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Published on : January 15, 2014

My Take

My Take

Recently, while attending a conference in Austin Texas I had opportunity to meet and listen to several guest speakers. One caught my attentionthe most. This gentleman is well regarded in the workers compensation community and I do enjoy his Blog.

Some of his comments made great sense to me.  However, I was surprised at how far apart he was from the reality about how a true PPO should operate and should be compensated.  He said: “PPO access fee should be an outcome based; do not negotiate based on percentage of savings; Your PPO number of contracted providers is irrelevant to your captured saving and PPO penetrations”.

Wow, his statement on and his views PPO and PPO re-pricing were so far-off; way in the left field; so extreme and so one sided.  I am a believer that one-size- fits-all mentality will never work.  I must say that I was surprised and could not concentrate on remainder of his speech.  Honestly, he lost me at “PPO fee should be based on outcome”.

Anyone who has ever worked for a PPO or studied PPO business model knows that “Outcome Based Pricing” will be very difficult to attain today’s Workers Comp Market.  Outcome based models began in the commercial group health setting.  What I feel he may have forgotten is that workers’ compensation injuries tend to be more catastrophic, claims linger for years, and the outcome of one claim may substantially differ from another. Measuring a “positive” outcome for a work comp injury is difficult.  It is not a simple task and it will require a change in the foundation of workers compensation.

A PPO should be customized, it should address needs of the payer (insured and self-insured).  This is why states like California have established the MPN regulations; Texas has the HCN and Illinois has adopted PPP.  These states recognize that outcomes in a work comp setting include “total cost of the claim”, and not just PPO, TPA, BR and/or CM.

PPO networks must be well established, well organized and should include provider selections along with provider savings. Yes the size matter!!!, thegreaternetwork you have the better customized network you can offer your clients. PPO network should have adequate coverage. The Client needs will not be met if it is limited.  Injured employees move from one state to another, companies change locations, and subsequently a limited PPO will be impractical.  Patients, who have a legitimate case, have to be given the flexibility to choose a provider who can deliver better care and/or a more fair assessment of the injury.If you don’t have a large PPO (providerdirectory), how can you refer the injured employee to another provider?  How can you control the claim?  Working with a trusted PPO has proven to be the best approach to make referral, no matter where the injured employer may reside.

Here is what I suggest:

•    Unbundle your vendors’ contract- from your insurance carrier, to your TPA, Bill Review, Case management and finally PPO? 
•    Negotiate a wholesale pricing for all this services?  Pay for services you get.  (Pricing is not the main reason to work with a vendor).   As they say “you get what you paid for “.
•    Ask your vendors to work with each other to achieve your desired goal(s), not theirs.
•    Analyze your past medical claims (proceduresonly) and consider changing your panels and provider directory. Your PPO should have the ability to analyses your past claims history and offer you sufficient data.  Use that date to customize your network.
•    You are in control not your vendors.  If they don’t agree with your way of business, move on to the next, there are plenty of them around.
•    Remember, they are experts in what they do, listen to their suggestions and take their suggestions into consideration. But, ultimately the decision is yours, not your vendors.

THAT IS THE WAY YOU CONTROL OUTCOME!!!!, NOT BY CHANGING THE PRICING METHODOLOGY OF YOUR VENDORS.

Outcome based pricing will not work unless, you change the entire Workers Comp industry, from ground up. I respect every one decision and I do respect the speakers’ point of view.  He is entitled to his opinion and I am to mine.

This is my take, what is yours?

About the Author

Mr, Banyan is VP of sales and business development with Prime Health Services in Brentwood TN since 2009. He is 48 years old and a Father of two and husband for past 11 years. He was born in Iran and came to USA in 1984.