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.


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.


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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4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.


That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.


Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]