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Trends in Workers' Comp

Adoption of Value-Based Care Continues

Tying payment to outcomes will require a paradigm mindset shift in workers' comp.
By: | January 30, 2018 • 4 min read

Over the past decade, value-based care has been on the rise, and the trend toward tying patient results to compensation doesn’t appear to be fading. While in the group health arena insurers are embracing this approach whole-heartedly, workers’ comp continues to lag behind and operate largely through its traditional fee-based model.

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The concept of tying pay to patient outcomes was first kicked around in the 1990s when several professors published their ideas about benefit-based copays. The model didn’t take off until the passage of the Affordable Care Act (ACA) in 2009, which outlined a to-be-implemented Medicare Value-based Purchasing Program and the formation of accountable care organizations (ACOs), which are networks of physicians, hospitals and other health care providers who agree to work together to provide coordinated care for a single payment.

Since that time, the Centers for Medicare & Medicaid Services (CMS) has developed and piloted multiple value-based programs and is increasingly tying Medicare reimbursement to patient outcomes.

Kimberly George
senior vice president, corporate development, M&A, and healthcare, Sedgwick

Although Republican lawmakers are hoping to dismantle the ACA, and many, including former secretary of the U.S. Department of Health and Human Services Rep. Tom Price, R-Ga., oppose tying reimbursement to patient outcomes, Kimberly George, an SVP and senior healthcare advisor for Memphis, Tenn.-based Sedgwick Claims Management Services, Inc., says she thinks the value-based care “train has already left the station.”

“I don’t think anyone wants to get rid of really good metrics around quality and infection rates that aim to improve care for individuals and populations — I don’t see that going away,” she said.

Bob Evans, the vice president of repricing solutions at Rising Medical Solutions, agrees that a significant number of providers and payers believe that value-based care “makes absolute sense” and are unlikely to decelerate the move toward tying more payments to patient outcomes just because there may be fewer federal mandates for them to do so.

“The benefit of value-based health is a win-win-win: Better care, more profitability, more efficiency, and cheaper for the payer,” he said.

While he suspects this trend will continue on the group health side, he does speculate that the move toward value-based care could stagnate on the workers’ comp side, which has several large barriers. These include a litany of differing state regulations and the often higher fee-for-service reimbursement of workers’ comp coveted by physicians who may be reluctant to change.

More Companies Examining Provider Quality Outcomes

Despite some of the state-specific regulatory challenges and potential unwillingness of care providers to move to a value-based care approach, more companies are closely examining the performance of the physicians and developing bundled options in an attempt to reduce costs and improve patient outcomes.

Evans says his firm’s surgical care program charges a single fee for a bundle of care for workers’ comp clients that includes the employee’s surgery, care coordination and post-operative care. The program has expanded to five states, with the largest concentration in Florida, and the company expects to continue to grow the program.

Bob Evans, vice president of repricing solutions, Rising Medical Solutions

“I think it brings a different level of cohesion with providers when they begin to better recognize how the whole health care experience is a combination of what all of them do together,” he said.

While bundled care can reduce the likelihood of cost surprises, it doesn’t necessarily drive quality, says Denise Algire, the director of risk initiatives at Albertsons. In the state of California where Albertsons is based, the company created its own medical provider network (MPN), allowing the company to enforce the clinical quality outcomes it expects from its workers’ comp providers. Providers are continuously monitored, and the company notes everything from the costs of episodes of care to ensuring that treatments provided to workers are within evidence-based guidelines to return-to-work outcomes. Those who make the cut continue to be included in the MPN.

California-based Harbor Health Systems also focuses on physician performance. The company mines data from payer partners to identify the top performing physicians based on costs and patient outcomes so that its clients can identify physicians within a particular specialty who have historically proven to have better outcomes. While some of these top providers may charge slightly more up front, they are able return a patient to work faster, maintain a record of low litigation and generally have reduced other medical expenses associated with the episode of care, says Linda Lane, the company’s president.

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Lane noted that while adoption of value-based care in workers’ comp is slow, she does expect it to continue to grow.

“Many are still in the mindset in the workers’ comp industry that driving down unit cost is how you achieve cost containment,” she says. “In value-based care, we’re talking about a paradigm shift of mindset that’s been so ingrained.”

George of Sedgwick agrees. “Value does drive outcomes … nothing is valued more than less litigation and quicker return to work.” 

Angela Childers is a Chicago-based writer specializing in health care and business management. She can be reached at [email protected]

More from Risk & Insurance

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Risk Management

The Profession

As a professor of business, Jack Hampton knows firsthand the positive impact education has on risk managers as they tackle growing risks.
By: | April 9, 2018 • 4 min read

R&I: Who is your mentor and why?

Ellen Thrower, president (retired), The College of Insurance, introduced me to the importance of insurance as a component of risk management. Further, she encouraged me to explore strategic and operational risk as foundation topics shaping the role of the modern risk manager.

Chris Mandel, former president of RIMS and Risk Manager of the Year, introduced me to the emerging area of enterprise risk management. He helped me recognize the need to align hazard, strategic, operational and financial risk into a single framework. He gave me the perspective of ERM in a high-tech environment, using USAA as a model program that later won an excellence award for innovation.

Bob Morrell, founder and former CEO of Riskonnect, showed me how technology could be applied to solving serious risk management and governance problems. He created a platform that made some of my ideas practical and extended them into a highly-successful enterprise that served risk and governance management needs of major corporations.

R&I: How did you come to work in this industry?

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From a background in corporate finance and commercial banking, I accepted the position of provost of The College of Insurance. Recognizing my limited prior knowledge in the field, I became a student of insurance and risk management leading to authorship of books on hazard and financial risk. This led to industry consulting, as well as to the development of graduate-level courses and concentrations in MBA programs.

R&I: What was your first job?

The provost position was the first job I had in the industry, after serving as dean of the Seton Hall University School of Business and founding The Princeton Consulting Group. Earlier positions were in business development with Marine Transport Lines, consulting in commercial banking and college professorships.

R&I: What have you accomplished that you are proudest of?

Creating a risk management concentration in the MBA program at Saint Peter’s, co-founding the Russian Risk Management Society (RUSRISK), and writing “Fundamentals of Enterprise Risk Management” and the “AMA Handbook of Financial Risk Management.”

A few years ago, I expanded into risk management in higher education. From 2017 into 2018, Rowman and Littlefield published my four books that address risks facing colleges and universities, professors, students and parents.

Jack Hampton, Professor of Business, St. Peter’s University

R&I: What is your favorite book or movie?

The Godfather. I see it as a story of managing risk, even as the behavior of its leading characters create risk for others.

R&I: What is your favorite drink?

Jameson’s Irish whiskey. Mixed with a little ice, it is a serious rival for Johnny Walker Gold scotch and Jack Daniel’s Tennessee whiskey.

R&I: What is the most unusual/interesting place you have ever visited?

Mount Etna, Taormina, and Agrigento, Sicily. I actually supervised an MBA program in Siracusa and learned about risk from a new perspective.

R&I: What is the riskiest activity you ever engaged in?

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Army Airborne training and jumping out of an airplane. Fortunately, I never had to do it in combat even though I served in Vietnam.

R&I: If the world has a modern hero, who is it and why?

George C. Marshall, one of the most decorated military leaders in American history, architect of the economic recovery program for Europe after World War II, and recipient of the 1953 Nobel Peace Prize. For Marshall, it was not just about winning the war. It was also about winning the peace.

R&I: What about this work do you find the most fulfilling or rewarding?

Sharing lessons with colleagues and students by writing, publishing and teaching. A professor with a knowledge of risk management does not only share lessons. The professor is also a student when MBA candidates talk about the risks they manage every day.

R&I: What is the risk management community doing right?

Sensitizing for-profit, nonprofit and governmental agencies to the exposures and complexities facing their organizations. Sometimes we focus too much on strategies that sound good but do not withstand closer examination. Risk managers help organizations make better decisions.

R&I: What could the risk management community be doing a better job of?

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Developing executive training programs to help risk managers assume C-suite positions in organizations. Insurance may be a good place to start but so is an MBA degree. The Risk and Insurance Management Society recognizes the importance of a wide range of risk knowledge. Colleges and universities need to catch up with RIMS.

R&I: What emerging commercial risk most concerns you?

Cyber risk and its impact on hazard, operational and financial strategies. A terrorist can take down a building. A cyber-criminal can take down much more.

R&I: What does your family think you do?

My family members think I’m a professor. They do not seem to be too interested in my views on risk management.




Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]