Archive for September, 2012

Unbundled: How to review a BI demand and pay the right amount

It’s a quandary just about every casualty adjuster faces; how much should I pay on this claim?  To land on the right figure, there are two key considerations; liability and damages. From a purely academic standpoint, in situations where an insured was not liable, the damages should not matter.   Likewise, if an insured causes an accident and there are no damages, liability doesn’t matter.  Of course, reality is much different than academia and claims do get settled for any number of business reasons, even if they aren’t owed.

In the last edition of Blocking & Tackling, we focused on comparative negligence and the million dollar opportunities for carriers who take the challenge to improve accuracy on liability assessment.   Today, we are going to focus on the damages aspect of the claim and another tremendous opportunity for third party medical bill review.

When a demand for an injury is received, there will be consideration for both special damages, providing compensation for economic loss, and general damages to compensate for pain and suffering.   While both areas can be challenging, it is special damages that warrant particular scrutiny.   Specials are often used as a foundation upon which large demands for generals can be made.   In a day and age of upcoding, unbundling and other questionable billing practices, it has become more important than ever to conduct a thorough medical bill review.

Consider a demand received for a fairly typical accident in with the insured making a left turn in front of the claimant causing $2500 dollars in property damage and a soft tissues low back injury.   There was no trip to the emergency room and the claimant treatment consisted of an initial visit to a medical doctor for $500 dollars, a referral to a chiropractor with $10,000 dollars in treatment, a referral to specialist for $700 dollars and $6,000 dollars in diagnostic testing.   At first glance, that $17,200 dollar claim for medical specials seems pretty significant.   But a closer review of the medical bills reveals that many of the CPT, or Current Procedure Terminology codes, were inaccurate.

The initial treating physician billed $500.00 for CPT code 99205, which is a high level office visit for a new patient requiring three key components:

1)      A comprehensive history

2)      A comprehensive examination

3)      Medical decision making of high complexity

A billing for this type of service typically occurs when there is a serious condition during which the doctor spends at least 60 minutes face to face with the patient.   In this particular case, an injury of lower complexity is reported so what occurred is called upcoding, a fraudulent practice in which provider services are billed for higher CPT procedure codes than were actually performed, resulting in a higher payment by the insurance company.

During the claims investigation, it is very important to take steps to not only validate treatment, but to get details from the injured party such as a physical description of the medical clinic and provider, route driven to the clinic, and a descriptive summary of procedures conducted and their duration.   During my tenure investigating claims, it was not uncommon for claimants to cite face to face time as a matter of just a few minutes.

After seeing the initial physician, the claimant is then referred to a chiropractor who bills twelve weeks of codes 97110 (therapy) and 97140 (manipulation).   This is important as there are only four true chiropractic CPT codes as follows:

98940 Chiropractic manipulative treatment (CMT); spinal, one to two regions

98941 spinal, three to four regions

98942 spinal, five regions

98943 CMT, extraspinal, one or more regions

The billing by the chiropractor in this case is an example of unbundling, as 97110 and 97140 would be included in the chiropractic manipulation code.   It is important to note that not all instances may be improper if the therapy or manipulation was done as a standalone procedure.

The secondary issue is the run up of $10,000 dollars in chiropractic treatment in such a short period of time, often necessitating a records review for medical necessity and duration of treatment.   To most effectively identify proper coding, treatment and duration issues, carriers may benefit from utilizing medical bill review services, coding experts and medical professionals who have the training and knowledge of the NCCI, or National Correct Coding Initiative, to identify abuses.

The demand also includes diagnostic testing which was billed as CPT code 72148 for a lumbar MRI with contrast and 72149 for a lumbar MRI without contrast.    72148 was billed at $2400 dollars and 72149 was billed at $2600 dollars.   These services should have been billed at CPT code 72158 for a lumbar MRI with and without contrast material.   The reasonable cost for this bundled operation may have been  $2800 dollars.   Again, paramount to determining what is owed is a review of medical bills to determine upcoding and unbundling.

As discussed in Re-Adjusted: 20 Essential Rules To Take Your Claims Organization From Ordinary to Extraordinary, digging into injury demands is critical to the quality and accuracy of outcomes.    Medical bills should be thoroughly scrutinized with a process that leverages medical knowledge and coding expertise to focus on causation, relationship of diagnosis to treatment, frequency, duration and appropriateness of medical billings.

There are ten basic questions that the adjuster should answer in the bodily injury evaluation summary are as follows:

1)      Was there a mechanism for injury?

2)      Is there a causal relationship between treatment and injury?

3)      Were there pre-existing conditions or intervening causes?

4)      Is the treatment appropriate?

5)      Is the treatment active or passive?

6)      Did the injury result in a permanent impairment?

7)      What is the level of service being provided?

8)      What is the frequency, duration and expected time to reach MMI, or maximum medical improvement?

9)      Coding accuracy, including unbundling and upcoding?

10)  What is the actual amount of specials owed versus what was billed?

While claims vary in complexity, this is designed to provide a basic overview of what should be expected during the bodily injury demand review.  By taking the additional steps to execute on basic blocking and tackling, carriers will create a competitive edge as they transform their claims organizations from ordinary to extraordinary.


Christopher Tidball is a claims consultant and the author of Re-Adjusted: 20 Essential Rules To Take Your Claims Organization From Ordinary To Extraordinary!  He has more than two decades of industry experience with multiple leading insurance carriers.  To learn more, please visit or e-mail


September 26, 2012 at 10:17 am Leave a comment

Understanding the science of presidential polling and what it really means

There are seemingly three certainties in life; death, taxes and the inconsistency of polling numbers.  One day the polls say one thing, the next something entirely different.  How is it possible to have such fluctuations within very short periods of time?  Understanding the science of polling provides the best insight into both quality and accuracy.   By understanding the principles of polling, it becomes easier to look at the polls as nothing more than a simple data point amidst thousands of other data points.  Paramount to this is also the recognition that polling is far from an exact science and is quite often wrong.

In 1980, Jimmy Carter was beating Ronald Reagan by eight percentage points just a week before the election.  He lost in a landslide.  Remember the poll in 1984 that had Walter Mondale defeating Reagan by 16%? Another landslide.  In 2004, John Kerry was up on George Bush by double digits.   Each and every election the polls spin out of control in the 24/7 news cycle moving so fast that your head might spin.

Before the presidential conventions, polls are relatively meaningless.   The American people are engaged in other aspects of their lives and really don’t pay much attention.   Shortly after their respective conventions, there is typically a bounce for each candidate.  Of course, that bounce is short lived and the polls remain relatively meaningless until the debates begin.   Only as the election looms closer do meaningful trends begin to emerge.

But what about the numbers?  Are they meaningful?  When an AP poll says that one candidate is favored over the other by 47% to 45%, what exactly does that mean?  First, one must look at the sample size to see if it was statistically valid.  In calculating sample size, to establish a margin of error with a 95% confidence level for roughly 185 million voters, 600 people need to be surveyed.  The accuracy of the survey is determined by two critical components; confidence interval and confidence level.

The confidence interval, or margin of error, is the plus-or-minus figure usually reported in newspaper or television opinion poll results. For example, if you use a confidence interval of 4 and 47% percent of your sample picks an answer you can be “sure” that if you had asked the question of the entire relevant population between 43% (47 minus 4) and 51% (47 plus 4) would have picked that answer.

The confidence level tells you how sure you can be. It is expressed as a percentage and represents how often the true percentage of the population who would pick an answer lies within the confidence interval. Most researchers and pollsters use the 95% confidence level.

When you put the confidence level and the confidence interval together, you can say that you are 95% sure that the true percentage of the population is between 43% and 51%. The wider the confidence interval you are willing to accept, the more certain you can be that the whole population answers would be within that range.

In a recent poll, 47% said that they would pick Barack Obama if the election were held today.  This means that the actual percentage from which you can be 95% certain would vote that same way is between 43% and 51%.   In other words, if you spoke to roughly 600 random people you can be 95% certain that between 43% and 51% would vote for Obama, a swing of 8 points.

Also, another key factor is the proportion of the electorate that is being polled.  For example, if 30% of the polling takes place in a state that makes up 2% of the population, there is disproportionate representation.  The same holds true for party affiliation, in particular this year, as many pollsters are consistently oversampling Democrats.  Their formula is based upon 2008 voter turnout, where Democrats did, indeed, show up in higher numbers.  But, from a historical perspective, voter turnout is generally higher among Republicans and Independents.

This is where the very important enthusiasm gap comes into place.  In other words, which party is more “fired up” about the coming election.  For example, in 2008, the Democrats were overwhelmingly more enthusiastic, whereas in 2012 this gap has shifted to Republicans.  However, many pollsters aren’t factoring this in, hence the disproportionate surveying of Democrats based upon turnout in the last election cycle.

It is also important to read the fine print at the bottom of the poll to understand whether those being polled are registered voters, likely voters or voters who actually voted in the last presidential election.  While millions are registered to vote, only about 55-60% will actually show up on Election Day.    Likely voters provide a more accurate picture, but even among likely voters, only about 80% will show up at the polls.

As you can see, polling is a science that even on its best day has opportunities for error.  Complicating matters is a media that often is cited as having its own agenda, hence skewing sample sizes and demographics to garner an outcome they desire.   For example, if a polling company wanted to show Romney with a sizeable lead, they would oversample Republicans or “red” states.   Conversely, oversampling Democrats or states like California or New York can show a big win for Obama.

With the polls being so tight, it is all that much more important to pay attention to the details.  Consider a recent Pew poll that included the following;  459 Republicans, 813 Democrats and 599 Independents.  Voter registration nationwide is fairly evenly spread between the two parties and Independents now enjoy a clear plurality, so just looking at the numbers tends to call into question the credibility of this particular poll.   As expected, this particular poll showed an Obama advantage.  Had the numbers been reversed, it would have likely favored Romney.  Had a true representation of likely voters been polled, it would have given a more realistic probable outcome.

As the news media bombards us with a flurry of polls, keep in mind that the devil is in the details and understand that there may be other agendas at play, as well.  At the end of the day, the only poll that matters is the one that is reported after the polls close, and that is the actual election outcome.  So don’t let the polls sway you and don’t let them deter you from voting.  Set aside some time on Election Day to go out and let your voice be heard.

Christopher Tidball is an executive consultant and author of multiple books including Kicked to the Curb: 20 Essential Rules For Coming Out On Top When Your Life Has Been Turned Upside Down.   His rules for success have been featured on CBS Market Watch, The Wall Street Journal, ABC News, MSNBC, Kiplinger’s and dozens of other media outlets.  To learn more, please visit or e-mail

September 17, 2012 at 7:37 am Leave a comment

Comparative Negligence: The Million Dollar Answer

Have you ever picked up a claim file and scratched your head as to how the adjuster arrived at their liability decision?  Having run a quality assurance department for a large multinational insurer, I can say with certainty I’ve been in that position more than once.

Consider scenarios involving intersection accidents, parking lots, lane changes, slip and falls or product defects where liability is simply assessed at 100% with little to no discussion on duties owed and breached.   Then consider the financial impact that improper liability assessment can have on claim settlement accuracy or policy holder retention.

Doing some simple math in the auto market , let’s say, on average, an insurer is assessing comparative negligence in 5% of all cases.  While seemingly a low figure, I am told by a number of top executives that real comparative negligence assessment is often even less.

Let’s also consider that according to Jury Verdict Research, a national organization that tracks such data, rear end auto accidents, or clear liability losses,  accounted for only 45% of auto cases adjudicated, with the remainder comprised of intersection collisions, lane changes, chain reaction and parking lot scenarios. In other words, a lot of claims where there was a high probability of shared liability.

Having worked with a large number of insurers on accuracy improvement projects, such as liability, achieving 35% comparative negligence assessment in pure comparative states has proven to be a reality.  For modified comparative states, this figure is in the 25% range and contributory states drops to about 12%.  Further evidence of this potential opportunity area can be derived from more formulaically driven jurisdictions, such as Japan, where comparative negligence is routinely assessed about 35% of the time.

If the average assessment is 50/50 on 5% of all claims with an average payment of $2800.00 dollars, the benefit derived is $70,000 dollars per 1000 claims processed.  Keeping the average comparative assessment at 50/50, assessing comparative at an optimal level of 35% increases accuracy by $490,000, or an improvement of $420,000 per 1000 claims processed.   Multiplying this out by actual claims processed can show a tremendous opportunity for accuracy improvement, often to the tune of tens of millions of dollars per year.

Of course not all comparative claims will be settled at 50/50; some will be 80/20 in favor of the insured, others 60/40 in favor of the claimant.  What we do know is that seeing more shared liability is an opportunity nearly universally available to all insurers, both domestically and in many nations abroad.

The challenge is for carriers to identify this as an opportunity area and then determine the best ways to seize upon improvement, as it is easier said than done.  The first challenge is to measure currently performance.   How does your carrier stack up against the industry?  The reality is that even within one’s four walls there may be significant disparity between regions, offices and units.

In one particular instance I was involved with, there were two offices in California not more than twenty miles apart.  Both were assessing comparative negligence about 3% of the time.  After implementing a liability assessment improvement strategy, office A improved to 42% while office B improved to 11%.  Why the disparity in a similar geographic area?

Much of it was driven by internal management and adjusting philosophy.  In one office, the concept of comparative fault was embraced.  If the other, there was a fear of increased attorney representation and litigation, neither of which was occurring in either location.

Claim volume can often be an impediment to improvement, as identifying comparative negligence and successfully arguing it can take more time than simply paying 100%.  After all, adjusters are busy.

To truly be effective, the concept of accurate liability assessment has to become part of the corporate culture.  From the outset of claim training, adjusters need to be indoctrinated into the thought process that liability is a key element of each and every claim.  After all, to effectively pursue a claim one must prove both damages AND liability

Integrating proven resources can assist in the development of this philosophy as they provide consistent feedback and reporting that enables management to look for coachable moments.   They can also provide the most effective roadmaps for successfully negotiating liability settlements.

Considering juries across the nation assess comparative fault more than half the time, there is no reason that our own “experts” can’t move the ball closer to the goal line.   The key is to give them the tools by which to effectively do so.

Christopher Tidball is an executive claims consultant and author of multiple books including Re-Adjusted: 20 Essential Rules To Take Your Claims Organization From Ordinary To Extraordinary!  He is an industry veteran have worked in various adjusting, management and executive capacities for multiple top 10 claims organizations.   To learn more about comparative negligence or other claims performance improvement opportunities contact chris at 904-742-9031 or e-mail

September 7, 2012 at 7:26 am Leave a comment

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Chris Tidball is a claims and revenue management consultant and author of the "20 Essential Rules" series of self and organizational improvement books. You can ask him a question at

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