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Risk Scenario + Webinar

The Best Laid Plans

Treatment delays and other effects of health care reform implementation blind-side a deal between a regional employer and a health care system.
By: | September 27, 2013 • 8 min read
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

Part One

Hale Everson disliked silence and wasn’t bothered by visible distractions. A natural multitasker, he liked to keep D.C. Span, the 24-hour news channel devoted to Washington politics, on his office TV.

As the Human Resources director for the Southern operations of Fuego Motors, a leading European car maker, Hale had been working for years to create a state-of-the-art health care monitoring system for the automobile manufacturing plant’s employees.

On the computer monitor in front of him, there were no less than 10 open spreadsheets.

Hale loved data and along with the auto plant’s risk manager, he had compiled plenty of it.

Hale paused at his keyboard and shifted his attention to his TV set. The U.S. Senate was voting on the passage of the Patient Protection and Affordable Care Act.

“Come on boys, come on,” he said, as he watched the “yes” votes pile up. Hale wasn’t worried about the outcome of the vote. He’d been preparing for this day for years.

***

When it came to what he required to work well, Brady Heller, the CFO for Apex Care, a regional hospital, was a door-shut type, even though he had a corner office. Brady hated any sort of distraction.

Scenario Partner

Scenario Partner

It wasn’t until he got home late that night and watched the 11 o’clock news that Brady found out the Affordable Care Act had passed. Brady watched impassively as his wife sat next to him.

Always keeping his cards close to his vest, Brady quietly calculated what Apex Care had spent over the past four years to acquire numerous specialty practices to build a state-of-the art Accountable Care Organization.

Brady wasn’t worried about the outcome of the vote either. He’d also been preparing for this day for years.

***

Brady and Hale, friends since college, were walking down the fourth fairway at the local country club when the two community leaders, key members of the local chamber of commerce, put their well-disciplined heads together.

“Nice job picking up Neil Zane’s cardiac practice buddy,” Hale said to his friend with a smile.

“Thanks,” Brady said, as he scanned the grassy rise for his golf ball.

“From what I can tell, you’ve got all the pieces in place,” Hale said.

“I sure hope I do. Cost us enough,” Brady said as he turned to set up a 2-iron shot.

“Brady, hold on just second,” Hale said. Brady turned and looked soberly at Hale, alert to the business-like tone Hale had switched to.

“I think I’ve got all my pieces in place too, and I don’t want to wait ‘til the wind changes. I want to bring my entire workforce to Apex on a direct contract. I’ve got all the data…”

“I bet you do,” Brady said.

“And with my documentation we can get this done sooner rather than later,” Hale said.

“You got everybody ready?” Brady asked.

“I’ve got everybody on board, from Turin to where we’re standing right here,” Hale said, and Brady could tell that Hale meant every word.

Within three weeks, the local business weekly ran a story under the following headline and subhead.

“Fuego and Apex Ink Healthcare Pact”

“Savings and better quality of care in focus in multi-million-dollar arrangement”

The story featured a picture of Brady and Hale shaking hands over a conference table.

Poll Question

How do you envision health care reform impacting your workforce’s health in general?

View Results

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Part Two

Under the direct contract with Apex, Fuego’s workers and their dependents would receive exclusive health care at the regional health giant for three years. The contract was set to renew as long as costs didn’t deviate more than five percent on an annual basis from projections.

Scenario_BestLaidPlans

Seven months after the direct contract deal was announced, Serge Bernstein, head of Apex’s high-profile bariatric medicine and weight loss clinic, requested a face-to-face meeting with Brady.

“I have to ask you, did you have access to Fuego’s health care data before you agreed to this deal?” Dr. Bernstein asked Brady.

“I know as a matter of fact that the company keeps excellent records,” Brady said as an opening defense.

“Well, I keep pretty good data on my end as well,” Dr. Bernstein said, as he expertly swiped his digital tablet to bring ups some figures.

“The contract with Fuego says costs can’t deviate more than five percent from projections,” he said.

“That’s correct,” Brady said.

“What would you say if I told you that I am seeing instances of diabetes in that population at about 250 percent of projections?” Dr. Bernstein said.

“I’d be very concerned,” Brady said.

“Then you should be very concerned,” Dr. Bernstein said.

Two weeks later it was the hospital system’s head of orthopedics, Krishnan Gilani, who was sitting in Brady’s office.

“I’ve got a four-week waiting list for initial non-emergency evaluations,” Dr. Gilani said.

“Why?” Brady said.

“Have you heard of the Affordable Care Act? This autoworker population requires a lot of care. Many of them are overweight, which complicates treatment. I’ve also got a threefold increase in overall caseload due to all the previously uninsureds coming on board under the new law,” Dr. Gilani said.

“Wow,” Brady said.

“Wow indeed, Mr. Heller,” Dr. Gilani said. “These are substantially out of whack figures and of great concern,” Dr. Gilani said.

***

Hale and Brady were mostly silent as Hale lined up a putt and the two of them digested the information that the increased number of insureds coming in for treatment was threatening to broadside their direct contracting arrangement.

“It’s the first year of the program,” Hale said after his putt lipped out. “I’m sure the numbers will settle down in years two and three.”

“You’re probably right,” Brady said as he stood over his putt.

“You’re probably right.”

Poll Question

What steps is your company taking to educate executives on the impacts of health care reform?

View Results

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Part Three

Hale’s view of his in-office television screen is obscured by the bulk of the autoworkers’ union vice president. To the vice president’s left is the union president. Neither of them looks healthy and neither of them looks especially pleased.

Scenario_BestLaidPlans

“Eighteen months ago you sold this hospital deal to us, saying it would be better for the workers and their families. You said we’d get better treatment, cheaper, and better access to treatment,” the union president said.

“I did say that, that’s true,” Hale said

“None of that was true,” the vice president said.

“We got a guy on the line, he twists his back trying to keep an engine compartment bonnet in place. You know how long it takes him to see a back specialist?”

“I don’t…” Hale begins.

“How about five weeks?” the vice president said. “Five weeks!”

“And this is the only hospital we can go to,” the president said.

“I thought health care reform was about choice. You know what? We have no choice,” the union president said.

“Am I in Russia now because I feel like I’m in Russia,” the union vice president says to the union president.

The quarterly meetings between hospital management and the medical team leaders have become so fraught with tension for Brady Heller that they begin to feel like out-of-body experiences.

Dr. Bernstein, Dr. Gilani and Dr. Helen Beers, chair of the cardiac unit, have Brady in their cross-hairs.

“When you brought my practice into your system, I was assured that I could maintain my care standards, that my cost of risk would be reduced by 20 percent and that my revenues would increase by 30 percent,” Dr. Beers begins.

“None of that has happened,” she said, fixing formidable steel blue eyes on Brady through her titanium eyeglass frames.

“Instead I’m seeing delays in payment. I am seeing care standards that I never would have tolerated independently, and I am seeing this across a number of departments, not just my own,” she said.

“We want access to full financial documentation under the terms of our contracts or we are walking, I am not kidding you,” Dr. Bernstein said.

Brady looked from Dr. Bernstein to Dr. Gilani to Dr. Beers. Nowhere was there mercy or understanding.

Hale has a board meeting of his own to attend.

“If we pay them this $3 million that they’re asking for,” the CFO for North America says to Hale.

“On top of the contracted amount,” he says, looking around the table for emphasis, to make sure everyone is getting his point.

“On top of the contracted amount,” he says yet again, unmercifully.

“What assurances do we have that we’re not going to be shelling out another $3 million in six months to a year from now?” the CFO asks.

“I’m not sure that I can offer you any assurances,” Hale says.

“We’re seeing treatment delays and co-morbidities that are beyond the scope of our projections,” he adds.

“I thought this was the best health care money could buy,” the CFO says.

“It may be,” says the North American CEO, who has made a special point to be at this meeting.

“The issue is we didn’t know it would take this much money to buy it.”

The CEO fires Hale Everson that very evening.

Poll Question

How will Health Care Reform impact the level of involvement you have in the care delivery system for your employees?

View Results

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Summary

A sizable regional employer and a large health care system come to grief when their directly contracted health care arrangement is blind-sided by health care reform implementation. The planners of the deal fail to take into account the delays in treatment that large numbers of previously uninsured patients coming into the system will create. Contrary to their promises, standards of health care deteriorate and key stakeholders become alienated.

1. The importance of good data: Data is only actionable if it is good data. Fuego Motors thought it had adequately measured the health care risks inherent in its employee population, but events proved it to be woefully wrong. The advent of the Affordable Care Act is going to impact medical treatment and loss projections are going to have to be altered.

2. Assess your contract: Direct contracts to provide health care services to employers might make a lot of strategic sense, but they can turn into straightjackets if not written with enough flexibility to account for increasing health care costs and the unknowns of health care reform.

3. Medical practice acquisition is fraught with perils: Bigger is not necessarily better when it comes to health care business management. Conflicting work cultures and compensation and quality of care expectations can lead to disagreements, litigation or worse if contractual provisions aren’t spelled out adequately.

4. Health care regulation is in conflict: Federal health care reform is not the only wind sweeping the waters. There are numerous federal and state entities regulating health care and their missions and mandates are not in step with each other. Understanding the full lay of the land moving forward is a must.

5. Move with measured steps: There is so much going on in health care practice and regulation right now that the unknowns outnumber the knowns. Look at acquisition targets with more caution than ever before.

6. Be fully transparent: Both sides thought they had all the data they needed. But in the end, their failure to completely share with their data with their respective teams created unpleasant surprises. Being fully candid about all risks is the best strategy in this unsure environment.

The Webinar

The issues covered in this scenario were in part based on the impact of health care reform. This follow-up webinar focused on specific changes to the health care market in the wake of Affordable Care Act implementation and presented actions insureds can take to prepare themselves moving forward.

Download a copy of the slide presentation here.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at dreynolds@lrp.com.
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2014 NWC&DC

When a Claim Runs Off the Tracks

Risk Scenarios Live! explored the lessons learned from the handling of a construction worker’s injury.
By: | November 20, 2014 • 3 min read
RiskScenarios

Mike is a 54-year-old construction worker. One day, he strains himself picking up a piece of lumber and goes home with shoulder pain. He reports his injury and five weeks later is taking Vicodin, an opioid, and Naproxen, an anti-inflammatory, and given an occupational therapy regimen.

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That was the scene set for a crowded roomful of attendees at “Risk Scenarios Live! Navigating the Challenging Claim” session, presented at the 2014 National Workers’ Compensation and Disability Management Conference & Expo in Las Vegas.

Mike begins taking more Vicodin per day than he’s prescribed, and performing duties at work that do not allow his injury to heal.

Eventually, he sees an orthopedic surgeon. She suggests Mike may have a rotator cuff tear, which would require surgery and an extensive recovery period that would keep Mike out of work for six months, at least. She orders an MRI to determine if there is a tear.

Even at this early stage of treatment, there are several red flags on Mike’s case, said experts on the panel that included Dr. Kurt Hegmann, associate professor at the Rocky Mountain Center for Occupational & Environmental Health; Dr. Robert Goldberg, chief medical officer at Healthesystems; and Tracey Davanport, director-national managed care, Argonaut Insurance Co.

Using an anti-inflammatory medication alone, without an opioid, often yields better outcomes and avoids the risk of addiction that comes with opioids, said Hegmann.

In Mike’s case, Vicodin was not medically necessary. His condition was not improving, and he was commuting to and from work and performing his job under the influence of an opioid, said Goldberg.

What should have been done to get this claim back on track? Every party involved – worker, employer, claims organization and prescribing physician – should have been communicating directly. That would have helped catch early abuse of painkillers and ensured that the physician is adhering to evidence-based guidelines.

Assignment of a nurse case manager may have also been necessary.

MRIs should be administered with caution, experts said. Such tests often turn up problems unrelated to the original injury, opening up a can of worms in terms of appropriate treatment and compensability.

“You have to treat the entire patient, not just the injury that brought him in,” Goldberg said, such as taking pre-existing conditions into account. Mike’s age, for example, significantly increased his risk for a slow recovery.

The MRI scan revealed a full-thickness tear of the rotator cuff. After surgery, Mike was prescribed Oxycontin to manage post-op pain. He then sat at home, gaining weight and drinking while taking his pain medication and neglecting to perform the at-home exercises his orthopedic surgeon advised.

When he went in for a check-up, the doctor decided to switch him back to Vicodin, although Mike still had a refill left on his Oxycontin. He envisioned doubling up the medications to achieve a new high.

At this point in the case, someone needed to step in to track Mike’s refills and limit his dosage.

“The patient can’t be the one to control the prescription pad,” Goldberg said.

Employers should also try to have workers return to modified-duty positions as soon as possible, which helps to maintain social connections and motivates the employee to get back to their pre-injury capacity.

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“The patient needs to be engaged and motivated to get better,” Hegmann said. “If they choose not to do the work, then there’s nothing else a doctor can do for them.”

Mike was not motivated. He did not adhere to the restrictions placed on him in a light-duty position; he failed to dedicate himself to physical therapy and stay active; and he abused the opioids prescribed to him.

A year after his injury, he was 20 pounds heavier, had not progressed in strengthening his shoulder, and his employer’s workers’ comp claims organization was looking at a six-figure settlement for permanent disability.

Katie Siegel is a staff writer at Risk & Insurance®. She can be reached at ksiegel@lrp.com.
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Sponsored: Healthcare Solutions

The Promise of Technology

A roundtable in Philadelphia explores the power of technology in WC and its potential to take us where we have never been before.
By: | December 10, 2014 • 7 min read

SponsoredContent_HCS
The field of workers’ compensation claims management seems ideally suited as a proving place for the power of technology.

Predictive analytics in the hands of pharmacy and medical management experts can give claims managers the data they need to intervene in troublesome claims. Wearables and other mobile technologies have the potential to give healthcare providers “real-time” reports on the medical condition of injured workers.

Never before have the goals of quick turnaround and transparency in managing claims appeared so tantalizingly achievable.

In the effort to learn more about technology’s potential, in September, Risk & Insurance® partnered with Duluth, Ga.-based Healthcare Solutions to convene an information technology executive roundtable in Philadelphia.

The goal of the roundtable was to explore technology’s promise and to gauge how advancements are serving the industry’s ultimate purpose, getting injured workers safely back to work.

 

Big Data, Transparency and the Economies of Scale

Integration is a word often heard in connection with workers’ compensation claims management. On one hand, it refers to industry consolidation, as investors and larger service providers seek to combine a host of services through mergers and acquisitions.

In another way, integration applies to workers’ compensation data management. As companies merge, technology is allowing previously siloed stores of data to be combined. Access to these new supersets of data, which technology professionals like to call “Big Data,” present a host of opportunities for payers and service providers.

Through accessible exchange systems that give both providers and payers better access to the internal processes of vendors, a service provider can show the payer the status of the claim across a much broader spectrum of services.

SponsoredContent_HCS“One of the things I see with all of this data starting to exchange is the ability to use analytics to predict outcomes, and to implement workflows to intervene.”
–Matthew Landon, Vice President of Analytics, Bunch CareSolutions.

“Any time that we can integrate with a payer across multiple products such as pharmacy, specialty and PPO services, what it does is gives us a better picture of the claim and that helps us to drive better outcomes,” said roundtable participant Chuck Cavaness, chief information officer for Healthcare Solutions.

Integration across multiple product lines also produces economies of scale for the payer, he said.

Big Data, according to the roundtable participants, also provides claims managers an unparalleled perspective on the cases they manage.

“One of the things that excites us as more data is exchanged is the ability to use analytics to predict outcomes, and to implement workflows to intervene,” said roundtable participant Matthew Landon, vice president of analytics with Lakeland, Fla.-based Bunch CareSolutions, A Xerox Company.

Philadelphia roundtable participant Mike Cwynar, vice president of Irvine, Calif.-based Mitchell International, agrees with Landon.

Jerry Poole, President and Chief Executive Officer, Acrometis

Jerry Poole, President and Chief Executive Officer, Acrometis

“We are utilizing technology to consolidate all of the data, to automate as many tasks as we can, and to provide exception-based processing to flag unusual activity where claims professionals can add value,” Cwynar said.

Technology is also enabling the claims management industry to have more productive interactions with medical providers, long considered one of the Holy Grails of better case management.

Philadelphia roundtable participant Jerry Poole, president and CEO of Malvern, Pa-based claims management company Acrometis, said more uniform and accessible information exchange systems are giving medical providers access to see how bills are moving through the claims manager’s process.

“The technology is enabling providers to call in or to visit a portal to figure out what’s happening in the process,” Poole said.

More efficient data storage and communication is also resulting in quicker turnaround times, which is shortening the duration of claims and driving down the overall cost of risk, according to Cwynar.

 

Going Mobile

Another area where technology is moving the industry forward, according to the Philadelphia technology roundtable participants, is mobile technology, which is being used to support adjustors and case managers and is also contributing to quicker return to work and lower costs for payers.

The ability to take a digital tablet to a meeting with an injured worker or a health care provider is allowing case managers to enter data and give feedback on a patient’s condition in real time.

“Our field-based case managers have mobile connectivity to our claims systems that they use while they’re out of the office attending doctor’s appointments, and can enter the data right there into the system, so they’re not having to wait until they are back at the office to enter critical clinical documentation,” said Landon.

Injured workers that use social media, e-mail and the texting function on their mobile phones are staying in better touch with those that are charged with insuring that they are in compliance with their treatment plans.

Wearable devices that provide in-the-moment information about an injured workers’ condition have the potential to recreate what is known in aviation as the “black box,” a device that will record and store the precise physical state of an employee when they were injured. Such a device could also monitor their recovery process.

But as with many technologies, worker and patient privacy also needs to be observed.

“At the end of the day, we need to make sure that we approach technology enhancement that demonstrates value to the client, while ensuring patient advocacy,” Landon said.

Consolidation

As payers and claims managers set out to harness the power of computing in assessing an injured worker’s condition and response to treatment, the cycle of investment in companies that serve the workers’ compensation space is currently playing a significant role.

The trend of private equity investing in companies that can establish one-stop shopping for such services as medical case management, bill review, pharmacy benefit management and fraud forensics has huge potential.

SponsoredContent_HCS“Any time that we can integrate with a payer across multiple products such as pharmacy, specialty and PPO services, what it does is gives us a better picture of the claim and that helps us to drive better outcomes.”
— Chuck Cavaness, Chief Information Officer, Healthcare Solutions.

The challenge now facing the industry, one the information technology roundtable participants are confident it can meet, is integrating those systems. But doing so won’t happen overnight.

“There’s a lot of specialization in the industry today,” said Jerry Poole of Acrometis.

Years ago there was a PT network. Now there’s a surgical implant guy, there’s specialized negotiations, there’s special investigations, said Poole.

The various data needs to be integrated into an overall data set to be used by the carriers to help lower the cost of risk.

“Consolidating all these providers will take standardization of communication pathways and it will likely be led by the vendors,” Poole said.

 

Securing Sensitive Information

Long before hackers turned the cyber defenses of major national retailers inside out, claims management professionals have focused increased attention on the protection of data shared across multiple partners.

Information security safeguards are changing and apply to what technology pros refer to “data at rest,” data that is stored on a particular company’s servers, and “data in flight,” data that is transferred from one user to another.

Michael Cwynar

Michael Cwynar, Vice President, Mitchell International

Mitchell’s Cwynar said carriers want certification that every company their data is being sent to needs to have that information and that both data at rest and data in flight is encrypted.

The roundtable participants agreed that the industry is in a conundrum. Carriers want more help in predictive analytics but are less willing to share the data needed to make those predictions.

And as crucial as avoiding cyber exposures and the corresponding reputational damage is for large, multinational corporations, it is even more acute for smaller companies in the workers’ compensation industry.

Healthcare Solutions’ Cavaness said the millions in loss notification and credit monitoring costs that impact a Target or a Home Depot in the case of a large data theft would devastate many a workers’ compensation service vendor.

“They’d be done in a minute,” Cavaness said.

The barriers to entry in this space are higher now than ever before, continued Cavaness, and companies wishing to do business with large carriers have the burden of proving that its security standards are uncompromising.

In Reality

Workers’ compensation risk management in the United States is by its very nature, complex and demanding. But keep in mind that those charged with managing that risk get better results year after year.

Technology has a proven capability to iron out the system’s inherent complications and take its more mundane tasks off of the shoulders of case adjustors.

The roundtable members agreed that the business goals of a lower cost of risk and an even more productive workforce will follow.
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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 Healthcare Solutions. The editorial staff of Risk & Insurance had no role in its preparation.




Healthcare Solutions serves as a health services company delivering integrated solutions to the property and casualty markets, specializing in workers’ compensation and auto liability/PIP.
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