"They wanted outcome-based networks for their workers' compensation claims," says Chicago-based Kimberly George, Senior Vice President and Managed Care Practice Lead for Sedgwick CMS. "They told us they wanted a network that provides a quality program and identified physicians who delivered quality outcomes in workers' compensation."
Today, there is a clear, emerging shift in current thinking regarding the treatment of injured workers. "Unfortunately, the industry has become focused on delivering managed care rather than quality healthcare. But we have seen first-hand that change is inevitable. Our clients told us they wanted to see that change as early as four years ago, and we listened," affirms Ms. George.
The company quickly embarked on provider benchmarking and today Sedgwick CMS has several years of outcome-based network data with phenomenal results. According to Ms. George, "Many of our employers have embraced this initiative and, as a result, have become less concerned with PPO networks. They know that if the physician is a five-star provider, ultimately costs will be lowered," she says.
"The point is," she explains, "that despite what some are saying within and about the TPA services industry, employers are getting effective medical management and positive impact to cost of risk without having to unbundle services to achieve those critical objectives. This holds true especially in terms of medical care for injured workers and total cost of risk."
Ms. George explains that managed care techniques became part and parcel with workers' compensation claims management activities in the 1990s. At the time, the idea was to blend long-standing cost containment tools prevalent in group health to the strained workers' compensation system. Medical bill review, case management, utilization review, and preferred provider organizations (PPOs) became a part of the workers' compensation risk management vernacular. Unfortunately, despite comprehensive managed care programs in the workers' compensation arena, claims costs continued to soar with medical expenses leading the way.
The rate of increase associated with workers' compensation medical costs outpaces that of general healthcare. Moreover, studies have shown that the standards of care associated with occupational medicine are generally perceived to be lower than those delivered in a traditional healthcare setting.
"It's clear from those two trends alone that there needs to be less emphasis on negotiating discounts and processing paperwork, and greater emphasis on identifying quality providers and improving the care delivery model," says Ms. George.
How can the industry better control costs and improve care? Ms. George believes the answer is fairly straightforward. Mainly, both needs can be met by ensuring an injured worker receives appropriate medical care as soon as possible.
Continuing she explains, "Better medical outcomes are good for both workers and employers. Workers are more likely to return to healthy, productive living and employers are more likely to see better results in claims durations, long-term medical costs, and total cost of claims." Above all, less emphasis should be placed on achieving volume discounts and more emphasis needs to be placed on seeking the best care available at a reasonable cost. Delivering successful healthcare for the injured worker should be an inherent part of the claims process.
Ms. George says it is simply incorrect that all TPAs are price-gauging clients with regard to managed care. "In fact," she says, "Sedgwick CMS clients who bundle their managed care and TPA claims management services actually achieve greater savings compared to industry benchmarks."
For example, employers who bundle services don't require sophisticated systems to manage and merge data or administrative staffs to decipher the data and make sense of where the program stands. Sedgwick CMS clients can receive real time reports addressing claims trends, costs and outcomes. The reports illustrate how the company contributes to the client's bottom line.
Ms. George points out that Sedgwick CMS spends $2 billion annually in medical care on behalf of clients. But when Sedgwick CMS goes out with an RFP for medically related services, they are not looking to squeeze every nickel out of the providers delivering care and services. Instead, they use transparent pricing and the most cost-effective, quality medical care as a one-two strategy in lowering client costs. Ms. George adds that there are simple ways to determine if a client is getting its money's worth from a TPA. She sites average costs per bill for bill review re-pricing, for example, as an excellent gauge.
At Sedgwick CMS, the numbers speak for themselves. For the 2.4 million bills processed over the past year, the average cost per bill (not including duplicate bills and inclusive of all costs) was under $14.00 per bill. Industry averages are between $20 and $57 per bill. Of the 2.4 million bills processed by Sedgwick CMS during this time, nearly 650,000 were processed with no bill review fee to clients, 27 percent of total bills were processed with no bill review or PPO fee, and the client paid the Sedgwick CMS negotiated unit cost for the service with no mark-up or added charges. Those numbers translate into net savings greater than 50 percent for clients, with a PPO penetration of 62 percent.
Another key point is that Sedgwick CMS deploys a formal RFP process to identify partners with enhanced offerings. Sedgwick CMS also negotiates best-in-class specialty network pricing for its clients. Using its leading-edge technology, billing associated with pre-approved treatment is processed at the negotiated rate. "There is no wholesale/retail mark-up," she says. "Clients pay no bill review or PPO fee. We are not making margin on what the client pays. Instead, 100 percent of the unit cost is the fee for the specialty network."
Whenever possible, Sedgwick CMS prospectively coordinates approved medical treatment with emphasis on providers delivering high valued services in workers' compensation, resulting in:
-- Delivery of quality, timely care to the injured worker
-- A streamlined healthcare delivery model
-- Efficiencies at its desks
-- Positive impact to cost of risk
"Clearly, those numbers show that focusing on healthcare, and not managed care per se, can deliver value," she says. "Unfortunately, managed care in workers' compensation has evolved without a true focus on quality care, but rather by building an entire industry of oversight, expenses and fees. The latter will not resolve the health and welfare issues facing an injured worker, and it's not helping the client save money."
Applying focus-on-quality healthcare to workers' compensation requires change. Under its model, Sedgwick CMS has successfully overcome the challenge of identifying physicians and providers who are the most capable of providing quality healthcare and showing them how to work more effectively within the workers' compensation system.
"For the TPA industry, the idea should not be to try and make money on managed care," Ms. George says. "If you focus on claims and outcomes, if you have a drive to promote healthcare and offer transparent fees and pricing, it eliminates many of the issues plaguing the industry today."
"Some things in our industry need to be fixed," she says. "The focus needs to be more on quality healthcare, not building large managed care practices. It sounds like common sense, but it has taken time to gain traction."
Ms. George concludes that partnerships with providers are critical in order to streamline the quality of care and put the focus where it needs to be.
"Bill review needs to be a commodity," she says. "It should not be the primary focus of a TPA selection decision. After all, medical claims drive costs, but managed care companies have not been focused on the optimal healthcare delivery model while helping injured workers get back to work. It's time for that to change."
For more information, contact Kimberly George at 312.356.1980 or firstname.lastname@example.org. To learn more about Sedgwick CMS, visit: www.sedgwickcms.com
About Sedgwick CMS
Sedgwick Claims Management Services Inc. is the leading North American provider of innovative claims and productivity management solutions. Sedgwick CMS and its affiliated companies deliver cost-effective claims administration, medical management, risk consulting, and related services to clients through the expertise of approximately 8,500 colleagues in more than 170 offices in the U.S. and Canada. The company specializes in workers' compensation; disability, FMLA and other employee absence; general, automobile and professional liability; and warranty and credit card claims services as well as Medicare compliance solutions. Sedgwick CMS and its affiliates design and implement customized programs based on proven practices that meet client needs. For more see www.sedgwickcms.com.
(The above piece is part of our continuing Insights series designed to highlight key products and services to our readers. This paid-for Insights was written and edited by Risk & Insurance®
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June 1, 2011
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