Occupational medicine can take the edge off managed care
But working with employers and workers’ comp claims can be unnerving
In a tough managed care environment, what’s one of the best hedges against falling outpatient reimbursements? After being bullied for years by commercial health plans, outpatient administrators are turning to an old standby to shore up reimbursements occupational medicine.
"The old workers’ comp claim isn’t what it used to be," says Kathy Bishop, MPA, OTR/L, former director of occupational health at Urgent Treatment Centers, a four-clinic chain in Lexington, KY.
Once mostly tolerated by providers as a necessary evil, occupational medicine languished compared with more lucrative-paying claims from payers such as Medicare and private health plans. But the specialty is becoming a buttress against falling revenues in an age of deep discounts and low fixed payments.
The reasons are as follows:
• Although payment rates are in many cases also fixed, it is still one of the few remaining payer sources largely unencumbered by managed care.
• Providers have also found it an easy field to enter. Demand is high, and most of the minimum capital and labor requirements, such as equipment and nursing, are already in place at most licensed ACCs, says Frank Leone, MBA, MPH, president of Ryan Associates, a Santa Barbara, CA-based occupational health consulting firm.
• Contracts are generally negotiated directly with employers. They’re also usually long term, and providers are able to better control rates and terms of services, which make these contracts extremely appealing to providers, says Leone.
• And in many cases, clinical outcomes are better than with conventional patients because patients are seen over a longer period of time, and the services involve a direct, back-to-work orientation, Leone says.
"If done right, occupational health can be a big profit opportunity for ambulatory care centers [ACCs]," says Bishop.
More than simply workers’ compensation claims, the entire field of occupational health involves a spectrum of outpatient services, including same-day surgery. About 84% of workers’ comp cases nationwide involve muskuloskeletal injury cases, according to the California Society of Industrial Medicine and Surgery in Sacramento.
The field can be extremely financially rewarding, says Jacqueline Barrett, administrative director of occupational health services in Seattle for a joint venture between Sisters of Providence Health System in Seattle and HealthSouth Corp., based in Birmingham, AL.
Occupational health areas include pre-employment screening, drug testing, accident prevention training, employee wellness programs, acute and preventive surgery, and environmental medicine, among others.
According to the National Association of Occupational Health Professionals, based in Santa Barbara, CA, the field is undergoing a dramatic transformation fueled partly by cost-conscious employers.
No longer concerned with just health benefit costs, large to mid-size employers are taking a bigger hand in the level and quality of medical services directed at their employees, says Leone.
The field is growing in the ambulatory care setting, says Leone, who adds that it’s no surprise. "Health care is focusing on large population groups. You see it in managed care. It makes perfect sense to target the largest of all populations: employees," Leone says.
Although the field is growing, tracking its growth has been hampered by the fact that most facilities provide some form of occupational health in treating work-related injuries or performing pre-employment screenings.
But on the downside, despite heightened employer activism, there are two major trends that concern providers:
• Health maintenance organizations (HMOs) are eyeing occupational health as a possible new frontier for managed care.
If HMOs make substantial inroads in controlling the nation’s $75 billion-a-year workers’ compensation programs, providers may be forced into contracting with them. Or they may risk losing considerable business to competing providers. Providers want to discourage that, says Bishop.
• Competition is heating up. Hospitals and provider networks are assuming a bigger presence in occupational health. Large entities such as hospitals can wield a competitive edge in providing low-cost global services to employers, says Barrett.
The threat means that many independent, freestanding ACCs may have to join networks or lose business they’ve worked hard to attain. They also may drop out of the business, experts believe.
On the other hand, managed care isn’t finding occupational medicine an easy road. For example, workers’ compensation is still largely driven by employers, who normally dictate the terms and locations where injured employees receive their medical care.
Convenience and accessibility are key factors in workers’ comp, says Carl Brakensiek, executive vice president of CSIMS, which has 600 member providers.
HMOs will have to deliver a full network of locations before employers will add workers’ comp to the menu, Brakensiek says.
Furthermore, HMOs have not been able to compete with rates set by many states and aren’t likely to meet the cost of comprehensive care standards currently in vogue under many employer-provider relationships, says Kreeta Haffner, business office manager with Boulder (CO) Community Medical Center.
For example, the ambulatory surgery conversion factor allowed by the Colorado workers’ comp program pays facilities $78.53. The medical visit conversion factor is $6.11. In contrast, rates offered by HMOs that have tried to contract with Boulder Community are between $72 and $74 for surgery and less than $5.85 for medical visits, Haffner says.
Occupational health is still a very relationship-oriented, direct-contracting form of medical care, says Barrett. The negotiated commitment providers make to employers offers administrators direct control over the delivery of services and their costs. The personal relationship element has been extremely appealing to providers entering the field, Barrett says.
Field has its obstacles
But once in, many find something other than a financial utopia.
"It’s a sizable commitment," even on a small scale, cautions Bishop. You can do an occasional workers’ comp claim. Or you can offer a comprehensive range of services. But if you do, employers will demand certain conditions such as multiple sites, extended hours, and easy access to physician specialists, says Boulder Community’s Haffner.
Facility managers also need heavy doses of sales, marketing, and public relations to continually service the employers, says Bishop.
"There are lots of pieces to pull together," observes Barrett of Providence Health, which operates more than 12 hospitals and scores of outpatient clinic programs in the Northwest. (For advice from experts on putting together a successful occupational health program, see story, p. 91.)
Increasing your number of workers’ comp claims also can become a curse, observes Sarah Hayes, a workers’ compensation claims specialist at Boulder Community.
"Long payment delays and bitter worker-employer disputes can hold up payments for months," Hayes says.
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