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 reentry into the workforce.
Workers Compensation
Managed Care
“Participants”
Employer
Minimal
cost to
TPA/
Claims
Adjuster
Employer
Workers Compensation
Managed 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 Compensation
Managed 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 Compensation
Managed 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 Compensation
Managed Care
• Case Management (Continued)
– Role:
• Develop treatment plans and communicate those
plans to:
– Treating Physician
– Injured Employee
– Employer
– TPA/Claims Adjuster.
Workers Compensation
Managed 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 Compensation
Managed 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 Compensation
Managed Care
• Medical Provider System
– PPO
• PPO networks involve pre-negotiated discounts for
the employer by use of selected providers.
Networks may include:
–Hospitals
–Physical Therapy Centers
–Physicians
–Other Medical Services
–Prescription Services
Caution: There is a potential for utilization abuse. Should
evaluate treatment frequency.
Workers Compensation
Managed 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 Compensation
Managed 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:
–Physician charges
–Hospital Charges
–Prescriptions
–Other medical services
Caution: Must verify adherence to fee schedules through
in-house review or through an independent vendor who
shares in the percentage of savings.
Workers Compensation
Managed Care
• Medical Provider System (Continued)
– Goal:
• An effective medical provider system results in
medical cost containment. Indemnity losses may be
indirectly affected.
Workers Compensation
Managed Care
• Utilization Review
Definition:
Utilization review is a system to manage, assess,
and review the injured employee care.
–Role:
• Care is evaluated based upon the following
criteria:
–Frequency
–Duration
–Medical reasonableness/necessity
–Appropriateness
Workers Compensation
Managed Care
• Utilization Review (Continued)
– Goal:
• Effective utilization review results in medical cost
containment. Indemnity losses may be indirectly
affected.
Workers Compensation
Managed 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 Compensation
Managed 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 Compensation
Managed Care
• Employer
One of the fundamental principles of managed care
involves employer participation.
– Role:
•
Provide educational materials and training to personnel
regarding:
– Safety programs
– Workers Compensation system
– Wellness programs
– Light duty/Return to work
programs
– Procedures for
reporting job-related
injuries
Workers Compensation
Managed Care
• Employer (Continued)
– Role: (Continued)
• Formalize light duty programs.
• Communicate frequently with injured employees.
• Involved in the selection of industrial/panel
physicians.
Workers Compensation
Managed Care
• Employer (Continued)
– Goal:
• The employer involvement results in both medical
cost containment and reduced indemnity losses.
Workers Compensation
Managed Care
The End