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ATLANTA-Boston recently became one of the first cities to create its own preferred provider arrangement for workers compensation injuries, adding to a list of changes that are turning around a runaway system.

During 1996, the city cut its workers comp costs by $1.7 million from the previous year with several system changes made even before the implementation of the new network. The amount of cost reduction easily surpassed the expectations of Patricia A. Morey Walker, Boston's workers compensation agent. A year ago, she told an audience at the annual Risk & Insurance Management Society Inc. Conference in Toronto that she expected to trim $1 million in workers comp costs during 1996.

Back then, she described a workers comp system that was in shambles. Even simple oversight was absent and claims regularly disappeared into a black hole, she said. Former city workers continued receiving payments years after they were no longer entitled (BI, April 29, 1996).

She told of having to gain union cooperation to implement a modified-work program, early intervention system and case management.

At last week's RIMS conference in Atlanta, Ms. Morey Walker was able to report positive results. She moderated a session detailing Boston's success.

Boston's workers comp costs exceeded $7 million in 1996, compared with $11 million in 1992, she said. The city now has 200 of its more than 15,000 employees away from work because of injuries, compared with 500 in 1992.

Still, the city continues to make improvements and changes. The Workers' Compensation Services department replaced a telephonic case management system with one-on-one personal contact for serious injuries.

"It's much more aggressive, said Loredana Devardo, the department's utilization review nurse. "Our employees respond more to the face-to-face contact."

Case managers visit employees at their homes, and by seeing their surroundings the case managers can make additional recommendations for speedy recovery, Ms. Devardo said. The case managers only make such visits with the approval of employees, Ms. Morey Walker added.

In January, the department launched the new provider network, which works in conjunction with city's modified return-to-work program because the contracted medical providers understand the city's requirements.

Before implementation of the network, employees saw doctors who were not providing adequate treatment yet were charging high rates for their services. Injured employees also sometimes had to wait for days before a doctor was available to see them.

The Boston network consists of five separate provider organizations. They are three major hospitals and two rehabilitation facilities. They are all in Boston because of the employer's regulation that employees live within the city they serve.

While Ms. Morey Walker was working to create the program, many vendors tried to sell her their pre-packaged medical networks, she said. But she wasn't satisfied with any of them because they all included far too many medical providers within their approved networks. "I didn't understand how they were going to control medical costs when the provider list was just so, so large," she said. "So I asked people I know, 'Can I start my own?' and that's what we did."

"Also, a lot of networks in existence had great lists of internists, orthopedists and all kinds of specialists, but one of the things they seemed to lack was occupational specialists," said Ms. Devardo. "Work-related injuries are a specialty. We believe that, so we wanted a program that gave our employees access to occupational specialists."

The contracted medical facilities are not providing their services to Boston on a capitated basis. However, the city's contract does come with requirements they must meet. For example, even though some of the facilities typically charge patients for parking, those fees are waived for city employees seeking treatment for work-related injuries, Ms. Devardo said.

Doctors also must give definitive medical recommendations. Just to say someone must recuperate away from work is not enough, Ms. Morey Walker said. They must specify the amount of time required before the injured employee can return to work.

The providers also must offer 24-hour service for employees who work odd shifts. And they must provide care within 24 hours and visit city sites to see the type of work employees perform.

Creating the network required the approval of the state's Division of Industrial Accidents. It also required, where possible, coordinating the city's and providers' billing systems.

Ms. Morey Walker predicts that in 1997, the city will cut workers comp costs by $250,000.