What is a DER?
A new concept that is gaining popularity in the ever complex industry of third party liability claims reimbursement is the Discounted Early Resolution platform or DER. To expedite reimbursement on auto accident and workers comp claims this concept makes use of a cloud-based platform that can connect a hospital or their revenue cycle management company directly to the adjuster processing their claim.
These platforms are becoming popular for two reasons. 1. The Hospital/RCM is allowed to directly negotiate an early settlement in exchange for a reduction in the bill. 2. Conversely, the insurance carrier can clear out its books faster while receiving a discount on the provider’s bill for doing so.
Why would a provider negotiate a reduction in its bill?
In today’s world, processing these complex claims is a very tedious process that can involve waiting over 6 months for reimbursement. When the carrier finally submits payment that payment is typically sent to the claimant or their attorney. The attorney then turns around and negotiates with all the providers for discounts so they can receive their fee out of the lump sum. When all is said and done the hospital receives, on average, 30% of their total billed amount.
The DERs allow the providers the ability to expedite reimbursement and potentially increase the amount received for services provided.
Why are carriers excited?
Healthcare cost is outpacing the economy at such a rate that many studies say it is unsustainable and major changes need to be made. Insurance carriers need to raise their rates but the economy won’t allow it. Many carriers are facing a negative Combined ratio.
The DERs allow the carrier to mimic a contractual adjustment that isn’t currently available to third party liability claims. This gives the carrier the ability to cut loss payments which in turn will improve their Combined ratio (with volume).
What does this mean for the two industries?
Opening communications between both parties will improve the system. DERs will provide that communication. Using these platforms the overall goal of additional profits for both the providers and carriers will be attained.
In a followup blog we will discuss the differences between DERs and how to choose the one best suited to your needs.