For workers' comp practitioners, the findings demonstrate a need to ensure injured workers are sent to medical providers who have the best medical outcomes, which often also means the lowest costs in the end.
"Less than 7 percent of medical providers generate over 70 percent of workers' compensation claim costs," said Karen Wolfe, president/CEO of MedMetrics, a workers' comp analytics firm. "If you carve out that small percentage and make sure you don't send claimants to them, it will make a real impact."
Wolfe's comments followed MedMetrics recent spot check data analysis in three large states. Similar to the previous research in Louisiana, the company found a small percentage of medical providers generated most of the workers' comp costs -- 6.5 percent in California, 6.38 percent in Texas, and 6.6 percent in Florida.
Research from Dr. Edward J. Bernacki, director of the Johns Hopkins University School of Medicine Division of Occupational Medicine, looked at more than 8,000 workers' comp claims over a five-year period. Of the 2,034 physicians involved, the study identified 77 "cost-intensive physicians" who accounted for the vast majority of the costs.
"CIPs treated 16 times more claimants (2.6 claimants per physician versus 47 claimants per physician) and their average claim cost was four times higher than the other physicians," explained Bernacki in a presentation to a recent meeting of the Self Insurance Institute of America. "CIP claims settled in 697 days versus 278 days for other physicians."
Also of note in Bernacki's research was that the major contributor to the difference was minor claims. Where the average claim duration for minor claims was 208 days, the average claim duration for the CIPs was 460 days.
Following the recent SIIA presentation, MedMetrics decided to do some additional research in other states. "What prompted the study was the frequently asked question, 'how do you know the results from Bernacki's Louisiana study can be translated to other states?'" Wolfe said.
Wolfe says her analysis included all medical providers in the workers' comp system in the three states while Bernacki's included only physicians. Nevertheless, the results clearly showed that a handful of medical providers generate the majority of the costs.
"I think it's the 80/20 rule," Wolfe said. "The bad apples cause a lot of damage."
The "bad apples" are not only the highest cost generators in the workers' comp system. According to Wolfe, CIPs were also associated with longer medical treatment durations, longer claim durations, and higher indemnity, as well as medical costs.
What the latest findings should signal, according to Wolfe, is that the idea of discount medical networks clearly needs to change. "We're still using networks as we were 25 years ago; everybody on a panel, they give a discount and isn't that great. Well, it's not," she said. "So what we need to do is look at the data, analyze the data, and determine what are the characteristics and find the good and bad apples through the data ... people shouldn't just accept the network as is. Use the tools that are available."
Wolfe says weeding out the high-cost medical providers involves closely analyzing the data. "Where people start out typically if they want to do analytics is they look at bill review. But that's not going to tell you the whole story," she said. "[It will tell you] what they billed and billed for, but not about the return to work, the indemnity costs, whether there has been legal involvement. You have to integrate the data at the claim level and then analyze it."
Effecting change. Changing the system to focus on medical providers with the best outcomes is no easy task, at least not yet. "Networks are paid by the utilization of the providers in their network and they take a cut off the discount. They would have to restructure their revenue stream, so where is the money going to come from?" Wolfe said. "That's a sticky wicket. They are not going to change something paying them so well."
But some of the blame also falls on employers. "They have not demanded it," Wolfe said. "There's a bit of a groundswell, there is some change starting to happen."
In a blog posting about the recent SIIA meeting, Robert Wilson of Workerscompensation.com said it just has not been a priority area for the industry. "We have assembled massive networks of physicians with an eye largely focused on procedural costs and negotiated discounts," he wrote, "and it appears this practice is costing us money and sacrificing the health of those in our care over the long run."
By Nancy Grover
Read more at the WorkersComp Forum homepage.
August 5, 2013
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