April 2011
How important are Medical Provider Networks (MPN) for employers in fighting unauthorized treatment? More important than ever. In a recent WCAB en banc decision issued on April 20, 2011, the WCAB made it clear that when there is a valid medical provider network (MPN), and the injured worker obtains treatment outside the MPN, the employer and carrier will not be liable for the costs of that treatment, and more importantly, those reports will be inadmissible.
In Elayne Valdez v. Warehouse Demo Services (ADJ7048296), the injured worker sustained an admitted injury and was initially sent for medical treatment with a physician within the Defendant's MPN. Approximately three weeks later, the applicant retained legal counsel and she began treating with a physician outside the MPN. An issue arose over the applicant's entitlement to temporary disability based upon that treatment, and the matter proceeded to Trial. At Trial, the Workers' Compensation Administrative Law Judge (WCJ) found, based upon the reports of the non-MPN physician, that the applicant was entitled to temporary disability (TD) benefits for a specified period of time, less any payments received from the Employment Development Department (EDD) during that time period, whose lien was allowed. The Defendant filed a timely petition for reconsideration of the WCJ's decision. The applicant did not file an answer to the Defendant's petition.
At the Workers' Compensation Appeals Board (WCAB), a majority concluded that when there is a validly established MPN for which the proper notices have been provided employees and injured workers, the reports of non-MPN physicians are inadmissible and cannot be relied upon. Further, the WCAB went on to say that defendants are also not liable for the cost of the non-MPN reports.
The stereotypical insurance salesman couldn’t be more demonstrative than from the “Ned Scenes” in Groundhog Day.
Thankfully the insurance industry is one of the most professional and highly regulated in the U.S…perhaps in large part due to the “Ned’s” of this world.
Fortunately, professionalism is at the heart of the true experts who are delivering meaningful value to serious insurance buyers. There is a lot on the line and colossal complexity related to risk transfer strategies, people safety, policyholder provisions, exclusions and ultimate management of escalating insurance premiums. They are, at a minimum, challenging concerns and not for the faint of heart. With all of the insurance organizations claiming “excellent customer service” and “expertise” the obvious question that emerges is “how does one go about quantifying an organization’s ability to deliver on its claims”?
The answer to that question brings clarity to that very tough question.
There are two defining considerations when an organization is endeavoring to decide which insurance organization to work with.
Most people think life insurance is used for only one specific purpose: to replace the lost earnings should a primary breadwinner pass away. Those who subscribe to this theory often purchase low-cost, term insurance that expires soon after retirement. However, such thinking ignores the wide variety of uses for life insurance, especially when it comes to estate planning. Let’s examine several alternative uses of life insurance that many perhaps overlook.
1. Estate Creation - One of the most obvious, yet most overlooked, uses of life insurance is to create or expand one's estate. Every parent wants to leave their children better off financially than they were. Life insurance can create an immediate estate for one's children, often for pennies on the dollar. In uncertain economic times, life insurance can be an important resource to ensure our children's economic well-being.
2. Liquidity to Pay Estate Taxes - The truth is, the IRS expects all estate taxes to be paid off within 9 months of your death. Federal estate taxes can be as high as 50% of your gross estate. The average Californian's estate is dominated by two assets: their personal residence and their Individual Retirement Account. Neither of these assets is easily liquidated on short notice without triggering substantial tax penalties. Even if your heirs were able to liquidate one or more of these assets to pay taxes, using life insurance proceeds instead may make far greater sense.
David Axene is one of the most well respected healthcare actuaries in the world. He is passionate about creating innovative solutions to meet the increasing demand of the many healthcare challenges facing the U.S.
Most people are frustrated by escalating workers compensation premiums and I’m always surprised to learn that even sophisticated insurance buyers don’t realize that there are market alternatives for the right business risks.
Rather than buying an “off the shelf” workers compensation policy, why not explore the options which could include High Deductible, Retro, Rent-A-Captive group programs (both heterogeneous and homogenous), as well as stand alone Captive formation? A simple analysis will determine the best route for you and your business. The analysis will deliver empirical evidence as to whether or not an alternative approach is feasible. This process will also be very valuable because you’ll learn a tremendous amount of information related to safety best practices and how they are a proven methodology to control workers compensation costs.
Alternative approaches also insulate the buyer from extreme market and pricing swings. Recently a client referred to his workers comp captive as a market “shock absorber”. Now that is well stated!
Duke Helfand’s April 3, 2011 article in the LA Times commented on the shift towards smaller networks. This shift is finally getting the eye of the public as health plans use narrower networks as another tool to control health care costs. Is this something worth noting? Does this work? If so, why does it work?
For many years, this has been an internal health plan issue. How big should the network be? Care managers preferred concentrated membership by provider to maximize their ability to impact provider’s behavior. Marketing and sales staff preferred broad networks to maximize the attractiveness of the program to as many potential members as possible. Both sides have their point, but in recent years the scale has tilted to the care manager’s perspective which frankly has become the plan’s perspective.
In technical terms this is called provider disruption. How willing will individuals be to sign up for a new plan given the nature of the network and whether or not they will have to change providers to be a part of the new plan? If the network is narrower than normal, there is a greater likelihood that someone’s provider will not be on the list. The broad network includes most everyone and there is only a remote chance the provider is not on the list. Health plans, insurance brokers and many employers review complex provider disruption analysis to determine how much impact a new program will have on their current population. Up until recently, the prevailing thought was bigger is better, at least we can avoid the complaints from our employees and their dependents. Internally it was generally accepted by health plans that a smaller network was easier to control and would likely to reduced health care costs. Today the importance of health cost reduction has led to more plans offering restricted networks which usually claim lower cost of operations.
Some employers view telecommuting as the cure-all to reduce fixed costs associated with real estate and to lure prospective employees to their workplace. Questions have persisted in the minds of some about the pros and cons of telecommuting. From the risk management standpoint we need to ask: Do we really understand the potential risk ramifications of telecommuting?
Telecommuting can be defined as the practice of employees working out of their private residences on a regular basis (once a week, twice a week, or more). With advances in technology (e-mail, computer networks, fax modems/machines, phone systems, etc.) telecommuting continues to increase at a steady rate. This virtual office atmosphere (being able to be connected essentially anywhere) has significantly increased the number of employees who can perform their jobs effectively from home. Tens of millions of Americans work at home on a regular basis.
The Benefits
- Millions/billions saved in real estate costs including heating/cooling/electrical, etc.
- Increased productivity to the company -- employees are allowed to work at their own pace/environment with fewer interruptions.
- Environmental benefits from less fuel consumed and less pollution.
- Shorter commute times for those who still go to offices as a result of fewer vehicles on the road.
- “Flex” time for family commitments and increased employee satisfaction.
It is also necessary to provide work-at-home employees with the same safe environment given to office employees. Each employer is required by OSHA to provide employees with a safe work environment regardless where the “work” is located. There was a proposal by OSHA to require home-office inspections but it was quickly dropped.
Health care reform in the form of PPACA was signed into law by President Obama on March 23, 2010. Now more than a year later it is still a significant matter of discussion. The House and the Senate continue to discuss whether or not we need it. Yes this topic has its political sides and strong supporters on both sides, but few seem to get to the real issue, “do we really need it?” Health care reform has been widely discussed for most of the past forty years. Many have feared its coming, others have anxiously awaited it. Now that it is a reality, it continues to dominate much of the discussion.
The key reasons for wanting health care reform have included:
- Significant numbers of uninsured and underinsured individuals (i.e., more than 40 million or about 1 out of 7 individuals)
- High expense of health care services in excess of 17% of the GDP (i.e., more than 1 out of 6 dollars spent on healthcare)
- Need for improved quality in healthcare (i.e., continuing medical errors as reported by the Institute of Medicine leading to more than 130,000 deaths per year)
- High rate increases for insurance products limiting the public’s ability to purchase insurance
Most of these reasons are inter-related. The high cost of care forces up premium rates which in turn impacts the ability of individuals to obtain health insurance. This in turn stresses our excellent health care system with the large number of individuals without health coverage, sometimes leading to more than expected medical errors.
The United States enjoys what I term Heroic Healthcare.
What do I mean by Heroic Healthcare?
I was there when our first daughter was born two months prematurely requiring immediate, life-saving surgery to overcome an esophagus abnormality, where her esophagus was attached to her lung rather than the normal development. We were told when this surgery occurred (1980) that 20 years earlier the medical community would not have been able to successfully perform the "heroic" surgery, saving Jocelyn's life. Our medical insurance paid dearly for this procedure, the hospitalization and aftercare. Jocelyn is now a healthy, 29 year old woman.
I was there, when Irene was expecting our second child and she was told to abort by her OBGYN .... because Jocelyn's medical issues were "hereditary" and the same incidence would re-occur. That information later proved to be outrageously erroneous after consulting with another physician who performed "heroic" research on the matter. JoAnna is now a healthy, 25 year old woman.
I was there when Irene was hospitalized with an undiagnosed disease. After a two week local hospitalization she was transported by ambulance to UCSF; two days later she was diagnosed with incurable Primary Amyloidosis. We are intimately involved with the system, oftentimes changing the course of routine protocol because of our influence. UCSF and others have used "heroic" efforts to save Irene's life using modern medical technology. Our health insurance provider has paid in excess of seven figures for treatment protocol and continues to pay ongoing medical expenses.
Is your company’s safety and health committee meetings becoming repetitive and/or ineffective? Need some new guidelines to help increase your company’s profit and productivity?
Canadian Center for Occupational Health and Safety suggests the following parameters to self-evaluate and help “jump-start” your safety and health committee efforts:
- Make sure committee members names are posted so all workers have access to them.
- All employees need to know each committee members duties and authority.
- Provide sufficient support to committee members to achieve their assigned duties. This support needs to include: adequate time (paid), funds, accident/incident reports, and training documentation.
- Periodically survey all workers to ensure your committee is valued as providing safety leadership.
Insurance Thought Leadership aggregates best practices from highly respected experts in their field. Insurance Thought Leadership provides knowledge and experience at a time when its needed most, times of sweeping change and market uncertainty.
Whether it’s Healthcare, Worker’s Compensation, Property & Casualty, Auto, Sophisticated Life Insurance designs, Directors & Officer’s, Safety, Risk Control or other Claims Management, Insurance Thought Leadership promises to deliver the most relevant mind share the industry has to offer.
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Dave Dias
David Axene
Jeff Pettegrew
Jennifer Weathersbee
Mark Webb