Whether unbundling workers’ compensation managed care services from third-party administration contracts really benefits employers continues to stir debate among the strategy’s advocates and detractors. I suspect that whether an employer that unbundles sees improved claims outcomes and cost savings, or better service depends on their resources and commitment to managing multiple vendors.
However, fewer risk managers and workers’ compensation managers may be considering unbundling today, compared to a few years ago, said Charles F. Martin, managing director, casualty operations consulting leader at Marsh USA Inc.
“My sense is that there is definitely less of an inclination to unbundle,” Martin said, noting that he has clients that unbundle and he believes some companies benefit from doing so.
But proponents haven’t established that unbundling guarantees better claims outcomes, Martin said. Meanwhile, TPAs and insurers improved their delivery of managed care offerings, helping to sway employer decision-making.
Some employers using an unbundled approach for years are being nudged back to bundling, thanks to consolidation among managed care service providers. I can’t say, however, whether there’s a trend there.
One workers’ comp manager I spoke with reaffirmed her commitment to keep unbundling case management, utilization review, and bill review from her TPA services. She said doing so allows customization of those products to fit her needs and affords greater quality control.
Unbundling remains an important option for employers with the sophistication to manage it. Recently, though, Srivatsan Sridharan and Niel Simon at Gallagher Bassett Services Inc. sought me out to pose counter arguments to unbundling.
Risk managers with shrinking internal staff support will be challenged to oversee multiple service providers and replicate the level of quality control that a TPA team can provide, they said.
“There are too many moving parts and making sure that quality and outcomes are not compromised in any of these parts requires significant investment in time, people and resources,” Sridharan said.
Employers can make mistakes when there is a limited amount of claims data to analyze before deciding which service providers to contract with, they said. In contrast, GB makes decisions based on its analysis of $4 billion in claims data.
Sridharan and Simon also posed other arguments. But several speakers in a recent Risk & Insurance® webinar titled “Succeeding with an Unbundled Claims Management Approach” made strong arguments for their opposing view as well.
For example, Frank Lott, corporate claims director for FirstGroup America, said he unbundles bill review, pharmacy benefit management, field nurse case management, and physical therapy.
Doing so for 2.5 years has led to greater transparency in bill review fees, he said. Before he couldn’t understand what he was billed for. He has also experienced reduced costs, improved program control for greater loss cost reductions, and a higher level of service provider expertise.
The debate over bundling versus unbundling doesn’t matter much to some insurers because they don’t allow their customers to unbundle.
But the option should remain available for employers and the debate should continue so they can weigh critical insights on which options may serve them best.
Through the Gap
A caller reported a serious workers’ comp injury involving a 44-year-old truck driver, Phil Howard. Initial facts were sparse. What we knew was that Howard was driving a truck in familiar territory when the truck inexplicably careened down a steep embankment.
Howard suffered multiple fractures and severe head trauma requiring hospitalization. The employer, a regional trucking line, was self insured for $350,000. My carrier had the remaining coverage.
Phil was married with two children and had worked at the company for 15 months. The employer described his performance as “adequate” and left it at that. There were no prior workers’ comp claims.
The accident investigation was ongoing. I explained that I would need to know if there were any state or national OSHA investigations planned but the employer remained circumspect.
A case manager had been to the hospital to visit with Phil and his family. Unfortunately, he was in a medically induced coma and the family was too distraught to speak.
The case manager confirmed blunt head trauma, opining it would result in cognitive damage. She didn’t yet know the extent of his other injuries.
No details about the truck were available, but to my way of thinking, examining the truck for steering or braking mechanism defects would be a good place to start, to determine if subrogation potential existed.
The employer hadn’t responded to our specialist’s request to examine the truck. I had 21 days to make a decision on compensability. The police report was still pending.
I called the claimant’s attorney and requested permission for continued case management — he agreed. He said he didn’t yet have subrogation information but he was open to protecting our subrogation interests.
I called the underwriter and advised on the truck inspection stalemate. Within four days, the truck was evaluated with a finding of no observed defects.
The police report yielded a perplexing surprise. The truck had left the interstate and traveled behind barriers on a portion undergoing reconstruction before plummeting 15 feet. There was a gap where a new bridge was planned. I spoke with the insured and advised that Phil’s unexplained actions raised serious compensability questions. Defense counsel concurred and planned to deny the case.
Eventually, Phil regained consciousness but had challenges with cognition, speech and vision. He was transferred to a post-acute rehabilitation facility.
As we prepared our defense, we decided to obtain the group health claims records. We also informally canvassed co-workers. They described Phil as moody and rumored to have an unhappy marriage. Group claims records reflected three hospitalizations for major depression/suicide threats.
An accident re-creation analysis concluded it was “highly probable” this was an intentional act. It noted the presence of warning signs and barriers, and the fact that it happened in broad daylight.
Despite a sympathy factor, we remained confident that we could successfully defend the case, but Phil’s inability to speak didn’t help either party. The judge recommended settlement considering Phil’s total disability. Ultimately, we reached a compromise paying only 30 percent of indemnity and medical, net of the self-insured retention.
Accidental or intentional? You decide.
The Next Wave of Workers’ Comp Medical Cost Savings
Managing medical costs for workers’ compensation claims is like pushing on a balloon. As you effectively manage expenses in one area, there are bound to be bulges in another.
Over the last decade, great strides have been made in managing many aspects of workers’ compensation medical costs. Case management, bill review and pharmacy benefits management are just a few categories that produce significant returns.
And yet, according to the National Council on Compensation Insurance (NCCI), medical costs remain the largest percentage of workers’ comp expenses. Worse still, medical costs continue to be the fastest growing expense category.
Many medical services are closely managed through provider negotiations, bill review, utilization review, pharmacy benefits management, to name a few. But a large opportunity for medical cost containment remains largely untouched and therefore represents a significant opportunity for cost savings.
Ancillary medical services is a term used to describe specialty or supplemental health care services such as medical supplies, home health care, durable medical equipment, transportation and physical therapy, etc.
According to Clifford James, Vice President of Strategic Development at Healthesystems in Tampa, Fla., modernizing the process for managing ancillary medical services presents compelling opportunities for cost savings and improved patient care.
Source: 2014 Healthesystems Ancillary Medical Services Survey
“The challenge of managing these types of medical products and services is a cumbersome and extremely disconnected process,” James said. “As a result, it represents a missing link in an overall medical cost management strategy, which means it is costing payers money and patients the most optimal care.”
James singled out three key hurdles:
Lack of transparency
As the adage goes, you can only manage what you can measure.
Yet when it comes to the broad range of products and services that comprise ancillary benefits, comprehensive data and benchmarking metrics by which to gauge success are hard to come by.
The problem begins with an antiquated approach to coding medical services that was developed in the 1970s. The coding system falls short in today’s modern health care environment due to its lack of product and service level detail such as consistent units of measure, quantity and descriptors.
As a result, a meaningful percentage of ancillary benefits spending is coded as “miscellaneous,” which means a payer has little to no visibility into what product or service is being delivered — and no way to determine if the correct price is being applied or if the item is even necessary or appropriate.
Source: 2014 Healthesystems Ancillary Medical Services Survey
“It’s a big challenge. Especially when you consider that for many payers, it’s difficult to determine exactly what they are spending, or identify what the major cost drivers are when it comes to ancillary services,” James said. And when frequently over 20 percent of these types of services are billed as miscellaneous, payers have zero visibility to effectively manage these costs.
Measurement and monitoring
Often, performance that is monitored is given the most attention. Therefore, ancillary programs that are closely monitored and measured against objective benchmarks should be the most successful.
However, benchmarks are hard to determine because multiple vendors are frequently involved using disparate data and processes. There isn’t a consistent focus on continuous quality improvement, because each vendor operates off of their own success criteria.
“Leveraging objective competitive comparisons breeds success in any industry. Yet for ancillary services there is very limited data to clearly measure performance across all vendors,” James said. “And for payers, this is a major area of opportunity to promote service and cost containment excellence.”
Source: 2014 Healthesystems Ancillary Medical Services Survey
If you ask claims executives about their strategies for improving the claims management process, a likely response may be “workload optimization.” The goal for some is to enable claims professionals to handle a maximum case load by minimizing administrative duties so they can leverage their expertise to better manage the outcome of each case.
But the path towards “workload optimization” has many hurdles, especially when you consider what needs to be coordinated and the manual way it frequently is done.
Ancillary benefits are a prime example. For a single case, a claims professional might need to coordinate durable medical equipment, secure translation services, arrange for transportation and confirm the best physical therapy plan. Unfortunately they often don’t have the needed time, or the pertinent information, in order to make quick, yet informed, decisions about the ancillary needs of their claimants.
In addition there is the complexity of managing multiple vendor relationships, juggling various contacts, and accessing multiple platforms and/or making endless phone calls.
“We’ve been called the ‘industry integrator’ by some people, and that’s accurate. We are delivering a proven platform connecting payers with providers and vendors on the ancillary medical benefit front. It’s never been done before.”
– Clifford James, Vice President of Strategic Development, Healthesystems
Modernizing the process
To the benefit of both payers and vendors, Healthesystems offers Ancillary Benefits Management (ABM).
The breakthrough ABM solution consists of three foundational components — a technological platform, proprietary medical coding system and a comprehensive benefits management methodology.
The technological platform integrates payers and vendors with a standardized architecture and processes. Business rules and edits can be easily managed and applied across all contracted vendors. All processes – from referral to billing and payment – are managed on a single platform, empowering the payer with a centralized tool for managing the quality of all ancillary providers.
But when it comes to ancillary products, the critical and unique challenge Healthesystems had to solve is the antiquated coding system. This was completed by developing a highly granular, product-specific coding system including detailed descriptions and units of measure for all products and services. This coding provides payers with the clearest understanding of all products and services delivered including pricing and all the necessary utilization metrics.
“We bring the highest level of transparency and visibility into all ancillary products and services,” James said, adding that the ABM platform uses an extensive preferred product coding system 15 times more detailed than any other existing system or program.
This combination of sophisticated technology, proprietary coding system and benefit management methodology revolutionizes the ancillary category. Some of the benefits include:
- Crystal-clear transparency
- A more detailed and comprehensive view into ancillary products and services
- An automated process that eliminates billing discrepancies or resubmittals
- Integrated and consistent processes
- Strategic program management
Taken together, the system leapfrogs over the existing hurdles while creating entirely new opportunities. It’s a win for vendors and payers, and ultimately for patients, who receive the optimal product or service.
“We’ve been called the ‘industry integrator’ by some people, and that’s accurate,” James said. “We are delivering a proven platform connecting payers with providers and vendors on the ancillary medical benefit front. It’s never been done before.”
To learn more about the Healthesystems Ancillary Benefits Management solution visit: http://www.healthesystems.com/solutions-services/ancillary-benefits