Physician Networks

MPNs Not All They’re Cracked Up to Be

Despite early promise, California's provider networks haven't sustained their power to lower workers' comp medical costs.
By: | July 13, 2015 • 3 min read
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California’s medical provider networks have resulted in increased participation in networks, lower rates of attorney involvement, and higher rates of claim closure. But a new study also shows MPNs have not sustained their ability to significantly lower medical costs in the workers’ comp system.

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While not an indictment of MPNs, the California Workers’ Compensation Institute said their findings indicated several shortcomings, including a first-time showing that average medical payments on MPN claims with attorney involvement cost 2 percent more than non-MPN claims with attorneys. The report is based on data from more than 1.8 million claims between accident year 2000 through AY 2011.

“The bottom line is that physician networks now manage most California workers’ compensation treatment, but in recent years the cost savings historically associated with network medical management have declined,” the report said.  After adjusting for claimant characteristics, injury type, and administrative aspects, “average savings associated with network vs. non-network medical management on lost-time claims declined from 16 percent in the preferred provider organization era to 3 percent after MPNs became fully operational.”

MPNs were introduced in California in 2005 and “were intended to ensure appropriate levels of treatment, improve efficiency, better coordinate treatment, and reduce the cost of care,” the authors wrote. They allow workers’ comp payers to use networks of medical providers for injured workers and, unlike prior regulations, allow employers to retain medical control for the life of a claim. Previous research has shown medical provider networks were typically associated with lower costs and facilitated return to work.

The researchers measured the percentage of all claims and indemnity claims in which the primary treating physician involved was a network provider. They also tracked average medical payments for network vs. non-network claims and reviewed the changing nature and characteristics of claims managed inside and outside of a network. Their findings included:

  • Network utilization overall increased from 55.4 percent in the PPO period to 79.5 percent in the full MPN period. For indemnity claims, it increased from 44.2 percent to 77.2 percent.
  • Network claims had higher claim closure rates. However, the rate for network claims at 12 months post-injury decreased from 72.7 percent in the PPO period to 61.2 percent in the full MPN period.
  • The percentage of network indemnity claims with at least one opioid prescription increased from 39.1 percent in the PPO period to 54.5 percent in the full MPN period.
  • Average risk-adjusted medical payments on network claims with opioids were 16 percent less for network claims than for non-network claims in the PPO period, but were 20 percent less in the full MPN period.
  • Average risk-adjusted medical payments on indemnity claims at 24 months post-injury were 16 percent less for network claims than for non-network claims in the PPO era, but were only 3 percent less in the full MPN period.

The authors said there was “considerable variation” among individual networks with “just as many networks generating lower average costs per claim as higher average costs per claim when their results were compared to those of claims managed outside of a network. This suggests not only variations among network physician rosters, but in the medical management and reimbursement systems used by the various networks, as well as in the populations and regions served.”

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There were “significant” geographic variations, according to the report. Networks generated significant savings in several areas. However, the savings associated with network management in Los Angeles County “completely evaporated in recent years, with the spread between the average medical payments for network and non-network claims declining from 12 percent in the PPO era to no difference in the full MPN period.”

With provider networks evolving in the California workers’ comp system, “clearly, the clinical and regulatory complexity of providing treatment for occupational injuries requires greater network vigilance than ever before,” the report said.

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]
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Column: Workers' Comp

Integration Ramps Up

By: | May 6, 2015 • 2 min read
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.

Employer interest in grouping the management of workers’ compensation, nonoccupational disability and employee absence is spreading. The Affordable Care Act, amendments to the Americans with Disabilities Act, employee leave mandates and employer cost-reduction measures are all factors driving the trend.

Some larger employers with more ample risk management resources realized years ago the value of viewing employee health and wellness, disability management and claims administration through one lens.

These trendsetters understood that they faced productivity losses and increased health care costs when employees are ill or absent, regardless of whether the cause is a work-related injury, a nonoccupational disability or the need to care for family members.

They were also quicker to garner synergies by collaboratively administering some programs traditionally handled by human resources or risk management departments.

Now we’re seeing brokers that traditionally provided property/casualty services competing with benefits service consultants to advise clients looking to improve employee health and wellness.

But now a trend to comprehensively evaluate the management of short- and long-term disability offerings, workers’ comp, Family and Medical Leave Act, and ADA compliance is spreading among middle-market employers as well.

They are growing increasingly interested in managing employee absences and medical costs — no matter if the cause is rooted in workers’ comp claims, nonoccupational disabilities, or leave laws like the FMLA.

Recognizing the trend, brokers, third-party administrators and insurers are now offering products and services to middle market employers that want to link management of these areas.

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Now we’re seeing brokers that traditionally provided property/casualty services competing with benefits service consultants to advise clients looking to improve employee health and wellness.

As those employers move forward to further health and wellness goals they are asking how they might incorporate their workers’ comp program and claims management strategies.

Overall, though, many employers still manage occupational and nonoccupational disabilities in silos.

Thus, they miss opportunities to identify employees at risk for future lost work time.

It’s common for some claimants to cross over, utilizing both occupational and nonoccupational disability systems, according to a February 2015 report from the Integrated Benefits Institute.

IBI President Thomas Parry said he sees more employers now sharing information across the silos, rather than creating a single organizational unit to manage everything.

Broad-based and well-publicized federal regulatory change is spurring the practice of shared management or shared information.

The Affordable Care Act is designed to promote opportunities to gain from wellness and prevention initiatives that impact injury and illness, whether the cause is occupational or not.

Similarly, increased ADA, FMLA and other leave and accommodation law mandates cut across both areas.

And during the recession, many employers cut their risk or disability staffs and now need practices for efficiently managing claims using less human resources.

Those that underwrite their risks and consult on them have taken notice.

 

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A Global Perspective

Political risk is on the rise in an increasingly unsteady world.
By: | August 3, 2015 • 5 min read
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As any traveler knows, the world is full of uncertainty and dangerous places, where the challenges of simply trying to run a profitable business far from home are complicated by even greater risks, such as political violence, civil unrest, credit risk, corruption, expropriation of private assets by the government, and more.

Anyone doubting this need only take a look at current events. Some 70 percent of the world’s nations currently have serious corruption problems throughout their governmental and civil service framework. Nearly 40 percent of all nations are experiencing some form of significant civil unrest. Signs of economic distress are everywhere, from falling oil prices to Eurozone debt crises to economic slowdown in China.

Despite such geopolitical risks, the world still needs its businesses to continue running amid dangers that range from warfare and terrorism to punishing economic conditions caused by international sanctions, to simple graft and hostility toward foreigners.

For global and multinational companies, keeping an eye on their political risk profile is as important as handling worker safety, environmental impact, products liability, or any other insurable risk. Thankfully, political risk exposures are insurable as well, and Starr Companies is there to provide its clients with robust political risk insurance coverage, a suite of unique support services that truly is second to none, and the ability to educate clients on how to manage their political risk.

Political risk hazards generally fall into one of the following categories:

Breach of Contract and Non-Honoring of Financial Obligations

Starr_BrandedContentThese related hazards involve the failure of a local actor to uphold their contractual or financial obligations to a foreign investor, and the inability or unwillingness of local authorities to intercede on the foreign investor’s behalf. This is perhaps the most common form of political risk hazard, as it is a major problem in any environment where there is substantial economic instability and/or corruption.

Confiscation of Property

Also known as “expropriation,” “ownership risk” and “nationalization,” this is when a government seizes property or assets without compensating the owners for them. An overt example of expropriation would be a revolutionary government seizing an office building or a factory belonging to a foreign-owned corporation. An example of creeping expropriation would be a series of successive events by a government to gradually deprive an investor of their property rights.

Regulatory Changes

This is when the local laws change in such a way as to constrict foreign investors’ economic activity in some way. It could range from creeping expropriation to changing taxation or labor laws that might simply make it far less profitable or far less efficient for a foreign entity to operate in a local jurisdiction.

Inconvertability of Currency

Also known as “transfer risk,” this is when a government takes action to prevent the conversion of local currency to another form of currency, making it difficult or impossible for foreign investors to transfer their profits elsewhere. This tends to happen in countries undergoing some kind of political crisis, like when Zaire—now the Democratic Republic of Congo—declared a new national currency in 1980.

Political Violence

Starr_BrandedContentProperty or income losses stemming from violence committed for political purposes, including, but not limited to declared and undeclared warfare, hostile actions taken by foreign or international forces, civil war, revolution, insurrection and civil strife (politically motivated terrorism or sabotage).

Kidnap and Ransom

Political violence might also manifest itself as a kidnap, ransom and extortion hazard, but that is typically covered by a separate, specialized policy.

To protect against these risks, insurers can provide comprehensive and custom-tailored political risk solutions, which at a client’s request can be broadened to cover investment contract repudiation, currency inconvertibility and political violence. Such policies typically last for periods of 5 to 10 years. Protected assets for this coverage include fixed assets (e.g., a factory, farm, warehouse or office), mobile assets (e.g., harvested natural resources, raw or manufactured inventory or mobile equipment), leased assets (e.g., aircraft, watercraft or construction vehicles) and investment interests in assets abroad (e.g., money dedicated to funding a foreign project, held in a host country bank and subject to expropriation).

Kidnap & ransom coverage protects company personnel and family by providing financial reimbursement for such an event. Depending on the insurer, some K&R programs also provide independent expert consultancy before and after a potential act of kidnapping, ransom or extortion.

Starr_BrandedContentGreat insurance coverage isn’t enough to adequately protect against political risk, however. Businesses need extra support to stay on top of their exposures, and to know what the latest geopolitical developments are.

 

Starr Companies, for example, does this through Global Risk Intelligence, a specialized team of political risk experts with long-standing backgrounds in national intelligence and international affairs. GRI delivers to Starr clients a unique risk advisory service that spans the gamut of commercial property & casualty exposures. GRI also produces two assets that are extremely helpful. The first is the Executive Intelligence Brief, a world-class monthly analysis of ongoing geopolitical developments (especially in emerging markets) available exclusively to a carefully selected readership of top executives. The second is the Global Risk Matrix, a quarterly ranking of the overall political security risk of every country on the planet.

The world’s geopolitical landscape is changing at a remarkable pace, with new risks and uncertainties arising in even the unlikeliest of places. And yet, as business becomes ever more globalized, insurers can provide their clients with tailored coverage to absorb the losses that stem from political turmoil. By finding the right insurer, with the financial strength to cover their risks as well as the analytical acumen to help turn risk into opportunity, businesses can create partners in prosperity anywhere in the world.

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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 Starr Companies. The editorial staff of Risk & Insurance had no role in its preparation.




Starr Companies is a global commercial insurance and financial services organization that provides innovative risk management solutions.
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