Here are tips to help agents, brokers and buyers better manage these cost drivers.

Evaluating providers

Not all providers deliver the same result.

This variability creates an opportunity to better manage workers' compensation medical-treatment costs by selecting or encouraging the use of providers shown to produce better outcomes more efficiently.

Agents, brokers and buyers should understand if and how potential TPAs and insurers measure provider performance in order to build better networks, or—in states that don't allow employers to direct the care of injured workers—to help educate injured employees.

This involves comparing provider performance against factors known to produce better medical care and outcomes. For example, Helmsman's recently developed Provider Performance Evaluation (PPE) tool promotes better care for injured workers and improves claims outcomes by reviewing provider performance in four categories that are associated with proper medical treatment:

• Clinical outcomes—Did the injured workers treated by the provider return to work? How long were they away from work?
• Process—Is the provider using the best widely accepted medical treatment practices when ordering tests?
• Utilization—Is the provider requesting care in accordance with state and widely accepted, evidence-based medical treatment guidelines?
• Billing and coding—Are provider billing procedures in line with national norms and guidelines?
• Controlling claim costs requires focusing on outcomes, rather than treatment costs: Quality care up front often means lower claim costs down the road. While this care does not have to be expensive, it is also true that the least expensive care isn't always the most cost-effective in the long-run.

Managing narcotics in workers' compensation claims

The appropriate use of powerful—and highly addictive—narcotics is a key factor in defining effective medical care for workers' compensation claims.

The good news: There are clear evidence-based medical guidelines covering the use of opioids, such as the American College of Occupational and Environmental Medicine (ACOEM) Guidelines for the Chronic Use of Opioids.

The bad news: There are wide variations in the prescribing of such prescriptions, according to a recent study by the federal Centers for Disease Control and Prevention. For example, in 2012, health-care providers in Tennessee wrote 143 pain killer prescriptions per 100 people, while doctors in California issued 57 prescriptions per 100 people, according to the report.

The stakes are high for injured employees and their employers. Workers' compensation claimants inappropriately prescribed opioids face potential challenges ranging from addiction to longer recoveries.

For employers, the inappropriate use of these painkillers to treat workers' compensation claimants can result in a huge financial burden. Employers and the insurance industry spent $14 billion in 2012 on narcotics for workers' compensation claims, according to NCCI's 2012 Issues Report, Workers' Compensation.

Further, the average cost of a claim involving a short-acting opioid is three times the cost of an average claim that does not involve an opioid ($39,000 compared to $13,000), according to a June 2013 New York Times piece.

Risk managers, agents and brokers should be aware of the potential negative consequences of narcotic use and four key strategies for curbing narcotic abuse in workers' compensation claims:

• Appropriate treatment—Having the injured worker treated by a provider experienced in occupational injuries will help the worker recover sooner, making the use of narcotics much less likely.
• Proactive, integrated claims management—Integrated pharmacy care and transparent data across the claim, combined with the effort to closely monitor claims, can help quickly identify the inappropriate use of narcotics. For example, predictive modeling considers all of the activity on a file and can flag cases that have the potential to escalate. Claims managers can also look for early warning signs, such as use of multiple pharmacies or physicians, depression and addictive behaviors.
• Pharmacy benefit manager—Risk managers and their brokers should expect their pharmacy manager to flag “outlier” prescriptions for the TPA's claims managers to investigate. Claims managers should understand if the prescription is appropriate given the employee's injury and if the number of recommended refills matches standard medical guidelines.
• Treating physician consults—When treating physicians lack experience with occupational injuries, the TPA's medical staff should help them understand the appropriate use of narcotics, and if the associated risks outweigh the need for such prescriptions. In addition, the TPA's nurse case manager should attend a claimant's appointment with the treating physician, when appropriate.

These strategies help employers better control their total pharmacy costs while protecting employees from the potential downsides of narcotic prescriptions.

Agents, brokers and buyers can help better manage the total cost of workers compensation by understanding how to best approach medical treatments and narcotic prescriptions – two of the leading cost drivers.