Proponents say MCOs have sped up workers’ compensation claims and cut red tape, while saving employers millions of dollars.
Ohio BWC administrator/CEO Steve Buehrer would like to see more improvements in managing medical claims and a stronger focus on rehabilitation. “We have made it clear to the MCOs that this is what we are working on.”
“I have been in this since the beginning of time, and there has been a tremendous impact from the pre-HPP days,” says Quinn Guist, president of Dublin-based CompManagement Health Systems Inc.
The open enrollment period for businesses to switch carriers begins April 30 and runs through May 25.
“Marketing this product is very relationship-driven,” says Ohio Employee Health Partnership CEO Karen Conger.
In 1997, 37 percent of claimants learned whether their claim had been approved or denied within two weeks. By 2006, the figure had almost doubled to 72 percent.
April showers might bring May flowers. But every two years, spring also means it’s time for employers to review their relationships with managed care organizations. MCOs, as they are commonly known, handle the medical component of Ohio Bureau of Workers’ Compensation injured worker claims.
The open enrollment period for businesses to switch carriers begins April 30 and runs through May 25. It is the only window for existing Ohio employers to change MCOs.
Employers shouldn’t be surprised if they’re inundated with a marketing blitz in the coming weeks, aimed at getting them to change their carrier. Open enrollment is also the only time when MCOs can openly market and advertise their services. Within this “feeding frenzy,” as one MCO CEO describes it, employers should be asking how their carrier is doing and how the system has worked overall.
Rise of the MCO
The creation of managed care organizations has been, so far, the state’s most earnest attempt at privatizing aspects of the BWC, says George Smith, executive director of the MCO League of Ohio, a nonprofit trade association. His statement might sound like a promotional plug, but Smith has worked in and around the workers’ compensation system for more than 30 years in his current post, as a lawyer and as a member of the Ohio Industrial Commission that hears appeals of BWC decisions.
“There has been a lot of energy in this over a substantial amount of time,” he says.
Years ago, Smith says, it took a long time for the bureau to get an injured worker’s claim processed and to pay medical providers for their services. Technology advances have helped. “At one time, they had 400,000 bills stuck in its system.”
Ohio lawmakers, in a move aimed at providing better service to injured workers as well as controlling costs, passed legislation to turn some BWC responsibilities over to professional medical management companies. In 1997, the year the changes were enacted, there were 57 BWC-certified managed care organizations working in the state. That herd has been thinned, Smith says, through mergers, acquisitions and the natural dynamics of the marketplace. For 2012, there are 17 approved MCOs.
According to a 2007 actuarial report conducted by the Kilbourne Company for the Columbus-based MCO League, the Health Partnership Program—the official name of the privatized portion of BWC claims management—has resulted in system improvement and saved employers some $400 million over 10 years. Strides were made in nearly every benchmark set by the BWC, the report states. Among them:
• Injury reporting and lag time: In 1994, the percentage of employees who reported injuries within one week of occurrence was 2 percent and the average number of days required to file a claim was 64. By 2006, those figures had improved to 76 percent and 13 days, respectively.
• Number of claims: The number of claims filed in 1997 totaled more than 273,000. They decreased every subsequent year, to 154,685 in 2006.
• Payment for medical bills: On average, it was two weeks in 1997 and one week in 2006.
• Claim decision rendering: In 1997, 37 percent of claimants learned whether their claim had been approved or denied within two weeks. By 2006, the figure had almost doubled to 72 percent.
“I have been in this since the beginning of time, and there has been a tremendous impact from the pre-HPP days,” says Quinn Guist, president of Dublin-based CompManagement Health Systems Inc. The company manages the medical claims for more than 31,000 Ohio employers, making it the third-largest MCO in the state. Guist says the system is less confusing than in the past. “Sometimes BWC gets a black eye just for being what it is,” he says.
The largest MCO in the state is Dublin-based CareWorks Family of Companies, with some 90,000 employers under its umbrella. Richard J. Poach, president and chief operating officer of CareWorks of Ohio Ltd., says via email that two of the primary responsibilities of MCOs are first report of injury and medical bill payment processing. “BWC statistics clearly show how MCOs have helped lower injury reporting lag time by more than 60 percent since HPP began and consistently process medical bills timely and with high accuracy per BWC’s required standards. Further, with MCOs in place, Ohio employers have a partner to directly assist them in developing effective injury management programs.”
Steve Buehrer, the Ohio BWC administrator/CEO, says the strides have been significant. He says the system has evolved into a true partnership, but cautions there is still room for improvement. “You can imagine that [waiting for 64 days] didn’t lead to great worker outcomes. The worker was often hanging out in space,” he says. “I think it is very accurate to portray this as an evolutionary process.”
How the System Works
Most employers in Ohio must retain a managed care organization, though there are exemptions such as for a self-insured company. An employer new to the state can pick its own MCO or have the BWC assign one; existing employers have the option to change carriers during open enrollment.
All MCOs report the initial injured worker’s claim to the BWC, manage medical treatment, review and pay medical fees, hear disputes and coordinate the employee’s return to work with the employer and the BWC.
The bureau issues an annual report card of MCO performance. Its evaluation encompasses five criteria: the number of employers the organization covers; the total number of injured worker claims for the year; the average number of days it takes from the time an employee reports an injury to when it is filed with bureau; the average time it takes for the MCO to file the claim electronically with the BWC; and the optimal return to work that measures how the MCO managed cases where the injured worker returning to his or her job stays on the job for at least three months.
In the bureau’s 2011 report, which looked at the companies’ 2010 performance, 231,000 businesses filed 336,824 claims, defined as cases that received any type of management overview in the previous 24 months. It took on average 6.07 days to get a claim filed from when an injury was reported and just shy of one day for the MCOs to file it electronically with the BWC. All MCOs received a rating of “well managed” in the optimal return to work category.
Guist says that during the course of a year, MCOs will collectively research and submit more than 105,000 new injuries, process and pay more than 2.5 million medical bills, manage 325,000 active injuries at any one time and work with more than 230,000 employers in the state of Ohio.
Companies like Guist’s are paid through a combination of administrative fees (55 percent) and incentives (45 percent) tied to meeting their return-to-work benchmarks set by the bureau. Dollars are disbursed by the BWC according to the percentage of active businesses assigned to the respective organizations. CompManagement, for example, manages 18.2 percent of all the businesses in the BWC pool, and its revenue represented 18.2 percent of the $1.9 billion in premiums paid by employers last year. The company’s clients paid $352 million in premium value to the BWC in 2011.
Because the bureau sets MCO fees, it can be hard to discern the competitive, free-market aspects to the HPP. Indeed, Smith says it would be difficult for a company to get approved as an MCO today because of regulatory burdens and the indemnity it would have to carry. Guist says even during open enrollment, there is little switching of carriers. “We may not be able to beat them on price, but we can beat them on service,” he says.
Pro-Pak Industries of Maumee in northwest Ohio, a supplier of corrugated boxes and palates that employs 124 people, has stuck with its Columbus-based MCO since the late 1990s. Human resources manager Scott Armey says the relationship with the Ohio Employee Health Partnership reduces claims management work for his one-person HR department and provides confidence that his employer and employees are getting a fair shake.
“As a small employer, we don’t have the luxury [of having a big staff]. And with Ohio Employee Health, I do not feel like I play second fiddle to anyone,” he says.
Armey heard stories from his predecessors about what the claims process was like before HPP. “They used to describe how it was phone call after phone call after phone call after phone call,” he says.
Armey expects the open enrollment period will bring calls and marketing materials courting his business. “Every two years they go through this cycle, and I’m sure I’ll get inundated with junk mail.”
Ohio Employee Health CEO Karen Conger says her 45-person office does not employ a sales or marketing department, relying instead on the relationships case managers establish with employers to create word-of-mouth referrals. “Marketing this product is very relationship-driven,” she says.
It also helps if you have a niche. Conger says Ohio Employee Health, a midsize MCO, is owned by a group of 10 medical provider investors. “We are different because we are owned by the providers who are treating the injured worker, and that’s all we do,” she says. “We’re not split between different masters.”
The four largest MCOs in the state each offer multiple types of services, and three of them are owned by other companies. At the end of 2010, those four collectively managed a little more than 51 percent of the active employers in the BWC’s HPP. Ohio Employee Health is the eighth-largest and manages around 4,300 employers.
Although MCOs can openly advertise their wares only every 24 months, Guist says they do benefit from word-of-mouth marketing. Gaining a reputation among certain types of organizations can ultimately lead to new business. For instance, since the Ohio School Boards Association is one of CompManagement’s clients, the company also represents a number of school districts and educational groups.
Despite the progress, there are signs more reform is necessary, the BWC’s Buehrer says. It’s true the number of claims is decreasing, but some costs are rising. The expenses for each lost-time claim are rising 6 percent annually in Ohio versus 4 percent nationally, he says. Overall, the BWC paid total benefits of nearly $2 billion in fiscal year 2011.
Buehrer would like to see more improvements in managing medical claims and a stronger focus on rehabilitation. “We have made it clear to the MCOs that this is what we are working on,” Buehrer says.
In the past year, the bureau has cut costs, reduced employers’ workers’ comp premiums, implemented rate discounts and initiated a rebate program that gives employers up to 4 percent back on their premiums for participating in a safety program and demonstrating a reduction in the number of workplace accidents. “A lot of our back-and-forth thinking is, how can we ensure the employer is getting his money’s worth,” Buehrer says.
Pro-Pak’s Armey says the company’s $115,000 annual premium cost is daunting and stifles economic development in Ohio. “As a state that wants to promote business, this is the one thing that can act as the ultimate deterrence,” he says.
Conger agrees something more has to be done with MCOs, because the efficiencies found thus far are pretty much tapped out. “It is working and it has made some huge changes, improving the process so much,” she says. “But we’ve squeezed just about as much from that onion as we can.”
She would like to change a BWC form that asks injured workers to list what they can’t do, asking instead what tasks they can perform. It’s a small step, Conger says, but would send the injured worker a signal that he or she is valued. “We need employers to get into the return-to-work attitude,” she says. “Instead of saying, ‘I can’t lift x-pounds,’ we need to say, ‘I can lift up to 45 percent.’ ”
Already, the BWC provides grants to employers who use transitional methods to get an injured worker back on the job by assigning the employee tasks that can accommodate his or her injury. The bureau says on its website that such efforts can lower a company’s workers’ comp and HR expenses.
Conger says the idea has been gaining steam. “It’s in early discussions, but the train is getting loaded.”
Craig Lovelace is a freelance writer.
Reprinted from the May 2012 issue of Columbus C.E.O. Copyright © Columbus C.E.O.