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Taming Medical Costs … the 800 Pound Gorilla! Kevin Fleming, President Paradigm Management Services.

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Presentation on theme: "Taming Medical Costs … the 800 Pound Gorilla! Kevin Fleming, President Paradigm Management Services."— Presentation transcript:

1 Taming Medical Costs … the 800 Pound Gorilla! Kevin Fleming, President Paradigm Management Services

2 It’s a Jungle Out There 1 The most formidable challenge in Workers’ Compensation today is figuring out how to improve the recovery of injured workers while keeping costs at bay. Proprietary & Confidential Copyright Paradigm Management Services Key Issues ■Quality recovery ■Medical cost inflation ■Cases with medical spikes in outbound years ■Claims “leakage” ■Limited resources The Big Challenge: Keeping Costs at Bay

3 Medical Claim Costs ($000) Annual Change +4% Annual Change +10% Medical Inflation 2 With medical inflation increasing at an alarming rate, our industry faces a serious financial issue. Proprietary & Confidential Copyright Paradigm Management Services Source: NCCI; based on states where NCCI provides ratemaking services

4 Traditional Solutions 3 Solutions such as negotiating provider discounts and bill review have kept unit costs contained… Proprietary & Confidential Copyright Paradigm Management Services Quality Solutions ■Bill review ■Provider negotiated discounts ■Utilization review ■Pharmacy benefit review Help Keep Costs Contained

5 Need for the Big Guns 4 … however, the traditional solutions while good, are not good enough, we need bigger savings. Proprietary & Confidential Copyright Paradigm Management Services Bigger Needs ■Even lower spend on high volume, standardized cost categories ■Effectively addressing major categories of spend ■Long-term spend efficiency – no trading off long-term financial health because no one is looking

6 Strategies that Work 5 There are six strategies that matter when it comes to taming medical costs. Proprietary & Confidential Copyright Paradigm Management Services 6. Keep Track of Where You Are Laws of the Jungle 5. Work Through the Pain 4. Keep an Eye on the Sleeping CATs 3. Tackle the Big CATs 2. Sharpen Your Tools 1. Survey Your Spend Territory

7  Survey Your Spend Territory 6 After surveying their spend, most companies find they have three or four key areas that dominate their “spend territory.” Proprietary & Confidential Copyright Paradigm Management Services Top Cost Drivers Types of Cases ■“Standardized” spend ■Catastrophic injuries ■Chronic and continuing Categories of Spend ■Medical ■Pharmaceutical

8  Sharpen Your Tools 7 Sharpen your traditional tools for the high volume, standardized spend. Proprietary & Confidential Copyright Paradigm Management Services Watch for Program “Leakage” Over Time ■Inaccurately paid medical expenses ■Rework due to human error ■Fines and penalties ■Need performance audits & benchmarking to maintain focus ■Need strict exception processing standards ■Need automated tools with checks and balances

9  Sharpen Your Tools cont. 8 Traditional tools for standardized spend (continued). Proprietary & Confidential Copyright Paradigm Management Services Employing All Your Options eBilling Onsite Field CM Payment Processing Non-Discount Networks Prompt Pay HNC External PPO FROI Bill Review UM SROI Nurse Reviews Internal PPO MPN Fee Negotiations TCM PT Networks Radiology Networks PBM DME Peer Reviews IME

10 9 Use different tools to tackle the big catastrophic cases. Proprietary & Confidential Copyright Paradigm Management Services  Tackle the Big CATs Different “Tools” for CATs ■Don’t treat CATs like kittens ■Telephone vs. Onsite ■Nurses vs. Physician/Nurse combination ■Inexpensive vs. Best-in-Class facilities and providers

11 10 Use different tools to tackle the big CATs (continued). Proprietary & Confidential Copyright Paradigm Management Services  Tackle the Big CATs cont. Need Systematic Care Management TM ■Specialist physicians ■Catastrophic nurses onsite ■Full recovery plan from start ■Systematic medical management ■Data informing all aspects of care ■Checks and balances ■Guarantees “skin in the game”

12 11 Use different tools to tackle the big CATs (continued). Proprietary & Confidential Copyright Paradigm Management Services  Tackle the Big CATs cont. More Effective and Lower Cost 1.Based on a an independent comparison by Milliman, the nation’s leading actuarial and consulting firm, of Paradigm cases to their proprietary database of similar Workers’ Compensation claims; Release to Return to Work is determined by the attending physician (not Paradigm) Returned to Competitive Work 5 x better Paradigm 41% 8% Industry Benchmark 1 ParadigmIndustry Benchmark 1 80 MM 125 MM 36% lower total cost Medical & Indemnity Costs $71 MM $21 MM $104 MM $9 MM Medical Costs Indemnity Costs

13 12 Catastrophic cases can have serious spikes in costs years outbound from the original injuries. Proprietary & Confidential Copyright Paradigm Management Services  Keep an Eye on the Sleeping CATs Watch Out For: ■Spend in excess of $5K mo. ■Recurrent infections (respiratory, urinary tract, skin, bone) ■Chronic musculoskeletal and/or neuropathic pain ■New recommendations for invasive procedures ■Frequent hospitalizations ■Intensive equipment needs/long- term ventilator dependence ■Chronic wounds

14 13 Catastrophic cases can have serious spikes in costs years outbound from the original injuries (continued). Proprietary & Confidential Copyright Paradigm Management Services  Keep an Eye on the Sleeping CATs cont. Claim Year Annual Payout $801,246 $1,549,128 $2,685,315 $3,905,343 $4,492,888 Total Paid Medical* * Selected sample of five acquired brain injury claims with traditional medical management (i.e., not Paradigm cases); numbers adjusted for inflation $0 $100,000 $300,000 $500,000 $700,000 $900,000 $1,100, “Sleepers” – Outbound Cost Spikes

15 14 Catastrophic cases can have serious spikes in costs years outbound from the original injuries (continued). Proprietary & Confidential Copyright Paradigm Management Services  Keep an Eye on the Sleeping CATs cont. Like CAT – Need Different Tools Systematic Care Management TM Works ■Specialist physicians and catastrophic nurses onsite ■Course correction plan from start ■Systematic medical management ■Data informing all aspects of care ■Checks and balances

16 15 Chronic pain with its associated pharmaceutical bills and invasive surgeries cost organizations enormous amounts of money. Proprietary & Confidential Copyright Paradigm Management Services  Work Through the Pain Elephant in the Room (or on Your Back) ■Effects1 in 5 adults ■70,000 annual DR visits ■250,000 lumbar surgeries are performed annually ■Pain medications are overperscribed ■ $79 billion in annual spending ■ Rampant litigation The Pain Problem – The

17 16 Chronic pain (continued). Proprietary & Confidential Copyright Paradigm Management Services  Work Through the Pain cont. PAIN PAIN insomnia atrophy fear of movement PAIN depression atrophy insomnia weight gain medical life roles addiction Acute Pain (0-3 months) Transitional (3-6 months) Chronic Pain Syndrome Greater than 6 months Best to intervene before this point! Pain is a Process

18 17 Chronic pain (continued). Proprietary & Confidential Copyright Paradigm Management Services  Work Through the Pain cont. Early or Late – Systematic Care Management TM Works ■Specialist physicians and catastrophic nurses onsite ■Immediate correction plan ■Systematic medical management ■Data informing all care ■Checks and balances 184% Early Intervention Pain Management (Less than one year from date of injury) Chronic Pain (Average case age six years from injury date)

19 18 It is important to keep an eagle eye on the areas of greatest spend and track the results of your containment efforts. Proprietary & Confidential Copyright Paradigm Management Services  Keep Track of Where You Are Program Must Haves ■Tracking of return to work (single best medical and financial metric around) ■Short- and Long- term cost focus ■Regular tracking ■Senior leadership engagement

20 Starting Monday 19 While transforming the way you address medical costs can take effort, there are a number of things you can start doing right away. Proprietary & Confidential Copyright Paradigm Management Services First Thing Monday ■Stick your neck out ■Pull your data ■Identify 15 cases ■Carve out your CATs Start Saving Money & Ensuring Long-Term Financial Stability


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