Complex Claims

Helping Injured Workers Live Their Best Lives

Providers are developing new strategies for keeping up with advances in prosthetics and finding the best options for injured workers.
By: | May 2, 2017 • 7 min read

Experts are finding ways to mitigate the challenges of workers’ compensation claims involving the use of prosthetics, given the rising costs of ever-more complex devices — and the potential for psychosocial impacts and comorbidities.

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One Call Care Management this month announced the launch of its prosthetics clinical review program, in which a prosthetist certified by the American Board for Certification will assist claims adjusters in understanding the complexities of prosthetics and in making the most informed decisions about them.

Referrals meeting one or more of the following criteria will typically trigger such reviews:

  • myoelectric upper extremity systems
  • system upgrades and/or excessive replacements
  • microprocessor-controlled knee and ankle prosthetics; and
  • excessive socket changes

Recent case studies have shown savings of up to 52 percent when clinical reviews are added to the claims approval process, according to One Call.

Jennifer McCarthy, a One Call clinical specialist based in Boston who will lead the new team, said that clinical reviews are needed because claims costs continue to rise as advances in prosthetics happen so rapidly that carriers can’t keep track of the changing technology.

“Historically in times of war or conflict that involves our military, the U.S. government awards grants to researchers to develop prosthetic technology, so we have seen a recent influx of advanced prosthetic devices,” McCarthy said.

“Because the devices often can involve robotics, they are expensive to manufacture at such a small quantity. The manufacturers then to transfer the costs of research, development and manufacturing onto the provider and payer.”

Jennifer McCarthy, clinical specialist, One Call Care Management

Moreover, since some of the devices are so new, there is no set fee schedule from Medicare, she said. The manufacturers can suggest a retail price for the providers to bill or the providers will charge an amount above their invoice costs.

“They attempt to make this pricing somewhat standardized, but there can often be a significant variance in the pricing between providers for the same device,” McCarthy said.

One Call’s prosthetics clinical review program is different than a utilization review, which verifies the medical necessity of the device being recommended from a nurse’s perspective.

“Our new program is more of a clinical oversight from a prosthetist’s perspective to make sure the recommendation is truly appropriate and there are no other types of prostheses that would allow for a better outcome,” she said.

“Our goal is to ensure that the device the prosthetist is recommending is appropriate for the patient’s functional level and will allow the individual to reach his vocational and avocational goals.”

Outreach to the prosthetist involved in the claim is often necessary to determine what other types of prostheses were considered and why they would not be appropriate, McCarthy said.

“If local expertise and resources are not available, it is sometimes more advantageous to send the patient to a center with expertise to minimize the risk and costs associated with ‘trial-and-error’ approach to prosthesis management.” — Julie Fawson, director of clinical services, Paradigm Outcomes

Sometimes the team will come to the conclusion that an alternate device may be more appropriate or there might be coding changes that more accurately represent the device recommendations, which can reduce costs.

In determining the most appropriate device, One Call’s team will also consider the health history of the injured worker, what their experiences have been with any previous prostheses and the environmental history — which includes the worker’s support system, home and social environments.

“This gives us a more holistic approach to determining whether this particular prosthesis would allow them to reach their highest functional level,” McCarthy said.

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Upon request from claims adjusters, One Call will create a prosthetics cost projection document covering the costs of maintenance, servicing and replacement for the particular device.

The company already has a clinical review program for physical therapy and dental, so prosthetics is “the next natural progression of providing clinical oversight to our customers,” she said.

Julie Fawson, RN, director of clinical services at Paradigm Outcomes in Walnut Creek, Calif., said that workers’ comp carriers face many challenges when planning for an injured worker’s prosthesis needs, especially in the current environment of rapidly advancing technology and cost of prosthetics.

“Our team defines broad achievements, such as returning to work, and detailed goals that focus on specific areas of function,” she said.

When reviewing claims involving prosthetics, Paradigm Outcomes considers the complexity of the amputation; impact of comorbidities and conditions; the expertise and resources of the treatment team; and the management of the patient’s needs and expectations.

“In general, the more proximal the amputation, the more complex and costly it can be,” she said.

“For example, an above-elbow amputation is more complex than a below-elbow amputation. While in both scenarios the amputee may be a candidate for body-powered and myoelectric prosthesis options, fabricating a prosthesis that incorporates elbow function is much more significant in terms of cost, therapy/training, maintenance and functional recovery expectations.”

It is also important to consider comorbidities or conditions that may add to the complexity of amputation and prosthesis management, Fawson said. For instance, a patient with extensive muscle or nerve tissue damage at the amputation site, or with a very short residual limb, will be more complex in terms of fabrication, fit and function of the prosthesis.

A patient could also require reconstructive surgeries of the residual limb over time, which will change the composition of the residual limb, thereby increasing the frequency of costly socket revisions in the first couple of years.

Complexity on Many Levels

In all prosthestics claims, expertise of the treatment team — the physician, therapist and prosthetist — and the resources they provide, are vital to the success of managing complex amputees, especially given the high technology, high cost prosthesis options available today, she said.

“If local expertise and resources are not available, it is sometimes more advantageous to send the patient to a center with expertise to minimize the risk and costs associated with ‘trial-and-error’ approach to prosthesis management,” Fawson said.

It is also important to understand the patient’s occupational goals, lifestyle and avocational interests, to guide the treatment team and patient to make the most appropriate prosthesis choice that will optimize the patient’s functional and psychological outcome, she said.

Julie Fawson, director of clinical services, Paradigm Outcomes

To alleviate the challenges of locating qualified providers of prosthetics, Memphis-based Sedgwick Claims Management Services Inc. developed a provider benchmarking tool to help identify providers who are known for consistently delivering high quality care and desired outcomes, said Kimberly Talton, a Sedgwick complex claims advisor based in Dallas.

“Another challenge is determining what to expect when it comes to amputees’ ongoing needs and care,” Talton said.

“Within the complex claims unit, we work with the team to provide education about critical care pathways to identify what to expect with these types of injuries, ongoing needs and costs of these types of claims.”

One of the challenges is determining the appropriate type of prosthetic for a particular person, as every individual and amputation is unique, said Riverside, Calif.-based Edward Canavan, vice president of Sedgwick’s workers’ compensation practice and compliance.

“Some individuals with amputation could end up being diabetic, and so they’ll have different needs than other amputees,” Canavan said.

“We want to get individuals to the right doctor who can give them the right recommendation to fulfill those needs, and then we can partner with the individuals to get them the right prosthetics.”

Other challenges are centered around the fast-paced evolution of technology for prosthetics, and determining whether the medical and peer review guidelines allow the use of particular devices that have recently been developed, he said.

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“There is so much research going on in every sort of prosthetic to help the injured worker, including the development of devices to feel what they are touching, exoskeleton research to help the person walk again, and stem cell therapy,” Canavan said.

“We need to balance that with determining what can help the injured person get the best possible outcomes. That’s where complex claims review comes into place. We can also leverage the right resources such as a prosthetics clinical review program.”

Prosthetics claims can be impacted if the affected amputation area hasn’t healed properly and completely before being fitted, said Rachael Ruther, a Sedgwick complex claims advisor based in Brea, Calif.

“Prosthetics are so specialized,” Ruther said.

“You want to be sure there is a proper fit; otherwise, the prosthetic may not be functional and may go unused.”

The key to providing the best care possible is to get patients as close to a normal level of functionality as possible, Talton said.

“Hopefully we can reduce some of the mental issues that come with these types of injuries such as depression and anxiety,” she said. &

Katie Kuehner-Hebert is a freelance writer based in California. She has more than two decades of journalism experience and expertise in financial writing. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Property

Insurers Take to the Skies

This year’s hurricane season sees the use of drones and other aerial intelligence gathering systems as insurers seek to estimate claims costs.
By: | November 1, 2017 • 6 min read

For Southern communities, current recovery efforts in the wake of Hurricane Harvey will recall the painful devastation of 2005, when Katrina and Wilma struck. But those who look skyward will notice one conspicuous difference this time around: drones.

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Much has changed since Katrina and Wilma, both economically and technologically. The insurance industry evolved as well. Drones and other visual intelligence systems (VIS) are set to play an increasing role in loss assessment, claims handling and underwriting.

Farmers Insurance, which announced in August it launched a fleet of drones to enhance weather-related property damage claim assessment, confirmed it deployed its fleet in the aftermath of Harvey.

“The pent-up demand for drones, particularly from a claims-processing standpoint, has been accumulating for almost two years now,” said George Mathew, CEO of Kespry, Farmers’ drone and aerial intelligence platform provider partner.

“The current wind and hail damage season that we are entering is when many of the insurance carriers are switching from proof of concept work to full production rollout.”

 According to Mathew, Farmers’ fleet focused on wind damage in and around Corpus Christi, Texas, at the time of this writing. “Additional work is already underway in the greater Houston area and will expand in the coming weeks and months,” he added.

No doubt other carriers have fleets in the air. AIG, for example, occupied the forefront of VIS since winning its drone operation license in 2015. It deployed drones to inspections sites in the U.S. and abroad, including stadiums, hotels, office buildings, private homes, construction sites and energy plants.

Claims Response

At present, insurers are primarily using VIS for CAT loss assessment. After a catastrophe, access is often prohibited or impossible. Drones allow access for assessing damage over potentially vast areas in a more cost-effective and time-sensitive manner than sending human inspectors with clipboards and cameras.

“Drones improve risk analysis by providing a more efficient alternative to capturing aerial photos from a sky-view. They allow insurers to rapidly assess the scope of damages and provide access that may not otherwise be available,” explained Chris Luck, national practice leader of Advocacy at JLT Specialty USA.

“The pent-up demand for drones, particularly from a claims-processing standpoint, has been accumulating for almost two years now.” — George Mathew, CEO, Kespry

“In our experience, competitive advantage is gained mostly by claims departments and third-party administrators. Having the capability to provide exact measurements and details from photos taken by drones allows insurers to expedite the claim processing time,” he added.

Indeed, as tech becomes more disruptive, insurers will increasingly seek to take advantage of VIS technologies to help them provide faster, more accurate and more efficient insurance solutions.

Duncan Ellis, U.S. property practice leader, Marsh

One way Farmers is differentiating its drone program is by employing its own FAA-licensed drone operators, who are also Farmers-trained claim representatives.

Keith Daly, E.V.P. and chief claims officer for Farmers Insurance, said when launching the program that this sets Farmers apart from most carriers, who typically engage third-party drone pilots to conduct evaluations.

“In the end, it’s all about the experience for the policyholder who has their claim adjudicated in the most expeditious manner possible,” said Mathew.

“The technology should simply work and just melt away into the background. That’s why we don’t just focus on building an industrial-grade drone, but a complete aerial intelligence platform for — in this case — claims management.”

Insurance Applications

Duncan Ellis, U.S. property practice leader at Marsh, believes that, while currently employed primarily to assess catastrophic damage, VIS will increasingly be employed to inspect standard property damage claims.

However, he admitted that at this stage they are better at identifying binary factors such as the area affected by a peril rather than complex assessments, since VIS cannot look inside structures nor assess their structural integrity.

“If a chemical plant suffers an explosion, it might be difficult to say whether the plant is fully or partially out of operation, for example, which would affect a business interruption claim dramatically.

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“But for simpler assessments, such as identifying how many houses or industrial units have been destroyed by a tornado, or how many rental cars in a lot have suffered hail damage from a storm, a VIS drone could do this easily, and the insurer can calculate its estimated losses from there,” he said.

In addition,VIS possess powerful applications for pre-loss risk assessment and underwriting. The high-end drones used by insurers can capture not just visual images, but mapping heat, moisture or 3D topography, among other variables.

This has clear applications in the assessment and completion of claims, but also in potentially mitigating risk before an event happens, and pricing insurance accordingly.

“VIS and drones will play an increasing underwriting support role as they can help underwriters get a better idea of the risk — a picture tells a thousand words and is so much better than a report,” said Ellis.

VIS images allow underwriters to see risks in real time, and to visually spot risk factors that could get overlooked using traditional checks or even mature visual technologies like satellites. For example, VIS could map thermal hotspots that could signal danger or poor maintenance at a chemical plant.

Chris Luck, national practice leader of Advocacy, JLT Specialty USA

“Risk and underwriting are very natural adjacencies, especially when high risk/high value policies are being underwritten,” said Mathew.

“We are in a transformational moment in insurance where claims processing, risk management and underwriting can be reimagined with entirely new sources of data. The drone just happens to be one of most compelling of those sources.”

Ellis added that drones also could be employed to monitor supplies in the marine, agriculture or oil sectors, for example, to ensure shipments, inventories and supply chains are running uninterrupted.

“However, we’re still mainly seeing insurers using VIS drones for loss assessment and estimates, and it’s not even clear how extensively they are using drones for that purpose at this point,” he noted.

“Insurers are experimenting with this technology, but given that some of the laws around drone use are still developing and restrictions are often placed on using drones [after] a CAT event, the extent to which VIS is being used is not made overly public.”

Drone inspections could raise liability risks of their own, particularly if undertaken in busy spaces in which they could cause human injury.

Privacy issues also are a potential stumbling block, so insurers are dipping their toes into the water carefully.

Risk Improvement

There is no doubt, however, that VIS use will increase among insurers.

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“Although our clients do not have tremendous experience utilizing drones, this technology is beneficial in many ways, from providing security monitoring of their perimeter to loss control inspections of areas that would otherwise require more costly inspections using heavy equipment or climbers,” said Luck.

In other words, drones could help insurance buyers spot weaknesses, mitigate risk and ultimately win more favorable coverage from their insurers.

“Some risks will see pricing and coverage improvements because the information and data provided by drones will put underwriters at ease and reduce uncertainty,” said Ellis.

The flip-side, he noted, is that there will be fewer places to hide for companies with poor risk management that may have been benefiting from underwriters not being able to access the full picture.

Either way, drones will increasingly help insurers differentiate good risks from bad. In time, they may also help insurance buyers differentiate between carriers, too. &

Antony Ireland is a London-based financial journalist. He can be reached at [email protected]