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Choosing a Health Care Network

June 28, 2023

Choosing a Health Care Network

An Employer’s Guide to Work Comp

Choosing a Health Care Network

In our increasingly competitive economy, employers are giving high priority to finding business solutions that streamline their operations for higher efficiencies. In workers’ compensation, the goals are to reduce costs, improve injured-employee outcomes, and develop consistently reliable partnerships in medical management.

The Health Care Network (HCN) model has proven to be the most effective medical delivery innovation in meeting these goals in Texas. However, in this the most regulated and complex system in the country, the decision-making path to the right network is often difficult to maneuver.

Injury Management Organization, Inc. (IMO) presents this article, in the form of questions and answers, to help employers identify the most crucial steps they should consider when partnering with a network that meets their needs.  We hope these are the same questions you have and the answers you need. 

IMO has 33 solid years of professional managed-care experience in Texas.  We are an established HCN certified for all carriers.  We are also a 504 Network Administrator for public carriers, and we administrate the customized network panels for non-subscribers in the State of Texas.   IMO’s success in improving injured-employee results and in medical cost-containment is well documented by the Texas Department of Insurance annual network report card.

As we share our experience in the Texas workers’ compensation system with you, we hope this guide is educational as well as practical in expanding your understanding of HCNs and 504 Networks and in helping with your decision-making.

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A Brief Introduction To Networks

What is a workers’ compensation network?

A workers’ compensation health care network (HCN) is built on the Managed Care model, structured to effectively manage medical cost, utilization, and quality medical delivery. HCNs have treated more than 1.3 million injured employees in Texas since 2006.

Do I need a workers’ compensation HCN?

For decision-makers in the workers’ compensation system, the answer is quite reasonably yes, especially if your organization seeks to manage medical costs and improve injured-employee well-being and physical functioning at the same time.

Are there objective sources of information I can look at to see if HCNs can meet my goals for medical cost containment and injured employee outcomes?

Yes. The Texas Department of Insurance (TDI) has what is probably the largest collection of workers’ compensation data in the country. The collection includes information on every injury, medical service provided, payment, treating doctor, and network status of each claim. It also surveys thousands of injured employees annually through Texas A&M Public Policy Research Institute.

The Workers’ Compensation Research and Evaluation Group (REG) was mandated in the 79th Texas Legislature to publish an annual Network Report Card based on TDI’s data collection. The REG conducts professional research with the medical data and survey results to compare the performance of networks with each other as well as with non-network claims on a variety of measures including:

  • Health Care Costs
  • Utilization
  • Satisfaction With Care
  • Access to Care
  • Return to Work
  • Health Outcomes

How effective are HCNs in managing costs compared to non-network care?

The TDI Network Report Card shows that workers’ compensation HCN’s typically have lower medical costs for their network injured employees than for injured employees who receive non-network medical care.

In 2022, the average medical cost per claim for network injured employees at 18 months maturity was 12 percent lower than for non-network injured employees, changed from 10 percent lower in 2021 (see Figure 1).

The Covid-19 pandemic has also recently added a new cost factor to the TDI Report Card results, especially with the prevalence of first responders among Covid claims (43 percent) and Covid fatalities (36 percent). First responders are typically treated in HCNs and the average medical cost per Covid claim tends to exceed non-Covid claims by more than 20 percent.

Do HCNs help return injured employees to work sooner than non-network care?

Yes, the TDI Network Report Card shows that HCNs typically have higher return-to-work rates for their injured employees than for injured employees who receive non-network medical care. In 2022, 94 percent of network injured employees had returned to work, compared to 89 percent for non-network injured employees (see Figure 2).

How many lost workdays do HCN injured employees have compared to non-network injured employees?

The TDI report also shows that the average lost days from work was 40 percent lower for HCN injured employees than for non-network injured employees. The lower number of lost workdays benefits all parties to the claim:

  • the employer has less workflow interruptions
  • the insurance carrier has lower income-benefit costs
  • the injured employee has better retention of skills and wages

According to the TDI report, a typical non-network injured employee was off work for 8 weeks, compared to 5 weeks for the typical HCN injured employee (see Figure 3).

Differences Between Networks

Do I have a choice of workers’ compensation network?

Yes, private-sector employers and insurance carriers can choose from among 30 TDI-Certified Health Care Networks (allowed under Texas Insurance Code Chapter 1305 and referred to as 1305-networks). Public political-subdivisions (such as counties, municipalities, school districts, and junior college districts) can choose either a 1305-network or 504-network (allowed under Texas Labor Code Chapter 504). The 504 Network is usually a single carrier or interlocal agreement between a few select employer/carriers.

What are the key differences between the network types?

While both 1305-networks and 504-networks out-perform non-network care for injured employees, they fall under different statutes and have some differences in requirements.

A certified 1305-network may contract with or be established by workers’ compensation insurance carriers, TDI-certified self-insured employers, groups of employers certified to self-insure, or governmental entities that self-insure, either individually or collectively. The 1305 Network contract is between the carrier and the HCN.

A public 504-network is owned by a public entity to manage public-sector injured employees, while the 1305-network can be utilized by both private-sector and public-sector employers.

A public entity that owns a 504-network can directly administer the network functions or delegate those functions to a Third-Party Administrator (TPA). These networks may form political sub-division risk pools, or establish self-governing groups supported by a TPA. They may also share their 504 networks with other political sub-divisions via interlocal agreement.

Public entities that are carriers can also contract directly with HCNs such as IMO.

What are additional key features and requirements for a 1305 network?

A TDI-Certified 1305-network has broader and more complex requirements than a 504-network. Among other requirements, 1305-networks:

  • Acknowledgment form and notice of network requirements confirmed
  • Confirm notice of network requirements
  • Confirm selection of treating doctor in network
  • Follow TDI rules for changing treating doctors in network
  • Approve or disapprove out of network provider
  • Ensure satisfaction of care
  • Ensure Telephonic / Field Case Management needs are met
  • Measure medical and indemnity cost benchmarks
  • Ensure provider education and responsibilities are achieved
  • Make certain that provider medical documentation is retrieved and reviewed.
  • Ensure evidence-‐based practice is followed
  • Must have provider access plans for each approved county
  • Must have an annual Quality Improvement Plan (QIP)
  • Must have 22 provider specialties for each approved county
  • Must have contracts with credential providers within approved counties
  • Must submit claims data for an annual data call from TDI

What are additional key features and requirements for a 504-network?

A 504-network has requirements, though not as complex and broad as those required for 1305-networks. A 504-network:

  • Does not have a TDI requirement for hospitals or specialists
  • May choose to have credential and contract with providers
  • Does not have to provide access and QIP plans to TDI
  • Must be reported to the DWC on form DWC-20SI
  • Must submit claims data for the annual TDI data call
  • Must have a dispute resolution process
  • Control the rules for changing treating doctors

Do all networks have the same results?

No, all networks do not perform at the same levels. While some networks may have better medical cost results than others, they may score comparatively lower on injured employee outcomes, and vice versa.

However, a few networks tend to excel both in medical cost and outcome measures at the same time.

For example, IMO had the second lowest average medical cost for professional and hospital services among all TDI-certified network and non-network lost-time claims in 2022.

At the same time, IMO also held the highest overall satisfaction with medical care (Figure 4) and the highest return-to-work rate (at 99 percent rate) among all network and non-network claims, where its rate was 10 percentage points higher than non-network claims (Figure 5).

In addition, IMO held the highest physical functioning scores (Figure 6) and mental functioning scores (Figure 7) among all TDI-certified network and non-network claims.

Figures 4-7 show the TDI 2022 results for overall satisfaction, return-to-work rates, and physical and mental functioning scores for all 1305-network, 504-network, and non-network claims.

Top 15 Questions in Considering a Network

1) Do Networks in general come with risks?

All business decisions come with risks, which is why it is very important to ensure that you do your due diligence and choose the right network. Some general areas of consideration include the following:

  • Who owns and administrates the network and is there any part that is outsourced?
  • What level of experience does the Network have such as in the HCN/504, managed care to obtain metrics on provider performance, credentialing/contracting and TDI compliance requirements?
  • What is the billing methodology of the network?
  • What are the results of the network based on the TDI Report Card or select carrier results of whom the network administrates?
  • Do you have an effective return to work program?

2) What are specific key risks in Networks?

The following are specific risks IMO has encountered and resolved since establishing its 1305-network:

  • Provider selection and accountability tools
  • Provider contracts without accountability measures
  • Conflicts of interests between HCN, insurance carrier, and TPA
  • A 504-network’s panel being managed independently by a TPA without the public entity engagement, medical management, and oversight
  • Not ensuring appropriate treating provider choice
  • Not negotiating provider fees
  • Not knowing the right questions to ask, and where to find reliable answers

3) As a carrier, where do we start to determine which network is my best fit?

  • Identify 2-3 top-performing networks from the TDI report card
  • Conduct a “Review for Information” (RFI) for each with a common questionnaire
  • Keep in mind, a carrier can contract within multiple HCNs as long as the policyholder uses the same HCN

4) Is it better to go with a network that has full State coverage, or one that is specific to my location?

  • Networks with full state coverage are usually turn-‐key PPO Networks
  • Networks with approved specific counties may have directly credentialed and contracted those providers, allowing a more contained network
  • Both may have advantages and disadvantages based on what “network fit” you are trying to reach.

5) Can provider discounts still apply in a network environment?

Yes, providers can offer discounts to a network, either below or even above the Texas medical fee schedule. The only way a provider can enter a discount rate is through a network contract.

6) How do I know if I have the right claims administrator to effectively manage the network claims?

  • Determine if the third-‐party administrator and insurance carrier have experience handling claims covered by a certified network
  • Determine if they are listed in the network “Report Card”
  • Determine the TPA’s philosophy, corporate culture and mission
  • Determine the effective date of the interface between the network team, the carrier, and the TPA
  • Can the TPA provide the necessary claim benchmarks, such as medical costs, lost days of work, legal costs, and ancillary service utilization?

7) Should I consider multiple services grouped in one network, or as separate cost-containment services such as Medical Bill Review, Preauthorization and Case management?

It is possible for you to have two different companies doing network access and Cost Containment services, however there are more benefits to having the network perform all of the cost containment services. Even with the right interface and integration, there are pros and cons within the delivery process. We have found that it is very hard to manage a network without the cost containment services since these are the metrics needed to track provider performance and accountability based on contracts and utilization of evidence-based guidelines. The cost containment services are the metrics of performance, billing practices and patterns of utilization.

8) What are the benefits of a single network conducting all the Cost Containment services under one roof?

The benefits of a network with full cost containment services:

  • Increased ability to optimize managed care and accountability
  • More accurate fee management and accountability in Medical Bill Review system
  • The certified network can modify the Pre-‐Authorization list and utilize the choice of evidence-‐based guidelines
  • Increased network scrutiny of pre-‐Authorization services, provider requests, treatment patterns, adherence to evidence-‐based practices
  • Better control over the Quality Improvement Process (QIP)

9) How do networks bill for services? What are the billing methodologies?

Typically, depending on whether a network is a 1305-network or a 504-network, they may choose to bill as:

  • Network access fees (provider access, Quality Improvement Program, complaint process, provider credentialing/contracting/education, website maintenance, Telephonic Case Management that is criteria based)
  • Percentage of savings
  • Policy discount premium
  • Cost-containment fee like a dollar fee for Medical Bill Review that covers the access fee
  • Per employee per month fee

10) What additional information about the networks would provide more insight?

The answers to the following questions would lead you closer to the answers you need:

  • Who owns the network?
  • Is the network provider panel outsourced from another company?
  • Is the network in compliance with TDI regulations?
  • What other services are outsourced – management agreements, Case Management, credentialing, quality improvement programs?
  • How are the provider panels selected, nominated, and credentialed?
  • How many providers have you released from the network?
  • Who is responsible for the accountability of the provider performance?
  • Who are the treating doctors in the network?
  • Are all provider types allowed to be treating doctors?
  • How does the network performance results compare to other networks in the TDI report card?
  • Are Telephonic Case Managers (TCM) involved in the network?

11) What should be the primary mission and benefit of using a network?

The primary mission of the network is to reinforce positive provider relations with managed care components. This approach should maximize the quality of Health Care, cost effective outcomes, satisfaction of care, early intervention and return to work.

12) What is the implementation process and how long does it take to kick off a network?

IMO’s experience is that overall network implementation can take from 45-75 days, based on available internal resources and team organization between the organizations.

  • Network and carrier define the responsibilities among the carrier, its TPA and the network
  • Plan of action with implementation schedule clearly described in the contracts between the parties
  • Differences accounted for between 1305-network and 504-network
  • Employees sign Notice of Network Requirements and acknowledgement forms
  • Educational sessions on provider selection and network expectations to employer and employees
  • An educational handbook can be used to establish network ground-‐rules
  • Identify areas that are critical to benchmarks, such as savings and enhancements in provider and employee relations

13) What is the Quality Improvement Program (QIP) in a network?

A Quality Improvement Program (QIP) is an annual program that incorporates a work plan, measures Case Management and return to work, and other areas of an internal network that provide benchmarks on results, patterns, and performance. The law requires that every network have a QIP.

14) How does a network manage a complaint?

The network manages a complaint through a detailed process of acknowledgement. Every network must have an internal complaint process that meets the criteria of TDI.

15) How does the network get a provider out of the network when the provider’s performance is not good?

A network must have a protocol in place that reviews performance and expectations of a provider. Should the contract or performance not be met through verbal and written warnings, a process should be in place to screen out those not meeting network expectations.

Thank You...

We at IMO thank you for your interest in considering a health care network as a reliable partner for effectively managing your workers’ compensation claims, to reduce costs and improve injured employee outcomes. We hope this guide improves your understanding of networks.

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View this guide as a PDF

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