In workers' compensation today, the 800-pound gorilla is rising medical costs. It was not that long ago that the ratio of indemnity costs to medical costs was 60/40. It's now been flipped — to 40/60, with medical costs representing the most expensive component. Moreover, that ratio is expected to change again, reaching 70/30 in 2016.

Therefore it's no wonder that today insurance payers are exploring every possible avenue of medical cost containment within their claim operations. No stone is left unturned, as they look at maximizing PPO/MCO strategies, specialty review, negotiation, and other managed care initiatives.

Of course, it's not as if companies haven't been seeking better ways to manage these costs, including medical management and utilization review (UR), for decades. Firms invest substantial resources in their medical management programs to ensure that injured workers get the appropriate medical care, and that claim dollars are spent wisely. Companies have engaged healthcare professionals with extensive expertise in workers' compensation, built strong utilization review teams and departments, and created processes that ensure that recommendations for key medical services are evaluated against evidence-based medical guidelines. Even so, it is difficult to document the effectiveness of these programs.