new paradigms for workers compensation managed care networks

1. New Paradigms for Workers� Compensation Managed Care Networks Richard Eskow Reliance National December 12, 1996

2. ... also, Billl Review (clinical and otherwise). Utilization mgmt on a primitive level... also, Billl Review (clinical and otherwise). Utilization mgmt on a primitive level

3. Phase Two: Integration with Case Management Rehab nurses and UM nurses IME The Medical Management Model PPO as Passive Partners ... minimal channeling, casting of a wide net ...... minimal channeling, casting of a wide net ...

4. PPOs: Planned Obsolescence Discounts for Volume Backlash: Interference Lack of Patient Volume Insufficient Controls .... �Pre- Planned Obsolesence ...�.... �Pre- Planned Obsolesence ...�

5. Goals for the Parties Managed Care Companies: Continued relevance, revenue Providers: Patient volume in return for financial, procedural concessions Employers: Cost-effectiveness, ease of administration, productivity Insurers: Reduced losses, client satisfaction ... realignment of agreements based on the sclear gaols of the parties ...... realignment of agreements based on the sclear gaols of the parties ...

6. The Managed Care Company�s Constituencies Employers Insurance Carriers Providers Government: Favorable Business Climate, Responsiveness to Voters and Special Interests ... have to balance internal inconsistencies .... �special interests� e.g. AMA, HMOs, labor, etc.... have to balance internal inconsistencies .... �special interests� e.g. AMA, HMOs, labor, etc.

7. The higher the intensity of managed care, the more certain needs go unmet (in the health system). Things look good re office waiting time (a comp cost factor), but medicare, travel time, appt waiting time, all are critical in w/cThe higher the intensity of managed care, the more certain needs go unmet (in the health system). Things look good re office waiting time (a comp cost factor), but medicare, travel time, appt waiting time, all are critical in w/c

8. Strategies Providers at risk �Depth� Vs. �Breadth� �24-Hour Reimbursement� Active Users of Passive Networks Ways to respond: define 24-hour reimbursement, active use of passive networks, issues (pro and con) with provider risk sharing. Let�s look at each strategy one by one.Ways to respond: define 24-hour reimbursement, active use of passive networks, issues (pro and con) with provider risk sharing. Let�s look at each strategy one by one.

9. Strategy #1: Providers at Risk Capitation Sample Size/Unpredictability Complexity of Rate-Making Potential for Under-utilization; yet, proven technique in managed care can be balanced with RTW incentives - carefully .. straight capitation is an unproven commodity ... vollume is the principal problem .... (24-hour capitation).. straight capitation is an unproven commodity ... vollume is the principal problem .... (24-hour capitation)

10. Exhibits: Impact of Physician Capitation ... this is what capitation has done on the group side; would this be good or bad for workers� compensation?... this is what capitation has done on the group side; would this be good or bad for workers� compensation?

11. Strategy #1: Providers at Risk Case Rates Disincentive for Return-to-Work; and/or Excessive Complexity The Gambling Factor: Losers are more upset than winners are happy; yet Excludes Frequency Variables Promotes provider �buy-in� .. incentive to keep costs low on medical = disincentive; last 2 points are positives.. incentive to keep costs low on medical = disincentive; last 2 points are positives

12. Strategy #1: Providers at Risk Risk Sharing/Gain-sharing Makes providers �co-insurers� with insurance carriers -- checks and balances in danger; potential for undertreatment; Potential conflicts regarding administration, reserving, etc.; yet, Aligns incentives for three interested parties (providers, insurers, employers) ... destroys provider vs. insuser �checks and balances�... destroys provider vs. insuser �checks and balances�

13. Strategy #2: �Depth� Vs. �Breadth� PPO design based on either active redirection to providers with maximum �results� - depth passive use of a broadband network - breadth mixed model purchasers of managed care services should be consciously selecting one or the other.purchasers of managed care services should be consciously selecting one or the other.

14. Strategy #3: �24-Hour Reimbursement� Integrate workers� compensation with group health medical (and potentially disability) Requires coordination of multiple, complex benefits discrepancy between employee benefits, dependent benefits; yet eliminates eligibility, compensability questions increases predictive value for capitation, other forms of reimbursement savings amounts are yet to be proven across the board. �24-hour capitation� is one approach; capitate for all med services; that gets us out from the predictablity problem in capitated comp..... Uniform case rates is another possibility..savings amounts are yet to be proven across the board. �24-hour capitation� is one approach; capitate for all med services; that gets us out from the predictablity problem in capitated comp..... Uniform case rates is another possibility..

15. Medical Financing Health Benefits Disability Benefits STD/LTD Workers� Comp Medical Comp Indemnity

16. Strategy #4: Active use of Passive Networks Overlaying third party medical management on PPO network Identifying optimal providers creating a �sub-network�, or �smart network� NOTE: no change of provider contracts is required, so a carrier or employer is still involved.NOTE: no change of provider contracts is required, so a carrier or employer is still involved.

17. �Active Use� continued can be initiated by employers, carriers, TPAs creates confusion, discontinuity in the process may alienate some providers endangers the network as a resource; yet the industry has provided no comprehensive alternative results appear promising not perfect, but a necessary stepnot perfect, but a necessary step

18. Active Use/Smart Network as Interim Alternative Employer, Carrier, or TPA can initiate Requires buy-in to early notification, redirection Increases percentage-of-savings discounts without recontracting with PPO or its providers Utilization management is problematic

19. MCO Networks as analog to an HMO defining the point of control physician case manager carrier/TPA prospects for a team approach ,,, we need to define all these loose terms on a more consistent fashion. HMO analogy is flawed but has some merit,,, we need to define all these loose terms on a more consistent fashion. HMO analogy is flawed but has some merit

20. Finding the Managing Physician moveable gatekeepers hospitalization the referral process case tracking the role of Case Manager needs definition �what is primary care?�what is primary care?

21. Physician Profiling Issues Defining Initial (intake) Physician Identifying Change(s) in Case Control Determining Tracking Points Setting the Measurement Level (individual/group/association)

22. The Managing Physician

23. Evaluating the Managing Physician Medical Cost/Case Indemnity Cost/Case Referral and �Outtake� Patterns Settlement Costs litigation rates (for larger provider groups), and where do they send injuries. Llitigation rates (for larger provider groups), and where do they send injuries. L

24. Managing Physician Lengths of Disability by Injury Type/Body Type Patient (Claimant) Satisfaction: access, waiting times, etc. Litigation Rates

25. Any study of costs per provider in comp shows that a few are responsible for the lion�s share of the cost. These are the ones that �matter�, not only for the care they render but for their referrals, and for how that care works to rehabilitate the patient. �Narrow band�, collaborative networks will replace �wide band� financially based networks. That will require new models of case mgmt, UR (including outpatient),a nd provider participation. But employers will have to step up to the plate to, and do a lot more to get patients into the network. Call it �networks that matter�. Any study of costs per provider in comp shows that a few are responsible for the lion�s share of the cost. These are the ones that �matter�, not only for the care they render but for their referrals, and for how that care works to rehabilitate the patient. �Narrow band�, collaborative networks will replace �wide band� financially based networks. That will require new models of case mgmt, UR (including outpatient),a nd provider participation. But employers will have to step up to the plate to, and do a lot more to get patients into the network. Call it �networks that matter�.

26. Adaptation to New Demands for PPO Service Increased Focus on the Personality (comp-driven, socially driven) Comp Point of Service through Benefit Enhancement (e.g.. ADR) PPOs in �Any Willing Provider� Environment comp requries that payors recognize the psychological factors that adress cost. ADR, etc., means that, while you can�t be punitiv with benefits, you can reward claimants.comp requries that payors recognize the psychological factors that adress cost. ADR, etc., means that, while you can�t be punitiv with benefits, you can reward claimants.

27. Adaptation to New Demands PPO as Information Science PPO as Marketplace PPOs -- or, networks -- may eventuzally become information resources where providers can �compete� in the �marketplace�, whre sufficiant information exists to make that possinble.PPOs -- or, networks -- may eventuzally become information resources where providers can �compete� in the �marketplace�, whre sufficiant information exists to make that possinble.

28. Team Management Doctors, nurses, or extensions will direct return to work collection of clinical data medical case management note RTW is priority one, importance of data, MCM as provider function.note RTW is priority one, importance of data, MCM as provider function.

29. Professional Team Claims Manager Medical Case Manager Managing Physician* Extended Provider Network Attorney Panel/Network EAP, others organizations and individuals *a moving target*a moving target

30. Team Management Claims professionals direct information flow serve as overall account managers Attorneys / legal panel litigate arbitrate set legal precedents The emphasis on arbitration will require more use of data, and a collaborative process between physicians and attorneys (if possible)The emphasis on arbitration will require more use of data, and a collaborative process between physicians and attorneys (if possible)

31. Team Leadership: An Open Question Candidates: Adjuster Medical Case Manager Gatekeeping Physician/Clinic/Association RNs can never �control� doctors, but someone has to track the clinical data and work with the employer. Adjusters have difficulty giving up controls.RNs can never �control� doctors, but someone has to track the clinical data and work with the employer. Adjusters have difficulty giving up controls.

32. Information and Communication Collection of required data points on loss, behavior, clinical activity, performance of parties involved (claimant, supervisor, company, providers) Comparison with normative data Trend analysis Information can be used to monitor -- and change -- behavior.Information can be used to monitor -- and change -- behavior.

33. The Team�s Process Pre-Loss carrier, employer Time of Loss employer, medical manager, physician Workplace Morale Safety Management Health and Wellness Worker Psychology Reporting Clinical Data Flow Immediate Corrective Action �Pre-loss� is proactive, preventive measures, and measures assuring that injuries will be handled properly should they occur (e.g. modified duty policy for supervisors.)�Pre-loss� is proactive, preventive measures, and measures assuring that injuries will be handled properly should they occur (e.g. modified duty policy for supervisors.)

34. Claim Management Time of Loss (cont�d) Notify employer, insurer, providers, managers Screen for case mgmt Redirect to provider state reporting Organizing resources What the claim �squad� does -- some of it is (or will be) IS driven, others will involve human activity.What the claim �squad� does -- some of it is (or will be) IS driven, others will involve human activity.

35. Claim Management Post-Loss Reporting Process Review Provider Communication Network Review The �stewardship� process, network evaluation, letting providers know how they�re doing.The �stewardship� process, network evaluation, letting providers know how they�re doing.

36. Clinical Interaction Medical Manager Physician Treatment plan Modified duty program ADL retraining Determination of MMI Assess Functionality -return to work plan aftercare plan what should go on between the RN on the telephone and the Doctor. The RN should be able to function as the extension of the doctor.what should go on between the RN on the telephone and the Doctor. The RN should be able to function as the extension of the doctor.

37. Selecting the Players Small Employers/Middle Market in groupings of associated business types; or, standard insurance company offering Larger Employers Account-Specific National Accounts custom selection of all parties It�s helpful to define the market before selecting the team�s players. The approach to forming a team can differ depending on what type of employers will be involved.It�s helpful to define the market before selecting the team�s players. The approach to forming a team can differ depending on what type of employers will be involved.

38. Sample Task Organization

39. Measuring the Team Frequency Speed of Notification/Cost by Notification Speed Promptness of Multi-point Contact Medical to Lost-Time Cases

40. Conclusions Provider Contracts will be Increasingly Less Important Employers Will Have a More Active Role Managed Care Will Reward Providers More, and Punish Less Provider Competition is Likely 24-Hour Integration -- driven by risk concepts more than by service