In the work comp world there’s an oft-used term used to describe medical costs – ‘severity’.
I’m beginning to think that word itself is a problem, and perhaps is part of the reason the work comp payer community has proven itself, with few exceptions, unable to effectively manage medical expense.
There are any number of meanings for the term itself, but as it is used in the claim world ‘severity’ refers to the medical cost of a claim, or when used more broadly, medical costs overall (e.g. Severity of lost time claims increased in 2008 by xx%).
Severity is something that sort of just happens – a claim is either really severe or it isn’t. Severity is driven by uncontrollable factors and thus we can only deal with the fallout, or results, or impact of severity.
Severity happens.
It does, but only if we let severity ‘happen’. In reality, medical costs are much more controllable than many think; severity doesn’t have to happen to you, unless you passively allow it to. But because we’ve grown accustomed to hearing things like “claims costs increased driven by a 9% increase in medical severity”, we think ‘oh well, there’s that severity again, yawn…”
What we should be doing is asking a lot more ‘why’ and ‘how’ questions, and using the answers, or lack thereof, as the basis for actions to control severity:
– why is severity increasing?
– what specific areas and types of medical expenses are up?
– is there a region or state that appears to be up more than others?
– what are we not doing and why are our present programs not controlling cost?
– how do our results compare to our competitors? why? what are they doing differently?
Because the fact is, ‘severity’ is controllable – if you’re willing to ask the hard questions and address some perhaps uncomfortable answers; able to concede that your programs aren’t really ‘best in class’, and willing to adjust, retool, and revamp processes to drive better results.
In my experience most comp payers aren’t willing to do what it takes to control severity. And that’s why ‘severity’ controls them.
Jul
12
Hey Joe,
Do we have to pay to hear your opinion on how to control severity? our court system does not help us one bit. Judges making medical decisions does not help us one bit. Thanks for the post.
Troy –
good to hear from you.
There are lots of ways to address severity. I fully understand there are inherent issues in each state that limit, or assist, in that process. Approaches that work in some aren’t possible in others and vice versa.
Let’s take a couple.
1. Use of high cost narcotic opioids not FDA approved for musculoskeletal pain, particularly those with black box warnings, is all too common in comp. Assertive, evidence-based intervention using specialty-matched or specialty-appropriate physicians discussing the issue with the treating doc is an effective way to dramatically reduce usage – which has benefits far outside the reduction in drug cost.
2. Direction – one state prohibits direction to providers – NY. In every other state, channeling, or direction, or transportation, is allowed if not encouraged. Use data mining and predictive modeling to identify providers that treat appropriately, and encourage/direct/channel/transport injured workers to those providers. No, you won’t get every claimant there; heck you may only get half of them, but most of the battle is won when the right doc is involved from the outset.
3. Physical therapy can be a big help to RTW; it can also be abused by unscrupulous providers. Documenting overtreatment with copies of SOAP notes that clearly show the only change is in the date, incorporating evidence-based assessments of medical necessity, and aggregating data to show consistent inappropriate patterns of care at a specific provider can help stakeholders – even judges – recognize problem providers.
There’s lots more you can do, but I’ll have to start the meter running.
Paduda
Thanks Joe you never disappoint! good stuff.
Troy
One of the confirmed contributors to high medical costs is that insurers do not have a financial stake in the process. As long as they can get rate increases, they can continue to pass along the increasing medical costs to their insureds!
Mr Galascione’s logic is too simplistic. In a competitive market there is plenty of incentive for individual insurers to improve their own company’s results by controlling medical severity. Premiums are largely paid up front, and the insurer’s bottom line is directly influenced by how well claims are managed and costs are controlled.
Different states limit the cost-containment tools at payers’ disposal, and one might argue that these tools could be more effective. Still there is a balance to be struck by policy makers between the various parties’ rights in the process.