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The attendee explained that these firms were doing deals to address what he said is the current scarcity of medical expertise in claims organizations. "Smart people see the opportunity created by this situation, and are moving quickly to position themselves to profit from others' myopia."

As Joseph Paduda, principal of Health Strategy Associates, further explained in his recent ManagedCareMatters blog, workers' comp is "an industry where claims does not adequately consider medical" despite the fact that medical costs comprise more than half the average claim cost. But Paduda and other workers' comp experts say this need not be the case. Effective use of technology, combined with medical expertise intimately involved in the claims handling process would help rein in spiraling medical cost leakage.

Integration/automation. Much of the cost leakage in medical can be contained through the integration of bill review and utilization review systems, the two say. Done correctly, integration allows important information to be immediately communicated.

"If the treatment guidelines say you can do 11 sessions [of a particular medical procedure] but through the initial utilization review process it is agreed that only six will be necessary for "this" claim and this fact is not recorded and shared in an instruction file, then if 11 sessions are performed the bill review system -- having no instruction otherwise -- will process all 11 as allowed for," Blunt said. As he explains, it's critical that all communication about a claim is shared among the bill review and utilization review parties from the start.

Somewhat surprisingly, executives of insurers, third-party administrators, large employers, and managed care firms by and large believe their systems are integrated, according to a recent survey. The survey of two dozen workers' comp decision-makers showed a large discrepancy between the perceptions of executives and front-line claims managers about integrating utilization review with other medical management systems.

One reason may be their definitions of the word "integrated." "Asked how are they integrated, some say 'electronically.' Asked how, they say 'well, because when I do utilization review I send them an email.' OK, if you say that's electronically integrated that's fine, but it's not," Paduda said. "My definition would be an automatic electronic feed sent to the bill review system which is indexed by claim number for a specific claims process, a specific provider, and the system is 'smart' enough to figure out this is a procedure that came in and it is approved so I don't have to look at it."

Medical vs. indemnity. Paduda said another reason for the disconnect among executives and front-line managers goes to the heart of why medical costs continue to increase despite programs to contain them. Those running the departments generally don't "get" medical.

"The problem is that people who run workers' comp payers and to a large extent risk managers grew up in the industry at a time when medical was not that important. Therefore, culturally their orientation is all around indemnity management, litigation management, underwriting," he said. "As a result of that, you have attempts to manage medical or 'medical management programs' that are nothing more than financial vehicles."

For example, he said medical provider networks are evaluated from a financial rather than a quality standpoint. The way they assess networks is based on network penetration and savings. Those are dollar figures not outcome figures, he said. "They approach medical as if it's a line item instead of an outcome, a result."

Focusing more on the quality rather than discounts of medical provider networks could go a long way toward better outcomes for all, many experts say. In fact, a common theme among speakers at the last two National Workers' Compensation and Disability ConferenceŽ & Expo has been the idea that improved quality of medical care leads to better care for injured workers, gets them back on the job faster, and results in overall lower costs for the workers' comp system.

Nevertheless, "I'd guess 90 percent plus of [medical provider] network arrangements are based on this percentage-of-savings basis," Paduda said. "What's happened is these companies are equating savings on a per bill basis ... judging their ability to manage medical by how many dollars they can save, and that's just wrong. It all gets back to those in the management of the organization don't understand fundamentally what it is they should be managing and because of that they are managing to metrix that are counterproductive."

Read more at the WorkersComp Forum homepage.

January 7, 2013

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