BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe



Nearly half of our nation's population is in a managed care plan, and within five years, treatment for most workers compensation injuries will be provided under managed care as well.

As competition in managed care workers compensation expands beyond price to quality, accreditation standards will become a necessity. Yet those who hope for a single "Good Housekeeping Seal of Approval" like the National Committee for Quality Assurance offers to HMOs are likely to be disappointed.

Establishing consistent quality standards will help safeguard employers and employees, but devising consistent measures for an evolving and consolidating system will be a challenge.

Managing the human situation is the fundamental work of the workers comp system. And those who are committed to quality and helping people deal with their injuries are responsible to make sure they are protected.

With regard to safety, employees must be protected from bad or dangerous doctors; overtreatment and undertreatment; careless disregard of risk of reinjury; avoidable discomfort or pain; unnecessary disability and career dislocation; and unnecessary financial loss.

Employee dignity issues also must be addressed. They include inconvenience or other difficulties with access to medical care; biased, arbitrary or capricious decision-making; unreasonable interference by payers and employers; rudeness; and poor service.

The American legal system reflects our cultural belief that individuals without free choice transfer the responsibility for making good choices onto those who constrain them. In the eyes of the law, employers, insurers and managed care companies have some responsibility for the quality of care arrangements they make-especially when they make explicit or implied promises.

Unfortunately, employers and insurance companies have not been the most sophisticated health care purchasers. They typically have focused on inadequate discount products. This short-term economic interest often increases overall claims costs and litigation rates.

Stories of group health plans-HMOs particularly-skimping on patient care, unscrupulous claim denial practices and substandard physician networks have made employers more sophisticated about what to look for in an HMO. State regulators also are moving to protect the public by scrutinizing HMO practices.

As a result, HMOs have begun to compete fiercely on quality, boasting their NCQA accreditation and Health Plan Employer Data & Information Set outcomes results. Employers are likely to use their newly developed quality sophistication in their managed care workers compensation decision-making.

Managed workers comp care

Less than 10 years ago, workers compensation was the last bastion of unmanaged health care, and property/casualty insurers responded by implementing primitive cost control programs focused on provider discounts and high-cost claims management programs.

Customers continue to press insurers, third-party administrators, cost containment and case management companies and industrial medicine clinics to provide managed care.

Most of the current managed care products are simply more aggressive versions of earlier offerings: attempts to channel patients into preselected discounted provider networks, earlier and more frequent case management and intrusive cost control techniques. Customers have grown somewhat cynical about claimed savings from some of these techniques, particularly with discounts on medical charges.

So today managed care workers compensation has become a catch-all term for many different kinds of services and means. Achieving somewhat different ends, a brief discussion of these follows:

Insurer micromanagement.

Micromanagement techniques are the hallmark of the traditional insurer's managed care approach, focusing on cases one at a time. Micromanagement means someone other than the treating doctor tracks, constrains or redirects care to speed prompt recovery and return to work. This kind of micromanaged care has evolved to a high art in workers comp because most physicians neither are trained nor interested in managing disability.

Many insurers' managed care programs should be more realistically named "managed cost." Careful inspection reveals that they mostly change the way care is paid for, rather than what care is actually delivered.

For example, a recent study compared data on medical care given to thousands of patients in the Midwest with identical injuries, some from a group health data bank and others in two workers comp data banks.

Those covered by workers comp received three times as many health care services over a longer period as those covered by group health insurance. A sprained wrist is a sprained wrist, whether caused by falling off a skateboard or a scaffold.

As it turns out, one of the workers comp groups did have "managed care." Bill repricers and utilization reviewers refused to pay the bills.

A company cannot manage care if it only manages cost by retroactively refusing to pay for services. Instead, it must improve quality, outcomes and value. Changing what happens to injured employees is what heals them faster and gets them back to productive work sooner. It also reduces cost the most.

The HMO model.

The traditional workers comp industry is threatened by the rapid development of workers compensation HMO programs. Because HMOs have produced 15% savings in group health, some employers believe they can do the same for workers comp. A recent Milliman & Robertson survey confirmed this; nearly all HMOs have workers comp offerings in development or in operation.

In contrast with the micromanagement practices of traditional insurers, HMO success in cutting group health costs stems from macromanagement techniques. Mainly, these are financial arrangements such as physician capitation, performance-based incentive payments and bulk-purchase arrangements.

Macromanagement focuses on the front end by setting up incentives to improve initial physician decision-making and decrease the monitoring and rework required on a case-by-case basis. But, quality and customer satisfaction need to be monitored for the possibility of skimping.

The HMO disadvantage.

While HMOs do some micromanagement, half of their dollars are spent on hospitalizations and very sick patients. Their case management expertise is in cancer treatment, sick newborns, heart surgery and other high-dollar cases.

Because group health medical costs dwarf workers comp medical costs-only 2% to 3% of national health care expenditures are for workers comp-HMOs tend to view workers comp as a sideline and feeder for their group health business.

HMOs may avoid the investment of time and money required to develop competence in workers comp, preferring to invest in their core business. Lacking familiarity with disability management and return-to-work programs, HMOs could increase case costs. Half of workers comp dollars still are spent on wage replacement.

Provider-centered models.

Networks once offered little more than provider address lists. Now more sophisticated national, regional and local networks have entered the managed care arena.

Physician/hospital organizations and similar local networks of providers that originally banded together to bid for contracts are getting into the business. Many of these organizations were born out of the health care industry's determination to outwit managed care companies, but legislation that sets up managed care organizations for workers compensation also has created opportunities.

This group of organizations is relatively new and thinly capitalized. The inexperience and internal dynamics of some provider-based organizations may make it difficult for them to deliver good cost reduction results in the bottom-line business of managed care.

The CMO model.

A new breed of company called a care management organization is emerging. A CMO is as different from a traditional casualty insurer as an HMO is different from a group health insurance company.

CMOs view themselves as part of the prevention and health care industry. They put the human event over financial transactions and claims processing. To CMOs, managed care is their core, even though they provide workers comp insurance and financial vehicles to customers who need them.

The difference between a CMO and a traditional insurer is internal identity and emphasis. Care management organizations also are very different from HMOs, because their specialty is workers comp. They recognize that there are three main ways to reduce workers comp costs: prevent injuries from happening, streamline injury care and speed return to work.

Like HMOs, care management organizations use macromanagement techniques to influence physician decision-making. They seek to align incentives with their networks and with individual physicians, emphasizing non-medical case outcomes, such as time off work, litigation and rehabilitation.

An example of this kind of innovation is paying providers to do more of the micro care tasks: tracking, monitoring, speeding and tailoring patient care to assure a prompt recovery and return to work. Although non-medical, these tasks speed the patient's transition from sick to well, and thus are legitimately part of the healing process.

Letting doctors practice

The most revolutionary tool in macromanaged care is letting doctors make more money when they use resources wisely.

The old-fashioned payment system, which pays a fee for every service, is basically piecework, known in manufacturing as a powerful incentive to increase output. In fact, doctors make lots of discretionary decisions between reasonable alternatives, though with different costs and consequences.

Progressive care organizations like CMOs see that physicians are sprung loose from a procedure-focused piecework-payment system. Encouraged to reach beyond technical medical treatment, these physicians become powerful allies.

The fundamental purpose of medical care is healing, so it's sensible to pay more those physicians whose overall results show they are faster and more efficient at getting their patients well.

Rudimentary incentive payment plans in place now focus almost entirely on average case costs, largely because of lack of adequate data about other quality measures. Managed care organizations are seeking to improve the data to include better outcomes and quality measurements.

Accreditation, certification

As data measurement improves, several aspects ofworkers comp care could be certified or accredited. Those include:

Loss prevention. Work-related injuries and illnesses are preventable. That fact makes workers comp health care different. Machine guards, lock-out/tag-out and protective equipment stop injuries. Injuries are signals that prevention failed.

Consequently, quality standards for prevention are critical and should not be overlooked. Too many prevention programs in workers compensation are weak, window-dressing, optional or are available only for a fee.

The greatest failure of the workers comp system may be its inattention to preventing injuries. In fact, for many insurers, effective prevention programs would jeopardize their income stream by improving experience and thus reducing premium.

Provider credential checking. This basic patient protection measure is not in widespread use in workers comp. Many employers still send their employees to providers with whom they have merely made informal business arrangements. Some workers comp networks' only selection criterion is whether the providers will accept heavily discounted rates. They may not check to make sure the doctors have medical licenses, aren't notorious drug or sex abusers and haven't had multiple malpractice judgments.

Network access to health care. Access is both a patient safety and an employee dignity issue. Good access to health care means getting the necessary care from an appropriate provider, in a reasonably convenient location, at the time needed and in a manner that meets one's service expectations.

Employers that are interested in access, and regulatory agencies that oversee this issue, typically specify ratios of primary care providers to patients, require plots of providers on maps, specify ratios of specialists to primary care providers, set maximum acceptable travel distances to providers and hospitals, require arrangements for off-hour and emergency care, etc.

Obviously, access standards from group health care need modification before being applied to workers comp.

Case management. This is a largely unregulated process. Nurses manage cases, but so do social workers and even insurance adjusters.

Case managers in different organizations work on different kinds of issues, depending on what piece of the health care pie interests them. Generic case management quality standards and accreditation will have to reflect the variability of practice location and dimensions being managed.

Most cases being managed in workers comp are musculoskeletal injuries, mostly sprains and strains. Forty percent of workers comp dollars are spent on back injuries, and case managers work hard to achieve good outcomes in these difficult cases.

Besides expediting the medical care process, workers comp case managers work on the return-to-work process, finding temporary transitional work so employees can finish their recovery on the job, and suffer the least life and vocational disruption.

An accredited case management program in workers comp needs to demonstrate its efficacy at preventing unnecessary disability by keeping employees productive, while protecting the patients from reinjury through premature return to work.

Case managers tend to work in the middle, in the gray zone, hired by payers to reduce cost but acting as patient advocates. Generally, making sure the patient is well cared for in as non-invasive and efficient a manner as possible reduces cost and improves quality of service and patient satisfaction. Ensuring professionalism of case managers by requiring training and documentation and tracking of results, including patient satisfaction, is important.

Utilization review. Utilization reviewers are often, but not always, nurses. They usually compare the doctor's plan with medical care protocols or standards.

Although the decision not to pay for a service is technically not the same as the decision not to allow it to be performed, UR frequently seems to function that way. Sometimes nurses, or even non-health care professionals, countermand the decision of the treating physician without listening to reasons or consulting another doctor.

The blind application by laypersons of simplistic protocols enrages the medical community and has attracted the attention of some legislatures. Patients can be hurt by both over- and undertreatment.

Unfortunately, there is no generally accepted accreditation available for managed care workers comp organizations.

Accreditation for group health care could miss gross failings in workers comp. NCQA cannot do it, since its charter limits it to prepaid health plans. Other possible accrediting outfits are the Utilization Review Accreditation Commission, American Assn. of Ambulatory Health Centers, and the Joint Commission on Accreditation of Healthcare Organizations. However, none of them reviews with the breadth, thoroughness and objectivity of the NCQA-and none has the reputation in the marketplace.

A quality guide for today

Until such accreditation systems emerge, there are several aspects of workers comp medical care employers can scrutinize to ensure quality. Those are:

Providers. Employers are advised to ensure that the providers they have selected have acceptable credentials. The easiest current solution is to use a network or managed care organization that abides by the credential-verification standards adopted by the NCQA or the new network standards promulgated by URAC.

In addition, quality and service complaints about providers should be carefully logged and evaluated to demonstrate a reasonable effort to avoid patient abuse.

Networks. Aside from marketing and deal making, group health HMOs and networks eager to offer workers compensation services may not know what they are doing. It is wise to check on the training, occupational experience and track record of all the people who will be involved in providing care.

Workers comp managed care organizations must have physicians who provide initial care for injuries. These doctors need to be located close to the worksite and available on demand during work hours. Beyond immediate care, these doctors also should serve as the entry point and guide into the health care system for cases that require care from specialists, hospitals or other medical providers.

Remember, doctors who are whizzes at acute injury care-urgent care and emergency providers-usually know very little about managing disability and preventing unnecessary time off work. Check how much rework is being required because the initial providers have not got the right philosophy, approach and expertise.

The best initial care providers know both occupational medicine and the workplace. They specialize in prevention and care of industrial injuries and disability management. Specialists and other providers in the network should be selected for their medical capability as well as their experience in and willingness to pay attention to the practical issues in treating work-related injury.

Case management. Pretty much every workers comp program includes case management, so the question is not if but when and how often and with what results. Programs that let claims adjusters decide when to call in case managers and organizations with only a few case managers and thousands of cases are way behind. The most innovative programs are moving case management to providers.

Does the managed care approach harness the discretionary capability of the providers? Is the main incentive for providers a negative one, i.e. fear of lost business? Is the incentive too big so it disturbs the physician's commitment to deliver good care to the patient? Are financial incentives aligned? Risk-sharing is not the only positive incentive and may be unkind because it is too risky for low-volume providers. Bonuses, preferential channeling, information and feedback are other potential positive incentives.

Is there a shared set of expectations on how the care process should go? Proprietary protocols and standards are becoming obsolete. Reducing variability in the kind of care given will increase efficiency.

Reducing wasted time reduces cost. Time can be wasted during active medical care-waiting for appointment, questions not answered because of poor communication-as well as wasted by delays in returning to work. Putting cases on schedules tightens up the system. Cases should be aged just like accounts receivable.

Report cards. Providers need and want feedback and information on their performance. Crude report cards may reinforce the wrong behaviors, i.e. evaluation solely on cost may encourage skimping on care and reinjuries. Multidimensional report cards that compare provider performance on customer satisfaction, medical quality and utilization, disability management and other outcomes, give doctors a solid footing to compare themselves with their peers.

Customers are getting wary of assertions about managed care effectiveness. Programs increasingly will be required to document their claims with objective evidence.

The managed care program's performance across all its customers is one piece of evidence: overall loss ratio, average cost per claim, lost-time claims as a percentage of all claims, average days lost per lost-time injury are items that sophisticated customers are likely to request.

Also be wary of component vendors. Having all the components "available" is not the same as having them in use and working together.

A call to action

Employers, insurers, labor and managed care companies must work together to set quality standards for workers comp managed care. If we act slowly or fail, regulators will act state by state using the local political process. This will only guarantee a highly variable outcome.

Take California's certification of workers comp health care organizations, or HCOs. In more than three years, only seven organizations have managed to get certified-an example of overzealous standard-setting. On the other hand, accreditation that nearly anyone can get has a low value as a distinguishing feature in the marketplace. The balance is difficult to find but important.

Quality standards for the highly fluid workers comp industry must be generic enough that applicants can be from different kinds of organizations. Additionally, the practical economics of the accreditation industry say there need to be enough applicants to generate enough income in application fees to make the business viable.

However, the need for income must be balanced by scrupulous, thorough and even-handed program administration. Even a whiff of insider dealing will devalue the accreditation and discourage applicants.

The accrediting body must thoroughly and objectively evaluate an applicant's compliance with their own programs and policies, not just accept their word on it.

To gain acceptance, accrediting bodies need industry sponsorship. They also need advisory boards for credibility. These boards and sponsors need to be very careful not to spoil what they are trying to build by maneuvering to take care of vested interests.

Dr. Jennifer Christian is vp and chief medical officer for ManagedComp Inc., a national workers compensation care management organization in Waltham, Mass