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8% Reduction In Claims Costs Spells Success for Workers' Compensation Pilot Program

Physician-Guided Managed Care Achieves Better Results

Ever wondered why managed care costs more every year but the results seem about the same? For decades, the most expensive portion of a claim was the indemnity payments. Today, with medical advances, it’s the medical expenses, which in workers’ compensation alone, have increased nationwide by an annual average of 8 percent, nearly double the medical consumer price index of 4.3 percent over the same six-year period.

Although managed care services vary somewhat from company to company, they are more or less delivered as commodities, with each service providing similar capabilities regardless of vendor. Upfront fees are the selling point, and price is the primary differentiator. Some service providers may be more efficient than others, but only because their technology underpinnings are better (or better managed). Either way, technology-based processes often define the service, with poor accommodation for human intervention.

In this typical managed care model, medical bill reviews sail through software systems as fast as possible, grabbing savings along the way based on automated business rules and built-in triggers. Experienced nurses conduct utilization reviews (URs), but generally in a rubber-stamp role, and escalation of questionable utilization reviews to physicians can slow the review process by days, or even weeks. Similarly, case management is a nurse-based service in which physicians come into play only on an exception basis. And finally, there are the networks of doctors and hospitals that discount fees. Because the managed care vendors that build these networks absorb part of the discounts as payment for network access, they have little incentive to choose these providers selectively.

In this standard managed care model, one service provider might boast the lowest price for medical bill review, another for utilization review, and both will attract buyers on price alone. But insurance entities that choose providers based on upfront fees are sacrificing a higher level of savings — one that can only come with a more holistic view of managed care services.

Current Managed Care Model
Many insurance companies use managed care services to find the obvious savings (or “low hanging fruit”) through case management, bill review, utilization review of patient treatment plans, and provider networks at discount prices.

Yet most managed care service providers seem powerless to arrest medical costs and have been unable to utilize or develop a different approach. They continue to use nurses and clerical review staff to oversee the medical component of a claim, when their valuable input often doesn't reach the treating physician in any meaningful way. And when a physician finally does become involved, the case is often already derailed by out-of-control treatment plans and costs.

Instead of charging fees to catch problems after the fact, industry innovators want a new, more effective model to lower costs and influence the quality of care from the beginning of a claim.

A New Model: Physician-Guided Managed Care Services
What is needed is a managed care infrastructure that leverages the credibility and expertise of doctors at key points in every service.

Physician-Guided Care (PGC), a ground-breaking approach to managed care, combines knowledgeable individuals with predictive analytics and systems to measure and influence medical care. It's a model where treatment is lead by doctors — not clerical review staff or nurses.

Widespread as it is “holistic” in nature, the Physician-Guided Care model informs the overall delivery of all managed care services. Put another way, Physician-Guided Care can be defined as supporting the right treatment at the right time by the right professional — and all at the right cost to workers' compensation programs. And this model has been proven to deliver better results, including:

  • 11% faster return to work for injured persons; and,
  • 8% reduction in overall claims costs.

The Right Treatment At The Right Time — By The Right Professional
To understand the value of “right” in this context, consider the prevailing practice of nurse-conducted utilization reviews (UR). Customers pay for the nurse's review, and again for a second review at a higher incremental price; each time a utilization review case is escalated to a doctor for specialized medical advice.

Alternatively, if the nurse chooses to call the treating physician to discuss the matter, there's no guarantee the call will be returned quickly, if at all, and nothing preventing the provider from proceeding with the planned treatment. Either way, relying on nurses at the initial stage of less-routine utilization review cases can increase costs, slow turnaround times, and prolong the life of the claim.

With the Physician-Guided Care model, only physicians conduct utilization reviews. The collaborative nature of physicians, trained to work together, delivers greater efficiencies and better outcomes to the process. In fact, the approach of using physicians at the appropriate level of every service has upended the commodity-based service model favored by the managed care industry. As trained clinicians, they pinpoint problems, negotiate with treating physicians, and arrive at fair resolutions more quickly and effectively. Physicians are used in the following ways:

  • Medical Bill Review: The Physician-Guided Care model combines the expertise of senior-level bill analysts with proprietary quality assurance technology that flags possible violations of medical procedure coding, PPO network discounts, and state fee schedules. Level of Physician Involvement: Questionable treatment, billing codes, and charges for medical services are escalated to physicians for clinical review.
  • Utilization Review: The Physician-Guided Care model uses staff physicians to review medical treatment plans and collaborate with treating physicians on patient care. Level of Physician Involvement: All utilization reviews are conducted by physicians.
  • Rx Utilization Management: The Physician-Guided Care model reviews prescriptions before they're filled, specifically Class II and III drugs, special requests, and prescriptions flagged by specifically configured triggers as potentially out of scope or harmful to the patient. Level of Physician Involvement: All requests are reviewed by physicians.
  • Case Management: The Physician-Guided Care model for case management combines physician and field nurse case managers who work with treating physicians and families to ensure the best possible patient care without incurring undue costs. Level of Physician Involvement: In the Physician-Guided Care model, physicians are assigned to any claim that meets at least one of dozens of critical factors and anticipates six weeks or more of lost work time, based on predictive modeling.
  • Physician on Call: The Physician-Guided Care model makes physicians available via an 800 number to help claims examiners resolve medical issues quickly, especially when they're under pressure. Level of Physician Involvement: All calls are handled by physicians.
  • 24/7 Nurse Triage: The Physician-Guided Care model uses phone-based triage-trained registered nurses to guide accident victims to the right treatment option the moment an accident occurs. Level of Physician Involvement: Nurse triage operations are overseen by a physician certified in internal and emergency medicine.
  • Claim Analysis: The Physician-Guided Care model helps claims examiners resolve persistent issues and move toward settlement of difficult or long-term claims. Level of Physician Involvement: All analyses are performed by physicians.
  • Medicare Set-Asides (MSAs): The Physician-Guided Care model helps claims staff forecast Medicare Set-Asides more accurately, expedite reporting, and comply with Medicare's Secondary Payer Act for case settlements. Level of Physician Involvement: Physicians oversee the work of analysts and forecasters.

Delivering Better Results For Claims Organizations
Over the last few years, Physician-Guided Care has confirmed its value for businesses by reducing medical costs, accelerating patient recovery, and minimizing appeals of managed care decisions.

Many workers' compensation carriers choose to first pilot the Physician-Guided Care model in order to evaluate results and confirm the benefits of the approach. One example of such a pilot was an insurance company specializing in workers' compensation claims. This organization chose to evaluate the Physician-Guided Care program in order to measure the success of using physician case managers, specifically on cases that involved severe injuries.

This pilot program ran between July 1, 2010 and May 31, 2011, during which time physicians were assigned as case managers to any claim that met the following criteria: involved an injury with certain critical factors and had at least six weeks of anticipated lost work time due to temporary total disability (TTD), based on predictive modeling.

By any measure, the results were impressive. During this pilot program, the use of physician case managers resulted in:

  • Medical expenses to drop by 8 percent.
  • Compare that to the 2 percent increase in the medical cost inflation rate for workers' compensation insurance in 2010, and the effect is a 10-point better result.

The Physician-Guided Care Model: Making an Impact
One thing is certain: the traditional model for managing medical costs and care is outdated and no longer generates sustainable improvements. The new Physician-Guided Care model has been tested with thousands of claims, and shown to deliver measurable improvements in claims outcomes and costs.

Physician-Guided Care is the groundbreaking approach successfully leveraging the credibility and expertise of doctors at critical points in every managed care service. The Physician-Guided Care model is successful due in large part to its foundation — the collegial and collaborative nature of physicians. In an environment where doctors have historically been trained to work together, the Physician-Guided Care model harnesses the peer-to-peer relationship to manage patient care from the start and throughout the entire claims process. The result: the treatment plan is set on the right course to get the injured person back to health quickly, and unnecessary medical procedures, costs, and prescriptions are avoided.

Record $2.3 Million+ Backpay Order

Shows Underpaying Or Violating Other Rules For Employing Foreign Workers Risky Business

Underpaying and failing to meet other H-2A visa program requirements for its employment of temporary foreign agricultural workers was an extremely costly mistake for Yerington, Nevada-based onion grower Peri & Sons.

Under a consent order entered by U.S. Department of Labor Administrative Law Judge Steven Berlin in San Francisco, Peri & Sons must pay a record total of $2,338,700 in back wages to 1,365 workers, plus a $500,000 civil money penalty to the Department of Labor for failing to properly pay foreign agricultural workers working under the H-2A visa program.

The consent order announced by the Labor Department Wage and Hour Division on July 10, 2012 reminds U.S. businesses of the need to meet compliance responsibilities when employing foreign workers and illustrates the significant risks that employers of foreign workers risk by failing to meet minimum wage and hour, overtime and other requirements for the employment of foreign workers.

The record back pay order stems from charges brought by the Labor Department’s Wage and Hour Division after it determined that Peri & Sons violated the Fair Labor Standards Act and the H-2A visa program requirements by underpaying H-2A employees involved in irrigation, harvesting, packing and shipping of onions sold in grocery stores nationwide.

All of the affected workers came to the U.S. from Mexico under the H-2A temporary agricultural worker visa program. In most cases, their earnings fell below the hourly wage required by the program, as well as below the federal minimum wage of $7.25 per hour for a brief period of time. Investigators also found that workers were not paid for time spent in mandatory pesticide training or reimbursed for subsistence expenses while traveling to and from the U.S. Additionally, Peri & Sons did not pay the worker’s return transportation costs at the end of the contract period.

The H-2A temporary agricultural worker program permits agricultural employers who expect a shortage of domestic workers to bring nonimmigrant foreign workers to the United States to perform temporary or seasonal agricultural work. The employer must file an application stating that a sufficient number of domestic workers are not available and the employment of these workers will not adversely affect the wages and working conditions of similarly employed workers in the U.S.

Employers using the H-2A program also must meet a number of specific conditions relating to recruitment, wages, housing, meals and transportation. See more on H-2A visa employment rules here.

Reflective of the Obama Administration’s heavy emphasis on the enforcement of wage and hour and other laws protective of workers, the Peri & Sons order shows the potential risks that employers run when violating these rules.

To minimize these exposures, employers of H-2A or other workers employed under special visa programs should carefully manage these programs to ensure their ability to demonstrate compliance with all requirements of the visa program, the Fair Labor Standards Act, and other relevant laws.

These programs should include careful and ongoing due diligence to maintain a current understanding of all applicable requirements for the legal employment of these workers and the establishment of systemized processes and documentation, both to maintain compliance and to preserve evidence necessary to demonstrate this compliance against possible investigations or charges.