Merging Managed Care and Workers' Compensation
Tabak, Mark H., Risk Management
As the health care marketplace rapidly reconfigures itself along managed care lines, workers' compensation programs are increasingly and successfully integrating managed care techniques. The extent of this integration may surprise some risk managers. After all, the utilization patterns for workers' compensation and group health benefits programs are markedly distinct -- a result of regulations and the programs' different overall purposes. Workers' compensation tends to favor a more aggressive intervention for a quick return to the workplace, while managed care is often characterized by a less aggressive, longer-term approach.
Risk managers who hope to integrate managed care into workers' compensation will meet definite challenges. But when applied properly, the same techniques that enable companies to deliver medical care more effectively in group health benefit plans can help risk managers gain more control over the $30 billion-ayear spent by U.S. employers on workers' compensation medical expenses. Since medical expenses account for nearly half of all workers' compensation dollars spent in the United States, employers can benefit substantially from the appropriate application of managed care techniques to workers' compensation. The trick is to avoid the worst of both -- heavy utilization and long-term treatment.
Managed care is a medical care delivery mechanism that emphasizes standardized treatment protocols, tight case management and controlled access to medical care. Because managed care plans feature built-in incentives for cost control, they are widely regarded as more cost-effective and efficient than the traditional fee-for-service plans, which grant access to both primary care physicians and specialists without question.
Managed care's rise to prominence in the health care arena has been rapid. Ten years ago, for example, health maintenance organizations (HMOs) were the exception, not the rule. Now, one in five U.S. citizens belong to one, according to an October 7, 1994 report in HMO's Managed Care Outlook. But while managed care's impact on the nation's health care system has been widely documented, its impact on discrete segments of the health care universe -- like the medical component of workers' compensation -- has not. The result: a sizable information gap and many important, unanswered questions.
A RISK MANAGER SURVEY
To fill that gap and find some answers, AIG Managed Care, Inc., a newly formed member company of American International Group, Inc., commissioned a survey, "Managed Care and Workers' Compensation: Risk Managers' Views," which was conducted by the independent national opinion research firm of Louis Harris & Associates, Inc. The survey was based on detailed telephone interviews with more than 400 risk managers representing Fortune 1000 industrial and service companies with 10,000 employees or more.
Conducted in August, 1994, the survey sought risk managers' views on a range of issues, including: their perspective on the overall state of the workers' compensation system; the degree to which risk managers believe that managed care is compatible with the medical needs associated with workers' compensation cases; the distance risk managers have traveled down the "24-hour" path -- that is, to what degree they have initiated efforts to more closely coordinate their workers' compensation and group health benefit programs and which trends risk managers believe will enhance or inhibit their cost-management strategies for workers' compensation over the next five years.
The survey clearly shows that risk managers are looking to gain better control over the medical component of their workers' compensation programs by using managed care techniques. Virtually all (more than 99 percent) of the risk managers polled were currently using at least one managed care technique. In addition, nearly all the risk managers agreed with the statement: "With managed care techniques, insurers can help manage and improve health care for workers injured on the job. …