An improving job market brings opportunities for employees in the workers’ compensation industry along with challenges for their employers and their employers’ customers. One large third-party administrator is experiencing an “uptick” in employee turnover as the economy gradually improves, the organization’s leader recently discussed at a conference. Other TPA executives tell me their employee retention levels remain flat, but one can reasonably foresee a repeat of the first TPA’s experience as more job opportunities arise.
An improving economy is good for everyone and a worker’s ability to advance into a better job is a positive sign that the economy is functioning as it should, by efficiently allocating resources.
When the economy tanked, for example, a risk manager I have known for years reluctantly returned to a TPA adjuster job following a layoff. Her skills were under-utilized and she wasn’t happy about returning to a role she had held before advancing in her career.
As the economy improved, she landed a risk management position where she is now happier, fully applying her broader knowledge. Her new employer also benefits from her skill set that was under-utilized during the recession.
The catch is that even moderate employee turnover among TPAs is difficult for customers, industry leaders tell me, presenting challenges for customer service continuity.
Clients suffer when a new adjuster assumes a file they are unfamiliar with. Customers like the service consistency delivered by adjusters and other TPA employees familiar with their business practices and claims handling preferences. They want to keep adjusters they have developed solid working relations with.
Losing employees also concerns TPAs because they can see their recruiting and training investments walk out the door.
Consequently, TPA executives are talking more about improving career advancement opportunities for their workers and how they might reshape careers in their industry so they can retain employees. That’s going to mean getting inside people’s heads and understanding their motivations.
There are many reasons people switch jobs, including commute times, salary increases, workplace personnel issues and career advancement.
A founding member of the Disability Management Employer Coalition recently suggested I write a story about the job churn he now sees among the disability insurers, consultants, and employers he has known for years. He thinks the movement is caused by the corporate demands that emerged during the recession, as companies moved to do more with less.
He thinks workers are moving in hopes of a lighter workload. I can’t verify whether his theory about the cause of job changes is correct.
But given his position in the disability management community, I suspect his observation that more professionals are moving on as the business outlook improves is on target.
The labor market has not fully recovered from the Great Recession’s impact. But industry leaders would be wise to look ahead and rethink employee retention strategies.
This is a cyclical challenge TPAs have faced before. Pre-recession, when the economy was booming, employee churn was significant, I’m told. But TPAs won’t be the only ones wrestling with these issues as the economy continues improving.
On the Case
Chances are greater today than ever that a workers’ compensation claimant will speak with a registered nurse, either telephonically or in person.
There is also greater likelihood that an injured worker with an ongoing claim will interact with a nurse case manager earlier in the life of that claim than occurred in the past. Those with new injuries, meanwhile, are more likely to speak with a “triage” nurse to help determine whether they need further medical assistance.
Increasingly, nurses are being used in a variety of workers’ comp roles, from providing counseling for injured workers, to becoming more aggressive questioners and overseers of medical treatment.
Hence, the constant appearance of want ads placed by workers’ comp companies seeking registered nurses, usually with case management skills, capable of helping manage disabilities and returning injured workers to the job.
Expect to see the number of those want ads grow as workers’ comp payers look to stem increasing claims complexity and medical expenses.
Over the next several years, employment of U.S. nurse case managers is expected to grow 3.3 percent annually. At the same time, the medical case management industry’s revenue is expected to grow by 3.6 percent annually, to an estimated $6.7 billion in 2018, according to a September 2013 report by IBIS World, an industry intelligence and research firm.
Those statistics reflect an expected growth in demand for all nurse case managers, including those working in group health. But much of the growth will come from workers’ comp, as the number of workers in the U.S. increases, the report stated.
Historically, hiring trends for nurses in group health and workers’ comp are cyclical.
Efforts to hire workers’ comp nurse case managers plateaued about five to seven years ago following a “huge increase,” said Linda Walker, a board member of the American Association of Occupational Health Nurses.
The growth spurt came when workers’ comp insurers and third-party administrators found they needed more registered nurses to help comply with increasingly complex medical laws and to ensure medical providers followed treatment guidelines, she said.
The hiring run ended due to the Great Recession’s impact on employment, according to IBIS World.
Part of the reason case nurses are so much more in demand today is that claims are much more complex today than in years past, said Liz Thompson, CEO at Encore Unlimited LLC, a case management company in Stevens Point, Wisc.
Comorbidities, an aging workforce, and narcotic prescriptions are driving claims complexities. Nurses are also spending more time addressing behavioral and psychosocial issues beyond the original workplace injury, Thompson said.
“Nurse case managers are really needed to help the insurance community navigate through these complex issues,” Thompson said.
Burgeoning Job Rolls
The proof of that need is that workers’ comp insurers and third-party administrators interviewed for this story said they employ many more nurses today than they did a decade ago.
Sedgwick Claims Management Services Inc., for example, employs more than 400 nurses, double the amount of five years ago, said Teresa Bartlett, senior VP and medical director at the company.
Travelers employs more than 500 registered nurses servicing workers’ comp claims nationwide. Their use was made necessary as the ratio of medical expense to indemnity costs for an average claim increased, said Jim Wucherpfenning, VP of workers’ compensation for Travelers.
Assigning nurses with the knowledge and communication skills to interact with injured workers and doctors alike speeds the recovery process and gets workers back on the job sooner, he said.
“We believe you get the best medical case management when those pieces of a claim are handled by a medical professional,” Wucherpfenning said.
Other claims payers have also increased in-house nursing staff to manage medical care costs.
“The operational models of carriers or payers increasingly have some commitment to in-house nursing to supplement adjusting staff,” said Ronald J. Skrocki, VP, product management and development at GENEX Services Inc. “Maybe 15 years ago there was some of that.”
Skrocki said it is hard to find a major payer today that isn’t using more nurses either in-house or in an outsourced function. No matter how the industry accesses the talent, it needs more of it, he said.
Melinda Hayes, president and CEO of managed-care company MHayes, said that while some large workers’ comp insurers employ hundreds of nurses, they also contract with her company for nurse field case managers and to bolster their telephonic nursing staff.
For older, complex claims, she has seen her nurse field case managers called in earlier today, with the average time from injury to referral dropping from 2.53 years in 2011 to 1.84 years in 2014, Hayes said.
Predictive analytics also plays a role, as it helps adjusters determine which cases will benefit from nurse oversight of medical care. The technology also helps ensure nurses are not unnecessarily assigned to cases that won’t benefit from their involvement, preventing wasteful expenses, experts said.
Slaves to Process
Insurers and other companies providing case managers and other nursing services also have best practices, treatment guidelines, protocols and client handling instructions that their nurses must follow. The measures are intended to help deliver proper care to speed recovery.
But some workers’ comp observers express concern that today’s case managers spend their workday adhering to those processes, rather than critically evaluating claims and applying their medical expertise to improve outcomes.
“I don’t need to pay for you to scribe. I need a critical thinker and a decision-maker and to challenge what is happening in the exam room.” — Judie Tsanopoulos, director of workers’ comp and loss control, St. Joseph Health System
Field case management nurses are now far less likely to engage in critical practices such as questioning a doctor’s treatment decisions when necessary, said Sherri Hickey, director of medical management for workers’ compensation insurer Safety National.
Instead they focus on following protocols and processes, such as making sure patients find their way to a contracted medical provider network. She doesn’t see as many nurses with the “more aggressive, challenging attitude” she believes is necessary.
“I find some of the nurses now are a lot more process-oriented,” she said.
“They get a little busy with all that work and they are not really focusing on what is the best outcome for the patient. It is more processing than it is looking at the best outcome and how to facilitate that best outcome.”
Hickey is a registered nurse supervising two other Safety National nurses. Hickey and the Safety National in-house nurses in turn police the field case managers assigned to claims by TPAs to make sure the field case managers are doing their jobs properly.
“We are calling those case managers and having discussions on the phone and saying, ‘Have you asked the [medical provider]this question, have you pursued this theory, have you asked them why they are doing this versus that,’ ” she said.
“We force them into that a little more.”
Judie Tsanopoulos, director of workers’ comp and loss control at St. Joseph Health System in Orange, Calif., agreed that some field case managers have become increasingly process-oriented to the detriment of good patient care.
“Absolutely,” she said. “We have had difficulty finding good nurse case managers.”
She discontinued relations with some field case management companies because their nurses merely accompanied claimants to medical appointments and took notes, but did not ask enough probing questions.
“I would get their reports and all they did was scribe,” Tsanopoulos said.
“I don’t need to pay for you to scribe. I need a critical thinker and a decision-maker and to challenge what is happening in the exam room,” she said.
“That is what I want to pay for and I want them to take their technical skills and clinical skills and utilize them.”
Done right though, nurse case management can have a huge impact on resolving claims.
Tsanopoulos said she spends significant sums for the liberal use of nurse case managers. It increases spending up-front but ultimately reduces claims durations and the costs of ongoing claims.
Over the years, the roles and training of workers’ comp nurse case managers has evolved, experts said.
Today’s nurses, for example, are more likely to be trained in “motivational interviewing,” said Susan DeMarino, vice president of accreditation services at URAC, a Washington, D.C.-based nonprofit that accredits case management and other health care programs.
The training includes best practices for eliciting information from claimants and empathizing with patients who may be mistrustful of the workers’ comp system.
“Case managers are getting additional training and education on how to ask questions to better engage the injured worker,” she said. “We started hearing about it about five years ago, but we are starting to see it being applied more.”
Of course, how well nurse case managers perform will be up to the individual. Rest assured, the workers’ compensation risk management industry needs as many of the good ones as it can get these days.
Read more of our three-part series on nurse case management:
Part I: On the Case
Payers are looking for spirited nurse case managers who will be patient motivators and advocates, not slaves to process.
Part II: How Much Is Too Much?
Nurse case managers can provide vital consultation, but contractual limits to the expenses associated with the service are advisable.
Part III: Available in the December 2014 issue.
A Renaissance In U.S. Energy
America’s energy resurgence is one of the biggest economic game-changers in modern global history. Current technologies are extracting more oil and gas from shale, oil sands and beneath the ocean floor.
Domestic manufacturers once clamoring for more affordable fuels now have them. Breaking from its past role as a hungry energy importer, the U.S. is moving toward potentially becoming a major energy exporter.
“As the surge in domestic energy production becomes a game-changer, it’s time to change the game when it comes to both midstream and downstream energy risk management and risk transfer,” said Rob Rokicki, a New York-based senior vice president with Liberty International Underwriters (LIU) with 25 years of experience underwriting energy property risks around the globe.
Given the domino effect, whereby critical issues impact each other, today’s businesses and insurers can no longer look at challenges in isolation one issue at a time. A holistic, collaborative and integrated approach to minimizing risk and improving outcomes is called for instead.
Aging Infrastructure, Aging Personnel
The irony of the domestic energy surge is that just as the industry is poised to capitalize on the bonanza, its infrastructure is in serious need of improvement. Ten years ago, the domestic refining industry was declining, with much of the industry moving overseas. That decline was exacerbated by the Great Recession, meaning even less investment went into the domestic energy infrastructure, which is now facing a sudden upsurge in the volume of gas and oil it’s being called on to handle and process.
“We are in a renaissance for energy’s midstream and downstream business leading us to a critical point that no one predicted,” Rokicki said. “Plants that were once stranded assets have become diamonds based on their location. Plus, there was not a lot of new talent coming into the industry during that fallow period.”
In fact, according to a 2014 Manpower Inc. study, an aging workforce along with a lack of new talent and skills coming in is one of the largest threats facing the energy sector today. Other estimates show that during the next decade, approximately 50 percent of those working in the energy industry will be retiring. “So risk managers can now add concerns about an aging workforce to concerns about the aging infrastructure,” he said.
Increasing Frequency of Severity
Current financial factors have also contributed to a marked increase in frequency of severity losses in both the midstream and downstream energy sector. The costs associated with upgrades, debottlenecking and replacement of equipment, have increased significantly,” Rokicki said. For example, a small loss 10 years ago in the $1 million to $5 million ranges, is now increasing rapidly and could readily develop into a $20 million to $30 million loss.
Man-made disasters, such as fires and explosions that are linked to aging infrastructure and the decrease in experienced staff due to the aging workforce, play a big part. The location of energy midstream and downstream facilities has added to the underwriting risk.
“When you look at energy plants, they tend to be located around rivers, near ports, or near a harbor. These assets are susceptible to flood and storm surge exposure from a natural catastrophe standpoint. We are seeing greater concentrations of assets located in areas that are highly exposed to natural catastrophe perils,” Rokicki explained.
“A hurricane thirty years ago would affect fewer installations then a storm does today. This increases aggregation and the magnitude for potential loss.”
On its own, the domestic energy bonanza presents complex risk management challenges.
However, gradual changes to insurance coverage for both midstream and downstream energy have complicated the situation further. Broadening coverage over the decades by downstream energy carriers has led to greater uncertainty in adjusting claims.
A combination of the downturn in domestic energy production, the recession and soft insurance market cycles meant greatly increased competition from carriers and resulted in the writing of untested policy language.
In effect, the industry went from an environment of tested policy language and structure to vague and ambiguous policy language.
Keep in mind that no one carrier has the capacity to underwrite a $3 billion oil refinery. Each insurance program has many carriers that subscribe and share the risk, with each carrier potentially participating on differential terms.
“Achieving clarity in the policy language is getting very complicated and potentially detrimental,” Rokicki said.
Back to Basics
Has the time come for a reset?
Rokicki proposes getting back to basics with both midstream and downstream energy risk management and risk transfer.
He recommends that the insured, the broker, and the carrier’s underwriter, engineer and claims executive sit down and make sure they are all on the same page about coverage terms and conditions.
It’s something the industry used to do and got away from, but needs to get back to.
“Having a claims person involved with policy wording before a loss is of the utmost importance,” Rokicki said, “because that claims executive can best explain to the insured what they can expect from policy coverage prior to any loss, eliminating the frustration of interpreting today’s policy wording.”
As well, having an engineer and underwriter working on the team with dual accountability and responsibility can be invaluable, often leading to innovative coverage solutions for clients as a result of close collaboration.
According to Rokicki, the best time to have this collaborative discussion is at the mid-point in a policy year. For a property policy that runs from July 1 through June 30, for example, the meeting should happen in December or January. If underwriters try to discuss policy-wording concerns during the renewal period on their own, the process tends to get overshadowed by the negotiations centered around premiums.
After a loss occurs is not the best time to find out everyone was thinking differently about the coverage,” he said.
Changes in both the energy and insurance markets require a new approach to minimizing risk. A more holistic, less siloed approach is called for in today’s climate. Carriers need to conduct more complex analysis across multiple measures and have in-depth conversations with brokers and insureds to create a better understanding and collectively develop the best solutions. LIU’s integrated business approach utilizing underwriters, engineers and claims executives provides a solid platform for realizing success in this new and ever-changing energy environment.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty International Underwriters. The editorial staff of Risk & Insurance had no role in its preparation.