Bringing value-based healthcare to workers’ compensation

Across the country, health plans and healthcare providers have been adopting the principles of “value-based healthcare” where providers’ compensation is based on the value of services and their impact on patients’ health.

However, thus far the so-called “volume to value revolution” has had little effect on the world of workers’ compensation insurance. That needs to change. By bringing workers' compensation in line with the emerging model of healthcare, it can be used to position workers' compensation as an attractive add-on and fundamentally change the relationship between comp and health insurance. We believe insurers today should seize the opportunity to rethink an often unprofitable business model. When combined with preventive safety and wellness programs, this will help give employers what they need: a healthy, happy, and productive workforce.

The Problems With Workers' Comp

As in much of the healthcare system, physicians and hospitals treating injured workers are paid using a fee-for-service approach that tends to drive up the volume of services delivered. The system has a long history of defeating reform efforts from state regulators. As one physician told us, “If you pay me less per unit, I’ll do more units.”

1Why has the volume-to-value revolution had such little effect on workers’ compensation?

Care delivery within workers’ compensation programs is arguably even more inefficient than in general healthcare. Payment is based on volume not quality. And insurers routinely try to drive down costs by micromanaging medical treatment with time-consuming utilization reviews. These problems are then exacerbated by uneven state regulations.
2Why would a value-based care approach be a welcome alternative?

Workplace injuries aren’t very common, so employees are often more open to new care models. Workers’ comp is also rich in forms of treatment that lend themselves to bundled or value-based payment, such as orthopedic surgery. Interestingly, workers’ compensation cases can be easier to track. In states where employers can steer injured workers to specific physicians, those physicians know exactly which patients are part of the population they must manage.
3How do you move toward a value-based model?

Insurers can simply contract with an existing ACO. In the short run, many plans may find it best to adopt elements of value-based care while preparing for more sweeping change later. They could enter into value-based, bundled contracts for particular episodes of care or particular conditions. More boldly, new networks could be woven together with a combination of specialty surgical centers, wellness companies, and other emerging care providers. At a minimum, many more medical payments for work injuries should be based on outcomes.
4Where does the greatest potential exist right now?

As the standard healthcare system itself becomes more coordinated, it makes sense to integrate the healthcare associated with workplace injuries as well. Take a hard look at the opportunities provided by the changing landscape. A single population health manager managing health issues whether due to work or leisure would have benefits across quality of care, cost, and patient satisfaction. Thinking about workers’ compensation and group health plan benefits in an integrated way can drive improved workforce health and productivity.