National Council of Self

November 2009
National Council of Self-Insurers
contents
Nona Grancell Reelected President
Macy’s Department Stores, Owens-Illinois, United States Steel Elected to Board of Managers
Thank You to Sponsors
New Members
HR 635
NCSI Amicus Brief Supports Exclusive Remedy
Don CeSar – Site of 2010 Meeting
Traumatic Brain Injuries: Poorly Identified and Treated
Workers’ Compensation Pharmacy Benefit Management Value
Workers’ Compensation Issues of 2009
Taming Medical Cost Inflation
Beating Workers’ Compensation Fraud with Technology
Workers’ Compensation National Reform: Affecting and Implementing Jurisdictional Change
Management of Musculoskeletal Injuries
Driving Accurate Impairment Ratings: New AMA Guides to Evaluation of Permanent Impairment
– Sixth Edition
2009 Annual Meeting Photos
Executive Director: Larry Holt 1253 Springfield Avenue, PMB 345, New Providence, NJ 07974
908-665-2152 FAX: 908-665-4020 E-mail: [email protected]
Website: www.natcouncil.com
Nona Grancell
Reelected President
At the 2009 annual meeting in Greater Palm Springs, CA, the
Board of Managers reelected Nona Grancell the President of
the National Council of Self-Insurers. Active in the California
Self-Insurers Association, Ms. Grancell is currently the
Executive Director-Emeritus of the Association. Her office is
in Los Angeles.
The Board also reelected, Dave Kaplan, the Vice President of
the National Council. Mr. Kaplan is the Executive Director of
the Washington Self-Insurers Association, the second largest
state self-insurers association in the country. His office is in
Olympia.
Max Koonce was appointed to the third officer position on the
Executive Committee, Past President.
The Board of Managers elected Buz Minor of the Ohio
Self-Insurers Association as well as reelected Greg Saxum of
the Self-Insurers Association of New York to represent state
self-insurers associations on the Executive Committee.
Additionally, the Board reelected Theresa Muir of Southern
California Edison, Bob Steggert of Marriott International and
Lynn Tatum of Tyson Foods to represent self-insured employers
on the Executive Committee.
Thank You to Sponsors
The National Council of Self-Insurers expresses its
appreciation to the following organizations for their
financial contributions to the 2009 annual meeting of
the National Council.
California Self-Insurers Association
Danville, CA
CompPartners
Agoura, CA
Grancell, Lebovitz, Stander, Reubens and Thomas
El Segundo, CA
Modern Medical
Lewis Center, OH
Professional Medical Specialties (PRO MED)
Maitland, FL
New Members
Macy’s Department Stores, Owens-Illinois,
United States Steel
Elected to Board of Managers
At the business session during the 2009 annual meeting of
the National Council of Self-Insurers, the members of the
Council elected Macy’s Department Stores of Cincinnati, OH;
Owens-Illinois of Perrysburg, OH and United States Steel of
Pittsburgh, PA to the Board of Managers.
Company representatives are Anne Schnure of Macy’s
Department Stores; Thad Franklin of Owens-Illinois and Dr.
Charles Prezzia of United States Steel.
The National Council of Self-Insurers is happy to
announce and welcome the following new members:
AmTrust North America
Duluth, GA
Designated Representative: Steve Yount
Bauer Investigation, LLC
Albuquerque, NM
Designated Representative: Grant Bauer
Biancamano & Di Stefano
Edison, NJ
Designated Representative: Matthew Gitterman
Cedars-Sinai Health Systems
Los Angeles, CA
Designated Representative: Shirley Pettigrew
Impairment Resources, LLC
San Diego, CA
Designated Representative: Leslie Dilbeck
Claim Insights
Farmington, CT
Designated Representative: John N. Wilson
Information Builders, Inc.
Mount Sinai, NY
Designated Representative: Robert T. Lynch
Cliffstar Corporation
Dunkirk, NY
Designated Representative: Kevin M. Sanvidge
Iowa Self-Insurers Association
West Des Moines, IA
Designated Representative: Matt Eide
Colorado Hospital Assoc. Shared Services
Greenwood Village, CO
Designated Representative: Gary Swenson
Learning Care Group, Inc.
Novi, Michigan
Designated Representative: Jeffrey J. Gehrke
Cost Containment Solutions
Nashville, TN
Designated Representative: Jody Ball
Leonard Family Corporation
San Antonio, TX
Designated Representative: Melanie J. Schulte
David Donn Consulting
San Francisco, CA
Designated Representative: David Donn
MedAllocators, Inc.
Duluth, GA
Designated Representative: Chris Carpenter
Dominion Diagnostics
North Kingstown, RI
Designated Representative: Frank A. Fornari, Ph.D.
MediCor
Lawrenceville, GA
Designated Representative: Richard Duhe
FAIRPAY Solutions
Avon, OH
Designated Representative: Rachel Wey
Momentum Healthcare, Inc.
Jacksonville, FL
Designated Representative: Jerry G. Albert
Fulmer, LeRoy
Ft. Lauderdale, FL
Designated Representative: C. Richard Fulmer
Montana Self-Insurers Guaranty Fund
East Helena, MT
Designated Representative: Jeff Lapham
Hack, Piro, O’Day, Merklinger, Wallace & McKenna
Florham Park, NJ
Designated Representative: John T. West
MyMatrixx
Tampa, FL
Designated Representative: Mike Bunkley
Horsemen, Inc.
Huntington Beach, CA
Designated Representative: Jeffrey Walters
NextImage Medical
San Diego, CA
Designated Representative: Elizabeth Griggs
Network Synergy Group
Tampa, FL
Designated Representative: Shawn Twiss
Overland Solutions, Inc.
Overland Park, KS
Designated Representative: Mario Fiel
Paradigm Management Services
Concord, CA
Designated Representative: Kelly Wilson
PMSI
Tampa FL
Designated Representative: Heather O’Brien
PPG Industries, Inc.
Allison Park, PA
Designated Representative: Cyndi J. Greco
H.R. 635
On January 22, 2009, Congressman Joseph Baca of California
introduced in the U.S. House of Representatives, H.R. 635,
“National Commission on State Workers’ Compensation Laws
Act of 2009.” The legislation would establish a national
commission to study and evaluate the adequacy of state
workers’ compensation laws and report back to Congress its
findings and recommendations. H.R. 635 has been referred
to the House Committee on Education and Labor.
The National Council is opposed to HR. 635 for the following
reasons:
Each state’s workers compensation system has always been
the responsibility of its own government - the legislative,
judicial and administrative branches of the state. The
federal government has never and should not now interfere
in the operation of a system that has served the states well
for decades.
Prime Industrial Recruiters, Inc.
Tulsa, OK
Designated Representative: Donna J. Long
In response to their own studies, the states, through the
years, have substantially increased their level of benefits and
expanded the availability of their benefits to injured workers.
Sowell Gray Stepp & Laffitte, LLC
Columbia, SC
Designated Representative: Grady L. Beard, Esq.
Employers have improved their workers’ access to excellent
medical treatment, advanced their safety records and
strengthened their programs to return their employees to work.
Stumar Investigations
Norristown, PA
Designated Representative: Lloyd Brown
The cost of a study commission and staff is especially unnecessary
during this time of strained federal and state budgets.
The current state-based workers’ compensation system
provides each state the ability to experiment creatively and
borrow from experiences in other states without the burden
of a “one size fits all” federal program.
Congressman Baca’s intent was to fast-track H.R. 635 through
the U.S. House of Representatives. Due, however, to the
multitude of letters sent by members of the NCSI and others
in the business community to the members of the House,
expressing opposition to the “National Commission on State
Workers’ Compensation Laws Act of 2009,” Congressman Baca
did not achieve quick passage of H.R. 635.
In response to the broadly based opposition of business,
Congressman Baca renewed his initiative to achieve
co-sponsors of H.R. 635.
The result is that the ensuing Congressmen are now
co-sponsors: Rep. Gerry Connolly (D-VA), Rep. Alan Grayson
(D-FL), Rep. Marcy Kaptur (D-OH), Rep. Raul Grijalva (D-AZ),
Rep. Dale Kildee (D-MI) and Rep. Dennis Kucinich (D-OH).
Significantly, the last three are on the House Education and
Labor Committee, to whom HR 635 has been referred.
If HR 635 gains additional sponsors, the likelihood of action
within the next six months increases.
If you or your organization has not already sent a letter of
opposition to your U.S. House of Representative, the
Executive Committee of the National Council of Self-Insurers
asks you to promptly send a letter.
NCSI’s Amicus Brief Supports
Exclusive Remedy
The National Council of Self-lnsurers, Illinois Self-lnsurers
Association and Ohio Self-lnsurers Association have filed an
Amicus brief with the United States Supreme Court to affirm
the exclusive remedy of workers’ compensation.
The United States Court of Appeals (Sixth Circuit) has ruled
that six employees of Cassens Transport Company may
proceed with their Racketeer Influenced and Corrupt
Organizations Act (RICO) suit, alleging that Cassens, its TPA
for workers’ compensation and a doctor illegally denied the
employees benefits for workplace injuries. Cassens Transport
has petitioned the Supreme Court to review the decision of
the Court of Appeals.
The Amicus brief states that if the decision holds, employees,
who say they are injured at work, will be able to prosecute
RICO actions in state and federal courts as well as actions in
workers’ compensation courts.
Cassens Transport, a car hauling company, is headquartered
in Edwardsville, Illinois. The preparation of the Amicus brief
was coordinated by the Illinois Self-lnsurers Association. The
brief was written by Chris Gibbons and Richard Kimnach of
the Association.
Don CeSar - Site of 2010 Meeting
The 2010 annual meeting of the National Council of SelfInsurers will be from Sunday, May 23 to Wednesday, May 26
at the Don CeSar Beach Resort in St. Pete Beach, Florida. The
Don CeSar is directly on the Gulf of Mexico.
The room rate at the Don CeSar that the National Council
has achieved for its conference is $174 per night, single or
double occupancy. Also, the $10 daily resort fee per person will
be waived. The following is taken from a brochure of the Don CeSar:
“There is a common phrase that says, ‘elegance is simple.’ This was true in 1928 when Thomas Rowe first opened the
Pink Palace (Don CeSar) and remains true today. The easy
comfort of plantation shutters and ceiling fans, along with
the refined indulgence of rich mahogany and shimmering
crystal, seamlessly blend to create a feeling of tranquil luxury. The openness in each guest room accompanied, by the
therapeutic golden Florida sunshine make each morning a
special experience.”
The Don CeSar has a Four Diamond rating.
For more information visit: www.loewshotels.com/en/Hotels/
St-Pete-Beach-Resort/Overview.aspx
Traumatic Brain Injuries: Poorly
Identified and Treated
As part of the 2009 annual
meeting of the National Council
of Self-Insurers, Chris Nowinski;
President of Sports Legacy
Institute, a Harvard graduate
and a former wrestler with
World Wrestling Entertainment;
gave a presentation regarding
the challenges and dreadful
effects of the poor identification
and treatment of head injuries.
A synopsis of his presentation
follows.
Traumatic brain injury (TBI) has always been a major concern
in workers’ compensation, but recent research coming out
the sports world is rapidly changing our understanding of
the long-term consequences of TBI. This new understanding
from sports is likely applicable to occupational and industrial
injuries, and therefore may signal a changing landscape in
workers’ compensation for self-insurers.
Recent studies show that the public health burden of sportsrelated concussions and brain trauma is far greater than
athletes and families have ever appreciated. The research
has also shown that a lack of proper education and response
after TBI has made the problem far worse. Early adoption of
the lessons learned in sports may provide the insurance and
workers’ compensation fields opportunities to provide better,
more efficient, and less costly care after TBI.
I am a survivor of multiple TBIs. I used to wrestle in World
Wrestling Entertainment as Chris “Harvard” Nowinski, a
snobby character that built upon my genuine Ivy League
education. I was forced to retire at the age of 25 due to too
many concussions suffered in WWE and playing football at
Harvard University, and have since dedicated my life to the
sports concussion crisis. To advance our understanding of the
consequences of repetitive trauma to the brain, I founded
the non-profit Sports Legacy Institute (SLI) in 2007 with Dr.
Robert Cantu, and we partnered with Boston University
School of Medicine to create the Center for Study of Traumatic
Encephalopathy (CSTE), the only center in the world to focus
solely on the long-term effects of repetitive TBI.
The CSTE operates a brain bank where analyze the brains of
former athletes to learn how repetitive trauma affects the
brain on a microscopic level. From September 2008 through
June 2009, six of six former football players, all of whom
died between the ages of 18 and 66, were diagnosed to be
suffering from Chronic Traumatic Encephalopathy (CTE).
CTE is a progressive degenerative brain disease caused by
trauma and marked by excessive amounts of the protein tau
throughout the brain.
CTE shares some symptoms and pathology with Alzheimer’s
disease, but is a distinct disease. Deceased former NFL
players who suffered from CTE include John Grimsley, Tom
McHale, Mike Webster and Andre Waters. Combined with
external research, 10 of 11 football players ever studied have
been diagnosed with CTE, all in the last eight years.
CTE, previously known by the term “punch drunk” as it
frequently affects boxers, is a devastating disease than can
occur in anyone that suffers trauma to the brain. Prior to
death, the CTE sufferers tend to suffer memory loss, confusion,
impaired judgment, paranoia, impulse control problems,
aggression, depression, and, eventually, progressive
dementia. There is great concern that CTE affects a
significant percentage of contact sports athletes.
In the workers’ compensation field, this and other new
research provides three key insights:
First, TBI’s that may seem to lead to a full recovery can actually
cause a life-long degenerative disease that currently can only
be identified post-mortem.
Second, employees that have past brain injuries may already
have CTE or be predisposed to more severe symptoms
following a TBI due to past brain injuries.
Third, acute response and management after traumatic brain
injury is crucial to giving an employee the best chance at a
full recovery.
In light of these insights, it may be time to reevaluate your
approach to traumatic brain injury, especially when it comes
to prevention and education. In the sports world education is
a key component to gain buy-in from athletes in respecting
TBI, allowing athletes to know when to seek care and methods
to minimize their exposure to risky situations. The goal is to
help athletes return to play at full strength and minimize the
risk of long-term effects. A similar model applied in workers’
compensation may reduce the overall burden of TBI in the
workplace.
Mr. Nowinski may be reached at [email protected]
Workers’ Compensation Pharmacy
Benefit Management Value
The following article was written by Brian Carpenter, Vice President
of Clinical Services at First Script Network. It is a synopsis of Mr.
Carpenter’s presentation at the National Council of Self-Insurers’
2009 annual meeting.
Pharmacy Benefit Management programs provide value
through four primary points:
• Reducing drug spend through discounts from state and
federal fee schedules
• Utilization management through plan edits and drug list
design at point of sale
• Retrospective drug utilization review
• Data analytics
Without PBMs in place, many payers use bill review vendors
to manage drug costs. Most bill review vendors price
the transactions at fee schedule providing little savings or
utilization management. PBMs typically price lower than fee
schedule providing extra savings. In many cases, the bill review
charge per transaction may be lower or even eliminated
since there is no further reduction available below the PBM
contracted rate.
The main focus for payers in the past has been to reduce the
cost of goods through discounts. While price points still are
a major concern, real value and savings can be obtained on
utilization management.
Point-of-service (POS) utilization management is comprised
of two components: (1) plan design such as days supply,
forced generics, available mail service, etc; and (2) drug list
design. The PBM can provide general best practice plan
design to the payers. The payer and the PBM can use this
best practice as a starting point in developing the best
program for the payer’s employee base.
Drug list design can be very simplistic to extremely sophisticated
based on the need of the payer. The simple design is a singular
drug list that reflects medications typically used in workers’
comp. The more sophisticated model includes claim
information that identifies and aligns specific-injury types
to a limited drug list design. For instance, an injured worker
with a burned arm would have different medications
available to them than a person with a head trauma. This
type of design has proven to reduce calls into the claims
examiners, reduce unnecessary authorizations and decrease
payer drug spend. New claims produce the best outcome for
this model due to the up front effort of claims management.
For older claims, the model is less successful due to the
historic medication utilization that must be overcome.
For the older claims, the best tool available today is a drug
utilization review (DUR) that incorporates both drug usage
and medical history. Combining the two elements provide a
similar outcomes, retrospectively, as the POS process.
Suggested review topics include but not limited to: prevention
of therapeutic duplication, provide therapeutic alternatives
for safety and cost reduction, evaluating medical records
and drug/disease, drug/drug and drug/age interactions,
and appropriate dosing using national guidelines. The full
analysis can be then used to support other medical disciplines
such as case management and physician review.
An important point to be made is that pharmacy is just one
aspect of the total health care continuum. Drug management
cannot occur in a vacuum. The PBM can provide great data
analytics and trending for claimant drug utilization. The
PBM can provide feedback to the prescribers in appropriate
dosing and drug utilization with respect to injury. However,
Workers’ Compensation Pharmacy Benefit Management
Value prescribers spend little time working with the PBM in
driving outcomes that can drive better results that include
both claim cost reduction and improve patient response.
The PBM can provide the injured worker the right medication
for the appropriate injury at a macro-level. What the PBM is
unable to provide is if the right drug is compatible or even
used by the claimant. To close such a gap, counseling and
urine/blood analysis could be used as a marker for patient
compliance.
Use of other services or medical disciplines such as case
management and a strong total medical utilization
management approach and other such services will help
drive the overall therapeutic outcomes that the payers and
the injured workers desire.
Mr. Carpenter can be reached at [email protected]
Workers’ Compensation Issues of 2009
The following article was written
by Ken Martino, President
and Chief Executive Officer of
Broadspire Services, a Crawford
Company. It is a synopsis of
Mr. Martino’s presentation at
the National Council of SelfInsurers’2009 annual meeting.
The workers’ compensation industry continues to change
and it is vital to remain abreast of developments to better
understand present conditions, visualize where the industry
is heading and to develop strategies to mitigate adverse trends.
Indemnity claim expenses, which have not attracted much
attention, continue to grow at a steady pace. While
indemnity claim costs increased by an average of only 1.7
percent in the early ‘90s, an upward trend began in 1996.
When final numbers are released for 2008, it is expected
that costs will have increased another 5 percent. The struggling
economy, however, is likely to slow this upward trend as
wage increases continue to be modest while employers
work through difficult financial times.
The encouraging news – that the unit cost of medical services
(with the exceptions of hospital and pharmacy expenses) has
remained relatively flat is diminished by increased utilization.
A trend of increased utilization has contributed greatly to an
ongoing rise in medical costs, which increased an average of 6.9
percent annually from 2002 through 2007 and are expected to
have jumped an additional 6 percent during 2008. Increased
utilization has placed the traditional role and use of medical
networks at a crossroad. Cost containment strategies
must address more than unit cost – they must examine
overall care plans to help control utilization.
According to a recent NCCI study, the frequency rate for
workers’ compensation drops during a recession more due to
job creation than job destruction. While there tends to be an
increased moral hazard during a recession, when employees
may report claims as a means of job/benefit protection, the
increase tends to be tempered by the lack of job creation.
While claim frequency has been declining, a tough economy
has historically contributed to increased medical severity and
longer durations. And once again, increased utilization is the
primary driver for higher medical costs. A number of factors
impede return to work during challenging economic times
and contribute to increased utilization. Many employees
consider their disabled status as a form of job security and
hesitate to return to work because of employment
uncertainty. In addition, working through state workers’
compensation systems tends to slow because of staffing
cutbacks and reductions in availability hours. Any factor
that contributes to slower return to work also contributes
to increased utilization and higher medical costs.
The workers’ compensation industry faces specific challenges
as we near the second decade of the 21st century. The
percentage of overweight Americans continues to grow, and
studies have shown a direct correlation between the number
of workers’ compensation claims and obesity. The most
obese employees (those 40 pounds or more overweight) file
twice as many claims as healthy-weight workers. Another
trend, an aging workforce, is also likely to impact the overall
cost of workers’ compensation. Because older employees
tend to heal slower than their younger counterparts, workers’
compensation claim durations and severity are sure to be impacted.
Many employers understand the challenge of finding and
retaining qualified staff, and the healthcare and TPA industries
are not immune. A shortage of nurses and claims adjusters
is likely to continue, and staffing is another area that requires
creative strategies to remain competitive.
Technology continues to drive progress and efficiency.
Advances in computer hardware and software have made
predictive modeling a more appealing knowledge model to
guide claim workflow. Another advancement that may gain
traction: self-service. As technology helps stimulate increased
independence among consumers, self-service in the claims
area may be on the horizon.
Healthcare reform is a topic that continues to stimulate
controversy throughout the country. Despite some concerns,
it is highly unlikely that any healthcare reform will resemble
the universal systems presently in Canada and many European
countries. As any healthcare reform unfolds, expect individual
states to be very protective of their workers’ compensation
systems and fend off any direct impact. However, any major
reforms in healthcare delivery or reimbursement are sure to
have an impact on workers’ compensation loss costs.
Mr. Martino can be reached at [email protected]
Taming Medical Cost Inflation
that 50% of medical spending arises from 6.2% of all claims,
those which exceed $100,000 in medical spending.
The following article was written
by Kevin Fleming, President
of Paradigm Management
Services. It is a synopsis of
Mr. Fleming’s presentation at
the National Council of SelfInsurers’ 2009 annual meeting.
Medical cost inflation in workers compensation is nearly
double that of healthcare inflation overall, a pattern which
has been true for close to a decade. Given these costs, one
of the most formidable challenge in workers compensation
is figuring out how to improve recovery outcomes of injured
workers while holding at bay the surging costs of medical
care.
Cost containment efforts to date have not stopped the
upward trend. They have undoubtedly lowered the incline
going up, but clearly more is needed to curb the escalating
medical expenses that plague the workers compensation
industry.
The conventional focus of insurers is to try to lower the cost
of each individual unit of care, such as a diagnostic test or
a physical therapy visit. A common strategy is to contract
with medical provider networks that negotiate discounts
with providers. However, as studies have shown conclusively,
the number of treatments is more important than unit costs
in driving medical costs, and can quickly undo the benefits
generated by the negotiated discounts.
What is needed is a far more reaching cost containment
approach to control medical costs. This can only be accomplished
with a balanced approach: first to sharpen the tools insurers
already employ to contain costs, and second, to address the
most costly cases with distinct practices.
The most costly cases, catastrophic, chronic, and pain-related,
generate a vast proportion of medical costs. These are
medically complex cases. Some may not start that way, but
within a year the medical picture has become very complex.
The National Council on Compensation Insurance reports
To accomplish the aim of combating medical cost inflation,
five strategies can be employed.
Strategy 1: Sharpen Your Traditional Tools
Insurers have traditionally focused much of their attention
on medical expenses that are high volume, standardized, and
susceptible to narrowly designed means of control. These
expenses include physical therapy, medications, durable
medical equipment, and diagnostic tests.
The vendor community has developed a plethora of highly
specialized tools to containing these costs. These tools
annually trim away at over a hundred million medical events,
across over a million claims, cutting costs by the tens or
hundreds of dollar per transaction. It is important to ensure
that you have the essentials in place for utilization review,
pharmacy benefit management, and to follow strong
practices that will help ensure your programs remain sharp
such as benchmarking results to maintain focus.
Strategy 2: Contain chronic pain treatment
Pain care is in a class by itself, especially important to monitor
because chronic pain conditions are linked to claims that
account for half of total claims costs. Much of the treatment
for chronic pain is controversial, expensive, very often
ineffective, and even harmful to the patient.
Patients are often treated with expensive drugs, and undergo
care by anesthesiologists and orthopedic surgeons. Months
and even years may elapse without the claimant experiencing
sustained pain relief. The smart insurer picks a team of expert
doctors and nurses to monitor these claimants, consult with
treating doctors, and propose fresh approaches to treatment
before it is too late to change the course of care.
Companies such as Paradigm Management Services have
used expert physicians, onsite nurses that specialize in pain
and an extensive amount of data about pain care effectiveness
to inform their medical management strategy. Dr. Nathan
Cope, Chief Medical Officer for Paradigm reports that more
than 50% of the pain cases managed by Paradigm result in
completely eliminating narcotics use, while creating a 184%
return on investment for insurers.
Strategy 3: Carve Out The Management of Catastrophic Injuries
Severe burns, spinal cord injuries traumatic brain injuries, and
other major injuries are also in a special class by themselves. They
are rare – about 5 cases out of 1,000 claims but can consume
10% to 20% of all medical dollars. Care can be extremely
difficult to deliver, as multiple treatment teams get involved
and risks of complications are high. Clinicians with national
expertise in each type of catastrophic injury should be
recruited to treat and consult on these injuries.
Recently Milliman, Inc., the leading actuarial firm in the US,
found that Paradigm Management Services was able to get
catastrophic patients back to work at five times the industry
average and save insurers 36% on lifetime medical costs
through the use of expert doctors and a systematic process
of medical management.
Strategy 4: Keep Constant Watch over Former Catastrophic
Injury Patients
Unless an injured worker has returned to work, the chances
of that person developing additional complications stemming
from their initial injury are very high. “We see cases that were
not managed appropriately in the initial stages of the injury
spiking with medical complications two to 15 years post
injury,” says Dr. Cope whose company manages post
catastrophic cases as well.
“The same strategies that work for managing chronic pain
and catastrophic injuries will help course correct medical
complications that arise years later,” says Dr. Cope. “The key is
to see the spike coming by watching for escalating costs, so
that you can contain the damage early.”
The Final Analysis
In summary, sharpen your tools to control high volume,
standardized expenses. Build your medical expertise to
monitor and influence doctor treatment plans. The ultimate
medical cost containment solution is timely and complete
patient recovery. Smart insurers acquire the expertise to
discern who is best to provide what care at what time in the
course of treatment leading to recovery.
Mr. Fleming can be reached at [email protected]
Beating Workers’ Compensation
Fraud with Technology
The following is a summary of
the presentation by John Swedo
at the 2009 annual meeting of
the National Council of SelfInsurers. Mr. Swedo is Vice
President-Claims for American
Insurance Services Group, a
unit of ISO.
Property/casualty insurance fraud costs self-insurers and
insurers billions of dollars annually. According to USAA
Magazine, studies show that 10 percent of property/casualty
claims and 36 percent of bodily injury claims involve fraud or
inflation of otherwise legitimate claims. The Coalition Against
Insurance Fraud estimates that workers compensation
insurance fraud costs insurers and employers a whopping $6
billion a year. Those who fight fraud — insurers, employers,
state insurance fraud bureaus, and law enforcement — face
significant barriers in identifying and prosecuting fraud, but
are being assisted today by new technologies and analytic
capabilities.
There are three types of workers compensation fraud:
Claimant (employee) fraud occurs when false or exaggerated injury claims are filed. Claims can be filed for injuries
not received on the job, or to collect benefits while actually
working other jobs. Claimant fraud trends can reflect general
economic conditions. The National Insurance Crime Bureau
recently reported that there has been an increase in the
number of suspicious or “questionable claims” as the economy
deteriorated. An analysis of questionable claims reported to
the Bureau by its 1,000 members in the first quarter of 2009
compared those reported in the first quarter of 2008 shows
significant increases. Questionable claims related to workers
compensation increased 71 percent. There were significant
increases in other lines as well. Questionable claims for hail
damage increased 407 percent; suspicious vehicle fires/arsons
were up 27 percent; and suspicious slip-and-fall claims under
commercial policies were up 77 percent. Traditionally, 60
percent of injury claims payments covered the indemnity
payment and 40 percent covered the medical costs. Today,
that relationship is reversed. While frequency and indemnity
payments are down, the medical costs (severity) have increased
dramatically. The increase is attributed to organized crime
and provider fraud.
Provider fraud involves medical or treatment providers
who exaggerate treatments for minor injuries or bill for
treatments not actually provided.
Employer premium fraud is represented by underreporting
of payroll, misrepresentation of job classifications or the type
of business, or classifying employees as independent contractors.
An example is a temporary employment agency in New York
that paid employees in cash to avoid paying payroll taxes and
to reduce its workers compensation insurance premiums.
Industry efforts to combat fraud are encouraged by regulators
and legislators. There are two major focuses for industry
antifraud efforts: 1) fraud awareness, and 2) investigation
and enforcement.
Fraud awareness involves fraud training for claims adjusters
and underwriters to help them identify signs of suspect
behavior or claims patterns. Support for public fraud
awareness and education is also broad, involving insurers,
the Coalition Against Insurance Fraud, consumer interest
groups, and the National Insurance Crime Bureau. To support
the antifraud effort, 38 states have established insurance
fraud bureaus and several states have pending legislation.
Fraud investigations and enforcement involves the insurance
industry, lawmakers, and law enforcement, with many
states investing significant resources in investigations and
subsequent arrests and prosecutions. For example, in fiscal
year 2006 – 07, the California District Attorney’s W.C. Fraud
Program reported that it prosecuted 1,115 cases involving
1,224 suspects — resulting in 499 convictions and orders for
restitution totaling $25 million.
Today, there are effective technology and analytic tools for
combating fraud:
Fraud Indicators (‘Red Flags”) — Red flags are characteristics
of claims that frequently indicate fraud. Examples of red
flags are 1) the claimant was a seasonal worker at the time
of the injury, or 2) there were no witnesses to the injury. Red
flags can be applied in claims evaluation by claims handlers
or claims systems.
Industrywide Databases — Access to industrywide claims
histories through participation in a shared database can
be invaluable in fraud detection. Analysis of claims activity
can reveal suspicious patterns or preexisting injuries. The
insurance industry’s all-claims database has grown from 147
million claims in 1998 to over 660 million claims in all lines
of business today — an increase of 347 percent. Other
databases can provide insight into medical provider billing
activity or medical sanctions, revealing suspicious patterns.
Data Analysis and Visualization — Software that graphically
shows links or connections between data elements in claims
can reveal suspicious behavior. Examples are claimants
connected to a vehicle that appears in multiple claims, or
links between individuals that appear in several claims.
Scoring and Predictive Analytics — Advanced analytic
methods, such as regression analysis, social network
analysis, and text mining, can examine vast numbers of claims and
their attributes. Claims systems can score claim characteristics
and identify red flags and patterns of claims.
Premium Audit Models — Insurers routinely audit commercial
accounts to make sure the premium collected for workers
compensation, as well as commercial and general liability
and commercial property insurance, is correct. Fraud detection
can be one aspect of an audit. Predictive models can be used
to optimize audit resources and effectiveness in three
operational areas: deciding which accounts to audit; determining
the most efficient allocation of mail, telephone, and physical
audits; and optimizing the order of audits so any additional
premium due the company can be identified early.
In summary, there is a full arsenal of analytic technology
at the disposal of self-insurers and insurers to detect fraud.
While the challenges from fraud rings and fraudulent activity
are formidable, the companies that will succeed and thrive
are those that use technology and analytics effectively. They
will be the leaders in the 21st century.
Mr. Swedo may be reached at [email protected]
Workers’ Compensation National Reform:
Affecting and Implementing
Jurisdictional Change
The following is a synopsis of a presentation, at the 2009 annual
meeting of the National Council of Self-Insurers, by Darrell Brown,
Workers’ Compensation Practice Lead, and Kimberly George, Managed
Care Practice Lead, both of Sedgwick Claims Management Services.
National Reforms
HR 635. Congress last undertook an evaluation of the
workers’ compensation system in 1972. The project is better
remembered for its cost than its results, having produced
little in the way of concrete improvements. Representative
Joseph Baca (Dem. California) has introduced legislation calling
for a new national study. Many employers have expressed
unease about the project for fear that some of the hard won
gains in state reform might be endangered by heavy-handed,
highly politicized national hearings on the system. If the bill
passes, however, self-insurers and other employers will want
to be at the table for whatever discussions are held. Currently
the bill has been overshadowed by other matters, most
notably the economy and national healthcare reform, and
the outlook for final passage is unclear.
MMSEA. The goal of the Medicare, Medicaid and SCHIP
Extension Act of 2007 (the MMSEA) is to protect the Medicare
System from shouldering costs that rightfully should fall
to private insured and self-insured plans. The background
reality is that particularly in no-fault and liability programs,
there has been virtually no systematic enforcement of
Medicare set-aside provisions, although the Medicare SetAside process in workers’ compensation is not perfect. The
objectives of the Act are appropriate and fair, but the efforts
of the Centers for Medicare and Medicaid Services (the CMS)
to implement the legislation have been marked by a series
of significant adjustments to the previously announced
implementation requirements and deadlines. Self-insureds
and other funders are rightly concerned that in addition to
paying increased loss costs, they will be burdened by extremely
expensive and complicated administrative and data reporting requirements. The CMS is seeking through public Town
Hall Meetings and other avenues to smooth the path of
implementation by gathering information and managing
expectations. The CMS is to be commended for its receptivity
to feedback from the Medicare Advocacy Recovery Coalition
(MARC) and other engaged stakeholders. The adjustments
to the implementation requirements have thus far been
reasonable and positive for self-insurers and other funders,
but the prospect of higher real costs remains.
Brown v. Cassens. The decision of the Sixth Circuit Court of
Appeals to allow plaintiffs to proceed with a RICO complaint
against an employer, TPA and physician on grounds they
conspired to commit fraud in denying workers’ compensation
benefits raises the real prospect that issues previously reserved
for the workers’ compensation system and state administrative
law judges may now be exposed to the greater costs, higher
penalties, and uncharted water of the federal court system.
Brown v. Cassens did not rule on the merits of the case,
but the higher costs of the process itself may disadvantage
self-insured employers in negotiations with workers’
compensation plaintiffs’ attorneys.
State Reforms
State-level engagements with workers’ compensation reform
continue to focus on PPO discounting, medical networks,
utilization review regulations, provider contracting practices
and rising costs. Medical costs remain the primary drivers
of reform efforts. In 2008 they reached approximately $30
billion, accounting for 58% of workers’ compensation costs
in 2008 compared to 46% in 1988. California, Florida, Illinois,
New York and Texas remain the bellwether states for reform
and the assessment of its results. Attorneys, providers and
others stakeholders continuously probe for soft spots to
undo intended benefits of reforms in the courts, through
unfavorable regulations, or through the development of
revenue streams for services not addressed in reform measures.
Is the pendulum of workers’ compensation reform swinging
against the interests of employers and pro-jobs advocates?
Especially in the confluence of economic and political
changes shaking states such as California? There is a risk, but
there are remedies:
Self-insureds and other employers must focus on medical
outcomes in designing MPNs as grounds for common interest
among themselves, worker advocates and claims payers.
Self-insured employers must also stay the course of
legislative activism by remaining well informed, building
and nurturing coalitions, prioritizing issues, planning and
executing communications strategies with both voters and
public officials, and participating in the political and
regulatory process by providing information and data.
Mr. Brown can be reached at [email protected]
Management of Musculoskeletal Injuries
Costco uses PreCare as their vendor partner to provide onsite
injury prevention, PT and return to work (“RTW”) services at
select warehouses across the United States. The goals of the
overall PreCare program are:
To reduce costs associated with work-related injuries by
preventing them from occurring and facilitating efficient
recovery for employees who are injured.
In collaboration, create & implement solutions for ergonomic
problems that increase risk of musculoskeletal injuries.
To partner with case managers, claims examiners, treating
physicians and warehouse management to facilitate an
efficient return to work.
PreCare hires, trains and manages physical therapists and
athletic trainers (‘clinicians”) who provide services onsite
for Costco. Each clinician is assigned to a set number of
warehouses and visits each warehouse on a regular basis to
provide services. The clinicians interface with employees,
supervisors, management, physicians, case managers and
claims examiners to facilitate injury prevention and efficient
return to work.
The primary focus for PreCare and Costco is prevention;
prevention is the only way to avoid injuries with their
associated costs to the injured worker and Costco.
Prevention goals include:
The following article was written by Sara Craig, Founder and CEO of
PreCare Inc. It is a synopsis of the presentation by Ms. Craig and
Katrina Zitnik at the National Council of Self-Insurers’ 2009 annual
meeting. Ms. Zitnik is the Director of Workers’ Compensation for
Costco Wholesale.
Since 2003, Costco Wholesale has been utilizing an innovative
and effective program to reduce the frequency and cost of
work-related musculoskeletal injuries. Like many employers
across the USA, strain/sprain injuries are Costco’s #1 injury.
Musculoskeletal injuries are often caused by repetitive lifting,
pushing and pulling activities and these injuries often result
in the need for physical therapy (“PT”). For Costco in California,
28% of claims require PT and 17% of claim dollars are spent
on PT. In Washington State, 42% of claims require PT and 30%
of claim dollars are spent on PT.
Assess and reduce risks for strain/sprain BEFORE an
incident happens.
Reduce unnecessary work to increase productivity and
reduce employee fatigue.
Provide education and early intervention for employees
experiencing discomfort or excessive fatigue.
PreCare provides a wide variety of prevention services for
Costco. Clinicians provide Early Intervention Screenings,
one-on-one Job Coaching, Work-n-Stretch/Conditioning
Classes, Wellness Programs, Manager & employee training
classes, new employee orientation, Safety team participation,
Ergonomic Assessments & Recommendations and Project
Consultation. All services are provided “in the trenches” with
employees so the reality of the day-to-day work load and
pace are incorporated into the program.
For the injuries that do occur and require PT, PreCare
clinicians provide treatment onsite at the warehouse. Costco
provides a small, private space for the treatment. Treatments
are one hour and include the work environment. Rather than
simulating the work in a clinic, the patients actually perform
appropriate work tasks as part of the rehabilitation process.
This allows the injured employee to be educated while being
conditioned back to full capacity work. Employees perceive
the onsite treatment to be an added benefit to working with
Costco. The program is enthusiastically embraced by both
employees and management.
Return to Work Job Coaching is for an employee who has an
open claim, is not receiving physical therapy with PreCare, is
on transitional work, and is not moving efficiently toward full
duty. Costco refers employees to RTW Job Coaching if the
claim is musculoskeletal and open after 30 days. Clinicians assess
the referred employee’s current work capabilities compared
to the physical demands of the job. The clinician then works
with the employee on body mechanics, work technique,
coaching, conditioning, demonstration and practice to get
the employee safely released to full duty. Written
communication is sent to the physician, claims examiner
and case manager. This is extremely helpful in bridging the
gap between the off-site vendor partners and the worksite
and also reduces the employee’s chance for re-injury.
Costco’s results have demonstrated that the PreCare program
has been effective in both reducing cost and in employee
satisfaction. In the states where PreCare is implemented (CA,
WA, OR, NY, NJ), PT treatment duration, frequency and cost
is less than in those states where PreCare has not yet been
implemented. In regards to prevention results, the states
where PreCare is implemented have a 32% less indemnity rate
than those states where PreCare has not yet been implemented.
Costco’s success in reduction of strain/sprain injuries and cost
can be attributed to their philosophy that it is right to invest
in employees’ overall health, safety and well-being.
Sara Craig may be reached by email at [email protected]
Katrina Zitnik may be reached by email at [email protected].
Driving Accurate Impairment Ratings: New
AMA Guides to Evaluation of Permanent
Impairment – Sixth Edition
The following is a summary of
the presentation by Christopher
Brigham, MD, at the 2009
annual meeting of the National
Council of Self-Insurers. Dr.
Brigham is Chairman of Impairment Resources, LLC, and a
Senior Contributing Editor for
AMA Guides to the Evaluation
of Permanent Impairment.
Impairment ratings, typically based on the AMA Guides to
the Evaluation of Permanent Impairment (Guides), drive
an estimated twenty billion dollars of cost in state worker’s
compensation systems. Studies have clearly documented
that the majority of ratings are erroneously inflated, often
two to three times higher than appropriate. The costs, human
and financial, are marked and controllable. It is essential to
recognize the problem and proactively managed these
assessments. Driving accurate impairment ratings reflects
both doing what is right and a superb opportunity for cost
containment.
Background
The AMA Guides to the Evaluation of Permanent Impairment
(Guides) is the most widely used basis for determining
impairment. The presence of impairment should always be
considered to reflect a failure - a failure in preventing an
injury or illness, a failure in mitigating the impact of injury
(i.e. not achieving full restoration of function), or a failure in
rating a condition that is not work-related (i.e. degenerative
processes, such as degenerative disk disease, that are not
work-related). The finding of impairment is commonplace;
ideally permanent impairment and permanent (partial or
total) disability should be rare.
AMA Guides - Sixth Edition
The Sixth Edition, published in late 2007, standardized the
rating process with the goal of improving accuracy. A second
printing of the Guides published in 2009 incorporated
corrections and clarifications.
The Sixth Edition uses the framework based upon the
International Classification of Functioning, Disability and
Health (ICF), a comprehensive model of disablement
developed by the World Health Organization. The Sixth
Edition was based on five axioms:
1. The Guides adopts the terminology and conceptual
framework of disablement as put forward by the International
Classification of Functioning, Disability, and Health (ICF).
2. The Guides becomes more diagnosis based with these
diagnoses being evidence-based when possible.
3. Simplicity, ease-of-application, and following precedent,
where applicable, are given high priority, with the goal of
optimizing interrater and intrarater reliability.
4. Rating percentages derived according to the Guides are
functionally based, to the fullest practical extent possible.
5. The Guides stresses conceptual and methodological
congruity within and between organ system ratings.
The Sixth Edition reflects a significant advancement,
particularly by having a unified approach that is designed
to promote more consistent and reasonable ratings. Ambiguity
was reduced and areas of abuse were fixed; however
ambiguity fuels litigation and thus providing more clarity
and reducing conflict may not be perceived as positive by
certain stakeholders.
Challenges
Impairment is not synonymous with disability. Comparison of
exceptionally abled (individuals with significant impairment,
yet dynamic with their lives) vs. needlessly disabled (individuals
with minimal or no impairment, yet perceive themselves as
disabled and victimized) provides insights to both empowerment
and to inherent problems with our workers’ compensation
and disability systems. Experience has shown that disability
relates more to perception than measurable impairment. A
paradigm shift is required to reinforce a change in behavior
and actions that are beneficial to patients.
Erroneous Impairment Ratings
In decades past we accepted what physicians did as being
right, since they were “doctors”. Later, we learned that not
all care was appropriate, and thus there was the need for
practice guidelines, utilization review and bill review. More
recently the severity of problems with erroneous impairment
ratings is being recognized. Most impairment assessments
are done incorrectly resulting in erroneous and typically
inflated impairment ratings. A skilled expert evaluator may
review impairment ratings to determine if a rating is done
correctly by reassessing the provided clinical information
using the procedures defined in the Guides. Review of 3756
cases nationally in 2007 to 2009 by Impairment Resources,
LLC (www.impairment.com) revealed that 76% of the ratings
were incorrect and the original rating averaged 20.9%, however
it should have averaged 8.1%. Thus, approximately three
fourth of all ratings are wrong and typically rated two and a
half times higher than appropriate. In California the estimated
inflated cost averages approximately $18,000 per case.
Solutions to Impairment Rating Management
The high costs (human and financial) resulting from erroneous
impairment ratings may be prevented, resulting in a superb
return on investment. Manage impairment ratings as you
manage other issues: defining best practice strategies,
assuring accuracy and efficiency, using data for total quality
improvement and not tolerating mediocrity or fraud. Early
in the claims cycle it is important to identify claims likely to
result in impairment (permanent partial disability), determine
probable date of maximal medical improvement (MMI) and
for reserving purposes determine the probable impairment.
At MMI provide guidance to the physician on how to perform
an accurate rating and enlist them in the goal a reliable,
unbiased, efficient rating.
When a rating is received, use dedicated experts on the
Guides to audit and critique ratings. Given the complexity of
the Guides, the medical issues involved and the fact that the
vast majority of physicians are unable to provide a correct
rating, it is inappropriate to expect a claims adjuster to be
able to identify which ratings are correct and to rerate those
that are incorrect. If a rating is erroneous, manage the error.
The first step is to provide feedback to the physician and an
opportunity to correct the rating. If this is not successful than
other strategies are considered, which may include developing
an effective cross examination of that physician, providing
the expert report as evidence, providing expert testimony
and negotiation. The review of all impairment ratings not
only assures accurate ratings on each case, it also provides
data essential for total quality improvement.
Summary
It is imperative to recognize and manage the challenge of
erroneous impairment ratings. Recognition and management
of root causes for erroneous ratings results in improved accuracy,
decreased conflict, reduced costs (human and financial) and
prompter case resolution. The goal of all stakeholders should
be avoiding needless impairment and disability, and maximizing
human potential.
A more detailed summary of Dr. Brigham’s presentation is
available at: www.impairment.com/Media/Pdf/ncsi-2009amaguides.pdf
Dr. Brigham may be reached at [email protected]
Pictures from the 2009 Annual Meeting