Facing the Road Ahead
There are both new and evolving challenges facing workers’ comp practitioners in the coming years. But there is also an increasing level of sophistication among those who are working to meet those challenges.
Top carriers came together for a meeting of the minds on Wednesday for a session entitled “Workers’ Comp Insurance Exposed: Views from the Industry’s Leading Carriers.”
The session, led by Eric Silverstein, senior vice president and risk management leader for Lockton Cos., included participation from Russell Johnston, casualty president for the Americas Region with AIG Inc.; Debbie Michel, executive vice president, commercial markets with Liberty Mutual Insurance and president of Helmsman Management Services; and Sean D. Martin, vice president with The Travelers Cos.
One development carriers are encouraged by is an increase in employers exploring benefits integration, bringing together disability, health care and workers’ comp.
“The challenge is that many customers look at it in a bifurcated way,” said Johnston. A more unified approach can help employers address the issues that affect outcomes across the spectrum, which are of increasing concern for employers as ongoing economic woes continue to force older employees to work as long as they’re physically able.
A more holistic approach can help improve outcomes from both the occupational and the non-occupational sides by working to improve the overall health of the employee population.
“If you have a healthy employee, regardless of age,” said Johnston, “you’re going to have a better outcome.”
The potential to positively affect outcomes and cut costs across the whole of an employee population can also provide substance for workers’ comp professionals trying to make the business case for wellness investments such as on-site gyms or an on-site nutritionist, Johnston said.
Going forward, there are plenty of positives to build from, panelists said. Currently, 22 states have filed for rate decreases.
“If there’s any point in time where I think the industry has been exceptionally good at risk selection and pricing, it’s today,” said Johnston. And employers that have been diligent about managing their risk profiles can expect significant improvement.
Still, there’s a great deal of room for improvement, as evidenced by California’s ongoing challenges. Despite the most recent round of reforms, California is still plagued by dramatic increases in injury frequency and severity, and by crushing backlogs in the independent medical review process.
The uncertain fate of TRIA’s renewal is still on the radar for employers as well as carriers, but panelists said they are cautiously optimistic.
They are somewhat more concerned about other looming threats such as physician capacity and hospital consolidation, the Affordable Care Act, and cost shifting into the workers’ comp space, said Martin.
Carriers are also closely watching the development of interest in workers’ comp alternatives.
The formation of ARAWC – the Association for Responsible Alternatives to Workers’ Compensation – by many large companies is a clear sign that there is interest in an expansion of alternatives to state workers’ compensation systems, such as the nonsubscriber system in Texas and the recently enacted Oklahoma option, to other states.
In the end, said Michel, it will be up to states to find the “balance between doing the right thing for the economy and doing the right thing for the injured worker.”
Program Business Administrators Outpace Market
The financial performance of commercial property/casualty insurance program administrators continues to outpace the performance of the overall property casualty insurance markets, according to the Target Markets Program Administrators Association.
The TMPAA’s latest annual survey revealed that program business premium revenues increased by 9.8 percent reaching $30.1 billion in 2013, up from $27.4 billion in 2012.
That’s compared to a 4.6 percent increase in direct premiums written for the overall commercial lines marketplace.
“Carriers are attracted to program administrators for several reasons, the biggest being the segment’s ability to outperform the general marketplace through focused underwriting and deep understanding of the industries being served by expert underwriters,” said David Springer, group president and COO of NIP Group, who also serves as president of the TMPAA.
“Additionally, it is a more efficient distribution model for a carrier as they can ‘pick up’ volume through a single source rather than building distribution in a class over time,” he said.
Chris Pesce, president of Maritime Program Group and a member of the TMPAA Advisory Board, said the success of the program business is driven by “two specific reasons.”
“Firstly, there’s a record amount of capacity in the market that needs to get deployed,” he said.
“Carriers have the capacity and desire to grow and expand but often lack the distribution. The PA model allows the carrier to quickly gain traction in a niche industry segment for which they had no prior experience.
“Through the PA, they get immediate penetration with the retail distribution that’s driving that class of business without having to incur the expense of finding them one over one.
“For example, a commercial auto underwriter isn’t likely to succeed as a yacht underwriter.” – Chris Pesce, president of Maritime Program Group and a member of the TMPAA Advisory Board
“Secondly, the PAs typically engage in a niche class for which they develop a deep expertise and often a personal passion.
“From an underwriting perspective, this leads to a much more intimate knowledge of that class and understanding of how to underwrite the class profitably. This is hard for the carrier to replicate using staff underwriters that have no specific passion or expertise directly in the class of business they’re underwriting.
“For example, a commercial auto underwriter isn’t likely to succeed as a yacht underwriter,” Pesce said.
“In addition, the overall acquisition cost of utilizing a PA is more attractive than trying to build a profitable portfolio organically when contemplating the cost of building the retail distribution, underwriting talent and systems support. If a PA brings all of that to the table, it’s a compelling model for the carrier to consider.”
However, a number of challenges were also identified by the study, including technology, which was highlighted by both administrators and carriers as one of the top issues facing the program space.
“Technology, when deployed effectively, can be a game-changer,” Springer said, but he noted program underwriting operations “can be expensive to run and interaction with carrier systems can be very manual.”
“Deployment of technologies that can gather and move information into and out of our agency management, rating, policywriting and CRM solutions can generate big expense savings over time, which help program administrators reach their full potential.”
“The required experience and skills,” he said, “are as unique as the niches the programs serve and finding the right talent — or growing it — can be difficult.” – David Springer, group president and COO of NIP Group, and president of the TMPAA
Pricing is another challenge.
“With so much capacity in the market and cheap reinsurance that’s overly abundant, there will be continued pricing pressure in all directions,” Pesce said.
“Unfortunately, the market entrants that have capacity to deploy will inevitably buy their way into the desired market share at pricing that is often unsustainable until the results catch up to the portfolio, which often takes years, not months.
“This all means continued downward pressure on pricing for the foreseeable future,” he said.
The survey highlighted a number of talent recruitment and training differences between insurers and brokers, especially as related to professional certifications.
And, according to the study, hiring and retaining qualified personnel in the program space continues to be a major challenge — with administrators saying they are boosting training programs to better support the needs of both new and experienced underwriters.
“Nearly half of the administrators polled do not require their applicants to have professional designations,” according to the study. “Thirty-six percent say they prefer underwriters with professional designations and will pay more, while 21 percent prefer underwriters to have professional designations, but will not pay more.
“In the case of insurers, half of those polled prefer underwriters with professional designations and are willing to pay more. Thirty-seven percent of the respondents do not require their applicants to have professional designations, while 13 percent prefer underwriters with professional designations, but will not pay extra.”
Springer said “scale and funding” could explain that difference of opinion.
“It is interesting that positions with expertise in program administrator shops are some of the hardest to find good candidates for but most program administrators don’t have the resources that a carrier does when engaging in recruitment or even formalized training programs to grow future talent.
“That is one of the driving forces behind the investment our association has made in Target University — where we endeavor to make available education to program administrator teams and the carriers and vendors that serve them.
“The required experience and skills,” he said, “are as unique as the niches the programs serve and finding the right talent — or growing it — can be difficult.”
Changing the WC Medical Care Mindset
Controlling overall workers’ compensation medical costs has been an elusive target.
Yet, according to medical experts from Healthesystems, the Tampa, Fla.-based specialty provider of innovative medical cost management solutions for the workers’ compensation industry, payers today have more powerful options for both offering the highest quality medical care and controlling costs, but they must be more thoroughly and strategically executed.
Specifically as it relates to optimizing patient outcomes and controlling pharmacy costs, the key, say those experts, is to look beyond the typical clinical pharmacy history review and to incorporate a more holistic picture of the entire medical treatment plan. This means when performing clinical reviews, taking into account more comprehensive information such as lab results, physician notes and other critical medical history data which often identifies significant treatment plan concerns but frequently aren’t effectively monitored in total.
Healthesystems’ Dr. Robert Goldberg, chief medical officer, and Dr. Silvia Sacalis, vice president of clinical services, recently weighed in on how using a more holistic, comprehensive strategy can make the critical difference in the ongoing medical care cost control battle.
Fragmentation, Complexity Obscure the Patient Picture
According to Dr. Goldberg, fragmentation remains one of the biggest obstacles to controlling overall healthcare costs and ensuring the most successful treatment in workers’ compensation.
Robert Goldberg, MD, discusses obstacles to controlling overall medical costs and ensuring the best treatment in workers’ compensation.
“There are several hurdles, but they all relate to the fact that healthcare in workers’ comp is just not very well coordinated,” he said. “For the most part, there is poor communication between all parties involved, but especially between the payer and the provider. Unfortunately, it’s rare that all the stakeholders have a clear, complete picture of what’s happening with the patient.”
Dr. Goldberg explains that health care generally has become a more complex landscape, and workers’ comp adds another level of complexity. Physicians have less time to spend with patients due to work loads and other economic factors, and frequently there isn’t adequate time to develop a patient specific treatment strategy.
“Often we don’t have physicians properly incentivized to do a complete job with patients” he said, adding that extra paperwork and similar hurdles limit communication among payers, nurse case managers and other players.
In fact, Dr. Sacalis emphasized that it’s not only the payer, but often the healthcare provider who is not getting a complete picture. For example, a treating doctor may not be the primary care physician and therefore they may not have access to the total healthcare picture for the injured worker.
“Most of all, payers need to adopt a more collaborative approach in their relationships with physicians, employers and patients, as well as networks involved. It will result in getting people back to work through appropriate medical care and moving the case along to a prompt closure.”
– Robert Goldberg, MD, FACOEM, Chief Medical Officer, Healthesystems
“It’s often difficult for multiple physicians to communicate and collaborate about what’s happening because they may not be aware of each-others involvement in that patient’s care,” she said. “Data sharing is lacking, even in integrated healthcare systems where doctors are in the same group.”
Done Right, Technology Can Bridge the Treatment Strategy Gap
Dr. Sacalis explained the role technology advancements can play in creating a more holistic picture of not only an injured workers’ post-accident state or pace of recovery, but also their overall health history. However, the workers’ comp industry by and large is not there yet.
“Today’s technology can be very useful in providing transparency, but to date the data is still very fragmented,” she said. “With technology advancements, we can get a more holistic patient view. However, it is important that the data is both meaningful and actionable to promote effective clinical decision support.”
Silvia Sacalis, PharmD, explains the role that technology advancements can play in creating a more holistic picture of an injured worker’s overall health.
Healthesystems, for example, offers an advanced clinical solution that incorporates a comprehensive analysis of all relevant data sources including pharmacy, medical and lab data as part of a drug therapy analysis. So, for example, the process could uncover co-morbidities – such as diabetes – that may be unrelated to a workplace injury but should be considered in the overall treatment strategy.
“Healthcare professionals must ensure there are no interactions with any
co-morbidities that may limit or affect the treatment plan,” Dr. Sacalis said.
In the majority of cases where Healthesystems has performed advanced clinical analysis, information gathered from the various sources has uncovered critical information that significantly impacted the overall treatment recommendations. Technology and analytics enable the implementation of best practices.
She cites another example of how a physician may order a urine drug screen (UDS), yet the results indicating the presence of a non prescribed drug were not reflected in the treatment regimen as evidenced by the lack of modification in therapy.
“Visibility and transparency will help with facilitating a truly effective treatment plan,” she said, “Predictive analytics are necessary tools for proactive monitoring and detection of trends as well as early identification of cases for intervention.”
Speaking of Best Practices …
Dr. Goldberg highlighted that the most important overall best practice needed to secure the optimal outcome is centered around getting the right care to the right patient at the right time. To him, that means identifying patients who need adjustments in care and then determining medical necessity during the entire case trajectory.
“It means using evidence-based medical treatment guidelines that are coordinated,” he said.
“You must look at the whole patient, which means avoiding the typical barriers in the workers’ comp treatment system, issues such as delays in authorizations, lengthy UR processes or similar scenarios that are well intentioned but if not performed effectively they can get in the way of expedited care.”
Dr. Goldberg and Silvia Sacalis provide recommendations for critical steps payers should take to achieve the best outcomes for everyone.
Dr. Goldberg noted that seeking out the most effective doctors available in geographic locations is another critical best practice. That requires collecting data on physician performance, patient satisfaction and medical outcomes, so payers and networks can identify and incentivize them accordingly.
“This way, you are getting an alignment of incentives with all parties,” Dr. Goldberg said, adding that it also means removing outlier physicians, those whose tendencies are to over-treat, dispense drugs from their office or order unnecessary durable medical equipment, for example.
“Visibility and transparency will help with facilitating a truly effective treatment plan. Predictive analytics are necessary tools for proactive monitoring and detection of trends as well as early identification of cases for intervention.”
– Silvia Sacalis, PharmD, Vice President of Clinical Services, Healthesystems
“Most of all, payers need to adopt a more collaborative approach in their relationships with physicians, employers and patients, as well as networks involved,” he said. “It will result in getting people back to work through appropriate medical care and moving the case along to a prompt closure.”
Dr. Sacalis added that from a pharmacy perspective, another best practice is becoming more patient-centric, using a customized and flexible approach to help payers optimize outcomes for each patient.
“Focus on patient safety first, and that will naturally drive cost containment,” she said. “Focusing on cost alone can actually drive results in the wrong direction.”
Dr. Goldberg explains how consolidation in the health care and WC markets can impact the landscape and quality of care.
Dr. Goldberg and Silvia Sacalis discuss if injured workers today are getting better treatment than they were twenty years ago.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Healthesystems. The editorial staff of Risk & Insurance had no role in its preparation.