By KELLY WILSON, chief marketing officer of Paradigm Management Services, national provider of catastrophic case management
Jim, a salesman who smokes and has an impressive paunch for a stomach, almost keels over from an attack of low-back pain while in the office. After two months on painkillers, his primary-care doctor refers Jim to a pain specialist, who gives him a series of injections. The symptoms return. A surgeon operates. Then comes a second operation. Medical costs: $200,000 assuming lifetime use of pain medications.
Eduardo is electrocuted while trimming a tree and falls 20 feet onto a driveway. The emergency-room team counts half a dozen injuries to his head, torso and internal organs. He is treated at a succession of hospitals and outpatient clinics. Lifetime medical costs: $1,500,000.
Medical expenses for these kinds of claims account for a huge share of medical dollars spent on injured workers. This little known fact has enormous implications for how insurers address the rising costs of workers' comp medical care.
Innovation in care and the diffusion of expensive diagnostic, surgical and pain treatments are pushing up costs. Innovation is said to improve patient outcomes. Arthroscopic surgery for shoulders and knees is a banner-like example. But, overall, innovation plus defensive medicine are doing their work to push up costs.
The National Council on Compensation Insurance reported early in 2009 that 49 percent of medical costs are associated with claims for which the medical bills exceed $100,000. These are a mere 6.2 percent of all lost-time claims. The year 2008 was the eighth in the past 10 years in which the average medical cost of lost-time claims rose at more than 150 percent of the medical consumer price index. Medical cost-containment efforts to date have not stopped the upward trend. They probably have just lowered the incline going up.
The lion's share of the medical costs are lodged in the extended care over time. For Jim, these are almost entirely medication costs. For Eduardo, they also could be caretaker costs. Medical cost savings can literally be in the hundreds of thousands of dollars. It is not unusual to settle the indemnity cost of a claim for $75,000 and have still $300,000 in medical care yet to spend.
A DIFFERENT STRATEGY
The conventional focus of insurers is to try to lower the cost of each individual unit of care, such as a diagnostic test or a physical therapy visit. A common strategy is to contract with medical provider networks that negotiate discounts with providers.
This strategy can curtail unit costs but in a very limited way--as the 211 percent rise in average medical costs per claim since 1998 makes clear. Studies have shown that the number of treatments is more important than unit costs in driving ultimate claims costs.
This unit-cost containment strategy shaves medical expenses dollar by dollar, across very many payments. A good example is how most insurers have contracted with pharmacy benefits management firms to negotiate lower prices for drugs, establish a list of approved drugs (a formulary), process payments and keep an eye out for aberrant patterns of use. PBM services over the years have become essential.
Much of the treatment for chronic pain is controversial, expensive, very often ineffective and even risky to the patient. And outcomes vary wildly. Jim's $200,000 back claim could very well have been a $50,000 claim if the treatment team had shepherded him early into an activity-focused, conservative treatment plan.
Patients are often treated with expensive drugs and undergo care by anesthesiologists and orthopedic surgeons. Months and even years may elapse without the claimant experiencing sustained pain relief. At this point, the patient is likely to be clinically depressed and physically depleted.
Early intervention can prevent many emerging cases from deteriorating further. A claimant who is in persistent pain and is six months beyond his injury has a reasonable chance of full recovery and return to work.
THE DOCTOR DIFFERENCE
Specialist doctors who treat these cases are making diagnostic, surgical and, to some extent, rehabilitation decisions that largely determine how much the worker recovers. Their clinical skills and judgment influence the size and length of the tail of expenses.
One specialist, or more accurately one team of specialists, can produce dramatically different results than another team. The job of the insurer is laid out for it: Pick the right team. The smart insurer picks a team of expert doctors and nurses to monitor these claimants, consult with treating doctors, and propose fresh approaches to treatment before it is too late to change the course of care. This can be a program to wean the claimant off drugs, coach on coping skills and restore physical vitality.
Perhaps it cannot because of patient resistance or simply the lack of alternatives. In every region in the country there is a painful shortage of quality providers who treat pain conservatively and well. In that case, the insurer must--to control the total medical costs of the claim--recruit the right medical advisors, including case managers, to advise on the case.
This message is not lost on sophisticated insurers, which appreciate the complexity of care. They set up special CAT care teams and engage expert physician and nurse advisors. They recruit doctors who have proven skills in promoting functional recovery, who are fluent with treatment guidelines for best practice and can be particularly adept in medical decisions where treatment guidelines may not be very instructive, such as for patients with serious co-morbidities.
The smart insurer works with occupational medicine doctors for initial care. And it will work through medical experts to locate the top regional experts to bring in on the complex and expensive cases.
They use utilization review with treatment guidelines, but are ready to suspend UR for providers in which you place a lot of trust.
In their book of claims, these insurers may be able to find an extraordinary wide range of financial costs of claims. The $1,700,000 in medical costs for Jim's and Eduardo's composite, but very realistic, claims could have perhaps been halved had the insurer been able to secure the best available medical care.
Data from Paradigm Management Services confirms this. The firm assists workers' compensation insurers in managing catastrophic and chronic pain cases. According to a study by Milliman, the actuarial firm, Paradigm's catastrophic cases return to work at a rate of more than five times the rate of conventionally managed claims.
Catastrophic and other major traumatic injuries are in a special class by themselves. The total lifetime costs of two similar such injuries can vary by a factor of two depending on the quality of care, running well above $1 million. They consume inpatient hospital services and ongoing drug regimes, two cost drivers in medical care.
They are rare--about 0.5 percent of lost time claims can consume 10 percent to 20 percent of all medical dollars. Care can be extremely difficult to deliver, as multiple treatment teams are engaged and risks of complications are high. Here, clinicians with national expertise in each type of catastrophic injury should be recruited to treat and consult on these injuries.
Savvy insurers also create a comprehensive plan up front, showing the injured worker how they could progress from the date of injury all the way to the best-case clinical outcome recovery. Such a plan can almost lead the patient to a self-fulfilling prophesy through "outcome signaling"
Another best practice for workers' comp CAT claims is to create a comprehensive communication and record-sharing system, maintaining a patient's medical history in one single record or document that all doctors in the transition team can access.
On-site attention from nurse case managers, not telephonic care, can make a huge difference in catastrophic cases as well.
Pay attention to the quality of treatment to save tens of thousands of dollars, while not ignoring ways to save dollar by dollar. This balanced approach has a much better chance of succeeding in taming the medical cost beast.
July 9, 2009
Copyright 2009© LRP Publications