V. MANAGED CARE, WORKERS COMPENSATION
While this discussion of Managed Care is of primary important to those who market employee benefit plans, another aspect of Managed Care is quite important as well. Work-related accidents create their own special Managed Care problems and one such accident can affect the success of a business and the employee as much as a serious illness or non-job-related accident.
For those not familiar with Workers Compensation Insurance, a detailed explanation is outside the scope of this discussion, but briefly stated, Workers Compensation insurance provides health benefits (including rehabilitation), and disability benefits. State laws require groups of certain size or occupations to provide Workers Compensation insurance on all of their employees.
When Workers Compensation insurance becomes involved because of a work-related accident, the company may institute a Managed Care procedure which is called a “Post-injury Response Plan.” Of course with accidents, there is no prospective review.
A post-injury response plan are procedures which are designed to provide the injured employee with the proper medical attention so that the person can return to work as soon as possible. This plan involves the cooperation and communication with the patient, the employer, the medical providers, the Workers Compensation carrier, and in many cases, supervisors and fellow employees. Post injury response plans are established to help control Workers Compensation costs.
THE OPERATION OF A POST-INJURY RESPONSE PLAN.
Obviously, the first step in this plan would be to verify that the employee receives first-aid and other immediate treatment for their illness or injury. Needless to say, the proper first-aid treatment often saves the life of the patient, and at the very least, lessens the severity of the injury. As a precaution, the first-aid should be administered only by qualified individuals.
Once first-aid has been administered, a company representative should provide whatever help and assistance is necessary for the employee to obtain prompt medical attention. As an example, an employee should never be allowed to drive themselves to the hospital, regardless of how minor the injury appears to be. The supervisor that accompanies the employee to the treatment location should always stay with the employee until the treatment is completed or the employee is confined for overnight. If necessary, the supervisor should provide an ambulance or other transportation to the employees home if an overnight stay is not needed.
The employee’s supervisor should become involved in the total treatment, and should alert the hospital and/or physician immediately after the accident. This also accomplishes several things that can assist the Managed Care programs.
- Since the supervisor and other employees become personally and actively involved, the employee feels that the company has an interest in their condition. This helps to eliminate any antagonistic feelings that the employer may have and alleviates any problems that may develop with the Managed Care techniques.
- Because the employer is involved in the treatment process, the treatment program will continue to be focused on the employee returning to work. Communication between the employer and the providers can assist in determining exactly what duties the employee performed, and what duties will be expected in the future.
- If for nothing other than peace of mind - which can be a powerful stimulant in returning an employee to work - the employee is aware that he/she is important to the employer and the employer has their best interests at heart.
Immediately after the accident, the area in which the accident occurred should be isolated and not used until a complete investigation can be completed. If the situation causing the accident could be repeated, corrective action must be taken immediately.
Claims and claims details must be provided to the company and to the insurer immediately. The reporting of the claim starts the post-injury response plan and is essential to controlling the Workers Compensation costs. The claims reports activates the professional claims examiners and benefits administrators. Therefore, as soon as the insurer starts claims management, the quicker the injured employee’s medical bills will be paid, disability checks commence, and Managed Care strategies can be employed. The insurer can be a source of information and reassurance to the employee who may be confused by the Workers Compensation system.
Workers Compensation is considered a target for those committing fraud and cases of workers drawing disability while performing normal physical activities are commonplace. Prompt reporting can help to reduce the number and amount of fraudulent claims, and the most rapid method of reporting is by telephone or fax. If the injured worker has a history of Workers Compensation claims, an investigation can be implemented prior to payment of any benefits.
ONGOING COMMUNICATION.
The employer should make a special effort to maintain continual and positive communication with the injured employee, and continue to do so as long as the employee is disabled. This will facilitate treatments and at the same time contribute to the employees attitude toward the employer and the Managed Care plan.
Continual communication assures that medical treatment is moving as quickly and efficiently as possible and according to the post-injury response plan. Since the employee is probably receiving disability payments, any delay in treatment becomes more expensive than similar treatment under an employee benefit plan. Therefore, if the employee is not recovering as soon as expected, the employer may wish to have the treatment plan reviewed to make sure that it is appropriate for that particular employee.
A similar plan can be used to control disability income insurance costs when this type of coverage is provided as an employee benefit.
PLANNING FOR RETURN TO WORK AND/OR ALTERNATIVE EMPLOYMENT.
A common practice in disability claims is not to allow an employee to return to work until they are medically able to perform every aspect of their previous job. This may be a more costly procedure, but indemnity benefits do not have to be paid once the employee returns to work. This savings in benefits makes such a plan successful.
Injured employees normally feel better physically and mentally when they are allowed to return to work as soon, as is practical. Unfortunately, employees who are out of work for a longer period of time because of disability, have a more difficult time in returning to work. They can actually develop a “disability mentality” that makes it very difficult for them to return to work at any time and which can cause the medical and disability benefits to soar.
Therefore, employees should be allowed to return to work when they can perform any meaningful or useful job for any period of time. They may be placed in “transitional” work with the understanding that the work is temporary and eventually the employee will be allowed to return to their former position.
Transitional employment is part of the American Disabilities Act, and any disabled employee who is denied transitional employment according to the Act, can initiate a lawsuit. The act states that transitional employment must be useful to the company and not demeaning to the employee.
VOCATIONAL REHABILITATION
Even though the objective of any return-to-work policy, is to return the employee to the position that they held prior to the injury. Occasionally, this is impossible because of the type or degree of injury, e.g. amputation of hand or limb. Therefore, the only alternative is to rehabilitate the employee and start them on a vocational rehabilitation program.
Vocational rehabilitation starts with a complete assessment of the individual’s physical and psychological condition. Then a study of the employee’s interests, aptitudes, education, work history and particular skills is performed in order to determine the type of work that the employee can perform with the greatest success.
The job market is searched to determine the availability of a position for which the employee is qualified, and for which they have an interest. A job meeting all of the requirements may not be available, in which case the employee will be trained for a similar position, with a specific attempt to provide skills so that the employee can obtain a job at an income the same as, or as close as possible, to the income from the original position.
Again, early claim reporting allows the vocational rehabilitation to get a jump-start on recovery so that the employee will have a job waiting as soon as they are released from medical care.
While transitional employment for these more seriously injured employees may be preferred, the goal of the employee becoming a productive member of society again is the same. However, if vocational rehabilitation is involved, the employee may have a different job, at a different location or the same job with a different employer or even a different job with a different employer.
RECOVERIES/SUBROGATION
In certain circumstances, all or part of the claim payments can be recovered from other parties. Subrogation is involved when there is a legal liability by a third party; e.g. a manufacturing defect causing the accident can be recovered from the manufacturer.
Some states have created Second Injury Funds, which alleviates the risk of an employer that hires a physically impaired employee. If the employee is injured and if the pre-existing impairment causes the claim to exceed the amount that would have been paid if the employee had not been impaired, the fund will pay the excess.
CASE STUDY: How Managed Care Techniques Help Injured Employees
The SunTech Industries factory is located in a state that required Workers Compensation (WC) on all employees, and WC must be purchased through a licensed insurance carrier.
Felix is an Assistant Supervisor for SunTech and works in the manufacturing facility. On June 3, a chain drive on a machine that had been broken and was being repaired under his supervision, broke while operating at high speed, and struck Felix above the elbow on his right arm. He fell to the floor, with his arm gushing blood.
Felix's immediate superior, the Section Supervisor, had been trained in First Aid (all Supervisors and above had taken mandatory First Aid courses), and he immediately shut down the machine, ordered all workers away from the machine, snatched the First Aid kit that was next all machines and bandaged Felix's arm rather expertly. Meantime, the alarm bell that sounded when an accident occurred prompted the office to dial 911.
The paramedics arrived and they took Felix to a hospital only 2 miles away. His supervisor went with him to the hospital, completed the necessary paperwork, notified Felix's wife, and stayed with him until Felix's wife arrived and Felix was in a hospital room and resting.
Meantime, the area of the machine was taped off, and the machine manufacturer was notified and was sending expert engineers to determine the cause of the accident so as to preclude any further accidents of this type. The office supervisor notified the Workers Compensation carrier of the accident who immediately appointed a Case Manager to work with Felix and his doctors.
Felix underwent surgery the following day in an attempt to save his arm, which was successful, however he would have very limited usage of his arm. His supervisor visited him on a regular basis and kept his wife informed of company benefits available to Felix. With Felix's permission, he contacted the Felix's mortgage company and 2 creditors and assured them that Felix would be receiving disability payments and asked for patience. The rapport between Felix and his supervisor could not have been better.
After 2 weeks in the hospital, Felix returned home and time with a physical therapist was scheduled. While this helped him use what he could of his arm, Felix was concerned about returning to his job. The Case Manager, working with his doctor, surgeon and therapists, found ' that he would not be able to perform the exact same job that he had previously. With the education, experience and training that Felix had prior to the accident, a course of vocational rehabilitation was scheduled leading to a position in management, Felix completed his rehabilitation and has returned to the company in a higher paying position than before his injury.
CENTERS OF EXCELLENCE
A facility, usually a hospital, is considered a “Center of Excellence” if it is designated by a payer to perform certain high-cost/high-risk procedures. A common procedure performed in Centers of Excellence is organ transplants. A transplant patient would be admitted to this hospital for the transplant, and then returned to another “regular” hospital to recover.
Other Centers of Excellence are orthopedic hospitals, and hospitals specializing exclusively (or nearly exclusively) in the treatment of cancer, etc.
The purpose of designating a facility as a Center of Excellence is because physicians and facilities that perform certain procedures most frequently have the best results, with higher success and lower death rates. Obviously, practice makes perfect. Also these facilities will have the proper equipment, including state-of-the-art equipment and as importantly, they will have a highly trained and experienced staff.
These centers obtain patients from other facilities and from physician referrals, and in return they are usually willing to discount their fees. Because of the highly specialized treatments and services that they offer, their cost is quite high, but with the discounts the plan’s cost would be comparable to obtaining the same services elsewhere, perhaps at even a lower cost. It is common for the center to provide for travel and hotel costs to help compensate for the patients having to travel some distance to receive treatment.
The services rendered by these centers are usually regionalized so those patients needing, for example, cardiac care in nearby states would use this facility. A patient needing cancer treatment would go to another center located elsewhere in the same geographical region.
This regionalization helps to alleviate the costs of all hospitals having to invest heavily in new technological equipment in competition with hospitals “down the street.” If all of the hospitals in a small area all purchase the same “high-tech” equipment, for instance, the cost would be covered through increasing the hospital’s rates for other services. Further, the quality of care suffers, as the same number of patients would be spread among more hospitals.
CASE STUDY: How Bad HMO Decisions can Affect a Family
An unnamed HMO had arranged for a leukemia baby’s bone-marrow transplant to be done in another state by a “Center of Excellence.” The child’s older sister (who was having behavioral problems) was recommended as the donor, and, in this capacity, would have to be away from home for an extended period of time. The baby’s family felt the distant treatment site would create added social and financial hardship for them. Both parents feared long absences would mean demotions or loss of their jobs, and requested referral to a closer medical facility.
Although several centers competent in the procedure existed nearby, the HMO would make no exception in its policy, declaring that it chose only the “best” for its clients. Prompted by the family’s dilemma, Western determined that the center chosen by the HMO had “no particular experience” in treating the type of blood cancer the baby had. He and Lauria were cautioned by one colleague not to offend the HMO because their own clinic “was in the running for the next contract.” The HMO administrator stated Weston and Lauria were “interfering with the client-carrier relationship.”
The transplant was successfully performed at the HMO - designated center and the baby returned to Weston’s care about five months later. Unfortunately, the family had suffered severe social and financial hardship as a result of their disruption caused by their child’s illness and the faraway treatment site. They had already lost their home, depleted their savings, and to make things worse, the baby relapsed and required another transplant. This time the HMO made arrangement with a different center - because the original one was no longer deemed to offer “quality care.” The family would again have to develop a relationship with an entire new cadre of doctors and staff. Complicating matters, the father had lost his job and the mother was demoted. To keep her family together, the mother quit her job, took her family out of the HMO, and applied for welfare.
The New York Times, March 15, 1996
MANAGED LONG TERM CARE
The field of Long Term Care, i.e. the providing of care (skilled, intermediate and custodial) for individuals who require such care, and furnished by Nursing Home, Community Care Retirement Centers, Adult Living Facilities, Home Health Care, and other such providers. Managed Care is usually regarded as the management of medical care, however, with long term care, it goes beyond simply medical care. Indeed, the majority of those requiring long term care need very little medical care. Skilled nursing facilities, who furnish medical care and who provide around‑the‑clock medical care & and medical supervision by doctors and nurses, comprise less then 10% of those requiring long term care.
With millions of Americans receiving institutionalized long term care and professional home health care, the industry has developed its own Managed Care techniques. For those needing medical care, the techniques are the same as those of other health care providers. However, there are some distinctions, and for the purpose of this text, two of the areas are of interest.
CARE COORDINATOR CONCEPT
Long Term Care Insurance is considered Health Insurance, and has been available for over 30 years, originally covering nursing homes only, then adding home health care and other types of intermittent care. Newer policies covering all types of long term care, both in the home and outside of the home, are available in a single policy. However, less than 5% of nursing home costs are paid by long term care insurance policies. The largest payer of nursing home care is Medicaid, the welfare program jointly administered by the state and the Federal Government. The need for long term care insurance is immense, as the number of persons over age 65 will triple by the year 2030. The annual cost of care in a nursing home averages $40,000 per person in the U.S. This translates into approximately $90 billion a year spent on nursing home stays.
The care of these patients necessitates some form of Managed Care, if for no other reason than to "keep the lid on" the escalating costs, Long Term Care insurance has a unique Managed Care concept in a "Care Coordinator' (the name will vary by company, but the duties are basically the same) who is a trained professional that is available to the policyholder of his/her family when benefits are to be provided under the policy.
When the insured first required benefits, they contact the Care Coordinator (CC) who works with the insured, the insured's family, the doctor and the care provider (nursing home or home health care agency). The CC is familiar with the policy benefits and can assist in deriving the maximum benefits from the policy, and created specifically for the policyholder. At the time when a person requires long term care assistance, it is quite reassuring to have a professional working with the policyholder in helping to answer such questions as: "What is the best nursing home in this area for my condition?” "What services can be provided in the home so I won't have to go to a nursing home until absolutely necessary?", "How much is the insurance going to pay and how much will have to pay?", etc.
The CC continues to work with the policyholder, family and providers as long as they are covered under the policy. However, the policyholder is not obligated to use the services of the CC, but there are incentives to do so.
Most Long Term Care Insurance (LTC) policies have a waiting period before benefits are paid (such as 20 days, 60 days, or 100 days) with the longer the period, the lower the premium. With several LTC plans, if the CC is used, the waiting period is waived; i.e. benefits will be provided on the first day that the insured qualifies. This type of policy is new on the market, however it is expected that very few policyholders will not take advantage of this form of Managed Care.
MANAGED LONG TERM CARE IN NEW YORK
Realizing that the care of the Medicaid patients, mostly senior citizens in nursing homes or receiving Home Health Care, causes a tremendous drain on the state budget, the state of New York and 2 other states have approached the problem by passing legislation that states in essence that if an individual has a LTC policy that provides nursing home benefits for a minimum of 3 years or home health care for 6 years, then after this period of time, the individual can receive Medicaid without "spending down", i.e. using all of their own assets to pay for Medicaid. (Under Medicaid, an individual can have only a minimum of assets and income, depending upon the state ‑ as an example in one state the patient may have a maximum of $2,000 of assets, if in an institution, with maximum gross income of $1400. If they have more than that, the sate will take their assets until the minimum‑ is reached. Any assets that have been transferred to any other person for a 3 year period prior to receiving Medicaid can be seized).
In August 1997, the state legislature of New York passed a bill that clears the way for 24 new managed care programs (described as "demonstration" programs, meaning that these are trial programs) that will provide primary, acute and long term care services for up to 25,000 chronically ill New Yorkers.
These demonstrations can be sponsored by a variety of types of organizations, but 1WOs, prepaid service plans, and integrated delivery systems may sponsor no more than five of the 24 programs. No more than eight can involve capitation.
Overseeing these demonstrations will be a 13 member advisory committee, five of whose members must be either clients of participating sponsors or their representatives.
It also allows accelerated payment of death benefits under a life insurance policy for people who require lifelong long term care.
There is little doubt that other states are watching this very closely, and it can be expected that the New York experiment will spread to other states rapidly, particularly those states with large Senior Citizen populations.
THE MANAGEMENT OF TECHNOLOGY
As discussed earlier, technology costs have driven up the cost of health care, so it was a prime candidate for Managed Care techniques. Technology can be managed by assessing the value of the various procedures, drugs and medical devices. This assessment is important because it helps to prevent the rapid assimilation of any new “state-of-the-art” technology, which may or may not be appropriate. There is a distinct tendency to overuse the technology, with the result that can subject patients to unnecessary treatments, erroneous diagnostic procedures, or treatments that will produce no benefit.
If a new procedure is overpriced, it can create underutilization; i.e. patients won’t use the new technology because it costs too much. (However, sometimes the opposite effect occurs, as some patients will insist on receiving the highest cost procedure available. Fortunately most insurers or other plan providers will not allow this situation).
Conversely, if the cost of new technology is under-priced, then it can be over-utilized. It is obviously essential to establish the proper price for the technology.
When new technology for the treatment of patient first appears the insurers or benefit payers insist that the new technology have final approval from the proper governmental agency before they even consider paying for the service. They will further insist that there is conclusive evidence that the new technology is beneficial to the patient. They have strict criteria regarding testing outside of the controlled conditions of the study submitted that showed it to be effective - in other words, the same outcome must be available in areas outside of the original study. The technology involved must be an improvement over existing alternatives to the technology.
WORK RELATED & NON-WORK RELATED ILLNESS & INJURY
Employees and employers frequently ask why the insurer cannot combine employment benefits and Workers Compensation, thereby providing 24-hour coverage for accidents and illnesses.
For regulatory purposes, this would be like mixing apples and oranges - health insurance benefits provided as employee benefits are underwritten by companies or organizations under the life and health insurance regulations of the state Department of Insurance. Workers Compensation is normally under the jurisdiction of the Property and Casualty regulations. (Workers Compensation can be provided through a state-owned monopoly also).
Forgetting for the moment that for Workers Compensation (WC) purposes all employees are covered immediately after hire, whereas under an Employee Benefit (EB) program, there is normally a waiting period before coverage can be offered, and normally it is not available to part-time employees, there are some other determining differences.
State laws make WC mandatory for all employees of a firm of a certain size, or involved in a certain occupation. EB is optional and is more common with large employees, i.e. there is no known regulations (at this time) that require ALL employers to provide employee benefits.
The primary difference is that WC pays for all medically necessary care, income replacement benefits, and vocational rehabilitation. EB pays for medical benefits which may be limited in scope (may not pay for all medically necessary care) and they normally do not pay for disability. If the employer does have a disability plan as part of employee benefits, it has a waiting period and usually coordinate with WC.
For the employee, the principal difference is that WC is provided at no cost to the employee, whereby EB may require the employee to pay part of the premium. Also, the health insurance plans normally have deductible and coinsurance provisions.
At this particular time, there is a major healthcare benefit provider active only in one state, that has just started offering WC through an affiliated company. The life and health agents may sell WC, but only under very strict conditions and under the license of a Property and Casualty general agent. This experiment should prove interesting and it can be expected that other large health benefit providers may offer this coverage.
One note of caution: Some indemnity insurers offer individual Major Medical plans which cover job-related accidents or illnesses if the insured is not covered by Workers Compensation insurance. However, these plans only cover the medical benefits, and are subject to deductible, copayment provisions, etc. Specifically, they do NOT cover disability payments.
STUDY QUESTIONS
1. Workers Compensation insurance
A. is only necessary in large companies.
B. can be written by health insurance companies.
C. provides health benefits and disability benefits.
D. only pays for temporary disability.
2. If an employee is injured on the job
A. a company representative should provide whatever health and assistance is necessary for the employee to obtain prompt medical attention.
B. only his individual health insurance policy will pay.
C. he should be terminated before making a claim.
D. he should not be moved until his attorney arrives on the scene.
3. After an employee has received medical treatment for an on-job injury
A. the employer should cut of all communications with the employee.
B. he should never be encouraged to return to work.
C. the employer should stop paying his salary.
D. the employer should make a special effort to maintain continual and positive communication with the employee.
4. An employee should return to work
A. only when benefits expire.
B. as soon as practical.
C. when he/she can perform 100% of his/her previous duties.
D. at any time they want to, regardless of their physical condition.
5. A program to return the employees to work when they are not going to be
able to perform the duties of their former position, is
A. Vocational Rehabilitation.
B. Physical Therapy.
C. a medical maintenance program.
D. seldom used as it takes the employee off disability too soon.
6. “Centers of Excellence” refers to
A. any university.
B. Ivy League schools.
C. hospitals that perform certain high cost and high risk procedures and meet very strict requirements.
D.. clinics located in the heart of large cities.
7. There is a tendency to over use medical technology with the result that
A. patients can be subjected to unnecessary treatments.
B. the cost of technology is reduced as the procedures are seldom used.
C. doctors won’t use new technology as they are uncomfortable with it.
D. hospitals can make bigger profits as they have more modern equipment.
8. Work-related, and non-work-related medical care
A. can be covered under a single policy.
B. are covered by two separate and distinct areas of insurance.
C. are covered immediately after employment.
D. are really the same thing.
9. Workers Compensation is
A. provided at no cost to the employee.
B. covers supervisors only.
C. a policy that only pays for temporary disability.
D. sold by life and health insurance agents.
10. The purpose of a Second Injury Fund is
A. alleviate the risk of an employer that hires a physically impaired employee.
B. to pay medical bills if an employment hazard injures more than one employee.
C. to pay a fund equal to one years salary or income, whichever is more, to the dependents of an employee that is injured on the job more than one time.
D. to fund the education of dependent children of a severely injured person, or an employee who dies on the job.
ANSWERS TO STUDY QUESTIONS
1C 2A 3D 4B 5A 6C 7A 8B 9A 10A