Healthcare Subrogation: How Healthcare Payers Could Recoup Billions in Recovery Savings

November 11, 2021 Mara Gericke

Conduent recently sponsored a webinar for Healthcare Web Summit. While there, I spoke with industry colleagues about the state of health plan subrogation in 2021. We also discussed, tips for how healthcare payers and insurance companies can avoid litigation and recoup the most savings when multiple stakeholders, such as lean resolution vendors, frequently intervene.

Key components of the subrogation process

As a quick refresher: Subrogation is what protects your company and your members from paying for losses that are someone else’s fault, such as medical expenses from a car accident. A successful subrogation process means a refund for payers and clients and can typically be broken down into three parts:

  1. Identification: Uncovering claims with the highest probability of being related to a subrogated event.
  2. Investigation & Validation: Determining all the parties involved in the underlying claim such as member attorneys and liability carriers. Then, validating associated information to understand the most viable path to recovery.
  3. Recovery: Ensuring that recovery staff has the most information possible to maximize recovery results — applicable to state, federal and case laws.

New trends impacting healthcare subrogation

The main goal with any subrogation process is to recover as many costs as possible while limiting litigation for the paying company. But a number of recent trends have emerged that are designed to slow that process down and impede effective and timely resolution. The right subrogation partner can help payers circumvent intervening third parties and limit abrasion for a faster recovery.

  • Lean resolution vendors: The number one issue raised across the board was increasingly involved lean resolution vendors. Their goal is to introduce purposeful friction on cases to wear the payer down. This often involves high volumes of document requests and disruptive red tape. Many companies don’t have the time or internal resources to appropriately address their requests, which they are counting on to get cases dropped.
     
  • Limited settlement proceeds: Another hurdle is low policy limits. A lot of people carry minimal limits on policies like auto insurance. If there is a very serious injury, payers are then limited on the amount they can recover, which can be difficult to explain to plan members. It requires extra time, education and outreach about why the recovery amount is lower than what they were expecting.
     
  • Non-responsive parties: Lean resolution vendors aren’t the only ones that can hold up a case. Attorneys, insurance adjusters and other parties that don’t want to speak to or respond to letters from recovery experts can make it tough to resolve a case. As a last resort, the plan member may be asked to provide additional information, which they may or may not have or understand.
     
  • Anti-subrogation states: Some states like Georgia, Washington and California have tough state and case laws that limit recovery rights. A lot of the difficulty comes from dealing with plaintiff attorneys who are new or not used to dealing with qualified plans that disavow any restrictions a state may have against subrogation. This requires a lot of back-and-forth education on what is governed by federal law vs. state law and it can make problems for negotiating without litigation.

How to avoid litigation

When it comes to successful subrogation, good communication throughout the life of a case is paramount. It can reduce time and a lot of headaches for everyone involved.  

There are several links in the chain - from the group to the subrogation vendor to the stop loss vendor who all might have input. To ensure good communication, look for the big gaps or missteps in a file and try to get ahead of them. Were there late notices, missed requests for a lean or a final lean for documents? Did the claims handler change in the middle of the case and miss any communications? It is important to flag issues like these before a lawsuit is filed to pivot to a different, less abrasive, strategy when possible.

Bad case law impacts the entire industry

Another good reason to avoid litigation is to also avoid creating bad case law. All it takes is one judge to say they don’t agree and then the entire subrogation industry deals with the fallout. Plus, there’s the cost factor of any given lawsuit to consider.

In the scenario where a lean resolution vendor intervenes to draw the lawsuit out, if you’re handling the case in-house, I recommend flagging those cases and dedicating the strongest people to resolving the case. Come up with creative ways to keep the lean resolution vendor in their lane. You can throw test trial cases at them to shake them up and keep them busy. Ultimately, you don’t want to litigate, but it can help to show you have that capability if push comes to shove.   

Outsourcing subrogation for faster recovery

The alternative is to outsource to a partner with dedicated subrogation staff that can negotiate payment quickly and efficiently with always up-to-date information and resources. An internal unit likely has a mix of responsibilities, whereas the right partner could help recoup billions   with their own in-house subject matter experts, legal support, investigators and recovery teams — entirely specialized in subrogation.

Thinking back to the three parts of a successful subrogation process, a lot of the manual effort can be completely removed with automated tools like data mining and analytics. These can be aggregated into a single platform to ID subrogation indicators and process data immediately upon receipt. This enables the investigation workflow to start and move into recovery without delay. Here’s what a supplemented subrogation process backed with an automated platform looks like: 

Here, technology and resources like constant case monitoring, are continually running and improving to make the subrogation process run as smoothly as possible. This means recouping the maximum refund and, most importantly, preserving relationships with your members.

At Conduent, our clients realize a 30% lift in subrogation recoveries. Learn more about uncovering every possible recovery opportunity by watching our sponsored webinar: The State of Health Plan Subrogation: Expert tips on maximizing subrogation success.

About the Author

Mara Gericke

Mara Gericke is the Director of Subrogation Recovery Operations, responsible for overseeing all aspects of subrogation recovery. She joined Conduent in 2000 and has held her current position as Director of Subrogation Recovery Operations since 2008. She is a graduate of Iowa State University where she holds a Bachelor’s Degree in Political Science, holds a Paralegal Certificate from Roosevelt University in Chicago, and is a Six Sigma Green Belt.

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