My post on Accident Fund’s ground-breaking analytical work generated a good bit of discussion, some public and much not, some appropriate and some a bit confused.

To clarify, allow me to address a few issues.

1.  As I said yesterday, Illinois has the highest medical costs in workers comp, driven in large part by the second highest fee schedule. WCRI’s CompScope report (12th Ed., ppg 10-11) provides an excellent comparison of medical costs among the study states; IL’s medical costs are – by far – the highest for both lost time and medical only claims (as defined by WCRI).

2.  I did NOT say IL’s workers comp costs were the highest – the state is fourth in that category.  Some readers evidently conflated “medical” with “workers’ comp”; medical is a component of workers comp costs, along with indemnity and administrative expense (ULAE and ALAE).

3.  There are several contributors to IL’s medical cost problem.  The highest outpatient facility costs, an easily-gamed fee schedule, no real employer direction, and high – I would suggest far too high – utilization of physical medicine at prices much higher than those in surrounding states are among the major drivers.  Internal HSA data from several large payers indicates the average number of PT visits for work comp claims in IL was above 15 in 2010; if anyone has more current data I’d love to see it.  This was substantially higher than states surrounding Illinois.

So, what’s to be done?

Well, start with identifying the best providers – defined as those who adhere to evidence-based medical guidelines and deliver the best outcomes: shortest disability duration, lowest medical and indemnity expense, sustained return to work.  Note that patient satisfaction is not automatically included.  Unfortunately some WC claimants don’t want to return to work when they’re physically ready to do so, and therefore don’t like providers who try to get them back quickly.  That’s not to say patient satisfaction should not be factored in, just that one has to be careful when doing so.  Much of what I’ve seen re patient satisfaction doesn’t adequately address this potentially-confounding issue.

Next, develop strong relationships with those selected providers – pay them fairly and quickly, don’t bother them with needless UR requirements, help them schedule ancillary services when and where necessary, and let them know you’ll be monitoring their performance on an on-going basis.

Direct injured workers to those good providers – this can be done in every state except New York. There’s an industry-wide misunderstanding of “direction”; it is legal in every state (but NY), however in some states the claimant can decide where they want to go, while in others the employer can require an injured worker go to a specific provider (or choose from among selected providers in states such as GA and PA).

Finally, monitor and measure outcomes, provide that data to providers, and continuously tweak your network.

Which leads us back to the Accident Fund’s CareAnalytics(tm) approach.  Notably, the analysis of providers did not factor in network participation or discount arrangements, rather it focused on outcomes.  As Jeff White reported in his public presentation at WCI in Orlando, desired outcomes include:

• adherence to evidence-based medical guidelines
• total claims cost
• claim duration
• medical cost
• addiction and dependency prevention

Finally, I’d echo what George Anstadt MD, former president of ACOEM, said yesterday in a comment on MCM: “glad to see insurers looking at good outcomes and recognizing that Occupational Medicine specialists are a great value, as a group, and that within that group are an experienced and ethical sub-group who save insurers even more money and get even better health outcomes for workers and their employers.”

For several years, the Accident Fund (HSA consulting client) has been making major investments in data analytics and working on ways to use their new-found knowledge to reduce costs and improve outcomes.  Now, the results of those efforts are becoming apparent.

Claims costs are coming down, driven by rapid referral of selected claims to top occ med physicians.

AF’s program identifies higher risk claims and claimants, alerts adjusters and case managers, and, when necessary seeks to move the claimant to one of the top docs.

The program, which recently won an award for innovation, is under the direction of Jeffrey Austin White, director of Medical Management Practices and Strategy for Accident Fund Holdings.  In a press release Jeff said “It’s a huge honor to receive this award and it is truly reflective of the hard work of our claims representatives, risk case managers and operating companies…This is a major accomplishment of custom software development to meet our business needs and improve efficiency while also giving us a competitive edge.”

So far, the program has helped identify high-risk claims faster, improved policyholder satisfaction, and reduced claim costs for targeted claims in excess of 20 percent.

Jeff reported on these results at several recent conferences including August’s Workers Comp Institute in Orlando.  Here are a few highlights:

• the more work comp experience a physician has, the better their outcomes are.
• the most experienced docs’ claims costs were 20% below the least experienced
• a lot of claims are handled by docs with zero experience in comp
• claims handled by occ med docs were 20% less costly than average

The net -“change of provider based on experience is an effective cost containment strategy.”

While others are talking, planning, and getting ready to get ready, Accident Fund is doing.  Kudos to Chief Claims Officer Pat Walsh, VP Claims Lisa Riddle, and Jeff White.

 

We’ve recently completed the First Annual Survey of Utilization Review in Workers’ Comp, and some of the results are a bit surprising.

Sponsored by CID Management, there were 118 respondents, both front line and executive staff. While there were some consistent findings, once again it is apparent there are rather more disconnects than one would expect.

• Execs are one-and-a-half times more likely than the front line to report their UM/UR system is integrated with their other medical management programs (e.g., bill review, networks, pharmacy). Interestingly, this is similar to the differences between executive and front line responses that HSA found in its most recent bill review survey; most executives thought BR was integrated with UM/UR, but most desk folks did not.
• Execs appear to be more concerned with the execution of the UM/UR guidelines/rules by the state while the folks on the front lines appear to be more concerned with the state’s poor enforcement/accountability of their guidelines.
• When asked what UR was utilized for, front line staff were more focused on controlling claim costs while management was most focused on delivering the right care at the right time.

Among those respondents using vendors for some or all of their UR work, the average vendor has been in place for five years – however most don’t see much of a barrier to switching vendors. In fact, two-thirds of both groups believe that it is neutral to very easy to make a UM/UR vendor switch. Further yet, approximately a quarter of both the FL and the EXs stated that it would be not hard or very easy to make the switch.

There’s much more detail to the Survey; we’ll be presenting results, and you can get a copy of the Survey Report, at the NWCD Conference in Las Vegas next month.  The presentation and Q&A will be held at CID’s booth; I’ll be posting the schedule next week.

 

That’s defined as care that does not improve patient outcomes, and it was the subject of Dr Rick Victor’s concluding remarks at the WCI conference. And the answer is, well, let’s consider the data first.
First, who cares? Not my problem, right? Consider that other research indicates the average household is working 4 weeks just to pay for the estimated total amount of dollars spent on unnecessary care.
When you put it in that perspective, it becomes very, very real. Dr Victor went on to discuss various indicators of wide variations in medical practices in comp. For example, docs inassachusetts are ten times more likely to prescribe schedule ll narcotics when prescribing narcotics than physicians in texas.
If you are prescribed narcotics in Louisiana you are four times more likely to become a long-term user of narcotics than in the lowest ranked state.
If you have a disc problem, you are almost three times more likely to get back surgery if you are in Tennessee than if you live in California.
Why?
Well, perhaps there are financial motivations at play. Victor reported their research indicates surgeons that own a surgery center do 76 more surgeries each year than non-owners.
And yes financial ownership is a driver, but owned ASCs are more efficient so they can do more, and owners were usually operating more often before they became owners.
But with all that, there are still 20% more surgeries done by docs who own ASCs when you account for these confounding factors.
Are they unnecessary? Well, Medicaid patients weren’t getting more surgeries, work comp patients were. And by the way, the same 20% increase was seen in colonoscopies.
And that’s not even getting into the huge differences in prescribing patterns exhibited by docs who begin to dispense drugs out of their own offices.
What does this mean for you?
Returning to the headline question, I’d suggest there is ample evidence that suggests there is indeed a lot of unnecessary medical care.
And every year you work until January 29 just to pay for that unnecessary care.

The first part of the report was supposed to be followed quickly by this, the second – however events overtook me, and I’ve just now come back to report on the Opioid Summit put on by PMSI last month in Sarasota.
We now turn to Dr Len Kamen’s talk on addiction – Dr Kamen is an addiction specialist practicing in Philadelphia, with extensive experience in workers comp.
Dr Kamen provided this definition of addiction: “Addiction is a primary, chronic disease of brain reward, motivation, memory and related circuitry”, that has these characteristics:
A. Inability to consistently Abstain
B. Impairment in Behavioral control
C. Craving; or increased “hunger” for drugs or rewarding experiences
D. Diminished recognition of significant problems with one’s behaviors
and interpersonal relationships
E. A dysfunctional Emotional response
Addiction refers to the loss of control over the intense urges to take the drug/substance even at the expense of adverse consequences – jail, divorce, losing custody of children, homelessness…
(The clarity brought by Dr Kamen speaks to an ongoing conversation at Mark Wall’s LinkedIn Group on this issue)
The discussion addressed the “chronic pain dilemma”, attempting to determine if the claimant is addicted to or dependent on opioids. There are three ways to think of chronic pain patients;
– Managed chronic pain patients – an opioid user on low, stable dose with return to function
– Dependent chronic pain patient – opioid user on escalating doses of long/short acting opioids, with high pain levels and low functionality
– Addicted patients – exhibits abusive and aberrant behavior, unstable with no identifiable pathology.
A session at the upcoming NWCI Conference focuses on chronic pain; moderated by Liberty Mutual National Medical Director David Deitz Md PhD, two experts on the subject will provide insights on: creating an effective pain management protocol; at what point in a treatment plan should pain management be utilized; are there effective practice parameters that have been developed to determine if a formal program of pain management is called for and if so, what types of treatments should be a part of such program.
There was a lot more to this, and I’ll be providing additional resources in the next post.

A few weeks ago the folks at UCDavis published a study on workers comp, asserting that WC payers – insurers, TPAs, but ultimately employers and taxpayers – are heavily subsidized by other insurers, that, in effect, work comp cost-shifts to other payers on a scale almost beyond comprehension.
To quote UCDavis’ press release, “almost 80 percent of these [occupational injury medical and associated] costs are paid by employer-provided health insurance, Medicare, Medicaid, Social Security and other disability funds, employees and other payers..this cost shifting leads to artificially low workers’ compensation premiums that should be used to cover wage replacement and medical care for employees injured on the job.”
Note – I wish I could add a lot more to this analysis, but I’ve asked UCDavis for a copy of the actual report (“Workers’ Compensation Benefits and Shifting Costs for Occupational Injury and Illness.”) twice over the last month, and have had no response whatsoever.
So, rather than wait seemingly forever for my email inbox to chime with the welcome news that Ms. Marjory Spraycar has responded to my entreaties, here’s what I make of this “study”.
First, there’s no indication that researchers Leigh and Marcin factored in settlements; those legal resolutions that result in the claimant assuming all future responsibility for medical and wage replacement issues related to their work comp claim. Simply put, if there’s a settlement, the claimant agrees that they – the claimant – will be responsible for the medical and related costs of that work comp injury going forward (this is simplistic and yes, there are variations, but generally speaking this is the way it works). Not Medicare, or Medicaid, or their Aunt Sally, or Aetna or Blue Cross – the claimant.
For Leigh and Marcin to assert that somehow work comp is “shifting cost” to Medicare et al for reported claims is just not reasonable nor accurate – if Leigh and Marcin have considered settlements (which, as i’ve not been provided a copy of the report, I can only assume they have; after all Leigh and Marcin are professors at a major research institution).
Next, I don’t know if they differentiated among states with no ability to close medicals and those where medicals can be settled. If they have extrapolated data from settlement states to all states, this would be a major error.
Third, they recommend we “Link premiums with company-specific injury experience rather than industry-wide estimates, which would encourage companies to lower premiums by reducing workplace hazards.”
I thought this was what experience rating and ex-mods did; perhaps I am mistaken. or perhaps not.
Finally, there’s absolutely no question work comp pays for treatments to help the claimant get healthy enough to return to work – even when those treatments are for conditions completely unrelated to the work comp injury, and especially when the claimant does not have other health insurance thru their employer or Medicaid. I don’t know if Leigh and Marcin put those expenditures on the work comp payer side of the ledger; somehow I don’t think so. Moreover, the failure of group health payers to deal with obesity problems shifts costs to work comp in a major way, one that – again, I do not think Leigh and Marcin considered.
There were a couple other articles that referenced the study; evidently (this is hearsay) home productivity and fringe benefits were included as part of the study’s analysis of costs due to work comp not paid by the work comp industry.
This is, to be kind, rather a stretch. The ever-quotable Bob Hartwig of III noted workers comp “was never meant to be a form of business interruption insurance, which is what’s being proposed here.”
I remain hopeful I’ll hear from Ms Spraycar or one of her associates at UCDavis. Quite frankly I’m surprised by the lack of responsiveness.
Then again, this is just a blog…

Medical cost containment expenses in California have doubled over six years. Yet medical expenses have continued to increase, led by facility and surgery expense, and WorkCompCentral reports the combined ratio hit 122 in 2011, a substantial jump from previous years. (sub req)
Are we wasting hundreds of millions on ineffective programs, or are these programs holding costs well below what they otherwise would be?
The answer isn’t readily apparent and it isn’t straightforward – no surprise there. Let’s reach into the cost containment bucket and see what we are paying for.
Bill review accounts for about $90 million of the $384 million total (based in a cost of about $6 per bill). We will be publishing our second Survey of Bill Review next month; a preliminary review shows most respondents see a good deal of value in bill review although that value would beach higher if UR and BR were electronically and tightly connected.
Networks are a bit knottier. Most incur a percentage of savings fee; I’ve long held that this arrangement – for generalist networks – encourages higher utilization of medical services and can drive up cost. My best guess is network costs in the Golden State account for about $110 million in cost containment expense, and that’s too much by far for many networks that don’t positively affect medical outcomes. (there’s no question some smaller tighter networks can and do have a dramatic impact on outcomes, but they just aren’t used enough.)
Case management can be very useful; if used correctly (Im seeing a pattern here…). Task-based field case management and well-coordinated telephonic CM can be very helpful indeed. Identifying problems, educating the employer about RTW and non-comp-savvy docs about comp, getting the claimant to the right providers and supporting the adjuster in assessing treatment are all necessary and cost-effective. But dumping cases on case managers, or allowing CM to run up lots of hours while doing not much more than documenting the downward spiral of case happens far too often.
And let’s not forget many (but by no means all) TPAs generate additional revenue and profit by employing CM whenever and wherever possible
Utilization review has been around forever, yet it is still misunderstood and controversial. Appropriately employed, UR can help ensure the care that is delivered is the right care for the claimant in the right setting at the right time. Used indiscriminately, it can be a cost driver that infuriates physicians, delays necessary treatment, prolongs disability, and does little to improve outcomes.
I’ll have much more to report on UR next month; we’re closing our first Annual Survey of UR in Workers Comp Friday. To date we have over 150 participants; if you’d like to add your thoughts to the Survey (and get a detailed copy of the report) click here.
The net?
Some payers are doing an excellent job managing medical and managing cost containment – by focusing on outcomes. But most are not.
Paying over a hundred million dollars for network access without clear and convincing proof that they are improving outcomes is not smart.
Using case management and UR indiscriminately across all providers in all cases is a waste of money and counter-productive.
More to come.