Early Case Management Speeds RTW, Report Says
Workers’ comp payers need to develop their own tipping points when seemingly routine claims escalate to high-cost levels. That’s among the strategies suggested in a new white paper.
Genex, a managed care firm, analyzed 46,000 claims over 12 months to identify characteristics that may signal a rapid escalation into excessive costs. While admitting there is no magic formula, the company says there are indications that a claim may be one of the estimated 5 percent that will turn into long-term, chronic cases that may cost millions of dollars. Among them are:
- Poor initial physician diagnosis
- Doctor hopping (e.g., three or more specialty physicians)
- Lack of modified work duty options
- Poor employee/employer relationships
- Psycho-social factors, including poor family support
- Preexisting conditions
- Alcohol or drug dependence
“One of the most important steps employers and carriers can take is to analyze claims and to engage telephonic case management for even routine injuries when two or more red flags are identified,” said Pat Chavanu, senior vice president at Genex. “As an industry we have to move away from setting arbitrary dollar figures for when to bring in case management; we need to utilize it earlier when it can make a difference in terms of costs, outcomes and the well-being of the worker.”
According to the analysis, delaying case management for a year can decrease the likelihood of the injured worker returning to work by nearly 20 percent. Claims that use case management in the first nine months are two times more likely to have a successful RTW as those referred three years after the incident.
“This does not mean, however, using case management for all claims,” the paper said. “Benchmarks, data, organizational culture and goals must be defined and incorporated into employer tipping point criteria.”
The company advises payers to hold case management programs accountable. “Look at their costs, how quickly they return employees to work, and whether they help to reduce litigation,” the paper said. “Does the organization also tell you when case management is not necessary? Ask claimants about their experience. Is it positive, negative?”
Payers should develop criteria based on the organization’s RTW goals, the paper advised. Also, they should make sure injured workers have access to a network of savvy workers’ comp providers, and give adjusters tools and resources to identify red flag claim characteristics.
Workers’ Participation Necessary for ADA Compliance
Want to avoid problems with the Americans with Disabilities Act? Get the injured worker involved from the get go in new injuries. That’s the advice of two experts.
Employers who turn a blind eye to the reasonable accommodation process early in the claims process may be acting illegally. Workers’ comp practitioners need to understand the nuances of the ADA in order to be in compliance.
“We in the workers’ comp industry have tended to do stay-at-work/return-to-work without the participation of the worker,” said Dr. Jennifer Christian, president of Webility Corporation and a veteran workers’ comp/disability expert. “The big difference I heard when talking to Aaron is that the worker needs to be involved in the discussion — at every step.”
“Aaron” is Aaron Konopasky, senior attorney advisor in the Equal Employment Opportunity Commission’s ADA/GINA Policy Division. As the chair of the work fitness and disability section of the American College of Occupational & Environmental Medicine, Christian is a member of a national return-to-work advisory group for the Department of Labor’s Office of Disability Employment Policy. Part of her role is developing a policy paper on promoting function and work as a health outcome for which stakeholders can be held accountable.
Christian said she was surprised to learn the ADA applies anytime a medical condition can potentially disrupt an employee’s participation in work. “There are people who come in with a disability, and those who acquire a disability while working for you,” she explained. “The ADA applies to any kind of health condition that will have a substantial impact on somebody’s ability to come to work and do their job.”
The need for active engagement by the injured worker is drawn from language in the ADA. Largely misunderstood by many employers, it is called the interactive process.
The ADA is a civil rights act that was signed into law on July 26, 1990, and amended effective Jan. 1, 2009. The law includes a requirement that employers reasonably accommodate their employees’ disabilities, ideally with input from the employee.
“The law says that an appropriate reasonable accommodation is best determined through a flexible, interactive process that involves both the employer and the individual with a disability,” Christian said.
Once the employer has received the leave accommodation request from the employee with a disability, “the employer must engage in the ADA interactive accommodation process with the employee to determine whether there is a reasonable workplace accommodation that will enable the employee to perform the essential functions of his or her position,” according to a white paper on the ADA published by The Reed Group. “The process includes discussion and exchange of information between the employee and the employer, and sometimes with medical professionals or others.”
While the ADA does not specifically define the interactive process, the EEOC says it shows employers are making a good-faith effort to comply with the ADA, according to the Job Accommodation Network. “And from a practical standpoint, it is a way to streamline the accommodation process and help insure that effective accommodations are provided.”
According to Christian, the provision means “that injured workers will need to be active participants in their employers’ stay-at-work and return-to-work decision-making process.”
Language about the interactive process is included in the appendix to the administrative rules to the ADA with several problem-solving steps employers should use. The law says reasonable accommodations should be determined by an interactive process, which can include:
- Analyzing the particular job involved, its purpose, and essential functions.
- Consulting with the individual to ascertain the precise job-related limitations imposed by the disability and how they could be overcome with a reasonable accommodation.
- Working with the injured person, identifying potential accommodations, and assessing the effectiveness of each.
- Considering the employee’s preference and selecting and implementing the accommodation that is most appropriate for both the employee and the employer.
Advice for Employers
ADA-related issues can occur at many different points during an employee’s recovery from an injury. Employers need to evaluate and manage workers’ comp and ADA legal issues simultaneously. Christian and Konopasky collaborated to write some concise guidance for employers on why, when, and how to do that.
“You have to think of the ADA and workers’ comp — or short-term-disability — running concurrently, not sequentially,” Christian said. “That’s the administrative compliance angle.”
As she and Konopasky explained, obligations for reasonable accommodation start when the employer realizes a worker’s medical problem is impacting the employee’s ability to work. “If the condition has the potential to significantly disrupt the employee’s work participation, the employer should immediately engage the worker in an interactive process to look for a reasonable accommodation under the ADA,” they wrote.
The three identified specific times when the ADA may apply:
- At the time a person is injured. “No matter whether the condition is already stable or is still evolving, the ADA may require the employer to provide a reasonable accommodation that would enable the individual to perform his or her essential job functions, unless doing so would involve significant difficulty or expense.”
- While recovering out of work due to injury. If the worker has been unable to work at all for a period, the interactive process should begin as soon as the worker’s condition is stable enough that a reasonable accommodation might allow the worker to perform the essential functions of the job.
- When the individual has exhausted his leave and workers’ compensation benefits and is still unable to return to the original position even with an on-the-job reasonable accommodation. At this point, whether or not the medical condition has reached MMI, the employer should consider other forms of reasonable accommodation.
2015 General Liability Renewal Outlook
There was a time, not too long ago, when prices for general liability (GL) insurance would fluctuate significantly.
Prices would decrease as new markets offered additional capacity and wanted to gain a foothold by winning business with attractive rates. Conversely, prices could be driven higher by decreases in capacity — caused by either significant losses or departing markets.
This “insurance cycle” was driven mostly by market forces of supply and demand instead of the underlying cost of the risk. The result was unstable markets — challenging buyers, brokers and carriers.
However, as risk managers and their brokers work on 2015 renewals, they’ll undoubtedly recognize that prices are relatively stable. In fact, prices have been stable for the last several years in spite of many events and developments that might have caused fluctuations in the past.
Mark Moitoso discusses general liability pricing and the flattening of the insurance cycle.
Flattening the GL insurance cycle
Any discussion of today’s stable GL market has to start with data and analytics.
These powerful new capabilities offer deeper insight into trends and uncover new information about risks. As a result, buyers, brokers and insurers are increasingly mining data, monitoring trends and building in-house analytical staff.
“The increased focus on analytics is what’s kept pricing fairly stable in the casualty world,” said Mark Moitoso, executive vice president and general manager, National Accounts Casualty at Liberty Mutual Insurance.
With the increased use of analytics, all parties have a better understanding of trends and cost drivers. It’s made buyers, brokers and carriers much more sophisticated and helped pricing reflect actual risk and costs, rather than market cycle.
The stability of the GL market also reflects many new sources of capital that have entered the market over the past few years. In fact, today, there are roughly three times as many insurers competing for a GL risk than three years ago.
Unlike past fluctuations in capacity, this appears to be a fundamental shift in the competitive landscape.
“The current risk environment underscores the value of the insurer, broker and buyer getting together to figure out the exposures they have, and the best ways to manage them, through risk control, claims management and a strategic risk management program.”
— David Perez, executive vice president and general manager, Commercial Insurance Specialty, Liberty Mutual
Dynamic risks lurking
The proliferation of new insurance companies has not been matched by an influx of new underwriting talent.
The result is the potential dilution of existing talent, creating an opportunity for insurers and brokers with talent and expertise to add even greater value to buyers by helping them understand the new and continuing risks impacting GL.
And today’s business environment presents many of these risks:
- Mass torts and class-action lawsuits: Understanding complex cases, exhausting subrogation opportunities, and wrangling with multiple plaintiffs to settle a case requires significant expertise and skill.
- Medical cost inflation: A 2014 PricewaterhouseCoopers report predicts a medical cost inflation rate of 6.8 percent. That’s had an immediate impact in increasing loss costs per commercial auto claim and it will eventually extend to longer-tail casualty businesses like GL.
- Legal costs: Hourly rates as well as award and settlement costs are all increasing.
- Industry and geographic factors: A few examples include the energy sector struggling with growing auto losses and construction companies working in New York state contending with the antiquated New York Labor Law
David Perez outlines the risks general liability buyers and brokers currently face.
Managing GL costs in a flat market
While the flattening of the GL insurance cycle removes a key source of expense volatility for risk managers, emerging risks present many challenges.
With the stable market creating general price parity among insurers, it’s more important than ever to select underwriting partners based on their expertise, experience and claims handling record – in short, their ability to help better manage the total cost of GL.
And the key word is indeed “partners.”
“The current risk environment underscores the value of the insurer, broker and buyer getting together to figure out the exposures they have, and the best ways to manage them — through risk control, claims management and a strategic risk management program,” said David Perez, executive vice president and general manager, Commercial Insurance Specialty at Liberty Mutual.
While analytics and data are key drivers to the underwriting process, the complete picture of a company’s risk profile is never fully painted by numbers alone. This perspective is not universally understood and is a key differentiator between an experienced underwriter and a simple analyst.
“We have the ability to influence underwriting decisions based on experience with the customer, knowledge of that customer, and knowledge of how they handle their own risks — things that aren’t necessarily captured in the analytical environment,” said Moitoso.
Mark Moitoso suggests looking at GL spend like one would look at total cost of risk.
Several other factors are critical in choosing an insurance partner that can help manage the total cost of your GL program:
Clear, concise contracts: The policy contract language often determines the outcome of a GL case. Investing time up-front to strategically address risk transfer through contractual language can control GL claim costs.
“A lot of the efficacy we find in claims is driven by the clear intent that’s delivered by the policy,” said Perez.
Legal cost management: Two other key drivers of GL claim outcomes are settlement and trial. The best GL programs include sophisticated legal management approaches that aggressively contain legal costs while also maximizing success factors.
“Buyers and brokers must understand the value an insurer can provide in managing legal outcomes and spending,” noted Perez. “Explore if and how the insurer evaluates potential providers in light of the specific jurisdiction and injury; reviews legal bills; and offers data-driven tools that help negotiations by tracking the range of settlements for similar cases.”
David Perez on managing legal costs.
Specialized claims approach: Resolving claims quickly and fairly is best accomplished by knowledgeable professionals. Working with an insurer whose claims organization is comprised of professionals with deep expertise in specific industries or risk categories is vital.
“We have the ability to influence underwriting decisions based on experience with the customer, knowledge of that customer, and knowledge of how they handle their own risks, things that aren’t necessarily captured in the analytical environment.”
— Mark Moitoso, executive vice president and general manager, National Accounts Casualty, Liberty Mutual
“When a claim comes in the door, we assess the situation and determine whether it can be handled as a general claim, or whether it’s a complex case,” said Moitoso. “If it’s a complex case, we make sure it goes to the right professional who understands the industry segment and territory. Having that depth and ability to access so many points of expertise and institutional knowledge is a big differentiator for us.”
While the GL insurance market cycle appears to be flattening, basic risk management continues to be essential in managing total GL costs. Close partnership between buyer, broker and insurer is critical to identifying all the GL risks faced by a company and developing a strategic risk management program to effectively mitigate and manage them.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty Mutual Insurance. The editorial staff of Risk & Insurance had no role in its preparation.