Recently a study was conducted in Southern California, where Health Nurse Managed Care has been utilized for Workers’ Compensation claims that, in the past, were processed under TRADITIONAL Insurance Industry claims procedures.  The results of this study was compared against claims serviced under Occupational Nurse Managed Care.  The detail of this study is herein reviewed.


First, the study noted that WITH nurse “managed care”:


1.                   Total incurred identified a saving of 38%.

2.                   Duration of days was reduced by 2%.

3.                   Medical Cost savings was 22%.

4.                   Indemnity payments were reduced by 57%.

5.                   Vocational Rehabilitation costs were reduced by 49%.

6.                   Allocation costs increased by +23%.

Note:    The higher allocations expense is associated with the “in house” occupational nurse and the occupational health physician consultant.


Controlling runaway workers’ compensation costs is a problem faced by many businesses.  Several years ago, nurse managed care was introduced as a possible solution, but critics raised concerns about its supposed effectiveness.


Risk Data Corporation, an information and statistical research firm, recently conducted a review of 24 Hour occupational nurse and doctor Managed Care.  The study compared closed claims of a California nurse managed care program and the claims data base of several standard Worker’ Compensation Insurers.


The purpose of the analysis was to determine if 24 Hour nurse managed care could live up to its promise of: reducing medical costs, lowering the wage replacement cost for lost work time, improve the quality of care, and lower litigation expenses.


The study revealed that the average medical costs from a nurse managed care program was $2,120 lower than the costs of the sample California Insurance Company database.


Three major factors were involved.  The first is the channeling of the injured employee by the occupational health nurses early in the claim cycle.


This channeling of injured employees, places the injured worker into facilities where the company has negotiated contracts, with a select group of industrial care providers’, that deliver fee schedule savings.  By utilizing a Preferred Provider Organization (PPO) costs can be managed and controlled significantly.


These nurses are also able to access considerable savings as a result of separate contractual relationships with hospitals, specialty and other ancillary providers, outside the PPO networking system.


The second factor is the occupational health nurse’s responsibility to review treatment plans and compare them to standard treatment protocols.  To assure that all aspects of the claim are managed appropriately, the nurse works closely with the assigned claims examiner on a team basis.


Occupational health nurses may also authorize more aggressive care than is typical of other programs.  The intent is to reduce the ongoing disability benefits and facilitate early return-to-work initiatives.  These activities reduce the over-treatment, assure quality outcomes and produce savings.



The third factor is managing the injured employee’s concern about their care.


The occupational health nurse is already positioned as the patient’s advocate in delivering benefit information, facilitating referrals, or resolving provider service issues and taking corrective action.


Nurse Managed Care generated an indemnity (wage replacement for lost work time) cost savings of an average of $7,995, or 57% percent.  This reduction results from the effectiveness of aggressive return-to-work activities by the occupational health nurses.


From the first day of disability, the nurse works to identify a temporary work assignment appropriate for the worker, with the help of the employer and treating physician.


This assignment practice is more aggressive than industry standards where nurse case managers are typically assigned only to the most serious injury or illness cases.  The development of modified work assignments saves costs that would normally be applied to re-training and education.


Savings can also be realized through early referral to medical specialists for disability evaluations, as soon as maximum medical improvement has been reached.  When taken together with the proactive channeling of nurse case managers, these results disprove concerns that managed care tactics increase indemnity costs.


The $6,139 (49%) average savings is the direct result of the occupational health nurse’s involvement with developing modified or alternative employment.


These cost savings are possible because less re-training and education for vocational rehabilitation is needed.  In addition, better communication between an employee and a vocational rehabilitation counselor promotes shorter rehabilitation plans, which cost less.


Claim allocation expense is the only area where the average cost is higher -- $862 on average.  The higher cost is due to the additional expenses of having occupational health nurses, and board-certified occupational health physician consultants, who play an important role in the management of these claims.


While there is an incremental cost to the managed care activities delivered by these specially-trained medical professionals, the resulting savings and positive outcomes more than offsets these additional costs.


The 12% reduction in litigation incidence reflects the advocacy role of the occupational health nurse and the use of pre-screened, credential medical providers, with industrial care expertise.


Although this figure may not seem high, it is significant when looked at in context.  Most of the business in the sample claim were written  in extremely litigious southern California metropolitan areas.  When compared to the statewide data, the savings figure assumes greater importance. 


The hospitalization incidence for the claims in this report was 48% lower than the rate for the industry overall.


This reduction was possible because occupational health nurses helped injured workers secure treatment outside of the hospital environment when appropriate.  Many times this was accomplished by providing home health care, more aggressive physical therapy and treatment, and use of outpatient facilities and durable medical equipment.  All of these alternatives reduce the need for hospitalization.


What’s significant about the study’s results is that savings were achieved in both medical and indemnity components.


This finding reveals that Nurse “managed care” does live up to its promise of lowering overall costs, while more effectively treating and returning injured workers back to productivity, and reducing litigation and related expenses.