How to Gain the Competitive Advantage in WC Managed Care

by Karen Wolfe

FAQ

A frequently asked question is, how can the value of Workers’ Comp managed care programs be proven? That the question is asked at all is a very good sign for the industry. Value has been ignored for far too long. However, people are less willing to accept assumptions and sales claims of savings as proof of value. The best example of value in managed care measured by assumption and sales claims is in medical networks.

PPO discounts

Medical Preferred Provider Organizations (PPO’s) emerged in Workers’ Comp about twenty-five years ago, mimicking PPO networks in group health plans. Methods of network development were similar to those in general health—sign up doctors and facilities. The deal was, in exchange for being a part of the network, thereby enjoying the marketing benefit of automatically bringing in new business (patients), the provider would accept a discount on their fees for their medical services. The gain for payers, the purchasers of PPO services, was the discount on medical fees. The benefit for networks is a cut of the discount and a very profitable business. But the intrinsic value of networks themselves remains obscure.

The spoof of proof

Unlike PPO’s in general health where the insurance plan defines the rates and what services are reimbursable; Workers’ Comp offers no such restraint. The conditions are set for unbridled medical cost escalation through increased numbers and duration of services. Discounts are proclaimed for each of those services while value received from services, is ignored. However, if people no longer believe in discounts, networks will need a measure of value to gain the competitive advantage.

The question behind the question

The real question behind the frequently asked question (FAQ) of how to prove value is how to gain the competitive advantage. Organizations want to know how to prove their managed care programs save money or generate better outcomes. In other words, they want to show they are better than their competitors. If they can demonstrate that kind of value, they will gain the competitive advantage.

Michael Porter, creator and leader of the Institute for Strategy and Competitiveness at the Harvard Business School has spent his career studying and writing about competitive advantage in all kinds of organizations.[1] He says the competitive advantage is gained by creating and sustaining superior performance.

Positioned for advantage

Managed care programs in Workers’ Comp are positioned to gain the competitive advantage, primarily because it is still a nearly deserted space. Most organizations are still in the FAQ stage. Networks will have great difficulty shifting to a value proposition because they will only reluctantly change their funding methodology.

Network value

The way for networks to create their competitive advantage is to analyze the data to evaluate provider performance. Rather than including every provider, only the best practice providers for Workers’ Comp, based on analysis of the data, will be included. The added challenge for networks is that payers and self-insured, self-administered employers can do this on their own. Moreover, the end savings with a best practice provider can easily outweighs discounts.
 

NCM—mysticism and skepticism

Nurse case management (NCM) has been widely implemented in Workers’ Comp, and at the same time, underutilized and misunderstood. Mysticism and skepticism  plague NCM programs.  The cause is its vague processes, procedures, and reporting.

Gaining the competitive advantage by creating and sustaining superior performance is well within the reach of nurse case management programs, but they will need to step up to superior performance by applying standardized systems and procedures.

Standardize and quantify the process

Nurse Case Management organizations have allowed their product to be defined, manufactured, and delivered by individual nurses, so the product, even with an organization varies widely. Standardized processes are rare.  Even though nurses might be certified in NCM, it is the organization that should establish measurable standards of performance and insure they are followed..

Organizational standards include specified initiatives taken for defined indicators in claims. As a beginning, objective indicators that trigger referral to NCM should be automated through systems to guarantee quality and consistency.

Superior performance

Once the referral is made to NCM, standardized procedures should be followed by individual nurses and the organization. Clients of the organization can be informed of the standards and procedures in advance and in process. In place of mysticism and skepticism, objective statements of goals and intervention tactics are clear.

Calculating savings (value)

Calculating savings is often tricky because it is necessarily based on what might have been had nurse case management initiatives not been applied. Some answers to that question can be found in a former MedMetrics article, “How to Measure WhatMight Have Been”. Needless to say, calculating savings in claims is best achieved when comparing apples to apples, when the conditions triggering nurse case management and the actions taken are consistent.

As Porter says, the competitive advantage is gained through creating and sustaining superior performance. Superior performance in NCM is creating objective standards and following them consistently. Automating and reporting superior performance seals the deal.

MedMetrics specializes in Workers’ Comp analytics and offers online “apps” that link analytics to operations, making them actionable. They strengthen and maximize  medical cost containment initiatives. Visit MedMetrics to learn more or contact  karenwolfe@medmetrics.org to learn how MedMetrics will help your organization gain the competitive advantage.

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[1] http://www.isc.hbs.edu/

Repost: You Might Be in the Medical Business Now

By Karen Wolfe

The well-known Workers’ Comp sage, Joe Paduda, published an article today for WorkCompWire entitled, “What Business are You In?” Paduda asserts that leaders in Worker’s Comp industry are misguided regarding what business they are actually in. He says they are in the medical business. The following article was posted by MedMetrics January 8, 2013 and is republished here to underscore Paduda’s point.

In Workers’ Compensation, direct medical costs now amount to 60% of claim costs. For most businesses in most industries, when the bulk of expense dollars shifts significantly, the business process immediately adjusts to target the problem. Not so in Workers’ Comp.

An example is managed care programs in Workers’ Comp having remained essentially unchanged since their inception, now nearly thirty years past. Originally designed to control medical costs (and generate revenue for networks), many managed care programs have fallen short. Some of the original designs were good while others were faulty from the start. That none has evolved, taking advantage of advances in technology, is disheartening.

Retro networks

Most medical provider networks not only have not changed, but have somehow sustained the illusion that they offer value. They report discounts on units of medical services. Shady medical providers respond by ramping up the number of treatment services and the duration of treatment to make up for revenue lost to discounts. Ironically, the result is more discounts reported! No one screams “Foul!” and the elephant in the room smugly sits there.

The bad guys

Industry research tells us less than 4% of the doctors generate over 70% of the costs. Moreover, it is easy to figure out who those people are by analyzing the data, so what keeps organizations from steering away from them? Individuals in the 4% bracket should be identified and claimants directed away from them. Better yet, stop referring to them just because they are in the network (and generating those bogus discounts).

Medical management is complicated

Many payers feel powerless in managing medical costs. Claims adjusters and Workers’ Comp managers may know a lot about work injuries, but they cannot be expected to create system change. Rather than trying to manage doctors, they should simply avoid the bad ones. Even in states where directing care is not allowed, intelligence about provider performance and claim outcomes is useful to inform decisions by claims adjusters, nurse case managers, and injured workers.

Monitor the data

A crescendo of concern about Opioid use and abuse has emerged recently. It’s not the drugs themselves that escalate costs, but the collateral damage they inflict on injured workers. Dependence, addiction, and pain confusion prevent, delay, and complicate recovery. Monitoring the data in real time to discover abuse in the form of repetitive prescriptions can be very effective. Most complex claims develop over time and would be more easily resolved and costs avoided when discovered in earlier stages.

Predictive modeling

Predicting the claims that are likely to become complex is an excellent initiative. Still, monitoring all claims electronically, concurrently, and continuously may be a more practical approach. For instance, an alert is sent when a second or third Opioid bill appears in a claim. Now is the time to intervene, whether the claim was predicted to be costly or not.

Even when a claim is tagged using predictive modeling, the only logical procedure is to monitor that claim from the beginning and intervene as conditions warrant. By the same token, concurrent data monitoring can trigger an alert when something suspicious arises in a claim. All claims can be monitored electronically rather than the few singled out through predictive modeling. It’s a powerful medical management tool and nothing slips between the cracks.

Technology-intensified medical management

Tackling the medical part of the business can be complex and difficult, especially for people not specifically trained in it. However, applying analytics and delivering information appropriately through technology tools is powerful. Deliver the right information to the right person at the right time so that early intervention will impact claim conditions, events, and medical costs more effectively. Well-designed technology will find problems early and inform the appropriate persons, thereby linking analytics to operations and significantly impacting results.

You are in the medical business

Workers’ Comp leaders should recognize they can’t avoid addressing the medical portion of claims. They are are actually in the medical business. It’s time to get serious and implement the expert methodologies available to actualize intended managed care initiatives. Continuing business as usual guarantees continuing high costs and substandard results. Ultimately, it could jeopardize the business itself.

Many organizations do not have the resources to develop the kind of tools briefly described here. Instead, they can purchase them from a third party Workers’ Comp managed care technology company. It is doable, affordable, and effective. Even small organizations can partake in the benefits.

Karen Wolfe is president of MedMetrics which applies analytics and technology to maximize medical management initiatives. Visit MedMetrics to learn about MedMetrics Provider Performance Suite and other “power apps” that link analytics to operations, thereby making them actionable.  For questions, contact karenwolfe@medmetrics.org

 

 

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Tips for Building a Medical Provider “A” Team

by Karen Wolfe

The “noise” in the Workers’ Comp industry about increasing medical costs is not subsiding. If anything, the chatter is swelling into a crescendo and much of it is relevant and important. Recent conferences such as the Workers’ Compensation Research Institute (WCRI) underscored the continuing problem of Opioids. Also of concern at the conference was physician-dispensed drugs.

Studies show when Opioids are prescribed inappropriately and when physicians sell patients medications directly from their offices, claim costs increase and outcomes deteriorate. However, while discussion of the topic increases, new initiatives in the industry designed to target the problem are scarce.

Source of the problem

The source of these two major cost problems is certain treating doctors. Doctors are the ones licensed to prescribe drugs and some are abusive. Probably only a few of the doctors are perpetrators, but the trick is to know in advance which doctors they are. Particularly for organizations that have employees geographically spread, this is a continuing challenge.

Networks are not a safe haven

Payer organizations have been lead to believe their networks are their safe haven. If an injured worker is sent to a network provider, a discount on medical services can be assured. Unfortunately, networks are known to contract with every physician and ancillary provider alive, without consideration of the provider’s Workers’ Comp knowledge, interest, or medical integrity. Nor are quality, overall cost, and outcomes considered.

Networks do not vet physician performance. They allege savings based on discounts off medical bills, but the number of bills is not measured. Most networks have not stepped up to apply analytics to provider performance so payers must look elsewhere.

Networks lack necessary data

The only practical way to evaluate provider performance in order to select the best is to analyze the data. The problem for networks is they do not have the scope of data necessary to fairly evaluate performance. They receive medical bills, discount them, take a cut, and pass them back to the payer. But medical bills alone are not adequate for evaluating provider performance.

Data from multiple sources is needed

To understand a provider’s performance, claims level data is also essential. It is needed to evaluate the uniquely Workers’ Comp nuances of return to work, indemnity costs, legal involvement, claim duration, timing, and other key factors.

Opioid data, another source

In the case of Opioids, the best source of data for evaluation is from the Pharmacy Benefit Management program (PBM). The PBM data set contains the detail of what drug was prescribed and when, who prescribed the drug, and where it was filled. However, Indicators of physician dispensing will not be found in PBM data.

Physician dispensing data

Physician dispensing will appear as an item on a normal bill from the treating doctor. The degree to which it is camouflaged will vary and it may or may not be noted by the bill review system. Many bills are summarized by the time they reach the claims adjuster, so adjusters cannot discern which bills are physician-dispensed drugs. Analysis of the data is the best approach, not with the goal of avoiding payment, but to avoid the physician altogether.

Networks are a platform for analysis

Payer organizations should use their network providers as a platform for selecting their A Team. By analyzing the data, the best practice providers will surface and injured workers can be directed to them. Unfortunately, most organizations do not have the necessary resources to accomplish that task.

The solution

The best solution is to invite a third party that specializes in analyzing Workers’ Comp data and identifying the best practice medical providers in your data. Avoiding doctors that prescribe Opioids and those that dispense medications from their offices will save thousands of dollars on any given claim—more than enough for ROI on the third party service. Savings can be measured in reduced claim costs and far better outcomes compared to claims where the perpetrators of these abuses were involved. Identifying the best medical providers and directing injured workers to them are powerfully effective cost containment initiatives.

Karen Wolfe is president of MedMetrics which specializes in medical provider performance analytics with easy user search tools. We analyze your data for you to score providers based on multiple indicators. Visit MedMetrics to learn about MedMetrics Provider Performance Suite of information services, including detailed Provider Performance Analysis and Master Provider Index, a quick search for best practice providers by specialty and geo-zip. For questions, contact karenwolfe@medmetrics.org.