Shaping the Future of Workers’ Comp
The reforms of the Affordable Care Act continue to transform models of health care delivery, and it’s only a matter of time before that transformation impacts workers’ comp medical management as well.
Chicago-based Boeing is trying to get ahead of the curve, embracing the reform tenets of accountable care, value-based pricing, and patient engagement.
Boeing’s Senior Workers’ Compensation Manager Lisa Kelly discussed the company’s efforts during a November 12 session at the National Workers’ Compensation and Disability Conference® and Expo in Las Vegas.
Boeing has since been able to realize significantly improved outcomes and lower costs by working to direct injured employees to five-star ranked doctors.
She was joined by Greg Moore, founder of Harbor Health Systems and senior vice president of innovation with One Call Care Management, as well as Sedgwick’s Kimberly George, SVP, and senior healthcare advisor.
In 2010, Boeing partnered with Harbor Health and Sedgwick to get a better handle on the quality of care delivered to injured employees. They developed a scorecard to measure their doctors by factors including total costs, claim duration, litigation rate, TTD and recidivism.
Doctors were given rankings from one to five stars. The disparity across the scorecard was sobering.
Boeing has since been able to realize significantly improved outcomes and lower costs by working to direct injured employees to five-star ranked doctors.
Additionally, Boeing recognized how the overall health of employees impacted its workers’ comp costs and overall productivity, and created partnerships to form two accountable care organizations to provide quality care and truly affordable coverage.
The relationship between comp and health care is changing, the presenters said, and it’s important for the workers’ comp world to play an active role in shaping the future direction of medical-care delivery.
“This change is going to happen, whether we bury our heads in the sand or not,” said Moore.
From left, Caroline Burhenne, PMA Cos. account manager for Barnabas Health; Keith Lavin, manager, corporate care; and Caryl Russo, senior vice president, corporate care.
This success story started in one department in one hospital. Workers’ compensation transformed into something called Corporate Care. Let the data display the success.
At first, Kimball Medical Center, now known as Monmouth Medical Center, Southern Campus, in Lakewood, N.J., experienced 51 cases of injured workers with days out of work, for 1,156 total lost days and estimated expenses of $1.16 million. That was in 2007.
By the following year, those numbers dropped to 35 cases, 353 total days out of work and $353,000 in expenses. By 2011, it was six cases, 129 total days and $129,000 in expenses.
What happened next was spreading that one success story to the rest of the
Garden State’s largest nonprofit health care system, Barnabas Health, with its 5,200 physicians, 21,000 employees and more than two million annual patient visits.
The initiative began when Caryl Russo, now senior vice president for Corporate
Care, and her team wanted to expand their efforts, in both scope and geography. Russo brought the data from Monmouth South to the attention of Barnabas Health’s senior management, along with several actual workers’ comp cases to humanize the issue.
Russo and her team wanted to transform what was already a good workers’ comp program overall across Barnabas Health into something exceptional.
Barnabas is being honored as a 2015 Teddy Award winner because they succeeded.
The Transformation Begins
The Monmouth South team realized that the traditional way workers’ comp occurred in the hospitals — operating out of the employee health department and utilizing a nurse or advanced practice nurse — was not optimal, said Joe Hicks, then CEO of Kimball and now president and CEO of Barnabas Health Behavioral Health Network and Corporate Care.
The first change at Monmouth South played to its strength: providing health care.
The small corporate care department led by Russo and manager Keith Lavin brought in a board-certified occupational medicine physician, Dr. Tanisha Taylor, and partnered her with a workers’ comp specialist.
The pair became “gatekeepers” who managed all injuries, notified supervisors of accident investigations, assessed underlying causes and even worked toward their remediation.
A primary benefit of gatekeepers is that they help reverse the trend whereby 60 cents of every workers’ comp dollar goes to medical costs.
Occupational physicians can help manage referrals and work with specialists. They can also keep the lid on prescription abuse, important in a world where one in three people addicted to prescription meds begin their abuse after a work injury.
The team’s efforts made this one small department at this one hospital stand out. Which is impressive because although processes and efficacy of workers’ comp efforts across the Barnabas Health system were uneven, its overall program was fairly successful.
“When we started this process, Barnabas Health had a pretty impressive MOD rating,” Russo said. “A lot of companies would have been satisfied and left it at that.”
Yet the corporate care team pushed forward. As Hicks recalled, their next step was to spread the revolution.
It would require the mind-set of a “product line,” and a management team to take administrative charge, control elements of the “product” and promote it across the entire system — which includes six other acute-care hospitals, two children’s hospitals, a behavioral health center, ambulatory care facilities, geriatric centers, women’s health centers, and home care and hospice services.
“We took it step by step and integrated the program into one facility at a time,” Hicks said.
They started with buy-in from corporate senior leadership by wielding the results from their successful experiment at Monmouth South — for lost time claims, direct incurred costs and disability days.
Next, they moved to the executives at the individual facilities, translating these metrics into financial implications for each and the “extreme costs” of not making a change.
Most of the Barnabas CEOs assumed workers’ comp was just a cost of doing business. The team brought the data to life with real-life workers’ comp anecdotes.
“Showing cause and effect with real-life stories about actual people was very successful,” Russo said, adding that the ultimate message was: “One injury, especially one that could be avoidable, is unacceptable.”
Given the green light, the team began to spread the corporate care way of doing things. But it was not just about hiring highly qualified occupational medicine physicians to serve as gatekeepers at each location.
The program’s framework afforded them the opportunity to standardize and improve all of the elements of the workers’ comp system, from injury management and accident investigations to policies governing employee safety.
One such innovation is a weekly conference call on all open claims.
A team, including the adjusters; the account manager for the company’s TPA, PMA Cos.; the facility’s occupational medicine physician; the workers’ compensation specialist; and Russo, examine care plans for injured employees, looking at any delays in treatment, discussing those who are able to return to work and plotting strategy.
They tackle the latest issues and injuries to identify emerging trends and discuss investigative results with an eye toward remediation.
“Every week when we go over these cases, we discover ways in which we can make our employees’ work environment safer … and we jump on them right away,” Russo said.
Targeting Safety Issues
Remediation efforts come via a number of avenues.
One is the health system’s safety team, led by Rajvinder Kaur, assistant vice president of safety management. Barnabas Health brought in Kaur nearly three years ago.
At that time, she evaluated how Barnabas Health facilities collected data after incidents and their average response times. Kaur and her team have since partnered with corporate care, and they get called in immediately after a work-related incident occurs.
This partnership and the data Kaur gathers help spotlight emerging safety issues, like the need for patient lifting equipment or for a wire management safety program.
“Safety now is critical,” Russo said.
The program also focuses on measurement. Barnabas worked with PMA Cos. from the start to gain real-time data from the TPA on those pivotal metrics of total claims, disability days, lost-time claims and incurred dollars — on at least a monthly basis for every site.
“We took it step by step and integrated the program into one facility at a time.” — Joe Hicks, president and CEO, Barnabas Health Behavioral Health Network and Corporate Care
For return-to-work, Barnabas Health launched another systemwide effort: a modified job bank. Each facility now operates a bank, which provides different accommodations across various skills, shifts and even languages. Each case is personalized and handled at the local facility level, but the twist is that now the human resources department pays for the position. This ensures departments are willing to bring on the injured employees.
“Subsidizing these positions benefits everyone and ensures a smooth transition back to work for our employees,” Russo said.
One of rarest innovations that began at Monmouth South involved how the corporate care team partners with the various Barnabas Health emergency departments to provide care for workers injured on second and third shifts.
The effort underscores the team’s ability to spread their gospel and involved getting the medical directors at each of the ERs to:
- Refer all workplace injuries (except the most serious) to corporate care the next morning;
- Recognize that most musculoskeletal injuries do not warrant narcotics; and
- Understand that work dispositions are the domain of the occupational physician.
The efforts are going so well that other businesses in the region know to send work-related injuries to Barnabas Health ER departments, Russo said.
The sum total of these innovations can be seen in corporate care’s workers’ comp numbers. In 2011, before the efforts to spread the new model, total incurred costs per claim were $3,312.
By 2014, Barnabas Health had that number down to $1,147, while reducing the total frequency rate by 54 percent. Its indemnity to medical-only ratio was 1:8.33 in 2011 vs. 1:17.88 in 2014, while average number of lost days per claim went from 38 to 24, respectively.
Approximately 94 percent of medical-only claims since 2012 have a total incurred cost per claim of less than $1,000, and more than 60 percent of the lost time claims have a total incurred amount of less than $25,000.
For the organization, the program has yielded a three-year savings of more than $3.5 million and a significant reduction in reserves. This, while the total number of employees increased from 18,198 to 21,028.
For the Barnabas Health workers’ comp team, though, the real success comes in seeing employees able to live better because they’re healthy and safe on the job.
Read more about all of the 2015 Teddy Award winners:
Revamped Program Takes Flight: The American Airlines and U.S. Airways merger meant integrating workers’ compensation programs for a massive workforce. The results are stellar.
Checking Out Solutions: From celebrating safety success to aggressively rooting out fraud and abuse, Stater Bros. Markets is making workers’ comp risk management gains on multiple fronts.
Revitalizing the Program: In three years, the Columbus Consolidated Government was able to substantially reduce workers’ compensation claims costs, revamp return-to-work and enhance safety training.
Spreading Success: Barnabas Health wins a Teddy Award for pushing one hospital’s success in workers’ comp systemwide.
Managing Construction’s True Risk Exposure
When it comes to the construction industry, the path to success is never easy.
After a long, deep recession of historic proportions, the sector is finally on the mend. But as opportunities to win new projects grow, experience shows that more contractors go out of business during a recovery than during a recession.
Skilled labor shortages, legal rulings in various states that push construction defects onto general liability policies, and New York state’s labor laws that assign full liability to project owners and contractors for falls from elevations that injure workers are just some of the established issues that are making it ever harder for firms to succeed.
And now, there are new emerging risks, such as the potential for more expensive capital, should the Federal Reserve increase its rates. This would tighten already stressed margins, perhaps making it harder for contractors and project owners to invest in safety and quality assurance, and raising the cost of treating injured workers.
Liberty Mutual’s Doug Cauti reviews the top three risks facing contractors and project owners.
“Our customers are very clear about the challenges they are facing in the market,” said Doug Cauti, the Boston-based chief underwriting officer for Liberty Mutual’s construction practice.
“Now more than ever, construction risk buyers – and the brokers who serve them – are leveraging our team’s deep expertise to find solutions for complicated risks. This goes way beyond what many consider the traditional role of an insurance carrier.”
Other leading risks facing contractors and project owners.
Given the current risk environment, firms that simply seek out the cheapest coverage could leave themselves exposed to these emerging risks. And that could result in them becoming just another failed statistic.
So what is the best way to approach your risk management program?
Understanding the Emerging Picture
Construction firms have been dealing with multiple challenges over the last several years. Now, several new emerging risks could further complicate the business.
After an extended period of historically low interest rates, the Federal Reserve is indicating that rates could rise in late 2015 or sometime in 2016. That would surely impact construction firms’ cost of capital.
“At the end of the day, an increased cost of capital is going to impact many construction firm’s margins, which are already thin,” Cauti said.
“The trickle-down effect is that less money may be available for other operational activities, including safety and quality programs. Firms may need to underbid and/or place low bids just to get jobs and keep the cash flow going,” Cauti said.
“Now more than ever, construction risk buyers – and the brokers who serve them – are leveraging our team’s deep expertise to find solutions for complicated risks.”
— Doug Cauti, Chief Underwriting Officer, Liberty Mutual National Insurance Specialty Construction
“Experience shows us that shortcuts in safety and quality often lead to more construction defect claims, general liability claims and workers’ compensation claims,” Cauti said.
Currently, the frequency of worker injuries is down on a national basis but the severity of injuries is on the rise. If those frequencies start creeping up due to less robust safety programs, the costs could grow fast.
And if this possible trend is not cause enough for concern, the growing costs associated with medical care should have the attention of all risk managers.
“Five years ago medical costs represented 56 percent of a claim,” said Jack Probolus, a Boston-based manager of construction risk financing programs for Liberty Mutual.
“By 2020, that medical cost will likely grow to 76 percent of an injured worker’s claim, according to industry experts,” Probolus said.
Rising interest rates and rising medical costs could form a perfect storm.
Focusing on the Total Cost of Risk
For risk managers, the approach they utilize to mitigate the myriad of existing and emerging risks is more important than ever. The ideal insurance partner will be one that can integrate claims management, quality assurance and loss control solutions to better manage the total cost of construction risk, and do it for the long term.
Liberty Mutual’s Doug Cauti reviews the partnership between buyers, brokers and insureds that helps better manage the total cost of insurance.
In the case of rising medical costs, that means using claims management tools and workflows that help eliminate the runaway expense of things such as duplicate billings, inappropriate prescriptions for powerful painkillers, and over-utilization of costly medical procedures.
“We’re committed to making sure that the client isn’t burdened in unnecessary costs, while working to ensure that injured employees return to productive lives in the best possible health,” Probolus said.
The right partner will also have the construction industry expertise and the willingness to work with a project owner or contractor from the very beginning of a project. That enables them to analyze risk on the front end and devise the best risk management program for the project or contractor, thereby protecting the policyholder’s vulnerable margins.
“We want to be there from the very beginning,” Liberty Mutual’s Cauti said.
“This isn’t merely a transaction with us,” he added. “It’s a partnership that extends for years, from binding coverage, through the life of the project and deeper as claims come in and are resolved over time,” he said.
In other words, it’s a relationship focused on value.
Today’s construction insurance market – with an abundance of capacity – can lead to new carriers entering the market and/or insurers seeking to gain market share by underpricing policies.
“We see it all the time,” Liberty Mutual’s Cauti said.
Where does this leave insureds? Frustrated at pricing instability, or by the need to find a new carrier. And wiser, having learned the wisdom of focusing on value, that is the ability to better control the total cost of risk.
“Premium is always important,” notes Liberty Mutual’s Cauti. “But smart buyers also understand the importance of value, the ability of an insurer to partner with a buyer and their broker to develop a custom blend of coverages and services that better protect a project’s or contractor’s bottom line and reputation. This is the approach our dedicated construction practice takes.
Why Liberty Mutual?
For more information on how Liberty Mutual Insurance can help assess your construction risk exposure, contact your broker or Doug Cauti at [email protected].
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty Mutual Insurance. The editorial staff of Risk & Insurance had no role in its preparation.