WC Medical Cost Control Made Simple and Affordable Through Technology

A White Paper
by Karen Wolfe

Everyone talks about it, but few are taking significant steps to effectively control medical costs in Workers’ Comp. Solutions are available that can significantly impact medical costs, but too few are implementing them. Moreover, the solutions are easy and affordable, leaving payers with the question, “How can continuing business as usual be justified”?

Technology as a cost management tool
The elements of success are already in place. Every payer organization, has data and an IT (Information Technology) department, either internally or through a third party (TPA). Now they need to advance beyond gathering, storing, and reporting data, to developing new capabilities through technology. The objective is to design technology applications that significantly impact claim costs.

Plain data

In its raw form, the data is not very useful. But when it is subjected to analysis and re-presented to business units in a simple and meaningful way, it delivers valuable claim management intelligence. For example, data can be evaluated through analytics to measure medical provider performance.

Transform data

Medical provider files in claims, bill review, and network systems contain the provider’s name, address, and other demographic information. However, the provider record alone cannot divulge the provider’s impact on claims, including cost, return to work, referral patterns, and other critical factors. But when data from bill review, claims level, utilization review, and pharmacy systems are integrated around a medical provider, the resulting information is exponential.

Measure medical provider performance

Medical provider data integrated across systems offers a platform for powerful analysis. Comparing providers of similar medical specialties treating similar injuries will reveal best patterns of medical care. Analyzing frequency of return to work, indemnity costs, legal involvement, and other factors associated with providers in the data will bring best providers for Workers’ Comp to surface and expose the poor performers and abusers. Workers’ Comp industry research shows avoiding the poorly performing providers results in measureable cost savings every time.

Electronic claims monitoring

Additionally, when data is electronically monitored on a continuous and concurrent basis, it can prompt and guide adjusters and medical managers to take timely and appropriate action. An example is electronically monitoring the data for medical doctors’ prescribing behaviors. Automatic alerts of excessive Opioid prescriptions are sent to appropriate persons who initiate damage control. Lives and dollars are saved.

Computer-intensified medical management

Computer-intensified medical cost management through rules-based data monitoring can be applied to scores of conditions and events in claims that portend risk and cost. Using technology to monitor all claims continuously can even preclude elaborate and expensive methods such as predictive modeling. Claims identified as risky through predictive modeling must be monitored going forward. However, monitoring all claims electronically through specifically designed technology insures that no risky claims are missed, including those identified or not identified through predictive modeling. Electronic data monitoring is the more comprehensive, yet affordable solution.

Maintaining status-quo

The IT tasks required to maintain claims systems and properly handle data are considerable. Therefore, additional IT tasks are not viewed favorably. At the same time, business units compete for IT time and are hesitant to request additional IT resources. Therefore, a simple solution that could save millions may be disregarded to avoid internal disruption. Change avoidance guarantees business as usual with no impact on medical costs.

Outsource for repurposed technology

Often the most propitious way to repurpose technology for Workers’ Comp medical cost control is to outsource to Workers’ Comp managed care and technology specialists. To build systems internally that will achieve significant medical cost control can be a daunting and lengthy task. Knowledgeable business unit personnel must translate strategies to IT personnel for design and development. IT personnel must be dedicated to the project and continuing process. Outsourcing is more practical.

Outsourcing extends IT

IT’s role in outsourcing is to transmit data elements in a secure file from each source system. Data integration and mapping is provided by the outsourced company, freeing IT from the burden. Updates to the data are set automatically so IT involvement is minimized. Outsourcing positions IT to oversee the technology project, while extending its capabilities with significantly less time and cost.

Affordable
Outsourcing medical cost management through outsourced technology is simpler, quicker, and much less costly than developing new medical cost management technology internally. Outsourcing technology to target medical costs through analytics and data monitoring is very affordable and offers favorable and timely cost benefits results. Doing nothing cannot be justified.

Karen Wolfe is the President and CEO of MedMetrics®, LLC, an online Workers’ Compensation analytics company. MedMetrics links analytics to operations to make them actionable for medical cost control.

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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2012, a Leap Year—Leap to What?

by Karen Wolfe

Bob Wilson of WorkersCompensation.com wrote this tongue-in-cheek comment regarding technology in the Workers’ Compensation industry in his Top 10 Predictions for 2012 1

“3. Technology will continue its relentless march
The workers’ compensation industry, which prides itself on its use of cutting edge, innovative technologies, will discover that the internet is on the computer now. Some in the industry will launch an aggressive, 10 year implementation plan, or at least put together a feasibility committee, to exploit, or at least study the potential to exploit, this stunning new capability.” 1

We all know technology is hardly embraced by the Workers’ Comp industry. That technology is employed at all is only because it is the easiest and most cost-efficient way to document the claims management process. But to use technology beyond documentation, to actually leverage newer technology to achieve better outcomes, is not the “go to” methodology in Workers’ Compensation.

Change avoidance
It’s human nature to resist and avoid change, especially in the area of technology. Technology is foreign territory and only minimally understood by most people. Business managers are forced to relinquish control of their processes to the technical magicians. When that happens, they cannot monitor or control their projects because they do not have the unique knowledge and skill to stay involved. That is contrary to the nature of business managers, especially when they will be held accountable for the outcome anyway. So many managers simply do not go there.

Avoid pain through outsourcing
Nevertheless, Bob is right about this: the Workers’ Comp industry can embrace the Internet now and in entirely new ways. However, rather than trying to reinvent and develop the solution themselves, they can choose to outsource to those who have already created the solution. Outsourcing to vendors providing Internet-based software (Software as a Service, Saas) technology where design and development are complete is an easy, painless, and affordable leap to technology and to improved results.

Outsourcing avoids the cost of hiring subject experts to plan the new system and technology experts to design technical specifications and develop the new system, both time-consuming and costly efforts. The SaaS outsourcing approach also avoids software installation and maintenance. It maximizes the time-to-benefit opportunity. It is instant-on.

Still, outsourcing can offer even more.

Collaborative applications
Through outsourcing, organization can benefit from comparative studies where their performance is measured anonymously against others. For example, they can access the vendor’s full data set to identify best-in-class providers in a geographic area where their own data is limited.

Chasing technology
Technology continues to advance at an amazingly rapid rate. When organizations choose to build systems internally, they are required to sign up for keeping pace with evolving technology. On the other hand, when they outsource, they shift the updating burden to the vendor.

Not invented here
Traditionally in technology, resistance to outsourcing has rested in what is known as the “not invented here” syndrome. The implication is that if it is not invented within the organization, it won’t fit the needs of the organization and will not be as good. The “not invented here” syndrome (stated or implied) is also a means of resistance by internal IT departments, thereby protecting their own territory.

However, outsourcing is more correctly viewed as an extension of IT, an exponential complement to internal resources. Because the system design, development and implementation and maintenance are inclusive from the vendor, resources for new creative thinking and customization are more readily available. Rather than starting from scratch, jumping on board at the completion stage can be far more rewarding.

Outsourcing, a fait accompli
As the New Year commences, a leap year, organizations can leap to applying technology to maximize results. Workers’ Comp professionals can refute their regressive reputation by leaping directly to outsourced technology, thereby enjoying its benefits of using technology to boost claim cost control and improved outcomes. With outsourcing, improved performance is a fait accompli.


1 From Bob's Cluttered Desk, Bob’s Top 10 Predictions for 2012 30 December, 2011
Robert Wilson is President & CEO of WorkersCompensation.com