingly, many administrative decisions favor carriers. 

How does this impact your facility? Quite simply, you lose the opportunity to get paid what the law requires by failing to take advantage of the fee review process. As the case above reveals, if your hospital is a trauma or burn center, this can mean hundreds of thousands of dollars lost that could have been recovered. Because of the strict appeal deadlines and the complexity of the Act in determining when the cost of care is exempt from the fee schedule, the assistance of legal counsel in pursuing these challenges is imperative.

The keys to an effective program to contest inadequate payments through the fee review process are: 1) prompt identification of exempt cases; 2) timely filing of the initial application; and 3) referral to legal counsel for the filing of a request for a hearing. An attorney who understands fee review procedures and the substantive law governing such reviews can help by educating your staff to identify cases for which review should be sought and by handling the appeals of administrative denials.

Liability

Another way payment is impacted is if a carrier denies that the injury leading to the treatment is work related, or denies that the care provided is related to an accepted injury. If there is such a denial, then health insurance should pay. However, if there is no health insurance or health insurance denies payment based on their conclusion that the care was not related to a patient’s employment, your hospital will be caught in the middle, seemingly without recourse. Hospital staff will then treat these as self-pay matters and write them off or have the patient apply for account assistance. The reality, however, is that just because a carrier denied the underlying claim does not mean they were right. They may rightfully conclude that the employee will either not bother to pursue the claim or be afraid that doing so might affect their employment. This is even more likely if the employee returns to work quickly.

Attorney involvement in these types of claims is often very effective. Insurance carriers have changed their denials when presented with medical records that establish that the injury is work related or that the care is related to an accepted work injury, especially when accompanied by legal argument in support. The law allows employers to accept a claim for payment of medical expenses only. Employers and their carriers will frequently pursue this option rather than take the risk the employee will pursue the claim fully. Even when that does not prompt a reconsideration of the denial, patients who are reluctant to pursue a workers’ compensation claim will repeatedly change their mind when they learn they will be responsible to pay for the medical expenses and are offered assistance in pursuing a claim.

The keys to recovery in these cases are prompt recognition that the matter is a liability denial; a thorough review of the medial records and other available facts to determine if the denial is appropriate; and, if not, immediate contact with the carrier to explain why they should reconsider and with the patient to secure their cooperation. 

Lump Sum Settlements

Finally, hospitals can find themselves denied payment when the patient and the carrier agree to resolve the case for a lump sum payment to the patient. The Workers’ Compensation Act provides a mechanism in which an employee can receive a lump sum settlement from the workers’ compensation carrier or employer in exchange for releasing the employer/carrier from any further liability for any benefits associated with the work injury—including the payment of medical expenses. These settlement agreements, referred to as Compromise and Release Agreements, are common, especially in cases contested over liability. Most importantly, there is no requirement that the agreement address outstanding medical bills. Hospitals are not required to be notified that an agreement excusing the carrier from paying work-related medical expenses is being considered.

The patient’s attorney will use the outstanding medical expenses as leverage with the carrier to increase the amount of settlement but make no provision in the agreement for payment of those expenses. When payment is made, the money will be disbursed to the patient and the attorney and the hospital is left with no ability to challenge the settlement.

Since nothing can be done after the settlement is finalized, it is vital to identify these matters early. In general, any case where medical bills are unpaid because the matter is in litigation, has the potential to settle. As with liability matters, once these claims are identified, all parties involved are contacted regarding the outstanding bills including the carrier, employer, employee and all involved attorneys. Though the law does not protect the hospital, you can secure the agreement of the patient and their attorney to address the medical bills in any settlement. This agreement, known as a Forbearance Agreement, exchanges your promise to not immediately file suit over the unpaid bills for the promise by the patient and their attorney to see that payment of the bills is accounted for in any settlement. Hospitals also have to be prepared to follow through with threats to sue when the patient and/or their attorney refuses to execute such an agreement. When a request to enter into an agreement fails, being served with a lawsuit that the patient has to defend or suffer a default judgment, succeeds.

Conclusion

Whether your payment roadblock is from Fee Review, Liability Disputes or Settlements,  the keys are the same—identify the roadblock and act promptly. Do not underestimate the complexity of workers’ compensation cases. While these types of cases are the outliers in workers’ compensation matters, they can represent millions of dollars of lost revenue to your organization if not handled in a timely manner. Protect your rights by using an attorney who understands workers’ compensation procedures and workers’ compensation law. If you want an effective means of addressing these cases, establish an ongoing relationships with an attorney whose practice focuses on  helping health care providers overcome obstacles to payment in these and other areas; an attorney with the experience in these matters.  Doing so will augment your staff’s in-house and outsourced collection efforts and you will be better prepared to identify these accounts, take actions to strengthen your legal position, and know when to seek involve legal counsel. 

About the Author

Sean P. Audley of Audley Law Offices has been a practicing attorney since 1990. A graduate of Allegheny College and the University of Pittsburgh School of Law, Sean’s experience includes representing a multi-employer health and welfare fund and large health insurers in subrogation related matters, as well as representing a public sector collective bargaining unit, which included Assistant District Attorneys, Assistant Public Defenders and Forensic professionals employed by Allegheny County in labor negotiations, interest arbitration, and other matters.

In 2003, Sean founded Audley Law Offices, P.C., where his focus of practice has been in the representation of hospitals, nursing homes and other health care providers in the recovery of unpaid claims. Since he began representing hospitals and other health care providers, Sean had recovered in excess of $35,000,000.00 for his provider clients.  Most of these recoveries are 100% of the expected payments and in some cases, such as workers’ compensation matters, he has collected well over the expected payment amounts. In addition, throughout his career, Sean has served as a Law Clerk to several Pennsylvania Judges and currently holds that position with the President Judge of the Allegheny County Court of Common Pleas.