In the past couple of years, the pharmacy piece of workers' comp medical management has gotten a lot of attention, and deservedly so. But there is another factor in the workers' compensation medical spend equation that is not as well known or managed, and history is teaching us that relying on traditional cost management approaches hasn't been effective. Especially when considering less visible areas such as ancillary medical services where the costs have gone unchecked. And the challenges in this area keep on growing.
Many of the medical complexities facing workers' compensation stem from delays in identifying when treatments and costs are going off course. It's been proven that the earlier an intervention occurs, and treatments are managed, the more likely it is that the outcome can be controlled.
This is also true for older claims that drive the majority of medical costs for most payers. These costs include ancillary services such as Durable Medical Equipment (DME), home health, implants, orthotics, translation services, transportation and many others, which historically haven't been managed aggressively. Yet, according to a January 2013 report published by the National Council on Compensation Insurance, these services comprise more than 25 percent of the total workers' comp medical spend for the most costly legacy claims (between 20 and 30 years).
In 2007, Healthesystems released a revolutionary Ancillary Benefits Management (ABM) program to address these challenges. The results of the ABM program have been significant.
According to Daryl Corr, president of Healthesystems, "While the program savings have been great, identifying the deficiencies and how many savings opportunities were being missed has been equally impressive." Three of the critical shortcomings are:
1.Transparency (visibility) and efficiency
3.Performance monitoring and analysis
Transparency (Visibility) & Efficiency
Payers usually rely on retrospective bill review to manage ancillary services. But, normally there isn't a way to validate whether the price of the services quoted during the referral match what is actually billed. Couple this with the fact that services are billed using an HCPCS structure that has a wide range of price and product variations for each code.
"Relying on HCPCS codes doesn't provide the necessary product level price and quality information, so we developed a proprietary master product coding system detailing over 90,000 different products and services," stated Corr. And the system also eliminates the problem of miscellaneous codes. For example, approximately 20 percent of all DME spend uses miscellaneous HCPCS codes such as E1399. Corr emphasized, "It's not about driving the cheapest product. The focus is on ensuring injured workers are receiving the most appropriate treatments and services to increase the quality of care, while incorporating cost controls."
Another focus of ABM is to be entirely prospective. Similar to pharmacy POS transactions, all adjudication edits are done up-front before services are provided, while simultaneously incorporating real-time prior authorizations based upon clinical rules and proprietary edits. This significantly increases program savings while eliminating all the retrospective inefficiencies. "In a retrospective environment, it's not uncommon for over 30 percent of the ancillary bill volume to come from resubmitted provider bills," stated Corr. "We have been able to improve it to less than 1 percent."
Utilization is a big driver for workers' comp medical costs. A common DME utilization challenge occurs with electrotherapy treatments (e.g., a TENS unit, supplies, etc.). Costs for rental units are comparatively less expensive upfront, unless therapy continues over an extended period. This scenario, combined with auto shipping of supplies, isn't monitored very well in a retrospective environment. Corr explained, "We are prospectively applying clinical and utilization rules before the products are delivered, as a result we have been able to reduce the average cost per claim for electrotherapy and supplies by as much as 80 percent compared to the average charged amount out of program." This is just one example, and according to Corr, the opportunities are significant in many other high-utilization areas such as home health and transportation.
Performance Monitoring and Analysis
Due to all the disparate data and processes involving multiple vendors, most traditional ancillary programs are more of an administrative burden, versus true benefits management focused on continuous quality improvement. Using a centralized prospective platform for managing all services, the ABM program has changed this paradigm.
Advanced analytics are also used to continually monitor and measure program results. All connected partners managed through the program are measured and scored on their performance, fostering an environment that promotes excellence.
The success of this new approach is a combination of many items. Overcoming the challenges in workers' comp requires constant innovation and flexibility. "The key," explained Corr, "is to have the ability to make changes as you go based on the data and results. And, based upon the ABM program's success, change has resulted in reversing the cost curve."
(The above piece is part of our continuing Perspectives series designed to highlight key products and services to our readers. This paid-for Perspective was written and edited by Risk & Insurance®
on behalf of our marketing partner. Additional Perspectives can be found on our Web site at www.riskandinsurance.com/.)
April 12, 2013
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