Tag Archives: preferred provider organization

We Need to Put the ‘P’ Back in PPO

A leading workers’ comp insurer once asked me to review its provider network strategy. The problem was that it didn’t have one.

The insurer readily admitted that after, a decade-long relationship with its preferred provider organization (PPO) vendor, the insurer could not identify a single quality medical provider in the network.

It was no wonder, because the entire business relationship with the PPO was based on discounts from network providers. The only document produced was an Excel spreadsheet showing total billed vs. total paid charges; nothing about what was paid for or to whom it was paid.

The entire foundation of the insurer’s network strategy was what is known as “percentage of savings” arrangements with the PPO and corporate clients. Corporate clients typically pay 33% of these savings to insurance companies and third-party administrators, making them a major cash cow.

When I asked to see a breakdown of providers by specialty and how they matched up with the insurer’s clients’ work locations, I was met with blank stares. I asked, “If a client is billed for a discount on an MRI that was not medically necessary, how is that a savings?” The reply was a proud, “The more MRIs ordered, the more money we make.”

Not a thing in the PPO network criteria included selecting credentialed, high-quality providers who were experienced in the diagnosis and treatment of work-related injuries and illness. That was a new concept to the insurer. It was not looking for the best doctor in town; it wanted the cheapest.

I found memos in which both the utilization review team and the unit that handled self-insured clients were completely in favor of developing a network based on the quality of care. But they were not invited to the table on corporate network strategy. Nothing was going to change that network strategy and cash cow.

Corporate clients have been paying for phantom savings for decades through these “percentage of savings” PPO arrangements.

That must change.

A corporate-wide network strategy must start at the moment of injury and consist of a pre-planned strategy at the local worksite. People say that all politics is local, and that is true with healthcare. All healthcare is local. Injured workers need to be treated by the best and most appropriate medical provider from the moment of injury. That should be the only network strategy. Period.

Paying the best provider a fair and negotiated fee, while establishing a pre-planned communication and claims process with input from local case managers and other medical providers around key work locations, is the foundation of a real strategy. This approach has been working for many well-informed and progressive companies for decades.

Why is this approach not promoted? Because there is no cash cow on discounts for managed care vendors, insurers and TPAs.

I have worked with major national corporations developing local hubs at key worksites across the country by utilizing front-line providers such as urgent care centers, primary care providers, specialists and facilities, all trained and credentialed in workers’ comp and industrial medicine.

In establishing these pre-planned hubs, we were able to establish excellent working relationships with handpicked network providers that worked closely with corporate clients by actually visiting work locations or reviewing videos of job requirements. The entire process of best practices from injury notification to return-to-work was put in place.

These custom-built networks truly reduced corporate costs 30% or more, savings that were documented using various benchmarks and metrics developed during the process but, more importantly, documented by the causality actuaries in their annual FASB financial statements. Those are savings that went directly to the bottom line and stock price. Instead of paying money to the insurer or TPA for 33% of the savings arrangements on broad-based PPOs and putting millions in PPO vendor bank accounts, I put money in the client’s bank account.

It is time for companies that pay for workers’ compensation to put the “preferred” back in their PPO strategy. A “preferred” provider isn’t offering discounts but is providing high quality medical care and better patient outcomes in compliance with evidence-based medicine practices.  Preferred providers diagnose and treat a given condition and get that injured worker on the road to recovery from day one.

That is a network strategy.

California SB 863, A Guide For Building And Monitoring Networks With Intelligence, Part 1

This is Part 1 of a multi-part series on building and monitoring networks with intelligence. Subsequent parts in the series will be published soon.

Building a medical provider community for Workers’ Compensation can be challenging, regardless of the jurisdiction. Nevertheless, carving out a legislatively-compliant, outcome-based, quality network is doable, and the return on investment is certain.

Injured workers deserve good medical treatment while employers and payers deserve transparent and fair costs. Moreover, industry research clearly shows that poorly performing providers are costly and lead to abysmal outcomes for injured employees, their families, and employers. This article features California SB 863 regarding MPNs (medical provider networks), but the concepts apply to creating intelligent medical provider networks anywhere.

Traditional Medical Networks
Medical networks in Workers’ Comp are not new, in fact, PPOs (Preferred Provider Organizations) have been around in Workers’ Comp since the early 1990s. Traditionally, the network administrator contracts with all physicians and other treating providers available. The trade-off is that providers exchange their discounted fees for increased patient volume. However, quality of medical care measured by outcomes and acknowledgment of Workers’ Comp nuances such as return to work are not considered. Some jurisdictions have made attempts to modify this practice.

Old SB 899 — LC 4616 Medical Provider Network (MPN)
In April of 2004 the governor of California signed SB 899 into law. It addressed MPNs under section LC 4616 (d) stating “In developing a medical provider network, an employer shall have the exclusive right to determine the members of their network.”

Encouragement to analyze provider performance is clear under section LC 4616.1: “Economic Profiling means the evaluation of a particular physician, provider, medical group, or individual practice associations based in whole or in part of the economic costs or utilization of services associated with medical care provided or authorized by the physician, provider, medical group, or individual practice association.” In other words, quality and costs matter and should be analyzed and monitored.

Direction Of Care
An important opportunity in California and many other states is that employers and payers are allowed to direct care for injured employees to doctors and other medical providers in their medical provider networks. After selecting the best doctors for a network, injured workers can be directed to them, a win-win scenario.

Even in states where direction of care is not permitted, payers or employers who have intelligent networks can give injured employees information regarding who are the best-in-class doctors based on objective analysis. Doing so is a service to employees who will often make use of them in selecting a doctor.

Ramping Up — SB 863
The logic of creating an intelligent network with measureable outcomes was recently fortified with California SB 863, effective January 1, 2013. The old bill is strengthened under SB 863, LC 4616 (b) (2) and LC 4616 (b)(3) “Every MPN must establish and follow procedures continuously to review the quality of care, performance of medical personnel, utilization of services, facilities, and costs.”

Quality Control
In other words, all MPN plans must have procedures in place to continuously review the quality of care and costs for medical providers in the network. The mandate is now even stronger to evaluate and monitor medical provider performance. No longer is it adequate to contract with medical providers, print the list of providers in the network, and forget it.

However, many employers and payers are at a loss about how to analytically select and continuously review provider performance.

Intelligent Networks
Legislative mandates and industry wisdom remove the question about whether to upgrade network quality through outcome analytics and monitoring. Yet, selecting the right doctors and other providers, then monitoring, and managing an intelligent MPN is a business in itself.

Most organizations do not have the appropriate resources and should outsource to companies that focus on intelligent network design, provider selection through analytics, review, and management. The following are some details for building and managing intelligent networks, whether they are legislated or not.

Gather The Data
The way to develop an intelligent network is to select the best in class medical providers determined by analysis of actual performance demonstrated in the data. Historic data must be combined with current and continually updated data to evaluate performance now and going forward. Reviews of updated data should be frequent and regular.

Additionally, the data must be derived from a broad spectrum of sources. Workers’ Compensation organizations typically segment data into bill review data, claims, pharmacy (PBM) and other silos such as UR and Medical Case Management. All are necessary for provider performance assessment. Do not be misled by those who say bill review data is adequate to the task.

Integrate The Data
Integrate the data with claims as the focal point for a complete picture of the claim. Execute algorithms that analyze the data and score provider performance based on multiple performance indicators. Individual medical providers, groups, and facilities should all be analyzed in this regard.

Continuous data update and electronic monitoring insures network and individual provider quality going forward as prescribed in SB 863 legislation. Maximize medical network quality and cost control using analytics, thereby complying with legislation and maximizing positive benefits.

More About Building Networks With Intelligence
Part 2 of this series will add more details of California SB 863 regarding medical provider networks and how to create networks with intelligence using analytics and common sense, an imperative for all medical networks in all states.

Karen Wolfe collaborated with Margaret Wagner to write this article. Ms. Wagner is President and CEO of Signature Networks Plus. She is considered an expert in network selection, monitoring and management, thereby creating Networks with Intelligence&#153 for clients.