Liberty Mutual Manages Workers’ Comp Using Group Health Analysis

Over the past several years, risk managers faced a staggering one-two punch. First, workers’ compensation medical costs exploded, growing faster than inflation. Then, medical treatment passed wage payments to become the biggest slice of the workers’ comp cost pie.

In response to this onslaught, Liberty Mutual launched a first-of-its-kind partnership earlier this year that brought the advanced medical cost analysis long standard in the group medical industry to workers’ comp.

Working with Thomson Medstat, a provider of analysis to group health insurers, Liberty Mutual uncovered what it believes are the two keys to managing workers’ comp medical costs.

First, the statistical averages for treating specific injuries in any city or state – for example, how many office visits are needed to heal a torn rotator cuff in Denver, or what does it cost to set a compound arm fracture in Pennsylvania. Second, how individual caregivers and facilities in the area compare to that baseline.

The result? Liberty Mutual says its approach has led to lower workers’ comp medical costs, better treatment for injured workers, faster return to work and savings on pharmaceuticals.

“It’s all about turning raw data into useful information,” says Mark Sidney, who manages workers’ comp claims for Liberty Mutual’s Fortune 1000 clients.

Liberty Mutual is currently using its analysis to build provider networks in Texas, in response to that state’s recent workers’ comp reform.

The companys says the tool helps lower costs because it strengthens its ability to negotiate by showing individual doctors and hospitals how they compare to others, and having them confront treatment and cost patterns beyond the statistical standard

Using its data analysis, Liberty Mutual identified medical performance baselines in each state and the providers that routinely exceed these. Now bills from any of these caregivers are automatically reviewed to make sure they were properly coded.

For example, the average primary care physicians in California bills 49 percent of their office visits as “complex,” that is, requiring more time and attention. Bills from providers in that state who code more than 49 percent of their office visits as complex are closely examined

“We’ve made a good start at using the sophisticated analysis to benefit our policyholders,” notes Sidney. “And we’ll continue refining this approach to bring even greater value to clients and brokers.”