Tag Archives: medmetrics

Proof of Value for Medical Management

Everyone knows the bulk of workers’ comp costs now are medical. Claims reps and nurse case managers handle injured workers and their medical costs with utmost care. Anecdotes show that their work saves time and money. The problem is that concrete evidence of their value has been elusive—until now.

How can costs avoided and time saved be measured? The measurements are like rabbits pulled from a magician’s hat. What really happened?

Quantifying what did not happen is usually impossible. However, quantifying and measuring savings is completely feasible through a different approach, using predictive analytics.

The workers’ comp industry does not readily embrace change or innovation. That is changing as pressure increases to become more efficient to sustain profitability as resources shrink. The best approach to meeting this challenge is incorporating advanced technical strategies such as predictive analytics that are designed to support and streamline the business process and make workers smarter. The collateral benefit is being able to objectively measure and report savings.

The solution is to extensively analyze the organization’s historic data using predictive analytics and deliver the insights in the form of actionable information to all the stakeholders, including claims reps, medical managers and other decision-makers. Just a few steps are needed, including data analysis, data monitoring, informing and integrating the efforts of stakeholders and measuring the savings.

The first and most critical initiative is analyzing an organization’s historic data using predictive analytics methodologies — because each organization has unique internal and culture processes regarding claims handling and medical management, using others’ data, regardless of how large the database, can mislead.

See also: 2017 Issues to Watch in Workers’ Comp

Situations and conditions found in the past are likely to recur. Once the risks are identified in historic data, they can be searched programmatically in current data through continuous data monitoring. When problematic situations occur in the data, appropriate responses and interventions are mobilized immediately. The insights are delivered to medical management stakeholders, including claims reps, medical case managers, senior management and others as appropriate. The knowledge delivered is structured to assist them in decision support and coordinating efforts.

Risk information in claims is delivered concurrently to stakeholders so they can make early and sound decisions, then initiate appropriate action. Importantly, all medical management participants receive similar information so initiatives are coordinated and integrated, thereby implementing strong, multi-disciplinary approaches.

When risk conditions in claims are identified in this manner, reserves in that claim need attention, as well.  When events and conditions in claims change, indicating a need for more intense medical management, reserving should also be addressed. Based on predictive analytics, the probable ultimate medical costs are projected and portrayed for claims reps, thereby providing key knowledge to support appropriate action.

Data monitoring identifies claims with risk conditions concurrently and informs the stakeholders immediately. Intervention efforts are coordinated among claims reps, medical case managers and others, providing broad-based, integrated initiatives leading to improved results. Savings are gained through proactive, coordinated intervention by professionals who are offered key information for decision support making them accurate, efficient, and effective.

See also: On-Demand Workers: the Implications

When claims are closed, objective savings are measured by comparing projected performance based on predictive analytics with what was accomplished through active, integrated initiatives across all medical management participants. The calculations are quantifiable and objective.

The simplest and most rewarding approach is to outsource this process to a knowledgeable medical analytics company. Internal processes need not change, but professionals and business processes are made more accurate and efficient—a win for the organization, its employees and its clients.

Technology is far less expensive than people. When it is designed to assist professional workers by making them more accurate and efficient, the return on investment is profound.

How to Make IT Efforts Strategic

Has your IT come out of the proverbial and actual basement to be an integral part of your business strategy? Too often, business leaders assign IT a task and expect an initiative to be delivered. End of story. The truth is, business owners must engage and own the outcomes of their IT investments, driving them to a strategic value that can be measured.

What is IT strategy? Think about any infrastructure initiative (building highways, public transportation or urban development). Without the requisite strategic investment of time, funding and planning, these initiatives face delays, cost overruns, diversion from desired strategy and failure. True partnerships between IT and business operations insure that the best thinking of both can be applied to a given situation to produce strategic results.

See Also: The 7 Colors of Digital Innovation

Business value

IT should be viewed as a business strategy. Today, not a single discussion in the workers’ compensation industry relating to claims management or medical management does not include IT. As workers’ comp focuses on outcomes (both cost and quality), it is the only new strategy around. Moreover, it is the most effective and efficient strategy to achieve business goals. The following six elements are necessary to generate business value by leveraging the IT strategy. 

1.    Define the project—Describing how new technology or a new data application will function is only the first step in integrating IT into the business strategy. However, defining the project can be tricky. Remember, IT professionals talk a different language and appreciate different measures of success than those involved in operations. Business owners cannot assume their IT requests are understood as they were intended. Even slight misinterpretations of requests can result in frustration, cost overrides and a useless tool.

I recall one time, early in my career, when I submitted specifications for a development project. I used the word “revolutionary” to describe the powerful impact it would have on the business. However, the IT person, who was younger and male, interpreted “revolutionary” in an aggressive, military sense, which was not even close to what I had in mind. Always verify that you have an understanding and clarify of all elements of the IT project. 

2.    Design for simplicity—If the IT project outcome is complicated or requires too many steps, people will not use it.

3.    Define the expected business value—As a part of defining the IT project, define its expected business value. Both the business unit involved and the IT team need to align their expected outcomes. Not unlike evaluating ROI (return on investment), identify the financial investment and rewards of the IT project. Make sure to also describe the anticipated collateral outcomes of the IT project, such as PR, business growth or client involvement. Figure out how to measure the expected business outcomes when the project is complete.

Design the project outcome value measures at the beginning. Too often, business leaders do not articulate their expectations of value and, therefore, can never prove them. If you do not know where you are going, you could end up somewhere else.

4.    Commit resources—Funding and other resources such as personnel should be allocated at the beginning; short-shrifting resources will guarantee less-than-satisfactory results. Know from the beginning how the IT project will be implemented and who will do and be responsible for the work. Establish accountabilities and create procedures for follow-up.

5.    Monitor progress—Continuously monitor and manage the project, even throughout the IT development process. Discovering deviations from the plan early on minimizes damage and rework. Obviously, rework means cost and delay.

6.    Measure value—Once the project is accepted and implemented, begin continuous outcome evaluation. Execute the value measures outlined at the beginning. Make the necessary adjustments and keep your eye on the business value.

Not everyone can be an IT expert, but everyone can become an expert in how IT advances the strategies of their domain.

How to Manage MPNs in Workers’ Comp

A recent study of the use of medical provider networks ( MPNs) in California by the California Workers’ Compensation Institute (CWCI) found that, “While the use of the networks to medically manage treatment of work-related injuries has fulfilled the legislative intent to encourage network use, over time the MPNs have not lowered the cost of medical care.”

David DePaolo, CEO of WorkCompCentral, says medical cost savings is only part of the picture. MPNs need to be managed because the medical impact on other aspects of claims such as disability, indemnity, return to work and other factors is significant.

So how should networks be managed?

Networks can be managed only by evaluating and monitoring individual performance.

A network is the sum of its parts, the parts being the physicians and other medical providers. A network cannot be managed as a whole. Each individual medical provider acts independently and with differing results. Moreover, each provider, even within groups or facilities, acts independently. Consequently, each must be evaluated and managed individually.

Since networks began in workers’ comp back in the 1980s, their rationale has been that they offer discounts off stated rates for services, which they portray to payers as savings. The assumption is that all medical providers are equal. But no one checked.

No one checked because it was easier to claim savings through discounts than to evaluate the performance of individual medical providers in the network. Evaluating medical performance is especially tricky in workers’ compensation because, in addition to cost and medical treatment factors, there are elements unique to the industry that must be considered. Indicators of quality performance are many and varied.

But indicators can be found in the data. They include medical treatment indicators such as direct medical costs, prescriptions, surgery, hospitalization and medical procedures analyzed by injury type. Non-medical performance indicators that are influenced by medical providers include return to work, indemnity costs and legal involvement, along with ultimate outcome indicators such as claim closure and disability ratings at the close of the claim.

The way to manage networks is to use the data to identify the best providers and monitor their performance.

The data necessary to evaluate medical provider performance, particularly physician performance, can be found in bill review data, claims system data, pharmacy data and the utilization review system. Unfortunately, the data resides in different silos, but, by combining the data from these sources at the claim level, individual provider performance can be measured.

Because the data reflects actual treatment and events, it is objective and quantifiable. Select quality indicators in the data, adjust for case mix and keep them constant over time.

Medical costs have increased to 60% of claim costs, calling into question the benefit of network discounts. The truth is that medical providers long ago learned how to overcome the cost of discounts by increasing treatment frequency and claim duration, as well as prescribing expensive procedures, among other tactics.

Going forward, the major hurdle in managing networks effectively is to de-emphasize discounts, while underscoring and rewarding quality performance. To make that financially feasible for the networks, a different approach to discounting should be entertained. For instance, those providers who rate highest in quality performance would be excused from discounts. Likewise, those performing the worst would be discounted the most.

To manage a network, the performance of individuals within it must be evaluated and monitored continually. No longer does it suffice to sign up providers for the network and walk away. When individual provider ratings slip, action should be taken.

Let providers know they are being monitored. It has been proven that observed performance leads to behavior change.

A Secret for Comparing Workers’ Comp Costs

Workers’ compensation claims and medical managers are continually challenged by upper management to analyze their drivers of workers’ comp costs. Moreover, upper management wants comparisons of the organization’s results to that of peers.

The request is appropriate. Costs of doing business directly affect the competitive performance of the organization. Understanding drivers of workers’ comp costs is key to making adjustments to improve performance. Still, it’s not that simple.

Executing the analysis is the lesser of the two demands. More challenging is finding industry or peer data that is similar enough to create an apples-to-apples study. In a recent article, Nick Parillo states, “Regardless of the data source, whether it be peer-related or insurance industry-related, risk managers must be focused on aligning the data to their respective company and its operations.” Parillo emphasizes that the data should be meaningful and relevant to the organization.

Aligning the data to the situation can be challenging. Industry or peer data may not be situation-specific enough or granular enough to elicit accurate and illuminating information. State regulations vary, as do business products and practices, along with a multitude of other conditions that make truly accurate comparisons difficult.

Variability in the data available for benchmarking can be especially disconcerting when considering medical cost drivers, which now account for the majority of claim costs. Differences in state fee schedules and legislation such as required utilization review (UR) and the use of evidence-based guidelines can produce questionable comparative results. Additionally, whether the contributed data is from self-insured or self-administrated entities can skew the results.

Other variables that make comparing industry or peer data less valid are unionization, physical distribution of employees, employee age and gender, as well as industry type and local resources available. Potential differences are unlimited.

External sources such as local cultural and professional mores, particularly among treating medical providers, can play a significant role in disqualifying data for comparison. For instance, my company’s analysis of client data has uncovered consistent differences in medical practice patterns in one large state. In one geographic sector, referrals to orthopedists with subsequent surgery and higher costs are far more frequent than in another sector of the state for the same type of injury.

Parillo continues, “Given the uncertainty and limitations on the kinds of peer group data a risk manager would need to perform a truly “apples to apples” comparison, the most “relevant and meaningful” data may be that which a risk manager already possesses: His own.”

Analyzing internal data can be highly productive. First, the conditions of meaningful and relevant are guaranteed, for obvious reasons. The geographical differential across one state was found in one organization’s internal data, which ensures that data variability is not a factor.

Analyses can be designed that dissect the data at hand. Follow up to the above example might include looking for other geographic variables in costs, in injury types and in medical practice patterns. Compare physician performance for specific injury types in the same jurisdiction and then look for differences within. To gain this kind of specificity and relevance, drill down for other indicators.

Evaluate how costs move. Look at costs at intervals along the course of claims for specific injury types. In this case, utilizing ICD-9s is more informative than the National Council on Compensation Insurance (NCCI) injury descriptors. One client found that injury claims that contained a mental health ICD-9 showed a surge in costs beginning the second year. Now, further analysis can begin to discern earlier indicators of this outcome. In other words, dive further into the data to find leading indicators.

Industry data is not likely to contain the detail necessary to evoke subtle mental health information during the course of the claim. Most analysis ignores the subtlety and sequence of diagnoses assigned. Few would uncover the mental health ICD-9 because few bother with ICD-9s at all.

Drilling down, analyze claims that fall into this category for prescriptions, legal involvement and other factors that might divulge prophetic signs. It is an investigative trail that relies on finite internal data analysis.

Too often people disrespect their own data, thinking it is too poor in quality, therefore of little value. It’s true, much of the data collected over the years is of poorer quality, but it still has value. Begin by cleaning or enhancing the data and removing duplicates. Going forward, management emphasis should be on collecting accurate data.

Benchmarking data sourced from the industry may be useful but should not necessarily be considered the most accurate or productive approach. Internal data analysis may be the best opportunity for discovering cost drivers.

Data Is Your Best Weapon in Work Comp

Managing the medical portion of workers’ compensation claims can be daunting. The variables are endless — vendors of all types, extraneous and overlapping events and even participants’ attitudes. Moreover, injured employees’ recoveries lie in the balance, making the effort essential.

Tried-and-true methodologies have been in place for 25 years, including bill review, utilization review, discounted medical provider networks, medical case management, fee schedules, guidelines and peer review. That should do the job, but apparently not. The medical portion of claims continues to rise.

Basically, the industry is continuing to follow the same pathways while hoping for different outcomes. Enough said.

This is not to say we should scuttle the strategies in place. Instead, the focus should be on updating and intensifying the existing processes to achieve their intended results.

Workers’ compensation is an industry replete with transactions that are recorded digitally. First reports of injury, bill review, pharmacy benefit programs and claims system paying bills and documenting events: All continually contribute to the data mass for each claim. Effectively analyzing that data on a concurrent basis and making the business knowledge available to claims adjusters and other decision makers is a powerful approach to strengthening current systems.

Analyzing data and converting it to useful information is the key to enhancing current medical management techniques. Writing reports and analyzing trends cannot affect outcomes. Such measures focus on the past, but that cannot be changed. Data must be utilized in new ways.

The first prerequisite is getting data-derived information to the front lines quickly. The business units should have access to analyzed information as concurrently as possible. Early information sets the scene for early intervention and resolving problematic situations in claims before they spin out of control.

Distributing information continuously requires that the data be electronically monitored and analyzed continually, not at the end of the month or quarter. When conditions that portend risk occur, the appropriate person is automatically notified. That might be the claims adjustor, medical case manager, medical director, supervisor or manager. Importantly, the notified person will follow the organization’s approved procedures, thereby lending structure to the process.

Monitoring data and notifying the right people when indicators in claims point to risk mobilizes medical management, as I explained in this article. Other data initiatives can be even more compelling.

Research in the industry irrefutably shows poorly performing medical providers lead to high cost and poor results. Poorly performing doctors in the workers’ compensation context are those who have little understanding of the system or deliberately abuse the system through overutilization. Indicators of such poor performance are readily found in the data.

The data will reveal the poor performers, those who ignore basic workers’ compensation needs such as early return to work, as well as those who bleed the system with excessive treatment practices.

Treating doctors essentially cause, influence or control a significant portion of medical costs. Once the injured worker is in the doctor’s care, opportunities to steer the course with medical management methods nearly disappear. Consequently, choosing the right physician at the start is essential.

Using data analysis to select the best practice doctors is the way to prevent problems and smoothly lead to the most optimal outcome. In many states, this is possible and encouraged. In other states, directing care is not allowed. Nevertheless, non-traditional applications of analytics can optimize results.

When directing care to the best doctors is not possible, the next best option is to change the perpetrating doctors themselves. The fact is, people, and maybe especially doctors, do not like to look bad. Presenting them with analytic representations of their performance compared with others of the same specialty in the state is a powerful behavior-change methodology. Those who are outliers will begin to move toward the mean.

Changing medical provider performance is not impossible! Of course, doctors will first attempt to push back. One way they argue is to say they treat only the more serious cases. That could be true. However, the pièce de résistance is to correct for medical severity in performance analytics, leveling the playing field. Those who treat more serious injuries are compared only with others who treat similarly difficult cases.

Adjusting for case risk or severity by diagnosis is how to diminish resistance for poorly performing treating physicians. Graphic presentations of comparative performance cannot be disputed. The fairness is built in.

As the treating provider outliers move toward the performance mean, they may never achieve best-in-class, but their outcomes will gradually improve. They will also be aware of continued surveillance, so the impact persists. Positioning data in this way is your weapon of choice for a powerful, yet bloodless medical management solution.