Industry Research

Study Supports Benefits of Evidence-Based Medicine

Researchers produced what they believe is the first scientific proof that consistently applied treatment guidelines are effective in treating injured workers.
By: | December 14, 2015 • 9 min read

Workers’ comp claims that follow evidence-based medicine guidelines have shorter durations and lower medical costs, according to a new study. The research suggests significantly improved outcomes and cost savings can result when medical providers follow recommendations based on peer-reviewed evidence in workers’ compensation treatment guidelines.

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While nearly all jurisdictions either have or are considering the adoption of evidence-based medicine guidelines in their workers’ comp systems, there is almost no published scientific evidence confirming their efficacy or mechanism for improvements. But a team from a workers’ comp insurance carrier and Johns Hopkins University School of Medicine have produced what they believe is the first scientific proof that consistently applied treatment guidelines are effective in treating injured workers.

“We set out to prove or disprove empirically that adherence to EBM guidelines was impactful,” said Jack Tower, senior data scientist at the Accident Fund Holdings Medical Center of Excellence. “We were able to do that.”

The researchers developed a methodology to measure adherence to the Official Disability Guidelines from the Work Loss Data Institute and used an adherence score to compare the outcomes for different case mix adjusted claims populations. They found that claims in which there was at least a 50 percent adherence to the guidelines had 13.2 percent shorter durations and 37.9 percent lower medical costs.

“That kind of gives a strong impetus to implement new medical management strategies based on the results,” Tower said. “Carriers and the work comp industry could benefit from developing programs that embrace the concepts behind EBM.”

Evidence-Based Medicine

The idea of evidence-based medicine is to improve the medical decision-making process by emphasizing the use of scientific research and medical consensus. While it has been around for the last several decades, evidence-based medicine has only recently become widespread in the workers’ comp system.

“The application of evidence-based medicine in workers’ comp is much different from the application of evidence-based medicine in the group health world,” said Jeffrey Austin White, director of Innovation for Accident Fund. “In group health the evidence-based medicine guidelines have been scrutinized by the medical professionals as they are limited in scope and typically used to control cost in a hospital setting by limiting reimbursement rates.”

“This study provides a mechanism for evaluating an EBM guideline and can be used to identify how they might be improved in the future.” — Jeffrey Austin White, director of innovation, Accident Fund Holdings

However, White argues that the workers’ compensation guidelines are much more focused and comprehensive. “Evidence-based medicine [in workers’ comp] encompasses tens of millions of claims having similar incoming diagnoses. The guidelines provide outcome expectations at the diagnosis and treatment level for the majority of workplace injuries,” White explained. “When the diagnosis is made, the evidence-based medicine guidelines define how often a treatment is administered, along with the expected cost and time off from work. It’s a much different way to apply evidence-based medicine than is typically done in the group health setting.”

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In addition to the Official Disability Guidelines, the American College of Occupational and Environmental Medicine has also created evidence-based medicine guidelines. A majority of states have adopted or are considering adopting either of the two national guidelines, a combination of the two, or homegrown guidelines that are state-specific to improve consensus around the definition of “necessary and appropriate” treatments for injured workers.

But “there’s a paucity of research around evidence-based medicine and best practice protocols,” said Dr. Dan Hunt, corporate medical director of Accident Fund. “We wanted to use our research to come up with hard facts — things that are true — to help improve the care for injured workers whether it’s Official Disability Guidelines, ACOEM, or another to say ‘here’s objective research that shows these guidelines work.’”

The researchers wanted to show whether and to what extent evidence-based medicine works specifically in the workers’ comp population. “There is a lot of literature that suggests the correct ways to do things medically but many times they are not really proven from an outcomes point of view,” said Dr. Edward Bernacki, professor of medicine and director of the division of occupational medicine at the Johns Hopkins University School of Medicine. “The medical care may be better, but does it really affect costs and return to work?”

The Study

Previous research from Accident Fund in conjunction with Johns Hopkins has highlighted some of the reasons for the increasing use of opioids in the workers’ comp system. One study, for example showed the use of opioids was an independent predictor of catastrophic claims costs while another identified physician dispensing as a driver of the increased use and costs.

“We found that physicians were contributing to [the opioid problem] and asked ourselves ‘Why?’ Our hypothesis was that providers were not using guidelines to help make administration decisions,” White said. “We thought by developing an algorithm or methodology to analyze a historical cohort of claims that we might be able to see a difference in outcomes between case mix adjusted claims that had various degrees of compliance with the guidelines.”

The idea of the study was to develop a technique for testing the safety and efficacy of an evidence-based medicine guideline rather than to drive public policy decisions on treatment practices.

It’s one of those situations where everyone wins — the employee returns to work and medical costs are constrained. To me, it’s a win-win.” — Dr. Edward Bernacki, professor of medicine and director of the division of occupational medicine, Johns Hopkins University School of Medicine

“If a state mandates the use of evidence-based medicine guidelines for the treatment of injured workers we are legally obligated to use them. If there are no mandated legislative guidelines, we are inclined to promote prospective guidelines that have been shown to reduce system costs and positively impact injured worker outcomes,” White said. “It’s important for us to know which guidelines work and why. This study provides a mechanism for evaluating an EBM guideline and can be used to identify how they might be improved in the future.”

Measuring Evidence-Based Medicine

The team developed two separate analytical techniques; one to stratify each claim for medical complexity and another to determine the adherence to the Official Disability Guidelines. The claims were divided into 10 levels of medical complexity and scored based on adherence.

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“The number one challenge when doing claims research is being able to group claims into like claims,” White explained. “You don’t want to compare a claim with a broken finger to a claim with head trauma.”

The group started with non-catastrophic, indemnity claims that spanned the years 2008 to 2012 of the insurer’s data. They considered open and closed claims using a two-year development cutoff.

The researchers developed a compliance score to determine adherence to the Official Disability Guidelines. The score assigns a quantitative value to the claim indicating approximately how many of the treatments were consistent with the recommendations from the guidelines.

They case mix adjusted the claims and compared those with greater than a 50 percent adherence to evidence-based medicine guidelines to those with less than 50 percent adherence for the differences in claim durations and medical costs incurred. Using data from Official Disability Guidelines, the researchers identified the adherence of every procedure given a specific diagnosis for each claim based on the following four codes:

Green flags in the Official Disability Guidelines indicate the procedure is recommended based on prevalence, medical consensus, and historical claim outcomes.

Yellow flags indicate the procedure is a common treatment for that diagnosis and should be allowed on a limited basis with a restriction on the number of times it should be performed.

Red flags denote low prevalence in workers’ comp and that the treatment is not necessarily indicated based on current scientific research, i.e., recommendation is to review.

Black flags indicate inappropriate care and possibly denial of service.

“For every diagnosis and treatment, we label it with the corresponding colors; then we determine an adherence score at the claim level,” White said. “For a given claim, you can consider the cumulative number of green, yellow, red and black flags, and you can devise a score that indicates the level of compliance which can be compared against like claims.”

Based on the scores, the claims were separated. Those with mainly green and yellow flags, for example, were deemed as fairly compliant with the guidelines while those with many black flags were noncompliant.

“If you break the claims into two buckets, you can compare outcomes of the compliant group with the noncompliant group,” White said. “So for two broken finger injuries where one received compliant and the other noncompliant care, you can see how they differ in duration and medical cost.”

Results

The average for all levels of medical complexity showed claims in the low compliance group had a 13.2 percent increase in claim duration and a 37.9 percent increase in medical costs compared to the high compliance group, the study found.

The numbers increased as the medical complexity of a claim increased. In looking at the top 10 percent of claims for medical complexity, there was a difference in claim duration of 18 percent and increased medical costs of 38 percent, between the low and high compliance groups.

The researchers also found there were more black flag procedures in the low compliance group — 3.5 times the number in the high compliance group.

“I think our research in essence provides evidence that if you do employ these guidelines the outcomes are better,” Johns Hopkins’ Bernacki said. “This is systematically over time that people return to work faster, for the insurers costs are a little lower, and for folks employing them the premium costs will be lower, so the cost of doing business will be lower. I think it’s one of those situations where everyone wins — the employee returns to work and medical costs are constrained. To me, it’s a win-win.”

Future Research

“It’s awfully exciting to be a part of a landmark study. No one else has done this before,” Hunt said. “The ability to develop an adherence process for claims management will have a lot of applications across the whole health care spectrum.”

Hunt, who called the study a “gargantuan undertaking,” hopes it will lead to additional studies that drill down more into the findings. “Age, jurisdictional differences — there are a whole host of really interesting things we can do now,” he said. “You’re going to see additional papers once this method is established.”

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For now, the authors hope the findings will help spur action in states that currently do not use evidence-based medicine guidelines in their workers’ comp systems. With properly worded legislation and effective dispute resolution processes in place, evidence-based medicine guidelines should offer better outcomes for everyone.

They hope workers’ comp practitioners will begin using the methodology they’ve created to further refine evidence-based medicine guidelines. In fact, they have developed a 10-step process for companies to replicate the results.

“It’s like a recipe. With evidence-based medicine guidelines, you can quantify exactly how much of each ingredient you put in and therefore enhance your ability to refine, measure, and improve your results over time. At least that is what EBM tries to do,” White said. “It’s a recipe that applies to, say 80 percent of the population most of the time. The recipe should reduce system costs and facilitate cooperation from both sides of the business — payers and providers alike.”

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Lead Story

Improving the Claims Experience

Insureds and carriers agree that more communication can address common claims complaints.
By: | January 10, 2018 • 7 min read

Carriers today often argue that buying their insurance product is about much more than financial indemnity and peace of mind.

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Many insurers include a variety of risk management services and resources in their packages to position themselves as true risk partners who help clients build resiliency and prevent losses in the first place.

That’s all well and good. No company wants to experience a loss, after all. But even with the added value of all those services, the core purpose of insurance is to reimburse loss, and policyholders pay premiums because they expect delivery on that promise.

At the end of the day, nothing else matters if your insurer can’t or won’t pay your claim, and the quality of the claims experience is ultimately the barometer by which insureds will judge their insurer.

Why, then, is the process not smoother? Insureds want more transparency and faster claims payment, but claims examiners are often overburdened and disconnected from the original policy. Where does the disconnect come from, and how can it be bridged?

Both sides of the insurer-insured equation may be responsible.

Susan Hiteshew, senior manager of global insurance and risk management, Under Armor Inc.

“One of the difficult things in our industry is that oftentimes insureds don’t call their insurer until they have a claim,” said Susan Hiteshew, senior manager of global insurance and risk management for Under Armour Inc.

“It’s important to leverage all of the other value that insurers offer through mid-term touchpoints and open communication. This can help build the insurer-insured partnership so that when a claim materializes, the relationships are already established and the claim can be resolved quickly and fairly.”

“My experience has been that claims executives are often in the background until there is an issue that needs addressing with the policyholder,” said Dan Holden, manager of corporate risk and insurance for Daimler Trucks North America.

“This is unfortunate because the claims department essentially writes the checks and they should certainly be involved in the day to day operations of the policyholders in designing polices that mitigate claims.

“By being in the shadows they often miss the opportunity to strengthen the relationship with policyholders.”

Communication Breakdown

Communication barriers may stem from internal separation between claims and underwriting teams. Prior to signing a contract and throughout a policy cycle, underwriters are often in contact with insureds to keep tabs on any changes in their risk profile and to help connect clients with risk engineering resources. Claims professionals are often left out of the loop, as if they have no proactive role to play in the insured-insurer relationship.

“Claims operates on their side of the house, ready to jump in, assist and manage when the loss occurs, and underwriting operates in their silo assessing the risk story,” Hiteshew said.
“Claims and underwriting need to be in lock-step to collectively provide maximum value to insureds, whether or not losses occur.”

Both insureds and claims professionals agree that most disputes could be solved faster or avoided completely if claims decision-makers interacted with policyholders early and often — not just when a loss occurs.

“Claims and underwriting need to be in lock-step to collectively provide maximum value to insureds, whether or not losses occur.” – Susan Hiteshew, senior manager of global insurance and risk management for Under Armour Inc.

“Communication is critically important and in my opinion, should take place prior to binding business and well before a claim comes in the door,” said David Crowe, senior vice president, claims, Berkshire Hathaway Specialty Insurance.

“In my experience, the vast majority of disputes boil down to lack of communication and most disputes ultimately are resolved when the claim decision-maker gets involved directly.”

Talent and Resource Shortage

Another contributing factor to fractured communication could be claims adjuster workload and turnover. Claims adjusting is stressful work to begin with.

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Adjusters normally deal with a high volume of cases, and each case can be emotionally draining. The customer on the other side is, after all, dealing with a loss and struggling to return to business as usual. At some TPAs, adjuster turnover can exceed 25 percent.

“This is a difficult time for claims organizations to find talent who want to be in this business long-term, and claims organizations need to invest in their employees if they’re going to have any success in retaining them,” said Patrick Walsh, executive vice president of York Risk Services Group.

The claims field — like the insurance industry as a whole — is also strained by a talent crunch. There may not be enough qualified candidates to take the place of examiners looking to retire in the next ten years.

“One of the biggest challenges facing the claims industry is a growing shortage of talent,” said Scott Rogers, president, National Accounts, Sedgwick. “This shortage is due to a combination of the number of claims professionals expected to retire in the coming years and an underdeveloped pipeline of talent in our marketplace.

“The lack of investment in ensuring a positive work environment, training, and technology for claims professionals is finally catching up to the industry.”

The pool of adjusters gets stretched even thinner in the aftermath of catastrophes — especially when a string of catastrophes occurs, as they did in the U.S in the third quarter of 2017.

“From an industry perspective, Harvey, Irma and Maria reminded us of the limitations on resources available when multiple catastrophes occur in close succession,” said Crowe.

“From independent and/or CAT adjusters to building consultants, restoration companies and contractors, resources became thin once Irma made landfall.”

Is Tech the Solution?

This is where Insurtech may help things. Automation of some processes could free up time for claims professionals, resulting in faster deployment of adjusters where they’re needed most and, ultimately, speedier claims payment.

“There is some really exciting work being done with artificial intelligence and blockchain technologies that could yield a meaningful ROI to both insureds and insurers,” Hiteshew said.

“The claim set-up process and coverage validation on some claims could be automated, which could allow adjusters to focus their work on more complex losses, expedite claim resolution and payment as well.”

Dan Holden, manager, Corporate Risk & Insurance, Daimler Trucks North America

Predictive modeling and analytics can also help claims examiners prioritize tasks and maximize productivity by flagging high-risk claims.

“We use our data to identify claims with the possibility of exceeding a specified high dollar amount in total incurred costs,” Rogers said. “If the model predicts that a claim will become a large loss, the claim is redirected to our complex claims unit. This allows us to focus appropriate resources that impact key areas like return to work.”

“York has implemented a number of models that are focused on helping the claims professional take action when it’s really required and that will have a positive impact on the claim experience,” Walsh said.

“We’ve implemented centers of excellence where our experts provide additional support and direction so claim professionals aren’t getting deluged with a bunch of predictive model alerts that they don’t understand.”

“Technology can certainly expedite the claims process, but that could also lead to even more cases being heaped on examiners.” — Dan Holden, manager, Corporate Risk & Insurance, Daimler Trucks North America

Many technology platforms focused on claims management include client portals meant to improve the customer experience by facilitating claim submission and communication with examiners.

“With convenient, easy-to-use applications, claimants can send important documents and photos to their claims professionals, thereby accelerating the claims process. They can designate their communication preferences, whether it’s email, text message, etc.,” Sedgwick’s Rogers said. “Additionally, rules can be established that direct workflow and send real time notifications when triggered by specific claim events.”

However, many in the industry don’t expect technology to revolutionize claims management any time soon, and are quick to point out its downsides. Those include even less personal interaction and deteriorating customer service.

While they acknowledge that Insurtech has the potential to simplify and speed up the claims workflow, they emphasize that insurance is a “people business” and the key to improving the claims process lies in better, more proactive communication and strengthening of the insurer-insured relationship.

Additionally, automation is often a double-edged sword in terms of making work easier for the claims examiner.

“Technology can certainly expedite the claims process, but that could also lead to even more cases being heaped on examiners,” Holden said.

“So while the intent is to make things more streamlined for claims staff, the byproduct is that management assumes that examiners can now handle more files. If management carries that assumption too far, you risk diminishing returns and examiner burnout.”

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By further taking real people out of the equation and reducing personal interaction, Holden says technology also contributes to deteriorating customer service.

“When I started more than 30 years ago as a claims examiner, I asked a few of the seasoned examiners what they felt had changed since they began their own careers 30 year earlier. Their answer was unanimous: a decline in customer service,” Holden said.

“It fell to the wayside to be replaced by faster, more impersonal methodologies.”

Insurtech may improve customer satisfaction for simpler claims, allowing policyholders to upload images with the click of a button, automating claim valuation and fast-tracking payment. But for complex claims, where the value of an insurance policy really comes into play, tech may do more harm than good.

“Technology is an important tool and allows for more timely payment and processing of claims, but it is not THE answer,” BHSI’s Crowe said. “Behind all of the technology is people.” &

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