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Paradigm-sponsored Business Insurance Risk Perspective

Episodic Care Management: The Power to Reduce Total Cost of Care and Improve Outcomes

By Michael Choo, MD; FACEP; FAAEM; CMRO | Chief Medical Officer & SVP, Paradigm

To truly understand how a fragmented care system fuels runaway total cost of care and suboptimal patient outcomes, we should put ourselves in the shoes of an injured worker with a relatively routine musculoskeletal (MSK) injury, such as a shoulder strain with rotator cuff tear. If not managed correctly, this type of case can result in unnecessary treatments, delayed recovery, and excessive costs. After filing your injury claim, you see a physician who refers you to a radiology specialist for diagnostic imaging studies. You are then prescribed medications that require visits to the pharmacist and receive a referral to a physical therapist for outpatient rehabilitation sessions. This is then followed by a visit to a pain management specialist, who suggests corticosteroid injections. Throughout it all, you just hope that they all know exactly what is causing your shoulder problem, and that the clinicians are delivering on evidence-based treatment guidelines.

If your condition doesn't improve, you may be approved to consult with an orthopedic surgeon to undergo shoulder surgery. Depending on the surgical outcome, you may find yourself back on the frustrating cycle of additional physician visits, more prescriptions, more physical therapy, and more pain management injections—all of which can lead to multiple surgeries, prescription drug dependency, and a delayed return to work.

Throughout this process, clinical providers are typically working in their own discrete worlds, billing separately, with little to no coordination or holistic clinical oversight. In such ineffectively managed MSK cases, the burden of care coordination too often falls on the injured workers themselves. This is why so many patients report feeling disengaged and frustrated with their care pathways.¹ Uncoordinated, siloed care also contributes to increased nonsurgical and surgical treatment costs as well as higher indemnity costs for payers.

From a claims management standpoint, multiply this situation over and over—including exorbitant costs in the hundreds of thousands of dollars—and it becomes clear why fragmented, fee-for-service care models need an overhaul. With HERO Episodic^SM, Paradigm delivers an industry-first care management solution for MSK injuries designed to lower total cost of care and improve patient engagement and outcomes through a proven, evidence-based model.

Transcending bundled payments for lower overall care costs

In our previous Business Insurance Risk Perspective, we discussed the idea of episodic care based on alternative payment initiatives, similar to the value-based programs tested by the Centers for Medicare & Medicaid Services (CMS). By linking, or bundling, payments for all care received during a treatment episode, providers are incentivized to coordinate care and focus on better patient outcomes. According to a RAND Institute study², one episode-based payment program resulted in a total savings to Medicare of $52.3 million.

It's important to stress that bundled payments should be seen as just one aspect of an effective, accountable episodic care management solution. "Bundling is a spoke in the larger wheel of value-based, episodic care," said Kathy Galia, Chief Clinical Solutions Officer for Paradigm. "Episodic care programs also need to deliver proven clinical pathways that increase patient engagement, avoid unnecessary treatment, work toward lower disability ratings, and guarantee functional outcomes."

The ability to guarantee outcomes—including maximum medical improvement (MMI) and release to return to work (RRTW)—not only improves the patient experience, but is also what truly lowers total cost of care. Continued Galia, "Guaranteed outcomes have a major impact on the permanency of a claim, lowering indemnity costs, and overall settlement. Combining this with reduced procedural costs through bundling, not to mention the savings from avoiding unnecessary procedures, is how an industry-first solution like HERO Episodic really delivers financial value."

For MSK injuries, Paradigm identified the decision point for surgery as one of the major cost drivers under current care models. HERO Episodic was designed to achieve guaranteed outcomes for both non-surgical and surgical cases by creating treatment pathways that increase accuracy and confidence in care decisions. 

Delivering the right care at the right time

Improving functional outcomes and lowering total cost of care requires extensive case data and deep clinical knowledge to keep each patient on the right track. For a worker dealing with a rotator cuff tear, accurately deciding if and when surgery is needed is a choice that any episodic care solution must address.

In cases that aren't precisely coordinated, unnecessary surgeries have a major impact from the perspective of both recovery and cost—and determining when and if surgery is needed for MMI can significantly reduce cost of care. "Paradigm has spent more than three decades developing an expert-driven, data-guided platform for complex and catastrophic injuries," said Kevin Turner, Chief Growth Officer for Paradigm. "HERO Episodic applies this same proven approach to MSK injuries. More accurate surgical decisions can be made by leveraging a blend of geographical data, procedural data, and risk scoring, ensuring the right care at the right time."

Under this model, HERO Episodic is committed to achieving maximum medical improvement, or the jurisdictional equivalent, and release to return to work for non-surgical cases. If surgery is deemed necessary, it is bundled on a fixed-cost basis with full risk transfer and guaranteed maximum medical improvement and release to return to work from the injured workers' physician. Continued Turner, "This unique approach we've established allows our clients to set reliable reserves, providing financial value and lower indemnity costs."

Integrated value-based, whole-person care

HERO Episodic offers a clear alternative to the fragmented care story we told above. Injured workers with an MSK diagnosis have immediate access to a team of condition-specific care coordinators and proprietary clinical pathways. Along with a dedicated Episodic RN Care Manager, Paradigm Medical Directors with specialized expertise in specific diagnoses guide care plans and consult with a best-in-class network of specialty providers.

Care delivery for HERO Episodic also involves a two-way, patient engagement platform that gives access to information and education. This commitment to engagement, including behavioral health care, is at the core of Paradigm's ability to guarantee outcomes. Added Galia, "From the outset, HERO Episodic is about real-time communication and support to foster a positive recovery and return to work-focused mindset that results in maximum medical improvement and lower disability ratings."

For decades, Paradigm has taken a value-based care approach that enables our ability to achieve better outcomes and lower total care costs. A 2020 study of our catastrophic product showed 32% lower lifetime medical costs and nearly six times higher return-to-work rates, compared to industry benchmarks. These results are consistent with previous studies of Paradigm cases conducted in 2008 and 2013, by the same independent actuarial firm, which demonstrated ongoing excellence across more than 20 years of case data.

The same commitment to whole-person care, evidence-based treatment, and total cost savings is at the core of HERO Episodic, and will enable even more patients to reach the life-changing outcomes that Paradigm is known for.

Learn more about HERO Episodic, Paradigm's innovative, outcomes-focused solution for MSK injuries.

1. Source: Paradigm Proprietary Research, 2018.

2. Source: Analysis of Bundled Payment, Rand Corporation. 

Michael Choo, MD, MBA, FACEP, FAAEM, CMRO.

Dr. Michael Choo is Paradigm's Chief Medical Officer. He maintains the company's relationships with its network of consulting physicians and centers of excellence, and is responsible for enhancing clinical operations and leading outcomes research and development. He also teaches residents in emergency medicine, internal medicine, and family medicine at Wright State Boonshoft School of Medicine. In addition, he serves as a senior oral board examiner for the American Board of Emergency Medicine (ABEM).

Dr. Choo has more than 30 years of experience as a clinician, academician, and health care executive. Before coming to Paradigm, he was President and CEO of CHM Regional Health System in Wilmington, Ohio, where he oversaw its transition from county-owned nonprofit to a private-equity-funded for-profit hospital. He was the Medical Director of Heart Emergency Center at Dayton Heart & Vascular Hospital, Chief of Emergency and Outpatient Medicine at Clinton Memorial Hospital, and Director of an occupational health clinic network and a hyperbaric medicine and wound center. He also was founder and CEO of an emergency medicine physician group, Professional Emergency Specialists of Southern Ohio, for 20 years.

Dr. Choo holds his BA and MD from Boston University's accelerated six-year honors program in medicine, as well as a MBA from the University of Tennessee's Haslam Graduate School of Business. He is a senior oral board examiner for the American Board of Emergency Medicine, a fellow of the American College of Emergency Physicians, and a fellow and board member of the American Academy of Emergency Medicine.