Workers Compensation Managed Care

By:

Laura Deterding, ACAS, MAAA

Midwest Employers Casualty Company

Ratemaking Implications of Managed Health Care on Workers Compensation:

Components and their Ratemaking Implications

The goal of Workers Compensation Managed Care is to integrate cost containment with optimal treatment to facilitate expeditious re-entry into the workforce.

TPA/Claims

Adjuster

InjuredEmployee

Minimal cost to

Employer

Medical Providers

Case Managers

Workers Compensation Managed Care

Employer

Utilization

Review

Specialist

VocationalRehabilitationSpecialist

“Participants”

Workers CompensationManaged Care

• Third Party Administrator (TPA)/Claims Adjuster– Role:

• Investigate compensability of the claim.

• Identify and assign appropriate case managers and vocational rehabilitation specialists.

• Set objectives and measure the results.

• Secure IME/Second Opinions.

Workers CompensationManaged Care

• Third Party Administrator (TPA)/Claims Adjuster (Continued)– Role: (Continued)

• Evaluate vocational rehabilitation involvement and return to work possibilities.

• Settle the claim.

– Goal:• Proper claims handling is essential to cost

containment and indemnity mitigation.

Workers CompensationManaged Care

• Case Management– Definition:

Case management is necessary to insure that proper medical protocols are applied for a specified injury type. The case manager is a registered nurse with professionally recognized designations and experience with industrial disability cases.

Workers CompensationManaged Care

• Case Management (Continued)– Role:

• Develop treatment plans and communicate those plans to:

– Treating Physician

– Injured Employee

– Employer

– TPA/Claims Adjuster.

Workers CompensationManaged Care

• Case Management (Continued)– Role: (Continued)

• Steer injured workers to industrial physicians/PPO/HMO networks

– Industrial physicians have an in-depth understanding of the industrial disability process and the employer’s needs. They serve as “gatekeepers” directing the initial treatment avenues

• Work with employer and vocational rehabilitation specialist regarding light duty and return to work possibilities.

Workers CompensationManaged Care

• Case Management (Continued)– Role (Continued)

• Attend medical staffings and provide input regarding appropriate treatment protocols.

– Goal:• Effective case management results in medical cost

containment and reduced indemnity costs.

Workers CompensationManaged Care

• Medical Provider System– PPO

• PPO networks involve pre-negotiated discounts for the employer by use of selected providers. Networks may include:

–Hospitals–Physicians–Prescription Services

–Physical Therapy Centers–Other Medical Services

Caution: There is a potential for utilization abuse. Should evaluate treatment frequency.

Workers CompensationManaged Care

• Medical Provider System (Continued)– HMO

• HMO providers are paid a flat fee for each covered employee. Providers involved in an HMO are employees of that organization.

Caution: There is an incentive for the provider to reduce the treatment frequency.

Workers CompensationManaged Care

• Medical Provider System (Continued)– Fee Schedules

• This involves a legislated schedule of fees payable by specified CPT codes. Fee schedules establish a schedule of maximum charges applicable to:

Caution: Must verify adherence to fee schedules through in-house review or through an independent vendor who shares in the percentage of savings.

–Physician charges–Hospital Charges

–Prescriptions–Other medical services

Workers CompensationManaged Care

• Medical Provider System (Continued)– Goal:

• An effective medical provider system results in medical cost containment. Indemnity losses may be indirectly affected.

Workers CompensationManaged Care

• Utilization ReviewDefinition:Utilization review is a system to manage, assess, and review the injured employee care.

–Frequency–Duration

–Medical reasonableness/necessity–Appropriateness

–Role:• Care is evaluated based upon the following

criteria:

Workers CompensationManaged Care

• Utilization Review (Continued)– Goal:

• Effective utilization review results in medical cost containment. Indemnity losses may be indirectly affected.

Workers CompensationManaged Care

• Vocational Rehabilitation

Definition:

Vocational rehabilitation is a systematic tool utilized to facilitate re-entry into the workforce. Parameters for vocational rehabilitation are established by the TPA/claims adjuster include setting objectives and measuring outcomes within established time frames.

Workers CompensationManaged Care

• Vocational Rehabilitation (Continued)– Role:

• Provides vocational assessments for feasibility of return to work.• Helps employer formulate light duty positions, both short and long term.• Perform labor market surveys and job searches.

– Goal:• Effective vocational rehabilitation results in reduced indemnity payments.

Workers CompensationManaged Care

• Employer

One of the fundamental principles of managed care involves employer participation.

– Safety programs

– Wellness programs

– Procedures for reporting job-related injuries

– Workers Compensation system

– Light duty/Return to work programs

– Role:• Provide educational materials and training to personnel

regarding:

Workers CompensationManaged Care

• Employer (Continued)– Role: (Continued)

• Formalize light duty programs.• Communicate frequently with injured employees.• Involved in the selection of industrial/panel physicians.

Workers CompensationManaged Care

• Employer (Continued)– Goal:

• The employer involvement results in both medical cost containment and reduced indemnity losses.

Workers CompensationManaged Care

The End