The State of the States

Regulatory Review

A round-up of nationwide regulatory changes affecting the workers' compensation industry.
By: | July 27, 2015 • 4 min read
cali capitol resized

California

Qualified Medical Evaluators

The Division of Workers’ Compensation proposed modifications to its proposed regulations regarding qualified medical evaluators. The modifications state that initial represented panel requests postmarked after Sept. 3 will not be accepted or processed by the medical unit for initial represented panel requests only. The last day to mail in panel requests will be Sept. 3. Effective Oct. 1, all initial panel requests must be submitted electronically.

Advertisement




Under the proposed modifications, parties will have 10 days from service of the panel list to strike a doctor. Also, disputes regarding the validity of panel requests must be resolved by a workers’ compensation judge. Disputes regarding the appropriateness of the specialty designated must be resolved by the medical director. Either party may appeal the decision with a workers’ compensation judge.

Medical Billing and Payment Guide

The Division of Workers’ Compensation proposed to modify rules to transition from the International Classification of Diseases, 9th Revision diagnosis and inpatient procedure coding systems to the ICD-10 diagnosis and inpatient procedure systems. The change will go into effect on Oct. 1. The proposed amendments also adopt new forms and amend the medical billing and payment guide to adopt the ICD-10 code tables and index. Additional updates were proposed to the medical billing and payment guide to adopt more current versions of instruction manuals for professional and facility paper billing forms and updated dental codes.

Colorado

Medical Fee Schedule

The Division of Workers’ Compensation proposed amendments to rules regarding the medical fee schedule. The rules revise the standard terminology and the administrative procedures and requirements necessary to implement the medical treatment guidelines and medical fee schedule. The proposed rule amendments also update the language of the medical fee schedule, revise the billing codes systems, and update the fees and relative values. The amendments also revise the medical requirements, procedures, and payments as they relate to the medical fee schedule.

Maine

Medical Fees

The Workers’ Compensation Board proposed to repeal and replace a rule regarding medical fees and amend rules regarding formal hearings and expenses and fees.

Advertisement




The rule states that in the event that the employer or insurer contends that the medical records and information, preexisting and subsequent to the workplace injury, are relevant for determination of compensability and disability, it may obtain from the worker and the employee is obliged to within 14 calendar days execute a limited authorization for focused written medical records. Also, an employer or insurer must pay a worker’s travel expenses incurred for medical treatment, including actual costs for overnight lodging, parking, tolls, and public transportation if accompanied by a receipt.

New York

Fees

The Workers’ Compensation Board announced the elimination of a number of fees. Starting April 1, fees for licensing compensation medical bureaus and laboratories were eliminated. Fees were also eliminated for physician arbitration, psychologist arbitration, chiropractor arbitration, and podiatrist arbitration. Licensed third-party administrator fees and licensed hearing representative fees were also eliminated.

Ohio

Claims Procedure Rules

The Bureau of Workers’ Compensation proposed amendments to the claims procedure rules regarding lump-sum advancements. The rule states that an injured worker or surviving spouse must file an application requesting a lump-sum advancement with the bureau. The injured worker or surviving spouse must provide proof that the lump-sum advancement is advisable for the purpose of providing financial relief or furthering the injured worker’s rehabilitation. The bureau will not grant a lump-sum advancement in a claim where the allowance of the award of compensation is on appeal.

Oregon

Medical Services

The Workers’ Compensation Division proposed amendments to rules regarding medical services. The rules clarify that the dispute record packet must include certification whether there is or is not an issue of compensability of the underlying claim or condition. The rules limit the denial of reimbursement based on the late submission of a treatment plan by an ancillary service provider to those services provided before the treatment plan is sent.

Advertisement




The amendments also require that an insurer approve or disapprove a health care provider’s request for preauthorization of a diagnostic study within 14 days of receipt of the request. The division scheduled a public hearing on July 21 at 9 a.m. at 350 Winter Street NE, Room B, in Salem.

Washington

Penalties

The Department of Labor and Industries amended rules to meet new measures for calculating penalties set by the Occupational Safety and Health Administration. The amendments add a minimum penalty amount of $2,500 for violations issued when contributing to a fatality. In a rule regarding base penalty adjustments, the language was modified to state that no reduction will be given if the violations are classified as willful, repeat, failure to abate, or violations contributing to an inpatient hospitalization or a fatality. The rule also added clarifying language on how to determine an employer’s good faith. The rule goes into effect on Sept. 1.

Christina Lumbreras is a Legal Editor for Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]
Share this article:

Integrated Disability Management

Thinking Outside the Absence Silo

Employers are increasingly looking at employee engagement and its role in disability management and return to work.
By: | July 27, 2015 • 3 min read
disabled worker2

Linking employers’ growing interest in worker engagement with an integrated disability management strategy can improve return-to-work outcomes following workplace injuries and non-occupational illnesses alike.

When engaged employees suffer an illness or injury they are more motivated than disengaged workers to return to the job, said Renee Mattaliano, VP and practice lead of workforce management at HUB International.

Advertisement




While that intuitively makes sense, the concept is also backed by quantitative research showing that engaged employees perform work tasks in a safer manner and rebound sooner from absence-causing illnesses and injuries.

A Gallup examination of 192 worldwide organizations with 1.4 million employees conducted in 2012, for instance, revealed that companies with engaged employees experience 48 percent fewer safety incidents, 37 percent less absenteeism, and a productivity increase of 21 percent, among other improved performance outcomes.

Sophisticated businesses in recent years have grown increasingly interested in worker engagement because of its impact on several components of corporate performance such as employee turnover rates, customer service satisfaction, and profitability.

A “Global Human Capital Trends 2015” report produced by Deloitte states that “this year, employee engagement and culture issues exploded onto the scene, rising to become the No. 1 challenge around the world.” Deloitte’s survey of businesses worldwide found that 87 percent percent believe the issue is important, while 50 percent called it very important.

“This year, employee engagement and culture issues exploded onto the scene, rising to become the No. 1 challenge around the world.” — Deloitte, “Global Human Capital Trends 2015”

Heightened business interest in worker engagement has included greater appreciation for its influence on absenteeism and disability management, said Karen English, a partner at Spring Consulting Group, an employee benefits and risk management consultancy.

“The concept is out there, it’s a matter of how much employers tie it all together,” English said.

Under one strategy tying employee engagement to absence management —whether absences are driven by workers’ compensation claims, short-term or long-term disability claims, or leave laws — HUB International advises employers to match the hiring of workers with roles that will specifically engage those employees.

To help employers do that, HUB International partners with Judgment Index, a company providing a predictive tool that helps businesses hire “the right person for the right job.” The tool “measures an individual’s judgment capacity as it relates to decision-making, stress management, how work is valued, and so forth,” according to a HUB paper on absence management.

The predictive tool, also named the Judgement Index, is neither an integrity test, a personality profile, IQ test, nor an emotional balance test, said Roger D. Wall, Judgment Index’s chief marketing officer.

The “values-based assessment” evaluates one’s judgment capacity and the strength of decisions they are capable of making, Wall said. It can help a prospective employer determine how motivated a prospective employee is and how well they fit a specific role, he added.

Advertisement




“We can tell you how motivated they are and what is their value of work,” Wall said. “If a person has a low value of work going into a work environment they are not going to be as engaged. And if a person becomes disabled (and) he doesn’t have a good value or work morale, he is going to be less inclined to go back to work.”

Completing the index takes a few minutes and requires subjects to rank or prioritize statements the subject deems most positive or agreeable.

Evaluating potential employees during the recruitment process with the goal of reducing absences or disability durations remains an innovative approach, said a disability-management consultant who asked not to be identified because they did not have corporate approval to speak.

For HUB International, applying the Judgment Index tool is a part of a comprehensive absence management approach that aims to integrate across workers’ entire “employment life cycle,” starting with their recruitment.

Employers are increasingly disregarding traditional corporate silos to develop comprehensive strategies for absence and disability management, HUB’s Mattaliano said. They are doing so by evaluating employee data regardless of whether it is generated by workers’ comp and disability claims, health and productivity measurements, group health outcomes or leave programs.

Roberto Ceniceros is senior editor at Risk & Insurance® and chair of the National Workers' Compensation and Disability Conference® & Expo. He can be reached at [email protected] Read more of his columns and features.
Share this article:

Sponsored: Lexington Insurance

Pathogens, Allergens and Globalization – Oh My!

Allergens and global supply chain increases risk to food manufacturers. But new analytical approaches help quantify potential contamination exposure.
By: | June 1, 2015 • 6 min read
Lex_BrandedContent

In 2014, a particular brand of cumin was used by dozens of food manufacturers to produce everything from spice mixes, hummus and bread crumbs to seasoned beef, poultry and pork products.

Yet, unbeknownst to these manufacturers, a potentially deadly contaminant was lurking…

Peanuts.

What followed was the largest allergy-related recall since the U.S. Food Allergen Labeling and Consumer Protection Act became law in 2006. Retailers pulled 600,000 pounds of meat off the market, as well as hundreds of other products. As of May 2015, reports of peanut contaminated cumin were still being posted by FDA.

Food manufacturing executives have long known that a product contamination event is a looming risk to their business. While pathogens remain a threat, the dramatic increase in food allergen recalls coupled with distant, global supply chains creates an even more unpredictable and perilous exposure.

Recently peanut, an allergen in cumin, has joined the increasing list of unlikely contaminants, taking its place among a growing list that includes melamine, mineral oil, Sudan red and others.

Lex_BrandedContent“I have seen bacterial contaminations that are more damaging to a company’s finances than if a fire burnt down the entire plant.”

— Nicky Alexandru, global head of Crisis Management at AIG

“An event such as the cumin contamination has a domino effect in the supply chain,” said Nicky Alexandru, global head of Crisis Management at AIG, which was the first company to provide contaminated product coverage almost 30 years ago. “With an ingredient like the cumin being used in hundreds of products, the third party damages add up quickly and may bankrupt the supplier. This leaves manufacturers with no ability to recoup their losses.”

“The result is that a single contaminated ingredient may cause damage on a global scale,” added Robert Nevin, vice president at Lexington Insurance Company, an AIG company.

Quality and food safety professionals are able to drive product safety in their own manufacturing operations utilizing processes like kill steps and foreign material detection. But such measures are ineffective against an unexpected contaminant. “Food and beverage manufacturers are constantly challenged to anticipate and foresee unlikely sources of potential contamination leading to product recall,” said Alexandru. “They understandably have more control over their own manufacturing environment but can’t always predict a distant supply chain failure.”

And while companies of various sizes are impacted by a contamination, small to medium size manufacturers are at particular risk. With less of a capital cushion, many of these companies could be forced out of business.

Historically, manufacturing executives were hindered in their risk mitigation efforts by a perceived inability to quantify the exposure. After all, one can’t manage what one can’t measure. But AIG has developed a new approach to calculate the monetary exposure for the individual analysis of the three major elements of a product contamination event: product recall and replacement, restoring a safe manufacturing environment and loss of market. With this more precise cost calculation in hand, risk managers and brokers can pursue more successful risk mitigation and management strategies.


Product Recall and Replacement

Lex_BrandedContentWhether the contamination is a microorganism or an allergen, the immediate steps are always the same. The affected products are identified, recalled and destroyed. New product has to be manufactured and shipped to fill the void created by the recall.

The recall and replacement element can be estimated using company data or models, such as NOVI. Most companies can estimate the maximum amount of product available in the stream of commerce at any point in time. NOVI, a free online tool provided by AIG, estimates the recall exposures associated with a contamination event.


Restore a Safe Manufacturing Environment

Once the recall is underway, concurrent resources are focused on removing the contamination from the manufacturing process, and restarting production.

“Unfortunately, this phase often results in shell-shocked managers,” said Nevin. “Most contingency planning focuses on the costs associated with the recall but fail to adequately plan for cleanup and downtime.”

“The losses associated with this phase can be similar to a fire or other property loss that causes the operation to shut down. The consequential financial loss is the same whether the plant is shut down due to a fire or a pathogen contamination.” added Alexandru. “And then you have to factor in the clean-up costs.”

Lex_BrandedContentLocating the source of pathogen contamination can make disinfecting a plant after a contamination event more difficult. A single microorganism living in a pipe or in a crevice can create an ongoing contamination.

“I have seen microbial contaminations that are more damaging to a company’s finances than if a fire burnt down the entire plant,” observed Alexandru.

Handling an allergen contamination can be more straightforward because it may be restricted to a single batch. That is, unless there is ingredient used across multiple batches and products that contains an unknown allergen, like peanut residual in cumin.

Supply chain investigation and testing associated with identifying a cross-contaminated ingredient is complicated, costly and time consuming. Again, the supplier can be rendered bankrupt leaving them unable to provide financial reimbursement to client manufacturers.

Lex_BrandedContent“Until companies recognize the true magnitude of the financial risk and account for each of three components of a contamination, they can’t effectively protect their balance sheet. Businesses can end up buying too little or no coverage at all, and before they know it, their business is gone.”

— Robert Nevin, vice president at Lexington Insurance, an AIG company


Loss of Market

Lex_BrandedContent

While the manufacturer is focused on recall and cleanup, the world of commerce continues without them. Customers shift to new suppliers or brands, often resulting in permanent damage to the manufacturer’s market share.

For manufacturers providing private label products to large retailers or grocers, the loss of a single client can be catastrophic.

“Often the customer will deem continuing the relationship as too risky and will switch to another supplier, or redistribute the business to existing suppliers” said Alexandru. “The manufacturer simply cannot find a replacement client; after all, there are a limited number of national retailers.”

On the consumer front, buyers may decide to switch brands based on the negative publicity or simply shift allegiance to another product. Given the competitiveness of the food business, it’s very difficult and costly to get consumers to come back.

“It’s a sad fact that by the time a manufacturer completes a recall, cleans up the plant and gets the product back on the shelf, some people may be hesitant to buy it.” said Nevin.

A complicating factor not always planned for by small and mid-sized companies, is publicity.

The recent incident surrounding a serious ice cream contamination forced both regulatory agencies and the manufacturer to be aggressive in remedial actions. The details of this incident and other contamination events were swiftly and highly publicized. This can be as damaging as the contamination itself and may exacerbate any or all of the three elements discussed above.


Estimating the Financial Risk May Save Your Company

“In our experience, most companies retain product contamination losses within their own balance sheet.” Nevin said. “But in reality, they rarely do a thorough evaluation of the financial risk and sometimes the company simply cannot absorb the financial consequences of a contamination. Potential for loss is much greater when factoring in all three components of a contamination event.”

This brief video provides a concise overview of the three elements of the product contamination event and the NOVI tool and benefits:

Lex_BrandedContent

“Until companies recognize the true magnitude of the financial risk and account for each of three components of a contamination, they can’t effectively protect their balance sheet,” he said. “Businesses can end up buying too little or no coverage at all, and before they know it, their business is gone.”

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




Lexington Insurance Company, an AIG Company, is the leading U.S.-based surplus lines insurer.
Share this article: