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Risk Insider: Bob Nevens Jr.

Insurance Implications of Ebola

By: | October 29, 2014 • 2 min read
Bob Nevens, Jr., AIS, ARM, is Director of Corporate Risk and Insurance at Houston Methodist Hospital. He can be reached at bjnevensjr@houstonmethodist.org.

Dealing with an Ebola patient at your health care facility presents many risks. There are a few that stand out like employee safety, safety to the general public and patient population, environmental exposures, and even risk to your company’s directors and officers.

All of these could be tied together with one Ebola case, especially if the case isn’t properly handled.

First and foremost, update all your policies and procedures relating to infectious diseases. Stay current with the Centers for Disease Control and their requirements. Appoint a response team.

Train all those in your facilities to spot a potential Ebola patient and the proper procedures for isolation, treatment, and transfer. It’s likely your emergency department will be the front line and most exposed.

A general liability policy insures against third-party liabilities. In this case, third parties could claim they were infected at your facility and you failed to provide a safe environment in which to conduct regular business.

Your policy should have a duty to defend, however. I would suggest reviewing your coverage, paying close attention to wording associated with expected bodily injury and other policy exclusions.

Workers’ Comp Implications

Employee safety in treating infectious diseases is paramount to delivering effective care to patients. Have your employees practice taking on and off all appropriate protective gear.

In the event a health care worker contracts the virus, workers’ compensation would likely provide coverage. Review your policy and tie it to any umbrella or excess liability coverage. This is crucial because your work comp policy most likely has a disease limit, per claims and disease per policy limit.

An infected employee may also elect to file suit against an employer alleging negligence. If you have workers that work or volunteer outside the U.S. then you may want to look into foreign voluntary workers’ compensation and couple it with an accident and disability policy.

The hospital that treated the first casualty in the United States, Thomas Eric Duncan, and also had two nurses contract the virus is currently dealing with reputational loss and lost revenues.

The first place to look is your facility’s business interruption coverage. Be cautious, as coverage is typically triggered only when there is direct physical damage. Even more so, most contain a communicable disease exclusion or a severely sub-limited amount of coverage and require a governmental agency requiring limited or no access.

Allegations of Negligence

A directors’ and officers’ policy provides defense and protection for allegations of executive mismanagement. These claims can arise from a variety of sources: the state attorney general, financial donors, even employees.

Allegations could include failure to follow CDC protocol, not properly safeguarding the institution’s assets, or lack of proper training. A situation handled incorrectly could cause negative publicity thus leading to declining revenues and admissions as well as a loss of reputation.

In summary, updated procedures and training is crucial to avoiding the pitfalls of such high profile infectious disease situations. Check with your broker to ensure what, if any, coverage is available under your current program and what triggers the coverage.

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Health Care Costs

The ACA and the Bottom Line

The Affordable Care Act has resulted in higher plan costs and more employers shifting costs to workers.
By: | October 28, 2014 • 5 min read
ACA

Even before President Obama signed the Patient Protection and Affordable Care Act into law in 2010, company executives began choosing sides. Some believed the PPACA would increase employee health care costs and financially cripple employers, while others hoped it would lower costs because the insurance pool would be expanded to include younger, healthier individuals.

After four years, a survey from the University of South Carolina’s Darla Moore School of Business found that more than three-quarters (78 percent) of respondents are reporting higher health-insurance costs —  averaging 7.73 percent more.

Nearly four in 10 (37 percent) stated that their labor costs have increased — averaging 5.6 percent — as a direct result of the health-care reform law.

The results were based on responses from 213 chief HR officers at medium- and large-sized U.S. firms.

ACAchart

Shifting Costs to Workers

One major result of those increased costs has been a significant move toward consumer-directed health plans (CDHP). More than seven in 10 companies (73 percent) have already moved — or plan to move — to CDHPs, which typically call for high deductibles, according to the survey.

“Four to five years ago, insurance companies were [pushing] CDHPs as a way to introduce more market mechanisms into the health market,” said Patrick M. Wright, a professor in strategic HR management at the University of South Carolina, who directed the school’s annual survey.

At the time, he said, roughly 15 percent of surveyed employers adopted that strategy.

“That’s a huge jump. What the [Affordable Care Act] did is basically give companies carte blanche to launch CDHPs,” he said.

Employer-sponsored health insurance will suffer the same fate as pensions, practically becoming extinct – Patrick M. Wright, professor in strategic HR management, University of South Carolina

Recent headlines also coincide with the survey’s findings on the impact of the ACA on employers.

Starting Jan. 1, 2015, Wal-Mart will no longer offer health insurance to employees who work less than an average of 30 hours per week. More than 30,000 workers will be affected. Other retailers, such as Target and Home Depot, already have made similar decisions to eliminate health-insurance benefits for part-timers.

And the impact of the law is still uncertain, since the ACA’s employer mandate was delayed until next year. The mandate requires that businesses with more than 50 full-timers provide health insurance or pay a penalty.

Wright said some employers are holding off from making any decisions until the mandate officially kicks in.

Strategies Required

He said the survey’s overall message to companies is that they will need to adapt to a new regulatory environment and figure out strategies to mitigate rising insurance costs.

Wright said he believes employer-sponsored health insurance will suffer the same fate as pensions, practically becoming extinct, as a growing number of companies seek to divorce health insurance from the employment relationship.

Despite the survey’s responses, others cite other reasons for rising health care costs.

“You have to look at your company, who you’re competing with and really make the case for what direction you’re going down the road.” –  Lenny Sanicola, senior benefits practice leader, WorldAtWork

David Newman, executive director at the Washington, D.C.-based Health Care Cost Institute, said other contributing factors include the recession and a long history of health care inflation.

He also noted that high-deductible health plans were growing in popularity even before the ACA was passed.

Newman also said that survey results do not always paint an accurate picture. There’s often a “disconnect” between how people respond on surveys and their ultimate actions, he said.

For example, he said, many employers vowed to drop health insurance if the ACA became law. Instead, they adopted a wait-and-see attitude.

Likewise, survey results can differ. According to the 2014 Employer Health Benefits Survey by the Kaiser Family Foundation, there were modest increases in average premiums — 3 percent for family coverage and 2 percent for single coverage.

But whichever numbers you look at, he said, increases are much lower now than in previous years.

“We can speculate to our heart’s content,” Wright said. “I would be looking more at whether the recession has structurally changed health care in some way to keep costs lower than we’ve historically seen.”

Impact on Employees

As more employers shift toward CDHPs, Wright said, each organization should challenge themselves to make such plans affordable to minimum- or low-wage workers who lack savings or live paycheck to paycheck.  How can they pay a steep $4,000, or higher, deductible?

Employers must also question the role health care in the company’s employee-value proposition, said Lenny Sanicola, senior benefits practice leader at WorldAtWork in Scottsdale, Ariz.

For instance: Is health care insurance a magnet or differentiator? Will dropping insurance and paying a penalty be a better alternative? What will the impact be on employee relations or attraction and retention? Will employees expect a bump in pay?

“You have to look at your company, who you’re competing with and really make the case for what direction you’re going down the road,” he said, adding that the University of South Carolina survey validated much of what he’s seen in other surveys or heard from employers.

Companies that decide to stay in the health care game need to explore options or develop innovative strategies to manage costs, he said.

Sanicola offers several to consider: Implement wellness initiatives with incentives, introduce spousal surcharges, pay less for dependents but more for individual coverage, or create reference-based pricing where the company only pays the average price for procedures or tests such as MRIs.

He said many large companies also contract with hospital systems and providers to deliver quality care at lower costs for big-ticket items such as knee or hip replacements.

Employers should prepare themselves to thoroughly explain any changes in health plans, especially CDHPs, which may require some handholding, he said.

In addition to providing vendor hotlines and conducting face-to-face meetings, he said, companies can train a handful of employees to act as ambassadors — to address questions from co-workers. Employers should also consider extending access to spouses — who often make family decisions.

Many companies continue to struggle in helping to educate employees to be better health care consumers.

They need to do “a better job of giving people tools to help them price out [services]  . . . and navigate the system,” said Sanicola. “That’s really half the battle.”

Carol Patton is a long-time, versatile journalist. She can be reached at riskletters@lrp.com.
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Sponsored: Helmsman Management Services

Six Best Practices For Effective WC Management

An ever-changing healthcare landscape keeps workers comp managers on their toes.
By: | October 15, 2014 • 5 min read

It’s no secret that the professionals responsible for managing workers compensation programs need to be constantly vigilant.

Rising health care costs, complex state regulation, opioid-based prescription drug use and other scary trends tend to keep workers comp managers awake at night.

“Risk managers can never be comfortable because it’s the nature of the beast,” said Debbie Michel, president of Helmsman Management Services LLC, a third-party claims administrator (and a subsidiary of Liberty Mutual Insurance). “To manage comp requires a laser-like, constant focus on following best practices across the continuum.”

Michel pointed to two notable industry trends — rises in loss severity and overall medical spending — that will combine to drive comp costs higher. For example, loss severity is predicted to increase in 2014-2015, mainly due to those rising medical costs.

Debbie discusses the top workers’ comp challenge facing buyers and brokers.

The nation’s annual medical spending, for its part, is expected to grow 6.1 percent in 2014 and 6.2 percent on average from 2015 through 2022, according to the Federal Government’s Centers for Medicare and Medicaid Services. This increase is expected to be driven partially by increased medical services demand among the nation’s aging population – many of whom are baby boomers who have remained in the workplace longer.

Other emerging trends also can have a potential negative impact on comp costs. For example, the recent classification of obesity as a disease (and the corresponding rise of obesity in the U.S.) may increase both workers comp claim frequency and severity.

SponsoredContent_LM“The true goal here is to think about injured employees. Everyone needs to focus on helping them get well, back to work and functioning at their best. At the same time, following a best practices approach can reduce overall comp costs, and help risk managers get a much better night’s sleep.”
– Debbie Michel, President, Helmsman Management Services LLC (a subsidiary of Liberty Mutual)

“These are just some factors affecting the workers compensation loss dollar,” she added. “Risk managers, working with their TPAs and carriers, must focus on constant improvement. The good news is there are proven best practices to make it happen.”

Michel outlined some of those best practices risk managers can take to ensure they get the most value from their workers comp spending and help their employees receive the best possible medical outcomes:

Pre-Loss

1. Workplace Partnering

Risk managers should look to partner with workplace wellness/health programs. While typically managed by different departments, there is an obvious need for risk management and health and wellness programs to be aligned in understanding workforce demographics, health patterns and other claim red flags. These are the factors that often drive claims or impede recovery.

“A workforce might have a higher percentage of smokers or diabetics than the norm, something you can learn from health and wellness programs. Comp managers can collaborate with health and wellness programs to help mitigate the potential impact,” Michel said, adding that there needs to be a direct line between the workers compensation goals and overall employee health and wellness goals.

Debbie discusses the second biggest challenge facing buyers and brokers.

2. Financing Alternatives

Risk managers must constantly re-evaluate how they finance workers compensation insurance programs. For example, there could be an opportunity to reduce costs by moving to higher retention or deductible levels, or creating a captive. Taking on a larger financial, more direct stake in a workers comp program can drive positive changes in safety and related areas.

“We saw this trend grow in 2012-2013 during comp rate increases,” Michel said. “When you have something to lose, you naturally are more focused on safety and other pre-loss issues.”

3. TPA Training, Tenure and Resources

Businesses need to look for a tailored relationship with their TPA or carrier, where they work together to identify and build positive, strategic workers compensation programs. Also, they must exercise due diligence when choosing a TPA by taking a hard look at its training, experience and tools, which ultimately drive program performance.

For instance, Michel said, does the TPA hold regular monthly or quarterly meetings with clients and brokers to gauge progress or address issues? Or, does the TPA help create specific initiatives in a quest to take the workers compensation program to a higher level?

Post-Loss

4. Analytics to Drive Positive Outcomes, Lower Loss Costs

Michel explained that best practices for an effective comp claims management process involve taking advantage of today’s powerful analytics tools, especially sophisticated predictive modeling. When woven into an overall claims management strategy, analytics can pinpoint where to focus resources on a high-cost claim, or they can capture the best data to be used for future safety and accident prevention efforts.

“Big data and advanced analytics drive a better understanding of the claims process to bring down the total cost of risk,” Michel added.

5. Provider Network Reach, Collaboration

Risk managers must pay close attention to provider networks and specifically work with outcome-based networks – in those states that allow employers to direct the care of injured workers. Such providers understand workers compensation and how to achieve optimal outcomes.

Risk managers should also understand if and how the TPA interacts with treating physicians. For example, Helmsman offers a peer-to-peer process with its 10 regional medical directors (one in each claims office). While the medical directors work closely with claims case professionals, they also interact directly, “peer-to-peer,” with treatment providers to create effective care paths or considerations.

“We have seen a lot of value here for our clients,” Michel said. “It’s a true differentiator.”

6. Strategic Outlook

Most of all, Michel said, it’s important for risk managers, brokers and TPAs to think strategically – from pre-loss and prevention to a claims process that delivers the best possible outcome for injured workers.

Debbie explains the value of working with Helmsman Management Services.

Helmsman, which provides claims management, managed care and risk control solutions for businesses with 50 employees or more, offers clients what it calls the Account Management Stewardship Program. The program coordinates the “right” resources within an organization and brings together all critical players – risk manager, safety and claims professionals, broker, account manager, etc. The program also frequently utilizes subject matter experts (pharma, networks, nurses, etc.) to help increase knowledge levels for risk and safety managers.

“The true goal here is to think about injured employees,” Michel said. “Everyone needs to focus on helping them get well, back to work and functioning at their best.

“At the same time, following a best practices approach can reduce overall comp costs, and help risk managers get a much better night’s sleep,” she said.

To learn more about how a third-party administrator like Helmsman Management Services LLC (a subsidiary of Liberty Mutual) can help manage your workers compensation costs, contact your broker.

Email Debbie Michel

Visit Helmsman’s website

@HelmsmanTPA Twitter

Additional Insights 

Debbie discusses how Helmsman drives outcomes for risk managers.

Debbie explains how to manage medical outcomes.

Debbie discusses considerations when selecting a TPA.

SponsoredContent

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Helmsman Management Services. The editorial staff of Risk & Insurance had no role in its preparation.


Helmsman Management Services (HMS) helps better control the total cost of risk by delivering superior outcomes for workers compensation, general liability and commercial auto claims. The third party claims administrator – a wholly owned subsidiary of Liberty Mutual Insurance – delivers better outcomes by blending the strength and innovation of a major carrier with the flexibility of an independent TPA.
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