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Workers' compensation executives would do themselves a favor by listening a bit more carefully to their career-long companions: doctors who treat injured workers. In many cases, these doctors are talking more about earning respect than about what they bring home in their pay envelopes.

The not-so-subtle subtext is that improving quality of care--really improving quality--is going to require that workers' compensation executives and doctors who work in that field to do a better job of listening to one another. The conversation could start over the search for medical experts.

At least two managed care companies, Paradigm Managed Services LLC and Best Doctors Inc., recruit nationwide the cream of these experts to consult on and treat complex cases, and the search goes on within individual states as well.

Edward Bernacki, a Johns Hopkins University physician helped launch one of the most ambitious expert networks in the field.

Guided by the idea that doctors want first to practice medicine as best they can, and then think about financial gain, the Louisiana Workers' Compensation Corp. hired Bernacki to build a circle of experts within its larger standard preferred provider organization.

By doing so, Bernacki and LWCC addressed long-festering tensions between doctors and workers' comp insurers over contentious points: less red tape, higher pay and more respect for physicians' time, expertise and professional culture.

This friction isn't new. Carriers and doctors have squabbled over these issues for decades, but now the disputes are more acrimonious. And, in the estimation of doctors, the red tape is lengthening. Yet insurers and doctors are beginning to talk constructively about one thing they can agree on: the value of high-quality care.

As a result, workers' comp professionals need to take a fresh, dispassionate look at what quality of care really entails in the insurer/doctor relationship. An important step in taking quality of care seriously is for a claims-payer to use quality of care as the benchmark when evaluating a network of doctors.

And that's just what LWCC decided to do five years ago, when it built "OMNET Gold," an expert circle within a broader network. LWCC recruited an occupational medicine unit within Johns Hopkins Medical Center to run the development project, with Bernacki at the helm.

In Louisiana, there is no employer/insurer direction of care and OMNET Gold is a network "based primarily on employee incentives to use it," says Bernacki. "Everyone gets lazy if there is no choice," he says.

His team picked doctors one by one, ending up with about 300 physicians. "We went to the occupational medicine physicians, and asked them for specialists with whom they worked--the positives and negatives," he says.

He enticed prospective doctors by telling them that "no one was going to look over your shoulder," and he kept his word. LWCC was good at turning off the utilization review procedures for these doctors, Bernacki says.

Kaiser Permanente, a major healthcare provider in California, has 50 occupational medicine clinics and because of its size, has the power to refuse to agree to discounts. It monitors the performance of its clinicians, and believes that it does not overtreat patients.

In addition, Kaiser welcomes third-party audits of treatment outcomes. "We do a report quality assessment of physicians," says Doug Benner, director of Kaiser's Northern California network of 32 clinics. "We are also now thinking of subscribing with some bill-review software, a proprietary approach--looking at errors, such as upcoding, disallowances and report quality. We also take into account complaints that people have."

RUMBLE IN INDIANA

A large hospital-run chain of occupational medicine clinics in Indiana has engaged workers' comp insurers and preferred provider organizations in a running battle.

On the surface, the struggle between Indianapolis-based Methodist Occupational Health Centers, a part of Clarian Health Partners, is about money. But demand for physician respect is unmistakable. Just listen to Tom Brink, Methodist's president.

In his doggedness to counter the discount PPOs, Brink is rare for his outspokenness. "Why agree to discounts without getting anything in return?" he says.

Indiana, being an employer-choice state, is an ideal setting for a PPO to help steer patients to network doctors. But Brink notes, somewhat caustically, that he is not aware of Clarian's clinics ever benefiting from patient steering.

Brink believes that Clarian is vigilant about quality assurance and preventing expensive overtreatment of patients, even going so far as to use an independent quality assessment service to report how his physical therapists perform compared to their peers.

Brink, originally trained at Indiana University as a social worker, subsequently took on a succession of management jobs in medical education, administration and systems consulting to rural health providers in Indiana. When he finally took over the president's job, he spent a year cleaning up such things as billing problems.

"Then I started looking at how the codes were being applied, and I realized that we were giving away huge discounts," he says. He began to work the discounts out of the contracts, knocking annual reimbursements upward by $1 million.

What doctors get paid is the result of a two-step process. First, there is state law or convention. In most states, a formal schedule sets rates either according to a list of prices for each procedure or, more popular in the past decade, a percentage of the prevailing rates for Medicare. For example, a state's rates might be set at 150 percent of Medicare rates.

In some states, either law or convention calls for reimbursement to be set according to "usual and customary" rates charged by doctors. Rates might be set at the 80th percentile of what is considered "usual and customary."

The second step is for a doctor to agree with a PPO to a lower amount based on a discount. For instance, where formal rates are 150 percent of Medicare rate, the doctor may agree to be paid 125 percent of that.

The threat of doctors boycotting the workers' compensation system due to compensation disputes is serious enough that two research teams are looking into it.

Steven Levine and Ronald Kent, both California-based physicians, have surveyed medical practices in 19 states and they've found that boycotting by specialists begins to spread when reimbursement, before any PPO discounts, is set low.

Levine and Kent do not propose a specific breakpoint, but their findings suggest that when rates dip below roughly 150 percent of Medicare, more than half the specialists drop out of treating work injuries.

They caution that, in states where the burden of dealing with workers' compensation regulations are high--which usually means a lot of utilization-review red tape--specialists will demand much more than 150 percent of Medicare.

The National Council for Compensation Insurance suggests that doctors are probably earning what they get from group health insurance contracts when specialist fee schedules are at about 150 percent of Medicare. At that point boycotting should not be a problem, according to the NCCI.

The danger zone for accelerated boycotting varies by state, the researchers agree.

For their part, doctors have to confront the reality that as a group they are poor contract negotiators and in many cases PPOs appear to have induced doctors to sign discount deals that appear to deliver no additional patients.

Little surprise then that some medical practices lose more than $250,000 a year by mismanaging the finances of their workers' comp volume, according to consultants. Much of that loss results from poor fee negotiation, they assert.

DEMOGRAPHICS OF ELITES

So, how many expert doctors are out there?

For Florida alone, probably about 150 to 200 well-spaced occupational medicine clinics are needed if an insurer wants to guarantee prompt access for injured workers.

Roughly 3,000 medical clinics nationwide market their services to treat injured workers' at the moment of injury. Ease of access is paramount--care must be available quickly and it's easy to sign up these clinics as expertise isn't an all-important factor in selection.

But it's another matter with specialists, who may be inclined to boycott the workers' comp system altogether, or limit their acceptance of patients.

In Florida, about 550 hand surgeons performed at least one carpal tunnel procedure on injured workers in 2006, but as few as 100 doctors performed half of these procedures, according to MedMetrics, a clinical analytics firm.

Some elite doctors will be in this grouping, but some will be outside of it. Indeed, some highly valuable hand surgeons may be boycotting the workers' comp system out of frustration over money and red tape.

A truly elite circle of experts for Florida would, in fact, include only about 25 hand surgeons, as these are the doctors other hand surgeons look up to. But 25 surgeons are not enough to do more than a minority of hand procedures and it's precisely these surgeons for whom claims-payers should be assiduous about clearing red tape for and even giving fee concessions to.

Overall, an elite circle of specialists in Florida could number about 300, out of a total population of some 34,000 practicing physicians. It is up to people like Bernacki to find them and bring them into the circle.

How many elite specialists are there nationwide? It depends on how tightly one wants to draw the circle. Arguably, there are less than 10,000; or less than one out of every 100 M.D.s, osteopathic doctors and chiropractors.

What is known is that a very small number of insurers, third-party administrators and their PPOs make a systematic effort to identify and support these elite doctors. Few actually measure doctor performance and fewer still have pay for performance or other incentive programs.

Quality for some PPOs, according to Joe Paduda, principal of the managed-care consulting company Health Strategy Associates, can be reduced to "licensed but not dead."

Karen O'Hara, editor in chief with the National Association of Occupational Health Providers, says that none of the association staff has "seen or heard of any such performance reports being sent directly to an occupational health program by a PPO."

Treatment guidelines for work injuries have, on balance, been good for the medical community, in particular the expert doctor. Guidelines isolate poorly performing clinicians without affecting the daily pattern of care of most providers, and they are authored largely by practicing clinicians.

The American College of Occupational and Environmental Medicine has in recent years issued a set of treatment guidelines and a return-to-work/stay-at-work guide to shortening the path to recovery. In addition, the grassroots "60 Summits" movement, led in part by doctors, promoted tighter links among doctors, employers and insurers.

Low compensation and quality of care may just not mix. If workers' compensation professionals really want quality, they better listen more.

PETER ROUSMANIERE is a Vermont-based columnist for Risk & Insurance®.

March 1, 2008

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