Paduda: The Price/Advantage of Catastrophic Case Administration| Employees Compensation Information

By Joe Paduda

Tuesday, March 23, 2021 | 45 | 0 | min read

A well-designed, thorough, and much-needed study of the impact of nurse case management on disaster cases was completed by the University of Washington late last year.

Joe Paduda

The UW study looked at 216 cases of cats insured with L&I, the State Employee Compensation Fund, and assessed employee satisfaction and self-reported results, length of time lost, and total medical costs.

Among the conclusions were these:

  • Worker satisfaction with nurse case management services is high.
  • There were no changes in the average length of time lost or average medical cost after the implementation of the pilot project for nurses case management of catastrophic injuries.

A particularly striking conclusion was the economic analysis. The analysis “examined projected and actual medical and NCM costs for a results-based company with the most referrals (paradigm).” Of the 216 cases, there were a total of 25 referrals to Paradigm, 15 of which were accepted by L&I and managed by Paradigm.

The report found that the small number of paradigm cases required a formal “statistical assessment or economic assessment, e.g. B. an analysis of the return on investment (ROI) ”, excluded. Instead, the UW researchers provided a “descriptive analysis that compared different measures of cost to assess the economic value of the NCM services provided by Paradigm”.

Regarding the paradigm cases, the study concluded:

The cost of nurses’ case management alone was 1.8 times the total medical cost paid by L&I. In addition, the medical costs estimated by the results-oriented company were, on average, significantly higher than the actual medical costs paid by L&I. At all other companies, nurses’ case management costs were significantly lower than the average medical costs for the injured workers.

I reached out to Paradigm for his opinion. This is the answer:

Paradigm is aware of the UW research paper and has reviewed its results. Due to the limited scope and methodology of the report, it is not possible to draw any conclusions about the “economic value” of our services. The report does not capture the most meaningful measure of success, which is the ability to achieve maximum functional results at a lower overall cost of care. This is the model that Paradigm and our customers adhere to. As you know, Paradigm’s Catastrophic Outcome Plan product to which UW refers throughout this document is not a traditional case management solution.

Confident of our results and our 30 years of experience delivering life changing outcomes to catastrophically injured workers and their families, we value our customers. We encourage you to read the October 2020 study by independent actuarial firm Milliman, which confirms Paradigm’s findings.

I followed this request:

I would appreciate a somewhat more detailed explanation of what, in particular, the limited scope and methodology prevent the conclusions cited by the study’s authors from being reached.

Comment on: What could have been responsible for the high cost of case management compared to the medical cost for many of the patients?

Paradigm replied:

Our commitment to Washington L&I was to provide our risk-bearing outcome plan model that offers lower overall lifetime costs and a guaranteed outcome – only verified by Milliman in October 2020 and based on 30 years of clinical data. With this product, Paradigm offers an integrated system of clinical skills, data and experts to achieve lower lifetime costs. The comparison of the case manager’s costs with Paradigm’s outcome plan model is invalid. Additionally, the study focused on a short period of time (less than 24 months) and failed to capture the outcome and overall cost benefits that Paradigm offers.

Three observations

First, the 24 month period may have been too short to capture the full impact of the Paradigm program.

Second, the cost of case management services does indeed seem “valid” to me when considering the total cost of a cat case. I can’t think of a scenario where a vice president of claims or medical director wouldn’t have specific questions about a cat case where the cost of case management was almost twice the medical cost.

Third, Paradigm forecast medical costs that were much higher than those actually paid by L&I.


Carisk is a consulting client of Health Strategies Associates. It has a department that competes with Paradigm Outcomes.

I am working with two of the researchers on a PCORI-funded analysis of the impact of various regulatory approaches on opioid prescribing in employee compensation.

Note: For more information on Paradigm, check out my posts, which brief the company on its strategy and suggest that more payers should use its services.

Joseph Paduda is a co-owner of CompPharma, a consulting firm focused on improving pharmacy programs in employee compensation. This column is republished from his Managed Care Matters blog with his permission.

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