Elements of Medical Bill Auditing

A review of the EthiCare Advisors’ audit

An audit is the evaluation of an organization, system, process or product performed by a competent, independent, objective, unbiased person or persons known as auditors. The purpose of an audit is to make an independent assessment based on the representations of another. In the world of medical claims, auditors using industry standards make independent assessments about bills presented by healthcare providers for payment.

EthiCare Advisors’ audits focus on uncovering potential: coding errors; duplicate charges; provider upcoding; unbundling; coding incompatible with reported diagnosis; and medical necessity issues. We accomplish this utilizing a proprietary, state-of-the-art auditing system run by a team of experienced expert auditors.

The American Medical Association’s CPT® and CMS’ HCPCS codes combined with the widely accepted billing guidelines used for federally mandated programs serve as the foundation of the EthiCare audit. Building upon this foundation, our auditors compare billed charges against the National Correct Coding Initiative (NCCI) and other industry-accepted guidelines. Lastly, our own algorithms – derived from our experiences and audit data of thousands of claims – is applied to the claim. Our objective is to base our audit recommendations on authoritative sources to ensure that we are both correct in making such recommendations and that any such denials would be accepted by healthcare providers.

WARNING! Beware of Discount Envy

An outbreak of DISCOUNT ENVY has been detected at numerous managing general underwriters (MGUs) and stop-loss insurance carriers across the country. ARE YOU INFECTED?

DISCOUNT ENVY can occur when underwriting a piece of business. A feeling of grief overwhelms you when you realize you can’t be competitive because the PPO discounts just aren’t deep enough to compete with the fully-insured quotes.

The claims department also experiences DISCOUNT ENVY when they see a $300,000 with a 3% discount when they know the same provider gave a 40% discount on a $10,000 claim.

Listed are a few of the symptoms of DISCOUNT ENVY:

  • The underwriting department using last nights lottery numbers to help determine rates;
  • Extra large bottles of antacids on the claims manager’s desk;
  • Marketing developing a 2 for 1 campaign – Buy a family, get a single for free;
  • Discounts being rescinded;
  • 20 minute tirades on how a hospital can charge $15,000 per night for a room and $10 for an aspirin, then offer a 20% discount and expect you to be happy.

In order to treat the symptoms and help cure DISCOUNT ENVY – we suggest utilizing EthiCare Advisors daily.

You don’t need a prescription for your daily dosage of EthiCare Advisor’s in-network claims settlement services. Save an average of 15% ABOVE THE PPO DISCOUNT daily with EthiCare Advisors to relieve DISCOUNT ENVY. Nor do you need a Doctor’s referral for EthiCare Advisors’ low fees of 15% of savings which come complete with a signed release on out-of-network settlements.

A website has been established for more information about this troubling condition, www.discountenvy.com.

Please don’t let DISCOUNT ENVY spread!


How’s Business Going?

Now that the relative calm of summer is over, the January push is starting up for most stop-loss managing general underwriters (MGUs) and insurance carriers. How would you assess your year so far? Are you writing the business you want to write or do you feel like every renewal is a fight? What about new business? Are you competitive or are the insurance brokers and third-party administrators (TPAs) not even giving you a second look?

How about claims? Is the loss ratio where you forecasted or are the claims chipping away at your profits?

As a company that interacts with many managing general underwriters and insurance carriers from large to small, we are hearing of many entities fighting hard to keep good business while seeing very little opportunity to write new cases. The wildcard in the process are the claims and how they are administered.

It is no secret that some administrators work better with some managing general underwriters and insurance carriers than others. It is also understood that many managing general underwriters & insurance carriers have strong opinions on how a specific third-party administrator operates.

As you evaluate your current position for the year and develop your year end plan, we at EthiCare Advisors remind you that while proper underwriting is very important, do not forget to assess your claim operations. Perhaps the following discussion points will get your company talking.

1. What is the maximum percentage of savings fee you allow to be reimbursed? Do you allow third-party administrators to charge for claims settlement services or do you consider it part of their fee? Do you allow third party firms to “buy” the claims from the providers and resell them to the plan? If not, what do you do when the situation arises?

2. Do you have someone either internally or externally that reviews large claims (over $50,000) regardless of the discount? Do you always request an itemized bill for large in-patient claims? If so, what do you do with them? If not, why not? Will you pay for duplicate charges? How about implants that were never used? Should the provider/hospital and/or network be able to dictate payment terms or should the plan document dictate payment terms?

3. How have dialysis costs affected your business over the past 5 years? Do you stay away from writing cases with a dialysis patient? If you had a better handle on dialysis costs could you write more business? Are you willing to pay dialysis providers up to 4 times more than you have to because they are in-network?

4. Does your organization pay claims according to the plan document? What about applying Usual & Customary as called for in most plan documents, even if the third-party administrator did not apply it? When you think of health insurance, do you believe it should cover everything or should the patient share some of the risk?

5. Seemingly everyone complains about the costs of certain drugs or implants. What do you do to protect your loss ratio from these charges?

We hope you take a few moments to consider these questions and how your organization deals with each situation. If you find yourself questioning your internal procedures and wanting to discuss potential changes, we are here to help. The proper changes could positively alter your results in terms of sales and claims.

The less you spend – The more you save.

EthiCare Advisors – your Medical Claims Settlement Specialists.

Price – Service – Results


PRICE. SERVICE. RESULTS. These are the three key ingredients in building a successful business no matter what the industry.

EthiCare Advisors, Inc. was founded in 2002 with the goal of reducing the industry average costs of claim settlements from 25% down to 15% of savings. We also decided to include provider sign-offs eliminating discount pushbacks experienced by other cost containment vendors utilizing blind networks. Lastly, and most importantly, we make a customer service commitment to our clients by doing the little things like returning calls, answering questions honestly, hiring employees with a TPA and/or MGU background and providing cell phone numbers of the owners to all of our clients. Nine years later, EthiCare Advisors has a client base which includes more than half the MGUs and stop-loss insurance carriers in the medical stop-loss market, numerous third-party administrators, some fully-insured first dollar carriers, some labor unions, and even some utilization review and case management vendors.

As a leader and innovator in the cost containment marketplace, EthiCare Advisors offers access to in-patient hospital usual and customary pricing data that will comply with the plan document language for many self-funded healthcare plans as well as fully insured policies. Our unique database is derived from the largest, all-payer inpatient care database in the United States. It contains data from approximately 8 million hospital stays from roughly 1,000 hospitals since 1988. We know that this database is the most defensible in-patient facility pricing database available to payors because it is based on actual charge data as submitted by providers nationwide to federal and state agencies collected during the past more than 20 years.

In the words of one of our MGU clients after hearing our pricing structure, “That is bad news for everyone else.” Our philosophy is simple – Cost containment is about saving money for the payor and the best way to do this is with great results at low prices. We charge the same low prices to everyone – from the largest stop loss carrier to the mid-size TPA to the small self-funded plan sponsor, everyone pays the same rate. We would never think of charging 35% of savings like some of our competitors. It is just a wacky idea.

Our customers are the ultimate payers of medical claims and we rely on them for business. We do not obtain business by buying it or offering huge cash incentives. If you are reading this, chances are your organization is a payer of medical claims. If our business philosophies sound appealing to you, please contact us. We are continuously looking for ways to improve the self-funded marketplace and sharing your ideas and opinions are important in improving our industry.

Good Customer Service

Stop-loss insurance carriers and managing general underwriters (MGUs) are in a peculiar position in reducing claims costs. They can’t direct first dollar payment, but if they don’t help third-party administrators (TPAs) watch costs their loss ratios mount causing rates to rise. Most stop-loss insurance carriers and MGUs have found cost containment companies to refer claims to, however few have found companies they are willing to call their partners.

Choosing a cost containment partner is no easy task, especially when your partners regularly interact with your clients. This interaction is a risky proposition. When selecting partners stop-loss insurance carriers and MGUs should seek out those offering the right mix of services, workers with key technical competence and – most important – likable leaders with great people skills.

“Underwriting brings in the business, claims keeps it,” an old insurance adage reminds us. Claims departments must deliver superior customer service while at the same time walking the fine line between paying all the claims, which drive up the loss ratios, or denying all the claims, which scares all the clients away. Claims managers must strike a balance knowing when to pay and when to deny without being pennywise and pound foolish, always keeping in mind the customer and serving their policy.

Everyone wants superior customer service. Everyone promises superior customer service. Few actually deliver it successfully let alone repeatedly. That’s because customer service is very subjective. It is measured in the eyes and hearts of people and every person sees and feels differently about a given set of circumstances.

EthiCare Advisors, Inc. is committed to delivering superior customer service every day through high-touch, customized claims settlement. Every claim is handled, checked or reviewed by an owner. We deliver a level of customer service you simply cannot get by repricing a claim online or through EDI. Here are some of the ways we deliver superior customer service:

Customized sign-off letters for your organization. Each company is different with different needs and requirements. EthiCare Advisors works with your claims staff to develop customized provider signed releases to suit your needs. We can add specific terms and conditions, your unique claim or client number, or specialty compliance language.

Our ability to say no. Time is money. When we know we can’t help secure a discount, we let you know upfront. We do not to waste anyone’s time or resources. Our clients give us considerable respect for just saying “no.”

Our high level of contact. It is not uncommon for clients to call or email us six or more times in one day. They ask questions, inquire about discount relationships, make special requests, etc. We are always accessible. Every client has the cellular phone numbers for EthiCare Advisors’ owners, Mark and John.

Professionalism. When a carrier/MGU refers a claim to us, they are usually referring us to the TPA. We stress the significance that the TPA is the client of the MGU/Carrier and our demeanor reflects back to the MGU/Carrier. We treat your clients with respect and courtesy as you would expect to be treated.

Our commitment to customer service extends to our pledge to charge among the lowest fees in the industry. We only charge 15% of savings for out-of-network claims settlement – compared to the industry standard we are 40% less!

We NEVER access a blind network or silent PPO. Securing a signed release means we NEVER had a discount pushback on our settlements. This gives stop-loss insurance carriers and MGUs the piece of mind in knowing that when a claim is settled by EthiCare Advisors it is settled for good.

EthiCare Advisors offers you superior customer service through quality, customized options at low prices on the terms and conditions you want. Give us a try today. We promise you won’t be sorry.