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2014 Risk All Star: Steve Stoeger-Moore

Alternative Vision Saves Millions

Steve Stoeger-Moore saved Wisconsin’s 16 technical colleges $10 million in premium over the past 10 years.

He did it by helping to create an alternative insurance system whereby the schools obtain nine varieties of coverage — including general liability, auto liability, workers’ compensation, property, violent acts, and most recently, cyber risk — via a mutual municipal insurance company.

Steve Stoeger-Moore, president, Districts Mutual Insurance

Steven Stoeger-Moore, president, Districts Mutual Insurance

That company is Districts Mutual Insurance (DMI). The mutual taps reinsurance markets including Gen Re and Fireman’s Fund, to obtain coverages above retention layers held by the individual colleges.

Most of the time, DMI also holds a retention layer.

The alternative insurance structure was devised in the midst of the hard markets of 2001-2003, when a few of the schools’ finance professionals wondered whether there might be a better way to go, said Stoeger-Moore.

At the time, he said, the Wisconsin Technical Colleges — which had been purchasing their needed insurance products as a consortium — were reeling from annual rate increases year after year.

“The schools had been seeing double-digit increases in premium for three straight years as of 2003, with compounded increases of 20 percent each year during ’01, ’02, and ’03 — all driven by market conditions, not losses,” Stoeger-Moore said.

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In fact, he said, the schools’ loss ratio over the three-year period was just 27 percent.

“The coverages appropriate to higher education had become more and more restricted. Carriers were selectively writing various businesses, and M&A activity among insurers was taking a lot of options off the table,” he said.

“No college pays for a loss suffered by another college. And no college pays a premium based on a loss at another college.” — Steven Stoeger-Moore, president, Districts Mutual Insurance

Meanwhile rates were going up and up and up every year, Stoeger-Moore said.

The solution: DMI.

Before the mutual was formed, Stoeger-Moore served as risk manager for the Milwaukee Area Technical College, one of only a few state technical schools that had a risk manager in place.

As the market hardened, school finance officials approached Stoeger-Moore, who developed the blueprint for DMI and agreed to take on the insurer’s day-to-day operations.

“It’s an insurance carrier that has no employees,” he said.

On the other hand, via independent vendors, DMI has experts working as third-party claims administrators, accountants, and auditors, besides commercial insurance carriers like London-based Beazley, which is now partnering with DMI in underwriting a cyber breach response program.

Stoeger-Moore said that it is illegal for insurers to pool their exposures, payments, or reserve funds under Wisconsin state law.

“No college pays for a loss suffered by another college,” he said.

“And no college pays a premium based on a loss at another college.”

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Stoeger-Moore has his share of fans. “Steve is really the most knowledgeable insurance technical person I’ve ever met. He created this whole thing,” said Joe DesPlaines, DMI’s business continuity and crisis response consultant.

DesPlaines said Stoeger-Moore envisioned that the mutual would offer insurance coverage as well as risk management consulting including crisis response planning, employee health and safety, and security assessments.

DMI’s budget is derived from college premium payments, said Stoeger-Moore.

Linda Joski, area vice president for Arthur J. Gallagher and Co. in Wisconsin, which brokers all reinsurance coverages for DMI, said that Stoeger-Moore is one of a kind.

“He is innovative and creative and works so well with these colleges,” she said.

Responsibility Leader

Steven is also being recognized as a 2014 Responsibility Leader.

Creating His Own Solution

When the 16 institutions comprising Wisconsin Technical Colleges faced persistent problems obtaining insurance coverage suited to their unique needs, Steven Stoeger-Moore didn’t just find the solution — he created it.

Stoeger-Moore helped to establish Districts Mutual Insurance (DMI) in 2004 to represent the colleges and provide better insurance and risk management services.

Under his self-implemented “Rule of 16,” he ensures that if any school has a problem, all 16 colleges benefit from DMI’s solution. That dedication led to the development of comprehensive risk management programs — provided to each school at no cost — for electrical and fire safety inspections, emergency response planning, legal consultations, and employee health and safety consultations, among many others.

And when those programs were tested, Stoeger-Moore sprang into action. In the past 10 years, the Wisconsin Technical College System has weathered both a tornado and a major fire. Both times, he was at the scene within 24 hours of the event, providing claims and insurance guidance as well as comfort for shaken colleagues.

Stoeger-Moore has also worked to bolster the industry’s future by encouraging young people to consider a career in risk management. Through DMI, he creates opportunities for young people to learn about the colleges’ unique challenges and the programs created to meet them.

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350px_allstarRisk All Stars stand out from their peers by overcoming challenges through exceptional problem solving, creativity, perseverance and/or passion.

See the complete list of 2014 Risk All Stars.

Responsibility Leaders overcome obstacles by doing the right thing over the easy thing to find  practical solutions that benefit their co-workers and community.

Read more about the 2014 Responsibility Leaders.

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Vermont Report: A Milestone

Hospital Group Hits Milestone

The captive’s health care parent has a long history in alternative risk transfer.
By: | April 7, 2014 • 7 min read
042014_vt_01coverstory

Back in 1991, a group of Pennsylvania hospitals dipped their toes into the water of captives. That water happened to be offshore. Their other insurance option was the “turmoil” of the traditional market. So they decided to dive in with a class-2 insurer called Cassatt Insurance Co. Ltd. It provided members with excess professional and general liability insurance.

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The group thrived — enough to encourage the formation of another captive in 1997. This time, Cassatt planted its flag firmly onshore, in Vermont, with a risk retention group (RRG) called Cassatt Risk Retention Group Inc. Coverage was for the primary level, set beneath what was then called the Pennsylvania CAT Fund, which became the Pennsylvania MCare Fund in 2002.

(Essentially, MCare, or Medical Care Availability and Reduction of Error, guarantees “reasonable compensation,” according to the Commonwealth, for persons injured due to medical negligence by paying from the fund for claims in excess of primary insurance coverage.)

The RRG today has five shareholders, nine hospitals and more than 1,200 physicians insured.

The next big step in the group’s evolution came in 2006, when Cassatt RRG Holding Co. gained a far greater role in the everyday operations of the captives and their members. The holding company assumed responsibility for claims, risk management, underwriting and finance.

“It is really a service organization to the membership,” said Eric W. Dethlefs, president and chief executive officer of the Malvern, Pa.-based holding company.

What the increased role of the holding company — and the overall development of Cassatt — demonstrates is truly an innovative progression; the ability to anticipate trends as they emerge. It’s a trait particularly handy for health care organizations, especially as of late, when issues appear to be rising faster than most organizations can understand, let alone manage.

Take the most recent examples of Cassatt’s growth. In 2012, Cassatt RRG Holding Co. launched the Cassatt Patient Safety Organization. This past October, it formed Cassatt Insurance Group Inc. — coincidentally, Vermont’s 1,000th captive formation. Both demonstrate Cassatt’s handle on 21st century health care exposures and strategic imperatives.

A Captive for Convenience

The Cassatt Insurance Group is a sponsored captive — or in other common parlance, a segregated cell captive. Vermont’s 1,000th captive is designed, Dethlefs explained, to provide insurance coverage flexibility for members as they merge and form affiliations with other hospital systems in the coming months and years, as they address the Affordable Care Act and other challenges. Many health care systems are scrambling to find such partners, Dethlefs said. (See related article Managing Change)

“The founding members believed then and continue to believe today that the sharing of risk and the sharing of best practices across the membership is something very important and one of the reasons they formed a group captive.” —Eric W. Dethlefs, president and CEO, Cassatt RRG Holding Co.

Cassatt’s sponsored captive will provide a flexible solution for the health care organizations that partner with Cassatt members. Dethlefs described the concept as each cell being similar to a new spoke off the sponsored captive’s wheel. The RRG is one established spoke. If new partners want the claims, patient safety and other benefits of Cassatt involvement, yet aren’t prepared to share in the other members’ liabilities as they would in the RRG, they can form their own cell, or a new spoke. One key benefit of segregated cell captives is that each cell’s liability is walled off.

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Roughly six months into the new captive, Dethlefs said, talks are underway with several health groups.

It’s an attractive model for health care organizations, according to someone who has seen plenty of captive business models (not all 1,000 of Vermont’s, but plenty).

“It is a neat process for them to expand their services to other hospitals,” said David F. Provost, deputy commissioner in Vermont’s Captive Insurance Division. “The result is going to be better patient care.”

“The regulators in Vermont clearly understand the needs of our member hospitals, and this new company will help us to grow and to continue to provide the members and their patients with the benefits of Cassatt’s success,” said Gerald Miller, chairman of the Cassatt board of directors.

A Captive for Care

Cassatt member hospitals have enjoyed a surge of benefits from the aforementioned Cassatt Patient Safety Organization (CPSO), which has been approved by the Department of Health and Human Services’ Agency for Healthcare Research and Quality.

“It’s not a one-and-done kind of thing. It’s continual,” Dethlefs said.

The CPSO can, for example, conduct risk assessments. It brings in experts in a given medical field that represents a high degree of liability exposure — say, obstetrics or surgery — and works with them to analyze the current practice and delivery of care. They learn what they are doing well, and where they could improve.

R4-14pA14-A15_TipIn_charts.inddAnother function of the patient safety organization is protected knowledge sharing. Chief medical officers, chiefs of obstetrics and other leaders from member hospitals can gather around a meeting room — a “safe table,” as designated by the federal government — and essentially compare patient safety notes.

Dethlefs called the patient safety organization “just as important, or maybe even more important” than the insurance underwritten by the captives.

“The founding members believed then and continue to believe today that the sharing of risk and the sharing of best practices across the membership is something very important and one of the reasons they formed a group captive,” Dethlefs said.

Indeed, the same rationale went into leveraging the holding company for in-house claims and risk management in 2006. The holding company now has four case handlers and one director making up the claims staff, representing more than 125 years of collective professional liability experience, he said.

They investigate each case, evaluate liability and damages, and make recommendations on whether to settle or litigate. The claims personnel are capable of following a claim from the initial incident to the case disposition, working in conjunction with member hospital staff and in-house counsel. They will even attend trials. The results of hands-on claims management pay for themselves.

“We have a very, very good, solid record in terms of favorable loss development,” Dethlefs said.

Cassatt’s holding company also employs a patient safety staff consisting of an administrative director, a medical director and other staff members.

All of this investment was a conscious decision that Cassatt could be capable of managing its members’ exposure better than third-party vendors.

“We had the belief that if we internalized these functions of claims, risk, finance and underwriting, and held people accountable, results would be better,” Dethlefs said.

A Captive for Copying?

Cassatt’s growth — particularly the patient safety organization and the sponsored captive — are not mere symptoms of ACA implementation, though the dynamic nature of health care risk today has a lot to do with it.

“Changes in health care — and particularly in the economics of health care (including the advent of the Affordable Care Act and other legislation and initiatives) — require hospitals to find better, more efficient ways to deliver consistent, high-quality care,” said Laurence M. Merlis, president and CEO of member Abington Health.

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“Cassatt is an indispensable partner for Abington as it addresses both challenges: cost and quality. Through its first-class patient safety and risk management work and innovative solutions to insuring our risks, Cassatt plays a major role in ensuring that Abington remains a center of excellence in health care in the Philadelphia region,” he said.

Collective risk management has been a long-term view of the member companies.

“Cassatt was created more than 20 years ago in response to the member hospitals’ need for a high-quality, cost-effective liability insurance solution,” said Miller, Cassatt’s board chairman. “The members’ continued attention to and investment in Cassatt has resulted not only in what we believe is a superior insurance program but also in Cassatt’s capability to provide first-class patient safety and risk management services to the member hospitals.”

Developments since then have been improvements on that theme and responses to current trends.

Although Cassatt’s model may well be considered innovative and worthy of imitation by others facing the current turbulence — we’ll leave that to the experts to determine — Dethlefs doesn’t think it’s particularly innovative. “I think it’s getting back to the basics of doing things correctly and holding folks accountable,” he said.

                                                                                       

Complete coverage from R&I’s 2014 Vermont report:

Hospital Group Hits Milestone

Managing Change

Who’s Who in Montpelier

Matthew Brodsky is editor of Wharton Magazine. He 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.

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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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