Keys to Successful Case Closures.

Although the goals of claims payers and case managers have been philosophically aligned, they have been consistently at odds from a business perspective. Here's what you need to know to get case managers on your side.

The disability case management business has been criticized for several years now regarding its inability to produce significant (and permanent) claim closures. I recall a Florida attorney addressing a large group of medical and vocational case managers and predicting that, unless they concentrated on outcomes instead of billable hours, the industry's reputation would suffer a severe setback. He was clearly correct.

Today, customers have taken dramatic steps to control their case management costs. They have arbitrarily capped hourly fees; they have refused to pay for certain line items; they have even gone as far as hiring independent companies to audit the invoices of independent case managers. Probably the worst effort made at cost control was the advent of the "task assignment." This occurs when the case manager is assigned one specific field assignment such as conducting one visit with the injured worker or doing a quick labor market survey, or going on one physician office visit with the worker to obtain first-hand medical clarification.

The problem with the task assignment model is that while it produces the deliverable, but it has little chance of producing a meaningful outcome. In my 32 years in the claims and disability management business, I have often wondered why the sale of case management services is such an uphill battle. Why do customers continue to be wary of case managers' intentions? Then, it dawned on me that the answer is really very simple. In any business partner relationship, the two participating parties must trust each other and work together as a team to be successful. To do this, there is one very necessary ingredient that must exist. Goals must be aligned.

Historically, the goals of claims payers and case managers have been philosophically aligned, but have been consistently at odds from a business perspective. Why? The customer (the claims person) wants the case closed; case closure is normally jurisdictionally relevant although there are several definitions. For example, in some states reaching MMI (maximum medical improvement) is considered closure. In others, return to work at a job where pay is equal to, or more than, the predisability wage constitutes closure. And yet in others, closure is derived from some form of settlement.

Now consider the case manager s perspective. The case manager also wants the claim closed. But, the financial success of the company is not aligned with the case closure goals. Let's examine this disparity by looking at an end-result, or outcomes, comparison.

One can see by reviewing the table on this page, that from a business perspective, which may be the only goal alignment that really counts, there is no goal alignment. My point is not that any business impropriety has occurred; quite simply, a better system for all concerned must be adopted to create solid customer and case management business alignment.

In concept, the solution lies in simple goal alignment. The problem with this theory is the degree of difficulty involved in bringing two industries that have been working together in this particular paradigm for more than 20 years together in simultaneous change.

For payers, the solution lies not in capping prices, auditing bills, or developing lists of approved expenses, but in designating what will and will not be paid. For case management, the solution lies in aligning revenue with desired outcomes.

Goal alignment can only be achieved if both business partners have something to lose and something to gain. That something must be tied to outcome. With that focus, how do we align our goals using a gain-sharing and loss-sharing model?

We can begin by asking the case management company to put a portion of their fees at risk to achieve the desired outcome. This is the simplest form of business goal alignment. Now, we should not care what the case management company charges. We are not capping their fees; we are not preventing them from making a profit. We are merely saying, "put your money where your mouth is." Prove your value by helping to resolve cases.

Here's a scenario of how this would work. The case management company normally charges $80 per hour for field case management. As the payer-customer, we tell the case management company up front that we want 10 percent of their fees put at risk. This means that interim invoices from the case management company will actually be billed at the rate of $72 per hour. If the case management company reaches the agreed upon outcome for the particular case assigned, they can bill an additional $8 per hour for all hours spent on the case. If the case management company fails to meet the outcome, it would lose the 10 percent that was at risk. This process is easy to administer and definitely points the case management company toward outcomes.

An even more attractive and effective process, however, is one that offers not only risk but a reward aspect for the case management firm. Beyond the 10 percent at risk fee, offer the case management company a reward opportunity. For example, let's assume that I have a case that is costing a lot of money with no case closure in sight. Why throw good money after bad by spending a lot on wasted case management efforts? Instead, align payer and case management goals by offering a risk-reward program. For a particularly tough case, I could ask the case management company to put 50 percent of the fees at risk for 90 days of effort. If the agreed upon closure goal is reached, I will give a 50 percent bonus. Services normally billed at $80 per hour would be billed at $40 per hour. Once the outcomes were reached, the case management company would invoice at $120 per hour.

I know, some of you are thinking this is outrageous for case management services. Well, you're right, it is. But is it outrageous for the outcome? I bet every claims person reading this article has at least two cases they would be willing to pay $200 per hour for, if they could just get the desired outcome. Besides, isn't this less than what this industry has been paying attorneys per hour?

The secret to more successful case closures is goal alignment. If you are purchasing services without ensuring business goal alignment, you may not be getting the most for the dollar you are spending.

Jeff Kreider is president of Integrated Management Services Inc., a disability management consultant in Westlake, Ohio.

                 Case Management Goals Not Always Aligned
                       Customer Company
Desired Case           If the goal         If the goal is
Closure Goals:         is Achieved:        Not Achieved
MMI (Maximum           Case closes:        Case remains open:
Medical Improvement)   Costs decrease      Costs continue
Return to Work         Case closes:        Case remains open:
                       Costs decrease      Costs continue
Settlement             Case closes:        Case remains open:
                       Costs decrease      Costs continue
Any form of litigation Case is protracted: Case remains open:
                       Cost increases      Costs continue and legal
                       significantly       costs are incurred.
                       Case Management Company
Desired Case           If the goal             If the goal is
Closure Goals:         is Achieved:            Not Achieved
MMI (Maximum           Case closes:            Case remains open:
Medical Improvement)   Revenue stops           Revenue continues
Return to Work         Case closes:            Case remains open:
                       Revenue stops           Revenue continues
Settlement             Case closes:            Case remains open:
                       Revenue stops           Revenue continues
Any form of litigation Case remains open:      Case remains open:
                       Revenue increases       Revenue increases
                       due to time spent       due to time spent
                       on litigation issues.   on litigation issues.