Archive for June, 2010

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Healthcare Reform and Workers Compensation

Monday, June 14th, 2010

In the the following guest post, Gary Anderberg, Phd, the Practice Leader For Outcomes and Analytics at Broadspire offers his thoughts on the potential impact of healthcare reform on workers comp in the coming years.
At the moment, health care reform appears to have a number of positive and negative potential impacts on workers compensation over the next few years. The net results cannot be estimated this early in the game. We can, however, identify a few elements and their possible consequences:

  • Insuring the now uninsured: Positive — employees who have health insurance tend to file fewer workers compensation claims. They have less incentive to cost shift. Another result will be that chronic medical conditions will be, over time, better controlled and less likely to increase the severity of work related claims.
  • Availability of care: Negative — with a large number of people having new health coverage, doctors and facilities may be swamped in some areas. The problem will lead to (a) delays in appointments for workers compensation-related medical treatments and (b) less willingness by providers to participate in occupational medical networks and offer discounts off fee schedules.
  • Removing the pre-existing exclusion: Unknown — in 2014 the pre-existing exclusion will disappear in group health. This cuts several ways at once. There will be less incentive for employees to claim long standing “wear and tear” conditions as work related – a positive change. There may also be much greater demand on employers for workplace and job accommodations leading to new exposures and safety issues.
  • Medicare reform: Negative — the passage of HR 3590 was predicated on massive adjustments in Medicare reimbursement levels, which are marginal for medical providers now. This will pressure providers, especially hospitals and some specialists, to cost shift where possible and workers compensation is a soft target in most states. We could see significant increases in medical costs per claim as the Medicare changes begin to bite in a couple of years. (The recession-driven cutbacks in state Medicaid reimbursements will only amplify this effect in the near term.)
  • Libby care: Unknown — the “Libby care” clause of HR 3590 (sec 1881A) is not intended to lead to the federalization of industrial diseases absent some very specific catastrophic circumstances comparable to those of the WR Grace disaster in Libby, MT. But we all know that ERISA was intended to address a very narrow set of union pension abuses when it was passed, but the Department of Labor, abetted by the Florida Administrators decision of the Supreme Court in 1977, expanded it greatly. The Libby care provision will bear watching.

Workers compensation was not at the table when Congress hammered out its health care reform solutions. Other than a few glancing mentions, such as the Libby care clause noted above, occupational medicine was overlooked and, by default, left to the states. This is probably a good thing, on balance. Yet, as health care reform changes begin to penetrate the enormous US health care enterprise, they will impact workers compensation in many overt and subtle ways over the next several years. Carriers, third party administrators, and managed care vendors will need to be alert to capture possible advantages and avoid potential nasty surprises.

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A killer edition of Health Wonk Review & other noteworthy news

Thursday, June 10th, 2010

Our Boston neighbor Tinker Ready hosts this week’s edition of Health Wonk Review at Boston Health News and it’s a killer edition – check it out.
Awkward – Making the web circuits, many have been posting about the Bollywood safety dance video by Transocean’s CEO. We encourage CEOs and senior managers to ensure that safety is top company priority – so on the one hand, we applaud the attempt. But in light of the recent explosion that resulted in 11 deaths, this video is ironic and embarrassing. This, coupled with the recent news that the company’s disaster response plan was riddled with egregious errors leaves one to think that BP’s risk management efforts were not as substantive as they might have appeared on the surface. The folks over at Risk Management Monitor have been posting about various aspects of the BP story. Jared Wade gives us the rundown on BP’s pattern of neglect and corner cutting as well as an infographics style rundown on the spill. Also, if you haven’t seen the wildly popular fake BP PR Twitter account, it might give you a chuckle if you are into black humor. BP is not amused by the parody.
Truck drivers & sleep apnea – A study on sleep apnea and truck drivers that was recently published in the Journal of Occupational and Environmental Medicine found that treatment for sleep apnea led to more than $6,000 in total health plan and disability cost savings per treated driver. “On average, researchers found that for treated drivers, health plan costs decreased an average of $2,700 in the first year and another $3,100 in the second year compared to no change for untreated drivers. The treated drivers also missed fewer workdays (average 4.4 days in the first year) and had lower short-term disability costs ($528 over two years).”
Battle of the pharma giants – Joe Paduda keeps an eye on the Caremark vs Walmart pharma fight and offers informed commentary about what’s going on.
No go in Ohio for Noe – The Ohio Supreme Court has rejected Thomas Noe’s request for an appeal of his convictions. You may recall that Noe got in trouble for the theft of $13 million from $50 million that he invested in rare-coins and beanie babies for the Ohio Bureau of Workers’ Compensation. His capers were a contributing factor in bringing down Governor Taft and various other state officials. Stories like this don’t surface often in workers comp – we have quite an archive from the early days of the scandal through conviction and the early days of the appeal.
Octomom settles WC claim – From California comes the news that Nadya Suleman (aka “Octomom”) settled her workers comp lawsuit for $23,120. The injury occurred more than a decade ago. See my colleague’s prior post: Comp as Enabler: The Nadya Suleman Story
Tooting our own horn – thanks to Evan Carmichael for including Workers Comp Insider in his listing of theTop 50 HR Blogs: 2010 – it’s a good list and worth checking out. EvanCarmichael.com is a good resource for entrepreneurs and small businesses.
Also, our post on N.Y.’s domestic workers bill of rights was reprinted at Today’s Workplace, an excellent group blog on issues of workplace rights and employment law sponsored by Workplace Fairness, a non-profit organization helping to preserve and promote employee rights. Both resources are well worth your attention.

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Engulfed by Risks

Tuesday, June 8th, 2010

We are following the consequences of the gulf oil disaster with increasing despair. Images of oil soaked birds, dead fish, and the serene Gulf waters transformed from the customary beautiful blue-green to an appalling brown. Our thoughts also turn to the men and women laboring under very challenging conditions to contain the impact of this man-made disaster.
NIOSH has issued the following summary of the exposures facing the recovery workers:

Chemical exposures may include benzene and other volatile organic compounds, oil mist, polycyclic aromatic hydrocarbons, and diesel fumes. Physical hazards may include ergonomic hazards, excessive noise levels, sun exposure and heat stress. Injuries may occur due to slips, trips, and falls on slippery or uneven walking and working surfaces. Other safety hazards are associated with the use of tools, equipment, machinery, and vehicles. Biological hazards include possible exposure to biting or venomous insects or other animals. Psychological hazards may include witnessing traumatic injuries or death, inability to help affected wildlife, and fatigue.

You can read the CDC’s 96 page opus on managing the exposures to emergency workers here. (I can’t help but wonder if this particular web-available document is symbolically collecting dust on the shelf, like so many other well-intentioned but rather long-winded safety manuals – the ones risk managers point to with pride during a tour of an industrial plant.
“We’re Hiring!”
BP has hired about 22,000 workers to help with the clean up. I wonder how carefully they screened the new hires. Any rapid ramp up is full of risk; the hazards of hiring on this scale for jobs full of open-ended risk is simply beyond calculation. How many of the 22,000 workers will end up with work-related illnesses and injuries? How would you project the future impact on BP’s workers comp costs? (Perhaps BP is calling the new hires “independent contractors.” Some may well be; most are not.)
Under regulatory scrutiny, BP has provided some form of rudimentory training and the necessary personal protective equipment (PPE) for the new workers. But how well is the work supervised? With temperatures routinely in the high 80s and the heat index over 100 degrees, how long can people function in the requisite protective suits, steel-toed boots, gloves, hard hats and safety glasses? What is the impact of raw crude on bare skin and laboring lungs?
Looming Epidemic?
There have already been reports of illnesses among these workers. Law firms have put out the word that at least one of the dispersants used in the clean up may harm workers:

OSHA representatives, Obama administration officials and others have expressed concerns that the oil dispersant chemical Corexit may be the source of the illnesses reported on May 26 by cleanup workers. In May, the EPA urged BP to stop using Corexit because of its toxicity. Corexit is manufactured by Nalco, whose board of directors has strong ties to the oil industry, including sharing at least one board member with BP.

We all feel a sense of urgency on an unprecedented scale as the pristine Gulf waters are sullied by millions of gallons of oil. A huge workforce has been mobilized to help with the clean up. Looming on the distant horizon is the cost of cleaning up the damage to those who are currently engaged in the clean up. It’s something we give only passing thought to today. But the time will come when those costs are as conspicuous and nearly as disturbing as the image of an oil-soaked pelican trying to spread its soiled wings, trying and failing to launch itself into the brilliant blue skies of its Gulf home.

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NY’s Domestic Worker Bill of Rights

Monday, June 7th, 2010

In the 1930s, when the Fair Labor Standards Act (FLSA) and the National Labor Relations Act (NLRA) passed, these two laws offered labor protections to workers nationwide – with the exception of two large segments of the work population: domestic workers and agricultural workers. These groups were excluded in the interests of political expediency since a large proportion of both groups were comprised of blacks and women, two populations that weren’t generally afforded full rights in many public and social arenas at the time.
With the 33-28 vote passage of the New York State Domestic Workers’ Bill of Rights in the Senate, New York is likely to become the first state in the union to remedy that. The Bill is not yet final law – first, the Senate bill needs to be reconciled with the bill passed by the state Assembly and then Governor Patterson must sign it.
Bill Number S2311D would “… amend the labor law, the executive law and the workers’ compensation law, in relation to establishing regulations regarding employment of domestic workers including hours of labor, wages and employment contracts.” The purpose of the bill is stated as being to: “… provide domestic workers with a Domestic Workers’ Bill of Rights which would set out the responsibilities of employers and employees as well as rules for paid holidays, paid vacations and standard overtime.”
It’s estimated that there are about 200,00 domestic workers in New York, 93% of which are women and 95% of which are people of color. Because the Bill covers all domestic workers – both legal and illegal – it’s been fairly controversial. Opponents decry the increase in regulation, which some say will result in fewer jobs. Many opponents also bridle against any protection for illegal workers, feeling that offers a legitimacy. Proponents say that it will go a long way to regulating an industry that has no standards or oversight and afford basic worker rights to a largely ignored worker population. Many of those in favor of the bill also think that shedding light on some of unregulated business segments which have historically been magnets for undocumented workers will be an important step in coming to grips with the hiring of illegal workers.
In a column in the New York Daily News, Albor Ruiz notes the irony that although we trust these domestic workers with our children, our elderly parents and our homes, they are among the most exploited of society’s laborers. He cites a study by Domestic Workers United and DataCenter, which found that, “…26% of domestic workers make less than the poverty line or the minimum wage rate. Also, 33% say they have been abused verbally or physically, and half report working overtime but not being paid for it. Health insurance from their employer is a rare luxury – only 10% get it.”
From our viewpoint, we think all employers have the responsibility to provide a fair and safe workplace for all employees, regardless of the work population involved – legal, illegal, here in the US, or offshore in other countries. It’s simply the right thing to do. But for those who don’t share this value, it generally makes sense from a cost perspective, too. In our experience, doing the right thing by employees is less costly in the long run.
Related:
Domestic workers and workers’ compensation requirements by state

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Blowing Smoke in Montana

Thursday, June 3rd, 2010

As a service for Insider readers who do not follow the Flathead Beacon, we bring you the western Montana saga of Brock Hopkins, who either was or was not an employee of Great Bear Adventures when he had a great bear adventure of his own, much to his detriment. Hopkins, 23 at the time, appears to have been an occasional worker at the seasonal attraction. On November 2, 2007, he showed up at the park, took a few hits on his marijuana pipe (not prescribed by a doctor) and checked in with the park owner, Russell Kilpatrick, who was on the phone at the time.
Kilpatrick wanted Hopkins to repair a gate. After completing the task, Hopkins went to ask Kilpatrick if there was anything else that needed doing, but Kilpatrick was asleep (hibernating?). So Hopkins, after carefully placing his marijuana pipe on a storage shed outside the bear pen, mixed up some feed and entered the pen. He was attacked by a bear and sustained severe injuries to his legs. He barely managed to crawl out of the pen.
Contract of Hire
In subsequent court proceedings, Kilpatrick argued that Hopkins was a volunteer at the park. While he denies asking Hopkins to feed the bears, he admits that he did ask him to adjust the gate. And, yes, he did slip him $300 shortly after he was released from the hospital.
Judge James Jeremiah Shea, of the Montana Workers’ Compensation Court, disagreed with Kilpatrick. In his written decision, Judge Shea managed to reference the (marijuana stoked) comedy, “Harold & Kumar Go to White Castle:”
“It is not as if this attack occurred when Hopkins inexplicably wandered into the grizzly pen while searching for the nearest White Castle. Hopkins was attacked while performing a job Kilpatrick had paid him to do – feeding grizzly bears.”
Kilpatrick denies asking Hopkins to feed bears, who may or may not have needed feeding. And one might be inclined to raise the issue of the marijuana impeding Hopkins’s judgment. Judge Shea took these factors into account and concluded that there was contradictory testimony on the issue of feeding the bears and most important, even though Hopkins smoked marijuana on the job, his being stoned was not a significant contributory factor in the injury. (If Hopkins could fix a gate while stoned, he could presumably feed the bears.)
Management’s Burden
Kilpatrick is appealing the ruling. He has a high mountain to climb if he wants to prove that Hopkins was not an employee. I’m not sure he is helping his cause when he indignantly stated the following:

“I became very very angry because I then knew what had happened. In my opinion Brock could not resist one last time of harassing the bears with his habit of blowing smoke in their faces for God only knows what reason and in direct defiance of my telling him NOT to disturb them!!!”

Alas, Kilpatrick is learning a tough lesson in management: you are responsible for the (stupid) actions of people who perform work-related tasks for you, whether or not you formally hired them – and in this case, whether or not you specifically asked them to perform a given task. (If a supervisor is napping, employees are pretty much on their own.)
The fact that Hopkins was prone to blowing smoke at the bears and Kilpatrick still allowed him on the property weakens his case considerably. (As Hopkins left his pipe on the shed prior to entering the pen, it is unlikely that he provoked the bear in this particular manner on that fateful day.)
Meanwhile, the youthful Hopkins has knee problems and possibly permanent muscle damage. He may want to find himself a medical practitioner to write him a script for marijuana, which is available legally in Montana. Blowing smoke can ease the pain, as long as you don’t direct it into the face of a sleepy or hungry bear.

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Cavalcade of Risk: The 4th Anniversary Edition

Wednesday, June 2nd, 2010

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Welcome to the June 2, 2010 edition of Cavalcade of Risk. With this issue, we mark the fourth anniversary of our biweekly risk roundup. Kudos to Hank Stern, Cavalcade’s founder, keeper of the flame, and all round good blog citizen. He’s the perfect person to lead the charge – as an insurance expert, he knows quite a bit about managing risk. Kudos to him and to all my fellow risk wranglers who’ve continued to dole out sage advice over all 106 issues of the Cavalcade – yay for us!
Risk is so random. You are enjoying the Stanley Cup playoff game between the Montreal Canadiens and the Pittsburgh Penguins when a massive sinkhole swallows you and your family whole sending you to an untimely death. No, this isn’t the plot of a bad ’60s sci fi flick, it was a real event that occurred in Canada just a few weeks ago. And as living proof of the Baader-Meinhof Phenomenon, right after hearing about this horrific event, we learn of the total disappearance of a six-story building in a Guatemala sinkhole.
Whether in business or in our personal lives, risk is unavoidable. Both consciously and unconsciously, we are all in a continual process of sizing up situations and activities, weighing the relative risk versus reward, and determining the maximum acceptable level of risk in going forward. The business or discipline of such assessment is called risk management; in our day-to-day lives, it’s called living.
In the biweekly issues of Cavalcade of Risk, we turn to various experts who weigh in with risk management advice for assorted business and life activities. Because risk can be messy, our topics span the gamut. While there may be some ongoing themes that recur in our lineups, by the very nature of the beast, it’s not always easy to sort submissions into neat little categories. Today’s issue follows suit.

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The Idaho Fee Schedule: An Opening Skirmish in the Cost Containment Wars

Tuesday, June 1st, 2010

With a population around 1.5 million and a land mass the size of New England, Idaho is probably not the first state that comes to mind in the national struggle to contain medical costs. Nonetheless, orthopedists in Idaho have managed to attract the attention of the federal government in their effort to increase rates of reimbursement for services. The feds are not happy with the Idaho docs.
The first problem came with the workers comp fee schedule. The “Resource-Based Relative Value system” set a price of $88 for most orthopedic procedures. The 65 or so orthopedists in Boise got together and decided to refuse to treat workers comp cases. As a result, the Industrial Commission raised the rates by 61 percent. Score one for the docs.
Emboldened by their success, the docs refused to accept Blue Cross patients under the prevailing fee scheme. But in taking on the conventional health care (as opposed to the state-based workers comp system), the docs crossed a line from a program run exclusively by the states into a behemoth system in which the federal government plays a big role. The feds came down hard with charges of violations of the Sherman Anti-Trust Act. Prosecutors sued five doctors, the Idaho Orthopaedic Society and the Idaho Sports Medicine Institute in Federal Court. If you think about it, it’s not hard to see how a bunch of doctors agreeing to hold out for higher reimbursements might fall under the general heading of “price fixing.”
As we have blogged rather frequently, Massachusetts has the lowest fee schedule in the nation. Most orthopedists have responded by refusing to accept the (ridiculously low) rates. But unlike the orthos in Idaho, the MA docs deal with the palty rates on their own. By refusing to accept them, they compel insurers to negotiate higher rates. These negotiated rates vary from doctor to doctor. There is simply no way and no need for the hundreds of orthopedic doctors in MA to agree on rates:it would be like the proverbial herding of cats.
In Idaho it’s different. The state’s unique characteristics – the large land mass and relatively small population – make a genuine “conspiracy” possible. The docs all know one another. So what seemed to them a fairly innocent attempt to leverage the system for higher reimbursement rates appeared to the feds as a conspiracy. In other words, their mistake was in sharing information about the rates and in uniting to take action against them. Had they acted individually, there would have been no violation of the anti-trust act.
War on Docs?
One blogger with roots in the libertarian Ludvig Von Mises movement sees in the government action a declaration of war against doctors. He believes that doctors will be “forced” to accept the government rates. Not exactly. As we have seen in Massachusetts, individual doctors can accept or reject patients as they please. What they cannot do is collude with fellow doctors to achieve a fee schedule to their liking.
With rising medical costs looming over every aspect of our economy, this little skirmish in Idaho is simply the opening salvo in what is likely to be a prolonged and painful battle to contain the costs of health care. It’s no accident that the Obama health care bill punted on the cost containment issue. One person’s cost containment plan is inevitably another’s cut in pay.
In the coming months, the battle of Idaho will move into the great metropolitan areas of our country. Just imagine the formidable barricades to be erected by the men and women in blue scrubs! This will be an interesting brouha, to say the least.

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