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LAKE LANIER ISLANDS, Ga.-Employers need to find new ways to use managed care to cut workers compensation costs, a disability manager says.

"You look at your case load and you know it can't be working that well," Michael Cherny, executive vp at Physician Advisors to Disability Managers in Chicago, said of the current programs.

Speaking earlier this month at the Society of Risk Management Consultants' fall conference in Lake Lanier Islands, Ga., Mr. Cherny outlined problems that plague workers comp programs.

First, claims costs continue to rise faster for workers comp than for group health plans, he said. Also, in many downsized companies, each employee has greater value, so the costs of an absence increase, he said. "Companies can no longer afford employees who they've trained to be out of work," he said.

Second, how a patient is treated varies by location in the country and sometimes within a region. This has no medical justification, he said.

Also, people receiving workers comp tend to stay away from work longer than those with the same condition who are not receiving benefits, he said.

For example, he said, one study showed people with the same type of hernia stayed out of work an average of 33.6 days when receiving workers comp, compared with 12.6 days for those in a group health plan.

Another problem is that people receiving workers comp have worse outcomes than non-workers comp patients, Mr. Cherny said. He said a small number of patients in workers comp will be out very long periods and account for a majority of claims costs. Of those patients out longer than six months, only 1% to 2% ever return to the workforce.

A fifth problem is variations in utilization review practices within the same health care company, he said. "You give two reviewers the same set of facts and the chances you get the same decision is less than 50%," he said.

Any successful program to control workers comp costs must address all these issues, he said.

Certain features characterize most managed care workers comp programs, according to Mr. Cherny. These features, however, do not fully address the problems, he said.

Most plans have a system of early notification of an injury. This lowers costs for some injuries but does not address the high-cost patient, he said.

Other features include provider networks, retrospective bill reviewing, precertification of medical procedures, nurse case management and a return-to-work coordinator, adjuster teams and independent medical examinations, Mr. Cherny said.

He said there are many shortcomings with these types of plans.

First, they ignore differences among providers and claimants, he said. For example, plans generally have provider networks but they rarely require board-certified physicians for certain procedures, he said. Plans also fail to identify workers who might have underlying problems that will lead to large claims, Mr. Cherny said.

One problem with bill reviewing is that it generally is concerned with per unit pricing. A more important figure is per injury pricing, he said.

Controlling costs per visit only causes providers to schedule more visits, he said. "The more you squeeze the physicians, the more they will find ways around it."

A problem with nurse review, he has discovered, is that many don't understand why the high-cost patients don't want to get better. As a result, they become advocates for the patient to receive more treatment rather than getting the patient back to work, he said.

Mr. Cherny proposes an alternative approach. In that system, a claim would be compared immediately with a benchmark for treatment and duration. If that were acceptable to the claimant and his or her treating physician, treatment would start with a pre-negotiated price.

If the plan is not acceptable, a plan physician intervenes immediately to reach an agreement with the treating physician.

"It gets physicians involved who can uniquely communicate with the other physicians," he said.

Mr. Cherny outlined precautions people should take when looking for a managed care workers comp company.

Be careful with intuitive appeal, he advised. "Lots of things make perfect sense" but don't lower costs when applied.

Also, he said, don't assume a company that achieves savings running a small part of the program will match that success with the entire program.

Take a hard look at the savings that companies claim to generate, Mr. Cherny advised. Sometimes, the management fees eat up any savings achieved, he said.

Finally, be skeptical when companies claim low costs, as they often hit employers with hidden charges.

"The pricing of these things is a real big game," Mr. Cherny said.