SETTING THE RECORD STRAIGHT

Arkansas-based company saving clients millions on health care costs

By Dwain Hebda

Stephen Carleson of US Beacon can talk at length about the need for cost oversight in the complicated field of health care, particularly for self-insured businesses and organizations. He’s also well-versed in explaining how the company’s technology performs its work, ferreting out incorrect charges that would otherwise go unnoticed. And as a former managing director and senior vice president with Merrill Lynch, he knows a good business opportunity when he sees one.

But for the uninitiated, all it takes is one glance at an itemized list of incorrect charges to see the genius of the Little Rock- based company. Carleson provided such a document, the company’s Explanation of Review, produced for an actual client, redacted to comply with HIPAA. The EOR’s tally list of incorrect charges went on for seven and a half pages.

The damage: 424 incorrect charges spread out among 271 individual line items totaling $127,858.94, roughly 40 percent of the original invoice. And considering the sample EOR represented the cost of medical care for just one employee of just one organization, the staggering financial impact of incorrect billing across the board quickly boggles the mind.

“We’re trying to make sure that what our client pays is what they really owe. That’s our job,” Carleson said. “Ninety-nine percent of the bills that we review, we find ineligible charges. We find about 30 percent savings on those 99 percent of the bills; with the bigger guys, we find closer to 35 to 40 percent.”

Health-care billing is an exceptionally complicated process where every tube, needle and bedpan are assigned both a billing code and a cost. Researching the validity of each line item is not only mind-numbingly tedious, but few companies have the manpower required to dissect bills from multiple employees’ care. To say nothing of the kind of expertise that would spot duplicate charges or misapplied codes anyway.

“We come in and we’re looking at the different codes,” Carleson said. “What happens in procedure codes is you have certain items that are in there that we have to take and dismantle to be able to come up with what the ineligible charges are.”

There are myriad reasons why a patient’s bills may be incorrect, from simple data input errors to something more nefarious.

“We do find fraud, waste and abuse, especially when looking at out-of-network providers,” Carleson said. “We had a client whose employee had an accident out of state and the bill was $2.5 million. We got the bill, we reviewed it, it was $900,000. Our clients often have to receive services from out-of-network providers and that often adds an additional level of complexity. In a very short period of time, we’ve shown we have the capability to unpack those bills effectively and determine what is a valid charge and what isn’t.”

Often, a patient is incorrectly charged for something multiple times. In the sample EOR Carleson provided, 60 hours of oxygen totaling $4,260 and half of a 25-dose, $1,400 medicine line item were deemed ineligible for payment. Or the cost of an item, let’s say a catheter tube, might be coded individually as well as being baked into another code covering the cost of a hospital room.

“If you’re paying for a surgical suite but then you also have pharmacy, you may have a charge for something, whatever it may be, that’s already in your code,” he said. “You’re already paying for it.”

US Beacon (us-beacon.com) bases its analysis on rules already on the books. Each inaccurate charge is correspondingly catalogued on the EOS with an explanation as to why the charge is ineligible. Examples include “Integral to service/procedure,” “Exceeds the maximum allowed in a single day,” and “Non-prescription drugs are not billable.” US Beacon’s expertise and meticulous attention to detail has earned an impressive track record when it comes to appeals of its analysis.

“We’re looking at the billing code and we’re dissecting it, we’re unbundling it,”

Carleson said. “A health provider could come back and protest that. However, we’re doing everything by the federal law. Our appeal rate is less than one quarter of one percent and we’ve never had an appeal loss because we’re doing it strictly on federal CMS regulations.”

That fact, said Dr. Dwight Davis, a private pharmacy management consultant who’s worked with US Beacon for four years, is one of the most compelling aspects of the company’s process.

“[US Beacon’s] findings are significant, and if their findings were erroneous more providers would appeal those,” Davis said. “The fact that they have a very low appeal percentage says that their findings are valid.”

On the strength of its track record, the company has experienced explosive growth since Carleson and fellow co-founders Jim Fersch and Carleson’s wife, Kimberly, incorporated US Beacon in 2019. In addition to its Arkansas headquarters, the company has offices in Los Angeles and Virginia and employs a total of 50 people. Carleson said based on business growth, he expects to double employee headcount by the end of the year.

“Things have grown considerably over the past four years,” he said. “Everything we’ve done to this point has been on referral; we work for someone and they tell another employer that has their own [selffunded health care] plan. Now, we’re actually going out and going after business offering this service to employers for health care and workers’ comp.”

Besides the obvious benefit of not paying for things they shouldn’t, companies and organizations are eager to have this kind of oversight to stay in good standing with the feds. Self-insured employee benefit plans fall under the aegis of the U.S. Department of Labor’s Employee Retirement Income Security Act (ERISA), a law that sets minimum standards for voluntarily established retirement and health plans in private industry.

Among ERISA’s requirements are fiduciary responsibilities for those managing and controlling plan assets. Blindly paying inaccurate medical bills instead of employing some sort of oversight to detect errors could be seen as a breach of fiduciary duty, resulting in prosecution and lawsuits.

“If you look at the ERISA regulations under health care, it singles out trustees and managers, meaning the company itself can be held responsible for violations for not doing their fiduciary responsibilities,” Carleson said. “So, we’re saving them money and we’re helping them stay in compliance with ERISA.”

US Beacon isn’t the only company providing these types of services, but it has set itself apart from the field in various ways. For example, the company has no service contracts with its clients but is paid a percentage of established savings. It is also differentiated by the range of medical bills it will review for clients.

“We don’t look at all their medical bills. There’s no way to look at all the bills, but we will look at bills as small as $10,000,” Carleson said. “The companies we compete with usually start at bills of $100,000 and above. Often in those cases, we’ll come in behind them and find things.”

The cost of doing business in this arena is substantial, not only to build the kind of technology US Beacon relies on to help decipher things quickly and accurately, but also to keep that technology current concerning frequently changing governmental regulations, dealing with new or obsolete codes and pushing the capacity of such tools to handle more and more bills. Currently, the company turns around bills submitted for review in 24 to 72 hours, but the likelihood of accelerated growth in the future means pushing the technological envelope to keep turn times manageable.

Thus far, the effort has been worth it. US Beacon is adding clients at a rapid clip from government and public entities to companies in every category of business and industry including, Carleson notes with a wry smile, hospitals. The company’s record for quality and expertise has also earned it the status of awarded vendor of the National Cooperative Purchasing Alliance, which allows it to do business with the government without going through an RFP.

Carleson said while the business may not be simple, the essential nature of US Beacon’s services and the fundamental benefits client companies realize as a result are easy to appreciate.

“It’s the old 80/20 rule; 20 percent of claims cost companies about 80 percent of their total,” he said. “All we’re saying is no, don’t pay for that Kleenex because Kleenex is already on your room charge. It all adds up. As our clients have said, ‘We just want to pay for what we owe; we don’t want to pay for things twice.’ That’s really what it boils down to.”