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Advanced Capabilities and Improving Outcomes in Workers' Compensation

Workers’ compensation has become a key aspect of the health benefit plan for a modern workforce, providing benefits and protections to employees who are injured or become ill because of their job. These state-mandated programs have typically focused on managing expenses related to covered-employee incidents and the care for specific procedure events and episodes. However, that primary focus is beginning to change as there is increasing acknowledgement that workers’ compensation carriers and vendors are in a unique position to enhance care, improve outcomes, and decrease costs by using value-based strategies – strategies like those implemented by group health plans. Carriers and vendors are also beginning to focus on the entirety of the care continuum through the implementation of pre- and post-event education and engagement strategies, the use of quality provider networks, the provision of mental health support, and the use of data and analytics to optimize care and manage expenses. There is a new generation of sophisticated workers’ compensation solutions emerging in the marketplace.

Navigating A Patchwork of State Requirements
Workers' compensation is a state-regulated system of insurance designed to provide financial and medical support to employees who are injured or get sick on the job. Generally, employers are mandated to provide coverage for medical expenses, lost wages, and rehabilitation costs - coverage intended to help employees cover costs and allow them to focus on recovery so they can return to work as efficiently and safely as possible while minimizing risk of complications.

Most US states require employers to carry some form of workers’ compensation insurance, with requirements differing from state-to-state. In most states, employers can purchase workers’ compensation through a private insurer (subject to state requirements), while in other states coverage is obtained through state-run funds. State-level policy also plays a significant role in the economics of workers’ compensation by setting insurance rates and policy premiums for coverage. A rating bureau within each state sets a baseline price for insurance, with rates differing by industry and state.

Tapping Group Health Plan Strategies to Innovate
While employers may have typically viewed workers’ compensation as a compliance priority, especially given state-level requirements, there is a growing recognition by the marketplace that the future of workers’ compensation can be a health and wellness priority – taking a page out of group health plans strategy playbooks and implementing value-based models and outcomes-based analytical strategies. This next generation of workers’ compensation is focused on driving innovation through four proven strategies: member education and engagement, the use of high-quality provider networks, increased focus on mental health, and unleashing the insights from data and analytics.
 

• Similar to cost containment efforts undertaken in the health plan payer market, workers’ compensation companies are increasing their focus on member engagement and care navigation. These more consumer-oriented approaches allow for more centralized control and oversight of the care continuum, leading to increased efficiency, more effective utilization of resources, and an improved overall experience. Additionally, employers are empowering their employee populations through a series of proven strategies; from education about the resources available to them, to information that helps them make informed decisions, to tools and services to navigate the ecosystem, and capabilities that manage care in a way that limits complications and readmissions. The new focus on member education and engagement is proving to be successful at promoting the utilization of appropriate care while ensuring adherence to best practices that optimize care and lower costs after a workers’ compensation event occurs.

 

• Paradigm, a pioneer in value-based care for workers' compensation, has set the standard for outcomes-focused care for individuals with catastrophic and severe injuries and diagnoses. Through a deep clinical foundation, Paradigm offers an expansive set of innovative care management, case management, and network solutions to deliver improved health outcomes and value, aiming to manage the employee throughout the workers’ compensation journey. To further the care management and recovery process, Paradigm acquired Welvie in January 2023, a healthcare decision-support company that helps educate individuals to have more informed and engaged conversations with their doctors, prepare for surgical episodes, enhance recovery, and improve the quality of care. This acquisition will further extend Paradigm’s longitudinal engagement with the individual. TripleTree served as exclusive financial advisor to Welvie for this transaction.

  

High Quality Provider Networks

• Like the broader trends happening across the healthcare industry, workers’ compensation carriers and vendors are beginning to shift towards value-based networks built around high-performing, quality providers. In contrast to typical workers’ compensation coverage where employees obtain care from a broad network of providers, which is reimbursed at predetermined rates for the activities rendered, there is a movement towards higher performing and value-based networks. This shift aligns all parties around high-quality outcomes: employees are guided to high performing providers, high-performing providers are reimbursed appropriately, and workers’ compensation payers stop reimbursing for high-volume procedures and activities.

 

• To facilitate this shift towards value-based networks, there is an increased need to share data between workers’ compensation payers and providers, resulting in new complexities that many companies are unfamiliar with. The expertise needed to form networks, quantify payment models, negotiate and contract, and conduct the necessary data analysis is becoming the catalyst for a new generation of companies.

 

• One example is Coventry, an Enlyte company, which offers workers’ compensation, auto, and disability care-management and network solutions for employers, insurance carriers, and third-party administrators. With roots in both clinical and network services, Coventry leverages its industry experience, knowledge, and data analytics to return people to work while focusing on outcomes. Coventry’s flexible design allows for market-specific or nationwide outcomes-based networks.

 

Mental Health

• Treating emotional distress and mental health is becoming an increasingly more important component of a successful recovery and return-to-work program. Along with the time needed to recuperate physically, many people need resources to support their mental health related to workplace injuries. Workers may become anxious about financial hardships related to missed work, develop depression due to the myriad of life changes, and/or feel stressed about the potential of losing their job.  As a result, workers’ compensation companies are beginning to focus on a more holistic view of recovery by offering evidence-based treatments, coordinating with high quality behavioral health networks, and providing clinical assessments, employee assistance services, and technologies modeled for early identification and intervention of high-risk employees.

 

• Companies that are working to support mental health across the workers’ compensation market include Carisk Partners, a specialty risk transfer, care coordination company whose end-to-end combined solutions include risk-transfer, care coordination of delayed recovery, and complex catastrophic cases. The organization began with a behavioral health foundation which continues to be a cornerstone of its clinical pathways to improve individual health. Additionally, Ascellus is a behavioral health provider focused on helping injured workers restore their physical and emotional wellbeing, specializing in telehealth and work-focused Cognitive Behavioral Treatment Services.

      

Data and Analytics

• Like other parts of the healthcare system, the use of data and analytics is beginning to transform the strategies and capabilities offered by workers’ compensation carriers and vendors.  Data and analytics can be leveraged for prospective cost containment to identify members who are at high risk for certain conditions and take proactive measures to manage conditions. Additionally, claims data insights can help identify patterns and trends that can be used to identify needed programs, plan features, and guide future cost-saving strategies. Data insights can also be leveraged to help optimize cost and care through the claims review process. Claims adjusters can utilize and review claims data to determine which claims qualify for coverage and, through medical history review, enhance the recovery journey of the claimants by directing appropriate care management strategies. Data sets are also important to reduce cost variations in surgical implants, which have a high frequency in workers’ compensation cases and where geographic and provider cost can vary drastically. Finally, data and analytical tools are needed to properly measure provider quality and outcomes. The use of analytical capabilities to track injury avoidance, recovery, and return-to-work timelines helps appropriately benchmark providers and networks and understand how employees should be directed based on the specific type and severity of the injury or illness.

Looking Forward
The days of traditional workers’ compensation are rapidly evolving. The use of proven strategies from other parts of the healthcare system are beginning to create a new wave of companies and capabilities that enhance care, improve outcomes, and decrease costs – the long-established goals of a more effective healthcare system. Technology, analytics, and cost containment strategies have become a key focus for workers' compensation companies as they work to manage the entire continuum of care. These new strategies and capabilities have been successful in recent years, and we look forward to keeping a keen eye on the workers’ compensation market as outcomes continue to improve for all stakeholders.