Managing Service Providers
Uncovering inconsistencies in an insurer’s or third party administrator’s service performance can ultimately strengthen an employer’s partnerships with the organizations managing injured-worker claims.
Advocates of independent reviews maintain that vendor management quality assurance audits conducted by independent reviewers can reveal weaknesses that impact an employer’s workers’ compensation program.
Yet other observers argue that independent quality assurance audits are becoming a thing of the past and their value diminishing.
Still, about 25 percent of self-insured employers and those with large deductibles seek the audits, said Dan Marshall, chief claims officer U.S. at Aon.
“It is only the most sophisticated buyers that want to look under the hood, so to speak, and get a gauge of the performance of claims service providers,” he said.
Insurers and third party administrators, meanwhile, employ their own teams to conduct highly structured quality assurance, or QA, reviews of their internal claims operations.
They test whether their employees adhere to internally mandated standards and whether their claims managers comply with negotiated service levels. They also evaluate the performance of external claims service providers.
“TPAs [and insurers] do a significant amount of internal quality assurance before a work product goes out,” said Jenny Killgore, VP of insurance services at Athenium Inc., which provides insurers with quality assurance systems for evaluating claims, underwriting processes and vendor-management practices.
Whether insurers and TPAs use internal resources or contract with outside companies for nurse case management, legal defense, MSA compliance, surveillance and other claims management services, QA reviews can reveal whether services are optimally deployed.
Reviews conducted by a TPA’s or insurer’s internal QA team also help those organizations strengthen their employee training programs and learn whether service inconsistencies exist among widely dispersed regional offices.
They also help retain customers as competitive market pressures and QA practices have pushed insurers and TPAs to improve their services over the years, several experts agreed.
But an independent review can help reveal whether employers are indeed well served by the internal QA processes of the claims management organizations they contract with, said Jim Kremer, senior manager, insurance and actuarial advisory services at Ernst & Young LLP.
Independent reviews can help confirm that an employer’s claims-management instructions and service agreements are consistently met and whether the company’s dollars are wisely spent.
“Leading practice would be a focus on claims management quality overall, especially outcomes.” — Jim Kremer, senior manager, insurance and actuarial advisory services, Ernst & Young LLP
“You have standards that are in place at every carrier and third party administrator,” Kremer said. But, he asked, “Are those front-line adjusters, and frankly their supervisors, adhering to those standards?”
QA reviews can assess timely claim intervention, reserving, pharmacy management and medical data management, among others. Audits should evaluate adherence to leading claims-management practices and impact on claims outcomes, Kremer said.
“Large employers have performance guarantees in place, hence requiring audits,” Kremer said. “Leading practice would be a focus on claims management quality overall, especially outcomes.”
An independent review might find, for example, that workloads unintentionally encourage a TPA’s adjusters to relinquish control of claim files to specialists more often than optimal. That can cause employers to pay for nurses or attorneys to complete tasks adjusters are capable of handling.
“There is a cost to that and you certainly don’t want to assign routine tasks that an adjuster should be doing to a nurse case manager or to an attorney,” Kremer said. “That is very expensive and produces what we call ‘expense leakage.’ We see it quite often when we are out auditing in the marketplace.”
Other common findings include inadequate supervision of adjusters and failures to optimally reserve for specific claims, brokers said.
One opportunity for improvement commonly found during Sedgwick Claims Management Services Inc.’s internal audits involves the inability of adjusters to connect with injured employees during attempted follow-up telephone calls, said Darrell Brown, Sedgwick’s chief claims officer.
Observers say that has become an industry-wide problem, especially with the increased use of cell phones.
That inability to connect slows claim management decisions and can result in the increased use of investigations when adjusters don’t receive responses to their queries or when claimants believe they are not being properly cared for, Brown said.
“You can’t have a good outcome if the injured employee is having a bad experience,” Brown said.
During the request for proposal process, when employers shop for new TPA partners, it’s common to ask to see results of the TPAs’ internal QA reviews, said Thomas Ryan, research leader for Marsh’s workers’ compensation center of excellence.
“Sometimes they will sanitize the results [of internal QA audits] and share those with us,” Ryan said. “Others are a little reluctant to do so. But they will at least give us some high-level findings.”
Once a TPA is selected, contract language provides employers with the ability to conduct audits.
Thing of the Past?
Not everyone agrees, however, on the value of QA audits.
Automated claims-handling systems with embedded quality assurance components make independent reviews less necessary today, said Jerry Poole, president and CEO of Acrometis, which provides automated adjuster desktops.
“The quality assurance audit will be a thing of the past,” Poole said.
He said that when making claims decisions, Acrometis’ adjuster systems conduct QA in real time, while audits provide a retrospective review.
Real-time QA provides beneficial data about certain adjuster tasks, such as whether specific claims actions are completed within certain timeframes, Kremer said.
But the systems still cannot sufficiently evaluate certain factors, like the intensity of a claim investigation, he said.
Internal risk management staff at Albertsons Safeway constantly monitor the performance of the TPAs servicing the grocery chain’s workers’ comp claims, and medical outcomes are continually measured, said Bill Zachry, group VP of risk management.
Yet Albertsons Safeway also obtains an independent audit every four or five years, Zachry added.
The Hartford, meanwhile, relies on an internal team, comprised mostly of nurses, to conduct evaluations of the business partners that provide workers’ comp services.
Those services include utilization review, field nurse case management, vocational rehab, pharmacy benefit management, transportation, interpretation, physical therapy and medical provider networks.
QA evaluations are conducted before contracting with such partners, said Dr. Marcos Iglesias, VP and medical director for the insurer. Then each is trained on The Hartford’s QA expectations with follow-up audits. &
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Compounding: Is it Coming of Age?
The WC managed care market has generally viewed the treatment method of Rx compounding through the lens of its negative impact to cost for treating chronic pain without examining fully the opportunity to utilize “best practice” prescription compounds to help combat the opioid epidemic this nation faces. IPS stands on the front lines of this opioid battle every day making a difference for its clients.
After a shaky start cost-wise, prescription drug compounding is turning the corner in managing chronic pain without the risk of opioid addiction. A push from forward-thinking states and workers’ compensation PBMs who have the networks and resources to manage it is helping, too.
Prescription drug compounding has been around for more than a decade, but after a rocky start (primarily in terms of cost), compounding is finally coming into its own as an effective chronic pain management strategy – and a worthy alternative for costly and dangerous opioids – in workers’ compensation.
According to Greg Todd, CEO and founder of Integrated Prescription Solutions Inc. (IPS), a Costa Mesa, Calif.-based pharmacy benefit manager (PBM) for the workers’ compensation and disability market, one reason compounding is beginning to hit its stride is because some states have enacted laws to manage it more effectively. Another is PBMs like IPS have stepped up and are now managing compound drugs in a much more proactive manner from an oversight perspective.
By definition, compounding is a practice through which a licensed pharmacist or physician (or, in the case of an outsourcing facility, a person under the supervision of a licensed pharmacist) combines, mixes, or alters ingredients of a drug to create a medication tailored to the needs of an individual patient.
During that decade, Todd explains, opioids have filled the chronic pain management needs gap, bringing with them an enormous amount of problems as the ensuing addiction epidemic sweeping the nation resulted in the proliferation and over-consumption of opioids – at a staggering cost to both the bottom line and society at large.
As an alternative, compounded topical cream formulations also offer strong chronic pain management but have limited side effects and require much reduced dosage amounts to achieve effective tissue level penetration. In fact, they have a very low systemic absorption rate.
Bottom line, compounding provides prescribers with an excellent alternative treatment modality for chronic pain patients, both early and late stage, Todd says.
Time for Compounding Consideration
That scenario sets up the perfect argument for compounding, because for one thing, doctors are seeking a new solution, with all the pressure and scrutiny they’re receiving when trying to solve people’s chronic pain problems using opioids.
Todd explains the best news about neuropathic pain treatment using compounded topical analgesic creams is the results are outstanding, both in terms of patient satisfaction in VAS pain reduction but also in reduction potentially dangerous side effects of opioids.
The main issue with some of the early topical creams created via compounding was their high costs. In the early years, compounding, which does not require FDA approval, had little oversight or controls in place. But in the past few years, the workers compensation industry began to take notice of the solid science. At the same time, medical providers also were seeing the same science and began writing more prescriptions for compounding – which also offers them a revenue stream.
This is where oversight and rigor on the part of a PBM can make a difference, Todd says.
“You don’t let that compounded drug get dispensed when you’re going to pay for it without having a chance to approve it,” Todd says.
Education is Critical
At the same time, there is the growing, and genuine, need to start educating the doctors, helping them understand how they can really deliver quality pain management to a patient without gouging the system. A good compounding specialty pharmacy network offering tight, strict rules is fundamental, Todd says. And that means one that really reaches out to work with the doctors that are writing the prescriptions. The idea is to ensure that the active ingredients being chosen aren’t the most expensive sub-components because that unnecessarily will drive the cost of overall compound “through the ceiling.”
IPS has been able to mitigate costs in the last couple years just by having good common sense approach and a lot of physician outreach. Working with DermaTran Health Solutions and its national network of compounding pharmacies, IPS has been successfully impacting the cost while not reducing the effectiveness of a compounded prescription.
In Colorado, which has cracked down on compounding profiteering, Legislative change demanded no compound could be more than $350.00 period. What is notable, in an 18-month window for one client in Colorado, IPS had 38 compound prescriptions come through the door and each had between 4 and 7 active ingredients. Through its physician education efforts, IPS brought all 38 prescriptions down 3 active ingredients or less. IPS also helped patients achieve therapeutic success (and with medical community acceptance). In that case, the cost of compound prescriptions was down to an average of $350, versus the industry average of $788. Nationwide IPS has reduced the average cost of a compound prescription to $478.00.
Todd says. “We’ve still got a way to go, but we’ve made amazing progress in just the past couple of years on the cost and effective use of compound prescriptions.”
For more information on how you can better manage your costs for compound prescriptions, please call IPS at 866-846-9279.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with IPS. The editorial staff of Risk & Insurance had no role in its preparation.