Secondary Prevention Strategies: Moving Beyond Safety

It's time to include or enhance these so safety professionals can move beyond their core practice of primary prevention.

• By Frank Pennachio
• Mar 01, 2009

A recent survey of nearly 100 employers regarding their worker’s compensation policies and practices, conducted by Occupational Health & Safety and Injury Management Partners LLC, demonstrated some alarming findings. The most disconcerting result was that nearly 60 percent of the respondents did not know how their insurance companies, third-party administrators (TPAs), or managed care organizations (MCOs) were compensated for the building and management of medical provider networks.

Why should safety professionals care about this and other findings in this survey? Let’s start by defining the difference between primary prevention and secondary prevention. Primary prevention is the principal purpose of safety professionals. The focus is on creating safe workplaces and safe employee work practices. The objective is to prevent an injury from occurring. Yet, no matter how well this job is done, some employees still will get hurt.

When an employee is injured despite the best efforts of safety professionals, it is critical for secondary prevention methods to be deployed. Secondary prevention is identifying and reducing cost drivers subsequent to an employee injury that precipitate increased medical costs and lost work days. Or, put another way, secondary prevention is keeping the costs and duration of the employee injury from spiraling out of control. It may be long past time for safety professionals to include or enhance secondary prevention strategies to their core practice of primary prevention.

There is probably no statement truer in the world of secondary prevention than “the medical drives the claim.” The cost of workplace injuries is much higher than the same type of injury that is not workplace related. Systemic problems in the system must exist in order to explain why the same injury costs more if it is paid under worker’s compensation.

Also, the best medical treatment brings the best results, and the inverse is equally true. The structure of how an injured employee accesses medical care will significantly impact the results.

During the past decade, worker’s compensation medical provider networks were built either as a cost containment strategy or because of a statutory mandate. Establishing and managing medical provider networks is complex and costly. The most common method of paying for the development and management of these networks is what is known as “percentage of savings.”

The percentage-of-savings pitch to employers, insurance companies, and third-party administrators goes something like this: “We can build the medical provider network, and it won’t cost you anything.” At a time of downsizing and budget cutbacks, the “it won’t cost you anything” is an appealing proposition. Something for nothing never seems to lose its charm, but rarely is there a free lunch.

Flaws of the ‘No-Cost’ Systems
How could managed care organizations engage in the costly process of building networks and make it appear they are not costing the employer or insurance company? Their first step was to approach doctors and other medical providers and demand they discount their fees as a requirement to be a member of the network. If the medical provider refused to discount their fees, it was likely not included in the network, which would reduce or eliminate its employee injury business. Although likely never said, the implication to medical providers was this: Either you discount your fees, or you will never see a worker’s compensation case again. So medical providers went along with the plan. Then, discounted fees are declared by the managed care organizations to be savings, and they get a percentage of those “savings” as their remuneration.

Several critical flaws that are detrimental to injured employees and employers have emerged with this way of compensating medical providers and managed care organizations.

Medical providers, due to their own economic challenges, are pressured to make up for the discounts by increasing the frequency and utilization of medical services. The discounts may actually result in increasing medical costs and lost work days.

Let’s look at an example. Employee A is injured and goes to a doctor who does not discount the office visit fee of $100. The employee sees the doctor three times, for a total cost of $300. Employee B goes to a doctor who has discounted the office visit to $80, but the doctor sees the employee six times for a total of $480. Office visit costs were $180 higher by the discounted fee doctor. Now, the managed care organization will magically turn the increased costs into a report of savings. It reports to the employer that the treatment for Employee B saved $120. (Savings of $20 per visit times six visits.) Plus, the managed care organization will take a percentage of the “savings” as its fee.

This example also demonstrates that the greater the utilization of medical services, the more money the managed care organization makes. There is little incentive for managed care organizations to contain medical providers’ utilization given that, when they do so, they cut their own fees.

Of course, managed care organizations have a solution for overutilization: They will sell you another service called Utilization or Peer Review. The employer or insurance company will pay additional fees to the managed care organization to address the problem they participated in creating.

Increased medical costs and utilization arising from discounting medical provider fees is only part of a much more serious unintended consequence of this practice. Let’s look at it from the perspective of the injured employee.

If an injured employee goes to a doctor six, seven, or even 10 times for a minor lumbar strain, he is likely to believe his injury is more serious than expected. The employee is likely to exhibit something known as “secondary gain behavior.” The employee begins to think, “I must be hurt worse than I thought, and somebody is going to pay for that.” In addition, the employee fears making the perceived exaggerated problem even worse, so he resists going back to work.

The longer the medical treatment continues, the greater the risk of secondary gain behavior, increased lost time, and demands by the employee for an impairment settlement. Overutilization of medical treatment for a minor lumbar strain can easily turn into a six-figure settlement and the loss of a good employee.

Cost Containment: Missed Opportunities
The survey highlights the critical need for employers to understand, get engaged, and take the lead in developing better methods for building medical provider networks and aligning their incentives with the medical providers. Paying medical providers for the best care that gets the best results for injured employees is far less costly than discounting their fees.

Another disturbing finding of the survey was that almost 75 percent of the respondents were unsure how their insurance companies or third-party administrators were compensated for Medical Bill Review. Medical Bill Review is a process where the bills submitted by the medical providers are adjusted for proper payment in accordance with a contract, fee schedule, or appropriateness of care. This is an important cost containment process that needs to be done, but, again, employers must understand and address how the service provider is paid. Otherwise, the employer may pay Bill Review fees that are greater than the fees paid to the medical provider.

For example, an injured employee is admitted to a hospital for four days. A hospital bill is generated for $60,000. The Bill Review service inputs the bill into a software program and adjusts the bill to a state-mandated fee schedule of $8,000. The Bill Review company declares a $52,000 “savings” and takes 20 percent of the “savings” as its fee.

As a result of this contractual arrangement, the hospital was paid $8,000 for treating the injured employee for four days, but the Bill Review company was paid $10,400 to adjust the bill. Bill Review is a necessary cost containment practice, and it is reasonable to pay fees for the service. The required software to do the task demands investment and maintenance, in addition to the labor costs, overhead, and profit for the Bill Review company. But does it make sense to be contractually obligated pay thousands of dollars, if not tens of thousands, for what is basically a data entry service?

Another concern arising from the survey is that more than half of the respondents said their service providers did not conduct satisfaction surveys, and another 32 percent were not sure. Even though millions of dollars a year are spent on provider networks, claims management, pharmacy, nurse case management, tests, physical therapy, and other treatment, we rarely bother to ask the injured employees how well the process worked.

There was some encouraging news from the survey. Almost 80 percent of the respondents have a written Return to Work program, and more than 80 percent use written job descriptions complete with the essential functions of the job. Almost half of the employers who responded have a supervisor training program focused on communicating and working with an injured employee. While that is a good sign, there is work still to be done in the critical area of supervisor training.

Safety professionals have much success to report with their primary prevention efforts. However, results are being seriously eroded when an employee is injured because of a lack of secondary prevention practices. Based on the survey results conducted by Occupational Health & Safety and Injury Management Partners LLC, now it’s time to solve the second part of the problem by implementing a strategic secondary prevention plan.

This article originally appeared in the March 2009 issue of Occupational Health & Safety.