Workers’ compensation programs, as we know them today, have evolved over a 30-year period.  Over time, benefits were standardized, cost-containment and equity with state regulations was addressed, and return to work programs that benefit workers were introduced. As this evolution continues, the need to contain costs continues to be critically important. In 2011, state and federal workers’ compensation laws covered approximately 125.8 million employees and paid out $60.2 billion in benefits.[i]  With payments of this magnitude,  the role of utilization management (UM) must be an integral part of workers’ compensation programs.[ii]

UM practices in workers’ compensation cases represent just one of several types of specialty UM programs. In many of these specialty UM programs, including workers’ compensation and drug UM programs, the core structure remains the same.  As an example, in workers’ compensation UM pre-certification review, concurrent review and retrospective review are still present with the ultimate goal of determining whether treatment is medically necessary. The question of what care is medically necessary care continues to be critically important in workers’ compensation claims with the main focus centering on what treatments are necessary to help an injured employee return to work.  The U.S. Department of Labor’s Office of Workers’ Compensation Programs had a total of 182,650 cases as of November 1, 2015 with total compensation and medical bills paid equaling almost $12 billion.[iii]

Given these staggering costs, it is important to align reasonable and necessary treatment goals along with managing claim expenditures.  It is not uncommon to see UM services embedded into telephonic and field case management programs, both for workers’ compensation and medical care settings. Additionally, employers and state workers’ compensation funds have an incentive to keep costs down and ensure that medically appropriate care is being rendered without overutilization of unnecessary or duplicative services.

In a study conducted by Health Strategy Associates, UM practices related to workers’ compensation matters were demonstrated to directly affect productivity, losses, compliance, marketing and profitability.[iv]  The study highlighted that regulatory compliance to state workers’ compensation laws remains a top priority.[v] Even though UM practices have a direct impact on key performance indicators for employers, they are not without criticism.

A common criticism of UM practices in the workers’ compensation setting is that many injured workers believe that the nurse case managers’ primary motivation is containing costs for insurers, rather than ensuring appropriate care is rendered at the appropriate time. Online workers’ compensation boards are filled with comments critical of nurse case managers, despite their success as a patient advocate.[vi]

While nurse case managers may appear to be an added expense for employers and insurers, they do play a critical role in the utilization management process and help to keep costs low. A recent white paper titled The N Factor: How Nurses Add Value to Workers Compensation Claims reviewed 42,000 workers’ compensation claims across four categories and found that when a nurse was involved, the worker returned to work faster, had 18% lower future medical costs, 26% lower overall costs, and 15% faster claims resolutions.[vii] Additional benefits, such as increased productivity and improvements in morale, were also found in the study.  Even with these benefits, nurses were not recommended for all claims; claims with no co-morbidities and employees that have positive relationships with their employers were found to have no likely benefit from a nurse case manager.[viii]

Stay tuned as we continue to report on the key issues surrounding Utilization Management, workers Compensation and other regulatory matters of interest.

The views expressed in this post do not necessarily reflect the official policy, position, or opinions of RegQuest. This update is provided for informational purposes. Please consult with an attorney regarding any legal matters discussed herein.

[i] Social Security Administration, Office of Retirement and Disability Policy. (2013). Annual Statistical Supplement, 2013 Workers’ Compensation Program Description and Legislative History. Retrieved from: https://www.ssa.gov/policy/docs/statcomps/supplement/2013/workerscomp.html

[ii] Social Security Administration, Office of Retirement and Disability Policy. (2013). Annual Statistical Supplement, 2013 Workers’ Compensation Program Description and Legislative History. Retrieved from: https://www.ssa.gov/policy/docs/statcomps/supplement/2013/workerscomp.html

[iii]DOL. (2015). Office of Workers’ Compensation Programs (OWCP) EEOICP Program Statistics. Retrieved from http://www.dol.gov/owcp/energy/regs/compliance/weeklystats.htm

[iv] Blunt, S., & Paduda, J. (2012).  2012 Survey of Workers’ Compensation Utilization Management/ Review: Executive Summary. Retrieved fromhttp://healthstrategyassoc.com/2012_utilizationsurvey.pdf

[v] Ibid.

[vi] Wolfe, Karen. (2014). How to Optimize Nurse Case Management in Workers’ Comp. Retrieved from: http://insurancethoughtleadership.com/how-to-optimize-nurse-case-management-in-workers-comp/

[vii] Helmsman Management Services. (2015). The N Factor: How Nurses Add Value to Workers Compensation Claims. Retrieved from:https://www.helmsmantpa.com/Documents/HMS_NFactor.pdf

[viii] Ibid.