Insight, analysis & opinion from Joe Paduda

Apr
21

A really bad idea

Posted by Joe Paduda on Wednesday, April 21st, 2021 | Comments

A long list of real and very difficult problems face California’s legislators; no where on that list is worker’s compensation.

  • Work comp premiums are at an all time low,
  • injured workers have no trouble accessing care,
  • are generally satisfied,
  • benefits are good and indemnity payments up by half a billion dollars since reform,
  • fewer workers are getting hurt or sick at work which means claims counts are dropping,
  • medical costs have actually declined,
  • opioid prescription volume has plummeted, and

  • even the IMR mess seems to be improving.

Oh, and rates are dropping again.

Not satisfied with leaving a good thing alone, two legislators are pushing to end all this good news. They’re proposing to return California’s comp system to the awful old days of rampant medical inflation, profiteering by a few shameless medical providers, rapidly rising premiums and much higher costs for taxpayers and employers.

What’s not to love?

AB 1465 is not a solution in search of a problem, rather it creates a problem – one identical to the problem we had before workers’ comp was reformed.

In essence, AB 1465 would allow any doc – regardless of their knowledge of workers’ comp  – to care for any workers’ comp patient who seeks them out. Employers and taxpayers would NOT be allowed to negotiate reimbursement, nor would they be allowed to evaluate physicians’ actual performance. (correction thanks to a diligent reader – thanks Sara!)

The bill’s sponsors claim there’s an “access to care” issue that prevents patients from receiving care.

No, there is not. There is no credible evidence that access is an issue – no studies, research, or data whatsoever. If you have any, please share.

Quite the contrary, there is NO significant difference in access to care for patients treated within or outside a Medical Provider Network.

This from CWCI’s report…

Similarly, there was no significant difference in distance from the patient to provider between MPN and non-MPN patients.

Solving this non-existent problem of access to care will cost California’s employers and taxpayers an additional third of a billion dollars.

But wait, there’s more.

Enabling any Tom Dick or Mary MD to treat workers’ comp patients will almost certainly lead to delays in return to work, higher medical costs, and lower recovery rates. Volumes of research show the more experience a doc has with workers’ comp, the better the outcomes. The contrary is true as well – the less the experience, the worse the outcomes.

I love California. The quality of life is generally excellent, services are generous and pretty good, it is beautiful and diverse and productive, the education system is among the best and higher ed is terrific.

It also has more than its share of problems, some created by stupid policy (restrictions on taxation, fire prevention initiatives, a poorly maintained electrical grid), others by all of us (climate-change-exacerbated wildfires and drought), a really problematic water situation, a major homeless population challenge, wildly expensive housing, awful traffic, and a complete inability to do important things like connecting cities by fast and efficient rail.

With fire season approaching and the grid in dire need of a major upgrade legislators should spend their very limited time fixing those real issues – not creating more problems. I have no idea why these two legislators think a non-existent “access to care” issue  merits increasing employers’ and taxpayers’ costs by a third of a billion dollars.

And I don’t think they do either.

What does this mean for you?

If you do business or are a workers’ comp patient in California, you’ve got to kill this bill.

Apr
16

Care managers vs Cost centers

Posted by Joe Paduda on Friday, April 16th, 2021 | Comments

All “discounts” are not bad.

Unfortunately in comments on and emails regarding yesterday’s post a few folks jumped to the opposite conclusion.

Let me explain. There are two distinctly different types of healthcare providers – let’s call them Care Managers and Cost Centers.

Care Managers are the treating physicians, the physicians that are managing the patients’ care and responsible for the patient’s outcome.

These the primary care docs – and in some cases surgeons – that are demonstrably better, delivering objectively and quantifiably excellent care. Think occ med docs, orthopods, physiatrists, PM&R specialists – the physicians who understand workers’ comp and return to work.

They  schedule care promptly, treat conservatively, don’t dispense meds, don’t upcode and unbundle. They respond to information requests, assist with return to work, and call for assistance when a patient isn’t actively participating in their recovery.

Those physicians are valuable indeed and must be treated differently. Once you’ve established that a physician fits that description, treat them as such.

Don’t bother them, pay them well, send them as many patients as possible, and show them via credible data that they are performing well compared to their peers. Have your staff assist the physician’s staff with scheduling and routing patients to network providers.

Monitor them, measure them by consistency with evidence-based clinical guidelines, and don’t hesitate to query them if things appear to go sideways.

Then there are the Cost Centers,  providers that do what the Care Managers ask.  Generally these are deeply discounted and/or management is outsourced to specialty vendors.

Cost Centers  are typically hospitals, ancillary care, ambulatory surgical centers (ASCs), pharmacies, physical therapy, radiology centers, and often surgeons [can’t wait to hear the howls about naming surgeons as cost centers…] and the like. These providers do WHAT the treating MD tells them to do.

Of course, one must assess their performance and preferentially and aggressively direct patients to:

  • hospitals and ASCs that deliver the best clinical outcomes and value patient safety;
  • physical therapists that focus on treatment modalities improving functionality and mitigating pain and the impact thereof;
  • imaging centers with demonstrably good results; and
  • surgeons that deliver excellent outcomes at a reasonable cost.

But make no mistake – there are thousands of facilities and imaging centers, and tens of thousands of therapists, surgeons, and other specialists. You have what they want – dollars to pay for services – and should use it as bargaining leverage.

Understanding the difference between Care Managers and Cost Centers is key to delivering lower medical spend while focusing on quality care focused on helping patients recover.

What does this mean for you?

It is STILL not about the discount – it is about your SPEND.

Apr
15

Why are you using that metric?

Posted by Joe Paduda on Thursday, April 15th, 2021 | Comments

I’ve had several conversations with claims and managed care folks over the last few months about measuring performance, outcome metrics vs process metrics, and the challenges of data collection, aggregation and analysis.

Two takeaways.

Too often the discussion has been too focused on process, too down-in-the-weeds, too concerned about how and what to measure. While process and detail are important, they are secondary to the “why” question.

The most important question is “Why?”

Why are you doing this? Why are you using that metric? Why do you think that is the right metric?

Sometimes I’m a (very) slow learner, but I’ve finally figured out that it is far better to ask those questions than to tell the person what they should be doing. Telling someone something eliminates the chance for them to think through what they have done, why they’ve done that, and if it that was the best thing they could have done.

It forces them to take a step back and question themselves, their assumptions, their pre-conceived notions.

It’s easier – and more ego-gratifying – to tell someone what they should do. I’ve found that this can shift the discussion into a far less productive direction, one where the client may well disagree, to defend what they are currently doing. After all,  to hear someone say what you have been doing for X years is “wrong” will make anyone bristle a bit.

Second, metrics are almost never directly aligned with the organization’s overall goals.

For example, the goal of medical management is to improve the combined ratio.  Has anyone in your organization verbalized that…ever?

If they have, then you:

  • wouldn’t give a rat’s rear end about “savings” or “discounts”;
  • would focus on overall spend;
  • would evaluate providers not on how much of a “discount” they give but on what their services cost and how that compares to other providers;
  • would evaluate networks not on how big their directory is and how deep their discounts are, but on the quality of their providers and the cost of their services.

And that’s just the beginning.

Once you establish the “why” the “what” is pretty straightforward – with one big caveat – every time you settle on what you will measure, go back and see if it aligns with your “why”.

Don’t be surprised if it takes a bit to re-orient thinking. Be patient – with yourself and others. It took me 30+ years, so hopefully you’re a much faster learner.

What does this mean for you?

Asking the right questions requires one to invest time and thought. If you don’t have time to do it right on the front end, you’ll never have time to fix it.

Apr
14

COVID’s impact on workers’ comp…focus on the facts

Posted by Joe Paduda on Wednesday, April 14th, 2021 | Comments

Could COVID have a “very alarming potential outcome that could have a huge impact on workers’ comp” due to claims for neurological and psychiatric issues? That’s a concern raised by Mark Walls in tweet that was noted in a recent article in WorkersCompensation.com.

Before we opine on Mark’s fears, let’s look at the science. I know, you just want the takeaways, but you have to eat your veggies before you get dessert.

A few days back the Lancet published a study assessing the neurological and psychiatric “outcomes” of about 236 thousand US COVID survivors. Here are the key findings.

  • there was a statistical correlation between COVID-19 and higher frequency of neurological and psychiatric diagnoses (the Brits used “outcomes”, but for we Americans, in this instance the analogous word is diagnoses)
  • these diagnoses were more common in patients who had required hospitalisation, and more common still in those who had required ICU admission or had developed encephalopathy

The researchers compared the increased frequency of those diagnoses in COVID survivors to increases in a similar set patients with non-COVID respiratory diseases including flu.

OK, here are some key considerations.

First, these patients are in the US; many of them may not have had regular healthcare prior to contracting COVID, and the neuro/psych conditions may have been present but not diagnosed pre-COVID. While the researchers attempted to control for this by comparing the group to a similar demographic of patients with respiratory infections, it is indeed possible – if not likely – the post-COVID patients had much more thorough medical care during and after COVID than the control group.

Interpretation – The more care, the higher the likelihood of a diagnosis.

Takeaway – The more you look for something the more likely it is you’ll find it.

Second, the older the patient group, the higher the correlation – and the less likely the patient was employed (note I did NOT say “risk” as the study did NOT show that a COVID diagnosis caused the neuro/psych diagnosis.) The average patient that was hospitalized or in the ICU was about 15 years older than non-hospitalized patients (58 vs 43).

Interpretation – COVID hits older people much harder than younger folks; the older the person, the less likely they are working.

Takeaway – the higher the correlation, the less likely the patient is employed, so the lower the potential for a workers’ comp claim.

Third, patients who already had neuro/psych diagnoses may have had that condition exacerbated by COVID. The research showed that a patient that had a stroke before COVID, was more likely to have another one than a COVID patient that had not had a stroke before COVID.

This is especially true for the most severe neuro/psych diagnoses…see “any” vs “first”

Takeaway – very tough to blame an ostensibly work-caused disease for a second stroke or encephalitis event.

Fourth – the most common post-COVID diagnoses were anxiety disorders (occurring in 17% of patients), mood disorders (14%), substance misuse disorders (7%), and insomnia (5%).

But here, the differences between the COVID and control populations were minimal (HR is Hazard Risk – the risk that a member of that population will have that event occur)

Takeaway – very tough to blame an ostensibly work-caused disease for a mood/anxiety/psychotic disorder, especially when the control group’s incidence rate is so close to COVID survivors’.

Fifth – Mark makes the point that outcomes for workers’ comp patients are worse than under group health for similar conditions – he goes on to say costs are higher too – and this may well be the case with COVID. Couple thoughts…

The definition of “outcome” in comp vs group health is pretty different and highly subjective; in comp we care about functionality – group health doesn’t. If you are worried about functionality, you will pay more for more care to improve the patient’s functionality. Ergo…more dollars spent.

There are any number of other reasons costs are higher in work comp – but I’d argue – vehemently – the primary reason is this – compared to other payers, WC does a generally crappy job managing medical. I work in both comp and group/Medicaid/Medicare, and the sophistication of medical management in group, managed Medicaid and Medicare is far superior to comp.

As in a graduate student vs a junior high student.

Takeaway – Lower quality healthcare = poorer outcomes at higher cost.

Finally, Mark says “we’ve never had a global pandemic where the government has mandated it be covered under workers’ compensation.”

Well…we still don’t.

I’m not sure which – if any – government(s) have broadly  “mandated COVID be covered under workers’ compensation”. Sure some states have passed presumption laws or had executive orders re presumption – but those are few, far between, rarely cover all workers – and typically come with a rebuttable presumption.

  • Only California and Wyoming cover all workers with a rebuttable presumption
  • Several states (NJ VT IL) cover “essential workers” – with varying definitions thereof
  • MN UT WI only cover first responders and healthcare workers

An excellent and up-to-date resource on state laws is provided by the good people at NCCI…

I’m struggling to see how the science and current state mandates will cause anything like a “huge” impact on workers comp.

  • The people with the most “risk” are older and less likely to have contracted the disease at work.
  • The study did not show a causal link but a statistical correlation – and correlation is not causation.
  • There have been relatively few COVID claims accepted by work comp.
  • Only two states have passed broad presumption laws.

To his credit, later in the article Mark notes “when you see a study like this, it makes you pause.”

I agree. Pause, read the study, then step back and think it through. And avoid hyperbole. 

What does this mean for you?

There’s a lot of fear out there about COVID – much of it more FOTU [Fear of the Unknown] than fact-based. Focus on the facts, and don’t react until and unless you know the details.

Side note – I opined on a related story 14 months ago…

 

 

Apr
1

Health Strategy Associates has been purchased.

Posted by Joe Paduda on Thursday, April 1st, 2021 | Comments

When you get an offer you can’t refuse…you don’t.

A couple months ago I was approached by an investment firm looking to build a niche practice focused on non-group health medical management. Long story short, for some undoubtedly very good reasons they decided HSA was the right fit.

I never thought a highly specialized, boutique consultancy with one “employee” would have any value beyond what we bring to clients, but clearly I didn’t think hard enough.  Sure, the footprint is solid. Yes, we can bring some very skilled, smart, and experienced experts to any engagement. And we certainly have a brand. Most of the time that’s a good thing, but sometimes it most definitely isn’t.

This isn’t a firm you’ve likely heard of; it’s not even domiciled here. For that reason, we’ll keep the HSA name.  Expect there to be additional resources and expertise, a broader array of skills and knowledge “on offer.” [I have to get used to the non-American English terms, so that’s a start]. There may be a bit less snarkiness from your faithful author too – but that’s attributable more to age sanding off some of the rougher edges than any edict from on high.

Speaking of which, we talked long and deep about whether and how we could work together, and ended up deciding we could. Despite my pathologic aversion to others attempting to tell me what to do, that shouldn’t be [pause for deep breath] an issue. There’s mutual respect and an understanding that when friction does arise we’ll work through it.

Couple of items of note.

First, expect an announcement from our new owners in the coming days.  We agreed that it would be best if we kept the initial focus on HSA and how this [doesn’t] affect clients.  Shortly we will do a more formal mutual release.

Second, yes there will be changes – good ones. HSA will remain focused on niche areas and serve the same client base (payers, service providers, and related businesses). I will continue to speak out on issues, commend those I respect and admire and condemn misguided and wrong actions and results.

Expect more use of technology to aid communications with blog subscribers, more polished presentations and reports, and expand into other channels.

I’d suspect we’ll get into other communications channels – perhaps podcasting, maybe even some video stuff. There are any number of things I’ve wanted to do but just don’t have the bandwidth or expertise or diligence to actually get done.

Finally, I cannot thank clients, supporters, and detractors enough. Over the last 25 years you have helped build HSA, made it better, and made me better. Critics have challenged me and in many cases made me re-think long-held beliefs.

What does this mean for you?

Expect the unexpected.

Mar
30

Chronic pain, opioids, and other drugs – the latest research

Posted by Joe Paduda on Tuesday, March 30th, 2021 | Comments

Dr Steve Feinberg pointed me to two studies conducted by the Agency for Healthcare Research and Quality on chronic pain, both systematic reviews [reviews of published studies of a specific topic]. One focused on opioid treatments for chronic pain, the other on non-opioid pharmacologic treatment.

The non-opioid research reviewed 190 studies, of which 185 were RCTs. Researchers concluded:

improvement in pain and function was small with specific anticonvulsants, moderate with specific antidepressants in diabetic peripheral neuropathy/post-herpetic neuralgia and fibromyalgia, and small with nonsteroidal anti-inflammatory drugs (NSAIDs) in osteoarthritis and inflammatory arthritis.

The takeaways include there are some benefits from some drugs, often dependent on the patient’s medical condition.

The opioid treatment for chronic pain study was based on a review of 162 studies; “115 randomized controlled trials (RCTs) [the gold standard of clinical research], 40 observational studies, and 7 studies of predictive accuracy.”

Note that for research purposes, chronic pain is described as pain that lasts more than 3 to 6 months.

There was more credible research available to assess short-term outcomes vs longer-term outcomes; there was no RCT comparing opioids to placebo for medium or longer-term periods.

Takeaways included (and these are direct quotes):

  • There were no differences between opioids and nonopioid medications in pain, function, or other short-term outcomes
  • Opioids were associated with small benefits versus placebo in short-term pain, function, and sleep quality.
  • There was a small dose-dependent effect on pain, and effects were attenuated [reduced] at longer (3 to 6 month) versus shorter (1 to 3 month) followup.

Most concerning, “there is evidence of increased risk of serious harms that appear to be dose dependent” [the higher the dose, the greater the risk].

This crossed my desk the day before a good friend’s brother died of an apparent opioid overdose, adding a painful exclamation mark to the study’s conclusion.

Extensive research in Australia focused on long-term opioid use in patients with chronic non-cancer pain found that:

Despite limited evidence of efficacy, there has been a considerable increase in the long-term prescribing of opioids for chronic non-cancer pain in several countries

Here’s the thing; the research we do have clearly demonstrates the risk of opioids is high, and the benefits are limited. However, there isn’t near enough research on the efficacy of long-term usage of opioids for chronic pain.

Anecdotal evidence indicates some patients can do well on opioids for extended periods.

That said, the evidence we do have suggests that overall, efficacy may be limited at best, and the risks are high. Fortunately more research on opioid efficacy and risks and chronic pain has already been funded.

What we cannot do is force patients off opioids; this is dangerous and unethical.

What does this mean for you?

Opioids have their place – but be very careful, especially when use is long-term. Life is precious. 

 

Mar
29

Facilities, fee schedules, and what should be your takeaway

Posted by Joe Paduda on Monday, March 29th, 2021 | Comments

Perhaps the most practical presentation at this year’s WCRI conference focused on outpatient facility costs. While the content itself was excellent, what was more valuable were the implications for medical spend management.

Rebecca Yang PhD provided a wealth of information about outpatient fee schedules, Medicare reimbursement, and the impact of Medicare’s changes on workers’ comp fee schedules. Note that as the slides indicate, findings are preliminary so subject to change.

First, the findings.

Dr Yang noted that outpatient hospital and Ambulatory Surgical Center costs  [outpatient costs] represent about 15% of total medical spend across the 18 study states, with Louisiana the outlier at 28% of spend.

There are lots of different ways to manage spend via fee schedules; one can base reimbursement on a fixed amount, % of charges, cost to charge, Medicare or some hybrid mechanism.

All have strengths and weaknesses, issues and challenges, but – with one very big exception – in general it is better to have a fee schedule than not – except when the fee schedule is easily gamed (we’re looking at you, Florida).

That exception is cost-to-charge, a term describing the ratio between a hospital’s expenses and what they charge. As we’ve discussed here ad nauseam, all hospitals in C-t-C states have to do to make bank is jack up their charges. 

I won’t dive deep into details about how Medicare’s changes to reimbursement affect workers’ comp except to note that when the dog wags the tail, the flea on the end (that’s workers’ comp) gets whipped about.

Okay, maybe a little detail…

The Peach State adopted Medicare as the basis for the WC FS back in 2013.  Essentially, the change followed Medicare FS changes, except excluded device reimbursement and (if I heard this right) some associated charges.

Medicare made changes to its reimbursement in 2016 and 2017 which drove  reimbursement declines for some knee surgeries; others were unaffected.

The point of this is to note that basing a fee schedule on a third party’s reimbursement demands payers really deeply fully understand the underlying third party’s reimbursement policies, practices, requirements and nuances.

Most workers’ comp entities don’t. The result is they are unable to ensure medical bills and accompanying documents support reimbursement – or don’t. Far too often, bill review entities just assume everything is in order (if the surgery was pre-approved) and authorize payment for all billed services. Reality is it’s pretty common that some of those billed services should have been bundled into the overall surgical fee.

What does this mean for you?

This isn’t unique to Georgia, or knee surgeries. If your BR operation doesn’t know this stuff at a granular level, you’re probably overypaying. 

(WCRI published an excellent summary of outpatient reimbursement and drivers last year).

Oh, and don’t forget my annual Aril Fool’s post is coming up Thursday. Don’t be fooled!

Mar
26

Friday catch-up

Posted by Joe Paduda on Friday, March 26th, 2021 | Comments

Swamped with WCRI’s annual confab (more posts to come on that event) and client work. And the ubiquitous Zoom/Teams/Webex meetings…my high is 6 in one day.

Hoping that’s more than you – for your sake.

Okay, here’s a few items of note.

WCRI’s sessions are recorded and available to registrants here. There’s a ton of great info on fee schedules, the impact of state regs on opioid usage, projections on the future of employment, and treatment for COVID.

Risk transfer

Tuesday I’m co-hosting with Carisk Partners’ CEO Joe Berardo a webinar on Risk Transfer Strategies. We will dive into the key to successful risk transfer programs – behavioral health. Usually it’s not the medical that’s the real issue – it takes a unique approach to get to the real drivers.

If you’re a claims exec, claims or risk manager, or medical director please join us; take a brief survey here before hand so we can be sure to cover the issues you’re most concerned with.

Vaccine effectiveness

Very good news indeed out this week – Medscape reported:

Testing (in California) showed new cases among 2.5% of those tested within the first week after the first dose, 1.2% during the second week, 0.7% in the third week, 0.4% during the week after the second dose was given and less than 0.2% in the second week after the second dose.

In North Texas, where workers were also vaccinated in the midst of the largest COVID-19 surge the region had seen, 2.61% of unvaccinated employees developed the infection versus 1.82% of partially-vaccinated workers and 0.05% of fully-vaccinated employees.

Put another way, you’re fifty times more likely to get COVID if you aren’t vaccinated than if you’re fully vaccinated.

I’ve got my first – hope you have both.

If you’re not at the table, you’re on it.

Great piece in Harvard Business Review on the impact of the pandemic on health system consolidation. This is going to be a major driver of facility costs for workers’ comp. Key excerpt:

Studies to date tend to rebut the argument that acquisitions improve efficiencies, reduce costs, and lead to better care coordination. Instead, they show that consolidation increases prices and fails to improve the quality of care. For example, hospitals’ acquisitions of physicians’ practices in California has been linked to higher prices for primary care and specialist services and to increases in insurance premiums.

Back to work next week – enjoy the last weekend in March.

Mar
23

WCRI on COVID and non-COVID claims, treatment delays (not) and drivers thereof

Posted by Joe Paduda on Tuesday, March 23rd, 2021 | Comments

The 2021 WCRI Annual Issues and Research confab kicked off today with several excellent presentations – not surprisingly there was a lot about COVID and its impact on employment, injuries, and claims.

The conference continues tomorrow – register here if you haven’t already…

I’ll get to those in later posts, but will start our coverage with Dr. Olesya Fomenko; she gave a very well-done – and very well-attended presentation on claims during COVID. Note that some of the findings and graphics may be preliminary so subject to change

Regarding COVID claims for Q2 2020 there was wide variation in the volume of COVID claims between the study states; in Massachusetts 42% of claims were COVID, compared to 1% in SC. On average 6% of claims in median state were due to COVID. COVID claims were-disproportionally LT claims.

There are a variety of reasons for these differences. Massachusetts has pay without prejudice, NJ’s presumption law went into effect pretty early, and the timing and severity of pandemic, impact of shutdowns and social distancing all affected the variability across states.

There was a relatively strong association between the COVID death rate and number of WC claims for COVID; this seemed to be more of an influence than presumption (slide below).

Not surprisingly the number of non-COVID claims dropped dramatically in Q2 2020 in WCRI’s study states; the majority of states had at least a 30% drop in non-COVID claims, with MA’s claims cut in half.  Employment also dropped dramatically, but there wasn’t much of a correlation between states’ employment reduction and drop in WC claims

Injury types weren’t didn’t change much from pre to post – altho the percentage of claims that were LT increased.  [This finding echoed research discussed by CWCI a few days ago]

Again, similar to CWCI’s research, there was no evidence of treatment delays for claims with injury dates in the first half of 2020. In fact, there was a slight improvement in time to surgery and PT. That holds true except for ER services which declined, perhaps driven by reluctance to go to a place where COVID might be present.

What does this mean for you?

Assumptions are dangerous – we now know that medical care wasn’t delayed, that COVID claims weren’t expensive (see CWCI), and that (shocker!) COVID claims counts were lower in states that did more to stop its spread.

Kudos to WCRI for excellent research giving us a much deeper understanding of the impact of the pandemic – and what drove the interstate differences.  And thanks to the organizations that support WCRI – you are helping all of us.

 

Mar
22

The cost:benefit of catastrophic case management

Posted by Joe Paduda on Monday, March 22nd, 2021 | Comments

A well-designed, thorough, and much-needed study of the impact of nurse case management on catastrophic claims was completed late last year by the University of Washington.

The UW study examined 216 cat cases insured by L&I, the state workers’ compensation fund, and evaluated workers satisfaction and self-reported outcomes, duration of time loss and total medical costs.

Among the conclusions were these:

there is a high level of worker satisfaction with nurse case management services, and

there were no changes in the average duration of time loss or average medical costs after implementation of the nurse case management pilot for catastrophic injuries.

One particularly striking conclusion was the Economic Analysis. The Analysis “examined the predicted and actual medical and NCM costs for one outcome based firm with the most referrals (Paradigm).” Of the 216 cases, there were a total of 25 referrals to Paradigm, of which 15 were accepted by L&I and managed by Paradigm. [A detailed description of the analysis of the Paradigm cases begins on page 104)

The report noted the small number of Paradigm cases precluded a formal “statistical assessment or economic evaluation, e.g., return on investment (ROI) analysis.” Instead, the UW researchers provided a “descriptive analysis involving comparisons of different cost measures in order to assess the economic value of NCM services provided by Paradigm.”

Regarding the Paradigm cases, the study concluded:

the cost for nurse case management alone was 1.8 times the total medical costs paid by L&I.  In addition, the medical costs estimated by the outcome-based firm were substantially higher than the actual medical costs paid by L&I, on average. For all other firms, the costs of nurse case management were substantially lower than the average medical costs for the injured workers. [emphasis added]

I reached out to Paradigm to get their take; this is their response:

Paradigm is aware of the UW research paper and has reviewed its findings. It is not possible to reach any of the conclusions made about the “economic value” of our services based on the limited scope and methodology of the report. The report fails to capture the most meaningful measure of success, which is the ability to achieve maximum functional outcomes at a lower total cost of care. This is the model that Paradigm, and our clients, uphold. As you know, Paradigm’s Catastrophic Outcome Plan product, which is the service that UW referenced in the paper, is not a traditional case management solution.

We confidently stand by our results and our 30-year record of delivering life-changing outcomes to catastrophically injured workers and their families, and value to our clients. We encourage you to read the October 2020 study conducted by independent actuarial firm Milliman which confirms Paradigm’s results.

I followed up with this request:

MCM – I’d appreciate a bit more explanation about what specifically about the limited scope and methodology prevents one from reaching any of the conclusions cited by the study’s authors?

Is there any comment re what could have accounted for the high costs of case management compared to medical costs for many of the patients?

Paradigm responded:

Our commitment to Washington L&I was to deliver our risk bearing outcome plan model that provides a total lower lifetime cost and a guaranteed outcome—verified by Milliman as recently as October 2020, and based on 30 years of clinical data. With this product, Paradigm provides an integrated system of clinical capabilities, data, and experts to deliver lower lifetime costs. Comparing case manager expenses to Paradigm’s outcome plan model is not valid. Further, the study focused on a short timeframe (less than 24 months) and could not have captured the outcome and total cost benefits that Paradigm delivers.

Three observations. 

First, the 24 month time period may well have been too short to capture the full impact of Paradigm’s program.

Second, the cost of case management services strikes me as “valid” indeed, if one is concerned about the total cost of a cat case. I cannot imagine a scenario where a VP of claims or Medical Director wouldn’t have some rather pointed questions about a cat case where case management costs were almost double medical expenses.

Third, Paradigm predicted medical costs that were much higher than what L&I actually paid.

Disclosures

Carisk is an HSA consulting client; it has a division that competes with Paradigm Outcomes.

I’m working with two of the researchers on a PCORI-funded analysis of the impact of different regulatory approaches on opioid prescribing in workers’ compensation.

Note – For more of my coverage of Paradigm, click on links for posts complimenting the company on its strategy and suggesting more payers should utilize their services.

 

Joe Paduda is the principal of Health Strategy Associates

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