Workers’ compensation is a complex system with varying laws in each jurisdiction and a changing American workforce. While there are many things that change, the fundamentals of a best in class workers’ compensation management program generally stay the same. One of those elements is the need for effective Medical Cost Management.
What is Medical Cost Management?
“Medical Cost Management” is a term that describes various operations carried out by a workers’ compensation third-party administrator or insurance carrier to reduce the cost of medical claims. It includes a number of different features that meets the needs of the employer that considers the nature of their industry, the workforce population it employs, injuries common to the work the employees perform and trends in health care that reduces the number of visits to health care professionals. It also must provide the medical care and treatment injured parties are entitled to as the result of a workplace injury.
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Common features of a medical cost management program include, but are not limited to:
- Preferred Provider Organizations (PPOs);
- Nurse case management, including web-based and telephonic hotlines and access;
- Injury case management, including medical and vocational experts;
- Utilization review of medical care and treatment. Given the dangers and overuse of prescription drugs, a complete review of prescription drug usage is essential;
- Independent Medical Exams (IME) & Peer Review;
- Pharmacy / Opioid Management
- In-Home healthcare services; and
- Medical billing review.
Implementing Medical Cost Management in Your Program
The implementation of an effective medical cost management program requires buy-in from a number of interested stakeholders. This includes an employer concerned about providing quality care and benefit delivery to injured workers. It also requires a third-party administrator or workers’ compensation insurer that cares about the service it provides to the employer/client and the workers served under the program. It also includes the effective implementation of the following program components.
- Prompt Reporting of Work Injuries: Any cost-effective program must include a number of different methods for employees to report a work injury. Advances in technology have moved the industry beyond paper forms that confuse even a trained claims professional. The use of web-based portals or smartphone apps can assist employees and their supervisors in prompt reporting of all workplace injuries. It can also include features that allow impacted parties and potential witnesses to preserve evidence related to the injury. One of the most important features of any injury reporting system needs to include access to immediate and appropriate medical care and treatment.
- Expedited Medical Care and Treatment: Beyond the issue of compensability, all workers are entitled to immediate and effective medical care and treatment following any work related injury. It should also include steps to monitor and manage the care so that drivers in healthcare (including fraud, waste and abuse) can be eliminated without sacrificing quality.
- Return-to-Work. Return-to-work is an often overlooked component of medical cost containment. Sadly, interested stakeholders who do not include effective return to work in their cost containment programs are doing a complete disservice to all interested parties involved in a claim. Implementation of a return to work program should be something that is re-evaluated frequently to meet the needs of each individual client and employee. It should also include an industry specific review of all processes and options.
Medical cost management in workers’ compensation is an important part of running an effective program focused on compliance with the law and supporting the needs of all interested stakeholders. A multi-pronged approach requires buy-in from the employer and execution by the third party administrator or insurance carrier. When done correctly, it will reduce costs and promote program efficiency.
Author Michael Stack, CEO Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center.
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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.