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Benefits professionals spend considerable time examining healthcare costs and how to reduce them without hurting the employee experience. Still, many overlook the hidden opportunities in subrogation or fail to give it the proper attention. This results in millions of dollars in reimbursements that are inadvertently slipping through the cracks due to outdated subrogation practices.
A Quick Refresher on Subrogation
Subrogation is all about post-pay reimbursement, a critical part of payment integrity in healthcare spending. Specifically, it is the process by which a health plan recovers medical costs it has already paid when another party or insurer is legally responsible. Some of the most common cases are motor vehicle accidents, slip and fall, or medical malpractice injuries.
Every health plan practices subrogation, but it often runs quietly in the background. For years, it has been a “set it and forget it” practice, but recently it has come to the fore due to federal guidelines and renewed emphasis on cost management.
Assessing the Current State of Subrogation
Since subrogation is often managed by third-party administrators (TPAs), here is how benefits leaders can work effectively with their TPAs.
It starts with a mutual understanding of subrogation and how it works on behalf of your organization. Traditionally, a subrogation program reviews paid claims and flags specific trauma-related codes that indicate an accident and the potential for another party to pay. Those claims trigger a questionnaire sent to the injured health plan member. The form, which asks for additional information about the accident, has been a standard practice for decades.
However, health plan members see questionnaires as a nuisance or redundant from the dialogue they had at the hospital or with healthcare providers. Members often wonder why they receive such requests. That perception is a common reason why as many as 85% of subrogation questionnaires are never returned.
This issue should be addressed in review meetings. Any discussion with a TPA should also seek to understand how much friction the health plan member experiences within the subrogation process. Additional areas to inquire about include how many times the member was contacted to move the claim along, and how long it takes to validate a recovery event or reimbursement opportunity.
Understand How TPAs Identify Recovery Opportunities
Benefits leaders should understand how their TPA identifies recovery opportunities, as the inability to identify reimbursement opportunities limits how much a plan will get back. While the subrogation questionnaire has been around for a while, significant innovation has occurred in recent years to reduce reliance on this traditionally high-friction practice.
Chief among these innovations is reverse identification. Instead of searching within paid medical claims for what should be investigated further, this model first looks at alternative liability policies. From there, it works backward by cross-referencing which paid medical claims qualify for reimbursement under these alternative policy claims. Key data points include court filings, auto insurance policies, accident reports, and police reports.
In addition to providing a more complete picture of what caused an injury, the reverse identification strategy creates a broader base of potential third parties that align with the coverage plan's policies. From there, the TPA has more to work with to maximize the company's health plan recoveries.
What Does a Good Subrogation Program Look Like?
Measurement is critical to the success of a subrogation program. Many programs are evaluated solely on recovered dollars, but that metric alone can mask significant opportunities. Benefits leaders should ask their TPAs to demonstrate how many recovery opportunities are being identified, methods used to identify them, recovery rates, cycle times, member engagement and satisfaction, and overall program effectiveness.
A best-in-class recovery program maximizes collections on known cases, consistently uncovers reimbursement opportunities that traditional approaches may never identify, and minimizes disruption to health plan members.
As healthcare costs continue to rise, companies are placing more scrutiny on the subrogation process. Benefits professionals can get ahead of potential issues and audits by proactively meeting with their TPA, understanding what’s going on, and refining processes for maximum recovery.
Laura Hescock is the CEO of Intellivo.
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