Why E-Billing Systems May Not Work for Everyone

Let me start by saying that I am a supporter of using an e-billing system for reviewing legal bills. I stated as such in an article I wrote for Claims magazine on evaluating e-billing systems.   For large insurers, I am convinced that e-billing systems are indispensable and very cost effective.

For smaller insurers, though, I have become just as convinced that e-billing systems are generally not very cost effective.  One big reason is that many smaller insurers lack the staff and resources of their much larger competitors to properly evaluate the myriad of reporting information.  This reporting information is the hallmark of e-billing systems for which insurers pay for whether or not they use this avalanche of information.  Thus, smaller insurers wind up paying for a flashy, but costly part of an e-billing system that they do not or cannot use.

Also, as smaller insurers have less staff, they also have less time to deal with the issues that invariably arise when outside counsel bills are reviewed for billing “errors” generated through a computer program that uses what is called a “fuzzy logic” to review legal bills for compliance with a company’s litigation guidelines.

Despite what some e-billing vendors will say, I have found that reliance on a computer generated program for bill reviews alone is not enough.  In fact, without a commitment to provide the staff with the additional time it takes to properly review the legal bills, reliance upon an e-billing program alone to review bills will invariably lead to faulty reductions being taken and invariably more “appeals” of those reductions by outside counsel.

Large insurers have large dedicated legal bill review staffs to not only spend full time reviewing the legal bills, but also to deal with the high volume of appeals.  Smaller insurers may have no internal staff to spend the additional time it takes to properly review legal bills or deal with the additional appeals brought on by computer generated legal billing issues except to use an already overburdened claims staff.

A possible solution for a small insurer is to outsource legal bill reviews to the e-billing vendor’s bill review unit.  But, that just adds even more expense to smaller insurers as they now have to pay for both the e-billing system and the outsourced legal bill reviews.   On top of this, there is the fact that many smaller insurers still pay for all of an e-billing system’s reporting features that they have little or no time to use.

A better solution for smaller insurers is to simply not use an e-billing program for their legal bill reviews and to just rely upon an outsourced legal bill review vendor who is not dependent upon the use of an e-billing program.   Not only will does this solution save on direct costs, a non-computer generated legal bill review is more flexible to use.  Thus, it can be more individually tailored to fit the smaller insurer’s exact needs.  The result is a far superior work product over one that is computer generated.

Using non-computer generated legal bill reviews may also help lessen complaints from outside counsel who are often offended by legal bill reviews that look like they were mass produced by a computer.  Believe me there is a big difference in how “computed generated” legal bill reviews and “non-computed generated” legal bill reviews are perceived by outside counsel.  If you are interested in seeing examples of either, please contact me.  I am sure you will see and appreciate the differences just like your outside counsel do.

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One Response to Why E-Billing Systems May Not Work for Everyone

  1. Bill Nagy says:

    e-billing has a place for low dollar, high volume invoices such as personal lines P&C. On the commercial side, particularly financial lines where invoices are normally hundreds of thousands of dollars, e-billing is not an attractive alternative. Personal review of hard copy invoices remains the best solution. Staring at an e-billing screen on a legal bill with 60 pages or more doesn’t cut it. (no pun)

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