Medical Bill Review Best Practices for Legal Professionals

Medical bills in workers compensation and personal injury cases are frequently inflated, contain billing errors, and lack transparency. For legal professionals, properly reviewing these bills is critical to protecting clients' interests and achieving fair settlements.

This comprehensive guide provides frameworks, tools, and strategies for conducting thorough medical bill reviews backed by data and best practices.

Why Medical Bill Review Matters

The Problem: Systemic Billing Issues

Inflated Charges:

• Providers often bill 2-5x Medicare rates for workers comp
• Lack of negotiated contracts leads to "usual and customary" charges
• Out-of-network billing at full chargemaster rates

Billing Errors:

• Studies show 80% of medical bills contain errors
• Duplicate charges, unbundling, upcoding are common
• Incorrect modifiers inflate reimbursement

Impact on Cases:

• Inflated medical bills reduce net recovery for plaintiffs
• Unreasonable bills weaken credibility in negotiations
• Excessive charges may indicate billing fraud

The Solution: Systematic Bill Review

Thorough review can typically reduce bills by 30-50% through:

• Identifying and correcting errors
• Challenging unreasonable charges
• Applying appropriate fee schedules
• Negotiating fair payment amounts

Medical Billing Fundamentals

Understanding Billing Codes

CPT (Current Procedural Terminology):

• 5-digit codes for procedures and services
• Example: 99213 (office visit), 73721 (MRI knee)
• Updated annually by AMA
• Basis for fee schedules

HCPCS (Healthcare Common Procedure Coding System):

• Level II codes for supplies, drugs, DME
• Example: L0637 (lumbar orthotic), J1885 (injection)
• Alphanumeric format

ICD-10 (Diagnosis Codes):

• Document medical necessity
• Link diagnosis to procedures
• Required for payment justification

Modifiers:

• 2-digit additions that change code meaning
• Example: -25 (separate E&M service), -59 (distinct procedure)
• Can significantly impact reimbursement

Payment Methodologies

Fee-for-Service:

• Individual charge for each service
• Most common in workers comp/PI
• Subject to fee schedule maximum

DRG (Diagnosis Related Groups):

• Bundled hospital payment
• Less common in workers comp
• Fixed amount per diagnosis/procedure

Ambulatory Payment Classification (APC):

• Outpatient hospital bundled payments
• Groups similar services
• Medicare methodology

Step-by-Step Bill Review Process

Step 1: Initial Documentation Review

Gather All Materials:

• Itemized medical bills (not just summaries)
• Procedure reports and operative notes
• Medical records for services provided
• Prior authorization documentation
• Fee schedule (if applicable)
• Explanation of benefits (EOB) if available

Verify Basic Information:

• Patient name and date of birth correct
• Dates of service match medical records
• Provider and facility information accurate
• Injury/diagnosis codes appropriate
• Bill addresses correct party (insurance, employer, attorney)

Step 2: Medical Necessity Review

Check Appropriateness:

• Is treatment related to claimed injury/accident?
• Was treatment medically necessary?
• Did treatment follow evidence-based guidelines?
• Was prior authorization obtained if required?

Red Flags:

• Treatment far exceeding typical for injury
• Services unrelated to documented diagnosis
• Experimental or investigational procedures
• "Upcoding" to more complex service level

Documentation Requirements:

• Medical records should justify each service
• Progress notes should support level of care
• Diagnostic tests should have medical indication

Step 3: Coding Accuracy Review

Common Coding Errors:

Unbundling:

• Billing components separately that should be bundled
• Example: Billing surgery and surgical approach separately when approach is included
• Check National Correct Coding Initiative (NCCI) edits

Upcoding:

• Billing higher-level service than documented
• Example: Billing 99215 (comprehensive visit) when notes support only 99213
• Compare documentation to CPT code requirements

Duplicate Billing:

• Same service billed multiple times
• Same date of service, same code
• May be administrative error or fraud

Modifier Misuse:

• Inappropriate use of -25, -59, -51 modifiers
• Modifier used to bypass edit checks
• Modifier unsupported by documentation

Verification Process:

• Cross-reference codes with medical records
• Use coding resources (CPT codebook, encoder software)
• Consult with medical coding specialist if complex

Step 4: Rate Reasonableness Analysis

Establish Benchmarks:

Medicare Rates:

• Federal fee schedule, publicly available
• Geographic adjustment factors (GPCI)
• Baseline for comparison (often "Medicare + X%")

Workers Comp Fee Schedules:

• State-specific official fee schedules
• Many states set maximum allowable charges
• California, Texas, Florida have detailed schedules
• Some states use percentage of Medicare

Commercial Rates (Price Transparency Data):

• Negotiated rates from hospital/payer transparency files
• "Usual and customary" market rates
• More relevant for personal injury cases

Fair Market Value:

• 150-200% of Medicare often considered reasonable
• 300%+ requires strong justification
• Workers comp may have different standards by state

Rate Analysis Example:

Using Price Transparency Data:

1. Identify comparable providers in jurisdiction
2. Extract negotiated rates for specific CPT codes
3. Calculate median/75th percentile rates
4. Document methodology for court/arbitration

Step 5: Facility vs. Professional Fees

Understanding the Split:

Facility Fees:

• Charged by hospital or surgery center
• Covers overhead, supplies, equipment
• Often substantially higher than professional fees

Professional Fees:

• Charged by physician or provider
• For their services and expertise
• Separate from facility charges

Common Issues:

• Both facility and professional fees claimed for office visit (inappropriate)
• Facility fees for procedures that should be office-based
• Excessive facility fees for simple procedures

Step 6: Supply and Medication Charges

Review Supply Charges:

• Itemize supplies separately billed
• Many supplies included in procedure code
• Compare costs to wholesale pricing (AWP - 20% typical)

Medication Charges:

• Drug name, NDC code, quantity, administration method
• Compare to NADAC (National Average Drug Acquisition Cost)
• Typical markup: AWP - 15% for medications
• Verify route and dose match medical records

Durable Medical Equipment (DME):

• HCPCS codes for braces, wheelchairs, etc.
• Compare to Medicare DMEPOS fee schedule
• Rental vs. purchase appropriateness
• Medical necessity for high-cost items

Workers Compensation Specific Issues

State Fee Schedule Application

Fee Schedule Jurisdictions:

California:

• Official Medical Fee Schedule (OMFS)
• Based on RBRVS with state-specific conversion factors
• Detailed rules for surgery, anesthesia, evaluation
• Separate schedule for DME and pharmacy

Texas:

• Texas Workers' Compensation Division (DWC) fee guidelines
• Medicare RBRVS-based with Texas multipliers
• Separate guidelines for specific services

Florida:

• Reimbursement Manual for workers comp
• Fee schedules by service category
• Maximum reimbursement amounts

New York:

• Workers' Compensation Medical Fee Schedule
• Regularly updated
• Separate outpatient and inpatient schedules

States Without Fee Schedules:

• "Usual, customary, and reasonable" standard
• Requires market rate analysis
• More room for negotiation and dispute

Medical Treatment Utilization Schedule (MTUS)

Guidelines for appropriate treatment:

• Evidence-based treatment protocols
• Time/frequency limits for various services
• Presumptions of medical necessity (or not)
• Varies by state

Use in Bill Review:

• Treatment exceeding MTUS guidelines may be unreasonable
• Supports challenges to excessive treatment
• Demonstrates lack of medical necessity

Prior Authorization Failures

If Prior Auth Required But Not Obtained:

• Provider may not be entitled to payment
• Payer may deny or reduce payment
• Depends on state law and circumstances
• Emergency services exception

Personal Injury Specific Issues

Reasonable and Customary Charges

Legal Standard:

• Varies by jurisdiction
• Often defined as "usual charges in the community"
• May be "reasonable in relation to services provided"
• Requires expert testimony in many cases

Establishing Reasonableness:

• Price transparency data from local providers
• Medicare fee schedules as baseline
• Expert witness testimony
• Published fee surveys (Fair Health, HIAA)

Letter of Protection (LOP) Bills

Special Considerations:

• Provider waits for case settlement for payment
• May inflate charges knowing payment is uncertain
• Higher charges may be asserted as "reasonable"
• Subject to same review as standard bills

Review Strategy:

• Don't assume LOP bills are unassailable
• Apply same reasonableness standards
• Document excessive charges systematically
• Negotiate pre-settlement when possible

Lien Resolution

Medical Liens:

• Provider claims against settlement proceeds
• Must satisfy before plaintiff receives funds
• Negotiable despite provider claims otherwise

Negotiation Leverage:

• Risk of non-payment if case loses
• Time value of money (delay in payment)
• Comparative fault reducing recovery
• Attorney fees and costs reducing net settlement

Typical Reduction:

• 30-50% reduction from billed charges common
• Medicare/Medicaid liens have specific rules
• Hospital liens may have priority by state law

Building Your Bill Review Case

Documentation Best Practices

Create Comprehensive Bill Review Report:

1. Executive Summary

   • Total billed vs. reasonable amount
   • Dollar reduction recommended
   • Key findings overview

2. Methodology

   • Standards applied (fee schedules, market data)
   • Sources for reasonableness benchmarks
   • Qualifications of reviewer

3. Line-by-Line Analysis

   • Each charge reviewed
   • Coding errors identified
   • Rate comparison to benchmarks
   • Recommendation for each service

4. Supporting Documentation

   • Fee schedule excerpts
   • Price transparency data samples
   • Medical records citations
   • Expert credentials

Using Expert Witnesses

When to Engage Expert:

• Bills exceed $50,000
• Complex coding/bundling issues
• Anticipated dispute/arbitration
• Need for courtroom testimony

Types of Experts:

• Medical Billing Specialist: Coding and billing practices
• Forensic Economist: Valuation and market rates
• Medical Professional: Necessity and appropriateness
• Fee Schedule Specialist: State-specific regulations

Expert Report Elements:

• Qualifications and experience
• Materials reviewed
• Methodology and standards applied
• Opinions on reasonableness
• Calculation of appropriate charges

Technology Tools for Bill Review

Essential Software

Billing Analysis Tools:

• EncoderPro or similar (coding verification)
• BillFlash or R1 RCM (claim scrubbing)
• Medical repricing engines

Data Resources:

• FAIR Health consumer cost lookup
• Healthcare Bluebook pricing data
• Medlyze price transparency database
• Medicare fee schedule lookup tools

Document Management:

• Organize bills, records, correspondence
• Track revisions and negotiations
• Maintain audit trail

Price Transparency Data Integration

Accessing Data:

• Download hospital/payer MRF files
• Use aggregator services (Medlyze) for processed data
• Extract negotiated rates for specific codes

Analysis Workflow:

1. Identify provider and jurisdiction
2. Pull comparable provider rates
3. Calculate market statistics (median, 75th percentile)
4. Compare billed charges to market
5. Document findings

Negotiation and Dispute Resolution

Initial Challenge Letter

Key Elements:

• Identify specific billing errors
• Cite applicable fee schedules/standards
• Provide rate comparison data
• Offer reasonable payment amount
• Request itemized correction

Tone:

• Professional and fact-based
• Reference specific regulations
• Avoid accusatory language
• Invite dialogue

Negotiation Strategy

Opening Position:

• Start with reasonable calculation (150% Medicare or fee schedule)
• Justify with data and precedent
• Leave room for compromise

Concessions:

• Consider provider's perspective (time since service, collection risk)
• Offer prompt payment for discount
• Structured settlement if large amount

Walk-Away Point:

• When further negotiation not productive
• Proceed to formal dispute resolution
• Arbitration or court action

Formal Dispute Mechanisms

Workers Compensation:

• Medical bill dispute process (varies by state)
• Independent bill review organizations
• Workers' compensation appeals board

Personal Injury:

• Mediation/arbitration
• Declaratory judgment action
• Defend lien action in court

Common Pitfalls to Avoid

Pitfall 1: Accepting Aggregate Bills

Problem: Provider sends summary bill without itemization

Solution: Always request detailed, line-item bills with CPT codes

Pitfall 2: Overlooking Small Errors

Problem: Focus only on large charges, miss many small overcharges

Impact: $50-100 errors add up to thousands across full bill

Solution: Review every line item systematically

Pitfall 3: Failing to Document

Problem: Verbal agreements or informal reductions without written confirmation

Impact: Provider later claims full amount or disputes agreed reduction

Solution: Memorialize all agreements in writing

Pitfall 4: Missing Deadlines

Problem: State law may impose time limits for bill disputes

Impact: Lose right to challenge if miss deadline

Solution: Calendar all deadlines, act promptly

Pitfall 5: Inadequate Record Support

Problem: Challenge bills without obtaining full medical records

Impact: Can't verify medical necessity or coding accuracy

Solution: Request complete records early in review process

Case Study: Personal Injury Medical Bill Reduction

Background

• Motor vehicle accident, personal injury case
• Client treated at local hospital ER, followed by orthopedic surgery
• Total billed: $185,000
• Hospital placed lien against settlement

Initial Bill Analysis

Emergency Department:

• Billed: $28,500
• Issues: Level 5 ER visit (highest complexity) not supported by records
• Duplicate charges for X-rays
• Supply charges excessive

Surgery:

• Billed: $156,500 (facility + professional)
• Issues: Facility charged $142,000 for routine outpatient procedure
• Supply costs marked up 400% over wholesale
• Professional fee 850% of Medicare

Review Process

Step 1: Coding Review

• ER visit should be Level 3, not Level 5 (saved $1,800)
• Duplicate X-ray identified (saved $650)

Step 2: Rate Benchmarking

• Used price transparency data for 5 comparable hospitals
• Market median for this surgery: $48,000 facility fee
• Billed amount 296% of market median

Step 3: Supply Analysis

• Obtained wholesale pricing data
• Many supplies already included in surgical code
• Appropriate markup: AWP - 20%

Step 4: Professional Fee

• Medicare rate: $1,850
• Physician billed: $14,500 (783% of Medicare)
• Market median: $3,200 (173% of Medicare)

Negotiation

Initial Offer:

• Presented detailed analysis with price transparency data
• Offered $68,000 (37% of billed amount)
• Emphasized risk of litigation if unreasonable

Hospital Response:

• Countered at $95,000
• Defended charges as "usual and customary"
• Threatened to block settlement

Final Resolution:

• Settled at $75,000 (41% of original bill)
• $110,000 reduction from original bill
• Significantly increased net recovery for client

Key Success Factors

1. Comprehensive price transparency data analysis
2. Detailed line-by-line review
3. Professional expert report
4. Attorney persistence in negotiation
5. Credible threat of litigation

Frequently Asked Questions

Q: How do I get itemized bills if the provider only sends summary statements?

A: Make formal written request citing state law if applicable (many states require itemization). If provider refuses, note the refusal as evidence of unreasonableness.

Q: Can I use price transparency data as evidence in court?

A: Yes, it's publicly available data mandated by federal law. Courts increasingly accept it as evidence of usual and customary charges. Have expert explain methodology.

Q: What if the provider claims their billing is "non-negotiable"?

A: Almost everything is negotiable. Use data to demonstrate unreasonableness. Pursue formal dispute resolution if necessary.

Q: Should I challenge bills before or after case settlement?

A: Ideally before, to maximize client recovery. But if after, same principles apply—bills must still be reasonable.

Q: How much should I pay for bill review services?

A: Varies widely: $75-150/hour for review services, flat fees for smaller bills, contingency arrangements (% of savings) for larger bills. ROI usually strongly positive.

Q: What's a reasonable timeline for bill review?

A: Simple cases: 1-2 weeks. Complex cases with multiple providers: 4-8 weeks. Includes records review, analysis, report writing, and initial negotiation.

Conclusion

Effective medical bill review protects clients from excessive charges, increases net recovery, and ensures fair outcomes. With price transparency data now publicly available, legal professionals have unprecedented tools to challenge unreasonable billing.

Key takeaways:

• Systematic approach reviewing every aspect of medical bills
• Data-driven analysis using price transparency and fee schedules
• Thorough documentation to support challenges and negotiations
• Expert assistance when bills are large or complex
• Persistence in negotiation—providers expect pushback

By implementing these best practices, legal professionals can routinely achieve 30-50% reductions in medical bills, directly benefiting their clients and improving case outcomes.

The question is not whether to review medical bills, but how rigorously you'll approach the task.

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Need Expert Medical Bill Review Support?

Medlyze provides comprehensive medical bill review services for workers compensation and personal injury cases, including:

• Line-by-line coding and rate analysis
• Price transparency data benchmarking
• Expert witness reports and testimony
• Negotiation support

Contact us to discuss how we can help reduce medical bills and maximize your clients' recovery.