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DePaolo's Work Comp World

Capitate It

Workers' compensation medicine is often critiqued against general health medicine, the implication that general health does things better.

And to an extent that is correct. General health medicine coverage, in general, seems to turn out better patient satisfaction, greater physician participation, and overall less acrimony.

But a huge difference between work comp and general health is that work comp is "first dollar" for the most part - meaning that work comp pays right off the bat. There is no co-pay, no deductible, etc.

Also, whether it is because of tradition, technology, culture, politics, or whatever, but work comp is for the most part a fee for service system. A provider performs a certain function, denotes its billing code, and gets paid whatever the system says that code is worth.

General health is moving away from that model towards a "capitation" model. Basically that model makes a one time payment per "population" that is assumed to require a certain level of service. Incentives for quality and outcomes are built in, and measurements are required to adjust the cap level.

Brent James, MD and Gregory Poulsen in the July-August issue of the Harvard Business Review make a Case for Capitation, outlining how such incentives can be built, monitored and deployed to the benefit of everyone: patients, providers and payers.

There are some elements that could be applied to workers' compensation.

The University of California, Los Angeles and R&Q Healthcare have partnered on a limited capitated plan for a select service: outpatient treatment for pain and addiction.

UCLA provides the service, R&Q does the selling.

The benefits are that uncertainties regarding treatment cost are reduced, and longer term, payers should see reduced claim costs as the injured worker's drug use decreases.

I might add, that if an injured worker's addiction to opiates is the product of workers' compensation treatment the system has a moral obligation to reverse that...

William Lape, chief executive officer of R&Q Healthcare Interests. He told WorkCompCentral the capitation model turns the tables on the traditional workers' comp system in which a provider outlines a course of treatment and then faces challenges from the payer for anything that seems inappropriate.

"What we've done is reverse that," Lape said. "It's not the way workers' comp is used to doing it."

Indeed, physicians interviewed by WorkCompCentral for the story were pleasantly surprised, saying they would welcome a system where each treatment request wasn't second guessed or challenged by the payer.

Before a payer commits to the program, the injured worker is sent to a free, in-person evaluation to assess various factors, including whether the claimant wants to reduce her dependence on painkillers.

If the claimant seems to be a good fit for the program, the payer can enter an agreement for up to six months of outpatient treatment. The maximum price is capped, Lape said, but if the cap is not reached, the payer will pay for only the services used.

The program can also be customized to a degree. For example, if the injured worker needs detoxification before entering the outpatient program, that service can be added, Lape said. And if an injured worker drops out midway through the program, she'll have one opportunity to re-enter.

There are other capitated or bundled payment programs around the country, though not many.

It seems like nirvana, and that's because capitated programs are, for now, of limited application, ergo value. The models have to be refined for various injury treatment scenarios to ensure that incentives are properly placed and deployed.

But I think capitated plans are the future of medical care, and in particular workers' compensation. We'll see more of this as experience is gained.

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