Validation for Making Data a Work-in-Progress Claim Management Tool

by Karen Wolfe

According to a recently published White Paper by LexisNexis®, Data makes all the difference. The article, “More Data, Earlier: The Value of Incorporating Data and Analytics in Claims Handling”, states that carriers can reduce severity payments by up to 25 percent.[1]

The article further states that “PC carriers have implemented real-time data and analytics to enhance risk management, streamline processes and reduce costs. Yet historically within the claims function, data and analytics have mostly been isolated in the special investigative unit (SIU).  

LexisNexis believes that carriers should use data and analytics as an operational tool first, and an investigatory tool second. We conducted a study to investigate the effect of having more data earlier in the claims process and found that claims with more data are resolved faster, with lower overall costs.”

 

The study is about bodily injury claims, not about Workers’ Compensation, but the findings can logically be extrapolated and applied to Workers’ Compensation. Applying data early and throughout the claims process will result in lower costs, efficiency, and improved outcomes.

 

Early data
 

In Worker’ Compensation, having early and comprehensive data is a fait accompli. The First Report of Injury (FROI) from the employer and in many states, the treating physician, launch the data collection process. The claim is set up in the payer’s claim system and continually fed by additional data. Bills from medical providers and others are streamed through bill review systems, then to claims systems. Events such as litigation, court dates, and bills paid are documented in the claims system. Pharmacy is managed by the PBM (Pharmacy Benefit Management), thereby setting up an additional database for the claim. Most also collect utilization review and medical case management data. The question is not the data, but what is done with the data. How can it be applied?

Sitting data

 

Unfortunately, in Workers’ Compensation, voluminous data sets often remain in separate silos. The focus in Workers’ Compensation for the last twenty-five years has been on collecting the data. Now the question is, how to make data an operational tool and achieve the kind of positive results reported in the LexisNexis study. Doing so requires a different approach to data management.

Integrated data

 

Making data a useful work-in-progress tool is a matter of first integrating the data. This is not as difficult as is often portrayed by many IT departments. Nevertheless, the request and funding must come from the business units where data integration is also not usually a priority. Until business managers understand the value of converting data to actionable knowledge, little will be done.

Actualized data
 

To actualize the data for useful application, it must be analyzed and re-presented to the business units in ways that can be easily accessed, understood, and applied. The data is transformed to knowledge, knowledge about conditions in claims, approaching benchmarks, and performance of vendors.

Knowledge is actionable, not the data.

 

Actionable knowledge
 

Actionable knowledge is derived from analysis of the data. To achieve measureable cost savings, continuously monitor the integrated data, analyze it, and re-present it to the business units in the form of understandable knowledge, thereby making it actionable. Individuals can be prompted by the system to take specific actions based on the knowledge, thereby creating a structured and powerful approach to claims management with measurably positive results.

Karen Wolfe is the founder and President of MedMetrics®, LLC, a Workers’ Compensation medical analytics and technology services company. MedMetrics offers online apps that super-charge medical management by linking analytics to operations, thereby making them actionable. karenwolfe@medmetrics.org

---

[1] A.Hassib and T.Fannin. LexisNexis. June, 2014 insurance.sales@lexisnexis.com

 

How to Optimize the Nurse Case Management Advantage, 2nd Edition

by Karen Wolfe

This is an update to an article posted in January, 2013. The response to it was excellent, suggesting the topic is important.

Traditionally in Workers’ Comp, nurse case management (NCM) services have been widely espoused, yet misunderstood and underutilized. The reasons for underutilization are many. Tension between NCM and claims adjusters for claim ownership is one. Even though overburdened, adjusters often overlook the opportunity to refer to NCM.

Also to blame is the NCM process itself. In spite of professional certification for NCM, the process is poorly defined for those outside the nursing profession. Moreover, and more importantly, NCM has difficulty measuring and reporting proof of value.

Underlying issues

Continuing to do business as usual is not acceptable. NCM needs to address several issues to qualify as legitimate value contributors to the claim process. First, they need to articulate their value. To do that, NCM must computerize and standardize its process, measure and report outcomes, just like any other business in today’s world.

Computerize

NCM is last and least to computerize. When a process is poorly understood, funding and designing an effective software system is impossible. Too often, computerization for NCM is relegated to adding nurses’ notes to the claim system. However, such notes cannot be analyzed to measure outcomes based on specific nursing initiatives.

Package through standardization

Packaging a process is the way to standardize it so it can be understood and valued by others. In most situations, an individual NCM interprets the problem or issue, decides on an action, and delivers the response. The organization’s medical management is thereby a subjective, illusive interpretation rather than a definable, quantifiable product.

Granted, the NCM is a trained professional who reacts to events and conditions in the claim based on a medical knowledge base. But when the product is unstructured, variables in delivery cannot be measured or appreciated.

A process that is different every time can never be adequately defined. Establish organizational standards of conditions in claims to be referred to NCM—without exception. Remove the myriad of decisions made or not made by claims adjusters to involve the NCM. The referral can be automated through electronic claims monitoring and notification. NCM takes action on the issue according to organizational protocol and the claims adjustor is notified at the same time.

 
Measure
When the conditions in claims that lead to intervention by NCM are computerized and standardized, the outcomes or effects can be measured. Apples can legitimately be compared to apples, but not to oranges and tennis balls. Similar conditions in claims are noted and approached the same way every time, so the results can be validly measured.

Results in claims such as indemnity costs, time from DOI to claim closure, or overall claim cost can be compared before and after NCM standardization. Compare across different date ranges for similar injuries going forward to measure continued effectiveness and honing of the process.

Measuring outcomes is the most essential aspect of the process. Value is disregarded unless it is defined, measured, and reported. Many options for measuring success are available when the components are standardized and computerized.

Report

Report and communicate measured outcomes. Never assume others will recognize NCM value without delineating it for them. For non NCM’s, the dots in medical management must be connected to see the picture. Describe what was done, why it was done, and how it was done the same way for similar situations and in context with the organization's standards. Then report the outcome value. Establish a continuing value communication process.

Define process in advance

NCM constituencies should be informed in advance of the process and outcome measurements. Define in advance how problems and issues are identified, executed, and how results will be measured. Then proceed consistently.

Recognized NCM value

Nevertheless, at long last, NCM value is now being recognized. American Airlines recently reported they are adding NCM to their staff and will refer all lost time claims. They cite a pilot project where nurse interventions were documented and measured, proving their value in getting injured workers back to work.

Christopher Flatt, Workers’ Compensation Center of Excellence Leader for Marsh Inc., in an article written for WorkCompWire (http://www.workcompwire.com/) stated, “One option that employers should consider as part of an integrated approach to controlling workers’ compensation costs is formalized nurse case management. Taking actions to drive down medical expenses is an essential component to controlling workers’ compensation costs.”[1]

Industry research and corporate wisdom
Industry research and corporate or professional wisdom regarding risky situations can supply the standardized indicators for referral to NCM. American Airlines uses the standard that all lost time claims should be referred to NCM. But there are many, sometimes more subtle indicators of risk and cost in claims that can be identified early through computerized monitoring and referred for NCM intervention.

Another example of developing standard indicators for referral is based on industry research that shows certain comorbidities, such as diabetes can increase claim duration and cost. These claims should also be referred to NCM for oversight. Yet another example is steering away from inappropriate medical providers who can profoundly increase costs.

Computer-intensified medical management
As a long-ago nurse and a longer-time medical systems designer and developer, I believe the solution lies in appropriate computerized system design. To be effective, the components are those described above. The elements need to be simple to implement, easy to use, and consistently applied. Only then can NCM offer proof of value.

MedMetrics®, LLC offers Medical Intelligence Profiles with Alerts, an online app that serves as a smart container for an organization’s medical management standards and rules of referral. MedMetrics monitors all claims continuously and sends electronic alerts when conditions in a claim match those in a profile. This and other MedMetrics apps link medical analytics to operations, thereby making them actionable. karenwolfe@medmetrics.org

[1] http://www.workcompwire.com/2013/01/christopher-flatt-the-case-for-formalized-nurse-case-management/?utm_source=WCR+Daily+1%2F22%2F13+-+A+New+Leader+Speaks%21&utm_campaign=WCR&utm_medium=email

 

How to Tap the Secret Power of ICD-9's

by Karen Wolfe

The medical portion of Workers’ Compensation claims now meets or exceeds 60% of claim costs. That fact alone should easily convince payers to focus on the rich medical information in their data. Very powerful information residing in claims data is virtually untouched—diagnostic codes in the form of ICD-9’s. The problem is few in the industry really understand ICD-9’s or in what ways they could inform powerful medical management.

ICD defined

ICD-9 codes are not unique to Workers’ Compensation. ICD-9’s are the World Health Organization's International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM). They are a standardized method of describing injuries, illnesses, and related issues worldwide.

ICD is the classification that codes and classifies mortality data worldwide. The ICD-CM is used to code and classify morbidity data from inpatient and outpatient records and doctor’s offices.

The purpose of the ICD and of WHO (World Health Organization) sponsorship is to promote international comparability in the collection, classification, processing, and presentation of mortality statistics. New revisions of the ICD are implemented periodically so that the classification also reflects advances in medical science.

ICD’s in standard billing forms

Those who bill for medical services in the U.S. are required to use one of two CMS (Center for Medicare and Medicaid) standard forms, the HCFA-1500 (Health Insurance Claim Form) for outpatient and UB-04 Unified Billing) for hospitals and other facilities. Both standardized forms require the medical provider to list ICD-9’s appropriate to the medical procedures for which they are billing. The verdant data derived from these forms should be analyzed and incorporated into managed care processes.

Unwieldy and ignored

Bill review organizations and payers capture data from the standardized billing forms in their systems. Nevertheless, while the ICD information is documented in systems, it’s use usually stops there. ICD-9’s are difficult to interpret.

ICD-9’s on bills are displayed in the form of codes, not descriptions of injuries and illnesses and they number in the thousands. Individuals cannot remember the codes, nor do they have the time to look up codes for interpretation. Instead, they simply ignore them.

Secret power of ICD

Incremental essential knowledge resides in ICD-9 codes that can be translated to powerful medical management. When they are monitored electronically and concurrently, they reveal and inform.

ICD-9’s reveal migrating claims

For instance, migrating claims accrue ICD’s. Migrating claims are those that are not going well, are becoming more complex and costly, often an insidious process that is missed by claims adjusters and medical case managers until considerable damage is done. What happens in migrating claims is the injured worker is not recovering for some reason and is referred to multiple specialists. Each specialist adds new ICD-9’s to the claim.

As a claims migrates, and the number of ICD-9’s associated with it mounts.

Computer monitoring

Using a computerized system especially designed to monitor ICD-9’s is a powerful knowledge solution. Alerts are sent to appropriate persons when the number of ICD-9’s in a claim increases beyond a designated point. Migrating claims cannot be missed and intervention is early, therefore far more effective.

ICD-9’s are predictors

Another way to tap the secret power of ICD-9’s is to score them individually for medical severity, the seriousness of the injury or illness. Each claim then contains a total ICD-9 score in the system for medical severity. As ICD-9’s are added during the course of the claim, the claim ICD score increases. As a claim migrates and accumulates ICD-9’s, an appropriate person is automatically notified by the system. Migrating claims cannot go unnoticed.

Claims with high ICD-9 scores are predictors of risk and cost. Claim ICD-9 scores can be monitored from the outset and throughout the course of the claim.

ICD-9’s scores level the playing field

The claim ICD-9 score reveals the seriousness and complexity of a claim. Medical doctors managing difficult claims can be differentiated from those handling less arduous claims, thereby creating fairness in measuring provider performance.

Many indicators are used for claim monitoring and provider performance including medical cost, frequency and duration of treatment, indemnity costs, return to work and multiple other factors. The claim ICD medical severity score automatically predicts trouble and alerts the appropriate medical managers.

Moving on—ICD-10

The ICD-9 contains thousands of codes. Moreover, the ICD-10 revision will more than double the number of codes, making its information value exponential. ICD-10 is slated to be activated in October of 2014.

Karen Wolfe is President and CEO of MedMetrics®, LLC, an online Workers’ Compensation analytics company. MedMetrics analyzes data and provides “apps” online to link analytics to operations, thereby making them actionable. MedMetrics also monitors concurrent integrated data to detect potentially high risk or high cost events in claims and automatically alert the appropriate persons.

 

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.

---

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