By Kevin Conley, EVP, Arissa Cost Strategies
One purpose of a claims risk manager is to provide the best possible care while controlling the total cost of risk. The goal is to help injured workers recover from injuries and return them to work quickly with transparency all while managing the cost effectively through results, not process. As part of the claims results, the risk manager needs to ask the question regarding managed care services. Do you bundle/ integrate with your TPA or unbundle to an independent service vendor?
Managed care services include: 24/7 Nurse Triage and Claims Intake, Telephone or Field Nurse Case Management, Medical Bill Review, Diagnostic Networks, Return to Work, Catastrophic Case Management, Chronic Pain Management, Pharmacy Benefits Management, Utilization Review, Independent Medical Examiners, Drug Testing, Medicare Set-aside. You can unbundle all or some of these services.
When reviewing managed care programs the risk manager needs to balance risks and rewards and ask the following questions. What are the program mission and outcomes? What KPIs can be used to measure outcomes? What opportunities does each approach offer? What risks does each approach present? What will it take to change?
Let’s first look at nomenclature. Bundled does not equal integrated. In a bundled program the TPA buys and manages the managed care services. These services may or may not integrate effectively with each other and your program. Ask the question does the TPA pay service fees to the managed care vendor? What fee transparency is shared with the risk manager? Integrated managed care programs means the TPA owns the managed care services they deliver. These services and systems integrate for a more cohesive approach.
Now let’s discuss integrated claims and managed care solutions risk and rewards.
The risks of an integrated program involve increased program costs as managed care is a revenue source for TPAs with integrated solutions. There can be surprises if costs are not clearly spelled out in pricing proposals. There can be a lack of transparency and this can vary with how billing and reporting systems are set up and how contracts are written. In many cases there is a lack of flexibility including; lack of choice in managed care vendors; more effort to customize your program components and guidelines; vague contract language for service fees and deliverables.
The rewards of an integrated program support a “total cost of risk” approach with the alignment of claims goals. The TPA and managed care vendors may be more fully aligned with your goals. You can leverage that alignment across the whole workers’ compensation program, including managed care. In many cases, there is a cost reduction when you leverage the relationship to get the terms you want, including analysis of all fees/schedules/charges. The adjuster has easy access to all the information needed to manage the claim and this can help them guide injured workers to the most effective treatment and ultimately reduce the total cost of risk.
Now let’s discuss unbundled claims and managed care solutions risk and rewards.
The risks of an unbundled program involve resources needed to manage multiple vendors and contracts including expertise, time, and staff. Many times in selecting a vendor there is insufficient data to evaluate services/impact of services. There may be a lack of cultural alignment across multiple vendors. It can be challenging to build an effective team. Some vendors may lack quality system access. If you are transitioning to unbundled services then there is a change management process that must be implemented. There may be a lack of coordination and communication among vendors. Individual vendors may not have aligned interests. Delays in sharing information can extend claim durations/delay recovery. There may be finger-pointing between separate vendors.
The opportunities and rewards of an unbundled program allow for greater flexibility. This flexibility can be beneficial if you need to change vendors if one proves unsatisfactory or if the program needs change. Unbundling allows support of the suite of services the employer wants. The flexibility extends to negotiating charges (e.g., flat fee vs. percentage of savings). It allows for maximum savings and control of the managed care program. The savings equate to avoiding markup by the TPA when the TPA purchases services from third-party vendors. This approach supports tougher negotiation on terms and better expertise and service for that “product”. The selected vendor truly supports a “total cost of risk” approach and aligns fully with the risk management program.
Managed care vendors are experts in their field and are educated on rapid changes in managed care and medical science and ensure that the vendors stay abreast of the newest cost containment and treatment strategies.
Things to Consider:
- No matter which approach you take risk managers need to align their philosophies with the vendor organizations from the top down.
- Organizations must provide metrics for program evaluation utilizing KPIs measuring performance-based, not process-based. Can the program support performance guarantees, rewards, penalties?
- How much control does the employer want to have in claim outcomes and how is this accomplished?
- Ultimately common processes and operating procedures developed over time will deliver best managed care practices for reducing claims total loss cost.