By Mike Ryan, Chief Growth Officer, MedRisk, Inc.
Recently, I moderated a panel on cost containment at the Workers’ Compensation Educational Conference (WCEC) in Orlando. As always, utilization management was a hot topic. Despite the implementation and application of managed care strategies over the past few decades, Workers’ Comp medical costs continue to rise. Pharmacy, which represents 19 percent of the workers’ comp medical spend, is a well-publicized cost driver. However, not everyone realizes that between 20-30 percent of the comp medical dollar is spent on physical medical services such as physical therapy (PT), occupational therapy (OT) and chiropractic care.
One of the most significant reports illustrating the relationship between workers’ comp and physical medicine costs is a 2008 National Council on Compensation Insurance (NCCI) study which showed that physical therapy experienced above-average increases in the average number of treatments per claim. Researchers found the average physical therapy treatment per claim rose from 18.9 to 30.4 — a dramatic 61 percent increase. Surgical claims involved more than twice the number of treatments per claim, including physical therapy. In fact, physical therapy treatments constituted 50 percent of all treatments per claim.
Over the years, states have employed numerous strategies to control physical medicine expenses. Most noteworthy is California’s 2003-2004 work comp reforms, which included a 24-visit cap on PT/OT and chiropractic care along with the introduction of medical provider networks and a mandatory medical treatment utilization schedule. The results? According to a 2011 California Workers Compensation Institute report, the total average amount paid per claim increased 51.8 percent while the total average amount paid for medical management and cost-containment services went up 245.5 percent.
Other strategies in the industry include the implementation of discounted Preferred Provider Organization (PPO) networks. Here, the PPOs contract with PT clinics and hospitals for a percentage off fee schedule charges and/or usual and customary charges. There are a couple problems with this approach. First, the cost issue in PT is not the price per service, but the amount of services delivered — namely utilization. Many traditional PPOs don’t address this issue. In fact, deep-discount PPOs can give providers an incentive to deliver additional services. Second, and more importantly, PTs who don’t regularly treat patients who file for workers’ compensation often treat differently than those who do.
Comp-savvy physical therapists use a series of treatments and modalities geared to restore functionality and support return to work goals. Their treatment philosophies take into consideration job-type; light-duty return-to-work options; the value of functional capacity evaluations (FCEs) at the appropriate time; and the limited value of passive interventions.
Studies have shown that expert providers in work comp also have better outcomes. They’re more apt to follow work-comp specific, physical medical guidelines. Plus, these therapists are familiar with the comp reporting and claims process and better prepared to provide the workers’ comp documentation claims organizations require to effectively manage cases.
What are we seeing? Caps alone don’t work. Network discounts alone don’t work. Even guidelines alone don’t work. The foundation of a cost-effective work comp physical medicine program is a network of providers with expertise in workers’ compensation. Provider expertise and clinical oversight through utilization review using workers’ compensation-specific evidence-based guidelines round out the program. Constant communication among all the stakeholders is critical; employers need to prepare for transitional duty and everyone needs to share the return-to-work goal.
About Mike Ryan
As Chief Growth Officer, Michael Ryan spearheads sales, marketing and account management initiatives. He joined MedRisk in April 2011, bringing 15 years of experience in strategic planning, branding, marketing, and business development for commercial insurance organizations to the position.
Prior to MedRisk, he served as senior vice president of sales and marketing for Specialty Risk Services (SRS), one of the country’s largest third-party administrators (TPAs) and a wholly owned subsidiary of The Hartford. In that role, he oversaw the implementation and integration of SRS’ new business acquisitions and built SRS’ presence as an industry leader. Identified as a key talent early in his career at SRS, Ryan was selected to participate in The Hartford’s prestigious Leadership Impact Program.
Ryan graduated from Rowan University in Glassboro, NJ, with a bachelor’s degree in marketing and has since achieved an extensive professional background in the insurance industry. Prior to joining SRS, he served as an account executive for Sedgwick Claims Management Services in Philadelphia and held various positions at American Financial Group, Inc. and Liberty Mutual Insurance Company.
Founded in 1994 and based in King of Prussia, Pa., MedRisk, Inc. is ranked as one of the fastest-growing companies in the Greater Philadelphia area on the Inc. 500|5,000 and the Deloitte “Technology Fast 50” lists. The company provides specialty managed care services for the physical rehabilitation of injured workers. MedRisk is fully accredited under URAC and has successfully completed a SSAE 16 Type II examination. MedRisk’s programs deliver savings and operational efficiencies that are significantly greater than traditional programs. Customers include insurance carriers, self-insured employers, third-party administrators, state funds, general managed care companies, case management companies, claims adjusters and physical medicine providers. To make a referral or obtain more information, visit www.medrisknet.com or call 800-225-9675.