Managed Care Matters

The Broward County School Board audit of their workers compensation program is even-handed, insightful, detailed, and brutal. It shows no mercy for managed care firm CorVel, administrator Gallagher Bassett, or the Board's own risk management department. And according to my reading of the 211 page document, no mercy is deserved.

I'm going to spend a few hours reviewing and commenting on this audit and my take on same. The purpose is not to slam any individual or company, but to highlight "worst practices" that are persistent throughout the workers comp industry; detail some of the findings to show specifically what can go wrong when a program is poorly conceived and managed; and shed light on what can happen when vendors take advantage of an ignorant or lazy program manager.

I do want to note that the audit report itself reflects an attention to task, focus on the real issues, and blunt assessment that are both rare and welcome in public or private reports. It does the Board credit.

Broward County's schools have some 350 locations and 39,000 employees. Annual workers comp expenditures are in the $34 million range.

The audit's introduction does not soft-pedal the issues; "the problems…were not subtle or a matter of interpretation, but were substantive, overt, and revealed a fundamental breakdown n processes and accountability. The result is a program that is woefully inadequate in providing for the District's workers' compensation needs."

The executive summary goes on to note:

"…an effective workers compensation system needs to be a fully integrated system, Specifically, this integrated system is comprised of certain core components that are both fundamental and inextricably inter-dependent. Simply fixing a sub-set of these components will not fix the system and may in fact adversely impact some of the other interdependent components and …continue to perpetuate the spending of tens of millions of dollars annually that could have been utilized to support our educational programs…"

I'll note some of the more egregious problems contained within the report (page v), and we'll focus next time on the issues related to medical management, followed by networks, and close with lessons learned.

Problems included:

-- undercounting of lost time claims by Gallagher Bassett by more than half - GB reported 14% of claims were LT; the audit indicated the real percentage was 35%. This is somewhat puzzling; TPA normally get paid more for managing a lost time claim, so an under-report here is unusual. Still, a rather amazing discrepancy.

- "The focus of the CorVel network on obtaining a large quantity of discounted medical services rather than facilitating quality care and superior results through a concentrated collection of high quality clinicians who are properly paid." This is one of the best indictments of the "percentage of savings" large deep discount PPO model I have read. And very accurate.

-- A total of 292 claims, costing over $81 million that have been open for over five years. Wow. This reflects either a complete lack of interest in or understanding of claims management.

-- "Excessive assignment of claims to field case managers, at a cost of over $2 million with little or no tangible results." Inappropriate billing practices for both field and telephonic case management were also noted, possibly resulting in over $1 million in over billings.

-- "The transference of many claims responsibilities from claims adjusters employed by Gallagher Bassett Services to field and telephonic case managers employed by CorVel. This transference then allows CorVel to bill the District under additional services."

The overarching problem reported in the audit was the complete lack of "any goals for process or program outcomes currently in place in order to enable one to determine whether the program was successful on a daily monthly or annual basis."

What does this mean for you?

Consider the problems uncovered in Florida in respect to your program, operations, or client relations. While being sloppy, lazy, or possibly unethical may be profitable or easy in the short term, it is certainly no recipe for long term success.