Editor's note: Deborah L. Michel ispresident of Helmsman Management Services.

The average medical cost per workers' compensation lost-timeclaim was 56% higher in 2013 than in 2003, according to theNational Council on Compensation Insurance (NCCI). With this figurecontinuing to grow, buyers, agentsand brokers are seeking to better manage medical treatments andnarcotic prescriptions: two of the leading claim-costdrivers.

Effectively managing medical-treatment costs requiresidentifying and encouraging the use of providers that can quicklyand effectively treat injured employees and help them return towork.

Controlling prescription costs is all about curbing potentialnarcotics abuse.

Here are tips to help agents, brokers and buyers better managethese cost drivers.

Evaluating providers

Not all providers deliver the same result.

This variability creates an opportunity to better manageworkers' compensation medical-treatment costs by selecting orencouraging the use of providers shown to produce better outcomesmore efficiently.

Agents, brokers and buyers should understand if and howpotential TPAs and insurers measure provider performance in orderto build better networks, or—in states that don't allow employersto direct the care of injured workers—to help educate injuredemployees.

This involves comparing provider performance against factorsknown to produce better medical care and outcomes. For example,Helmsman's recently developed Provider Performance Evaluation (PPE)tool promotes better care for injured workers and improves claimsoutcomes by reviewing provider performance in four categories thatare associated with proper medical treatment:

• Clinical outcomes—Did the injured workers treated by theprovider return to work? How long were they away fromwork?
• Process—Is the provider using the best widely accepted medicaltreatment practices when ordering tests?
• Utilization—Is the provider requesting care in accordance withstate and widely accepted, evidence-based medical treatmentguidelines?
• Billing and coding—Are provider billing procedures in line withnational norms and guidelines?
• Controlling claim costs requires focusing on outcomes, ratherthan treatment costs: Quality care up front often means lower claimcosts down the road. While this care does not have to be expensive,it is also true that the least expensive care isn't always the mostcost-effective in the long-run.

Managing narcotics in workers' compensationclaims

The appropriate use of powerful—and highly addictive—narcoticsis a key factor in defining effective medical care for workers'compensation claims.

The good news: There are clear evidence-based medical guidelinescovering the use of opioids, such as the American College ofOccupational and Environmental Medicine (ACOEM) Guidelines for theChronic Use of Opioids.

The bad news: There are wide variations in the prescribing ofsuch prescriptions, according to a recent study bythe federal Centers for Disease Control and Prevention. Forexample, in 2012, health-care providers in Tennessee wrote 143 painkiller prescriptions per 100 people, while doctors in Californiaissued 57 prescriptions per 100 people, according to the report.

The stakes are high for injured employees and their employers.Workers' compensation claimants inappropriately prescribed opioidsface potential challenges ranging from addiction to longerrecoveries.

For employers, the inappropriate use of these painkillers totreat workers' compensation claimants can result in a hugefinancial burden. Employers and the insurance industry spent $14billion in 2012 on narcotics for workers' compensation claims,according to NCCI's 2012 Issues Report, Workers' Compensation.

Further, the average cost of a claim involving a short-actingopioid is three times the cost of an average claim that does notinvolve an opioid ($39,000 compared to $13,000), according to aJune 2013 New York Times piece.

Risk managers, agents and brokers should be aware of thepotential negative consequences of narcotic use and four keystrategies for curbing narcotic abuse in workers' compensationclaims:

• Appropriate treatment—Having the injured worker treated by aprovider experienced in occupational injuries will help the workerrecover sooner, making the use of narcotics much less likely.
• Proactive, integrated claims management—Integrated pharmacycare and transparent data across the claim, combined with theeffort to closely monitor claims, can help quickly identify theinappropriate use of narcotics. For example, predictive modelingconsiders all of the activity on a file and can flag cases thathave the potential to escalate. Claims managers can also look forearly warning signs, such as use of multiple pharmacies orphysicians, depression and addictive behaviors.
• Pharmacy benefit manager—Risk managers and their brokers shouldexpect their pharmacy manager to flag “outlier” prescriptions forthe TPA's claims managers to investigate. Claims managers shouldunderstand if the prescription is appropriate given the employee'sinjury and if the number of recommended refills matches standardmedical guidelines.
• Treating physician consults—When treating physicians lackexperience with occupational injuries, the TPA's medical staffshould help them understand the appropriate use of narcotics, andif the associated risks outweigh the need for such prescriptions.In addition, the TPA's nurse case manager should attend aclaimant's appointment with the treating physician, whenappropriate.

These strategies help employers better control their totalpharmacy costs while protecting employees from the potentialdownsides of narcotic prescriptions.

Agents, brokers and buyers can help better manage the total costof workers compensation by understanding how to best approachmedical treatments and narcotic prescriptions – two of the leadingcost drivers.