PBM Legislation Worries Workers’ Comp Payers
Legislation introduced in several states seeking to impose new regulatory authority over group health pharmacy benefit managers could harm workers’ compensation PBMs and claims payers, sources said.
Introduction of similar bills in 11 states has raised concerns among workers’ comp insurers, third party administrators, and some large employers, said Brian Allen, VP of government affairs for Progressive Medical, a workers’ comp PBM.
“We have had customers calling us every day worrying about how it is going to impact us and them,” Allen said. “These are big insurance companies … they are nervous about it and want to know how it’s going to impact them.”
Overall, it appears the bills seek greater transparency in the way group health PBMs set their pricing, said Joe Paduda, principal at Health Strategy Associates. But group health PBM practices differ substantially from those of workers’ comp PBMs and the bills seek to address issues that “have nothing to do with workers’ comp,” he added.
Yet while the bills appear aimed at practices among PBMs serving the group health industry and not workers’ comp PBMs, Allen and others say a spillover into workers’ comp is possible. So several organizations want language inserted into the bills that would clearly exempt workers’ comp PBMs.
“It appears that workers’ compensation PBMs are not the target of this legislation,” the American Insurance Association said in a statement. “That said, AIA supports efforts to include clear exemptions for workers’ compensation PBMs in these bills in order to clarify legislative intent and avoid any confusion down the road.”
“Community” pharmacies seeking more revenue from products they dispense are supporting the bills that would put PBMs under certain state regulatory agencies, such as pharmacy boards, Allen said.
State workers’ comp commissions or insurance departments already regulate workers’ comp PBMs, depending on the jurisdiction, Allen explained. But the legislation could add oversight from additional agencies such as state pharmacy boards.
Complying with regulations developed by two distinct agencies with potentially conflicting goals could cause an administrative burden for workers’ comp PBMs, Allen added.
“We want to make sure we are not swept up into crazy regulatory schemes that would be difficult to manage,” he said.
A new oversight body could also decide to impact workers’ comp PBM pricing, which is already regulated by state fee schedules, Allen said.
“If for some reason the pharmacy board said, ‘you have to pay pharmacists more money,’ that potentially would impact our customers because we would have to pass that cost onto payers,” Allen said.
Technology’s Role in Managing Employee Absences
The 24th annual National Workers’ Compensation and Disability Conference® and Expo takes place Nov. 11-13 at the Mandalay Bay Resort and Casino in Las Vegas. The conference is produced by LRP Publications, which publishes Risk & Insurance®. For more information, visit www.wcconference.com.
You might not think that an employee’s absence for just a few days could raise concern for an employer. But all absences are not created equally.
There is workers’ comp, short- and long-term disability, Family and Medical Leave Act, and other types of absences. Some are planned, others are not. Some are paid, some unpaid. Some are associated with job protection benefits, others are not. There are state and federal regulations that may apply.
Employers need to understand when each should be employed and make sure they have fair and consistent practices in administering their leave programs.
“There is a misconception that absence management is easy. It is not,” said Keith Nelson, vice president and head of group insurance program delivery for Aetna Life Insurance Co. “Absence management is very complex.”
As Nelson explains, even a single day of absence may involve multiple types of leave and can impact different components of an organization in many different ways.
“We’ve got state mandated leaves such as those under workers’ comp, and state family and medical leave laws, that run concurrently with FMLA leaves,” he says. “There are now even a growing number of municipal leaves being added into the equation for employers to administer.”
His session, Technology Tools for Managing Disabilities and Absences, takes place Thursday, Nov. 12 from 10:45 a.m. to noon.
Effects on Personnel
“An employee might be out for one day, but that day of absence could apply to 15 or 16 different benefits,” Nelson said.
“Some have different start dates or end dates. The employee may have been approved for one benefit but denied for another on the same day. In my experience, many key stakeholders don’t fully understand those nuisances. There’s a concurrency component of absence management.”
An employee’s absence may affect people within an organization differently, depending on the role of the person. Each may have a different awareness of which type of leave benefit applies to the employee’s absence request.
“An employee might be out for one day, but that day of absence could apply to 15 or 16 different benefits.” — Keith Nelson, vice president and head of group insurance program delivery, Aetna Life Insurance Co.
“From the employee’s perspective, they don’t know all the benefits available to them or the differences,” Nelson said. “The only thing some of them can say is ‘I’m injured or ill,’ whether it happened at work or not, and ‘I need to be off of work.’”
Absence, he explains, is very personal to each individual. The concerns change from one person to another throughout the company.
“As you go up the organization, the interests are very different,” he said. “For the supervisor, it is ‘do I have a full staff at work?’”
Plant managers, human resources personnel, and the company’s CEO all have other concerns about an employee’s absence. Where one department is concerned about the effects on productivity, another may be more interested in finding out how and why the injury/illness occurred.
“Employers want to protect their employees from injuries or safety incidents. They are really all about mitigating safety risks and putting prevention in place,” Nelson said. “From the economic side of a workers’ comp accident, not only is the employer funding the lost wages for an employee who is away from work, but also likely funding the legal expenses, the medical expenses, and all kinds of claim-related expenses such as temporary labor expenses.”
“Different rules of compensability apply in different states. Moreover, employers may offer different types of disability plans for different groups of employees,” Nelson said. “The same can be said for leave of absence policies that are offered to different groups of employees. The overarching impact is the same: ‘Do I have a full workforce or not?’”
The one common link among each department is the need for information about the absence.
With technology, each department within an organization has access to information about an employee’s leave in the form best applicable to the needs. Personnel can better understand the overall picture of absences with a good technology platform.
“It enables effective information exchange,” Nelson said. “There is a whole new level of sophistication in the workforce, and employers/providers have a new appetite for information. That’s the big picture of what the session is all about — learning how technology can assist employers to administer effective absence management programs.”
Employers are required to use fair and consistent practices when applying the various types of leaves. Through technology, various facets within an organization can have a clear understanding of the rules and regulations.
“The industry is changing,” Nelson said. “There are new regulations all the time, new types of benefits, emerging paid sick and paid family leave. From a workers’ comp perspective, there is medical only and true lost time claims, but it’s still the same individual. How does it work? How do all constituents stay informed?”
The privacy aspect of an employee’s absence is another concern that can be addressed through technology. For example, workers’ comp has different protocols for sharing claim information than is routinely used for disability and state or federal leaves. The circumstances dictate what can be shared with an employer.
Failing to ensure fair and consistent practices can lead to regulatory scrutiny, legal action, and other financial liability. Technology can help reduce the complexities of absence management, minimize inconsistencies, and ultimately, mitigate risks.
A Wake up Call for Any Company That Touches Food
It’s not easy to be in the food industry these days.
First, there is tougher regulation. On August 30, 2015, the Food Safety Modernization Act (FSMA) required companies to file planning paperwork for Preventive Controls for Human Food. The final FSMA rules take effect on August 30, 2016.
Next, increases in food recalls, some deadly, are on the rise. In early September, 9,000 cases of frozen corn were pulled from shelves after a listeria scare. A few days later, a salmonella outbreak in cucumbers imported from Mexico resulted in one death, while sickening hundreds of consumers nationwide.
Courts are getting tougher, too, as owners/executives in particularly egregious cases involving consumer deaths have been prosecuted criminally, with one receiving a recommendation for a life sentence.
Finally, advances in science – including whole-genome sequencing technology, which maps DNA of microbes to more easily pinpoint precisely where contamination occurs – can expose every player in the supply chain to potential losses and lawsuits.
“Few companies have the balance sheet or brand loyalty to survive a serious recall. Outbreaks, new regulations, prosecutions and science have made purchasing product recall and contamination insurance literally an act of survival for companies of all ages and sizes,” said Jane McCarthy, Senior Vice President of Global Crisis Management at Liberty International Underwriters (LIU), who has over 30 years of industry experience.
Working with growers, processors, manufacturers, importers, shippers, packagers, distributors, wholesalers or retailers, LIU’s policy provides indemnity to pay for losses a company might incur from a recall, including logistic expenses, lost income and access to crisis management and public relations consultants.
Legislation tightens on food-related companies
Passed in 2011, the FSMA gives the Food and Drug Administration a far more proactive weapon in the war on tainted food, as the focus shifts to prevention combined with the FDA’s newfound authority to close businesses that aren’t complying with FSMA rules and regulations.
In addition to the August 30, 2015 deadline for filing paperwork for preventive controls, as part of the law, all companies need to be registered if they do anything with food in the United States, or a company is a foreign entity bringing food into the U.S.
“It’s the law and every regulation and benchmark has to be met,” McCarthy said. “The FDA will shut someone down if they don’t think a company is handling a food product properly. With these new rules and regulations, the whole industry has to change.”
With LIU’s product contamination policy, companies have 24/7 access to pre-loss consultancy through red24, one of the world’s leading security consultants and global crisis management consultancies. For example, they’ll work with clients to best prepare them to meet the FDA’s 48-hour response deadline should a food contamination or product recall incident occur.
Costly outbreaks on the rise
According to a Wall Street Journal article, food recalls from 2012 to 2014 increased more than five times compared to the total number of recalls from the prior eight years combined. The Journal also reported that foodborne illness is often never formally reported, so about 48 million Americans, or one in six, get sick each year from food. The CDC estimates 128,000 hospitalizations and 3,000 deaths from tainted food.
Food contaminations happen in two main categories: allergens (peanuts, etc.) and pathogens (bacteria). There were four listeria outbreaks in 2014 alone, compared with one in each year from 2011 to 2013. Listeria is a particularly tricky and virulent pathogen that continues to survive and blossom, even in refrigerated environments. Listeria does not impact the appearance, taste or smell of food it invades, so a company in the food industry can only confirm contamination through testing or, unfortunately, once a customer becomes ill.
“Listeria is one of the worst nightmares. Not only is it deadly, but once it gets into a plant, it’s very difficult to eradicate,” said industry veteran Meg Sutton, LIU’s Senior Claim Officer. “It sneaks into drains and crevices that you thought were clean. Attempts to clean those drains and crevices, if done improperly, can result in aerosolizing the listeria and spreading it throughout the facility. In some cases, companies are forced to shut down the plant for extended periods of time, resulting in significant business interruption and loss of revenue.”
Courts get tough on deadly cases
With the increase and severity of food contamination recalls rising, the courts are getting tougher too. The food industry was rocked last month by a recommended life sentence for the ex-CEO of a peanut manufacturing company following a multiple-felony conviction for knowingly selling tainted peanut butter that ended up killing nine people.
“The judge ended up sentencing him to 28 years in federal prison, still the harshest penalty ever in a case of food contamination. While our policy won’t cover your defense if you’ve committed a crime, the penalty is another wake up call for the food industry that executives at the highest levels will be held accountable,” McCarthy said.
Science boosts detection, transparency
By using today’s scientific methods to trace back to the source (grocery store, restaurant, wholesaler, etc.), experts can determine the production facility or farm that originated the food or food additive. They can swab the facility for DNA matches and pinpoint the contamination.
Considering those four prime drivers, it’s not surprising that interest in food product recall and contamination coverage from companies of all sizes is gaining momentum.
“We don’t want them to just buy our insurance,” McCarthy said. “We want them to be better for it with us as their partner by making sure they have the right coverage in place and improving their business from a health, safety and compliance standpoint.”
Liberty International Underwriters is the marketing name for the broker-distributed specialty lines business operations of Liberty Mutual Insurance. Certain coverage may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds and insureds are therefore not protected by such funds. This literature is a summary only and does not include all terms, conditions, or exclusions of the coverage described. Please refer to the actual policy issued for complete details of coverage and exclusions.
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.