A Most Compelling Study

The Louisiana Workers' Compensation Corp. had the vision some time ago to ally itself with a team of medical practitioners and researchers affiliated with Johns Hopkins University.

By Peter Rousmaniere

This partnership produced earlier this year one of those rare research reports, which is so at home with the truth that it should be required reading by thousands of workers' comp professionals. The study was published in the January 2010 issue of the Journal of Occupational and Environmental Medicine.

The article describes how certain doctors drive up medical expenses and enable excessive disability. It points to ways to contain these doctors. And it reveals the absolute folly of relying on broad-based fee discount PPOs. The article delivers the best argument I have read in favor of using selective provider networks, as much to turf some doctors out as to bring other doctors in.

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Visionary Larson and the Law (08/01/11)
The Man With Two Bodies (09/01/11)

The authors looked at claims that occurred over a five-year period, from 1998 through 2002. (The relative remoteness of these years does not diminish the potency of the findings.) The authors classified claims according to how they were initially valued and focused on claims with both relatively low initial reserves and high reserves.

Then they did something very clever. They noted claims that migrated during the course of their lifetime from low reserve requirements to high reserves. And they isolated those doctors--77 in number--who each were responsible for at least five of these upwardly migrating claims.

They tracked these doctors and compared them to hundreds of other doctors for all types of claims, for instance, even those claims which were initially reserved and eventually closed for a low sum.

For pretty much whatever claim these 77 doctors touched, duration of disability was much longer and medical expenses were much higher. The greatest discrepancy was in the claims with initial low reserves. The high-intensity doctors were far more likely to increase the costs of these claims.

In sum, less than 4 percent of treating doctors caused claims costs to increase by 50 percent without any evidence that this increase was due to a higher medical severity.

The authors stop short of prescribing remedial measures, but they are easy to discern.

The message is that insurers must wean themselves from addiction to the beggar-and-whack 'em theory of provider relations. That theory uses broad scale discount PPOs to drive down unit pricing and utilization review to control excessive treatment. It fails to control for high intensity specialist doctors and sends the wrong message to doctors who treat well.

Insurers should consider recognizing doctors who treat closer to the norm by providing them with higher compensation, relaxing their utilization rules and reimbursing them faster.

I'd like to know how these claimants arrive at the doorstep of these high intensity providers. They are almost all specialists, such as orthopedic surgeons and pain management specialists. It would be energy well spent to educate these doctors about their abnormal performance.

It would also be wise, based on these findings, to conduct more peer consultations using highly respected doctors who practice within the same market area.

Which brings us to the most important message of the study: know your doctors.

PETER ROUSMANIERE is an expert on the workers' compensation industry.

May 1, 2010

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