Episodic care management represents an exciting development for the risk management and workers' compensation industries, offering substantial benefits for patients, payers, and providers alike. The concept is an evolution of alternative payment initiatives — including value-based programs implemented by the Centers for Medicare & Medicaid Services — which link payments for all care received during a treatment episode. This is in contrast to a traditional fee-for-service approach, which contributes to fragmented care, encourages increasingly higher utilization of services, and escalates costs.
Bundled payments, however, are only one component of successful episodic care management. While an episodic model does incentivize provider accountability, above all, quality care management is about guaranteeing outcomes through coordinating evidence-based treatment and driving patient engagement. Successfully launching outcomes-focused episodic care management should be a top priority as our industry strives to focus on delivering better patient experiences and reducing costs for employers and carriers.
At Paradigm, we have spent decades developing a successful value-based care model — backed by independent studies — that aligns outcomes for all parties in the care process for catastrophic and severe injury types. Because episodic care management programs reduce costs and improve care outcomes for a wide range of injuries, there is a great opportunity for our industry to move forward.
As Paradigm's Chief Clinical Solutions Officer, Kevin Turner, put it, "The workers' compensation space can and should be adopting this model for the full range of injury severity, as it combines cost savings potential with better outcomes for injured workers."
Proven results for reducing spend and streamlining care
Every care management system should be built on this core principle: When you align common outcomes, it benefits everyone. An obvious positive outcome to carriers and payers is the reduced spending that can result from aligning incentives through a fixed payment model. For example, in one 2020 review of the impact of bundled payment on health care spending and quality, the authors highlighted a reduction in spending of 14% per case for orthopedic episodes of care.1
While lowering costs is a cornerstone for any payer's long-term risk management strategy, it needs to be a component of a high-quality care delivery program to be sustainable. This same study concluded that outcomes for bundled payment models could vary and emphasized the importance of risk stratification, and accounting for differences among patient groups.
Exceptional episodic care management is more than bundled payments
This is where episodic care management has the power to go beyond simple cost bundling — to provide a comprehensive framework that aligns outcomes through evidence-based medicine, provider accountability, risk sharing, and actively promoting patient engagement. "The goal in workers' compensation medical management is to always be working toward reaching maximum recovery for all types of cases, achieving higher functional abilities, returning to work, and a positive experience for the injured worker," explained Kathy Galia, Senior Vice President & General Manager, Paradigm Clinical Solutions. "This model offers the potential to deliver the types of guaranteed outcomes and lower medical costs in lower severity injuries that Paradigm has been achieving in the catastrophic and complex injury space for the last 30 years."
The key is harnessing data and leveraging evidence-based clinical best practices to put injured workers on proven trajectories. For example, with a musculoskeletal injury such as a rotator cuff tear, it is critical to put patients on the correct journey to recovery early on. Surgery can be avoided in many cases, but in others, it is the best course of action.
Fully aligned outcomes-focused care management programs put injured workers on the right path from the outset, and should be able to guarantee an outcome. Turner elaborated, "If a worker with a shoulder injury requires surgery, effective clinical management can take this patient from the day of surgery to full recovery and guaranteed maximum medical improvement." Any bundled cost structure needs to drive provider accountability and incentivize return to work. Continued Turner, "This is about so much more than negotiating a fixed price for an orthopedic surgical procedure — episodic care management is a way to join bundled payments with full risk transfer and guaranteed outcomes across the injury spectrum."
Practical solutions to fee-for-service fragmentation
Currently, there is still a long way to go to reach this improved state of health care for musculoskeletal injuries in workers' compensation. Injured workers face a fragmented system that too often makes them feel disengaged, and like they are "going it alone." Meanwhile, payers and carriers have to negotiate a seemingly never-ending case management system and a fee-for-service payment structure.
"After sustaining a relatively commonplace shoulder injury, workers can expect to be evaluated by and referred to multiple providers," said Galia. "This can run the gamut from radiology specialists, to orthopedic surgeons, to physical therapists, and pain management specialists. All the while, injured workers and carriers alike encounter multiple referrals, scheduling delays, and uncoordinated treatment that can cause issues ranging from an increased risk of unsuccessful surgery to long-term misuse of prescription medication," she continued.
In the worst-case scenarios, this leads to runaway costs for cases where workers remain injured and unsatisfied with their care. According to industry data, maximum claim costs for a rotator cuff repair surgery can be as high as $123,276, while return-to-work time can be as high as 393 days.2
Coordinated episodic care management offers a clear alternative built on using clinical best practices, top-quality providers, and accountable payment structures to increase patient engagement and put injured workers on an optimal recovery track. "Based on an initial visit with a high-quality provider, an episodic care manager can create a data-driven treatment plan based on the diagnosis," said Turner. "A managed care network should be focused on collaboration and outcomes, including whole-person behavioral health. The goal is for patients to feel engaged and on a guided path to the best possible outcome, whether that means conservative or surgical treatment."
Through rigorous selection standards for providers and payment models that incentivize positive clinical results, best practice episodic care management has the power to drive down costs in the tens-of-thousands of dollars, and shorten return-to-work times by months, according to the same data referenced above. As Galia put it, "The right approach for musculoskeletal injuries transcends high-quality case management and bundled payments to create a holistic program that improves patient and cost outcomes across the board."
Building the future of care delivery in workers' compensation
In our catastrophic product, Paradigm has been taking a value-based care approach that has driven provider accountability for decades, and is fundamental to our ability to achieve better outcomes and lower costs. A 2020 study by a leading actuarial firm showed Paradigm achieved 32% lower lifetime medical costs compared to industry benchmarks, while achieving nearly six times higher return-to-work rates. These results are consistent with previous independent studies of Paradigm cases conducted in 2008 and 2013, which demonstrated ongoing excellence across more than 20 years of case data.
"Paradigm has been able to accomplish these results for catastrophic and complex workplace injuries through a care management model built on guaranteed outcomes and full risk transfer that is completely unique to the industry," said Turner. "As we move into episodic care management for less severe injuries, we're excited to take the proven approach that Paradigm has become known for and apply it in a way that will help even more people."
Added Galia, "Paradigm has always been a leader in value-based care for the industry. Along with initiatives such as our value-based partnerships with best-in-class providers, episodic care management will help us continue to promote provider accountability and collaboration in a way that genuinely increases patient engagement and outcomes."
Learn more about HERO EpisodicSM, Paradigm's outcomes-focused solution for shorter-term musculoskeletal injury cases.
1. Agarwal. Rajender et al. The Impact of Bundled Payment On Health Care Spending, Utilization, and Quality: A Systematic Review. Health Affairs, January 2020, 39:1 <https://www.healthaffairs.org/doi/10.1377/hlthaff.2019.00784>
2. Source: ODG by MCG. Injured worker in best practice outcome was a smoker with elevated BMI, mirroring typical patients.
Michael Choo, MD; FACEP; FAAEM; CMRO is the Chief Medical Officer & SVP, Paradigm