Insurance Implications of Ebola
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.
Combating External Fraud Scams
The risk of fraud cannot be eliminated completely, but the opportunities to commit fraud can be reduced through effective awareness and internal training initiatives by risk managers.
Multiple surveys have highlighted that companies may be losing as much as 7 percent of their annual turnover as a result of fraud. There have been multiple “false CEO/President scams” and other attempts to defraud multinational companies.
In France, over 160 companies were victims of fraud scams in 2013. Some examples of successful frauds scams are:
• Payment by one company of over $2M to a fraudulent international transport company.
• Another company was targeted to transfer money “to buy urgent raw materials for business needs” resulting in a loss of $14M!
By training managers to be aware of the scams, avoidance of the risk can be achieved. Having better awareness and training in place can also help a company decrease insurance premiums for financial risk insurance.
These are red flags of the risk:
• Frequent calls: One international company was called 33 times by the same supplier in four days.
• Demands for payment are always urgent.
• Demands are exceptions outside of normal business procedures.
Fraudsters have developed creative schemes in order to obtain unjust enrichment. The external fraud success is the professional and legitimate appearance of the demand.
The most typical external fraud scams involve four steps:
• The fraudster obtains information about Company Y via the Internet or a publicly advertised conference.
• The fraudster calls Company Y pretending to be a supplier. The fraudster, acting as Supplier Z demands payment, stating that they are upset, and that Company Y owes them past due money. Often, multiple managers are targeted at the same time within Company Y.
• The fraudster obtains the logo and letterhead of the Supplier Z. Using this, the fraudster writes a demand for payment and sends it to Company Y.
• The fraudster then pretends to work in Company Y’s finance department and targets an actual financial controller within Company Y by emailing the forged supplier Z letter. An urgent wire transfer is requested to wire funds to countries like Switzerland, the Far East (China, India, Hong Kong), or Israel. When the funds are wired, the fraud scam is successful.
Preventing the wire transfer is the key to risk prevention. Prevention focuses on the elimination of one of the following:
• Pressure – Where the pressure felt by individuals is greater, the risk of fraud occurring is increased.
• Opportunity – If opportunity is removed altogether, there will be no fraud.
• Rationalization – Rationalization can generally be linked to a lack of ethical leadership within the organization.
If strict controls are not in place, increasing awareness of the risk is essential. Risk managers should consider adapting and applying practices used by global corporations in promoting awareness. These good practices are successful.
Six Best Practices For Effective WC Management
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.
“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:
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?
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.
Debbie discusses how Helmsman drives outcomes for risk managers.
Debbie explains how to manage medical outcomes.
Debbie discusses considerations when selecting a TPA.
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.