Catastrophic injury and medically complex cases are uncommon but very costly. They remain a difficult medical challenge for all stakeholders in the workers compensation industry.
A recent study conducted by Aon on claims occurring from 2009 to 2016 from more than 400 companies with $7.6 billion in claim values confirmed a statistical pattern. This pattern has not varied much over the years when considering the operational and economic impact of severe and catastrophic workers compensation claims on employers and their employees. The study found the following.
Severe injuries (claims with over $50,000 in total incurred costs) generally account for 4–6 percent of claim frequency and 50–60 percent of total incurred costs.
Catastrophic injuries (claims with over $250,000 in total incurred costs) generally account for 0.5–1 percent of claim frequency and 20–30 percent of total incurred costs.
While the impact varied slightly by industry, the range of impact of the total cost was always of significant financial impact, 20–30 percent, for catastrophic injuries.
It should also be noted that, from a causation perspective, elevated falls, nonroutine tasks, motor vehicle accidents (both on the road and in industrial settings, such as forklifts), and burns are often common threads for the most severe injuries. Attention to anticipating and controlling these exposures is paramount.
We sat down with Dr. Michael Choo, MD, MBA, FACEP, FAAEM, chief medical officer at Paradigm Outcomes and a thought leader in the treatment and medical management of catastrophic and complex injuries, to better understand this type of injury and how they differ from the typical workers compensation claim as well as to shed light on how those involved in the treatment and claim management of these cases can help achieve better outcomes.
What is different about catastrophic and complex cases?
Catastrophic and medically complex injuries are truly the conundrum of the highest order among the medical injury conditions. Hence, their challenging distinction mandates a more specialized systematic care management solution to withhold the high degree of volatility and uncertainty associated with these injuries. To achieve greater results, these catastrophic and complex injuries require a very highly discerning approach with proficiency in specialized skillsets and capabilities that extend beyond what is typical and sufficient in a conventional, managed care approach that is acceptable for more common, straightforward injuries.
Aren't there only a few of these cases?
It's true that catastrophic and complex injuries are uncommon and make up a small percentage of overall injury cases. Yet, this handful of cases represents half of the total spending. This is why moving the dial on savings even by a small increment can significantly impact a payer's entire claim spending, especially when the total cost associated with these catastrophic injuries is often in the millions of dollars. In fact, 6 percent of injury claims account for 50 percent of total costs associated with injury claims, according to the National Council on Compensation Insurance (NCCI).
A more detailed cost analysis of NCCI data by Paradigm Outcomes corroborates just how significant a very small percent of catastrophic injuries (0.3 percent) can account for a large portion of total claims spending (17 percent) of total claims cost.
What drives the volatility and cost?
Catastrophic and medically complex injuries are inherently very complicated with a high degree of medical instability during the acute or early phase of injury management. Additionally, there is a strong association with an expansive list of medical and surgical complications that occur in post-acute periods, which can significantly confound the recovery and medical costs associated with these injuries. Even more vexing is the harsh reality that many catastrophic injuries result in some level of permanent residual impairments, leading to unexpected and distressful adjustments to one's body image and/or self-image.
Ultimately, the extent of medical problems, complications, and changes in psychosocial aspects associated with catastrophic injuries that occur throughout the care continuum drive the high levels of volatility and costs associated with these injuries. Furthermore, and not surprisingly, due to the high level of medical volatility, the long-term financial exposure from medical costs is currently much higher than the indemnity cost.
How can the volatility and cost be managed?
Due to the inherent heterogeneity of catastrophic injuries, there is no single approach to mitigating volatility and costs. Rather, the solution is a systematic care management framework that incorporates the following key ingredients.
Seasoned, experienced medical specialists
Proficiency in a biopsychosocial model
Outcomes-based analytics capabilities
Outcomes and accountability-driven culture
Can you describe these key factors?
Consultative medical specialists with extensive knowledge and subject matter proficiency related to the specific catastrophic diagnosis are essential to catastrophic injury care management. The medical specialists must not only have literature-associated knowledge but also significant clinical insights gleaned through years of experience specific to given diagnosis, treatment, medical complications, and recovery trajectory. Furthermore, it is important to have medical specialists who embrace the principles of functional restoration and an outcomes-oriented injury recovery process.
A comprehensive care approach is essential for achieving an effective and expedient injury recovery. As previously noted, the complexity of catastrophic injuries mandates careful attention to both biomedical issues as well as psychosocial factors. Greater outcomes can only be achieved where attention is given to each of the three components for a strong recovery: biomedical, psychological, and social factors. This can be likened to a three-legged stool, which will fall over without three equal legs. This biopsychosocial model to recovery is easier said than done; it requires clinical providers to be proficient and experienced in this methodology.
Catastrophic Injury Outcomes Analytics
A crucial piece of the puzzle that can powerfully support and augment the effectiveness of care management teams is having access to insightful and actionable data specific to catastrophic injuries. To mitigate and manage the high medical volatility and uncertainty of catastrophic and medically complex injury cases, you can either develop or gain access to clinical analytic capabilities. These analytics can guide the proactive delivery of helpful resources to the appropriate group of catastrophically injured individuals at a crucial time to achieve a low rate of complications and better outcomes.
The following are examples of clinical outcomes-driven analytics.
Frequency benchmarks of common and high-impact medical problems associated with catastrophic injury conditions
Short-term and long-term consequences of treatment decisions and care management decisions related to given catastrophic injury conditions
Clinical milestones and timelines typically required in order to achieve specific long-term outcomes
Identification of specific clinical confounding risk factors with high-impact potential and early risk stratification decision tools for proactive interventions and care planning (e.g., psychosocial-behavioral risks, obesity/body mass index risks, etc.)
Having such outcomes-driven analytics with actionable benchmarks and decision-making support tools are essential to conferring confidence and ability to clinical providers to effectively manage the volatility and uncertainties innate to catastrophic injuries. In addition, deep experience and actionable data speak volumes with clinical providers, especially when it comes to guiding clinical options, medical treatments, and care plans.
Outcomes and Accountability Driven Culture
The final requirement for managing volatility and uncertainty of catastrophic injuries is the appropriate mindset of the clinical teams involved in managing catastrophic and medically complex injury cases. To obtain the consistent achievement of effective outcomes, the care management organization and its clinical members must possess and demonstrate a strong culture of accountability and reliability to drive actions and plans to help prevent risks, errors, and problems from occurring and/or their reoccurrence. The solidarity of every stakeholder in the organization to the purpose of achieving effective functional outcomes is what contributes to success with catastrophic injury care management.
Employers can take a proactive role in helping to prevent and mitigate the impact of these rare occurrences as well. One of the key elements involves understanding the factors that contribute to your organization's severe claim profile. Conducting a forensic severity analysis of your existing claims with costs over $100,000 will shed light on the drivers of these claims. Such an analysis should include but not be limited to the following.
A trend analysis should focus on the cause, body part, tenure, claimant age, and other variables to determine if there is any type of profile that may be actionable from a prevention or mitigation perspective.
A detailed review of financial transactions should fully understand where the money has been spent on these claims. This will provide precise insight as to what drives costs on these claims.
A detailed review of sample claim files should determine how well the claims have been handled, if specialty medical resources and appropriate and specialized case management professionals/techniques were deployed, if best-in-class frontline management of the claims was executed by the handling adjuster, and, finally, if an appropriate strategy is in place to achieve a positive medical outcome for the employee.
A review of any accident investigations that might have been done at the time of these incidents to determine if true root causes have been identified and, if appropriate, corrective actions have been proposed or implemented to prevent such severe claims in the future should be conducted.
A safety assessment should focus on the actions, conditions, organizational behaviors, and workplace exposures that specifically drive high-severity claim potential.
Taking the appropriate steps to control these complex cases will help your organization's bottom line in the future.
The author would like to acknowledge and thank coauthor Dr. Choo, the chief medical officer at Paradigm Outcomes who is responsible for enhancing clinical operations, care management outcomes research, and monitoring clinical innovations. He teaches emergency medicine, internal medicine, and family practice residents at the Wright State Boonshoft School of Medicine. The author would also like to thank coauthor Paul Capuzzo, who is a managing director with Aon Global Risk Consulting and leads Aon's managing consultants who specialize in the execution of complex workers compensation cost containment strategies.
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