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How Insurance Companies Evaluate Claims, What Every Doctor Should Know

Aug 17, 2007
Most if not all insurance companies have been using expert systems, software that is supposed to mimic highly trained humans , to evaluate car accident and truck accident injury claims. Some insurance companies use it as a tool and for some guidance, but some insurance carriers stick to the response provided by the computer program.

The way these programs work is by taking huge amounts of statistical data from jury verdicts and then comparing it to the case in question. The primary problem is that the data entered is often pre-screened when the jury verdicts are high.

The best way to cut down on the probability that you will be called to testify at trial is to simply do an excellent job in your documentation and facility a settlement. If the document is not readable it will not be entered into the computer system for evaluation. Handwritten notes are often unreadable, so reports and notes should be type or transcribed.

The second thing that has to be done is to insure that the magic words and numbers are in the report. Certain specific words are value driver and certain numbers are magic numbers. Unlike the real world, insurance companies do things of the basis of magic words and magic numbers.

The list of keywords and numbers is very long and only known by the software developers, but the following are magic words that increase the value of a case and facilitate a fair settlement which in turn permits health care providers and hospitals to get paid:

Specific words
Muscle Spasms
Dizziness
Radiating Pain -into the extremities
Headaches
Restriction of Movement
Nausea
Vision Disturbances
Neurosis
Depression
Anxiety
Temporomandibular joint disorder -TMJ
Bruises
Contusions
Subluxations (M.D.s only)

Medical reports should also have all the basics, there should be a diagnosis that is detailed and specifies each distinct injury. The diagnosis should be broken down into each specific injury. The prognosis should likewise do the same. The prognosis should specify whether the future risk or treatment is necessarily in fairly certain terms. Specifically the reports should state probable and definite for the software to consider it a value driver. The term possible adds no value to the case. If you believe the patient will need specific a specific procedure to alleviate a current ailment or a future problem say so, say what it is, how recovery time would be required, what post procedure steps are required, and how much it would cost.

The key to determine the certainty is what is more is likely than not. If the patient is more likely than not to need a specific procedure then the thresh hold has been met and you should say it is highly probable and more likely than not to need the specific procedure in the future. Every report is required to have a prognosis for the purposes of adding value. If it is missing, then the patient has lost as result of the medical providers failure to add it. The prognosis should be one of the following: 1. No complaint, 2. Complaint\ no further treatment, 3. Complaint with further treatment necessary, 4. Guarded.

These computer systems have some very specific cut off dates and numbers in determining value, which makes sense, since computers are programmed to go add or disregard by simply looking at a number. Chiropractic visits are capped at about 25, after 25 the computer program actually starts to deduct for additional visits. Two patients involved in almost identical accidents with almost identical soft tissue injuries, but substantially different number of chiropractic visits would have seemingly counterintuitive results with the one with fewer visits obtaining a better net settlement.

For physical therapy and acupuncture the software has a different limit, which is mostly in the hands of a medical doctor. If the medical doctor keeps renewing the prescription for this treatment the computer will accept a much larger number of visits than for chiropractic care. In cases where physical therapy or acupuncture is involved the computer uses as least to cut-off points which are seemingly unfair. If the number of visits is 1 day or 90 days it is treated as up to 3 months, but if the treatment is 91 days to 180 days it is treated as 3 to 6 months. So 91 days seems to be the optimum number of visits. Duration of treatment is more significant than number of visits. Physical therapy two times a week over 90 days for a total of 45 visits is added greater value than 89 visits over 89 days.

Drug prescriptions are evaluated on 1 to 30 days counted as up to 30 days and 31 dates which is counted as over 30 days. When prescriptions are for more than 30 days two categories further divide it, there is regular use and irregular use. With regular use adding greater value to the claim.

Hospitalization is evaluated on the basis of whether there was any hospitalization or not and if it was overnight or same discharge and if overnight the number of nights. Two hours and 19 hours could be the same depending on whether discharge is on the same day or not.

The most important thing when it comes to evaluating claims is the coding. The coding
has to be accurate, there has to be an ICD and CPT code and they have to be for the right procedure or service. Each service has to be dated, coded and the charge identified. If there are errors the insurance carrier will simply not add it and not even consider it. If codes do not match they will be discarded and not counted in the valuation

I met a medical doctor at a deposition that stated that medical doctors don not care what caused the injury, because the treatment for the injury is the same. Most attorneys completely agree, but insurance companies operate in a magical world where logic seems not to apply and in evaluating cases involving vehicles they look to property damage. Software differs, but generally the cut off is $1,000 to 1,500. If the claimants damage in the car accident is under $1,000, the insurance company will not bother putting it into the computer on the basis that there is no injury.

Interestingly insurance companies take preexisting injuries into consideration and actually use logic correctly and acknowledge that the patient is more fragile with a preexisting condition. A pre-existing condition is considered a value driver in evaluating the car accident claim.

Other factors that are taken into consideration are delays and gaps in treatment. Long delays and gaps adversely affect the value of the claim. The medical provider can and should provide written explanations if there any, otherwise the value of the claim declines. Delay before seeking treatment because the patient wanted to see if the pain would go away, or the patient was self treating with bed rest, did home exercises, or took over the counter medication then there is likely no penalty as it would be a good explanation.

Prescription for TENS unit to be used at home adds value. Prescribed bed rest adds value and so do neck braces and walking aids.

If the patient cannot take time off work and continues to work even though it is obvious the patient should not be working then it should be documented. When the patient has to engage in certain activities despite his condition, the insurance companies for purposes of evaluating the claim describe them as duties under duress. These activities usually means working despite the pain the patient experiences. Other possible activities include household chores, and school.

Many if not all insurance carriers using expert computer systems also give great weight to permanent disability ratings if done in accordance with the AMA Guides to the Evaluation of permanent impairment (5th edition). The disability has be 5% or greater and it has to be done by a medical doctor. Whole person impairment has to be at least 2% and likewise the evaluation has to be done by a medical doctor.

If there is a loss of enjoyment of life the medical provider should document it as well. The records should indicate the loss of enjoyment of life and the reason for the loss. The activity could be work; domestic activities such as cooking and cleaning; household activities such as : yard work and household upkeep; hobbies; and sports and social activities.

Contrary to popular belief, an injury victim is not a lottery winner and is not better off as a result of the accident. At best the injury victim is going to be where he or she should have been, if the accident had never occurred. In the vast majority of cases, they are worse off. Tort law does not account for a lot of miscellaneous items such as the disruption in the relationship between family, the fact that the vehicle is not worth the same even thought it looks fine, the fact that if the victim is living pay check to pay check that his or her credit can be damaged or destroyed and no compensation for that damage can be sought.

A medical provider treating accident victim patients directly affects the outcome. As tedious as proper document may appear, it is the best way a medical provider can assist a patient to get fair compensation and avoid getting called to trial. These procedures also diminish or minimize the likelihood that you will be deposed, and it increases the likelihood that the heath care will get paid and on time because it facilitates settlements. Lastly it shows the medical provider did a good job and serves as malpractice prevention.
About the Author
Attorney Arnold Hernandez represents clients in car accidents, truck accidents, dog bites, overtime claims, and unfair loans in the cities of San Marcos, Escondido, Vista, Oceanside, Cathedral City, Palm Springs, Indio, Riverside, and throughout Southern California. http://www.arnoldhernandez.com
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