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Dec
17

The snow job

Here in central New Hampshire the snow is piling up..so far we have somewhere around 2 1/2 feet with more to come.

The weather reminded me of a vendor assessment project I did a while back for a workers’ comp client concerned with ever-increasing medical management fees. The program featured a medical management program integrated with TPA services, with the marketing pitch touting the efficiencies gained from one-stop shopping, electronic interfaces, close coordination and the like.

I won’t get into the specifics or identify the vendor – for reasons that will become obvious in the following.

Here’s some of what we learned.

  • Medical management fees – bill review, case management, UR, PPO, “enhanced” bill review and the like accounted for more than 13% of medical costs – a percentage way over industry standards.
  • Fee schedule reductions were way lower than those delivered by other BR vendors, but “savings” from “enhanced BR” solutions such as nurse review, bill negotiation and the like were really really outstanding. Notably the vendor didn’t get paid extra for FS reductions, but made 26% of savings for “enhanced BR” reductions. 
  • The TPA/vendor LOVED assigning case managers to claims; pretty much every lost time claim had a nurse engaged, and more than a handful of med onlies. A deep dive revealed that the CMs were doing a lot of what claim adjuster was supposed to do – discussing and documenting return to work discussions, talking with the patient and providers, even handling tasks which seemed more like claim intake and investigation. Of course this freed up the adjuster to do other stuff, and increased revenues for the vendor because the claim fees were a flat rate, but CMs were billed hourly… 
  • Nickel-and-diming was rampant; extra charges for worksite posters and provider directories, fees for accessing the claims portal, charges for processing duplicate bills, billing for windshield time for field case managers, % of savings for their PBM program plus add on fees for pharmacist reviews and drug alerts, mandatory annual increases due to “inflation”…pretty much any way the vendor could tack on a service charge, they did.
  • TPA claim fees were very competitive, but med management fees were way out of whack – PPO and “enhance BR” fees were north of 26% of savings, CM fees above $120 an hour (and no this wasn’t a California/Alaska/Hawaii client)

While the pitch made sense, once you dug just a bit deeper it became obvious it was a complete snow job; the vendor’s complete and total focus was on driving revenues, at the expense of a trusting client.

What does this mean for you?

Brush that snow away so you can really see what’s underneath.


8 thoughts on “The snow job”

  1. Joe, a good case management company will be a life saver to a payer/employer in helping to:

    1. Reduce injuries by knowing the employer/work site and making suggestions as to safety programs.
    2. Making sure the injured worker is being seen by a provider who understands work comp: I.E Return to work, and is in the area of specialty that the injured worker needs. Care coordination and opening up communiction is critical between the IW, Employer and physcian and other members of the healthcare team. WC Case Managers are in place to work to ensure that barriers are broken down and that the IW and the employer are engaged in the process. They look for problems early and employ proactive management to help to avoid setbacks and re-injury. They work with the employer to look at return to work early. Also, having a nurse/rehabiliation case manager in place will help to avoid attorney involvment unnecessariarly. Not all medical management companies are the same, but in my opinion, this is what a company should look for when they retain a medical management service. We should be viewed as ‘revenue generating vs. a cost center.

    1. Thanks for the note Anne – Agree that properly used, CM can be very helpful indeed. The key is to find a CM firm that is committed to delivering value defined as better outcomes, pay them fairly, and monitor them closely.

      be well – Joe

  2. Joe, thanks to you I got some keen insight on the emerging use of artificial intelligence in the claims process. Seems many of the “traditional processes” are evolving for the good. Geez …. are we actually getting closer to having vendors compete on outcomes instead of “discounts?”

    1. Frank – always a pleasure!

      I am ever hopeful, and every optimistic…but changing the basis of competition will require buyers to change their buying criteria.

      This can start by NOT FLIPPING TO THE PRICING SECTION OF EVERY RFP RESPONSE.

      (sorry for yelling…)

  3. Nice job summing up the benefits of Case Management Anne and of course Joe you are spot-on regarding accountability. Any organization in any field who is good at what they do WANTS to be held accountable. Business relationships should be built on service and outcomes not tickets to football games. Results should come first, everything else after. This holds true not only in our industry, but across the board

  4. Having seen and worked in this industry for over 30 years I have seem many programs, concepts, companies and trends come and go. What never changes is the importance of ROI and customer service and quality assured outcomes. Transparency is also key. Incentivizing case managers in billing is a key reason that pushes the spend needle and I feel has always tarnished our industry. Harnessing technology will also assist in driving down costs and number of days open.

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Joe Paduda is the principal of Health Strategy Associates

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A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.

 

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