Two Techniques for Managing Claim Costs

Utilization reviews have saved companies around the country billions of dollars in workers’ compensation costs since California mandated utilization review in 2004. Other techniques, such as using a specialized workers’ compensation medical care network, can also work. Here’s a brief overview.

Utilization Review

Utilization review is designed to bring greater efficiency to the recovery process and help injured workers return to health more quickly. It ensures that treatments are administered within established scientific guidelines — usually those compiled by The American College of Occupational and Environmental Medicine (ACOEM).

The California legislation, since adopted by many other states, requires every employer to establish a utilization review process. This is defined as the ability to prospectively, retrospectively or concurrently review, approve, modify, delay or deny medical treatment based in whole or in part on medical necessity to cure and relieve work-related illness and injury.

Studies have shown that UR effectively tames workers’ compensation costs. A report prepared by the California Workers Compensation Institute on the impact of reform legislation shows that in five of six types of services, utilization review resulted in fewer visits and lower amounts paid per claim.

But Jay Garrard, vice president of Pasadena, California-based medical management company GSG Associates, warns that not all URs are created equal. Differences in approach by the client and the medical management company can cause a huge disparity in results, he explains.

For instance, all utilization review providers use registered nurses to perform the original review. If they find discrepancies, they often refer the case to a consulting physician, who charges much higher rates. Instead, it’s often cheaper and more effective for the nurse to contact the provider to discuss the reasons for the apparently inappropriate treatment. “It could be something as simple as the treating physicians not being familiar with the nomenclature,” Garrard says. “If the plan makes sense or the nurse can negotiate, you don’t have to send the case to a physician advisor so it’s a lot cheaper.”

Dr Paul Umoff, the medical director at GSG Associates, notes that taking a holistic approach to medical cost management pays off for both the employer and the injured worker. “You need to look at the big picture,” he advises. “You have to look at outcomes and not each request for treatment.”

Garrard recommends such a strategy even if it goes beyond the formal terms of utilization review and crosses the boundary to utilization management. “Utilization review asks whether the treatment matches the medical guidelines,” he says. “Utilization management is a process that starts before treatment begins and is more hands-on.”

Medical care networks

But other techniques also offer important cost efficiencies, according to a study in the Journal of Occupational and Environmental Medicine. Led by Dr. Edward J. Bernacki of Johns Hopkins University School of Medicine, Baltimore, the study found that in workers’ compensation cases, using a specialized network of occupational healthcare providers to manage the treatment of injured workers—without third-party utilization review—can still reduce missed work days and health care costs.

The researchers looked at how injury management by a specialized network affected the care and outcomes of Louisiana workers’ compensation claims. In the statewide network, called Omnet Gold, each phase of treatment was coordinated by an occupational medicine physician or other specialist with experience in treating workers’ compensation patients and expert knowledge of the physical demands of work. These managing physicians could call in other network specialists and were free to make diagnostic and treatment decisions without utilization review.

The study found that claims managed by Omnet Gold averaged 53 missed work days, compared to 99 missed day for cases managed in the traditional way. Cost of care was also lower for claims managed in the network.

“Utilization review seems to have little impact on the behavior of experienced healthcare providers pre-selected for their ability to appropriately treat and manage workers’ compensation cases,” Dr. Bernacki said.