Cost savings for insurance

Cost Savings for P & C, Work Comp or Auto Claims

Using In-House On –Line Case Management and Resource Allocation Instruments

from MCD

www.MarylandClinicalDiagnostics.com

Value of MCD tests for a company • On-line, easy to use, case management tool used in

house by the medical department of a company. • Saves the insurance adjustor time and money• Helps adjustor set proper reserve by providing

accurate diagnosis for the misdiagnosed claimants • Helps adjuster allocate resources by providing an

objective basis for selecting claimant for fraud evaluation. Saves money on fraud detection

• Improved return to work rates, with less expense for medication and fewer doctor visits. Reset reserves.

• For open claims, get case closure

Reserves of “Bad (untreatable) Diagnoses” which convert to “Good (treatable) Diagnoses” with proper medical evaluation,

using the MCD Diagnostic Paradigm

• Fibromyalgia - $90,000

• Lumbar Strain - $150,000

• Cervical Strain -$120,000

• Lumbago – $80,000

• Failed Back Syndrome –$120,000

• RSD (CRPS I) -$1,000,000

• Causalgia – $450,000

• Migraine Headache – $95,000

• Lyme disease - $50,000

• Disrupted Disc (IDD)- $60,000

• Facet syndrome -$20,000

• Anteriolysthesis – $35,000

• Post laminectomy syndrome – $80,000

• Nerve entrapment –$50,000

• Thoracic outlet -$65,000

• C2-3 root - $45,000

Wrong Diagnoses Correct Diagnoses

Resettting reserves, based on accurate diagnosis results in immediate cash improvement, since lower reserves mean increased income

Background of Authors of the Test Research• Donlin Long, MD, Ph.D. former chairman of neurosurgery Johns

Hopkins Hospital, founder and Director of the Pain Clinic, Johns Hopkins Hospital, professor of neurosurgery, Johns Hopkins University School of Medicine

• James Campbell, MD –professor of neurosurgery, Johns Hopkins University School of Medicine, past president, American Pain Society

• Reginald Davis, MD – former chief resident in neurosurgery, Johns Hopkins Hospital, assistant professor of neurosurgery, Johns Hopkins University School of Medicine, chief of neurosurgery, Greater Baltimore Medical Center

• Nelson Hendler, MD, MS-former Assistant Professor Johns Hopkins University School of Medicine, past president, American Academy of Pain Management

• Matts Gronblad, MD, PhD –Professor of Rehabilitation Medicine, Rehabilitation Institute, Turku, Finland

• John Rybock, MD, assistant professor of neurosurgery Johns Hopkins University School of Medicine, assistant dean for academic affairs, Johns Hopkins University School of Medicine.

What are the issues?• Cost containment. How do you achieve this? • You margins are shrinking, so you need to control

workers compensation costs with an in-house tool• Current fraud detection methods are not cost

effective (Elaine Howe, State Auditor California)• Proper diagnosis and treatment with good doctors*• Proper treatment results in early case closure• Using *these techniques, Johns Hopkins Hospital

cut their workers compensation costs in half, by ruling that any of the 15,000 employees injured at Johns Hopkins had to see Johns Hopkins doctors.

www.MarylandClinicalDiagnostics.com Internet Case Management and Resource Allocation System

Sprains and strains are self limiting diseases, lasting no more than 2 months. Any “lumbar strain” or “cervical sprain” more than 2 months old is, by definition, misdiagnosed. Get the proper diagnosis & save money

Detect Fraud. Accurately Set Reserves. Close Long Term Catastrophic Cases

STEP 1) Administer the Pain Validity Test (PVT) for all claims. Find the fakers.

2) 6%-13% of claimants will be faking. The PVT finds them with 85%-95% accuracy. 3) Use surveillance and MCDs on pin- pointed claimants. Conserve resources. 4) Bring closure to the case5) Average of $1,654/case, same quarter savings, by eliminating FCEs, MCDs, and surveillance in 87%-94% of the cases (see Real Pain)

2) 87%-94% of claimants do not need IMEs, FCEs or surveillance but 40%-67% are misdiagnosed (Psychosomatics , 1993,1996). Reduce expenses Strains last only 2 months. Get the correct diagnosis and proper treatment 3) Administer the Diagnostic Paradigm ($800) to get an accurate diagnosis, and treatment plan. Accurately set reserves. 4) Get proper treatment. Increase return to work* 5) Bring closure to the case. Savings of $90,000 to $2,500,000 (Harvard School of Cybermedicine, 2001)

*For claimants out of work for 2 years or more, return to work rates of 19.5% for Workers Compensation cases, and 62.5% for auto accident cases. The insurance industry reports less than a 1% return to work rate in these cases.

Real PainFakers

Ease of AdministrationMCD tests can be administered through WorkSTEPS, which is the largest pre-employment testing company in the country, with 900 affiliated locations around the country, and 4,000 corporate clients including: (over 100,000 tests/year)

Barnes Aerospace Knight Transportation

SYSCO Waste Management

COMAIR Kinetic Concepts, Inc.

Chevron Conoco Phillips

Nabors Drilling Trinity Industries

Borden Republic Services

Johnson Controls Embarq

Proctor & Gamble Missouri DOT

Chaparral Steel Southern California Edison

A carrier Administrator(needs company administrator handbook)

A carrier Administrator selects insurance adjustors, in each office, who will determine which claimant should get the MCD tests, and monitor and direct the progress of the claimant

Insurance Adjustors selects the claimant to take the MCD tests, &

selects Proctoring Location, where the claimant will take the

tests. Then the adjustor sendsthe claimant a

letter, with instructions. (Needs insurance adjustors handbook)

Claimant receives the letter.Claimant then schedules his

own test with the testing Proctoring Location,

and goes there, with photo ID

Proctoring Location Administrator selects

employees to administer the test (needs proctoring administration handbook)

Proctoring Location employee administers test to

claimant (needs test proctoring handbook)

When tests results are returned, adjuster either does fraud investigation or uses MCD

\The MCD in-house case management tools for a carrier

How the Adjuster Uses the MCD Tests• The PVT test tells the adjuster if a claimant is faking

and exaggerating or has a valid complaint of pain• When adjuster gets the results of the PVT, he (she)

notes, in-house, which claimants are identified as exaggerating pain patients

• The adjuster uses surveillance, IMEs and FCE to document the exaggerated claim, & deny payment

• For claimants identified as objective pain patients, the adjuster requests a Diagnostic Paradigm for the claimant, gets the results, then resets reserves, & sends test results to the medical director or nurse case manager for disposition and management

FRAUD DETECTION

The Action Plan For Using the MCD Pain Validity Test

A carrier vs MCD methods of Finding Fraud

The Old Subjective Method• Claim is identified by

insurance adjustor as potentially fraudulent, based on subjective criteria, length of claim, past claim record, etc

• Adjustor determines if claim goes to SIU, where expense of surveillance, nurse case managers, IMEs, or FCE is incurred. What % hit rate? Costs?

The MCD Objective Method• All claims coming in

receive the MCD Pain Validity Test, which identifies potential fraud with 85%-95% accuracy

• Only the claims with a high chance of fraud are referred to SIU

• Increased accuracy of claim selection saves money for a carrier

• Costs $300/claim

California Does a Poor Job of Combating Worker’s Comp Fraud

(Workers Compensation Report, Vol 15, No. 11, p.206 May 17, 2004)• State Auditor Elaine Howle says the $30,000,000 annual expense

in State of California to combat fraud may be wasted, because they select the wrong claimants to investigate most of the MCD

• Insurance companies cannot measure the effectiveness of their efforts using independent medical evaluations and surveillance.

• The companies are relying on anecdotal testimony from stakeholders in the workers compensation community, unscientific estimates, and description of local cases involving fraud.

• The fraud division publishes statistics showing the number of investigations, arrests, convictions, and restitution, but cannot show if anti-fraud efforts are cost-effective. Saves $6 for $30 spent

• The State may spend $5,000 a case investigating 6,000 cases ($30,000,000) and identify 600 cases of fraud (10 % accuracy)

Outcomes from “Standard Insurance Practices”

• Is an independent medical evaluation cost effective? Do they ever say patient is misdiagnosed?

• Is surveillance cost effective? In what percentage of cases are they used? When they are used, what percentage of the time do they find cheats?

• Is “cookie cutter” (everyone gets the same treatment) chiropractic care or PT cost effective?

• Is delay in treatment cost effective? Evidence?• Is a Functional Capacity Evaluation cost effective?• Information cannot be based on anecdotal reports. Are

there references from the insurance literature to support cost effectiveness of these techniques? Is there evidence? Or is it “company policy”?

National Council on Compensation Insurance (NCCI)published a report Assessing Pain, Real andImagined (11/29/98 www.NCCI.com/painreal.html)

Summary of the ReportThe Johns Hopkins doctors reported that 13% of workerscompensation claimants are exaggerating or faking. The MCD Pain Validity Test ($300) can identify fakerswith 85% accuracy, and valid complaints 95% of the MCD.Average savings of $1,654/claim, same quarter savings, byeliminating doctor exams, FCE, surveillance, and nurse case reviewer in the claimants with valid complaints (87%), and focusing the surveillance on the 13% of claimants who are exaggerating pain patient. But which claimant should be investigated?

The PVT helps the adjuster decide which 13% gets surveillance

Average Cost Savings $1,654 Using Pain Validity Test

Scattergram of Computer Scored MCD Pain Validity Test.On the left, 3* is a severe abnormality, 2 a moderate abnormality, 1 a mild abnormality,

and 0 is no abnormality on at least one objective medical test. At the bottom, 8-25 represent the score on the MCD Pain Validity Test. 17 or less is an Objective Pain

Patient, 21 point or higher is an Exaggerating Pain Patient

0

1

2

*3

2118 20178 1210 14 15 1613119 19 22 23 24 25

11/13 = 85%

65/69 = 95%

Objective Pain Patient

Exaggerating Pain Patient

COST SAVINGS USING THE PAIN VALIDITY TEST- SAVE $1,802,000 on 1,700 CLAIMSSuspected Faker

Current Methods

Detectives $2,500 Pain $300

Independent Validity

Medical Test

Evaluation $1,700

Functional

Capacity

Evaluation $1,400

TOTAL $5,600 $300

Savings $5,300

Number of Insured Lifes 170,000

Number of Workers

Compensation Claims per Year-Lost MCD

Rate is 1% of all workers 1700

Number of

Workers Compensation

Cases/year lasting

more than three months

20% of all claims 340

Total cost of Pain Validity Test =$300 X 340 $102,000

Cost of old way $5,600 X 340 $1,904,000

Cost savings to evaluate these claims

using the Pain Validity Test $1,802,000

PROPER DIAGNOSISor what to do with the 87%-94%

of patients with a valid pain complaint

Action Plan for the Use the MCD Diagnostic Paradigm and Treatment

Algorithm

Failure of Chart Review Process• Very often, doctors do not ask the questions they

need to determine if a patient’s complaint of pain is valid.

• Most of the IME doctors do not ask the questions they need to determine proper diagnosis

• Chart review is inaccurate because the diagnoses are inaccurate 40%-67% of time

• Doctors order the wrong tests. MRI 30% false +.

• Therefore, “garbage in -- garbage out” or GIGO

• Company missed real cost savings due to bad data

Action Plan -How do you achieve accurate diagnoses and proper treatment ?

• Use automated history taking. A proper history gives a more accurate diagnosis. The Internet questionnaire never forgets to ask a question-Diagnostic Paradigm

• A single question may have 30 potential answers• Since all doctors are not the same, the automated history

taking eliminates inter-rater (between doctor) differences The Diagnostic Paradigm has 95% correlation with JHH.

• Computer scoring gives consistent quality interpretation• Outcomes studies published in peer reviewed medical

journals prove this techniques works.• Treatment Algorithm indicates proper tests to use

Missed Diagnoses-Neck and Back Pain

• The Johns Hopkins doctors did a study of 60 and 120 patients admitted to a pain clinic.* (180 total)

RESULTS• Prior to admission, 40%-67% were misdiagnosed

with “lumbar strain, cervical strain, chronic pain syndrome, or conversion reaction.”

• However, facet syndrome, thoracic outlet syndrome, damaged discs, nerve entrapments, and radiculopathy, were found in these patients, all of which were confirmed by objective testing.

(*Overlooked Physical Diagnoses in Chronic Pain Patients Involved in

Litigation, Part I and Part II, Psychosomatics, ’93 and ‘96)

Reserves of “Bad (untreatable) Diagnoses” which convert to “Good (treatable) Diagnoses” with proper medical evaluation,

using the MCD Diagnostic Paradigm

• Fibromyalgia - $90,000

• Lumbar Strain - $150,000

• Cervical Strain -$120,000

• Lumbago – $80,000

• Failed Back Syndrome –$120,000

• RSD (CRPS I) -$1,000,000

• Causalgia – $450,000

• Migraine Headache – $95,000

• Lyme disease - $50,000

• Disrupted Disc (IDD)- $60,000

• Facet syndrome -$20,000

• Anteriolysthesis – $35,000

• Post laminectomy syndrome – $80,000

• Nerve entrapment –$50,000

• Thoracic outlet -$65,000

• C2-3 root - $45,000

Wrong Diagnoses Correct Diagnoses

Resettting reserves, based on accurate diagnosis results in immediate cash improvement, since lower reserves mean increased income

Lumbar and Cervical Strain• Strains are self-limited to 6 weeks at most.• Beyond that, the claimant needs a more

extensive evaluation, not just X-ray and MRI • The best diagnostic process are physiological

tests: flexion-extension X-rays, facet blocks, root blocks, trial in a body jacket, and provocative discograms: all not often used by local doctor.

• Did you ever sprain your ankle? How long did it take to heal? Did it take 6 months? How many lumbar sprain cases do you have >6 months

When a Sprain or Strain Lasts More than 6 weeks-What is it?

• If a ligament pulls off a bone, there is excessive motion around a joint.

• This caused muscle spasm, because the muscles now have to do the work of ligaments to hold the bones together.

• When a disc is damaged, and there is a loss of disc space height, then there is less tension on the ligaments that hold vertebrae together, and there is excessive motion at that vertebral segment. This results in an unstable spinal segment.

• The patient needs discectomy and fusion.

Cost Containment for Sprains• Sprain cause an average of 7.5

days restricted activity, 2 days of bed disability, and 2.5 days work loss (Dept. Health & Human Services # PHS 87-1592, 1987).

• If a cervical or lumbar sprain last for more than 6 weeks, it must be something else. Malingering or real? Sprain or facet disease?

• How many cases of lumbar and cervical sprain do you have that are 3 months old or older?

• What is the reserve on these cases? Look at the costs.

• Diagnosis of lumbar sprain for 3 years

• Physical therapy or chiropractic $15,000/yr• Doctor visits for 3 years $2,500/yr• Medication for 3 years $12,000/yr33 year old claimant- lost wage/yr

$18,000/yrTotal for 3 years $142,500

Diagnostic Eval. Using MCD Lab Studies, provocative disco

$21,000Discectomy and fusion $41,000Total $62,000

Savings $80,500

Action Plan to Prevent Unnecessary Surgery or Get Surgery if Needed

• Using Treatment Algorithm, and do the proper tests to determine is surgery is really necessary

• Prevent mioptic approach-relying on wrong tests

• If the only tool you have is a hammer, everything looks like a nail. Use provocative discogram

• MRI has a false positive rate of 30% (Jensen, et al, New

Eng J. of Med, 1994),. Get surgery at wrong spot.

• MRI has false negative rate of 78%, (Sandhu, et al, J.

Spine Disorders, 2000) Patients don’t get surgery needed

Flaws with Just Anatomical Tests

MRI- Jensen et. al. (N. Eng J. Med, ’94), 92 patients with no back pain, but 27 had protruding disc

(30% false positive rate).MRI with Modic (vertebral end plate

changes)-21/23 patients had + provocative discograms. BUT- in 90 patients with positive provocative discograms, only 23% had Modic

changes, and 77% no changes in MRI. (Braithwaite, et al, Eur. Spine J. ’98). Therefore a 77%

false negative rate for MRIFlipping a coin would give more accurate

results about which disc is damaged

Review of a Bus Company Charts

• All cases are 6 months old or older• Of the 260 case cost summaries sent for

evaluation, 126 were sprains or strains = 48% of cases

• A sprain or strain is a self-limiting disease, and can’t, by definition, last longer than 7-10 days. Therefore at least 48% misdiagnosed.

• The oldest 15 cases cost $3,733,882.35 with an average cost of $248,925.50.

433,879.03 STRAINED BODY PART 433,879.03 1345,039.70 SPRAINED BODY PART 345,039.70 2266,597.24 TRAUMA

584,651.42 BRUISE/CONTUSION/ABRASION


210,270.67 SPRAINED BODY PART 210,270.67 3265,364.19 STRAINED BODY PART 265,364.19 4353,206.62 BRUISE/CONTUSION/ABRASION


424,372.35 UNKNOWN

194,757.01 STRAINED BODY PART 194,757.01 5196,225.58 SPRAINED BODY PART 196,225.58 6300,392.27 BRUISE/CONTUSION/ABRASION

342,407.24 FOREIGN BODY

281,495.90 STRAINED BODY PART 281,495.90 7154,293.92 STRAINED BODY PART 154,293.92 897,616.18 HEART ATTACK

215,260.65 BROKEN/FRACTURED BODY PART

219,690.79 STRAINED BODY PART 219,690.79 9183,503.02 SPRAINED BODY PART 183,503.02 10156,277.06 STRAINED BODY PART 156,277.06 11241,706.34 STRAINED BODY PART 241,706.34 12292,068.65 SPRAINED BODY PART 292,068.65 13304,889.28 STRAINED BODY PART 304,889.28 14254,421.21 STRAINED BODY PART 254,421.21 15

126 cases cost $12,365,366 with $98,137.82 = average.

Summary – 260 Bus Company Cases –sprain or strain N =126

Cost Containment for RSD (CRPS)• Johns Hopkins doctors report that

80% of all RSD cases are really nerve entrapments. (Dellon, 2006)

• Nerve entrapments cost $50,000 to treat.

• How many RSD (CRPS) cases do you have.

• What is the reserve on these cases? Most companies have $1,000,000 reserves for RSD case

• If your company settles the case for less than the reserve the difference comes to the bottom line.

• $1,000,000 -$50,000 = $950,000 income for at 80 % of your RSD cases

• On the right, note cost savings on treatment basis, not reserve reduction basis

• Misdiagnosis of RSD-3 yrs• Sympathetic Blocks 20 X $2,500 $50,000• Physical therapy or chiropractic $15,000/yr• Doctor visits for 3 years $2,500/yr• Medication for 3 years $12,000/yr33 year old claimant- lost wage

$18,000/yrTotal for 3 years $192,500

Diagnostic Eval. Using MCD TestsTreatment Algorithm $21,000Nerve decompression $29,000Total $50,000

Savings $142,500

Diagnosis of RSD vs Nerve Entrapment

RSD or CRPS• Pain all around a limb• Good response to

sympathetic blocks• No response to blocks of

peripheral nerve• Thermal allodynia (a

painful response to a normally not painful stimulus)

• Abnormal bone scan

Nerve Entrapment• Pain in nerve distribution• No response to

sympathetic blocks• Good response to blocks

of peripheral nerve• No Thermal Allodynia

(no pain in response to alcohol drop on the painful limb)

• Normal bone scan

Stanton-Hicks, Baron, Boas, Gorddh, Harden, et al, Complex Regional Pain Syndrome : Guidelines for Therapy, Clin. J. of Pain, 1998

COST SAVINGS USING THE DIAGNOSTIC PARADIGM = $13.000.000 for 170,000 insured workers with lumbar/cervical strain cases

Current Methods over a three year period of MCD for "Lumbar Strain"

Physical Maryland Clinical Diagnostics

Therapy $45,000 Diagnostic Paradigm $800

Doctor Visits $7,500 and Treatment Algorithm

Medication $36,000 Diagnostic Studies

Lost Wage $54,000 Recommend by $20,200

TOTAL $142,500 DP&TA

Fusion Surgery Recommended $41,000

Total Expense

Using DP&TA $62,000

Savings $80,500

Number of Insured Workers 170,000

Number of Lost MCD Workers

Compensation Claims per Year

Rate is 1% of all workers 1,700

Number of

Workers Compensation

Cases/year lasting

more than three months which are sprains/strain

10% of all claims 170

Total cost of DP&TA $800 X 170 $136,000

Cost of recommendations of DP&TA, including DP&TA $62,000 X 170 $10,540,000

Cost using old techniques $142,500 X 170 $24,225,000

Cost savings to evaluate these claims

using the DP and TA $13,549,000

Does your current system work?

• How do you measure if a methodology works?

• Do you ask a patient if they hurt less? No value.

• The most objective measures are

1) return to work rates –(what are yours?)

2) number of doctor visits/month

3) use of medication

4) published outcome studies

Published Outcome Studies-for Litigants*- out of work for more than 2 years from a clinic using the MCD tests

Clinical Neurosurgery, ‘89

Before After # of Patients Working • Return to Work-Auto 3/19 10/19 (62.5%)* • Return to Work -Work Comp 0/41 8/41 (19.5%)*• Doctor visits/month (WC/auto) 2.78 1.51 (46% reduction)*• Averg. Narcotic pills/month 105 10.8 (89% reduction)*• Averg. Hours out of bed 11.9 15• Trouble falling asleep- /m 22.8 16.1• Pts. with relief (5%-100%) 0 31/60 (51%) • * 6 months after treatment

*literature search shows insurance carriers report less than a 1% return to work rate for claimants out of work for 2 years or more on a workers compensation claim.

Advantages of the Tests for Adjusters

• Simplifies the decision making process

• Saves the adjuster MCD and money, since all new claims would get the Pain Validity Test

• Based on results of Pain Validity Test, the adjuster decides who gets surveillance, or MCD or FCE. No guess work, no wasted resources, by putting detectives on pin-pointed valid claim.

• For the misdiagnosed objective pain patients, get the Diagnostic Paradigm, and have the company doctor review the results and decide what to do

PVT-Saves $1,654/case • The current methods of assessing fraud are not cost

effective, as documented by the State of California• The Pain Validity Test (PVT) saves at least $1,654/case

when compared to current methods of fraud detection• Misdiagnosed patients cost insurance companies much

more than fraudulent cases. The PVT identifies both• There are at least 4 times as many misdiagnosed cases

as there are fraud cases• There are reliable methods for detecting fraud = PVT• Insurance carriers should demand Evidence Based

Medicine proof of efficacy of treatment.

Diagnostic Paradigm –Saves $80,000• 40%-71% of litigants with chronic pain problems are

misdiagnosed. Just “sprains” alone account for 48%.• Misdiagnosed claimants cost the insurance industry

millions in wasted medical treatment &delay of proper treatment. Proper diagnosis & treatment can save money.

• Internet administered (automated) history taking is reliable, and produces proper diagnosis and treatment (www.MarylandClinicalDiagnostics.com ).

• Using this technique, one pain clinic was able to obtain far higher return to work rates, and claimants had fewer doctor visits, and used less medication, all of which result in cost savings, averaging $80,000 a case.

• http://www.slideshare.net/DiagnoseMyPain/patient-cost-savings-documented-with-letters

CONTACT INFORMATION

• www.MarylandClinicalDiagnostics.com

• Mailing address

440 South El Cielo Rd suite #3660

Palm Springs, CA, 92264

• 24 Hour HELP line- 443-277-0306

• Email [email protected]

Cost savings for insurance

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