Today, I was wondering how long would Workers Compensation survive when examining the following situation.
The process of Workers Compensation is going to always involve claim over-payments. Any time that I hear “We have X, Y & Z process in place to not overpay vendor and injured employees is just not being honest with themselves.
Any time benefits are paid to any type of claimant or vendor, overpaying the benefits is going to be a large concern.
Insurance carriers and especially Third Party Administrators (TPA’s) have a massive fiduciary responsibility to their insured clients to make sure that overpayments are limited as much as possible. There is no excuse for issuing overpayments as part of a trend. I was reading today in a report by the GAO (PDF file) which found $14.1 billion in overpayments.
This did not seem that large as the Center for Medicaid/Medicare Services (CMS) is a massive payor. I then read in this article the error rate for overpayments was 5.8%.
The 5.8% error rate is likely understated. The audit was examining a small section of the overall payment structure. The GAO and CMS even admitted that their MCO (PPO) payors had not really been audited.
We often are consulted to audit payments by carriers and TPA’s. The error rate is usually much lower, especially if the payments are made through a Workers Comp PPO network. However, direct non PPO payments do have a similar error rate to the CMS or higher.
One has to wonder how long would workers compensation survive if the error rates were as high as the CMS.
Article provided by James J Moore, AIC, MBA, ChFC, ARM. All articles are original content. Check out the full website at www.cutcompcosts.com.