Managed care slashes worker's comp costs
April 1, 1997 5 minutes read
Managed care slashes worker’s comp costs
Job-related injury losses drop 43%
A comprehensive managed care approach to occupational injuries not only reduced a hospital’s workers’ compensation losses by 23% over three years, but also slashed new job-related injury costs by 43%.
A recent study shows that between 1992 and 1995, the managed care program at Johns Hopkins Hospital and University in Baltimore produced the following results:
• Medical care costs per worker decreased from $81 to $63.
• Total per-capita losses fell from $241 to $185.
• Lost-time cases went from 22 per 1,000 employees to about 13.
• "Medical only" cases dropped from 155 per 1,000 to 96.
• Per-capita loss on claims associated with new occupational injuries fell from $23 to $13.
• Per-capita losses from temporary total disability fell from $53 to $26.
• Temporary total disability days decreased from 163 days per 100 employees to 70 days.1
The study describes three years’ experience of abating workplace injury hazards and medically managing workers using a preferred provider organization (PPO) established solely for workers’ compensation cases. The ongoing program is overseen by Hopkins’ Joint Committee on Health, Safety, and Environment. When the study was launched in 1992, approximately 21,000 employees were covered by the program, and nearly 24,500 employees were covered at the study’s termination in 1995.
You don’t need punitive features’
Workers’ compensation law in Maryland gives all employees the right to choose their medical providers and have their care paid for under their employers’ workers’ comp plan. Therefore, the program’s accomplishments demonstrate that the "onerous rules" generally associated with managed care provider restrictions and monetary penalties for "opting out" are not prerequisites for the successful implementation of a workers’ compensation managed care program, says Edward J. Bernacki, MD, MPH, director of the division of occupational medicine at the School of Medicine and executive director of health, safety, and environment for Johns Hopkins University and Hospital, as well as lead author of the study.
"If you have an organized system of delivery, you don’t need punitive features in the managed-care program. Rapid delivery of medical care in a friendly manner is more important than all these punitive aspects," he says. "If you see people early, if you treat them right, they’re going to stick with you and use your PPO physician. That’s what makes this so significant; it’s kind of managed care lite.’ The occupational medicine physicians are referring [employees] to the PPO physicians, but in the state of Maryland unlike in many states that have enabling managed care legislation, or in an HMO where you have no choice you have a choice. However, 95% of the time, people go along with your [referral]. This has to be viewed as a continuum of the primary care piece, the occupational medicine piece, and the internal PPO piece. If they start with us, they’re going to go through the whole system with us. It’s a convenience for the employees, and it’s more lucrative for the institution."
While ergonomics controls and a modified-duty return-to-work program also were implemented, Bernacki says the managed-care component probably contributed most significantly to the cost savings.
The in-house PPO network consisted of eight full-time Johns Hopkins University faculty physicians with credentials in occupational medicine, neurosurgery, orthopedics, or physical medicine and rehabilitation. Their participation was voluntary. Medical management guidelines and indications, as well as return-to-work protocols, were used to ensure consistency in approaches to patient care and rehabilitation.
At the same time the PPO was established, a multidisciplinary medical management work group was formed, consisting of nurse case managers and primary and specialty physicians. The group meets twice monthly to develop a coordinated treatment plan for each injured worker. In addition, a workers’ compensation claims management work group was established, composed of nurse case managers, safety professionals, human resources specialists, a workers’ compensation program administrator, and an adjustor who meet once a month to form a plan for each employee who has lost time from an occupational injury. Their goal is to return an employee to work on modified duty as soon as possible.
A claims adjudication work group was formed in 1993 to plan each workers’ comp case scheduled for a hearing. Its members meet monthly and include outside attorneys, a workers’ compensation program administrator, an adjustor, and nurse case managers.
The occupational physician/nurse case manager team is responsible for integrating all the program’s components. (See chart, p. 45.) Occupational medicine physicians provide primary care and serve as liaisons to the PPO physicians along with nurse case managers, who make referrals for workplace ergonomic assessments when indicated. Industrial hygienists trained in biomechanics inspect workplaces, recommend abatement measures, and perform follow-up.
The program has performed as expected, Bernacki says, adding to previous evidence that the approach might be successful in reducing workers’ compensation costs and work-related injuries.2-3
"We didn’t invent this, and we’re not the only ones who are doing it. But we did get results utilizing a larger study population and a longer period of observation," he notes. "This is not luck; it’s not just one year’s aberration. This is year in, year out."
Despite the extremely large worker population base at Johns Hopkins, Bernacki says the program can be scaled down and still produce results for smaller institutions. However, "to have the staff in place to make this work, you probably have to have at least 1,500 to 2,000 employees in a hospital," he adds.
Nevertheless, Bernacki maintains that even much smaller hospitals can implement some of the principles, such as case management, to help manage costs. In fact, many already do, proving that employee/occupational health departments can save money for their hospitals.
In the four years the program has been operating, Bernacki says he conservatively estimates the hospital’s cost savings at $5 million to $6 million a year, and "in this day and age of cost containment, that’s really a lot of money."
References
1. Bernacki EJ, Tsai SP. Managed care for workers’ compensation: Three years of experience in an "employee choice" state. J Occup Environ Med 1996; 38:1091-1097.
2. Gallager P, Granahan WL. A Report on the Second Annual Milliman and Robertson Survey: HMO Managed Workers’ Compensation Strategies and Products. Radnor, PA: Milliman and Robertson; 1995.
3. McGrail MP Jr, Tsai SP, Bernacki EJ. A comprehensive initiative to manage the incidence and cost of occupational injury and illness: Report of an outcomes analysis. J Occup Environ Med 1995; 37:1263-1268.
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