Taming Medical Cost Inflation

Transcription

1 Taming Medical Cost Inflation How to Combat the Rising Costs Associated with Workers Compensation Claims During the past decade, medical costs associated with workers compensation claims have risen dramatically. Specifically, as an industry we have experienced a 211% rise in average medical costs per claim since While cost containment efforts to date have slowed the upward trend, clearly more is needed to curb the escalating medical expenses that plague our industry. One of the most formidable challenges today is figuring out how to achieve quality medical outcomes for injured workers while holding at bay the surging costs of medical care. The conventional focus of insurers has been to try to lower the cost of each individual unit of care, such as that of diagnostic tests and doctors visits. A common strategy is to contract with medical provider networks that negotiate discounts. However, as studies have shown, the number of treatments is more important than unit costs in driving medical costs, and a high quantity can quickly undo the benefits generated by the negotiated discounts. Since 50% of medical spending arises from the top 6.2% of all claims 2, it essential to address the most costly cases individually. What is needed is a far more reaching cost containment approach to control medical spending. This can only be accomplished with a balanced approach involving sharpening the tools insurers already employ to contain costs, and addressing the most costly cases with distinct practices. Four strategies can be employed to accomplish this. The first addresses unit cost containment, while the last three address the categories of cases that represent the greatest spending within workers compensation. Strategy 1: Sharpen Your Traditional Tools Insurers have traditionally focused much of their attention on medical expenses that are high volume, standardized and susceptible to narrowly designed means of control. These expenses include physical therapy, medications, durable medical equipment and diagnostic tests. This unit cost containment strategy shaves medical expenses dollar by dollar across many payments. A good example is how most insurers have contracted with pharmacy benefit management firms to negotiate lower prices for drugs, establish a list of approved drugs (a formulary), process payments and keep an eye out for aberrant patterns of use. Pharmacy benefit management services over the years have become essential. 1 National Council on Compensation Insurance Id

2 In addition to pharmacy benefit management, the vendor community has developed a plethora of highly specialized tools. Examples include utilization review, bill review, preferred provider networks, e-billing, automated workflows, and prompt pay, among other solutions. Together, these tools annually trim away more than a hundred million medical events, across more than a million claims, cutting costs by the tens or hundreds of dollar per transaction. To address this portion of spend, it is important to ensure that you are taking advantage of the exiting tools by employing them in your organization. It is also critical that you follow strong practices to ensure your programs remain sharp. What often happens is that program management becomes slack. Common issues include the overpayment of medical bills, inconsistent decision making, the use of manual work arounds, using unapproved vendors, re-work due to errors, and the use of practices that are contrary to policies and known best practices. This can result in millions of dollars being lost. According to Mitchell International, for a payer that processes 25,000 bills a month the amount lost would be more than $6 million: In order to curb these losses, a number of solutions are available. These include employing regular performance audits, benchmarking results, using configurable workflow tools and fully configurable rules engines, performing PPO performance audits, using automated transaction monitoring, connecting programs with best-ofbreed interface integration, managing adjuster approvals, and employing exception processing and data analytics. Strategy 2: Contain Chronic Pain Treatment Pain care is in a class by itself, and especially important to monitor because chronic pain conditions often make up a third of an insurers total claims costs. Additionally, they are hard to evaluate as many of the treatments for chronic pain are controversial, expensive, very often ineffective and even harmful to the patient. Patients are often treated with expensive drugs and undergo care by numerous doctors. Months and even years may elapse without the claimant experiencing sustained pain relief. According to industry studies, the following costs are associated with pain conditions: $100 billion in health care expenditures and lost productivity 3 $500,000 per 1,000 full time workers for medical costs, lost productivity and pharmaceutical costs associated with back/neck pain conditions 4 250,000 lumbar surgeries annually with a failure rate of 30% for those with fusion and 37% of those without fusion A 10% reoperation rate for back surgery Moreover, the ongoing pain and failed medical results make the patient more likely to become clinically depressed and physically depleted. $400,000 per 1,000 for medical, pharmaceutical, and lost work due to depression 5 And the patient may even develop a personal view of themselves as a pain victim. 3 NIH Guide: New Directions in Pain Research, September 4, Loeppke, Ronald, MD, MPH et al. Health and Productivity as a Business Strategy Journal of Occupational and Environmental Medicine Id 2

3 This illness persona, as it is often referred to, leads to the adoption of physiological patterns that can exacerbate the patient s condition. However, early intervention can prevent many cases from deteriorating further. A claimant who is in persistent pain and is six months post injury has a reasonable chance of full recovery and returning to work. Paradigm, for example, returns 84% of patients to work and gets 48% of patients completely off drugs when addressing injuries less than a year from the date of injury. Strategy 3: Carve Out the Management of Catastrophic Injuries Severe burns, spinal cord injuries, traumatic brain injuries and other major injuries are in a class by themselves. They are rare about 5 cases out of every 1,000 claims but consume approximately 20% of all medical dollars. A claimant who is in persistent pain and is six months post injury has a reasonable chance of full recovery and returning to work. Even for cases years out from the date of injury, there is hope. For cases an average of six years from the date of injury, Paradigm returns 34% of patients to work and gets 52% completely off narcotics. While not as impressive as the 84% that will return to work if addressed early, it is nonetheless dramatic when you consider the financial impact of reducing an ongoing legacy book of pain cases by a full third. Paradigm believes it is essential to address pain from a medical, physiological and social point of view, and to employ expert doctors and nurses that can monitor claimants, consult with treating doctors and propose treatment approaches. Successful treatment requires a motivated individual and a skilled treatment team willing to work within the biopsychosocial paradigm. It is Paradigm s belief that the use of the biopsychosocial model is the best evidence-based method for restoring function and reducing disability. The biopsychosocial model emphasizes functional recovery over pain elimination, and employs physical treatment, medical care and supervision, cognitive/behavioral modalities, psychological treatment, vocational rehabilitation and patient education. Care can be extremely difficult to deliver, as multiple treatment teams get involved and risks of complications are high. Clinicians with national expertise in each type of catastrophic injury should be recruited to treat and consult on these injuries. Following treatment in the intensive care unit, droves of specialists are typically involved with catastrophic injuries. And while the care they provide is generally of high quality, there is inherent in the delivery numerous missed handoffs, high rates of medical errors and severe complications that lead to poor medical outcomes and increased costs. Some of the more common complications associated with catastrophic cases include (but are not limited to): skin breakdown, hydrocephalus, seizure disorders, spasticity/contractures, chronic pain, pneumonia, heterotopic ossification, adhesive capsulitis, abscess, infection, wound infection and sepsis, and ventilator dependency. Knowing what to look for is half the battle. Paradigm accomplishes this by using extensive data, years of experience and the quality of our expert involvement. 3

4 In order to ensure strong outcomes, the following elements are instrumental: Specialist physicians Catastrophic nurses onsite Full recovery plan from start Systematic medical management Data informing all aspects of care Built in checks and balances Underscoring the success of these elements is a recent study by Milliman, Inc., the leading actuarial firm in the US. Milliman recently found that Paradigm returned catastrophic patients to work 40% of the time, five times the industry average, and saved insurers 36% on lifetime medical costs through the use of expert doctors and a systematic process of medical management. Severe burns, spinal cord injuries, traumatic brain injuries and other major injuries are in a class by themselves. Strategy 4: Keep Constant Watch Over Former Catastrophic Injury Patients Unless an injured worker has returned to work, the chances of that person developing complications stemming from their initial injury are very high. Some of the warning signs to watch for include: Costs anticipated in excess of $500,000 for the remaining lifetime of the claim Recurrent infections (respiratory, urinary tract, skin, bone) Long term ventilator dependence Chronic musculoskeletal and/or neuropathic pain Complex daily care needs Instability with care configuration/support Behavioral dysfunction/ deterioration/instability Recommendations for experimental treatment Recommendations for invasive procedures Suboptimal results to surgical intervention Chronic wounds Seizure disorders Joint contractures Frequent re-hospitalizations Failure to adapt to disability General health deterioration Cognitive impairment Intensive equipment needs When these conditions are in evidence, active management is needed. This is because these types of persistent chronic conditions can cost a great deal. According to the Archives of Physical Medicine and Rehabilitation Volume 84: $1.2 Billion is spent annually for chronic postacute conditions that have developed years after initial catastrophic injuries 6 80% of Individuals With a SCI will experience skin breakdown 7 Within the First 5 Years After a SCI, 25% to 30% Experience Wounds 8 This will include expert physician supervision, employment of an onsite case manager, and active systematic management of the claimants medical conditions in order to mitigate the medical conditions and course correct the escalating problems. The same strategies that work for managing chronic pain and catastrophic injuries will help course correct chronic medical complications that arise years after the initial injury. 6 Archives of Physical Medicine and Rehabilitation Volume 84 7 Id 8 Id 4

5 The key is to see the spike coming by watching for escalating costs so that you can contain the damage early. Expert physician supervision, employment of an onsite case manager, and active systematic management of the claimants medical conditions can mitigate the medical conditions and course correct the escalating problems. In terms of the impact that can be achieved, Paradigm has found that appropriate management leads to: 20% reduction in lifetime reserves 9 50% improvement in physician service costs 28% improvement in attendant care costs 22% improvement in pharmacy costs The Final Analysis In summary, sharpen your tools to control high volume, standardized expenses. Build your medical expertise to monitor and influence treatment plans, and employ a higher level of medical management to chronic pain, catastrophic and problematic post-catastrophic claims. Remember, the ultimate medical cost containment solution is timely and complete patient recovery. The trick will often be in discerning who is best to provide what care at what time in the course of treatment leading to recovery. When this is accomplished, medical inflation can be significantly curtailed. 9 Milliman, Inc review of Paradigm cases 5