Column: Workers' Comp

How About a Flat Fee?

By: | February 18, 2014 • 3 min read
Roberto Ceniceros is senior editor at Risk & Insurance® and chair of the National Workers' Compensation and Disability Conference® & Expo. He can be reached at [email protected] Read more of his columns and features.

More employers wanting predictability in the fees they pay workers’ comp third-party administrators are negotiating to pay a single, flat fee for bill-review services, sources tell me. The arrangements follow from criticisms some employers, their brokers and consultants have heaped on TPAs, saying traditional TPA charges for bill-review services obscure the ultimate cost of those services.

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Under traditional arrangements, a TPA might charge an employer on a per-bill basis for each medical-provider bill reviewed. Or, they might charge on a per-line basis, tallying a fee for each expense line on a bill. They can also charge the employer according to the percentage of savings produced by the bill-review process.

The inconsistency in billing methods has fueled suspicion that some TPAs — operating in a highly competitive environment — win business by bidding to provide basic claim-handling and administration at a low cost, and then boost their revenue with additional charges.

TPA executives have countered that their billing measures are transparent, at times even arguing that brokers stir the controversy to attract consulting business. But questions remain.

TPAs also differ from one to the next in their billing formats for the broad range of other claims management services they offer. So employers with the resources to do so often pay their brokers or consultants additional sums to analyze their bills and to help them select the best TPA agreement for them.

Srivatsan Sridharan, senior vice president, product development for TPA Gallagher Bassett Services Inc., said more large employers are negotiating to pay a consistent flat, per-bill fee for all bill-review-related services for each claim. The employer then pays additional amounts for claims handling and all of the other TPA services required to resolve a claim, although the charges for those other services have tended to be more predictable than the bill-review fees.

Data collection has made it possible for TPAs to model an employer’s expected claims-management expenses and accommodate flat-fee deals, Sridharan said. Such arrangements won’t reduce the cost of managing a claim, but they can make bill review costs more predictable, he added.

In a similar vein, brokers meeting privately with TPA executives during the National Workers’ Compensation and Disability Conference® & Expo, held in late November, asked TPAs about their willingness to charge one, all-inclusive fee for an employer’s entire book of claims business, said Joe Picone, chief claim officer for Willis of North America.

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Ultimately, employers want to know the “true cost” of managing their claims and this “could be the next evolution of TPA pricing,” Picone said. “Why don’t we just say, ‘Instead of paying $1,500 per claim, my whole contract is worth $1 million or $500,000.’ ”

The mountain of workers’ comp claims data that TPAs collect could help make the broader flat-fee arrangement possible, at least theoretically, because TPAs could mine the data to predict the claims management costs an employer will generate when operating in a specific region and industry, with certain employee demographics and exposure differences.

We will have to wait and see whether innovative employers and TPAs go down that path.

But additional employer options for paying workers’ comp expenses would be a good thing. And with data increasingly available to help TPAs and employers understand claims-management costs, the time is right for employers wanting pricing predictability to seek change.

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Pharmacy Trends

Attitudes Shift on Medical Marijuana

A growing number of industry stakeholders are keeping an open mind about reimbursing claims for the medical use of cannabis.
By: | May 24, 2016 • 7 min read
med marijuana2

The tide is turning towards paying workers’ compensation claims involving medical marijuana, but many payers remain reticent

Industry professionals would prefer that the federal government stop classifying the drug as an illegal controlled substance before paying such claims.

Four states — Connecticut, Maine, Minnesota and New Mexico — approved workers’ comp reimbursement for the use of medical marijuana, at least publicly, according to Mark Pew, senior vice president at PRIUM in Duluth, Ga.

Courts in New Mexico ruled that carriers must pay for marijuana if a doctor in that state recommends it as part of a claimant’s treatment.

However, some carriers are defying the state court’s order, arguing that it’s illegal under federal law. Still, there seems to be an ongoing shift in risk management and insurance toward paying claims that involve marijuana use.

Mark Pew, senior vice president, PRIUM

Mark Pew, senior vice president, PRIUM

“I think increasingly, more people with whom I’ve spoken are open to the possibility — that includes physicians, nurses, claims adjusters, and those that influence decisions,” he said.

“They will review based on the clinical efficacy for that particular patient.”

However, not everyone is convinced, as the studies conducted on marijuana are not as definitive as those for FDA-approved drugs, Pew said.

Moreover, professionals still point to the fact that marijuana is classified as illegal by the federal government.

 

Paying claims for its use could create a legal quandary.

“I think those that not convinced are still the majority of the workers’ comp industry,” Pew said.

“It is a loaded question, because marijuana is a divisive and partisan issue, and personal biases of individuals within the workers’ comp system influence their perceptions on it.”

On top of this, payment decisions based on utilization reviews (UR) are problematic because there are no medical guidelines for medical marijuana, Pew said. In some states UR is the arbiter, in other states UR is but an opinion, and in still others, UR is not supported.

Within workers’ compensation, the two treatment guidelines most used by states are Official Disability Guidelines and ACOEM, although some states have created their own. None currently recommend the medical use of marijuana, regardless of condition.

As such, if UR decisions rely on those guidelines, “the answer would be ‘no’ ” on payment for the drug use, Pew said.

But when reimbursement decisions are made outside of UR, individual biases on the subject of marijuana could have an impact, he said.

“Some will absolutely not consider marijuana as medicine and refuse reimbursement,” Pew said.

“Others may have personal experience or know someone that cannabis helped and be willing to consider it.”

“At no time in our history has a state government required the reimbursement for use of a substance that is illegal under in the eyes of the federal government.” — Nichole Wilson, director, pharmacy product development, Coventry Workers’ Comp Services

When it comes to evaluating the clinical efficacy of medical marijuana, practitioners should look at whether benefits exceed the risks, level of function and activity, quality of life, and whether the addition of medical marijuana could help discontinue the use of such dangerous drugs such as OxyContin, Alprazolam, Xanax and Soma, he said.

“In other words, evaluate the appropriateness of cannabis as you would any other drug or treatment — does it work or not for that specific patient? That has been the case in the four states where reimbursement is being done, and the way in which the tide seems to be turning,” Pew said.

The use of medical marijuana for chronic pain is growing more and more popular — as of February 2016, 26 percent of all registered medical cannabis patients in New Mexico usde it for chronic pain, Pew said.

Moreover, 46 percent of registered patients use it for PTSD.

These numbers include all registered patients, not just injured workers, but those conditions are obviously applicable to workers’ comp.

Chronic pain is typically included as a qualifying condition for medical cannabis programs around the country, with Minnesota adding a very narrowly defined “intractable pain” to its list of approved uses as of Aug. 1.

“All of this means that medical cannabis is a burgeoning issue, with evolving science and opinions, and is absolutely pertinent to workers’ comp both now and into the future,” Pew said.

“And if marijuana is ever made legal and/or rescheduled at the federal level, the conversation changes dramatically.”

Lisa Anne Forsythe, senior consultant, regulatory business consulting and analysis, at Coventry Workers’ Comp Services in Sacramento, Calif., said “the tide is definitely turning.”

She has been working on the issue from a regulatory, legal and financial/billing perspective.

There were no medical marijuana claims whatsoever until after the recent appellate rulings in New Mexico, the first state in the country to allow medical marijuana as a compensable benefit.

“It simply wasn’t an issue from a legal, regulatory and financial standpoint until then,” Forsythe said.

Paucity of Evidence

Don Lipsy, Coventry’s manager, pharmacy regulatory communications in Tucson Ariz., said there are “burgeoning pockets” of utilization of medical marijuana related to workers’ comp injuries. While Coventry has not had claims, they’ve heard secondhand of claims being paid by others.

“We’re seeing an expansion of use as an alternative to opioids, and my concern is that we might be trying so hard to address the opioid epidemic that we are treating medical marijuana as a silver bullet,” Lipsy said.

“I’m not so sure we aren’t trading one issue for another.”

From a clinical perspective, there are still a lot of people on the fence on whether or not marijuana is useful, said Nichole Wilson, Coventry’s director of pharmacy product development in Omaha, Neb.

“The evaluation of benefits versus risks are on most clinicians’ minds,” Wilson said.

“Since it’s still classified by the federal government as an illegal Schedule 1 controlled substance, there is not a preponderance of clinical evidence evaluating the drug, and that is a challenge to the medical community.”

“The tide is turning towards public acceptance of medical marijuana, with 169 million people living in the jurisdictions that have legalized it.” — Gregory McKenna, vice president and counsel for governmental affairs, Gallagher Bassett Services

Moreover, there’s a lot of concern about possible interactions of medical marijuana might have with other treatments as well as its potential benefits, Forsythe said.

“But there is also comparatively little discussion on the practical, legal and financial implications associated with the adoption of medical marijuana as a compensable benefit at this time, and that is something that really needs to be talked about,” she said.

“That was definitely one of the larger topics within the New Mexico bill. When we tell an insurance company that medical marijuana is a mandated covered benefit, this is precedent-setting — at no time in our history has a state government required the reimbursement for use of a substance that is illegal under in the eyes of the federal government.”

The Federal Conundrum

The liability implications of paying for an illegal substance need to be more thoroughly examined, experts said.

For example, the use of the federal banking system to pay for the illegal drug could that trigger federal criminal action under the Racketeer Influenced and Corrupt Organizations Act (RICO), Forsythe said.

“Financial institutions are loathe to potentially run afoul of RICO and have avoided doing business with dispensaries, etc., due to liability concerns,” she said. “Insurance companies face a similar exposure.”

Gregory McKenna, vice president and counsel for governmental affairs, Gallagher Bassett Services

Gregory McKenna, vice president and counsel for governmental affairs, Gallagher Bassett Services

Gregory McKenna, vice president and counsel for governmental affairs for Gallagher Bassett Services in Itasca, Ill., said the TPA’s workers’ comp resolution managers “are on the front line,” since they decide whether medical marijuana is a compensable treatment.

First, since federal banking restrictions make it illegal for providers of medical marijuana to use FDIC-approved banks, payment to them has to be made in cash, McKenna said. As such, the claimant needs to pay the provider in cash, and then the claimant has to be reimbursed by check.

“Payors have to make decisions to proceed with a reimbursement to the claimant, which is further complicated by a series of federal criminal statutes related to marijuana transactions,” he said.

“This is out of the realm of what we do normally, so it is a new frontier.”

Another significant challenge lies in the fact that the industry has few decision-support tools for medical marijuana, such as clinical intervention to alert workers’ comp decision-makers to potential interactions between medical marijuana and other medications or medical bill review processes to ensure proper dosage or utilization.

“However, the tide is turning towards public acceptance of medical marijuana, with 169 million people living in the jurisdictions that have legalized it,” McKenna said.

“Because of that volume of people, now the DEA and other federal agencies are taking a very careful look at reclassifying medical marijuana to make it legal.”

The agencies are also looking at naming very specific components of marijuana, to determine whether there may be some additional benefits to those components. That could open up additional research to take a clinical look at the efficacy of medical marijuana.

“This and decriminalization could lead to more workers’ comp payments within the industry,” he said.

Katie Kuehner-Hebert is a freelance writer based in California. She has more than two decades of journalism experience and expertise in financial writing. She can be reached at [email protected]
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Sponsored Content by CorVel

Advocacy: The Impact of Continuous Triage

Claims management is never stagnant. Utilizing a continuous triage model keeps injured employees on track to recovery.
By: | May 4, 2016 • 6 min read

SponsoredContent_CorVel

Introduction

In the world of workers’ compensation, timing is everything. Many studies have shown that the earlier a workplace incident or injury is acted upon, the more successful the results*. However, there is further evidence indicating there is even more of an impact seen when a claim is not only filed promptly, but also effective triage is conducted and management of the claim takes place consistently through closure.

Typically, every program incorporates a form of early intervention. But then what? While it is common knowledge that early claims reporting and medical treatment are the most critical parts of a claim, if left alone after management, an injured worker could – and often does – fall through the cracks.

All Claims Paths are Not Created Equal

Even with early intervention and the best intentions of the adjuster, things can still go wrong. What if we could follow one injury down two paths, resulting in two entirely different outcomes? This case study illustrates the difference between two claims management processes – one of proactive, continuous claims triage and one of inactivity after initial intervention – and the impact, or lack thereof, it can have on the outcome of a claim. By addressing all indicators, effective triage can drastically change the trajectory of a claim.

The Injury

While working at a factory, David, a 40-year-old employee, experienced sudden shoulder pain while lifting a heavy box. He reported the incident to his supervisor, who contacted their 24/7 triage call center to report the incident. After speaking with a triage nurse, the nurse recommended he go to an occupational medicine clinic for further evaluation, based on his self-reported symptoms of significant swelling, a lack of range of motion and a pain level described as greater than “8.”

The physician diagnosed David with a shoulder sprain and prescribed two weeks of rest, ice and prescription strength ibuprofen. He restricted David from any lifting over his head.

By all accounts, early intervention was working. Utilizing 24/7 nurse triage, there was no lag time between the incident and care. David received timely medical attention and had a treatment plan in place within one day.

But Wait…

A critical factor in any program is a return to work date, yet David was not given a return to work date from the physician at the occupational medicine clinic; therefore, no date was entered in the system.

One small, crucial detail needs just as much attention as when an incident is initially reported. What happens the third week of a claim is just as important as what happens on the day the injury occurs. Involvement with a claim must take place through claim closure and not just at initial triage.

The Same Old Story

After three weeks of physical therapy, no further medical interventions and a lack of communication from his adjuster, David returned to his physician complaining of continued pain. The physician encouraged him to continue physical therapy to improve his mobility and added an opioid prescription to help with his pain.

At home, with no return to work in sight, David became depressed and continued to experience pain in his shoulder. He scheduled an appointment with the physician months later, stating physical therapy was not helping. Since David’s pain had not subsided, the physician ordered an MRI, which came back negative, and wrote David a prescription for medication to manage his depression. The physician referred him to an orthopedic specialist and wrote him a new prescription for additional opioids to address his pain…

Costly medical interventions continued to accrue for the employer and the surmounting risk of the claim continued to go unmanaged. His claim was much more severe than anyone knew.

What if his injury had been managed?

A Model Example

Using a claims system that incorporated a predictive modeling rules engine, the adjuster was immediately prompted to retrieve a return to work date from the physician. Therefore, David’s file was flagged and submitted for a further level of nurse triage intervention and validation. A nurse contacted the physician and verified that there was no return to work date listed on the medical file because the physician’s initial assessment restricted David to no lifting.

As a result of these triage validations, further interventions were needed and a telephonic case manager was assigned to help coordinate care and pursue a proactive return to work plan. Working with the physical therapist and treating physician resulted in a change in David’s medication and a modified physical therapy regimen.

After a few weeks, David reported an improvement in his mobility and his pain level was a “3,” thus prompting the case manager’s request for a re-evaluation. After his assessment, the physician lifted the restriction, allowing David to lift 10 pounds overhead. With this revision, David was able to return to work at modified duty right away. Within six weeks he returned to full duty.

With access to all of the David’s data and a rules engine to keep adjusters on top of the claim, the medical interventions that were needed for his recovery were validated, therefore effectively managing his recovery by continuing to triage his claim. By coordinating care plans with the physician and the physical therapist, and involving a case manager early on, the active management of David’s claim enabled him to remain engaged in his recovery. There was no lapse in communication, treatment or activity.

CorVel’s Model

After 24/7 nurse triage is conducted and an injured worker receives initial care, CorVel’s claims system, CareMC, conducts continuous triage of all data points collected at claim inception and throughout the life of a claim utilizing its integrated rules engine. Predictive indicators send alerts to prompt the adjuster to take action when needed until the claim is closed ­– not just at the beginning of the claim.

This predictive modeling tool flags potentially complex claims with the risk for high exposure, marking claims that need intervention so that CorVel can assign appropriate resources to mitigate risk.

Claims triage is constant – that is the necessary model. Even on an adjuster’s best day, humans aren’t perfect. A rules engine helps flag things that people can miss. A combination of predictive systems and human intervention ensures claims management is never stagnant – that there is no lapse in communication, activity or treatment. With an advocacy team in the form of an adjuster empowered by a powerful rules engine and a case manager looking out for the best care, injured employees remain engaged in their recovery. By perpetuating patient advocacy, continuous triage reduces claim severity and improves claim outcomes, returning injured workers to the workforce and reducing payors’ risk.

*WCRI.

This article was produced by CorVel Corporation and not the Risk & Insurance® editorial team.



CorVel is a national provider of risk management solutions for employers, third party administrators, insurance companies and government agencies seeking to control costs and promote positive outcomes.
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