Workers' Compensation

Choosing a Workers’ Comp Medical Provider PPO Network: Five Tips for Getting It Right

Understand the questions to ask when choosing a network of doctors and facilities to treat your employees injured on the job – not all PPOs are the same!

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By Ilene Wachs, President, Horizon Casualty Services, Inc.

New Jersey ranks #2 in the nation in cost of workers’ compensation insurance (California is #1) and almost half of that cost relates to medical expenses. Therefore, effectively managing medical costs is key to a successful workers’ compensation program.

The starting point for containing medical costs is selection of the best-in-class Preferred Provider Organization (PPO) network of physicians, hospitals and other health care professionals. The PPO must offer contracted provider reimbursement rates that reflect deep discounts. This ensures that the highest quality medical care can be delivered to insureds at the lowest possible cost.

Horizon Casualty Services, Inc. (HCS) provides workers’ compensation and personal injury protection (PIP) PPO services throughout New Jersey, processing over $2.5 billion in medical bills annually.

With that scale, and with clients representing 46 percent of all workers’ compensation premiums in New Jersey and 64 percent of all the insured vehicles in the state, HCS has insights into the nuances that can help carriers and companies choose the right PPO network.

Here are five tips for making the right workers’ comp PPO network decision:

Tip #1: Demand providers who put quality first

For injured workers and their families, nothing is more important than rapid recovery and timely return to work. And that means the right treatment, from the right specialist, from the very first visit. Your PPO should be adept at identifying these highest rated providers that are best-in-class within their specialties. This is especially critical for orthopedics and pain management, which should achieve superior outcomes by using nationally-accepted, evidence-based guidelines and are conservative in their approach to surgery, cautious in prescribing opioid narcotics and collaborate administratively.

At HCS, this is our Outcomes Focused Network Strategy. The objective is to achieve lowest per unit costs with best medical outcomes.

Tip #2: Ask Your PPO to provide the road map

Claims adjusters are busy. However, standard provider directories feature provider names displayed alphabetically. They do not make it easy to find best-in-class providers. Your PPO provider directory should feature premier providers at the top of any search along with their board specialty and principal area of practice (e.g. knee, shoulder or spine).

HCS provides the road map by featuring Outcomes Focused Providers at the top, along with their medical specialty, area of practice, and hospital and ambulatory surgical center affiliations. Consistent referral to best-in-class providers benefits injured workers and insurers – a win-win!

Tip #3: Make them put their money where their mouth is

Workers’ compensation claims may last from one day to a lifetime. Long tail claims can result in significant cost and reserving challenges. However, significantly controlling medical cost requires selecting a PPO with a sufficiently large provider network, with high quality providers and with contracted rates far below what insurers would pay if there were no PPO in place.

HCS has the size, referral volume and goodwill of the provider community to enable the company to successfully contract at extremely competitive rates with important health care providers in New Jersey. The difference in the results between a good PPO and a great one is many millions of dollars. If your PPO cannot show you a track record of better outcomes achieved at lowest possible cost, then move on.

Tip #4: Network utilization (or penetration) is an important metric – 82 percent to 92 percent is easily achievable

Under New Jersey workers’ compensation law, the insurer has the ability to steer injured workers to providers of the insurer’s choice. This provides opportunity to leverage contracted PPO rates and optimize results. For this reason, network utilization is a key metric. Because payments to facilities, such as acute care hospitals, rehab hospitals and ambulatory surgery centers, represent a significant portion of the medical spend, a broad PPO facilities network is important.

Network utilization is calculated as the sum of all in-network medical expenses prior to application of a PPO discount divided by all in-network and out-of-network medical expenses prior to application of a PPO discount.

HCS has 97 percent of all acute care hospitals in-network, and contracts with all major rehabilitation hospitals and a vast array of ambulatory surgery centers. The company also contracts with physicians and other health care professionals specializing in musculoskeletal medicine. As a result, its clients’ network utilization levels are extremely high at 82 percent to 92 percent.

Tip #5: Do they sweat the details?

A sloppy PPO operation, with unacceptable levels of medical bill processing and other errors, can create reputational damage for carriers and employers and unnecessary administrative cost. The best workers’ compensation PPOs process bills promptly and accurately. The leading indicator of an efficient PPO focused on precision is the appeal rate.

At HCS, our focus on precision is second to none. Our appeals rate is 0.20 percent. This demonstrates our relentless focus on maintaining pristine provider demographic data, precise medical bill pricing results and excellent relationships with our provider network participants.

In summary, your workers’ compensation PPO should be strong and stable to enable the delivery of best possible health care to injured workers. This critical component of an effective health care value strategy produces the best possible result for people, for business and for overall well-being.

Since 1996, HCS has provided results-based services to large workers' compensation insurers and self-insured entities. For more information, email Jed Hoban, HCS Business Development Executive, at