Pursuing Accident-related Claims Helps Health Plans to Contain Rising Costs

Health care expenditures are expected to rise at a rate of two times the rate of inflation for the next decade,¹and represent 4.3 times the amount our nation spends on national defense.² With these costs spiraling ever higher – they are projected to reach $4.3 trillion by 2016³ – those who pay for health care services need to utilize every tool available to contain costs, including the implementation of pre- and post-payment solutions for claims that are the responsibility of another payer.

“Approximately 8 percent to 10 percent of any health plan’s claims are accident-related and rightfully should be paid by auto, personal injury, workers’ compensation or other insurance plans,” according to Dr. Marcia L. Moberg, Subrogation Services operations research analyst at Ingenix. “This percentage may seem low, but with millions of dollars on the line, health care payers cannot afford to ignore these claims, particularly in today’s economy. By doing what it can to identify the correct primary payer, a health plan will control or reduce the costs paid by its members and/or employers.”

Competing goals: Prompt payment and claim investigation

Several factors can hinder health plans from pursuing accident-related claims. For example, many payers must meet state-mandated benchmarks for prompt claim payments. Meeting these benchmarks often is considered the measure of a health plan’s success. Investigations take time, particularly without experienced, well-trained staff, and can add time to recovery and payment efforts.

Reviewing claims to identify whether an accident triggered the need for health care services, coordinating benefits and determining coverage are duties that can be costly for a plan to manage internally. A recent study conducted by America’s Health Insurance Plans showed that in 2006, 14 percent of total claims were pending or delayed for eight to 14 days. In addition, Moberg explained, pending claims requiring manual or other review cost health plans $2.05 to process on average, as compared to $0.85 for a clean claim processed electronically.

Further, health plans often do not apply a great deal of resources toward identifying accident-related claims because they are unaware of the impact these claims have on their business, Moberg suggested. “Plan executives are quite surprised by how many accident-related claims go unidentified and how ensuring that the appropriate payer is responsible for those claims can improve their bottom line.”

To help plans get a sense for the impact of establishing or improving subrogation efforts, Ingenix can use live data to complete a proof-of-concept. “Our numbers help clients realize the true impact of ensuring that the appropriate payer is assigned to a claim,” Moberg said. “In fact, Ingenix helped health plans prevent or recover more than $230 million in accident-related claims in 2008,” she added.

Need for pre-payment injury coverage coordination and subrogation

Because health plans attempting to manage accident-related claims “may be overwhelmed,” Moberg explained, Ingenix offers both the prospective Injury Cost Coordination and the retrospective Subrogation Services to assist in the recovery of dollars where another party should be the primary payer. Using these products in tandem, Ingenix can identify, investigate and prevent or recover payments associated with accident-related medical and disability expenses at any point in the payment cycle – even triggering litigation to secure reimbursement on the plan’s behalf in necessary.

Medica, a health plan that provides coverage to 1.4 million members in Minnesota and parts of Wisconsin, North Dakota and South Dakota, has used Ingenix Subrogation Services since 2004. “The recoveries generated by Ingenix help hold down the cost of premiums, which benefits our customers,” said Rick Munson, director of Medica’s Special Investigations Unit. “With Ingenix as our partner, we expect to see more recoveries in the future,” he added.

As a result of its work with Ingenix, Medica realized a cumulative five-year net benefit of roughly $8.6 million, with a return on investment of 51 percent and a payback period of 13 months.

Pairing art with science yields better results

“Half the battle in effective subrogation is identifying which cases have the highest probability of resulting in a recovery,” Moberg indicated. “To tackle this problem, Ingenix pairs powerful analytics with experienced investigators to maximize results.”

Ingenix has more than 16 years of experience managing claims data and developing analytical tools that help its experts draw conclusions and forecast subrogation trends. However, “the statistical analysis of the data represent only one part – the science – of the Ingenix equation,” Moberg asserted. “The data is only as good as the logic used to gather it,” she said.

Ingenix uses proprietary technology to find accident-related claims that suggest a possible connection to a motor vehicle accident, property liability, product liability, medical malpractice or work-related accident. When a claim is flagged, Ingenix immediately launches an investigation.

In addition to the statistical analysis, Ingenix brings significant business expertise and industry experience – as well as social science techniques – to data collection and evaluation. “Data and statistical analyses are important, but so is knowing how to utilize the results in decision-making,” Moberg said. “It’s an ‘art’ that can make a tremendous difference.”

In the context of subrogation, both business/art and analytics/science teams must work together to provide the greatest impact, she explained. “Using critical thinking to evaluate data for validity and reliability and to determine how different factors may affect a recovery is very important – numbers and statistics alone may not tell the whole story,” she said.

Ingenix Pre-Payment Injury Coverage Coordination and Subrogation Services use SubroAnalytics™ to combine human expertise, intuition and interpretation with statistical tools like predictive analytics to identify increased savings opportunities and to enable the business to make better decisions and maximize recoveries.

With health insurance costs likely to remain a hot-button issue for years to come, health plans are seeking proven strategies to contain rising health care costs. “Cost containment has never been more critical to the health care industry,” Moberg stated, “and Pre-Payment Injury Coverage Coordination and Subrogation services are indispensable tools that can help plans accomplish this goal.”

¹ National Coalition on Health Care, Keehan, S. et al. “Health Spending Projections Through 2017: the baby boom generation is coming to Medicare,” Health Affairs Web Exclusive (Feb. 21, 2008).
² California Health Care Foundation, “Health Care Costs 101 – 2005” (March 2, 2005).
³ Keehan, S., et al. “Health Spending Projections Through 2017: the baby boom generation is coming to Medicare,” Health Affairs Web Exclusive (Feb. 21, 2008).

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