Contract Case Managers Prove Cost Effective in Federal Workers' Compensation Programs

Military Medicine, Mar 2008 by Mallon, Timothy Michael, Cloeren, Marianne, Firestone, Lisa Michelle, Burch, Helen Christine

ABSTRACT Objective: This pilot study examined whether contract case managers are cost effective in reducing workers' compensation (WC) costs and preventing injuries. Methods: We placed contract medical case managers at four installations where they employed private industry best practices. A needs assessment was performed and site-specific targeted interventions were developed. case managers improved WC program effectiveness by ensuring command support, and strengthening the case management process. They minimized lost work time and provided the WC team resources to review the oldest cases. Results: case managers cost $1.25 million and they generated $4.4 million in savings for a 3.52 return on investment. Case managers removed 73 workers from long-term rolls by making use of vocational rehabilitation, finding modified duty jobs, offering workers medical retirement, and terminating benefits when workers refused to work after being offered a job. Conclusions: This study of medical case managers demonstrates they can reduce WC costs.

INTRODUCTION

Between 2001 and 2003, the military services lost 4.6 million hours of productive work time due to occupational injuries and illnesses.1 The costs charged to the Army by the Department of Labor, Office of Workers' Compensation Programs (OWCP) include: wage replacement costs for injured employees, cost for medical treatment and rehabilitation, disability payments for injured workers, overtime costs of the remaining staff to cover the injured workers' lost time, OWCP nurse case manager costs, and the costs of recruiting and training replacement workers. This is equivalent to losing 2,660 full time workers or an Army Brigade.2

The U.S. Army Audit Agency discovered that the costs associated with work-related injuries and illnesses for its civilian employees were consistently increasing although the number of civilian employees working for the Army was decreasing. From 2001 to 2003, the federal workers' compensation (WC) costs for the Army rose from $169 million to $181 million dollars, not including the direct cost of medical care provided to the employee by Army health clinics and hospitals. The costs for lost work time paid by the Army to the employee during the first 45 days of injury, also known as the continuation of pay ("COP") period are not included. There are also indirect costs related to lost productivity and claims administration that are not included.3 In addition, a small but significant number of WC cases represent the bulk of future indemnity costs for the Army. The Army Audit Agency reports future liabilities related to permanent disability payments and lost wages associated with active claims is in the range of $2 billion.3

Although there are some differences that exist between state-run private sector and federal WC programs, there are opportunities to apply private industry-tested best practices, including medical case management, in federal programs. Research related to the management of work-related illness and injuries all points to the benefits of "early case management intervention" and "expedited return to work." The longer the lag time between an injury and first report, the more expensive a claim will ultimately be, and the less time employees are off work, the smoother the recovery and the more likely that they will return to their job.4

The Florida Partnership for Safety and Health Study showed that the longer employees are out of work, the less likely they are to return. According to the study, only 50% of employees out of work more than 6 months will return to their job. This figure drops to 10% for those employees out of work more than a year. Further, the American Occupational Medicine Association's Committee on Practice Guidelines noted that early return to work enhanced both psychological and physical recovery.5

METHODS

Although WC case management has proven to be beneficial in private industry,6 no studies have previously identified in a formal way the merits of using contract medical case managers in federal work settings. As a result, we decided to pursue a pilot study that involved placing case managers at several installations. We would then assess the cost effectiveness and utility of employing contract medical case managers to help existing WC program administrative staff improve claims management and to help installation commanders achieve Presidential and Department of Defense directives to prevent injuries and reduce WC costs.

The Army Center for Health Promotion and Preventive Medicine (CHPPM) hired managed care advisors to identify four sites where contract case managers would be employed. The four Army installations were selected based on high lost-work-day rates and high WC costs compared to other installations of the same size and work performed. One installation management agency and three Army medical command sites were selected. Once the four sites were identified, the CHPPM and managed care advisors team formulated a work plan, developed case management assessment criteria, and collected baseline case management data for each site. The assessment team visited each of the four sites for 2 days to conduct a comprehensive program review including command policies and procedures. They determined the extent of medical case management, WC administrator staffing, and level of medical support for the WC program. They also assessed the case reporting and information flow, access to care, use of light, and alternative duty and availability of WC program metrics data.