Optimizing Care and Reducing the Costs of City Government Workers’ Compensation Programs
April 16, 2021 | Categories: ODG by MCG
In 2015, the City of Fort Worth, Texas, had 6,250 employees and calculated total workers’ compensation costs, claims plus indemnity payments, at $9.7 million. The city leadership sought more effective ways to reduce workers’ compensation costs and still help employees received the appropriate care to support quality outcomes and return to work.
However, before the city grappled with the task of cost reduction, there was a need to better understand:
- How injured employees sought care
- The effectiveness of that care
- The most common injuries facing workers
FORT WORTH’S SOLUTION
The city was able to procure two data sets that contained medical and pharmacy claims and compared them against employee absence records. By applying outcome algorithms, the city was able to identify the time that an employee missed from work because of their injury, the value of that time off at the employee’s pay rate (or normalized rate), and how long it took for the employee to return to work.
In addition, Fort Worth was fortunate to take advantage of Chapter 504 of the Texas Labor Code, which allowed the city to create a physician panel available exclusively to city employees. By creating a physician panel, the city leadership could guide and monitor employee care to better estimate cost. Similarly, the city recruited physicians who not only yielded competitive rates but who also had the most successful outcomes for different types of injuries.
After establishing this patient panel, the city ranked providers based on average claim expense and average absence expense to determine the true cost of effective care to the employer. In addition, the city adjusted for comorbidities by assigning each employee a risk score so that rankings were based solely on provider performance and not the patients they treated. This helped counterbalance the physician’s claim that their “patients are sicker.” Included in this adjustment were various demographic and clinical data, which included age, gender, diagnoses, and the prescription drugs a patient takes.
Originally, the rankings showed that the higher an average expense claim, the more cost an employer incurred. Interestingly, when absence costs were applied on top of average expense claims, provider ranking shifted dramatically. Not only are absence costs a very real factor to an employer, but they can also serve as an indicator to fast a provider could get an employee back to work.
However, when providers were arranged based on their average risk-adjusted total costs, some doctors stayed in place, and other doctors dramatically shifted in rankings. This demonstrated that even though a provider may initially appear costly based on average claims expense, the results change when the focus is placed on provider performance, not the patients they treat.
This unique approach incorporated ODG by MCG’s industry-leading guidelines, benchmarking, and predictive analytics (along with IntegerHealth’s platform) to compare providers and monitor if evidence-based, best practices were being met both regionally and nationally. In addition, the city continues to leverage ODG solutions to compare claims against its ever-growing database to categorize claims within the normal reference range for an injury. If a claim appears outside of a normal range, then the city can flag the claim for investigative purposes.
The City of Fort Worth was able to use this creative approach to identify which providers to include in their own workers’ compensation provider network based on those who achieved the best outcome per injury type. In addition, the city leveraged the ability to triage care by ensuring injured employees stay within the provider network while seeking treatment, which helps with referral protocols and criteria for medical procedures that don’t require pre-authorization. By employing ODG and IntegerHealth’s solutions, Fort Worth is able to determine which claims fall within the normal range and flag those that appear outside of an acceptable range.
After the city implemented its provider network with ODG and IntegerHealth solutions in 2015, their costs fell from $9.7 million to $9.1 million in 2016. Even as recent as 2020, the costs continued to drop to $8.2 million, despite an increase in employees.
Image courtesy Shutterstock/Barbara Smyers
This blog was based on an article by Scott Roloff, President of IntegerHealth Technologies, Bill McCallum, Chief Information Officer of IntegerHealth Technologies, Mark Barta, Assistant Director of Human Resource and Director of Risk Management of the City of Fort Worth, and Jody Moses, Managing Director, Public Entities, Pooling & Associates at Sedgwick. Published by the Public Risk Management Association in the March/April 2021 issue of Public Risk.
If the information contained in this article concerns the ODG by MCG guidelines, it is those in the specified edition (and as of the date of publication) and may not reflect revisions made to the guidelines or any other developments in the subject matter after the publication date of the article.
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