Comp Community Has Eyes on ColoradoCare
Coloradans are set to vote on a state ballot initiative that would create the country’s first single-payer health care system – but how would such a system impact employers and their workers’ compensation programs?
Colorado’s Amendment 69 calls for the state to finance health care through ColoradoCare, which would be a new political subdivision of the state governed by a 21-member board of trustees that would administer a coordinated payment system for health care services.
The single-payer system would be paid partly by federal sources, and partly by a new 10 percent income tax that would be shared: two thirds, or 6.67 percent, would be paid by employers and one third, or 3.33 percent, would be paid by employees.
Experts who either support, oppose or are neutral about ColoradoCare spoke to Risk & Insurance® about their perspectives on how the ballot initiative would impact employers and their workers’ comp programs:
Ralph Ogden, senior legal counsel, ColoradoCareYes:
Under the current workers’ compensation system, employers have the right to make an injured worker see the physician of the employer’s choice in the first instance. After that, any physician to whom the worker is referred by the initial treating doctor also becomes authorized. In practice, employers direct employees to physicians who are selected by the insurance company.
Employers and insurers want this control because they are afraid that physicians outside of their networks either don’t understand occupational injuries or are unscrupulous and will keep treating workers long after workers reach maximum medical treatment and the need for treatment has expired.
Workers, on the other hand, believe that physicians in these networks have a bias towards the employers and insurers who select them, and frequently undertreat, force workers back to work before they’re ready, or otherwise give opinions which favor the employer-insurers in order to continue getting business from them.
Also under the current system, any physician can treat an injured worker, and neither certification nor expertise in occupational injuries or illnesses is required.
Workers’ compensation is fundamentally a return-to-work system, not a health insurance system.
The board of trustees has several alternatives for handling job-related injuries and illnesses. It could, for example, require that any physician wishing to treat injured workers be Level I certified, and could further require that employers present employees with a list of these accredited physicians in their locale, leaving the actual choice to the worker. This addresses some of the concerns of employers and insurers as well as those of injured workers.
It could also establish guidelines for initial diagnosis and treatment which would allow employers to direct workers to accredited specialists, depending on the nature of the injury. For example, workers with carpal tunnel injuries could be directed to accredited hand specialists while still leaving the final choice up to the worker.
Another alternative would be to use the worker’s primary care physician as a gatekeeper that the worker sees first and is then referred to the appropriate specialist, or, when the injury does not require specialist care, continues to be treated by their PCP. The advantage to this system is that the PCP would be aware of the worker’s total health picture and could better coordinate their care on a holistic basis.
There may be other, better alternatives for protecting the interests of both the employers and the workers. Amendment 69 intentionally leaves the selection of these alternatives to the board of trustees so they can make the best decisions in light of all information available at the time, rather than having the drafters tie the board’s hands with a system that may later prove inferior to ideas that develop over time.
The amount of money an employer will save under ColoradoCare depends on several factors, including how much, if anything, it currently pays for employees’ health insurance and how much it currently pays for workers’ compensation insurance.
According to the United States Bureau of Labor Statistics, the average employer payment for health insurance is 13.5 percent of payroll. Thus, if total payroll is $100,000, the employer will pay about $13,500 for health insurance. Under ColoradoCare, employers pay only 6.67 percent of payroll, or, in this scenario, $6,670, which saves the employer $6,830.
Computing savings on workers’ compensation insurance is much more difficult because the compensation rates are based on job titles and the risk associated with these positions, with office employees having a low rate and construction workers having a high rate.
Thus, employers with high-risk occupations will save the most on the med pay portion of their compensation premiums, while employers with office workers will save very little. In any event, because med pay accounts for about 59 percent of workers’ compensation payments, compensation premiums should be reduced by that amount.
Edward Pierce, producer, Denver office of Lockton Cos.:
Attempting to accurately quantify the effects that Colorado Amendment 69 will have on any one employer’s bottom line would be far too speculative without more information from the ColoradoCare System Initiative.
The proposed changes in legislation are currently written in an 11-page document, and there a number of issues and gaps from a workers’ compensation perspective. These changes may have ripple effects that are unclear without more insight from those putting the measure forward.
Concerns we have include:
- Currently, workers’ compensation has controls in place for employers and insurers to keep medical costs in check. How medical costs would be controlled under Amendment 69 is not addressed. If medical costs are increased, additional taxes would be necessary to fund ColoradoCare in future years.
- Amendment 69 creates issues for employers in the reporting and tracking of employees’ medical care. Employees may leave work and seek medical attention from government provided health care without informing their employer. How this would be controlled is not addressed in Amendment 69.
- The issue of subrogation for indemnity payments is not addressed in legislation and requires clarification. If the legislation prohibits or weakens the ability for insurers to subrogate, employers would likely bear the burden of increased premiums.
Overall, we do not have a transparent view of how this legislation and the board in charge of these changes will ultimately impact workers’ compensation to affect an employer’s bottom line.
Edie Sonn, vice president, communications and public affairs, Pinnacol Assurance, Denver’s state-chartered workers’ comp carrier:
Workers’ compensation is fundamentally a return-to-work system, not a health insurance system. Amendment 69 would eliminate that crucial distinction — and that’s not good for injured workers or employers. It fails to recognize the important role specialized occupational medicine plays in the recovery of injured workers.
Doctors who have been specifically trained in treating workplace injuries understand exceptional medical care is not simply treating the injury. They recognize how important it is to continually evaluate and facilitate an injured workers’ ability to return to work as early as appropriate.
Our ability to meaningfully contribute to society through our work is as important to the recovery process as providing appropriate medical care. The longer we’re away from our jobs, the more difficultly we face in our recovery process. A “one-size fits all” health insurance system fails injured workers.
In addition, we believe injured workers will be away from their jobs longer if there are no mechanisms to ensure they’re getting appropriate care and helping them get back to work. That will increase employers’ indemnity costs and won’t create value or improve the current workers’ compensation system in Colorado.
Richard Krasner, workers’ comp consultant and blogger:
The ColoradoCare initiative is up for approval by Colorado voters in November, but there has been some pushback because it would create a single-payer system and therefore, take away from the current health care system — including the workers’ comp program. Pushback is from the health care industry. They want to protect employer-provided insurance, as per the Council of Insurance Agents & Brokers, a national trade group.
I contend that the U.S. has unnecessarily created two silos of health care — general health care and workers’ comp health care. We seem to compartmentalize health care in this country, and the separate systems allow for companies to profit from each system. But if it were one system, then very few companies can profit from it. I don’t think there’s any other Western country that has such silos.
There may be certain surgeries, such as knee or back surgery, in which the doctor has no interest in knowing whether the person fell of a ladder at work or while he was putting up Christmas decorations at his home. It may not matter. There may be certain patient-specific precautions and procedures that the surgeon will do for one patient that is not needed by the other patient, regardless of work status, as this is a medical decision, not an insurance decision. Otherwise, the surgery is no different.
A Winning Strategy
As a fast-growing company, Under Armour Inc. naturally has to keep on top of any number of potential exposures that could pop up — and Susan Hiteshew helps her firm do just that with her New Business Venture Global Insurance & Risk Management playbook.
“In a young company that grows as quickly as we do, you can’t wait for things to happen — you have to be proactive,” said Hiteshew, who came on board in 2011 as the company’s first traditional risk manager.
Founded in 1996 as a fitness apparel retailer, Under Armour has logged 20 percent-plus quarterly revenue growth for years, as it extends its global reach and product base to include more fitness technology solutions.
In 2014, the company made its first acquisition, the fitness-tracking application MapMyFitness. As the firm began to integrate the new purchase, Hiteshew shrewdly realized that the organization needed a playbook to learn how her team could integrate and add value.
“When we built the playbook, we tried to think about our internal stakeholders — what is important to them — and how the work we do can help them get to the goal line faster and smarter,” she said. “But one of the biggest challenges of risk management is getting a seat at the table at the right time, and so instead of risk management chasing down information, we found a way to facilitate the flow of information to us.”
The playbook details exactly how Hiteshew’s team could add value to any new project, and how the team should be looped into any project at the onset, so that risk management could help to “reduce the likelihood of surprises in their businesses operations.”
“In a young company that grows as quickly as we do, you can’t wait for things to happen — you have to be proactive.” — Susan Hiteshew, senior manager, global insurance and risk financing, Under Armour Inc.
In drafting the playbook, Hiteshew’s team conducted extensive research, pulling themes from certain underwriting applications, timelines that are important to the organization, and key strategic areas of focus.
The team then asked its broker team at Aon, led by Charlie Skinner in Baltimore, to review and add input to the playbook before the materials began to be distributed internally in 2015. Since then, the playbook continues to be upgraded as the company grows.
The playbook has been particularly helpful in dealing with challenges created by fast growth, including coordinating communication between multiple facilities, Hiteshew said.
“We’re now decentralized between Baltimore, our European headquarters in Amsterdam, our team in Shanghai and Guangzhou, and our Latin American headquarters in Panama,” she said. “This document has helped us concisely communicate our involvement.”
Jonathan Schwartz, the firm’s vice president of global risk management, said Hiteshew excels at strategic thinking and communications.
“At Under Armour, change is constant, and playing catch-up with the business is a losing proposition,” Schwartz said. “Susan has kept insurance and risk management proactive and strategic by effectively keeping pace with UA’s growth and change.” &
Asleep at the Wheel
Drowsy driving can be just as deadly as drunk driving — and the transportation industry is taking steps to combat this sometimes tragic problem.
The National Highway Traffic Safety Administration estimates that 83,000 crashes each year are caused by driver drowsiness. Motor carriers, transportation companies and organizations with their own fleets are acutely aware of the tragedies that driver fatigue can cause, as well as the major financial and other losses that can result.
Even if a driver is not at fault in a crash that results in serious injuries or fatalities, ultimately the company’s reputation is at stake, said Michael Nischan, vice president, transportation and logistics risk control at EPIC Insurance Brokers and Consultants in Atlanta.
The company may be ordered to pay for damages, especially if management did not properly vet the driver for a sleep disorder or if the driver’s medical certificate was expired.
“Damages from civil suits may not be covered by insurance, so whether the driver is at fault or not, the costly settlements may ultimately cause a company to go out of business,” Nischan said. “The key is to ensure the driver is qualified before hire and throughout employment, and that requires continuing dialogue and education throughout the organization.”
Rates on the Rise
Crashes involving driver fatigue have also impacted commercial insurance for fleets. Craig Dancer, Marsh’s U.S. transportation industry practice leader in Washington, D.C., said that rates in the insurance market had been soft when carriers were trying to get business and build volume, and underwriting, in some instances, may have been lax.
“So now we’re seeing premiums rise to support the carriers’ level of losses, and some markets have exited the trucking industry,” Dancer said.
Underwriters wanting to write best-in-class are now looking to see whether organizations are using technology to make sure their drivers are performing optimally, he said. Underwriters are also looking to see if organizations are going down the regulatory checklist on how to deal with sleep apnea.
“The proactive motor carriers and transportation drivers have been addressing sleep apnea for a while now, and they have become really good at vetting drivers and adhering to fatigue management programs,” Dancer said.
Companies are conducting sleep studies and buying CPAP machines for drivers diagnosed with sleep apnea, which can have a huge impact on driver fatigue, said Todd Reiser, vice president and producer with Lockton’s transportation practice in Kansas City, Mo.
“A lot of motor carriers are trying to improve driver wellness, which correlates directly with driver fatigue,” Reiser said. “Truck driving is a sedentary job, and drivers tend to struggle with their health, whether it’s from occupational accidents or weight problems.”
The industry has also encouraged truck stops to provide healthier food alternatives, and trucking companies are implementing these alternatives at their own terminals, as well as exercise facilities, workout rooms, and nurses or physicians onsite to provide check-ups, he said.
Large trucking companies have terminals throughout the country in areas where they have a high concentration of business. Underwriters respond favorably to these types of programs.
Technology Use Increases Safety
Underwriters are also looking for anything from a technology perspective to make drivers safer, such as warning systems if a truck crosses the center line or drives onto the shoulder of the road, Reiser said. There is also collision mitigation technology that will stop or slow vehicles before a crash.
Advanced technologies can help identify tired, drowsy or distracted drivers. Canadian-based Fatigue Science makes biometric wristbands that drivers wear, said Rich Bleser, fleet safety specialty practice leader for Marsh Risk Consulting in Milwaukee.
Australian-based Seeing Machines builds dash-mounted sensors with image-processing technology that tracks the movements of a driver’s eye, face, head and facial expressions to detect driver fatigue — and even distraction from doing things like texting.
Seeing Machines also provides in-cab driver alerts to prevent accidents, and 24/7 monitoring and data analytics so employers can improve practices.
The National Safety Council recommends drivers stop every 100 miles and walk around, Bleser said. Keep vehicle temperature cooler and drink ice water, because when the core body temperature is lower, the body’s “internal furnace” kicks in and builds energy to stay alert.
“If drivers are tired, they should not drink caffeine, because even if it makes a person feel that they are awake, caffeine can’t control micro sleep,” he said. “I recommend taking a 10- to 15-minute cat nap, if the driver can find a safe place to park their vehicle.”
Jenn Guerrini, executive commercial auto specialist at Chubb Transportation Liability in Whitehouse Station, N.J., said that driver fatigue can also be a problem for ridesharing companies, as they are not regulated like taxi cab drivers.
“For most of the drivers, this is their second or third job, and there is no regulation on hours of work and fitness of duty,” Guerrini said.
She said some organizations forbid employees to use ridesharing services from 1 a.m. to 4 a.m. while traveling.
For organizations with their own commercial fleets, they should track driving hours automatically in real-time by installing electronic logging devices registered and certified by the Federal Motor Carrier Safety Administration, she said. Such devices will be mandated by the end of 2017.
Companies should also develop best practices for dispatchers, said Chris Reardon, vice president of transportation, warehousing and logistics practice at Assurance in Schaumburg, Ill.
“People are going to seek to put the fault on the motor carrier as well as the driver, but companies should be managing this issue at the dispatcher level as well because often, that is where hours of service issues originate,” Reardon said.
“Poor dispatching and load planning can lead to drivers feeling pressure from the dispatchers and management to get the trip done, regardless of the time constraints.”
He reminds clients of the widespread public scrutiny and even condemnation that could occur after crashes involving driver fatigue, citing comedian Tracy Morgan, who was hit by a Walmart driver who had been awake for more than 28 hours in 2014.
“There are always going to be drivers who don’t care about regulations, because they want to make the most money running the most miles,” Reardon said. “If the management of a company does not establish a culture of safety and compliance in the office or terminal, it will inevitably trickle down to the drivers as a result.” &