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Closer ties with physicians could keep workers comp costs in check

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Building relationships with physicians can help workers compensation payers improve the outcomes of claims and combat rising medical costs.

Third-party administrators such as Helmsman Management Services L.L.C. and Sedgwick Claims Management Services Inc. have measured physician and clinic performance for several years. They're among payers using the data to build relationships with highly rated health care providers, and working with low-scoring providers to improve outcomes.

Sources said building relationships with physicians is done by a small number of payers — perhaps as low as 5%. But with medical expenditures always rising, it's considered a best practice in workers comp managed care.

Cost concerns are real. Medical claim severity increased 6.7% from 1995 to 2012, the latest data available from the National Council on Compensation Insurance Inc. Meanwhile, indemnity benefits, which replace lost income based on an injured worker's average weekly wage, increased 4.8% during the same time period.

“The most costly thing from my avenue is when (workers) get misdiagnosed and mistreated, and then I have to go back and start all over again,” said Loyd A. Hudson, Columbus, Ohio-based integrated disability manager for American Electric Power Co. Inc., which has 18,500 employees in about 20 states.

Providers also are trying to improve outcomes and reduce costs, but face several obstacles, according to a Rand Corp. and American Medical Association study released earlier this month.

The goal of sharing data with physicians is to “make certain that the best providers are only getting better,” and those who “maybe aren't where they need to be are hopefully upping their game,” said Helmsman President Debbie Michel, who is based in Chicago. “If not, over time, then we would be making modifications to our network based on that.”

Providers are encouraged to meet with Helmsman's regional medical directors to discuss their evaluations, which are based on factors that include early requests for MRIs, the amount of physician-dispensed drugs and at what point they prescribe opioids, she said.

Sedgwick's provider benchmarking program, which scores physicians on litigation rates, billing practices, return-to-work outcomes and other factors, recently started sharing “scorecards” with providers, said Kimberly George, Chicago-based senior vice president and senior health care adviser at Sedgwick.

Many providers are interested in improving their scores, which helps payers since a low-scoring physician might be the only option in a rural area or a state that restricts employers from directing medical care, Ms. George said.

While states such as California and Florida allow employers participating in a managed care organization, preferred provider organization or coordinated care organization to direct workers comp medical care, states such as Arizona and Massachusetts allow injured workers to choose their providers.

Earlier this month, the Industrial Commission of Arizona said it received complaints of certain entities directing care, which only private self-insured employers can do in the state.

In Pennsylvania, state Rep. David S. Hickernell, R-West Donegal Township, introduced a bill in February that would require an injured worker to receive treatment from providers who are part of an employer's coordinated care organization for 180 days, rather than the current requirement of only 90 days.

The bill would help ensure “provider quality and integrity,” “eliminate unnecessary services, excessive or duplicative treatment and overutilization of medication,” while still allowing injured workers to choose a provider, Rep. Hickernell said in a statement earlier this year.

Even in states where employers can't direct care, sources say making injured workers aware of higher-rated physicians can help reduce the cost and length of a claim.

“So in states where (employers) can't direct, we will offer to advise the injured workers (and explain that) we have an understanding of the providers within the area that are delivering the most successful outcomes,” Ms. George said.

But payers don't need data to build relationships with physicians.

“Over the last 10 years, there's been a lot of debate about how you would actually measure and quantify who your good physicians are,” said American Electric Power's Mr. Hudson. “Nobody likes to be measured.”

Mr. Hudson said he looks to forge partnerships with physicians who understand comp and who will help him identify an injured worker's capabilities so he can offer a light-duty interim assignment until the worker can return to his or her full-time job.