Posts Tagged ‘costs’

Training Employers: How To Reach The Other 80%

Tuesday, February 19th, 2013

Last week, WorkersCompensation.com published a blog post by John D’Alusio entitled, “The Responsibility of Policyholder Education.” In it, Mr. D’Alusio talks about a friend’s troubling, frustrating and painful experience after a work injury, a torn finger tendon. The friend works for a self-insured Florida city whose claims are managed by an unnamed TPA. According to Mr. D’Alusio’s friend, the TPA, slow off the mark, delayed necessary treatment, dueling physicians traded opinions (slowly) and the employer, the city, was uninvolved, uneducated and unhelpful. In a word, clueless.
Mr. D’Alusio’s overarching question in all of this is, “Who’s responsible for educating the employer and employee about the workers comp system?” In other words, who is responsible for teaching workers comp best practices to employers who are all legally required to comply with workers comp statutes?
Here at Workers Comp Insider, we don’t usually talk about ourselves, but Mr. D’Alusio’s question prompts me to step outside that box for a moment, because his question is the same one I faced nearly 30 years ago.
I was an entrepreneur looking to start a business, and friends in the insurance industry suggested looking at workers comp, because costs around the country were raging like a California wildfire, and nobody seemed to have any answers that worked.
Knowing nothing about the subject, I at least had fresh eyes. And what I saw was that, even though workers comp insurers, agents, TPAs, et al, claimed to provide employer education, no one was actually doing it. The only thing employers knew about workers comp was that they had to buy it, and if employees were injured, the insurer was supposed to take care of it. Employers lived in a workers comp wasteland.
That insight was why we created Lynch Ryan with the mission to educate employers that the workplace is the best place to control and manage workers compensation. We were successful in that, and we grew into a substantial and influential management consulting company, and in 1991 Travelers Insurance made us an offer we couldn’t refuse, because they needed help. Heady stuff.
Yet, today, while large, enterprise organizations (many of them our clients), have sophisticated systems in place, systems that start with an unrelenting focus on safety, that provide immediate and excellent care for injured workers when safety fails, that return them to meaningful transitional work along a programmed path back to full duty, and that, consequently, keep costs to an absolute minimum, the other 80% of American business does not have the resources or the training to do the same, as Mr. D’Alusio’s Florida example illustrates. Why? Because traditional training is expensive, and a $7,000 premium (add a zero, if you’d like) doesn’t justify it, so everything is always unplanned and reactive. Moreover, many insurers, TPAs and agents have neither the time nor the inclination to provide meaningful training for the folks who pay the bills.
So, I’m back to my 30-year old question. We have millions of employers in America, call them all students. Who teaches, and how do they do it?
The answer? Technology and eLearning. That’s our new sandbox. What’s yours?
If you’d like to see what we’re doing, here’s a 1-minute tease. Contact Lynch Ryan if you’d like to know more – email me directly or connect with me on LinkedIn.

Co-Morbidities and the Cost of Claims

Wednesday, December 5th, 2012

NCCI Holdings has issued a report on the impact of co-morbidities on workers comp claims. While there are few surprises, the research is able to point toward a handful of specific conditions that are most likely to drive up the cost of a claim: hypertension, drug abuse, chronic pulmonary problems and diabetes. The research also confirms a particular red flag that has frequently been the focus of this blog: the impact of the aging workforce on the costs of workers comp.
The overall scale of the co-morbidity problem is relatively modest: only 6.6 percent of claims involve workers with co-morbid conditions that directly impact their treatment; however, this reflects a nearly a three fold increase between 2000 and 2009. In those claims where co-morbidities are a factor, the cost of medical treatment is double that of less complicated claims. Co-morbidities begin to show up in workers in their mid-30s and rise with age. Workers with co-morbidities are more likely to work in contracting or manufacturing – as opposed to clerical/office and goods and services. Finally, injuries to workers with co-morbidities are more likely to involve lost time, transforming what might normally be a medical-only claim into one involving indemnity.
The majority of claimants with co-morbidity diagnoses are male: 65 percent of all claimants, 73 percent of claims involving drug abuse, 68 percent of claims involving diabetes and 67% of claims involving hypertension. This may also correlate to the fact that men are more likely to be involved in physically demanding jobs, where co-morbidities would have more of an impact on recovery.
American Health
The study notes that illness rates in the general population are increasing, especially in the areas of hypertension, obesity and diabetes. As the incidence rates increase in the general population, the workforce will mirror this growth. While workers with co-morbidities currently comprise only 6.6 percent of injured workers, we should expect to see a steady climb in that percentage over time..Amercian workers reflect American health.
It will be fascinating to track the impact of (virtually) universal healthcare – AKA Obamacare – on workers compensation. For starters, we can hope for earlier diagnosis and treatment of serious health problems. Where workers without health insurance were highly unlikely to undergo treatment for their non-work related conditions, insured workers may receive treatment. Where uninsured workers were only covered by workers comp – and then only for work-related injury and illness – insured workers will have access to preventive care all along. This might help to contain the growth of workers comp costs.
As always, medical treatment under workers comp represents just a miniscule portion (about 3 percent) of total medical costs in America. There is an elephant in the room and it isn’t us. But what happens to that elephant will impact the unique, 100 year old public policy experiment that is workers comp. In this era of data mining, there will be much data to be mined.

News roundup: Risk, Dispensing Docs, Costs for Employees, Litigation & more

Wednesday, October 3rd, 2012

Risk roundup – Our Down-Under friend Russell Hutchinson of Chatswood moneyblog posts this week’s Cavalcade of Risk, with a global roundup of posts. Check it out.
Costs for EmployeesInsurance Journal reports on the latest Bureau of Labor Statistics report on the cost of U.S. employees, noting that the nationwide average cost for private industry employers was $28.80 per hour worked in June 2012. “The costs ranged within each region, with total compensation costs of $24.44 in the East South Central division to $33.47 in New England.” The article offers more detail on the report, noting that costs were collected from a sample of 47,400 occupations from about 9,500 establishments in private industry. Data excludes self-employed and farm and private household workers.
Physician Dispensing – Joe Paduda looks at potential conflict of interest issues in a post about ABRY Partners, he asks, “How is it that an investment firm owns stakes in a TPA, MSA company, subrogation firm – and a physician dispensing and billing company?” Is one company cleaning up a mess that another company makes? In other repackaging news, he notes that Miami-Dade Schools has taken a stand on physician-dispensed repackaged drugs – they are refusing to pay the markups, a move that saved more than half a million dollars. Employers take note: Is this a potential area of savings in your comp program.
Narcotics Studies – Rita M. Ayers reports on a recent study by Accident Fund Holdings and Johns Hopkins University that links opioid use to an escalation in overall claim cost in the Tower MSA Blog. She notes that the study reveals that 55% to 85% of injured workers receive narcotics for chronic pain. She says that the study, “…examined the interrelationship between the utilization of short- and long-acting opioid medications and the likelihood of claim cost escalating to a catastrophic level (> $100,000). Analyzing 12,000 workers’ compensation claims in Michigan during a four-year period, the study focused on whether the presence of opioids alone accounted for the cost increase or whether costs increased because opioids were associated with known cost-drivers, such as legal involvement and injury severity.” Related: WCRI: Nearly 1 in 12 Injured Workers Who Started Narcotics Still Using 3-6 Months Later.
Worst States for Lawsuits – “Lawsuit Climate 2012″ is a study evaluating how fair and reasonable states’ tort liability systems are perceived by businesses in the U.S. It was conducted by the U.S. Chamber Institute for Legal Reform. According to those surveyed, Delaware has the best legal climate for businesses.See respondents’ picks for the Top 10 Worst States for Lawsuits, along with more on the study’s results.
High Costs for Police Dept. – The LA Daily News reports that Los Angeles spends more on LAPD workers’ comp claims than for all others combined – some $65 million in 2010-2011 alone. The department averages 250 claims a month. Authorities say that it is “…one of four drivers of the city budget deficit. Others include the costs of salaries, pensions and health care.”
News Briefs

Addendum As a follow-on to yesterday’s post about Shackleton’s Medical Kit, we found more information and a photo of Shackleton’s medical kit at The Science Museum of London, and a related post from NPR’s Health Blog: ‘Cocaine For Snowblindness’: What Polar Explorers Packed For First Aid.
shackleton-medical-kit.JPG

What’s the Real Workers’ Comp “Secret Sauce?”

Tuesday, July 31st, 2012

“An educated consumer is our best customer.” – Sy Simms (a really smart retailer)

In the mid-1980s and early 1990s, our nation was in the midst of an awful workers’ compensation crisis. In my home state of Massachusetts, the cost of workers’ comp was approaching $2 billion dollars annually. Employers were looking for straws to grasp. Associated Industries of Massachusetts, the leading employer organization in the state, held quarterly seminars in large hotel ballrooms and filled them every time with CEOs, CFOs and HR VPs, all wanting to know what they could do to stem the tide.

Often, I was a keynote speaker. Why? Because my company, Lynch Ryan, had figured out that even though, as Peter Rousmaniere, my CFO at the time, put it, the crisis was “a horrendoma of the first order,” employers who were committed and driven to reduce their costs could do so if they instituted real, systemic programs with roles, responsibilities and accountability throughout the organization. These employers learned that time was their enemy and that when safety failed and injury resulted, they needed an urgent sense of immediacy to take hold of the injured person and keep him or her as close as possible to the bosom of the workplace. They didn’t just report the injury to their carriers and return to business as usual.

Relative to their peers — their competition — these employers shone like bright stars in the clear night sky.

In 1992, Massachusetts enacted far-reaching legislation to significantly improve what had become a woebegotten state system. This reform legislation produced results that still echo today as Massachusetts continues to have among the very lowest costs in the nation, but among the highest benefits. The big national bugaboo, medical costs, are about 40% of the total spend, as opposed to around 60% nationally. The $2 billion has shrunk to around $600 million.

Yet, even now, employers who treat workers compensation as they would treat any other important business function (time to repeat – with written documentation, roles, responsibilities and accountability established throughout) still outperform their competitors. I’ve worked with many of them who managed workers’ comp well and were proud of the results they’d achieved.

And that, to me, remains the secret sauce.

Yes, the Great Recession has caused terrible damage to the nation and, by extension, to the workers compensation system. Yes, the combined ratio is unsustainable (and may be understated). Yes, we’re in the middle of an epidemic of opioid abuse, enabled, for the most part, by doctors who long ago forgot their Hippocratic Oath and who now bow to Gordon Gecko. And, yes, workers’ comp, especially with respect to medical claims management, has gotten much more complicated over the years (and the Medicare Secondary Payer Statute hasn’t helped). But in the midst of all this, you will still find employers who are so serious about safety and injury management, that their workers’ compensation costs, relative to their peers, give them a significant competitive advantage. All things being equal, their boats are in a safe harbor, waiting to sail when the storm lifts.

In many cases, these employers who “got religion” long ago are large organizations, at least upper middle market. They have the resources to institute systemic programs. But what about the other 80% of American businesses? These companies need help. How do we bring them the education they sorely need to weather the market vagaries?

I think that’s the bull’s eye challenge.

New York Comp: Fully Documented Downward Spiral

Tuesday, June 19th, 2012

We live in the digital age, with all its conveniences and consequences. It would be hard to imagine a law requiring that all telephone calls be routed through live operators, or limiting maps to those that can be purchased at your neighborhood gas station. But each technological innovation creates a few new jobs and, seemingly, the loss of many others. Which brings us to the continued – and mandated – use of stenographers in virtually every workers comp claim filed in New York.
Senator Diane Savino (D-Staten Island) has filed S. 4112, which would certainly help the employment prospects of stenographers in the Empire state. Following an aborted effort by the NY workers comp board to test the use of digital recording in a few of the 300,000 or so annual workers comp hearings, Savino wants to ban digital recording from any comp hearing and require stenographic reports as the sole recognized form of documentation. Her bill, currently under consideration, would make stenographers a permanent fixture in workers comp for years to come.
Stenographers and their allies will argue that their presence improves the accuracy of court reporting. There are fewer “inaudibles” in their transcripts. But such accuracy comes at a substantial cost. The wages of a stenographer are in the $50-60K range, plus benefits. The cost of installing digital recording equipment in a courtroom runs less than $20,000, and once installed, the cost of maintenance is minimal. The trade off becomes even more reasonable when you consider that the New York system requires an unprecedented number of hearings for each and every workers comp claim.
In contrast to virtually every other non-monopolistic jurisdiction, New York insurers and TPAs are not allowed to make routine, unilateral changes in the status of any claim. A change in claim status requires a hearing, in front of a judge, complete with legal representation on both sides and a stenographer. This is enormously redundant and, in a word, non-sensical. It is also the root of New York’s highest-in-the-country, soon-to-go- higher administrative costs. On a per capita basis, New York has more judges, more bureaucrats, more hearings, more paper flow – and more stenographers – than any other competitive state.
No Easy Answers
The fundamental goals of reasonable reform in New York can be easily stated: improve benefits for injured workers and lower the exorbitant cost of insurance for employers. It is not difficult to imagine how this can be done: simply look at the way most other competitive states manage workers comp claims. New York would have to streamline its entire system: instead of operating like a monopolistic state, micro-managing every claim, New York could empower insurers and TPAs to manage claims as skillfully and independently as they do in other states; by doing away with unnecessary hearings and hugely redundant reviews of literally millions of forms, New York could substantially reduce staffing levels at the Workers Comp Board.
But efficiency comes at a cost. One person’s cost savings is another’s job loss. These needed reforms would eliminate many, many jobs – and in doing so, would throw hundreds of loyal workers into the already burgeoning unemployment lines. In this one small example, the elimination of stenographers from hearings would lower administrative costs, even as it would increase the unemployment of people with potentially obsolete skills. This is not an easy trade off, but a necessary one.
At some point, New York has to look at the big picture: workers comp is way too expensive, even though the benefits, for the most part, are mediocre. Every adjustment to the current statute, every administrative decision, should pass through a single filter: does this improve the benefits to injured workers and does it reduce the cost to employers? When you run Senator Savino’s S. 4112 through this filter, it’s not part of the solution, but just another clog in an already overloaded drain.

Health Wonk Review, Worker Memorial Day, OK, Obesity, Appendectomies & more

Thursday, April 26th, 2012

Health Wonk Review – Jennifer Salopek and Sarah Sonies have posted Health Wonk Review: Shiny Happy (Mostly) Edition, an excellent hosting debut at Wing of Zock, a blog sponsored by the Association of American Medical Colleges for practitioners of academic medicine. Make sure you click through to learn the origins of the fanciful name of the blog.
April 28 is Worker Memorial Day – an event dedicated to remembering those who died on the job from workplace injuries and diseases. It’s also a time to commit to doing better, to renew efforts for safe workplaces. The National Council for Occupational Safety & Health has a list of Workers Memorial Day events throughout the country, as well as fact sheets and resources in both English and Spanish.
Oklahoma decides against “alternative workers comp” – Last week, the Oklahoma Senate gave the nod to a bill that would allow some employers to opt out of workers comp system by offering a comparable alternative, but the OK House rejected the opt-out measure. Last week, Senator Harry Coates had issued an editorial discussing the opposition viewpoint: Be careful what you ask for. See Dave DePaolo’s take on OK’s non-subscription model and the recent Walmart opt out in Texas.
Is it OK to discriminate against obese people? – In what may be a first among hospital hiring restrictions, Victoria Hospital in Texas has stated they won’t hire very obese workers. HR pro Suzanne Lucas (also known as “Evil HR Lady”) asks if it is okay to discriminate against obese people, offering 5 reasons why she feels it is a bad policy. In addition to potential illegality, another issue she raises is that many health professionals consider the BMI or Body Mass Index a faulty indicator of health. The first link quotes a physician as noting that “A professional football player might have a body mass index of 32, which is technically obese, but only have 7 percent body fat.” (Be sure to check out the Flickr gallery of real people and their BMIs that Lucas links.) Now whether or not this is the wrong “solution,” the fact that obesity is a workplace problem is not at issue. A new Cornell study says that obesity accounts for almost 21% of U.S. healthcare costs, and “An obese person incurs medical costs that are $2,741 higher (in 2005 dollars) than if they were not obese.”
Usual and customary? – How much will an appendectomy cost you in a California hospital? It might depend on your insurance coverage. In one hospital, the cheapest procedure was $7,504 and the highest cost in the same hospital was $171,696. See more in Merrill Goozner’s post on the Anatomy of A Walletectomy.
Jail time for scofflaws/ – Jon Gelman notes that North Carolina is raising the stakes for employers that don’t carry workers comp – “the first contempt hearing is scheduled for May 22 when 125 uninsured employers have been noticed to appear in court.” The state says pay up or go to jail.
Sex, workers comp & horseplay – Joe Paduda posts about compensable sex on the road, an Australia case where a worker was injured while in flagrante delicto. My colleague discussed this case previously in his post Compensable Sex, Down Under? We don’t get to talk about sex very often on this blog, although there was a spanking incident a number of years ago (sadly the link to the news item appears broken.) The spanking post dealt with an instance of horseplay – an issue that Cassandra Roberts poss about at LexisNexis in her post A Roll In the Hay: Delaware’s Horseplay Defense and Australia’s Sex Romp Case Revisited, where she lists an array of quirky cases in which the horseplay defense failed.
More Noteworthy News

Health Wonk Review and other noteworthy news briefs

Thursday, March 18th, 2010

It’s Health Wonk review week, and Minna Jung serves up the March Madness of both the basketball court and the health care reform process in this week’s Health Wonk Review. Visit this week’s post at the Robert Wood Johnson Foundation’s blog The Users’ Guide to the Health Reform Galaxy.
Employer trends

  • Laura Petrecca of USA Today writes that employers are increasingly using technology to track and monitor employees. They do so for a variety of reasons, including monitoring to ensure productivity; to ensure that trade secrets are protected, and to ensure maintenance of professional and lawsuit-proof workplaces. Next month, the U.S. Supreme Court will hear a case that will explore privacy rights for employees when using employer-supplied devices. View some of the tech monitoring techniques that are being used.
  • NPR has been running a series on work-life balance and the increasing number of employers who are turning to flexible work schedules. You can read more about it at HR Web Cafe: Work-Life Balance and Flex Work.
  • Employee compensation costs – Private industry employers spent an average of $27.42 per hour worked for total employee compensation in December 2009 (PDF), according to a report issued last week by the Bureau of Labor Statistics. Wages and salaries accounted for 70.8% of these costs, while benefits accounted for 29.2%. Of the benefits, 8.2% were for the cost of legally mandated benefits.

CT crackdown – Connecticut employers take note – Attorney General Richard Blumenthal is planning a crackdown on workers that are misclassified as independent contractors. “Among the commission’s recommendations: increase the penalty from $300 per violation to $300 a day per violation, strengthen criminal sanctions against misclassification and jointly investigate misclassification complaints with other state agencies.”
Immigrant workers – In light of a recent Iowa Supreme Court ruling in a case involving a nonresident alien, Roberto Ceniceros posts about immigrant workers and benefit complexities. To stay current on other related issues, we refer you to Peter Rousmaniere’s Working Immigrants.
Toxic chemicalsThe Environment News Service writes that the Obama administration is giving mixed signals on right-to-know for toxic chemicals. On the one hand, to increase transparency, the EPA is providing free web access to the Toxic Substances Control Act Chemical Substance Inventory. This is the first time that employers will have access to thousands of industrial chemicals in the agency’s database. But in a move that seems at odds with the administration’s stated commitment to transparency, OSHA is proposing a reduction in the hazard warning information that chemical manufacturers must provide to workers, customers and other users. OSHA denies that it is weakening protections, and according to the article, claims that it is “merely trying to conform with global labeling rules and that manufacturers often disagree with the cancer hazard evaluations and other advisory information.”
Medical marijuana – We suspect we’ll be seeing more stories like this: Walmart fires Michigan man for using medical marijuana.The store fired 2008 “Associate of the Year” Joseph Casias when he failed a drug test. Casias has sinus cancer and a brain tumor and has an authorized medical marijuana card. He uses marijuana to control pain at night, but claims that he is never under the influence at work. (See our past posts on this topic: The current buzz on medical marijuana and the workplace and One toke over the line.)
Kemper runoff – Hard to believe that it’s been six years, but the Kemper runoff saga is nearing conclusion, according to Business Insurance. Some call this “one of the most successful runoffs in history,” but not all agree. Some are waiting for liquidation to see if they will fare better than the reported 25 cents to 50 cents on the dollar that claims are being settled at:

“A decision to wait for liquidation or settle beforehand should depend on a cost benefit analysis that includes evaluating whether state guaranty funds for workers compensation claims are likely to pay for the majority of a policyholder’s claims, several experts said.

Workers comp claims account for the largest portion of Kemper’s outstanding liabilities, totaling about $600 million, Ms. Veed said.

But some states have net-worth exclusions, which eliminate guaranty fund coverage for companies above certain net worth levels, which range from $10 million to $50 million depending on the state, several sources said.”

Health and safety news from the blogosphere

Wednesday, August 26th, 2009

Money-Driven Medicine – Maggie Mahar, one of the regular Health Wonk bloggers who we admire, is author of the book Money driven medicine: the real reason health care costs so much. Her book has been made into a documentary by Alex Gibney, the producer noted for his documentary expo Enron: The Smartest Guys in the Room. This Friday night, Bill Moyers Journal will preview excerpts of Money Driven Medicine, which Moyers cites as one of the strongest documentaries he has seen in years. It bears checking out. For more about the documentary, including a trailer, see moneydrivenmedicine.org. You can also follow Maggie’s blog posts at Health Beat.
Meanwhile, in Business Insurance, Joanne Wojcik writes that two surveys project that healthcare benefit costs will increase by more than 10% in 2010. Aon Consulting projects an average 10.5% increase, while Segal Co. sees cost increases ranging between 10.2% and 10.8% for managed care plans.
Nanoparticles – the NIOSH Science Blog highlights recent research related to occupational disease and nanoparticles. Nanotechnology is the discipline of technology that works at a molecular level with particles that are less than 100 nanometers in size. Earlier this year, the CDC released Approaches to Safe Nanotechnology (PDF), which offers recommendations for specific precautions to protect workers who are exposed to any level of nanoparticles. Learn more about research and risk management at the NIOSH Nanotechnology site.
Fatal SunshineTime recently featured an article on the plight of California farm workers, who frequently do not have adequate protection from heat stroke and basic precautions to prevent heat-related illness. While California state law mandates heat stress standards, many employers do not adhere to those standards. The ACLU and the law firm Munger, Tolles & Olson are suing California’s occupational health and safety agency on behalf of the United Farm Workers, workers who became sick, and relatives of workers who died from heatstroke.
Employer Pandemic Planning – While there are dueling projections for the potential impact of the H1N1 flu this fall and winter, it pays to be prepared. Safety Daily Advisor offers an abbreviated workplace pandemic planning checklist based on CDC recommendations. For more detailed planning information for work and home, see Flu.gov.
More on work suicides – We noted last week that a recent Bureau of Labor Statistics report showed that workplace suicides increased by 28% in 2008. At Comp Time, Roberto Ceniceros looks at the issue of workplace suicide in light of a recent Indiana appeals court ruling in which a widow was denied benefits related to her husband’s suicide.
Taking the job home – Jon Gelman blogs about a recent CDC study showing that workers who are exposed to lead can transport it home. The CDC suggests certain precentive measures to minimize risk to other family members.
Fitness for Duty – Fred Hosier of SafetyNewsAlert posts about how to deal with employees who are consistently unsafe through a comprehensive fitness for duty program.
OSHA – Is OSHA back in the business of enforcement? The Safety Duck thinks that issuance of 142 citations and $576,000 in penalties against Sims Bark Co. and Sims Stone Co. signifies that it is.