By Christopher E. Mandel, SVP Strategic Solutions, Sedgwick
To purchase services on a bundled or unbundled basis is a question that risk managers have debated for many years. In the past, conventional thinking among many risk professionals was to purchase services from distinct service providers. This decision was typically based on which vendors were perceived to offer the highest quality or lowest-priced services.
In recent years, however, there appears to have been a shift in thinking as bundled programs have become more popular. Technology advancements are helping drive this change in purchasing behavior. In large part, this is due to the improved efficiencies and outcomes that a packaged program can provide.
Examining the process will underscore the benefits that bundled services offer. However, no two programs are alike and customization must continue to be part of the discussion for any employer.
The bundled approach
As businesses strive for increased savings and productivity, services such as clinical consultation, pharmacy management, provider selection, and bill review are more commonly sought from a single services provider and integrated into the overall claims management process. Robust technology systems tie these service components together and provide risk managers with comprehensive access to complete and real time information like never before. The end result is this ability for all professionals managing the injury to make better, more informed decisions and ultimately improve outcomes.
When a workers’ compensation injury occurs, early response and appropriate treatment are critical to success. Integrating clinical consultation services ensures that an injured worker talks with a nurse by telephone shortly after an incident occurs. The two parties discuss the injury and related symptoms along with other health conditions that might affect the injury and recovery process.
Using his or her medical knowledge, the nurse can then discuss recommended treatment options based on this conversation. Depending on the severity of the injury, this can range from self-care to an occupational clinic visit to emergency room treatment. One of the key advantages to this approach is that it removes recommended treatment input from the manager or supervisor.
In a well-designed program, the nurse will have access to a listing of prequalified medical providers. These providers will have been selected based on a demonstrated ability to deliver desired outcomes on a consistent basis.
The providers also will have shown that they understand the workers’ compensation system and employer expectations. This contributes greatly to return-to-work initiatives. Quantifiable physician rating programs are preferred over an expansive listing of physicians who have been selected solely based on their willingness to negotiate price.
Management of prescription drug costs can also be part of a bundled services package. Most successful programs will employ injury-specific formularies. These are listings of drugs approved for certain types of injuries or conditions. Given today’s increased use of opioids in treating work-related injuries, these custom formularies can be a valuable asset in preventing unnecessary or extended use of such powerful narcotics.
A pharmacy management program can be structured so that a claims examiner receives an alert if a particular drug is prescribed or requested. The examiner can then place a call to the physician or pharmacist to see if there are alternative drugs available. Often, unnecessary or inappropriate drugs can be blocked at the point of sale.
The use of network pharmacies can also add value. These pharmacies are selected based on quality, price, and an understanding of program expectations. Drugs here are much preferred and often less expensive than prescriptions obtained from a physician’s office.
Network pharmacists also understand the value of generic drugs versus brand name prescriptions and recommend these when appropriate. They are available to educate injured workers about the benefits or risks associated with any given drug.
Bill review is becoming more commonly purchased as part of a bundled program. An effective bill review program goes beyond applying fee schedules and PPO discounts and is really driven by how information is processed.
Bill review services seek all possible reductions on every bill. Accurate coding should be applied throughout the process, and it should reflect the lowest possible allowance for any code and provider. Additional savings are then typically charged as a percentage of savings. The more discounts obtained early on, the lower the service fee will be.
Technology has really increased the attractiveness of bundled service programs. Detailed and immediate information empowers professionals to make sound decisions and take steps to move a claim toward closure and return an injured employee to work more readily than ever before.
As an example, when a clinical consultation nurse and claims adjuster share a single technology system, appropriate notes can be exchanged seamlessly and early details can be accessed that may later impact the case. Such a system also allows for a complete and up-to-date listing of prequalified medical providers and injury-specific drug formularies to be easily updated and maintained. This information is essential when an injured worker is seeking initial medical treatment or a claims adjuster is monitoring prescribed drugs. Also, when participating physicians and pharmacies are on a single system, medical bills are easily accessed and reviews performed more readily.
Additionally, technology associated with these types of services can produce valuable data used to measure performance and identify trends. It is then possible to develop strategies to improve outcomes in care management and at the desk level based on quantifiable information. When services are bundled and one system ties them together, gaps in data are avoided.
Business trends will continue to evolve as will debates over bundled versus unbundled services programs. However, today’s discussion is different than those in the past because of the advancement of technology and its resulting impact. Risk managers are looking to innovation to drive enhanced capabilities seeking improved efficiencies and effectiveness. Given the high stakes associated with increasing productivity and lowering costs, this debate is likely to intensify in the future, with technology adding zest to the conversation.
About Christopher E. Mandel, CPCU, CCSA, ARM, AIC, RWW
Christopher E. Mandel is SVP, Strategic Solutions for Sedgwick where he is responsible for helping the company reach its strategic vision of serving current and evolving needs of its current and future customers, as well as help lead the industry vertical to the next level and beyond. Previously he served as the president and managing consultant of Excellence in Risk Management, LLC., and also EVP, Professional Services for rPM3 Solution, LLC.; both independent consulting firms specializing in risk management and insurance services. Mr. Mandel has more than 25 years of experience in insurance and large global corporate risk management. He has pioneered the development of integrated risk management at USAA, where S&P rated USAA as “excellent” and a “leader in ERM”. His career included leadership roles at Liberty Mutual, Marsh, Verizon, American National Red Cross, PepsiCo and USAA, and he has served in numerous leadership positions with the Risk and insurance Management Society. He has held appointments to: the Spencer Educational Foundation Board; the Board of the risk retention group for the American Orthodontics Association; the Center for Enterprise Risk Management Advisory Council (University of GA); and the Advisory Boards of AIG, the Nonprofit Insurance Alliance Group, Liberty Mutual, Zurich American, FM Global, G4S and Willis. He was elected a founding member of Risk Who’s Who in 2008. He is recognized by his peers as a thought leader in ERM and related disciplines.
Training and education
Mr. Mandel received his B.S. in Business Management from Virginia Polytechnic Institute and State University and an MBA in Finance from George Mason University. Between these university programs, he was conferred the CCSA (2007), CPCU (1987), ARM (1990) and AIC (1982) designations. He is a frequent industry speaker and author and writes the “Next Level” column in the WC Forum for Risk and Insurance magazine, was named Risk Manager of the Year – 2004 by Business Insurance and the Risk and Insurance Management Society, Inc. and is a former President of RIMS.
Sedgwick Claims Management Services, Inc. is the leading North American provider of innovative claims and productivity management solutions. Sedgwick and its affiliated companies deliver cost-effective claims, productivity, managed care, risk consulting, and other services to clients through the expertise of more than 10,000 colleagues in 195 offices located in the U.S. and Canada. The company specializes in workers’ compensation; disability, FMLA, and other employee absences; managed care; general, automobile, and professional liability; warranty and credit card claims services; fraud and investigation; structured settlements; and Medicare compliance solutions. Sedgwick and its affiliates design and implement customized programs based on proven practices and advanced technology that exceed client expectations. For eight years in a row, Sedgwick has been awarded the distinguished Employer of Choice® certification, the only third-party administrator (TPA) to receive this designation. In 2011 and 2012, the company was named the Best Overall Large Account TPA by buyers of risk services through an independent survey conducted by Business Insurance. For more, see www.sedgwick.com.