In our previous post, on distribution, we pointed out that claims represents perhaps the most important customer touchpoint in the entire insurance journey. Nothing affects carriers’ bottom lines like claims; too many are not just capable of wiping out company margins but can jeopardize company survival. Full stop. And it’s not as if customers like claims, either. If insurers could magically prevent the underlying events from happening, customers – fraudsters aside! – would always be happier. There are, in principle, two key thrusts – claims prevention and mitigation and customer experience – which we shall now explore. The stats and perspectives below are taken from our Global Trend Map; a full breakdown of our survey respondents, and details of our methodology, are included as part of the full report, which you can download for free at any time. In theory, the scope for claims prevention and mitigation has been radically widened thanks to the Internet of Things, which does not just allow for better underwriting (by netting more data and feeding predictive models) but can also empower insurers – or other ecosystem players, too, for that matter – to intervene when things point toward an impending claim event. Claims, in the sense of claims prevention, is fast coming under the strategic spotlight as a means to shelter exposed policyholders, rescue broken policy portfolios and shore up insurers stricken by low interest rates and bad risk. Another benefit of sensor data is real-time insight into what has actually gone on with a claim event, which can be life-saving in an accident-and-emergency context, keeps a lid on damages at the point where they are liable to spiral the most and helps to identify cases of fraud.

"Claims is a significant part of the insurance value chain and, in our view, offers the largest potential for innovation. Many insurers are struggling with the dynamic of reducing costs while providing a positive customer experience. Recently in the U.S. and the U.K., many of the large insurers have experienced significant underwriting losses, for core products like motor, due to poor claims experience, deteriorating driving behavior, and rising repair/medical costs." – Sam Evans, managing director at Eos Venture Partners

While prevention does continue to get better, accidents and unforeseen incidents are always going to occur, so claims certainly aren’t going away anytime soon. When a claim does occur, insurers have the opportunity to impress their customers at that precise moment when those customers need, and appreciate, their insurance the most. We have noted throughout this content series (for instance in our earlier post on insurer priorities) the growing importance of customer-centricity to insurers. And claims – as the key, and in some cases only, consumer touchpoint – has become a key avenue of engagement. If insurers can provide excellent customer service throughout the claims experience, removing friction from the process wherever possible, then they are more likely to retain their policyholders and even open cross-selling opportunities. 1. Customer Experience in Claims Is customer experience (CX) a core focus for claims departments? We asked carriers whether customer experience (CX) was a key factor within their claims departments; 69% replied "yes" and 26% "somewhat." The trend toward the growing importance of customer-centricity within every insurance function is therefore borne out handsomely by the statistics. Looking across our lines, we see a consistently high focus on CX in claims, except for in life, which trails somewhat. This probably reflects a historic lack of touchpoints (often just policy renewals and death) and, as an extension of this, the more limited opportunities for new business and cross-selling. We encountered a similar lag with this line in our earlier installment on marketing and customer-centricity.

"Will claims call centers evolve from the current model of large numbers of people predominantly performing standard operations and having scripted conversations to a much smaller number of ‘problem solvers’ being available to support customers when something out of the ordinary creates an exception in the automated processes?" – Ian Thompson, EMEA chief claims officer at Zurich

See also: Using Catastrophes to Rethink Claims (Part 3)   Does automation play a role in the claims-handling process? Customers want frictionless experiences when making a claim. Certainly most young claimants (digital natives) would prefer to do everything through an app or portal rather than filling out paper forms, and this has seen some insurers embrace non-traditional channels such as WhatsApp for submitting claims materials. In addition to slickness, customers want speed or, where speed is not possible, clarity as to their claim's status. This level of service can only be provided effectively through recourse to automation in some degree – so that a large portion of uncomplicated claims can be processed straight-through and the customer either notified of the outcome or given a resolution date, all at the click of a button. 46% of carriers indicated that they have an automated claims-handling process, a figure we expect to become a majority soon. This stat does not necessarily imply that the majority of claims will soon be automated, merely that automation will soon be in the mix for the majority of carriers.

"There is no doubt that insurance, in general, and claims, in particular, will see significant changes through the automation of knowledge work. Customer choice and the importance to the customer of the claims service will mean that human involvement in the process will always be necessary. However, as claims leaders, we will need to rethink our operating models in the light of emerging technology." – Ian Thompson

There are many different workflows for claims management (depending on the type and complexity of the claim, as well as its value), and claims automation generally only means automating some of these. Although automation has connotations of cost-cutting (and this is definitely a factor), it can also be argued that less staff time spent on routine claims allows more staff time for high-stakes claims, meaning claims management can become customer-driven rather than process-driven. 2. Claims Prevention and Mitigation How much focus do (re)insurers have on claims loss mitigation? We asked carriers about their level of focus on claims loss mitigation; 57% replied that they had "a lot" and 39% "some" focus. North America leads our other regions in terms of having "a lot" of focus. We further explore the specificity of the North American insurance market in our forthcoming regional profile on the continent, which you can, of course, access immediately by downloading the full Trend Map. Will IoT affect the claims department? IoT fundamentally allows carriers (and other ecosystem players, in cooperation but also in competition with insurers!) to move from risk management to risk prevention by providing insights to bring down policyholder risk. In this sense, the overriding impact of IoT on claims is the reduction – or even outright elimination – of claims. This goal is perfectly aligned with customer wishes, and there are many more ways IoT can boost customer-centricity in claims. If event data can be captured automatically, this doesn’t just help eliminate fraudulent claims (which ultimately cost law-abiding customers), it also removes a lot of friction from the process of filing claims and means that business-as-usual can be resumed as early as possible. An example of this would be a temperature-sensitive cargo insured against temperature rises above a certain point, whereby a temperature sensor – in conjunction with blockchain and smart contracts – could trigger claims automatically if the limit were exceeded. This way, mitigation could begin straightaway with minimal head-scratching; in this example, that might involve immediately re-ordering the compromised cargo. In our earlier section on Internet of Things, 60% of respondents selected claims as one of the departments that would benefit the most from IoT, and this is largely borne out in the responses of carriers here: 53% of insurers and reinsurers believe that IoT will affect their claims department. Among our lines, IoT's impact on claims trails in life, unsurprising given that IoT-enabled life programs – if they exist at all – generally sit behind connected health initiatives (which get the plaudits). As the cost of sensors and connected devices continues to fall, we expect to see further growth in the connected-claims universe to the benefit of customers and carriers alike, across all lines. While the potential of sensor-led approaches to manage down risk remains hypothetical for many use cases (there are simply not enough long-term studies yet) and while there are inevitably other well-positioned ecosystem players with a shot at the prize, a more immediately tangible IoT-enabled saving is in relation to fraud, which we examine in our next installment. Telematics providers may not, in the end, make you a better driver – but the G-forces can tell them exactly what has gone on with your car. And with your insurer as it were in the passenger seat, you will feel rather less able to lie to the company.  

First, the good news. Large employers are beginning to provide extended, paid family leave for employees who become full-time caregivers. This is a much-needed sea change in the evolving trend of providing family-friendly employee benefit programs. The bad news is that it is estimated that, by the year 2020, there will be 117 million Americans who will need assistance with daily living and healthcare issues. At the same time, it is estimated that only 45 million family members will be available to help care for their loved ones. The majority of these 45 million caregivers are working age adults who are now, or will be, primarily responsible for the care of seniors or young children in need of 24/7/365 care.

The impact of the caregiver crisis facing both public and private employers is staggering. A recent study by Farleigh Dickinson University's PublicMind on behalf of Alzheimer’s New Jersey found that 29% of respondents are either now caring, or have cared, for someone with dementia. Among the study participants, 25% reported spending 40 hours or more per week as a caregiver. It gets worse: 65% were financially affected, 85% reported their emotional well-being was damaged, including anxiety and depression, and 60% reported their physical health was hurt. In addition, 53% reported they had no other family member to help, and 72% reported strained family relations as a result. Another recent study showed that 29% of caregiver employees declined promotion opportunities, and 12% actually quit their jobs due to the emotional stress involved.

I know. I was one of those people and can check every box. (See Looming Caregiver Crisis in the U.S. 5/18/16)

I am delighted to hear that progressive employers are now addressing the problem by providing expanded paid family leave for employees who become caregivers. Deloitte recently announced, as part of a Family Comes First program, that it is providing as much as 16 weeks of paid leave for employee caregivers when they become primarily responsible for the care of seniors.

See also: Looming Caregiver Crisis in the U.S.  

Extended paid time off for caregivers is essential to help employees maintain their own physical, mental and emotional health. There is no way to prepare to become a caregiver. It will be the toughest job you have ever had, and you have no choice. Your job and life become secondary, or just a welcome diversion.

As a caregiver for both my mom and dad in the final years of their lives, I had to learn how to deal with Medicare, Medicaid, their finances, banking, Social Security, pension, living wills, estates, taxes, power of attorney, selling a home, healthcare directive and proxies, DNR (Do Not Resuscitate orders), doctors appointments, proper and appropriate prescriptions, surgery, slips, falls and broken bones, housekeepers and visiting nurses, to name a few. I also had to become an expert in congestive heart failure, diabetes, clogged carotid arteries, dementia and depression. One night, I got a call that both my mom and dad were on the way to the emergency room in two different ambulances at the same time. The only good news was that they were going to the same hospital.

Mark Perzinski, a 35-year veteran in the employee benefit industry, agrees that these extended paid leave programs are a great start that “allow employers to fully protect their best assets, their employees, by providing a paid family first policy. The problem is these caregivers need a daily road map. We provide that road map.”

Mark is currently working with Philip Gow at Global Institutional Solutions (www.gisandco.com), developing strategic marketing relationships for their caregiver services in the employee benefits industry. This is a one-of-a-kind program that provides 24/7/365 access to an extensive library of user-friendly resources, links, databases and, as needed, a caregiver specialist. The service also includes resources for elder fraud and estate settlements, Medicare assistance, guidelines and screening, along with caregiver access via tablets and smartphones that provides resources and tools at your fingertips -- all for pennies per month per employee. There is also an optional telemedicine service that gives caregivers 24/7/365 access to physicians to help address common illnesses, stress, anxiety, depression and personal wellness.

Gow stated, “We designed this program to address the caregiver stress syndrome that affects 42 million Americans and 21% of households. The economic impact is estimated at $500 billion per year, up from $375 billion in 2007.”

This is a robust model that can help track and manage medical appointments, prescription drug regiments and adherence, while providing access to databases on everything from federally rated nursing homes, assisted living facilities and dialysis centers, to housekeeping and daily living services. Caregivers also have direct access to resources for chronic medical conditions such as oncology, head trauma, pulmonary vascular disease, congestive heart disease and dementia.

See also: 5 Trends for Employers to Watch in 2018  

The only technology available to me was my cell phone and answering machine.

For more information about the caregiver program at Global Institutional Services, contact Mark Perzinski at mark.perzinski@gisandco.com.

The above picture and caption reflects the view of a somewhat select but growing group of consultants and brokers within the healthcare cost management community known collectively as disruptors. It illustrates our feeling about the traditional healthcare funding system and how it has failed those it was to benefit. To all those known as disruptors, I say, “We have more battles to fight but the war is won.” To you, my fellow disruptors and Health Rosetta friends, as well as non-industry readers: Every day, I am amazed about the success stories I share, and the stories shared with me by my fellow disruptors in the healthcare consulting world. It is now commonplace to hear how long-term cost of care is being controlled, primary care provided at no cost to employees, employees no longer struggling to decide if they can afford to take their child to the doctor. What it means to have real access to your (yes your) primary care doctor. Real access is defined as access to your (yes, your) doctor within 15 minutes, 24/7 at their office, your home, your office or by video. Does anyone remember Marcus Welby M.D.? The ability to shop for surgical procedures provided by the best doctors at the best facilities and employees who now see their healthcare funding plan as a real benefit. A benefit worth staying with their employer for and a benefit worth changing for! All of this is accomplished everyday by consultants who have chosen to think outside the traditional “buy insurance” box. Heck, some of you never even saw the box in the first place. It is the success we are having that brings me to the core issue for this article: “If We’ve Won the War on Healthcare Cost, Why Are We Still Fighting So Many Battles?” See also: Whiff of Market-Based Healthcare Change?   You see, it seems counterintuitive to me that answers can be so clear and abundant, yet we continue to struggle in communicating our message of change. The first struggle I see is the client who always wants to know who else has done this or tried that. I believe this comes from years of no innovation, real thought or transparency from me and my fellow consultants. Even those of us around before PPOs (that’s you, Bill Rusteberg) became numb to the annual increases and the status quo that followed their introduction to the marketplace. We bought into the whole medical trend and discount mindset, allowing our clients to bear increases year after year, all because we believed it was the new normal. Because of this past lack of leadership by the consulting community, why should we be surprised when employers are skeptical and want to know who has done this before? What makes today unique, however, is that the question very rarely comes up in other employer expense categories. I believe this is because the free market system has continued to flourish in the other categories and been well-applied by the business community in all areas other than healthcare. Is it any wonder that when you tell an employer it can return 30% of their No. 2 business expense to the bottom line, stabilize future cost and make employees raving fans of the healthcare funding plan, the employer would like to see proof? I think not. The second struggle I see for us is the 30-plus years we allowed the big insurance companies and hospitals (now healthcare systems), to tell us and employers that you must have access to a PPO to avoid the huge bills the healthcare systems generate. Heaven forbid you have a $500,000 heart surgery and don’t have a PPO to discount it to $250,000. And then, in an Abracadabra “Wizard of Oz” moment, we are told not to look behind the curtain where we would see a cash price of $75,000 to $100,000. So, let’s get this straight: We need a PPO to discount a $500,000 bill to $250,000 when we could have paid $100,000 cash? Not to forget these same PPOs have exacerbated the fee-for-service model, which has led to long wait times and an average time spent with the doctor of seven minutes a year. These actions perhaps more than anything else have decimated the primary care doctor. I would encourage the reader to move that process to any other area of their economic lives. The best example I can think of is a furniture sale. We consistently see furniture advertised for 50% to 60% off. Yet if you take the time to really shop you will find that just maybe the prices have been increased to allow for the advertised discounts. The model we have used for so long simply makes no sense when truly reviewed. However, and this is important to understand, it is the system employers and employees know. As a bit of defense to my profession, the access we now have to data did not exist even 10 years ago. For many of us, it was that early ability to finally “see behind the curtain” that started the transition to how we do business today. Additionally, the internet, with all its problems, is a remarkable tool for collaboration. It, more than anything else, has allowed for innovation and collaboration within our community. As an additional illustration, please view the video from David Contorno, a friend and healthcare cost disruptor from North Carolina. Faced with the need for a hernia surgery, David’s effort to find a quality and cost-effective solution brought him out West to Oklahoma City. Thanks, David, for allowing me to use this video. Thirdly, we need to be passionate in sharing what we know. Employers are struggling with increasing cost of health insurance. Few of them have realized that the cost of health insurance and the cost of healthcare are two very different things. They are concerned about their employees who watch the increases in health insurance premiums eat up the raises they receive. Many employers have gone to plans with high deductibles and higher out-of-pocket cost in an effort to control premiums. However, this attempt while initially somewhat effective is no longer having the desired results. High-deductible plans are now increasing at the same or greater rate than traditional PPO plans. Studies show that the No. 1 concern of employees is where they stand financially, and the No. 1 financial concern is the cost of insurance and healthcare. I want the employees and employers I/we work with to know that those with whom I/we associate are passionate. Passionate about the employees who can’t afford the family premium to cover their spouse and kids, passionate about the single mom who wakes up at 2 a.m. with a child who has a 105-degree temperature and has to decide if she can afford a trip to the hospital because she doesn’t have a primary care doctor, passionate about the 50-year-old diabetic who ends up with a preventable surgery because he couldn’t afford his diabetic supplies, passionate for the employers that I/we have allowed to overpay into a bloated system, passionate because for so long I/we were a part of the problem but now understand that we can truly make a difference. We damn well need to be passionate. See also: How Advisers Can Save Healthcare   No. 4: While most of us in the disruptor community have already changed our compensation models, our profession, as a whole, must do the same. Being paid a flat percentage of the total cost of the plan simply adds to the problem. How can my goals be aligned with an employer if I receive an automatic pay increase when rates go up? Additionally, if I/we work hard for a client and improve/reduce healthcare costs, why should I be paid less? Better to have an open and honest discussion with the client about compensation. This allows for total transparency and allows for all goals to be aligned. By changing to a fee-based model, you can set expectations, provide better service and, with time, good works and trust, become a trusted member of the employer’s healthcare cost management team. Finally, to those of you who are not industry professionals, those employers and employees who have made it through this self-reflection of mine. I want you to know that there are real solutions that can help, and there are many nontraditional brokers and consultants who will be glad to show you the way. I would encourage you to simply reach out to any of those named here: Mark Watson with Union County Employer; Marilyn Bartlett, State of Montana Employer; Jeff Bernhard, Continental Benefits; William Rusteberg, consultant; David Contorno, consultant; Dave Chase, author; Mike Dendy, Asserta Health; Chas Dummit, Higginbotham; any member of Health Rosetta. Some, like me, are consultants, some are employers who have made a change, some are authors and speakers, and some are unique vendors who are making a difference. We are geographically diverse but united in purpose. I know that any of us will be glad to visit. We are all passionate!

In Part 2 of this series, I explored how the innovations that Amazon popularized in retail would be transformative if applied to healthcare at scale.

The potential value of such innovations is not lost on those inside the healthcare sector. Many startups and large healthcare organizations are already working hard to adapt and adopt them. (See, for example, my articles on diabetes prevention, Boomers and how to shape the future of connected health). Here are some of the advantages that Amazon brings to this challenge: 

Amazon can start with a clean sheet of paper. Unlike those inside the current healthcare system, Amazon doesn’t have existing customers to placate, legacy systems to update or business models to protect. A fundamental disconnect in healthcare is that the patient is not the customer, so helping customers doesn’t necessarily benefit patients (or vice versa). In this case, Amazon and its partners are the customers. And, because the potential patients are employees, Amazon can leverage strong existing connections, relationships and overlapping interests.

See also: 10 Mistakes Amazon Must Avoid in Health 

Amazon brings differentiated capabilities and experience. While many talented people in healthcare are working on the same capabilities, few can match Amazon’s technical expertise and practical experience. Amazon’s expertise in social networking, mobile devices, user experience, the Internet of Things and artificial intelligence are extremely relevant to healthcare. Its existing platforms, like its Alexa-enabled devices and AWS cloud platform, will, no doubt, also come into play.

Amazon doesn’t have to make money. Innovators in healthcare have to worry about revenues and reimbursement, usually from insurance. With deep pockets and the potential to recoup cost through savings, Amazon has great flexibility to experiment without such concerns. Indeed, the alliance declared itself to be “free from profit-making incentives and constraints.” While its initial focus is on reducing cost and improving satisfaction for its 1.2 million employees, the alliance is not shy about wanting to create solutions relevant to all Americans. Doing so would serve two other incentives for Amazon to think big about its healthcare innovation.

Healthcare could enable synergies with Amazon’s other businesses. As I’ve previously observed, Amazon approaches competition as a no-holds-barred battle for tighter customer relationships and ever-larger share of customer wallets. It is hard to find a bigger untapped market category than healthcare through which to grow Prime membership. In addition, because mobile devices, AI and cloud-based platforms and services have become synonymous with the future of healthcare, it is likely that Amazon can find business synergies in those areas, as well.

There is a massive $3.2 trillion healthcare market to enter. Industry valuations tremble at the whisper of Amazon’s interest in healthcare for a good reason, as has happened to pharmacies, benefit managers and health insurers. That’s because investors know that there are deep pockets of inefficiencies and unnecessary complexity in healthcare that, in turn, offer real market opportunities for Amazon. For example, one analyst estimates that just pharmacy benefits management (PBM) business is a $25 billion to $50 billion market opportunity. Amazon had already been rumored to be building an internal PBM capability for its employees. Adding Berkshire Hathaway and JPMorgan employees into that mix would be another step closer to launching a market-facing business.

See also: Media Coverage on Amazon Misses Point  

Forbes.com contributor Dan Munro is pessimistic. He describes the overall effort as an exercise in “Fantasy Health Care.” At the heart of the problem, he writes, are big systemic flaws that the alliance cannot address. What’s more, Munro argues that the alliance “is not remotely novel or innovative, and the historical evidence is clear that it certainly won’t disrupt health care.”

Rather than partaking in a fantasy, I think Jeff Bezos offered a cleared-eye view of the challenge in the alliance announcement:

The health care system is complex, and we enter into this challenge open-eyed about the degree of difficulty. Hard as it might be, reducing healthcare’s burden on the economy while improving outcomes for employees and their families would be worth the effort. Success is going to require talented experts, a beginner’s mind and a long-term orientation.

For my part, I’ll take an optimistic point of view. The problem is big and hairy, and I applaud the audacious effort to take it on.  Let’s remember: Innovation is always hard and more often than not fails—and that’s why the rewards are great for those with the audacity to try and the chops to succeed.

One of the areas of focus on Out Front Ideas with Kimberly and Mark has been addressing chronic pain without opioids. The workers’ compensation industry’s approach to chronic pain has historically been trying drugs and other medical procedures first. Then, if the pain has not subsided or has worsened, we look for psychological factors. If we truly want to help injured workers in pain and prevent opioid abuse and other unnecessary measures, we need to reverse that protocol. To learn more, we spoke with two of the nation’s most highly respected pain management experts, who gave us great insights into the experience of pain, how it can be best treated and non-pharmaceutical ways to treat pain. Beth Darnell is a clinical associate professor in the division of pain management at Stanford; a clinical pain psychologist at the Stanford Pain Management Center; an NIH-funded scientist doing research on psychological treatment for chronic pain; one of the co-chairs of the Pain Psychology Task Force at the American Academy of Pain Medicine; one of the co-authors of the 2017 Chronic Pain Guideline updates from the American College of Occupational and Environmental Medicine; and author of multiple books on the subject: "Less Pain, Fewer Pills" and "The Opioid-Free Pain Relief Kit" — both written for patients. Dr. Darnell also recently co-published a research paper on The JAMA Network titled “Patient-Centered Prescription Opioid Tapering in Community Outpatients with Chronic Pain” Dr. Steve Stanos is the medical director of pain management services for the Swedish Medical System in Seattle and runs the pain services for five hospitals in the system; the director of Occupational Medicine Services at Swedish; the president of the American Academy of Pain Medicine; and the medical director for myMatrixx. He was also a reviewer for the CDC’s Guidelines for Opioid Management and was involved in the National Pain Strategy. Myths and Facts Many of us have preconceived ideas about pain — what it is and how it should be treated. Unfortunately, many of these ideas are misconceptions and have led us to where we are today. We think of pain as solely a physical experience. But our experts explained that pain is really a negative sensory and emotional experience. Psychology is an integral part of the pain experience, and, if we ignore that, we are not adequately addressing an injured worker’s pain. Pain is very helpful in alerting us to situations where our bodies are at risk. If you put your hand on a hot stove, for example, the pain signals your brain to remove your hand. However, that does not work well for chronic pain when the continuing pain alert does not help us. Instead, it causes us fear and stress, which can actually exacerbate the pain. Those fears and stress are what we need to address in injured workers with chronic pain. Another misconception is that people in pain are powerless to do anything about it and are at the mercy of drugs or other medical procedures. That simply is not true. There are teachable skills patients can use to assuage their own pain. These are learned skills. See also: Is There an Answer to Opioid Crisis?   We need to help injured workers understand and deal with the psychology of their pain experience up front, instead of waiting until the claim deteriorates. Medical providers, payers and others involved in a claim need to be aware of that and work with the injured worker to empower him or her to reduce their fears and stress and, in doing so, reduce their pain. That leads us to another misconception — that dealing with the psychology of pain requires a specialist for extended sessions. Actually, non-behavioral health individuals can teach valuable skills to help cope with pain. Again, this should be done early in the claim process for the best outcomes. The best predictor of outcomes in a pain program is early intervention with psychosocial factors. We need to have an early emphasis on behavioral health. Yet another falsehood is that using drugs and medical procedures first is better for the patient because it does not assume he or she has any psychological issues. Instead, we are missing the elephant in the room, and, when the injured worker is finally sent for psychological intervention, it can be demoralizing. It sends a message to the injured worker that he or she is a failure and that the pain is all in his or her head. It does a terrible disservice to the injured worker. We asked our experts whether all patients in chronic pain need psychological intervention. The answer was, yes, anyone in chronic pain can benefit from some level of behavioral intervention. That does not mean long-term, expensive, one-on-one treatments with a trained psychologist. Again, there are teachable skills to deal with chronic pain. The focus is on changing behavior. Non-Pharma Pain Treatments There are a variety of programs to help people deal with pain, many of which are based on cognitive behavioral therapy (CBT). This short-term treatment is goal-oriented and takes a practical approach to problem solving by changing patterns of thinking and behavior. Doing so helps change the way patients feel. CBT is considered the gold standard of psychological treatment for chronic pain. It teaches concrete information and skills with action plans to move forward. It helps in creating care pathways that promote organized and efficient patient care based on evidence-based medicine. It helps patients become engaged and active in their own treatment so they rely on themselves more than the medical system. Patients can learn the skills of behavioral health principles through classes and videos as well as by talking with therapists and others. Again, it is something anyone in pain can and should learn — not just those who are profoundly depressed or have other, more serious psychosocial issues. It is active management of pain. Some newer treatments include mindfulness training, acceptance and commitment therapy and chronic pain self-management. These are all based somewhat on CBT, although not necessarily on pain management. Acceptance and commitment therapy trains you to stay focused in the moment so you do not react to pain. Negatively reacting to pain can be more distressing than the pain itself. These programs teach people how to self-soothe. They also help establish meaningful goals and the steps to achieve them so people are not stuck in a passive mindset about their pain. Functional restoration programs incorporate many of these aspects and can also be great, not only for at-risk patients already struggling with chronic pain, but also for early intervention. These programs have been around for years and typically involve physical and occupational therapy, psychology, relaxation training, exercise and vocational rehabilitation. The cost is fairly inexpensive when you compare them to unnecessary surgeries, so they can be helpful. There are also certain medical procedures and services that have been overused in the past but can actually have a role as part of an overall pain management plan. Spinal cord stimulators and injections are among them, along with chiropractic care and spinal manipulation. These can help with function for certain patients, such as those with acute pain. But they must be integrated into an overall plan, and they are only appropriate for certain individuals. Passive treatments, such as acupuncture and massage therapy, might be helpful for some pain patients, at least in the short term. But again, it needs to be used in conjunction with an active therapy program in which the patient is helping to manage his own pain through skills learned from CBT and other techniques. One treatment on which both experts are hesitant to recommend at this point is medical marijuana, mostly because of its classification as a Schedule I drug under federal law. The science on it is just too sparse; there is no safety regimen around it and no protocols for when to use it, what type to use and how much could help. "Prehab" is a relatively new term that might hold some promise. Think of rehab before the fact. It focuses on things like wellness, how to relax during the day and stress reduction techniques. The idea is to intervene with patients prior to surgery or other treatments and prevent poor outcomes. Patients who have fear avoidance or catastrophic thinking can be taught skills so they are better able to deal with their pain and stress later on. Education programs are key in helping pain patients to avoid overuse of medications and services. Because so many do not understand pain or how to control it, they may seek multiple treatments to eliminate the pain. Opioid Guidelines The 2017 revisions to the ACOEM Chronic Pain Guidelines, released in May 2017, included an extensive section on behavioral health, the role of psychology and recommendations to integrate psychological principles in chronic pain. The CDC’s guidelines for managing opioids have been invaluable in the attention they have brought to the opioid issue since they were released last year. However there has been some confusion and pushback, especially on the recommendations that deal with the morphine equivalent dose. The CDC recommends providers avoid or carefully justify prescriptions of more than 90 MED. Some payers have incorrectly interpreted that to mean physicians cannot prescribe above the 90 MED. Another controversial recommendation says providers should only prescribe opioids for the duration of expected pain, typically between three and seven days. But some providers have been mistakenly told they can only prescribe the drugs for a specific number of days. See also: Misconception That Leads to Opioids   The Future Both experts say a shift from fee-for-service to outcomes-based care could be a huge benefit because it would allow for a more holistic approach, including the integration of behavioral health. Putting behavioral health efforts on the front end of the claim is one of the biggest changes that they believe would help chronic pain patients. This would be a game changer in the workers’ compensation system and would cost more up front, but the speakers believe it would pay off in dividends. Precision medicine is an emerging field that the speakers say could provide great promise for treating injured workers with chronic pain. It involves deep phenotyping patients on the front end and at each point of care. It includes an array of psychosocial variables and assessments to determine the specific needs of each patient for targeted interventions. It moves beyond the one-size-fits-all approach. Technological advancements will allow for more and better treatment, such as apps and videos that reinforce behavioral health techniques. Telemedicine is a way to help keep patients engaged. Telehealth can allow for virtual face-to-face meetings between patients and psychologists. Virtual reality also holds promise as a way to help decrease pain levels during treatments. Clearly there is much that the industry can do to reap better outcomes for our injured workers and, in turn, their employers. However, we need new ways of thinking; a change in the way we have been doing things. All stakeholders need to truly understand pain and what we can do to address it better and faster.

Let me summarize where we are today in design thinking. Design thinking has raised a lot of expectations as well as its fair share of controversy. Why are organizations so caught up by DT? Often, it became the promise of having creative ways to solve solutions and work in harmony with all the rational thinking that dominates much of business thinking today. DT sounded so appealing, it quickly became, “oh, we need some of that.” So, the marketing of DT kicks in, looking to capitalize and add momentum. DT got heavily promoted. It quickly became sold as a process, just like Six Sigma; it became limited by those jumping on the latest concept not being true design thinkers, apart from attending a short course or two. Then this new process became a little uncomfortable; living alongside more established, rational ones, it was difficult to integrate. So as this new kid on the block struggled, questions were raised on how it complements all the efficiency and effectiveness that is expected around an organization’s dominating mindset? Most people lost the plot that design thinking was different. It was so different, it was human-centered. The extra fuzziness of design thinking can sit uncomfortably in highly organized and rational structures. Design thinking was looking for those leaps of faith and lots of creativity, but it needed to be separated and contained. See also: Key Considerations for Managing Innovation   Organizations are recognition that design thinking is not “plug and play” When you are asked to be flexible, agile, willing to experiment and often fail, sometimes publicly, this can take you into some very uncomfortable territory. You might like the idea, but will the boss? When you do not have a clear definition of design thinking, of where and how it can actually fit, it continuously suffers from a lack of clear assignment and makes it feel a little bit of an odd-ball. You can be left wondering who executes this and how it might be applied and implemented at scale. Yet it feels useful and needs to be more embraced for its creative value. So, the short answer is: Give everyone a short exposure and let everyone embrace design thinking as the creative avenue for all to explore. It suddenly gets broken down, so it can be repeatable, a step-by-step process. Then, easily enough, we all become design thinkers... or do we? [caption id="attachment_29077" align="alignnone" width="570"] Image: https://www.interaction-design.org/literature/article/design-thinking-a-quick-overview[/caption] See also: Case Study on Risk and Innovation   Organizations suddenly turned design thinking into a linear, often-gated, by-the-book methodology, and suddenly it is not true design thinking anymore; it becomes just another too linear, too slow and not as bright way to be creative. The dominating thinking about process starts to screw up the freedom within true design thinking. It quickly became boiled down to aiding and supporting the incremental innovation. It loses its real powerful edge of harnessing creativity to solve problems in highly imaginative and insightful ways; it becomes just the encouragement to help thinking along. Leaders start to ask questions about all this design thinking "hype" and begin demanding far more from a design thinking process to tackle their complex problems. Then it is suddenly, “Houston, we have a problem.” Continue reading and learn more here.

Wellness is back in the news these days. The National Bureau of Economic Research’s controlled trial invalidating a Harvard study that has been used to claim major benefits from wellness programs and the surprise decision in the AARP v. EEOC case disallowing large financial inducements for “voluntary” programs both received national attention. Further, WillisTowersWatson’s quiet revelation that most employees really dislike wellness programs marks the first time anyone in the industry has ever acknowledged that, absent bribes and fines, few employees would submit to their HR people playing doctor. By way of background, all these recent “findings” – the lack of savings from wellness programs, need for inducements, and the employee resentment – were quite clear to me in my roles at British Petroleum, Burger King and Walmart over three decades. Along with Al Lewis, I brought this experience (and many others, such as the much more positive and increasingly popular domestic medical travel program) to public view in our book "Cracking Health Costs," which continues to sell – and, more importantly, continues to resonate — five years after publication. Largely because of the news hooks above, there have lately been a flurry of references to a comprehensive, scholarly article by that very same Al Lewis. Al, of course, is well-known for poking the wellness beast with humor, screenshots and eloquence on www.theysaidwhat.com. This article is different. Not as much fun perhaps, but “The Outcomes, Economics and Ethics of the Workplace Wellness Industry” captures all my doubts and criticisms, and much more besides. See also: The Value of Workplace Wellness  Al often says that the wellness industry’s worst nightmare is being quoted verbatim. In this article, he has collected a mountain of self-incriminating verbatim quotes and claims, sourced with roughly 400 linked footnotes, all leading to the inexorable conclusion that, to be blunt, the wellness empire has no clothes. Al presents convincing evidence that what he calls “pry, poke and prod” programs really can actually harm employees. Further, the way wellness vendors typically calculate costs and benefits results in false ROI numbers. This exposé, though generally dry and straight, is not without flashes of Al’s understated humor, albeit delivered in the context of the leading law-medicine journal. In one passage, Ron Goetzel is forced to spin the gaffe that his wellness advocacy group, HERO, accidentally published a chapter in their Outcomes Guide showing that wellness loses money. Ron is sourced as saying: HERO’s board claims that, in creating the guide, they “fabricated” these numbers for the purpose of providing an example. Publicly, Goetzel, a member of HERO’s board, stated that “[t]hose numbers are wildly off . . . every number in that chapter has nothing to do with reality.” Al’s next paragraph: The chapter’s author, however, disputes the HERO board’s and Goetzel’s claim that the numbers were fabricated. He argues that, quite the contrary, his data is real and several board members, including Goetzel, reviewed it prior to publication. Reconciling the example’s data with the HCUP database, which shows almost total consistency between the HERO sample and the population, provides further evidence for the author’s claim that the data is not “wildly off” but rather real, and a representative sample of the privately insured American workforce. Al challenges the credibility of HERO’s board simply by quoting both a board member and the chapter author. After all, when your go-to defense is pretending to have fabricated your own numbers, you lose. And when Al Lewis is on the other end, you lose big. This article, though not a quick read, is a necessary one for all policymakers, pundits and especially employers as they decide how to react both to the new findings by NBER and Willis – which turn out not to be new at all –and how to prepare for 2019. See also: ‘Surviving Workplace Wellness’: an Excerpt   Perhaps the best preparation is to do something completely different – as my book says, perhaps try doing wellness for employees instead of to them. “Pry, poke and prod” programs, especially the coercive ones, may finally meet the demise that I’ve been predicting for about 15 years now. Published in the Case Western Reserve Health Matrix: Journal Law Medicine

For 10 years, I was an instructor of risk and insurance at LSU in Baton Rouge. I’d occasionally be invited to testify before legislative committees as an insurance expert. Often, some of the pending legislation was designed to solve real problems that were not fixable with insurance. In these cases, my testimony was simple. I’d explain: “Ladies and gentlemen, today, this legislative body has the ability to outlaw the effects of gravity on all state-owned lands. If this legislation is approved, a citizen can jump off the observation deck on the 27th floor and will die EVEN THOUGH IT IS AGAINST THE LAW. Gravity is unforgiving like that.” The first three examples below are real and, unfortunately, not sustainable in a long-term insurance model because we can't ignore adverse selection any more than we can ignore gravity. The fourth item is a “scientist” moving from the facts – and becoming (in my opinion) a social engineer acting on feelings. Consider the brief notes below as an introduction to each issue, not a complete discussion. 1. The Affordable Care Act – I’ll remove the emotion of illness and fairness from this discussion and just look at the numbers. From a Jan. 13, 2017, Wall Street Journal article, see the following statistics:

• The most expensive 5% of patients use 49% of health spending.
• The most expensive 20% of patients use 82% of health spending.
• The healthiest 50% of patients use only 3% of health spending.

Ours is a house divided. 50% of the market is perfect for an insurance model -- the other 50% is not, because insurance works when there is a “chance of loss,” not when losses are certain. In a loss-certain model, the No. 1 need is funding -- more and more money. See also: U.S. Healthcare: No Simple Insurtech Fix 2. NFIP (National Flood Insurance Program) – From the Acadiana Advocate (Jan. 26, 2018) see the following headlines: “Hopes for flood insurance deal dim – Another short-term extension expected” The future of NFIP is threatened by adverse selection. A disproportional number of high-risk buyers populate the pool, and an insufficient number of safe buyers (low-risk properties) exist to assure affordability and thus sustainability. 3. Auto insurance (issues of tort) – In the late 1970s in Louisiana, mandatory auto liability insurance became the law of the land. We can debate the wisdom or appropriateness of this, but it is the law. Today, ours is a house divided – those looking to sue and those fearful of being sued. Often, our industry invites (and sometimes deserves) lawsuits by being inefficient or ineffective or unreasonable in claims handling. In other cases, lawyers are searching for incidents and accidents that can do more than indemnify a claimant for a loss by creating wealth or at least “over-indemnification” through the courtroom. Our industry is becoming a tort roulette wheel. On a 140-mile trip from New Iberia to Baton Rouge, I counted 33 billboards for a specific attorney. There were many more for many others. Is this a cost the market is willing and able to pay? How many millions (billions) of dollars are taken out of the risk pool annually for over-litigation? Are we, the premium payers, willing to pay that cost? 4. Fairness in lieu of actuarial science – At its simplest, the insurance process includes four elements. Do these effectively, and you have a green and sustainable business model:

• Identify the risk to be insured
• Define the coverages
• Establish a price (premium)
• Pay the claims

On Saturday, Jan. 29, 2018, I was driving down a flooded Center Street in New Iberia concerned about the aforementioned flood article and the viability of the NFIP, when I heard a brief portion of a TED talk with Cathy O’Neil titled, “The Era of Blind Faith in Big Data Must End.” O'Neil, a data scientist with a PhD., talked about data being accurate but not being fair. Actuarial science demands objective data, but our society is starting to demand “fair.” Can these co-exist? Should bad drivers pay more than good drivers? Should health conditions be considered in underwriting life and health policies? See also: How Advisers Can Save Healthcare   I believe insurance is a risk-sharing process requiring underwriting, but it is rapidly moving to a “social welfare” platform. The market will get what it wants or tolerates, but as shown above our traditional insurance model may be sacrificed in the process. What does this mean in your world? Is it sustainable? What are we as an industry and a society going to do? Address the problems now or wait until these systems collapse or go bankrupt? “A government that robs Peter to pay Paul can always count on the support of Paul.” — George Bernard Shaw “We have met the enemy, and he is us” — Pogo comic strip

Insurance is risk transfer. A consumer has a risk. The consumer wants to eliminate or minimize the financial impact if that risk is, unfortunately, realized. Therefore, the consumer purchases an insurance policy. The insurance company takes the vast majority of the financial risk in return for a relatively small payment. The consumer eliminates the larger risk, however minimal the chances of realizing a loss, for a cost. For example, the consumer possesses the risk that his or her house will burn down. The homeowner wants (or just as likely, the mortgage company wants) to transfer to a third party the financial burden he would have if the house burned down. Let's assume the financial risk is $300,000. An insurance company accepts the risk of losing $300,000 in return for a $1,000 premium. If the insurance company has priced the risk correctly, then on average the company will make about $2 based on the last 10 years of results for homeowners insurance. That is quite a transfer of risk! (It may also qualify as a psychological study in madness because is it really worth $2 to go to all this effort and risk?) Some, maybe even most, people might argue that insurance companies have absolutely lost track that they are in the business of risk transfer. Some companies clearly have taken the attitude they are not in the business of incurring claims. Everyone, of course, claims to understand this, but actions speak louder than words, especially when internally their words echo their actions. They only want to write risks that have an incredibly tiny probability of a claim. As a reminder to all insurance company people, the world does not need you if there are no claims. This is your purpose, your reason for existing. Insurance company people are saying, upon reading this, "What does this author think claims people do all day? Of course, we have claims!" But what do claims people do all day is a valid question. On a broad scale, people do not have claims at nearly the frequency they had prior to 2001, according to A.M. Best data adjusted for more population, more cars, more homes, more businesses, and more drivers. All else being equal then, some claims employees may be twiddling their thumbs. One reason I suspect claims frequency has decreased so much is because agents are continually telling clients to not turn in claims. They do this because companies have conniption fits if they even think an insured has had a claim. Some underwriting is so tight, I am not going to be surprised to see a nonrenewal for an insured who even utters "claim" in a conversation. Again, no one needs companies if no reasonable chance of a claim exists. I understand the underwriting philosophy that once a person has incurred a claim the person is more likely to have another claim. That philosophy is as old as Lloyd's. I am not doubting a high-quality statistical study has been completed that uses an entire universe to prove this point. (I'm sure someone has actually completed this study and it just is not public because I have not seen one in 30 years.) See also: Underwriting, Marketing: Sync Up!   I doubt correlations are universal across lines. I doubt, too, that opportunity does not exist differentiating between types of first claims and types of insureds. Insurance companies, though, seem to throw the baby out with the bathwater. Underwriters and underwriting managers are too scared of a large, second claim occurring. More precisely, they are scared their boss will tear into them for not nonrenewing the account after the first claim, no matter how unrelated the first claim was to the second. So they go scorched earth and nonrenew everyone. Agents know this, so they tell insureds to not turn in claims. Underwriting behavior like this is highly problematic: 1. Agencies are damaged. Companies want their agents to survive and thrive, but they damage those agencies with their underwriting and claims actions.

• When agencies tell clients to not turn in claims, the agents are creating huge E&O exposures for themselves.
• Reputations are dulled and even damaged, especially relative to the new disrupters, because they have clean and better branding with no history.

2. The data used is questionable.

• How good is a particular company's one-loss regression analysis leading to a second loss? What is the true correlation, and is it really a simple regression? I doubt that. I imagine a quality statistical study would discover the correlation is a multi-factor relationship, and, therefore, simple underwriting rules should not be applied.
• If a large percentage of claims, even small claims, are not being turned in, then the database used to draw the correlation is inherently and materially biased.

3. I am not doubting a relationship does not exist between some small claims and future larger claims. One of my first underwriting lessons is that an old man backing out of the driveway and hitting a bike only had a small claim due to luck. The bike could have been a kid. The nature of the claim, though, dictates the probability of the future claim; the issue is not that a claim may have occurred. The industry's reputation is damaged when companies are so tight. If the reader does not see this, I am not going to explain. 4. Premium growth is impaired. One of the reasons premium growth has been so sluggish is that in the last 15 years tort reform, among other reforms, has arguably been too successful. I am not arguing such reforms should be relaxed, because, in my opinion, such reforms have been good for society. However, if fewer claims are filed or claims are settled for less, premiums decline. The fewer claims dollars paid, the lower premiums will be. The price for the risk transfer decreases because the risk decreases. When claims are not turned in, rates do not increase. When claims (not even claims, I’ll call them "incidents") result in automatic nonrenewals or large rate increases that force insureds to find more reasonable companies, rates do not increase. What is the definition of a claim anyway? When does a client's inquiry become a claim? Reputation damage, lower premium growth and increased litigation potential against agents should be enough to open eyes, if not at least slightly modify underwriting behaviors. Some companies wonder why agents do not sell more of their product. The policies are good, the rates are good and yet sales are minimal. What the agents do not say is they do not trust the company to be fair. The last thing agents want is having to deal with a client who has had a claim and is not being dealt with by the carrier fairly. The best solution is to not sell policies of those companies that have this reputation. Please believe me, most companies that have this reputation do not know they do. But look at growth rates office by office. See also: Shifting Balance in Risk Markets (Part 4)   Another bad situation for agents is to rewrite policies unnecessarily. Rewriting policies is a lot of work, and the agents do not get paid extra. So when companies take unnecessarily harsh underwriting positions, agents have to rewrite more policies. It is easier to just not write new business with those companies. For example: A young driver is backing out of a packed parking lot during the holidays. A careless driver is screaming through the rows trying to find a parking space. The two cars touch, but the young driver stops quickly enough to avoid any damage. The dust on both cars is wiped off, but the paint is not even scratched. At first, the simple and novice conclusion is the young driver should be more careful. But I suggest no one is going to see the speeding driver driving any more expediently than the young driver did. Yet, the insurance company canceled the young driver's policy simply for reporting the possibility the other driver might file a claim. The young driver did the responsible thing. The insurance company did the irresponsible thing. This is a true story. An insurance company should at least think these "claims" through or build better algorithms. Otherwise, no one really needs insurance companies, or at least ones that do not think. At the very least, just get rid of the underwriters by 5:00 pm because human underwriting without thinking is pointless and useless. Nothing good comes of increasing rates or nonrenewing accounts for incidents. Nothing good comes from agents telling clients to not turn in claims because insurance companies are taking ridiculous positions regarding incidents. Insurance companies are in the business of risk transfer, not writing risks that are absolutely perfect. If you run an insurance company or underwrite for one and cannot stand the pressure, sell the company or find a different job because absolutely no one needs an insurance company afraid of claims.