Tag Archives: ttd

Sanity Prevails on Award of TTD

The 4th District of the Court of Appeals has reversed a puzzling W.C.A.B. decision that had awarded TTD benefits beyond five years from the date of injury, ignoring the plain language of Labor Code 4656(c)(2). In County of San Diego v W.C.A.B. (Pike),<http://www.courts.ca.gov/opinions/documents/D072648.DOCX> the appellate court had little difficulty in reading the rather straightforward statutory language to firmly reverse the WCJ and W.C.A.B. decisions awarding TTD beyond the five-year jurisdictional limit set by statute.

The applicant, Kyle Pike, sustained injury to his right shoulder in July 2010 while employed as a deputy sheriff for the County of San Diego. He was awarded a 12% PD benefit in May 2011. On May 26, 2015, within the five-year jurisdictional time to reopen his case, he filed a Petition for New and Further Disability seeking TTD and Labor Code 4850 benefits. He received his 4850/TTD benefits through July 31, 2015, at which time benefits were terminated.

At trial, the WCJ awarded benefits on a continuing basis, determining that while Labor Code 4656 was clear regarding benefits payable within the five-year jurisdictional time frame in the statute, it was silent as to what benefits could be provided after five years from the date of injury. On reconsideration, the W.C.A.B., in a split decision, affirmed the WCJ’s award.

The Appellate Court had little difficulty in seeing through the WCJ’s and W.C.A.B.’s construct:

“       This interpretation of section 4656, subdivision (c)(2) is not tenable.  As discussed above, section 4656, subdivision (c)(2) clearly and unambiguously provides that temporary disability benefits “shall not extend for more than 104 compensable weeks within a period of five years from the date of injury.” (§ 4656, subd. (c)(2).) Thus, contrary to the board’s decision, the relevant statutory language does provide that all periods of temporary disability for which payments are made must occur within five years of date of the injury.”

The court also pointed out that if the WCJ/W.C.A.B. analysis was correct, even the 104-week limitation would not exist after the five-year limitation, in effect, eliminating any limitation on TTD beyond five years while providing limitations within five years, hardly a logical result.

“…Such inconsistent reasoning further demonstrates the fallacy of the WCJ’s interpretation.”

See also: Why WC Needs an Outcomes Strategy  

The appellate court also pointed out that all of the authorities cited by the applicant attorney, amicus for applicant and the W.C.A.B. were interpretations of Labor Code 4656 prior to the amendments limiting TTD to the period within five years from the date of injury.  The court further noted that in the one decision it found where similar language was included in the statute, the appellate court had limited the receipt of TTD to within the five-year statutory time frame.

The court reversed the W.C.A.B. decision remanding the case back to the W.C.A.B. to grant the Petition for Reconsideration of the Petitioner, County of San Diego.

Comments and Conclusions:

The W.C.A.B.’s decision in this case is at best puzzling, at worst a flagrant attempt to avoid the legislature’s clear intent. It is difficult to conceive of how this statute could be tortured into an interpretation that allowed TTD to be paid beyond the statutory limitation. The analysis by the WCJ, adopted by the majority of the W.C.A.B., was patently inconsistent and required a tortured reading of the statute to reach the final result.

If the WCJ/W.C.A.B. analysis had been upheld, all an injured worker would have to do to obtain additional TTD is file a petition within five years from the date of injury and then wait till after the five-year date to claim additional TTD. Hardly a result the legislature intended and one that even the W.C.A.B. would have a hard time justifying with a straight face.

A copy of the decision can be found here.

How Medicare Can Heal Workers’ Comp

Workers’ comp in every state should carve out its medical line and relinquish it to Medicare. The respective statutory systems for indemnity benefits would remain. This scenario, albeit challenging in execution, would correct the cause of many systemic workers’ comp ills.

First, we must admit that the root of most WC problems lies in the delivery of medical care. Workers’ compensation medicine inhabits its own “bizzaro-world,” often lacking both clinical science and common sense. This is not the fault of most medical practitioners themselves, but more because of the pervasive manipulations, exaggerations and legal stretching of sensibilities that defy the clinical standards used in other venues.

The ubiquitous, counter-intuitive flaw is that WC medicine often is used to expand a claim rather than provide a cure. Anyone in the WC business can agree to the following truths as just a sample of medically related frustrations:

– Most any study performed shows higher costs and worse outcomes in WC medicine than in other settings. Common injuries take longer to heal when they are WC claims.

– Hearing judges regularly disregard clinical opinions in favor of subjective evidence. A common judicial outcome is to award illogical progressions, allowing diagnoses to expand as problems progress through various body parts.

– Causal relationship has an extremely low and speculative threshold when injuries are combined with chronic overlays and co-morbidities.

– Chronic conditions are accepted as arising out of incredibly specious initial traumas.

– Multiple surgeries and lifetime narcotic regimes are embraced in the face of perpetual and repeated failures to cure, all to the general detriment of claimants’ health.

– Various entities have profit streams directly related to churning medical care.

– Most of the pendulum-swinging effort in statutory legal reform amounts to limited attempts to control medical systems already tainted by legal gamesmanship. Therefore, the results don’t always support optimal clinical perspectives or patient well-being.

WC professionals may have a jaded viewpoint and accept this nonsense as part of the game. I ask you to consider a world where WC medical care was a non-issue. How much conflict and cost could be taken out of the system?

Let’s take it another step and consider ridding the current system of Medicare Set Asides (MSAs). We all know MSAs and their surrounding requirements increase cost, require added resources and waste temporary total disability (TTD) money in process delays. MSAs are a hijacking of any given state’s ability to allow compromise settlements over unproven causal relationships. In effect, when no one has determined direct causal relationship, MSAs simply decree all future care be paid, in advance, as an addendum to a settlement. Another terrible dynamic of this hijacking is how Medicare profits from the wild abandon in WC medicine, as a litany of future responsibilities can be attached to a claim absent a clinical “reasonable and customary” test by which Medicare itself might never accept such treatment requirements.

Through the MSA process, Medicare enjoys an exceptionally advantageous position with respect to WC. However, the playing field can be leveled by giving Medicare every claim from day one.

There should certainly be a direct reimbursement requirement from WC claim payers to Medicare for related care provided. I argue that this scenario would be much less costly and more efficient and fair than the current big-picture scheme that is WC medicine.

Here are a few practical thoughts in application that require no big changes:

-Medicare uses its current rules for “reasonable and necessary” to approve all care and to formally conclude treatment. Disputes can be handled via existing channels available through Medicare.

– Medicare uses its current fee schedules.

– Medicare uses its current rules for determining “chronic” conditions as opposed to curative treatment. This is the arbiter for otherwise obstinate, litigated maximum medical improvement (MMI) arguments and sets the bar for drawing down the WC reimbursement requirement and transferring a case to group health if continuing care is necessary.

Here are additional suggested changes to support the concept:

– Questionable causation or responsibility for migrating diagnosis could be given a percentage likelihood that would be applied to Medicare reimbursements. Independent physicians from opposing sides could put forth opinions, and a review process could establish the percentage applied to the life of the medical case. For example, a clinical consensus decrees that aggravated shoulder pain is 25% likely as due to job-related issues, and therefore future Medicare reimbursements from WC are 25% of cost.

– Extent of disability and permanency could still be determined by state-sanctioned independent medical exams (IMEs) and litigation process. The difference would be limits on the opportunity to exploit medical opinion, as Medicare would refer for these opinions, and aspects of Medicare’s rules and controls and requisite threat of sanctions would govern the providers.

– Medicare would need to categorize WC-preferred providers with appropriate qualification in occupationally related medicine.

– The ability to actually settle medical costs would no longer exist in any state.

– New employer insurance products or funding mechanisms could be invented to cover “Continuing Medicare Reimbursements” on certain classes of long-term claims where indemnity is fully closed, as well as the sporadic one-off future claims that might arise as allegedly part of an initial WC claim, with a “claims made” type of trigger. No more MSAs.

In conclusion, this concept would profoundly improve WC in four ways:

1) It provides a nationally accepted level of care to injured workers.

2) It brings clinical common sense to an otherwise specious and manipulated system.

3) It ends the oppressive impact of MSAs.

4) It saves an incredible amount of direct costs, frictional costs and resources while reducing litigation.

This idea is radical, but, among the calls to revise the grand bargain, it does not totally explode the current state system. I say, let the debate begin!

Oklahoma And Beyond: Significant State Workers' Compensation Reforms In 2013

The cost of providing workers’ compensation insurance is one of the top issues for companies of all sizes and across industries. Because it is regulated at the state level, companies need to stay abreast of issues in any state in which they do business. To date in 2013, nine states have seen significant workers’ compensation reform bills signed into law. Highlights from the legislation in each of the nine states follows.

Oklahoma
Oklahoma’s workers’ compensation reform laws have received the most attention lately because of the inclusion of an opt-out provision, known as the Oklahoma Option. This legislation takes effect on February 14, 2014, and applies only to injuries occurring on or after January 01, 2014.

The ability to opt out has been a significant component of the Texas workers’ compensation system for a number of years. Wyoming also has a limited opt-out provision. Approximately one-third of employers in Texas participate in the opt-out, including many large national retailers. The significant cost savings employers saw in Texas was one of the driving forces behind the Oklahoma Option.

The Oklahoma Option’s application form is significantly different from that in Texas. Employers that opt out in Texas cannot simply endorse their excess liability policy to cover Oklahoma. Rather, employers in Oklahoma that choose the option are required to provide a written benefit plan that serves as a replacement for the workers’ compensation coverage. This benefit plan must provide for full replacement of all indemnity benefits offered in the workers’ compensation system. The plan can be self-insured, or coverage can be purchased from a licensed carrier. At this time, carriers are developing policies to provide both first-dollar and excess self-insurance coverage for the benefit plans under the Oklahoma Option.

The key component of the Oklahoma Option for employers is that it gives them full control of the medical treatment through their benefits plan. More than 60% of workers’ compensation costs are medical treatment. With full medical control, employers will be able to ensure that injured workers receive the appropriate medical care from medical providers who follow widely accepted occupational medicine treatment protocols. This will eliminate doctor shopping, which is a significant cost driver in many states. The hope is that full employer medical control will eliminate unnecessary treatment, produce shorter periods of disability, and ultimately improve medical outcomes for the injured workers.

Unlike the Texas opt-out, the Oklahoma Option does not permit employees to pursue a negligence action through the civil courts. Workers’ compensation is usually the exclusive remedy for an injured worker for any work-related injuries. In other words, the employee cannot usually pursue a separate tort action in civil court. In Texas, injured workers for employers who opted-out are free to pursue remedy in the civil courts. With the Oklahoma Option, any litigation must proceed through the normal workers’ compensation administrative processes. This exclusive remedy has a narrow exception for injuries that were intentionally caused by the employer. Attorneys will have to overcome this very high burden of proof in order to pursue a civil complaint for a work injury.

Another difference between the Oklahoma and Texas opt-out scenarios is that the Oklahoma system is backed by a guarantee fund, which provides benefit payments in the event that a carrier or self-insured employer becomes insolvent and is unable to continue paying claims. The Oklahoma Option coverage offers guarantee funds for both self-insured employers and carriers. These are separate from the workers’ compensation guarantee funds.

The Oklahoma reforms also include the switch from a court-based system to an administrative system. Oklahoma was one of the few remaining states where all workers’ compensation disputes were adjudicated in the civil courts. Civil litigation is both very expensive and time-consuming. This change to an administrative system should reduce employer costs associated with litigation and produce more timely decisions, which are key elements of controlling claims costs.

Overall, the changes made in Oklahoma are positively viewed by employers and should improve Oklahoma’s ranking as a top ten state for loss costs.

Delaware
The recently passed reform bill in Delaware was designed to control medical costs and encourage return-to-work efforts.

Medical cost savings will be achieved by:

  • Suspending for two-years the annual inflation increase on medical fees.
  • Lowering the inflation index on hospital fees.
  • Creating new cost-control provisions on pharmaceuticals.
  • Establishing a statute of limitations for appealing utilization review decisions.
  • Expanding the fee schedule to capture items that were previously exempted.

Other changes included more emphasis on return-to-work efforts, which will be considered in calculating the workplace credit safety program.

These changes are expected to lower employer workers’ compensation costs in Delaware.

Florida
The use of physician-dispensed medication has been a significant issue in Florida workers’ compensation. Physicians were charging several times what the same medication would cost from a retail pharmacy, and the costs were not regulated by a fee schedule. SB 662, which was recently signed into law, creates a maximum reimbursement rate for physician-dispensed medication of 112.5% of the average wholesale price, plus an $8 dispensing fee. Although the bill is expected to produce cost savings for employers in Florida, the fee schedule amount for physician-dispensed medications is still significantly higher than that for the same medications at retail pharmacies. There are savings; however, this will continue to be a cost driver in the state.

Another issue impacting workers’ compensation costs in Florida is that the First District Court of Appeals, in two separate rulings, has found sections of the workers’ compensation statutes unconstitutional. Under the Westphal decision (Bradley Westphal v. City of St. Petersburg, No. 1D12-3563, February 2013), the court decided that the 104-week cap on temporary total disability (TTD) benefits was “unfair” and violated the state’s constitutional right to access the court and “receive justice without denial or delay.” Injured workers are currently limited to 260 weeks of TTD benefits, which was the cap under the prior law. There is concern that the arguments used in Westphal could also be used to invalidate the 260-week limit. The Court has agreed to review this decision en banc, so the ruling is not final.

In the Jacobson case (Jacobson v. Southeast Personnel Leasing, Case 1D12-1103, June 5, 2013), the court found unconstitutional a section of the Act that prevented injured workers from hiring an attorney for motions for costs on disputed claims, as this violated their right to due process.

The Jacobson case is very narrow in scope and has limited impact, but the Westphal decision has potential to significantly increase employer costs. With these cases, there is growing concern in Florida that attacks on the constitutionality of the workers’ compensation statutes will continue, further eroding prior reforms that produced significant employer savings.

Despite savings produced via the fee schedule for physician-dispensed medications, if the court upholds the decision in Westphal, the associated costs will outweigh any savings from the recent legislation.

Georgia
Legislation passed in Georgia should have a positive impact on workers’ compensation costs for employers. Effective July 1, 2013, medical benefits for non-catastrophic cases are capped at 400 weeks from the date of accident, whereas previously, injured workers were entitled to lifetime medical benefits for all claims. This change significantly shortens the claims tail for non-catastrophic cases. By eliminating exposure for lifetime medical coverage on all claims, it also reduces the potential exposure on any Medicare Set-Aside, as Medicare’s rights on a workers’ compensation claims are confined to the parameters of the state law.

In order to receive this concession from labor on the medical costs, employers agreed to increase the indemnity rates for temporary partial disability (TPD) and TTD. The indemnity rate increases are as follows:

  • TPD: $334 to $350 for a period not exceeding 350 weeks from the date of injury.
  • TTD: $500 to $525 per week for a period not exceeding 400 weeks from the date of accident.

Indemnity rates in Georgia had not increased since 2007.

Another change involves a requirement that an injured worker make a legitimate effort to return to work when a modified-duty position is offered. The employee must complete a full work shift or eight hours, whichever is longer. If the injured worker feels that he or she is unable to work beyond that, benefits must be reinstated and the burden is on the employer to show the work offered was suitable. If the employee does not complete that full shift, then the burden of proof does not shift back to the employer and the employer can suspend benefits.

The cost savings from capping the medical benefits is expected to slightly outweigh the cost increases associated with the indemnity maximum rate increase. Thus, the net impact to employers should be a slight reduction in workers’ compensation costs.

Indiana
Research indicates that workers’ compensation medical fee schedules lower medical costs. In Indiana, legislation was passed that establishes a hospital fee schedule at 200% of Medicare rates. This is consistent with other states that base their fee schedules on Medicare rates. The bill also capped the price for repackaged drugs and surgical implants. Since repackaged drugs and surgical implants were previously outside the fee schedule, these caps will help to reduce employer costs. The fee schedule takes effect on July 1, 2014.

The legislation also included changes to indemnity benefits:

  • Gradual average weekly wage (AWW) increase of 20% over three years, beginning with a 6% increase on July 1, 2014, and up to 20% over current AWW by July 1, 2016.
  • An increase of 25% in permanent partial impairment or disability (PPI or PPD), from $1,400 per degree from 1 to 10 degrees to $1,750, gradually over three years. Higher PPI ratings, above 10 degrees, increased from 16% to 22% incrementally over the same period.

Indiana had not increased its maximum indemnity benefit for many years, so the general consensus is that the increase was overdue.

Given that medical costs typically account for 60% of the total workers’ compensation expenditure, the decrease in medical costs from these reforms should offset the increase in indemnity benefits. The expectation is that this legislation will produce a small degree of savings for employers.

Minnesota
Minnesota joined most other states in amending its statutes to allow for mental-mental injuries (a psychiatric disorder without a physical injury). The law provides that the employee must be diagnosed with post-traumatic stress disorder (PTSD) by a licensed psychiatrist or psychologist in order to qualify for benefits. However, PTSD is not recognized as a work injury if it results from good faith disciplinary action, layoff, promotion/demotion, transfer, termination, or retirement.

Other changes include a cap on job development benefits and a restructuring of how attorney fees are paid. There is also an increased cost-of-living adjustment (COLA) for permanently disabled workers and an increase on the maximum indemnity rate. Lastly, rulemaking authority is now in place to include narcotic contracts as a factor in determining if long-term opioid or other scheduled medication use is compensated.

The job development benefits and narcotic use in Minnesota are significant cost drivers, so these are positive limitations for employers. However, the increase in indemnity rates, COLA, and coverage of mental-mental claims all add to employer costs. Thus, a slight overall increase in claim costs is expected as the result of the legislation passed in 2013.

Missouri
Missouri’s reforms were focused on addressing the insolvent second injury fund and returning occupational disease claims to the workers’ compensation system.

The Missouri Second Injury Fund has been plagued by problems for several years. It was heavily utilized by injured workers to supplement permanent partial disability awards. The fund became insolvent when prior reforms capped assessments that were supporting it while not reducing the claims that were covered by it. Under these new reforms, which are effective January 01, 2014, PPD claims are excluded from the second injury fund. Access to the fund will be limited to permanent total disability (PTD) claims where the total disability was caused by a combination of a work injury and a pre-existing disability. In addition, employer assessments to cover the funds’ liabilities are increased by no more than 3% of net premiums. These increased assessments expire December 2021.

The new law also indicates that occupational diseases are exclusively covered under the workers’ compensation statutes with some exceptions, which are noted below. The Act also establishes psychological stress of police officers as an occupational disease under workers’ compensation.

Bringing occupational disease claims back under workers’ compensation came at a cost. Trial lawyers in Missouri had significant influence in crafting this legislation. The act defines “occupational diseases due to toxic exposure” and creates an expanded benefit for occupational diseases due to toxic exposure other than mesothelioma — equal to 200% of the state’s average weekly wage for 100 weeks to be paid by the employer. For mesothelioma cases, an additional 300% of the state’s average weekly wage for 212 weeks shall be paid by employers and employer pools that insure mesothelioma liability. These expanded benefits are in addition to any other traditional workers’ compensation benefits that are paid. Also, these enhanced benefits are a guaranteed payout to the injured worker or his or her estate. It is very unusual to see guaranteed payout of benefits in workers’ compensation, so there is potential that this will lead to an increase in toxic exposure claims being filed under workers’ compensation.

In addition, employers will no longer have subrogation rights on toxic exposure cases. This is a potentially significant issue. Often, attorneys do not bother filing for workers’ compensation on such cases, as their focus is on larger awards available on the tort side. Attorneys know any workers’ compensation benefits have to be repaid under subrogation. There is concern from some employers and defense attorneys that eliminating subrogation rights will actually encourage filing more toxic exposure claims under workers’ compensation.

The establishment of a “Meso Fund” is also creating confusion. Employers must opt into this fund, and it is supported by additional assessments against the employers in an amount needed to cover the liabilities. If an employer does not opt into the Meso Fund, their liability for a mesothelioma claim is not subject to the workers’ compensation exclusive remedy and action may be pursued in the civil courts. Most employers do not have exposure to mesothelioma claims, so it is expected that the only employers who will join the Meso Fund are those who frequently see such claims and are looking to spread their risk to others.

Between the increased assessments, expanded benefits for toxic exposure, and the loss of subrogation on toxic exposure cases, it is expected that this legislation will increase costs for employers in Missouri.

New York
Governor Cuomo has indicated that the workers’ compensation reform legislation he recently signed into law will reduce employer costs by about $800 million annually. These savings are derived primarily by streamlining the assessment collection process and eliminating the 25-a fund and its associated assessments. New York’s workers’ compensation assessments are the highest in the nation, so employers welcome any relief in this area.

Many employers are questioning whether this legislation provides any real savings. Because the streamlining process is not known, whether or not assessments will be significantly lowered is still unclear.

The 25-a fund covered claims that were reopened for future medical treatment. Eliminating this fund does not save employers money. As occurred when the 15-8 fund (second injury fund) was eliminated under the last reforms, the claims previously paid by these funds will now be paid by employers directly, so there is no net savings realized. In addition, running off the 15-8 and 25-a funds will take several years, so the assessments — in particular those for the 15-8 — will continue. Because of the continued assessments, shutting down these funds will actually increase employer costs in the short-term. The long- term impact should be cost neutral, with the employers paying the claim costs directly, instead of through assessments.

Finally, the minimum weekly indemnity benefit was increased from $100 to $150. This will have a negative impact on employers who hire part-time workers earning near the minimum wage.

Until the impact of the streamlined assessments is known, it is impossible to quantify the overall impact this bill will have on employers. However, after the legislation passed, the New York Insurance Rating Board recommended a double-digit rate increase for the second consecutive year, indicating that they are skeptical the law will produce significant savings.

Tennessee
Tennessee also moved its workers’ compensation dispute resolution process from a court-based system to an administrative system, leaving Alabama as the only state that still uses the trial courts for all such litigation. As mentioned in regard to Oklahoma, this should reduce employer costs associated with litigation and provide more timely resolution of disputes.

Tennessee also amended its law to provide for strict statutory construction of the Workers’ Compensation Act. The law previously required that close disputes be adjudicated in favor of the injured worker. The switch means that the administrative courts no longer can favor either party and must strictly follow the statutes. In theory, this should lead to a much narrower interpretation of the statutes and reduce the courts’ expansion of what is covered under workers’ compensation. However, strict construction can work against the employer if the language in the statutes is vague. For example, several years ago Missouri switched to strict construction, which resulted in some unintended consequences. The courts in Missouri issued many decisions that were unfavorable to employers because the statutes in Missouri did not strictly indicate that occupational disease was subject to the exclusive remedy of workers’ compensation or that permanent total disability benefits stopped at the death of the injured workers.

Calculation of permanent partial disability (PPD) has also been changed in the new Tennessee law. The multipliers for not returning an injured worker to employment have been eliminated in favor of a system based primarily on the impairment rating. Overall, PPD is expected to decrease under the new system. Until cases are adjudicated under the new system, however, this remains to be seen.

Tennessee also now requires a higher burden of proof on causation. Employees must prove that the workplace is the primary cause of any injury, meaning that the employment contributed more than 50% percent in causing the injury. This is expected to significantly reduce claims where an employee’s pre-existing conditions are the main cause of the work injury.

Finally, a medical advisory committee was created to develop treatment guidelines for common workers’ compensation injuries. In other states, these treatment guidelines have helped to lower medical costs. Until these guidelines are actually in place, the exact impact is unknown.

The workers’ compensation legislation in Tennessee was designed to make the state more attractive for businesses. Employers should see lower costs as the result of the reforms.

Pending Legislation
At the time of this article, some state legislatures were still in session with pending workers’ compensation bills. It is important for companies to stay informed on state-level changes to workers’ compensation laws as they can have significant impact on costs and approaches to managing this key risk area.

Author’s Note: I would like to thank members of the National Workers’ Compensation Defense Network (NWCDN) for their assistance with this article. They are a tremendous resource in my efforts to monitor workers’ compensation developments nationwide.

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.