Study Supports Benefits of Evidence-Based Medicine
Workers’ comp claims that follow evidence-based medicine guidelines have shorter durations and lower medical costs, according to a new study. The research suggests significantly improved outcomes and cost savings can result when medical providers follow recommendations based on peer-reviewed evidence in workers’ compensation treatment guidelines.
While nearly all jurisdictions either have or are considering the adoption of evidence-based medicine guidelines in their workers’ comp systems, there is almost no published scientific evidence confirming their efficacy or mechanism for improvements. But a team from a workers’ comp insurance carrier and Johns Hopkins University School of Medicine have produced what they believe is the first scientific proof that consistently applied treatment guidelines are effective in treating injured workers.
“We set out to prove or disprove empirically that adherence to EBM guidelines was impactful,” said Jack Tower, senior data scientist at the Accident Fund Holdings Medical Center of Excellence. “We were able to do that.”
The researchers developed a methodology to measure adherence to the Official Disability Guidelines from the Work Loss Data Institute and used an adherence score to compare the outcomes for different case mix adjusted claims populations. They found that claims in which there was at least a 50 percent adherence to the guidelines had 13.2 percent shorter durations and 37.9 percent lower medical costs.
“That kind of gives a strong impetus to implement new medical management strategies based on the results,” Tower said. “Carriers and the work comp industry could benefit from developing programs that embrace the concepts behind EBM.”
The idea of evidence-based medicine is to improve the medical decision-making process by emphasizing the use of scientific research and medical consensus. While it has been around for the last several decades, evidence-based medicine has only recently become widespread in the workers’ comp system.
“The application of evidence-based medicine in workers’ comp is much different from the application of evidence-based medicine in the group health world,” said Jeffrey Austin White, director of Innovation for Accident Fund. “In group health the evidence-based medicine guidelines have been scrutinized by the medical professionals as they are limited in scope and typically used to control cost in a hospital setting by limiting reimbursement rates.”
“This study provides a mechanism for evaluating an EBM guideline and can be used to identify how they might be improved in the future.” — Jeffrey Austin White, director of innovation, Accident Fund Holdings
However, White argues that the workers’ compensation guidelines are much more focused and comprehensive. “Evidence-based medicine [in workers’ comp] encompasses tens of millions of claims having similar incoming diagnoses. The guidelines provide outcome expectations at the diagnosis and treatment level for the majority of workplace injuries,” White explained. “When the diagnosis is made, the evidence-based medicine guidelines define how often a treatment is administered, along with the expected cost and time off from work. It’s a much different way to apply evidence-based medicine than is typically done in the group health setting.”
In addition to the Official Disability Guidelines, the American College of Occupational and Environmental Medicine has also created evidence-based medicine guidelines. A majority of states have adopted or are considering adopting either of the two national guidelines, a combination of the two, or homegrown guidelines that are state-specific to improve consensus around the definition of “necessary and appropriate” treatments for injured workers.
But “there’s a paucity of research around evidence-based medicine and best practice protocols,” said Dr. Dan Hunt, corporate medical director of Accident Fund. “We wanted to use our research to come up with hard facts — things that are true — to help improve the care for injured workers whether it’s Official Disability Guidelines, ACOEM, or another to say ‘here’s objective research that shows these guidelines work.’”
The researchers wanted to show whether and to what extent evidence-based medicine works specifically in the workers’ comp population. “There is a lot of literature that suggests the correct ways to do things medically but many times they are not really proven from an outcomes point of view,” said Dr. Edward Bernacki, professor of medicine and director of the division of occupational medicine at the Johns Hopkins University School of Medicine. “The medical care may be better, but does it really affect costs and return to work?”
Previous research from Accident Fund in conjunction with Johns Hopkins has highlighted some of the reasons for the increasing use of opioids in the workers’ comp system. One study, for example showed the use of opioids was an independent predictor of catastrophic claims costs while another identified physician dispensing as a driver of the increased use and costs.
“We found that physicians were contributing to [the opioid problem] and asked ourselves ‘Why?’ Our hypothesis was that providers were not using guidelines to help make administration decisions,” White said. “We thought by developing an algorithm or methodology to analyze a historical cohort of claims that we might be able to see a difference in outcomes between case mix adjusted claims that had various degrees of compliance with the guidelines.”
The idea of the study was to develop a technique for testing the safety and efficacy of an evidence-based medicine guideline rather than to drive public policy decisions on treatment practices.
It’s one of those situations where everyone wins — the employee returns to work and medical costs are constrained. To me, it’s a win-win.” — Dr. Edward Bernacki, professor of medicine and director of the division of occupational medicine, Johns Hopkins University School of Medicine
“If a state mandates the use of evidence-based medicine guidelines for the treatment of injured workers we are legally obligated to use them. If there are no mandated legislative guidelines, we are inclined to promote prospective guidelines that have been shown to reduce system costs and positively impact injured worker outcomes,” White said. “It’s important for us to know which guidelines work and why. This study provides a mechanism for evaluating an EBM guideline and can be used to identify how they might be improved in the future.”
Measuring Evidence-Based Medicine
The team developed two separate analytical techniques; one to stratify each claim for medical complexity and another to determine the adherence to the Official Disability Guidelines. The claims were divided into 10 levels of medical complexity and scored based on adherence.
“The number one challenge when doing claims research is being able to group claims into like claims,” White explained. “You don’t want to compare a claim with a broken finger to a claim with head trauma.”
The group started with non-catastrophic, indemnity claims that spanned the years 2008 to 2012 of the insurer’s data. They considered open and closed claims using a two-year development cutoff.
The researchers developed a compliance score to determine adherence to the Official Disability Guidelines. The score assigns a quantitative value to the claim indicating approximately how many of the treatments were consistent with the recommendations from the guidelines.
They case mix adjusted the claims and compared those with greater than a 50 percent adherence to evidence-based medicine guidelines to those with less than 50 percent adherence for the differences in claim durations and medical costs incurred. Using data from Official Disability Guidelines, the researchers identified the adherence of every procedure given a specific diagnosis for each claim based on the following four codes:
Green flags in the Official Disability Guidelines indicate the procedure is recommended based on prevalence, medical consensus, and historical claim outcomes.
Yellow flags indicate the procedure is a common treatment for that diagnosis and should be allowed on a limited basis with a restriction on the number of times it should be performed.
Red flags denote low prevalence in workers’ comp and that the treatment is not necessarily indicated based on current scientific research, i.e., recommendation is to review.
Black flags indicate inappropriate care and possibly denial of service.
“For every diagnosis and treatment, we label it with the corresponding colors; then we determine an adherence score at the claim level,” White said. “For a given claim, you can consider the cumulative number of green, yellow, red and black flags, and you can devise a score that indicates the level of compliance which can be compared against like claims.”
Based on the scores, the claims were separated. Those with mainly green and yellow flags, for example, were deemed as fairly compliant with the guidelines while those with many black flags were noncompliant.
“If you break the claims into two buckets, you can compare outcomes of the compliant group with the noncompliant group,” White said. “So for two broken finger injuries where one received compliant and the other noncompliant care, you can see how they differ in duration and medical cost.”
The average for all levels of medical complexity showed claims in the low compliance group had a 13.2 percent increase in claim duration and a 37.9 percent increase in medical costs compared to the high compliance group, the study found.
The numbers increased as the medical complexity of a claim increased. In looking at the top 10 percent of claims for medical complexity, there was a difference in claim duration of 18 percent and increased medical costs of 38 percent, between the low and high compliance groups.
The researchers also found there were more black flag procedures in the low compliance group — 3.5 times the number in the high compliance group.
“I think our research in essence provides evidence that if you do employ these guidelines the outcomes are better,” Johns Hopkins’ Bernacki said. “This is systematically over time that people return to work faster, for the insurers costs are a little lower, and for folks employing them the premium costs will be lower, so the cost of doing business will be lower. I think it’s one of those situations where everyone wins — the employee returns to work and medical costs are constrained. To me, it’s a win-win.”
“It’s awfully exciting to be a part of a landmark study. No one else has done this before,” Hunt said. “The ability to develop an adherence process for claims management will have a lot of applications across the whole health care spectrum.”
Hunt, who called the study a “gargantuan undertaking,” hopes it will lead to additional studies that drill down more into the findings. “Age, jurisdictional differences — there are a whole host of really interesting things we can do now,” he said. “You’re going to see additional papers once this method is established.”
For now, the authors hope the findings will help spur action in states that currently do not use evidence-based medicine guidelines in their workers’ comp systems. With properly worded legislation and effective dispute resolution processes in place, evidence-based medicine guidelines should offer better outcomes for everyone.
They hope workers’ comp practitioners will begin using the methodology they’ve created to further refine evidence-based medicine guidelines. In fact, they have developed a 10-step process for companies to replicate the results.
“It’s like a recipe. With evidence-based medicine guidelines, you can quantify exactly how much of each ingredient you put in and therefore enhance your ability to refine, measure, and improve your results over time. At least that is what EBM tries to do,” White said. “It’s a recipe that applies to, say 80 percent of the population most of the time. The recipe should reduce system costs and facilitate cooperation from both sides of the business — payers and providers alike.”
Reaping the Rewards of Benefits Integration
Discussions at this week’s Disability Management Employer Coalition conference held in New Orleans included measures for keeping employees healthy, injury free, and on the job.
Conference participants also reviewed risk reduction, ease of administration, and cost saving advantages obtained by integrating absence management and disability benefit programs such as workers’ compensation, the Family and Medical Leave Act, and short-term disability offerings.
Proponents say integration makes sense because of overlaps among the range of programs under which workers can be absent and the cost to organizations regardless of the reasons for missed work days.
They also point to potential compliance risks when the administration of programs is segregated and improperly aligned.
“There is hardly any situation where there is just one perfect claim going on,” said Karen English, a partner at Spring Consulting Group. “If someone is [out] on workers’ comp, they are probably on FMLA [and] STD. Then we have all our concurrent leaves going on. So keeping workers’ comp to the side can actually be viewed as a risk to your organization.”
Failing to integrate can lead to lost opportunities, such as the ability to appropriately minimize the amount of time employees spend away from the job by concurrently running FMLA leave with a workers’ compensation absence.
“Just as an example, if you have a workers’ comp claim and that person is out eight weeks for a surgery, if you don’t run it concurrently, you are allowing that employee to come back from that workers’ comp claim and then go out for 12 additional weeks of FMLA time,” said Trina Mouton, manager of disability management and wellness at CenterPoint Energy.
“So it is really advisable to run those concurrently,” Mouton continued. CenterPoint experiences a 2-to-1 return on investment from its efforts, she added.
Employers speaking at the conference cited their gains from integrating programs, although their results are also influenced by several efforts including implementing return-to-work programs.
“We compare ourselves to the hospital industry in terms of [employee restricted-duty days] and lost time,” said Jane Ryan, return to work recovery and claims services at Mayo Clinic. “Our lost time rates are actually lower than the national industry [average] and I think that speaks to the ability we have to keep people at work or return to work early.”
“There is not one silver bullet or only one way to integrate benefits delivery. Every company is so different.” — Karen English, partner, Spring Consulting Group
The paths that employers take to integration and the programs they integrate vary considerably depending on each company’s needs, speakers said.
“There is not one silver bullet or only one way” to integrate benefits delivery, English said. “Every company is so different.”
English will join DMEC’s CEO, Terri Rhodes, in a discussion on how to integrate workers’ comp, disability, and leave programs on Dec. 1, at the National Workers’ Compensation and Disability Conference® & Expo that will also take place in New Orleans.
At the DMEC conference held this week, meanwhile, other discussion topics focused on specific illnesses and corresponding wellness efforts for keeping employees healthy and productive.
Diabetes, for example, impacts employers’ profitability by driving medical costs that are 2.3 times greater than for people without the illness as well as by increasing employee absences and work disruptions.
“There is no question that diabetes affects the bottom line,” said Matthew Ceurvels, director of disability products at Sun Life Financial. “Productivity can be impacted by presenteeism, when an employee is working sub-optimally, by ad-hoc absences, and by long-term absences when employees go out on a disability claim.”
More employer disease management programs focus on diabetes than on other common illnesses like asthma or heart disease, Ceurvels said.
Diabetes care, for example, is a key component of a wellness program CNIC Health Solutions Inc. offers its workers, said Linda Benedict, human resources manager for the third party administrator of employee benefit plans.
CNIC Health Solutions’ employee wellness program’s overall offerings include a recreation center, free access to a CrossFit trainer, encouragement to engage in desk exercises, and online health assessments tied to biometric screenings that provide employees with private information about their individual risk factors.
As part of its health plan, the company also provides free monitoring and testing supplies for diabetes sufferers along with a third-party tracking service for the diabetes testing results.
“We also offer a discount on what the employee pays for their portion of health insurance premiums,” Benedict said. “That is one of the biggest components of our wellness program.”
The discount works as an incentive, providing employees with a 25 percent health care premium reduction, first for participating in the biometric screening, and then as they maintain a certain screening result level.
That led to a 23 percent improvement in employee health risk over one year, as measured by the biometric screenings.
The wellness efforts have improved employee engagement and morale, lowered workers’ comp losses and reduced absenteeism, she said.
“One key metric for us is that in the last year and a half, we have not had one FMLA leave,” Benedict said. “It has really limited FMLA leave for our employees because they are more engaged. They are taking care and looking at their metrics, and sharing them with their physicians. It is really starting to pay off.”
Buyers Beware: General Liability Outlook May be Shifting
The soothing drumbeat of “excess capital” and “soft market” to describe the general liability (GL) market is a familiar sound for brokers and buyers. Emerging GL trends, however, suggest the calm may not last.
Increasing severity of GL claims may hit some sectors like a light rain at first, if they have not already, but they could quickly feel like a pelting thunderstorm in others. A number of factors could contribute to the potential jump in GL prices for certain industry segments or exposures, possibly creating “micro” or niche hard markets in the short-term, and maybe even turning the broader market over the longer-term.
“There are trends we’re seeing that will play out slowly. Industries that carry more general liability exposure will and have been hit first and hardest, but it won’t apply across the board initially,” said David Perez, Senior Vice President and Chief Underwriting Officer, for Liberty Mutual Insurance’s National Insurance Specialty operation. “There is ample capital in the market today, which allows a poor performing account to move its policy frequently from carrier to carrier. Poorer performing classes, however, will likely face increased pricing for GL policies and a reduction in capacity.”
The good news for buyers is that they can take action today to lessen the impact these trends and the evolving market may have on their GL programs.
David Perez on the state of the GL market.
Medical and Litigation Trends Drive Severity
One factor increasing claim severity is the rising cost of health care, driven both by greater demand and by medical inflation that is growing faster than the Consumer Price index.
The impact of rising medical costs on commercial auto is well-known. Businesses with heavy transportation exposures are finding it more difficult to obtain coverage, or are paying more for it.
That same trend will impact general liability, just on a slower and more fragmented basis.
“In light of these trends, brokers and buyers should seek to understand how effectively their current or potential insurers defend GL claims, particular in using evidence-based medicine to assess and value the medical portion of a claim, and how they can provide necessary care to claimants while still helping clients control their total cost of risk.”
— David Perez, Senior Vice President & Chief Underwriting Officer, National Insurance Specialty, Liberty Mutual Insurance
“It takes longer for medical inflation to register through the tort system in general liability than it does in auto liability (AL) because auto claims are generally resolved more quickly,” Perez said. “But the same factors affecting severity in AL also exist in GL and as a result, it’s foreseeable that we will not only see similar severity trends in GL, but they may in fact be worse than we’ve seen in commercial auto.”
Industries with greater exposure to severity in general liability claims should be the first wave of companies to notice the impact of medical inflation.
“Medical inflation will drive up costs across the board, but sectors like construction and product manufacturing have a higher relative exposure for personal injury lawsuits.”
The impact of medical inflation on the GL market.
Beyond medical inflation, two litigation trends are increasing GL damages. First, plaintiffs’ lawyers are seeking to migrate the use of life care plans—traditionally employed only for truly catastrophic injuries—to more routine claims. Perez recalled one claimant with a broken thumb and torn ligaments who sought as much as $1 million in care for the injury for the rest of his life.
Second, the number of allegations of traumatic brain injuries (TBI) in GL claims is growing. It can be difficult to predict TBI outcomes initially and poor outcomes can be expensive and long tailed.
“In light of these trends, brokers and buyers should seek to understand how effectively their current or potential insurers defend GL claims, particular in using evidence-based medicine to assess and value the medical portion of a claim, and how they can provide necessary care to claimants while still helping clients control their total cost of risk,” notes Perez.
Changing Legal Landscape
Medical inflation and litigation trends are not the only issues impacting general liability.
Unanticipated changes in court interpretations of policy language can throw unexpected pressure on GL pricing and capacity.
Courts sometimes issue rulings interpreting policy language in a manner that expands coverage well beyond the underwriter’s original intent. Such opinions may sometimes have a retroactive effect, resulting in an immediate impact on not only open, but also closed cases in some circumstances.
Shifts in the Marketplace
In addition to facing price increases, GL brokers and buyers will be challenged by slightly shrinking capacity due to consolidation and repositioning among carriers in the marketplace. “Some major carriers have scaled back their GL writing, resulting in a migration of experienced senior management. As these executives leave, they take their GL expertise and relationships with them, resulting in fewer market leaders and less innovation,” Perez said.
“Additionally, there are new carriers coming into the business that may not have the historical GL loss data to proactively identify trends or the financial strength and experience to effectively service their GL customers and brokers. Both trends make it important for brokers and buyers to work with an insurer that is committed to the GL market and has the understanding and resources to help better manage risks impacting customers.”
Last year saw a high level of mergers and acquisitions in the insurance industry. Buyers should take advantage of that disruption to re-evaluate their needs and whether their insurers are meeting them. Or better yet, anticipating them.
What’s a Buyer to Do?
Buyers—and their brokers— should look to partner with insurers that can spot emerging trends and offer creative solutions to address them proactively.
What should buyers and brokers do, given the trends facing the GL market?
“Brokers and buyers should value insurers that have not only durability and a long history in the general liability business, but also a strong risk management infrastructure,” Perez said. “Your insurer should be able to help you mitigate your specific risks, and complement that with coverage that works for you.”
Beyond robust GL claims and legal management, Liberty Mutual also provides access to one of the insurance industry’s largest risk control departments to help improve safety and mitigate both claim frequency and severity.
In addition, notes Perez, “Even if a company has a less than optimal loss history in general liability, there can be options to provide adequate coverage for that company. The key is to partner with an insurer that has the best-in-class expertise, creativity, and flexibility to make it happen.”
By working closely with their insurers to understand trends and their potential impacts, brokers and buyers can better prepare for the possible GL storm on the horizon.
To learn more about Liberty Mutual’s general liability offering, visit https://business.libertymutualgroup.com/business-insurance/coverages/general-liability-insurance-policy.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty Mutual Insurance. The editorial staff of Risk & Insurance had no role in its preparation.