There is an industry consensus that shifting away from fee-for-service payments for medical treatment to value-based care will benefit workers’ compensation by linking medical-provider pay to patient outcomes. In this session at the 2016 National Workers’ Compensation & Disability Conference, early adopters of values-based models explained their strategies, challenges encountered and results obtained.
- Robert Evans, VP of Repricing Solutions, Rising Medical Solutions
- Cyndy Larsen, Area VP, Kaiser Permanente
- Ann Schnure, VP Risk Management – Claims, Macy’s
- Stephen T. Woods, M.D., Chief Medical Officer, Ohio Bureau of Workers’ Compensation
Value-based care rewards high-quality and cost-effective patient care, ties payments to patient and financial outcomes, and promotes a continuum of care versus transactional types of care.
The industry has been slow to adopt this model. In fact, according to the 2016 Workers’ Comp Benchmarking Study, only 13% reported that they have implemented it. 53% reported that they had no plans to implement value-based care. On the other hand, 40% of commercial group health entities have adopted the value-based model and Medicare ties 85% of payments to quality care results.
Now is the time for the workers’ compensation industry to adopt this model. First, we have never had more data to draw our conclusions from. Second, the technology is to a point where it will provide a great spring board to launch the model. Third, maintaining the status quo puts us at risk of decreasing access to quality providers.
Macy’s has applied this model in California, where much of its workforce is concentrated and has a high rate of workers’ compensation claims. They began with a goal to replace a fragmented fee-for-service system with an outcome-based, integrated “fee-for-value” system. They enlisted Kaiser On-the-Job (KOJ) value-based model of care where:
- Physicians, pharmacy, hospitals and medical centers are completely integrated and one electronic medical record centered around each patient.
- Evidence-based medicine is practiced and embedded into all systems.
- Physicians are salaried and performance rewards are based on quality, outcomes, complexity and satisfaction; not volume or revenue generated.
- Incentives with payers are aligned around quality and fee-for-value.
- External quality ratings include NCQA and CMS.
- Chain of command to call with concerns about treatment anywhere in the system.
Over the span of three years, the KOJ values-based model drastically reduced Macy’s medical and pharmacy costs as well as litigation rates. Total claims costs also remained lower with the KOJ model, even for multi-year closed claims. Employee care from the KOJ values-based model resulted in:
- 41% lower total cost per claim.
- 45% lower direct medical costs per claim.
- 59% lower average pharmacy costs.
- 64% fewer claims involving litigation.
- 42% lower medical costs for low-back injuries per claim.
- 73% lower costs for shoulder and upper-arm injuries per claim.
Macy’s learned some challenges and lessons along the way:
- Building an outcome-based network as a single-payer employer in multiple states is extremely difficult and resource-intensive.
- You cannot build any kind of network without analytics.
- An NPI number of rendering physician and treatment location are critical.
- The easiest place to start is with industrial clinics.
- Many specialty doctors may not have enough data.
- You need a place to house, maintain and update provider data.
- Outcomes-based networks reduce utilization review volume.
- Sometimes opioids aren’t the issue.
- You have to determine where are you going to start, what is the program goal and how are you going to measure ROI.
Adopting a values-based approach is a big shift, however, the opportunity to do it now is better than ever. There are many benefits, including the ability to produce predictable outcomes and reducing barriers to recovery.