Controlling Workers' Compensation Medical Costs: What's Next?
Unfortunately, the same can't be said for managing ancillary medical services, and the ability to truly manage these services has not kept pace with advances that have occurred in pharmacy.
Ancillary medical services includes all durable medical equipment (DME) such as medical supplies, orthotics and prosthetics and electro-therapy, in addition to home health, transportation & translation, and implantable devices, to name a few. Similar to most medical related services, these have become very expensive for insurance payers but historically haven't received a lot of attention. It's also an area that has been in dire need of process improvements. These services, in fact, can account for upwards of 10% of a workers' compensation payers' medical claim costs, making the dollars quite significant.
Historically for the payer, there hasn't been much in the way of cost containment solutions for these services beyond basic bill review and discounted network provider arrangements. According to Daryl Corr, president of Healthesystems, the Tampa, Fla., pharmacy and ancillary benefits management provider, there are three main areas that highlight the cost containment shortcomings for these services: 1) the lack of visibility into the products/services and the associated pricing, 2) an antiquated, retrospective adjudication process with minimal utilization management controls, 3) the lack of detailed benchmarking data upon which payers can use to determine what is driving costs and whether they are receiving the best level of service. And benchmarking is only possible if you are capturing clean and measurable data up front, which makes this a challenging issue since all three areas must be addressed, otherwise everything else will not work.
With that in mind, said Corr, in order to make a big impact, sometimes you have to change the entire way the business is performed. As a result, Healthesystems modeled its successful pharmacy management program framework and philosophy to completely re-architect the way ancillary services are provided and managed -- and developed an ancillary benefit management (ABM) model that focuses on using outcomes and performance benchmarking to drive better program savings and service. Corr explains that ABM is an entirely new and more comprehensive approach, and since going live over five years ago, the results have proved by using metrics and benchmarking, care and significant cost benefits are sure to follow.
The Healthesystems ABM program, created from the ground up on a proprietary platform, brings together a network of "best in class" connected partners -- in essence, a group of the top national workers' compensation ancillary services providers -- and combines the strengths of what these providers have to offer with a highly managed, technology driven solution that significantly saves more money and better manages care.
Elaborating further on the issues Corr mentioned: 1st Visibility: managing ancillary services costs, utilization and program performance has been very limited due to the lack of detailed data beyond traditional HCPCS based medical bill coding. For example, for many payers, almost 20% of all DME products are billed from providers by using "miscellaneous" HCPCS codes, such as E1399. As a result, understanding what products are being provided is very unclear. In fact, almost 50 percent of all DME products and services are billed within three main categories of cost -- miscellaneous items, electrotherapy and bone growth stimulators. Electrotherapy alone includes hundreds of different types of products that range in price from less than a few dollars to over two hundred, and bone growth stimulators tend to be very costly products, frequently as much as thousands of dollars. This example is a great representation of how this large group of products with wide ranging prices traditionally would be paid without having any supporting product definition.
In order to address this lack of visibility, Healthesystems created a proprietary product coding system which consolidates all the connected providers' products and services and contains over 60,000 coded items related to 1,700 HCPCS. Each catalog item is defined down to the individual product, including price. Best of all, no "miscellaneous" codes are used because every product must be defined.
Apart from the extremely wide scope of products and services, there also has been a lack of reliable data and tools available from ancillary providers to make the adjudication and provider authorization process efficient or reliable.
This addresses the 2nd issue Corr highlighted -- retrospective billing and adjudication. To solve this, Healthesystems developed a powerful new technology solution to ensure all utilization management controls and rules are performed up front, so the most informed decisions are made when approving ancillary products and services. Corr cautions, however, that while technology plays a critical role, it alone won't get the job done.
"Insight and expertise is the true measure of success in ABM when it comes to making the best decisions for both payer and patients," Corr said. "But it's not just about using internet technology as the sole means to improve this type of process. There is a risk of overselling technology as the only focus of the solution."
Corr explained that sometimes technology can be used to the detriment of making the best choice. Technology is supposed to make processes easier, drive better outcomes, and provide a better product. But that may not always be what drives the most successful outcomes with workers' compensation claims.
"Some tools are purely focused on an e-commerce model that helps facilitate purchasing products or services via the Internet," Corr said. "That's fine if you are buying electronics or books. But in the insurance world, that is not necessarily what payers, or claims professionals, need or want. Solely adding another electronic tool to 'shop' the Internet for products and services will not make the process any more efficient." If anything, he added, it could make it worse. It could require more work to search for products as opposed to ensuring the best or preferred products are automatically being used. There is also no way for claims professionals to ensure whether the services are being performed appropriately.
The technology must remove all the guess work, ambiguity and unnecessary work out of the equation, Corr explained. Payers need tools that focus on driving smarter up-front decisions and making the decisions easier through predetermined rules and best practices.
"It's not about more choices. It's about ensuring we make the best choices for all parties and continuously monitoring whether those choices are having a positive impact," he said
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This is where the 3rd issue Corr highlighted -- benchmarking and driving better performance - comes into play "Until we developed our ABM platform, there has never been any ways to accurately measure program performance, or even compare results to overall benchmarks," Corr noted.
In order to manage all the contributors to the growing cost of medical treatments and services, an ABM platform must be more intuitive and able to automatically remove the ambiguities of traditional provider billing processes, he said. At the same time, it also must deliver more detailed information to better define whether the quality of care is optimal. Corr said that products and services that fall within the "ancillary medical services" bucket traditionally have been overlooked because neither the metrics, detailed product level coding or even the understanding of what drives cost were available.
"The goal of using benchmarking is not to find the cheapest ancillary care or DME products, but the right ones," he said. For example, when analyzing electrotherapy products, cost per claim for rental devices can be reduced by upwards of 45 percent if you are able to more effectively control the utilization and duration of these types of products. Typically, accumulated rental charges for electrotherapy devices and supplies can grow undetected because the payer doesn't have a way to identify what the appropriate duration should be, nor is anyone alerted when it should be stopped.
"If you want to manage scenarios like these more effectively, you have to ensure all aspects of the program are being monitored and measured through effective benchmarking," Corr said. "Plus, when there is visibility and understanding about this oversight, everyone has the incentive to do a better job."
(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®
on behalf of our marketing partner. Additional Insights can be found on our Web site at www.riskandinsurance.com.)
November 1, 2012
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