Technology’s Role in Managing Employee Absences
The 24th annual National Workers’ Compensation and Disability Conference® and Expo takes place Nov. 11-13 at the Mandalay Bay Resort and Casino in Las Vegas. The conference is produced by LRP Publications, which publishes Risk & Insurance®. For more information, visit www.wcconference.com.
You might not think that an employee’s absence for just a few days could raise concern for an employer. But all absences are not created equally.
There is workers’ comp, short- and long-term disability, Family and Medical Leave Act, and other types of absences. Some are planned, others are not. Some are paid, some unpaid. Some are associated with job protection benefits, others are not. There are state and federal regulations that may apply.
Employers need to understand when each should be employed and make sure they have fair and consistent practices in administering their leave programs.
“There is a misconception that absence management is easy. It is not,” said Keith Nelson, vice president and head of group insurance program delivery for Aetna Life Insurance Co. “Absence management is very complex.”
As Nelson explains, even a single day of absence may involve multiple types of leave and can impact different components of an organization in many different ways.
“We’ve got state mandated leaves such as those under workers’ comp, and state family and medical leave laws, that run concurrently with FMLA leaves,” he says. “There are now even a growing number of municipal leaves being added into the equation for employers to administer.”
His session, Technology Tools for Managing Disabilities and Absences, takes place Thursday, Nov. 12 from 10:45 a.m. to noon.
Effects on Personnel
“An employee might be out for one day, but that day of absence could apply to 15 or 16 different benefits,” Nelson said.
“Some have different start dates or end dates. The employee may have been approved for one benefit but denied for another on the same day. In my experience, many key stakeholders don’t fully understand those nuisances. There’s a concurrency component of absence management.”
An employee’s absence may affect people within an organization differently, depending on the role of the person. Each may have a different awareness of which type of leave benefit applies to the employee’s absence request.
“An employee might be out for one day, but that day of absence could apply to 15 or 16 different benefits.” — Keith Nelson, vice president and head of group insurance program delivery, Aetna Life Insurance Co.
“From the employee’s perspective, they don’t know all the benefits available to them or the differences,” Nelson said. “The only thing some of them can say is ‘I’m injured or ill,’ whether it happened at work or not, and ‘I need to be off of work.’”
Absence, he explains, is very personal to each individual. The concerns change from one person to another throughout the company.
“As you go up the organization, the interests are very different,” he said. “For the supervisor, it is ‘do I have a full staff at work?’”
Plant managers, human resources personnel, and the company’s CEO all have other concerns about an employee’s absence. Where one department is concerned about the effects on productivity, another may be more interested in finding out how and why the injury/illness occurred.
“Employers want to protect their employees from injuries or safety incidents. They are really all about mitigating safety risks and putting prevention in place,” Nelson said. “From the economic side of a workers’ comp accident, not only is the employer funding the lost wages for an employee who is away from work, but also likely funding the legal expenses, the medical expenses, and all kinds of claim-related expenses such as temporary labor expenses.”
“Different rules of compensability apply in different states. Moreover, employers may offer different types of disability plans for different groups of employees,” Nelson said. “The same can be said for leave of absence policies that are offered to different groups of employees. The overarching impact is the same: ‘Do I have a full workforce or not?’”
The one common link among each department is the need for information about the absence.
With technology, each department within an organization has access to information about an employee’s leave in the form best applicable to the needs. Personnel can better understand the overall picture of absences with a good technology platform.
“It enables effective information exchange,” Nelson said. “There is a whole new level of sophistication in the workforce, and employers/providers have a new appetite for information. That’s the big picture of what the session is all about — learning how technology can assist employers to administer effective absence management programs.”
Employers are required to use fair and consistent practices when applying the various types of leaves. Through technology, various facets within an organization can have a clear understanding of the rules and regulations.
“The industry is changing,” Nelson said. “There are new regulations all the time, new types of benefits, emerging paid sick and paid family leave. From a workers’ comp perspective, there is medical only and true lost time claims, but it’s still the same individual. How does it work? How do all constituents stay informed?”
The privacy aspect of an employee’s absence is another concern that can be addressed through technology. For example, workers’ comp has different protocols for sharing claim information than is routinely used for disability and state or federal leaves. The circumstances dictate what can be shared with an employer.
Failing to ensure fair and consistent practices can lead to regulatory scrutiny, legal action, and other financial liability. Technology can help reduce the complexities of absence management, minimize inconsistencies, and ultimately, mitigate risks.
California Closed Formulary Legislation Heads to Governor
California is the latest state to adopt a closed drug formulary for its workers’ comp system. A bill passed in the waning moments of the legislative session would require state regulators to create an evidence-based closed drug formulary by July 1, 2017.
If the legislation becomes law, California would join a handful of states with closed drug formularies aimed at getting the right medications to injured workers and holding down costs. A.B. 1124 was passed by both chambers after meetings with a small working group in recent months.
“Overall I think the idea of bringing all the interests together to air our concerns or share ideas during the summer did a lot to get people focused on ‘where can we go with this,’ instead of fighting against it,” said Brian Allen, vice president of government affairs for Helios and part of the working group.
“It forced us to sit and talk about how to make it right and good. Those ideas will help the rulemaking process. We all have a stake in the game.”
In establishing the drug formulary as part of the medical treatment utilization schedule for medications prescribed in the California workers’ comp system, the legislation requires the Division of Workers’ Compensation to:
- Publish at least two interim reports describing the status of the creation of the formulary, beginning July 1, 2016.
- Update the formulary at least on a quarterly basis to allow for the provision of all appropriate medications, including those new to the market.
- Establish an independent pharmacy and therapeutics committee to review and consult with the administrative director in connection with updating the formulary. The formulary must include guidance regarding how an injured worker may access off-label use of prescription drugs when evidence-based and medically necessary.
“The way the rules ultimately will be crafted there will be a set of guidelines saying ‘if you follow [the guidelines] it’s assumed you are doing the right thing,’” Allen
said. “If there is a unique need or use of a [particular] medication that needs to occur, a treating physician will probably have to demonstrate some level of medical necessity for going down a path that is anomalous to what the guidelines say. … It’s important that the guidelines be reviewed and followed but there are always exceptions to the rule and we must allow for them in a clinical and appropriate way.”
Allen said the group looked at the formularies in other states such as Texas. Experts say formularies can be effective when appropriately designed and implemented.
“As good as that is, please do not make the all-too-common mistake of declaring victory and moving on,” wrote Joseph Paduda, principal of Health Strategy Associates in his ManagedCareMatters blog. “The formulary bill is just the first step.”
“It’s important that the guidelines be reviewed and followed but there are always exceptions to the rule and we must allow for them in a clinical and appropriate way.” — Brian Allen, vice president of government affairs, Helios
Making a formulary effective, according to Paduda, requires binding utilization review processes and rules that require compliance, flexibility to allow payers and PBMs to use rule-based processes and procedures to ensure injured workers get appropriate medications, specificity in the formulary for the particular disease/condition/injury, timing of new claims vs. legacy claims, and assessment techniques to identify potential irregularities in prescribing and dispensing.
“I believe the move to a state formulary is a very good idea, and hopefully we see this happening in more states,” said Sherri Hickey, director of medical management for Safety National.
Two key factors “are having a well-developed implementation plan as well as a well-defined enforcement procedure. How well you communicate to your users and how well you enforce it and address requests for exceptions and off-label use will determine how valuable the formulary will be,” she said.
With California likely to adopt a closed drug formulary, other states are also considering the idea. Tennessee and Louisiana are among the latest looking into it.
According to pharmacy benefit manager myMatrixx, a Tennessee proposal includes differences in terms of the drugs requiring pre-authorization, depending on the rule provision. So-called “N” drugs are those requiring pre-authorization based on the Work Loss Data Institute’s Official Disability Guidelines.
“For example, one provision required pre-authorization for all compounds and topical medications while another required pre-authorization only for compounds with an ingredient identified with an ‘N’ status in ODG’s formulary,” the PBM said. “myMatrixx recommended that the department require pre-authorization for all drugs identified with the status of ‘N’ in the current edition of ODG/Appendix A and all compound drugs, including compound topical medications.”
The PBM has also asked the Department of Labor and Workforce Development to clarify the requirements for initial prescriptions and retrospective review.
A proposed formulary for Louisiana noted that workers are prescribed more narcotics than most states. That proposal is also based on the ODG though it would allow some modification. The formulary would be effective Jan. 1, 2016, for injuries on or after that date, and Jan. 1, 2017, for injuries occurring prior to 2016.
Workers’ Comp Ripe for Cyber Attacks
The workers’ comp industry is ripe for cyber attacks, according to insiders. Identity theft, company embarrassment, and even blackmail are potential risks. The threats to an employer can range from reputational damage to criminal charges.
With organizations such as Sony, Anthem Blue Cross, and the Internal Revenue Service recently being hacked, it’s likely just a matter of time before such an incident occurs in workers’ comp. In fact, it may have happened already.
“In many cases where there may have been a threat or even an intrusion, there may still be research going on, or it may not be of the type that requires state reporting,” said Bob Jackson, a longtime security officer in the claims management industry. “My guess is there is some growing level of cyber threat in the workers’ comp industry.”
The workers’ comp industry may one day soon find itself the victim of a major cyber attack, experts warn. While there are no solid solutions just yet, the industry would be well-served to at least try to answer some key questions.
“What information is at risk for the company?” said Jeffrey Austin White, director of innovation for Accident Fund Holdings Inc. “What will the landscape look like in the future as hacking technology gets more sophisticated? Do we need to establish more stringent policies and procedures or start setting aside money for damages?”
“Systems these days are so complex that in order to truly understand the scope of an attack takes days, weeks, or months,” Jackson said.
Information is breached for a variety of reasons, the experts say. Many hackers are paid by large organizations for their efforts.
“We have professional hackers associated with organized crime that are paid professionally,” Jackson said. “We have groups that have an agenda; it may be political or it may be a public values agenda.”
Some hackers seek to embarrass a company, and there are hackers motivated by the fun in doing it.
“I do think workers’ comp is a very rich community for almost all those audiences,” Jackson said. “In workers’ comp, we have information that by itself would lead to identity theft for pretty well every claim being managed.”
“All these hacks are exploiting vulnerabilities that arise from updates to software and the operating system that are ongoing. … Technology is progressing so fast that keeping on top of this stuff requires dedicated resources.” — Jeffrey Austin White, director of innovation for Accident Fund Holdings Inc.
The fact that most states require Social Security numbers for injured workers is one of the key factors making workers’ comp claims information a target for security breaches. Jackson says it goes beyond that.
“This is not spoken of very much but … there’s potential for blackmail,” he said. “Material may have sensitive information about [an injured worker’s] status; that he/she is HIV positive, or the circumstances of an accident may be embarrassing, there may be a chronic disease, or a pregnancy that has not been announced yet.”
A company that has had its information breached may have difficulty keeping its reputation intact. It may lose contracts from clients.
“Most organizations in workers’ comp have contracts which entitle clients to terminate contracts upon these types of breaches without further arbitration,” Jackson said. “I’m seeing that contractual language more and more.”
There are a couple of ways people can hack into an organization’s data. One is a derivative of Bad USB, described as a security flaw that can be put on the firmware of a USB drive and turn a user’s keyboard, mouse, storage device of any USB device into a cyber threat.
Another way secure information can be breached is through external attacks to a company’s website or network. A system called Regin, for example, is sophisticated espionage software that can be used to get inside a company’s firewall and provide access to its internal computer network.
Information can also be breached through mobile devices brought in and out of a company by its own employees or by sending sensitive data through email. “There are also cloud computing platforms and outsourcing relationships,” said Jeffrey Austin White, director of innovation for Accident Fund Holdings Inc. “If you do business with a company that has access to your company or client information, how do you make sure they have the proper safeguards to protect your data?”
Because cyber threats are a moving target, reliable long-term solutions are an elusive goal. “There is no silver bullet,” White said. “All these hacks are exploiting vulnerabilities that arise from updates to software and the operating system that are ongoing. Companies are having a hard time keeping software current, especially when vendor solutions are not compatible with the latest releases. Technology is progressing so fast that keeping on top of this stuff requires dedicated resources.”
White likens the threat of cyber attacks to natural catastrophes and suggests the industry try to figure out how to prepare for these digital disasters as they are bound to happen. Both experts say the industry needs to at least develop policies and procedures for the emerging threat.
“The industry would be well-served to gather together [just] as high-tech industries have done, and create a forum for sharing concerns, solutions, and issues that sometimes are unique to the workers’ comp environment,” Jackson said. “I just don’t see that evolving. There’s such fear of sharing with your competition that you may have an issue or not know how to evaluate. People don’t want to talk. That’s unfortunate.”
In the absence of such a solution, Jackson says organizations would be well-advised to employ security officers who are aware of the needs of the business and have a strong working relationship with key personnel.
“When issues come up, they have authority and the relevance to go to the business and say ‘we need to make this change and use some [particular] tool and here’s why. Let me explain why this will reduce risk to the organization,’” he said. “They should have a business-to-business dialogue rather than imposing what seem to be random tactics. If the business is engaged and understands why [the security officer makes a recommendation], the business will embrace it and support it.”