Why UM might not save your company money
Most denials in workers’ comp are later approved
Are you really saving money from utilization management of workers’ compensation cases? Only if you focus your utilization management (UM) on care that is costly and has a higher than average denial rate, such as spinal surgery, according to a study published in the Journal of Occupational and Environmental Medicine.1
Researchers at the University of Washington in Seattle analyzed almost 12,000 workers’ compensation cases and found that only 2% to 3% are denied overall — and many of those denials are later reversed.
Some procedures had markedly higher denial rates, such as spinal surgery (5.5%) and carpal tunnel syndrome (8.6%). In some cases, the UM program required a procedure to be performed on an outpatient basis. For example, one in three patients reviewed for hernia repair or arthroscopy directed to an outpatient setting.
"Few people are denied care outright," says Thomas Wickizer, PhD, MPH, Rhom & Haas professor of public health sciences at the School of Public Health and Community Medicine at the University of Washington in Seattle. "A greater proportion have their length of stay reduced by concurrent review."
Employers don’t benefit from subjecting every procedure to utilization management, but instead should target efforts on those procedures that have a higher rate of unnecessary use, Wickizer says. "If it were more targeted, then it would be less burdensome to physicians and less burdensome to patients."
In their study, Wickizer and his colleagues found that UM reviews of spinal surgery with and without fusion produced savings of almost $2 million, or 37.4% of the total cost savings. Rehabilitation care ($268,000 or 6.2%) and carpal tunnel release ($212,200 or 4.9%) accounted for the next greatest savings. The total savings from all cases represented about $5.4 million.
Wickizer also cautioned employee health practitioners to carefully question the cost savings promised by utilization management programs. Sometimes a denial is just a delay of care, so savings can’t be calculated from the overall number of denials. "Our savings [estimates] would have been 42% higher had we not looked at that carefully and subtracted out those initial cases that were denied but later approved."
Reference
1. Wickizer TM, Lessler D, Franklin G. Controlling workers’ compensation medical care use and costs through utilization management. JOEM 1999; 41:625-631.
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