Subrogation & Healthcare Claims: Is Your Plan Leaving Money on the Table?

September 29, 2020

One of your members has been critically injured in a car accident where another party was at fault. Your plan has paid the member’s hospital and medical expenses and fortunately, the prognosis for the accident victim is good. But, does the story end there?

If your plan isn’t using subrogation to recover those costs, you may be leaving money on the table. When this type of scenario is replayed numerous times across many members, increased utilization and insurance payouts could have a negative impact on plan design, participant costs and member satisfaction over time.

What is Subrogation?

Subrogation is the process by which health insurance plans recover medical costs from the appropriate party. Subrogation falls into two broad categories: (1) casualty recovery and restitution and, (2) mass tort subrogation.

Casualty recovery and restitution opportunities tend to focus on incidents that impact a single member. Here are few examples of scenarios that are classified as casualty recovery and restitution:

  • Auto and motorcycle accidents that were caused by another party
  • Recreational vehicle injuries that occur in planes, boats or off-road vehicles
  • Premises liability where a fall or other injury was caused by unsafe conditions like an unmarked spill or uneven concrete in a public area
  • Homeowner’s liability where injuries occur on privately-owned property
  • Workers’ compensation cases where injuries occur on the job

In contrast, mass tort subrogation focuses on civil actions that involve numerous plaintiffs against one or more defendants in a state or federal court. Examples include product liability cases, medical malpractice cases, medical device defects, exposure to toxic chemicals or consumption of a pharmaceutical that causes subsequent injury.

Subrogation is Often Underused, But Why?

Across the insurance sector, the National Association of Subrogation Professionals (NASP) reports that as many of 15% of insurance claims are associated with missed opportunities for subrogation. Close to one-third (32%) of recoverable claims are either not pursued for collection or the file are closed with no funds recovered. In the healthcare sector, HMS has typically found that between 1% and 2% of healthcare claims paid are recoverable.

Health plans frequently miss subrogation opportunities for a variety of reasons:

  • At the time of claim intake, critical information may not be captured completely which would identify the claim as appropriate for subrogation.
  • Many organizations don’t have the sophisticated analytics needed to identify subrogation opportunities within their information systems.
  • Teams may not have access to the specialized tools and resources required to maximize claim identification and cost recovery. Tracking down cases frequently means combing through scattered and disorganized data at county offices, attorneys and insurance companies.
  • Organizations may not have implemented metrics to monitor which claims have subrogation potential and to quantify their dollar value. You can’t manage what you don’t measure.

Effective Subrogation Requires Identification, Investigation, Case Management and Recovery

HMS Subrogation Services is an end-to-end offering designed to help health plans track down, manage and bring cases to successful reimbursement and closure. Our team of legal and healthcare professionals provides services along the entire subrogation continuum to supplement a health plan’s existing operations or to provide a second-pass solution.

HMS Subrogation Services uses a three-stage process:

  1. Identification. Our identification procedures identify up to 300% more claims for subrogation than in-house teams.
  2. Investigation. Our investigation model uses multiple sources, which lead to response rate increases between 10% and 35%.
  3. Case Management and Recovery. Disciplined process steps increase net returns by 60%.

This approach has key advantages over in-house subrogation operations:

  • Research isn’t limited to accident-related cases. HMS Subrogation Services also focuses on mass tort cases, such as medical malpractice, defective devices or toxic exposures.
  • Legal experts conduct exhaustive searches. Our team searches property and casualty databases, reviews federal and state online court records, searches in LexisNexis and Westlaw and more.
  • The process is turbocharged by artificial intelligence and analytics. HMS has developed a proprietary subrogation identification-scoring model based on association analysis of client claims data. This predictive model identifies combinations of diagnosis and procedure codes with the highest likelihood to be accident-related and with the greatest probability of recovery.
  • The solution is secure and easy to use. HMS Subrogation Services’ customers have secure, reliable, web-based access to information around the clock. This includes real-time updates, document imaging, guided workflow and more.

Conclusion

Leading health plans are focused on enhancing the member experience, while optimizing their bottom line. HMS Subrogation Services is helping organizations achieve those goals through consistent processes, proprietary algorithms and analytics that identify additional subrogation opportunities, and a team of legal and healthcare experts that understand the ins and outs of subrogation. The result is a solution that maximizes returns, while minimizing member abrasion.

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