The balance billing problem would not be nearly as daunting if insurance companies (actually, the employers that directly fund most large plans) paid the full amounts their plan documents say they will. Instead, when claims are underpaid, consumers are left with the financial burden, and hospitals and physician practices are left with the risk that consumers won’t or can’t pay the balance bill.
Russell Safirstein, an admitted puzzle lover, saw a problem that needed solving: If 70% of patients are ‘insured’ by commercial plans that have “no policy,” meaning, the sponsoring employer actually pays on health claims and only uses the large insurance companies as third-party administrators, then the Employee Retirement Income Security Act of 1974 (ERISA)---which sets standards for most voluntarily established pension and health plans in private industry to protect individuals in the plans---could be invoked to appeal underpaid claims.
So why wasn’t anyone appealing “short pay” or “no pay” claims directly to employers? Was it lack of knowledge this not just a possible, but highly successful, approach? Or was ERISA just too intimidating? True: ERISA is a massive piece of regulation with an even bigger body of attendant case law built up over 40+ years. Even self-proclaimed ERISA specialists and lawyers don’t fully understand it, or its practical application. Safirstein and his business partner saw an opportunity---and found the missing piece to the puzzle. By focusing on filing ERISA-based appeals aimed at large, employer-funded insurance plans, that OTHER pile of aging, unpaid accounts receivable burdening healthcare providers (those awaiting payment by strapped self-pay patients) would weigh less on their financial stability. That focus gave birth to RacMax.
I recently caught up with Russell to learn more about him.
Name: Russell Safirstein
Paracon Group, Inc. – Co-founder, Partner www.paracongroup.com
RacMax – Co-founder, Partner www.racmax.com
How long have you worked in the revenue cycle field?
What attracted you to this work?
I’d met a former hospital CEO, and he described a problem with payment flow for self-funded health plans and ERISA appeals. Given my background in audit and finance, I knew there was a true need for innovative services in this area. We developed a proprietary discovery analytics process that uses machine learning and artificial intelligence to mine claim data using the full scope of ERISA appeals process. Our team was the first to use this audit, compliance, legal and technology solution to interrogate employer-funded health plans and recover hidden opportunities for providers.
Doctors and hospitals, being focused on clinical care, are of course not tuned into how the laws change over time. They’re not ERISA experts. They’re not thinking about how healthcare systems’ risk management and and employer plans’ fiduciary liability are connected to their financial stability.
Who has been key to your work in this field?
Scott Winslow. He introduced me to revenue cycle problems. He’s a true gentlemen and expert on ERISA and provider operations.
Tell me what an average day looks like for you
I spend a lot of time exploring new ideas to combat the very arcane nature of the business. There is much legal and regulatory review being done by my team. The Federal Register is our friend and leads us to astounding new discoveries every day here. We’re able to load the Federal Register into our system and the machine learning aspects of it allow us to identify new and important information daily. It automates the work of MANY legal and regulatory experts, identifying new and important compliance trends immediately. Many, if not all, of our clients both on the corporate side and provider side still don’t truly understand the role of the TPA, and we spend a good amount of time sharing that information with clients and prospective clients.
What have you learned in this business that you’d love to put on blast?
To the healthcare provider community: ERISA is your friend. Nearly two-thirds of all commercial claims are paid through self-funded plans. So most patients don’t really have “insurance.” Instead, their employer is footing the bill and the third party administrator (TPA), like Blue Cross, Aetna, etc., is just acting as a “paper pusher.” That these employer-paid plans are covered by ERISA means that the plan’s fiduciaries are on the hook if they don’t make decisions that are in the best interest of the plan’s participants. As a plan fiduciary, it’s usually not a good move to run afoul your plan’s formal documents, and refuse to pay out what those documents set forth, and then risk being found personally liable alongside your company after costly litigation. Health plan fiduciaries, whether they realize it or not, are also personally liable, as is the plan itself. Incented to avoid a fiasco and bound by the plan documents and ERISA, normally, a correctly executed ERISA-based claims appeal is successful.
This is why knowing the rights under ERISA is so critical to the revenue cycle model. Most companies in the revenue cycle game do the appeal process incorrectly, leaving so much money on the table for their clients. I can’t begin to tell you how many times we’ve gone into a prospective client who thinks they “have this covered” either in-house or with another vendor, but there’s still 10-40% we are able to recover on their claims. It’s very eye-opening for them.
What's your superpower as it pertains to the revenue cycle?
I’m not sure the provider community is prioritizing its asset recovery targets: If you go after the big fish like large employer-funded plans, you’ll get larger wins, and this can take the pressure off recovering a ton of tiny outstanding self-pay balances sitting in your aging A/R database. Even if you don’t engage a firm, a dedicated compliance specialist (a different and more senior role than a primarily administrative biller/coder) on the office team can do things like learn the ERISA appeals process, figure out which patient plans are large employer-funded plans, and go after what is contractually due.
In general, we need to improve the collective knowledge base relating to ERISA appeals. There is a true lack of understanding in this space from the legal side as well as the operations side. Also, I think this is a good trend that’s unstoppable: Technology is making all this scalable through automation. This frees up the experts and keeps them focused on true issues and not a lot of “noise” that occurs on the front lines of data and claims review.
Anything on the tube you can’t live without?
Probably one of the best shows on TV, The Americans. It’s so well done. The acting is superb. It’ll be a letdown after this next season, which is its last.
What would you do if you couldn’t do this work anymore?
I truly love what I do. It’s challenging and there is always something new around the corner. But something in the sports/marketing field could be interesting as well.