The future of networks (WC edition)

I met with quite a few managed care execs at RIMS, as well as several network vendors. There’s a disconnect between the two groups.

The execs are all talking about, and more importantly investing in and making progress towards, hybrid networks. They are moving beyond the national broad-based, discount-oriented networks.
The hybrid networks reflect a deeper understanding of the cost drivers in workers comp, and with that understanding, development of data mining techniques to track and monitor medical expenses, providers, and trends. And the data indicate that the generic approach to networks is no longer enough.
The hybrid has three main components. First, the all-important treating physician. Occ med docs, generalists, family practice and internists are the front line, capturing cases, focusing on return to work, communicating with the employer/payer, and working within a defined referral network. Specialists, primarily orthos and neuros, handle cases beyond the capabilities of the primacy care physicians. Both physician groups are identified and monitored via data mining, with analyses focusing on key metrics including duration of care, return to work outcomes, costs, and patient satisfaction.
The docs refer to specialty managed care vendors for diagnostic imaging, pharmacy, PT/chiro, and home health/DME. These specialists have very deep knowledge of their narrow niche, a knowledge that drives sophisticated reimbursement models, outcomes monitoring and management, and provider contracting.
Finally, the big-ticket billers, hospitals and facilities. There are two trends emerging here, trends which may turn out to be complimentary. One relies on the stand-by big and broad networks and their buying power to negotiate discounts with facilities, discounts that are passed on to the WC payers.
The second, and by far more interesting, combines a deep understanding (seeing a trend here?) of each jurisdiction’s WC and reimbursement rules and regs, as well as case law, with extensive databases of facility costs and charges, reimbursement data from HMOs, Medicare and Medicaid, WC, group health, and other sources. This combination is then applied to individual bills.
Yes, it is a craft approach to reimbursement, but the results can be stunning – savings of forty points plus below what the carrier would otherwise have paid.
One very large national payer is in the process of dropping PPO facility arrangements in several states, instead sending their bills to a specialty bill review firm.
Admittedly, the managed care execs are with large national payers including TPAs, insurers, and self-insured employers and thus represent a rather select group. But these are the trend-setters, and the directions they go indicate where the market will be.
Meanwhile, the large national network vendors are still thinking along the traditional lines of big networks with deep discounts. No doubt there will be a large and highly profitable business here for years to come, but it is a mature industry with all the implications thereof.
To grow and prosper, the big vendors have to evolve, adapt, and join forces with specialty vendors; use their data to build better networks, and work with payers, instead of selling the same old stuff.
Some of the managed care network vendors are getting there, many are not.