State of Minnesota Workers Compensation Cost Drivers

1
State of MinnesotaWorkers Compensation Cost
Drivers

• October, 2008

2
Agenda

• How do we control costs associated with workers
  compensation
• What are the cost drivers?
• How can we do a better job?

3
How do we control costs

• Managed Care PPO Network
• Direct employees to designated clinics
• Providers agree to follow managed care rules
• Providers must be 30 or 50 miles from
  employees work or home
• Non-network providers provide treating history
  - twice within the last 2 years
• Change of provider must be in network

4
How do we control costs?

• Managed Care Components
• Minnesota Treatment Parameters
• Minnesota Fee Schedule
• Telephonic or Field Case Management
• Utilization Review
• Pharmacy Program
• Bill Review
• Dispute Resolution

5
Department of Administration2008 YTD

• Number of bills reviewed 22,398
• Provider charges 15,995,796
• Recommended payment 7,594,273
• Savings 8,401,524
• Savings Percentage 53

6
Department of Administration2007 (January to
September)

• Number of bills reviewed 20,622
• Provider charges 13,520,227
• Recommended payment 7,114.662
• Savings 6,405,565
• Savings percentage 47

7
2007 to 2008 Difference

• Bill Count 1776
• Bill Charges 2,475,569
• Recommended Payment 479,610
• Savings 1,995,959
• Savings percentage 5

8
Per Bill Averages

• 2007 656
• 2008 - 714
• Difference 59 increase

9
Provider Type Analysis

• Physicians 44 3,266,944
• Facility 20 10,604,499
• Drug Supplies 18 1,093,924
• Soft Tissue 18 1,030,430

10
Hospital Charges

• Facility charges are only 20 of bills but
  represent 66 of costs
• There were 218 bills over 10,000 which
  represented 40 of total provider charges.
• These bills had the greatest savings of 71

11
Considerations

• Medical costs now exceed indemnity payments to
  injured workers.
• Medical costs continue to increase.
• Medical technology continues to offer new types
  of treatment.
• Aging workforce with increased need to surgery,
  longer healing periods.
• Not all medical treatment, service or supplies
  are covered by the MN Fee Schedule

12
Cost Drivers

• Late Reporting
• Severity of Injuries Disability Duration
• Number of Claims
• Lack of Return to Work Program
• Medical Costs - Technology

13
Medical Costs - Implants

• Four types of implants
• Reconstructive joint replacements
• Spinal implants
• Orthobiologics
• Trauma implants
• Fixation devices and artificial discs used in
  spinal fusion and motion preservation surgeries
  for the repair of vertebrae and replacement of
  degenerative disc

14
Medical Costs - Implants

• On average, hospitals bill at 200 to 400 of the
  implant invoice cost.
• The mark up on products used in these procedures
  is often dramatic. A pedicle screw used in spine
  surgery may cost 60 or 100 to make but the
  discounted price hospitals pay for the product is
  about 1,100.

15
Medical Costs - Pharmacy

• State employees need to use the CorVel pharmacy
  program.

16
What can we do better?Utilization Review

• Utilization review can be defined as the
  evaluation of the appropriateness, setting and
  intensity of medical care.
• It is one of the tools we have available to
  ensure that an injured employee received the
  best, most appropriate medical care necessary to
  achieve a quick and sustainable return to work.

17
What can we do better?

• Bill Review Application of Prevailing Charge
• Minn. R. 5221.0500
• Database must include 3 MN providers, at least
  20 billings from previous calendar year.
• Methodology

18
What can we do better?

• Directed Networks
• Imaging
• Physical Therapy
• DME
• Pharmacy
• Translation/Transportation

19
QUESTIONS?

• Thank You!