The almighty dollar is often just one component of a successful workers' compensation settlement. Savvy negotiators recognize that they have several tools at their disposal when it comes to bridging the gap between the payer’s offer and the plaintiff’s demand, many of which dictate how and when the settlement dollars can be used. On both sides of the negotiating table, many are adept at minimizing or maximizing the medical cost projection or the amount that goes into a Medicare Set Aside (MSA). Many in the industry also understand how a structured settlement (annuity) can unlock value and allow for the pacing of stable income for the claimant. Now, a small but growing number in the industry are beginning to understand how offering professional administration (PA) of the claimant’s future medical funds can help facilitate a settlement. PA provides the claimant with a dedicated support team after he settles the case, along with technology to ensure he saves money when he actually spend the settlement dollars on healthcare. What settlement issues can you use PA to help address? The most often cited concerns of injured workers when they face the prospect of settling are regarding: 1) access to their medical treatment and 2) how long it takes to get a response from their adjuster, attorneys or the board as they go through settlement process. Examples of these concerns are easily found by reading the comments directly from injured workers in a survey by the New York Workers' Compensation Board. Issues like “denied treatment” and “delayed processes” are at the core of nearly every complaint. PA is effective in addressing these concerns because PA services do not restrict the claimant’s access to medical treatment via utilization review or a medical provider network (MPN); PA services provide expanded choices for treatment. In addition, many PA services have call centers that offer support to their clients, the injured workers. CareGuard, for instance, offers 24/7 coverage to its members and prospective members to answer any questions they may have as they navigate the complex healthcare maze after settlement. Through the life of their claim, many injured workers simply lose trust in the attorneys, judges or system in general. This is often because the settlement process sets the parties up at a table for purposes of a one-time transaction, but then each group walks their own separate way. There is sparing research done on injured workers’ attitudes toward settling their case, but a survey in Minnesota in 2013 scratched the surface of what a daunting undertaking settling is for the injured individual. The study found that about one-third of injured workers did not fully understand their settlement. Further, it revealed that around three-quarters of injured workers did NOT believe they achieved a “fair” settlement. The sample used were folks who actually overcame their concerns and settled regardless of the negative sentiment the process evoked. Many claimants do not have the courage to push forward with settlement and instead decide to leave their future medical claim, if not their entire claim, open. PA can be a valuable tool, whether for adjusters, defense attorneys or plaintiff attorneys, to inject trust and solutions into a contentious situation. A team becomes available to address claimants' concerns about their future medical treatment. PA also introduces a party to the settlement negotiation whose interests are aligned with the claimant’s, because the PA provider will be the only party continuing to provide service to the claimant after settlement. This can give the claimant much-needed peace of mind that a partner is looking out for his best interests, and it is this peace of mind that helps reluctant claimants see that settling could in fact be their best decision. PA services give claimants comfort and confidence that life after settlement can be a rewarding and hassle free experience. How can you leverage PA in a settlement? To leverage PA effectively, negotiators on either side of the table should introduce the service early on in the process and clearly explain its benefits to the claimant. Often times, it’s useful to connect the PA provider directly with the claimant or her attorney so that a relationship is established and the service is well-understood. After all, the agreement between the PA provider and the claimant will exist for years beyond the settlement; it’s better to begin that relationship early on rather than try to throw it in last minute. The PA provider can serve as a neutral party that helps explain to the claimant what she can expect after settlement. Some PA providers, like CareGuard, can go further to provide cost analyses of what treatments will cost on their platform and demos of how their service works. PA providers understand that they do not get paid until the case settles, so they are a source of information and guidance toward settlement for all parties involved.

Insurance companies were built to bring stability to an unstable world. So, why do factors such as market instability, technological upheaval and consumer pressure seem to throw so many insurers into panic? In many cases, insurers can simply point to their rigid foundations. It didn’t take many California earthquakes to convince California builders that foundations would need to be built with flexibility in mind. In insurance, it won’t take many disruptive upheavals to teach businesses that current foundations are ripe for disaster. New foundations are needed to support a perpetually shifting business. In Reinventing Insurance: Leveraging the Power of Data, Analytics and Cloud Core Systems, a Majesco white paper issued in cooperation with Elagy, we look closely at how fundamental changes in the insurance business can be met with a new view of insurance infrastructure. By assembling cloud components into a fully functional virtual infrastructure, insurers remove the lethargy and overhead that bogs down everything from data aggregation and analytics to testing and product development. The goal is to build an insurance enterprise that can capitalize on market opportunities. Risk vs. Time To assess potential cloud value, Majesco first looked at the relationship between insights and risk assessment and at how insights are traditionally gathered and used. Traditional risk assessment regards claims experience across time and population as the best kind of informant regarding risk within any particular insurance product. This kind of risk assessment is proven. Actuarial science has been honed. Insurers have become adept at long-term predictive capabilities, and regulations have kept consumers and insurers protected from failure through adequate margins of error. The experience of time, however, has become the sticking point. To meet market demands, every insurance process has to be shortened. The new predictive fuel of data provided through real-time digital sources (as well as increasingly insightful technologies) can give insurers a much better view of risk in a much more appropriate timeframe. But even if they can gather data and assess the data quickly, they will, in most cases, still be held back by a product development and testing infrastructure that isn’t prepared to respond to fast-acting competitive pressure. The transparency that offers such promising opportunity is widely available to anyone, not just insurers, and it is highly coveted by agile, tech-savvy, entrepreneurial disrupters. Competition vs. Time Entrepreneurs love innovation and crave a new, marketable idea. They especially enjoy turning age-old processes on end, because these moments are often akin to striking gold. With technology’s rapid application of telematics, sensors, geolocation information and improved data management, nearly anyone can tap into the same data pools. Creative entrepreneurs, educated investors and innovative organizations are teaming up in a new kind of gold rush where rapid opportunity recognition will be met with rapid product development and relevant marketing. At a time when consumers seem to be susceptible to instant access product messages, disruptive companies will soon be feeding them instant-access products. Once again, the development time of legacy platforms can’t offer a competitive solution to insurers. The foundation is now susceptible to cracking because of its inflexibility. Legacy vs. Time Insurers still maintain dozens of advantages in the industry, the first and the foremost being experience. All of today’s new data sources, new channel options and modern infrastructure possibilities have more promise in the hands of insurers than in the hands of non-insurance disrupters. Legacy systems, however, are restrictive. They aren’t plug and play. Most aren't operating in a unified data environment with data consolidated and available across multiple databases. So, insurers’ opportunities will be found in a system built to fit the new insurance business and infrastructure model. Majesco’s report discusses how insurers can align cloud solutions with business strategies to capitalize on new risks, new products and new markets. With data aggregation, for example, cloud solutions available through Majesco and data-partner Elagy are rewriting analytic- and decision-making processes. A cloud data solution can integrate claims experience with third-party data and newly available data sets to relieve the need for additional IT overhead. A Satellite Office Approach Small and medium-sized insurers, in particular, stand to gain through a reinvention of their operational model. Market drivers—such as agents’ lack of marketing insights, the availability of relevant data and the need for low-cost process efficiencies—make an excellent case for change. The hurdles are real, however. Many insurers don’t have the needed resources to take advantage of these opportunities, and they are constrained by technology and a lack of operational capability. The ideal solution would be to transfer the whole pipeline to the cloud, migrating the enterprise infrastructure into a cloud-based infrastructure where partners and innovators can plug their solutions into a cloud-based core administration system. In the real world, most insurers would be served by a better strategy. When companies in any industry hope to move to a new geographic region, they sometimes open a satellite office. The satellite office is the new footprint in the foreign territory. It's the place where testing and acclimation happen, and its approach is somewhat analogous to what insurers can do when looking at cloud development. Insurers will find excitement and freedom running a new and improved model alongside the old model. While the organization practices its newfound agility, it will maintain the stability of legacy systems for as long as they are needed or are practical. A cloud-based insurance platform will quickly bring the insurer to the realm of data-fueled experience and competitive advantage. Its new processes and capabilities will breathe fresh life into insurers that are ready for resilient foundations.

A shockingly serious proposal has been floated to first persuade (and later possibly compel) publicly traded companies to disclose to shareholders quite literally how fat their employees are. Also, how much they drink, how well they sleep and how stressed and depressed they are. This proposal, advocating what is known as a fat tax, shouldn’t even merit a discussion among rational businesspeople, and yet here we are, discussing it. Even Harvard Business Review (HBR) is discussing this. Why? Because the well-financed, well-organized cabal behind this fat tax proposal include corporate names like Johnson & Johnson, PepsiCo, Humana, Merck, Novo-Nordisk and Unilever. The leader of this group is a South African insurer called Discovery Health. If you guessed that any critique written by me would also implicate Ron Goetzel, you would be correct. Despite having now himself admitted that most wellness programs fail, he is the one justifying this entire scheme by claiming that wellness programs increase stock prices -- even though they don’t. We’ve already offered a completely transparent analysis to the contrary. He also made a rookie mistake in his own analysis. The stock prices of companies in his study diverged greatly in both directions from the averages, and he didn’t rebalance existing holdings annually. It’s simple compounding arithmetic. Suppose the stock market rises X% a year. If every stock in your portfolio increases at that rate, you’ll match the averages. However, if half your stocks increase 2X% a year while the other half don’t appreciate at all, and you don’t rebalance, you’ll beat the averages. Simply by doing nothing. Goetzel’s study appeared right before the fat tax proposal was floated at Davos. No coincidence here -- Discovery Health (the sponsor of the Vitality Institute) cites the study as a basis for wanting shareholders to “pressure” companies into disclosing the number of fat employees they have. And the more fat employees a company has, the more shareholders will insist on wellness programs, thanks to this study. Johnson & Johnson and Discovery both sell wellness programs, while Merck and Novo-Nordisk sell drugs for various wellness-related conditions. We urge reading the HBR link in its entirety to see why a fat tax would be even worse than it sounds. Some highlights:

• No one knows how to measure this stuff. Example: Keas tried to measure stress and failed hilariously…and they all want to use body mass index (BMI) for weight, but BMI turns out to be an inaccurate measure of health;
• Two of the companies in this cabal, PepsiCo and Discovery/Vitality, can’t even get their own employees to lose weight;
• Employer weight loss programs don’t work;
• As this blog noted last week, even wellness promoters – including Goetzel – say it loses money.

Most importantly, though – and you don’t need Harvard to learn this – it’s just not nice to stigmatize employees for their weight or other shortcomings unrelated to job performance. Basic human decency should have been taught to this cabal a long time ago. We’ve pointed out many times in ITL that these wellness people were absent the day the fifth-grade teacher covered arithmetic. This proposal suggests that they were also absent the day the kindergarten teacher taught manners.

Perhaps the most important thing an insurer can do to keep clients and brokers happy is to implement the right kind of customer relationship management system and process. CRM lets the insurer anticipate needs and communicate effectively. The most obvious benefits of a good CRM system are:

• Accessible client information, with the ability to view it in multiple dimensions
• An automated tool for reminders
• The ability to document prospect and broker files

But those are just the baseline benefits. With a more comprehensive system, you get usability that exceeds these minimal expectations. It can bring an insurer to a whole new technological landscape that improves retention levels and increases efficiency. Choosing the Right CRM Before selecting CRM software, determine who’s considered a customer, because that will dictate the features the CRM software must have. Prospects and policyholders are certainly customers, but many insurers miss out when they neglect to recognize that brokers are customers, too. The CRM software chosen needs to serve them, as well. For maximum efficiency, choose a CRM that has certain integration functions. It should connect with other sales technology systems that you and your brokers use often, because service is the key differentiator. To take sales and service to the next level, the CRM system should allow for data to be entered once and then pushed out to other systems, including quoting and underwriting. Distribution channel and prospect information can then be populated into a sales and underwriting system. Not only is this a more streamlined way to conduct business, it also helps the process feel more personal and customized for each user. Every sales representative can have all her information immediately. It also provides for more effective self-service on the web. One-time entry also makes selling much easier for brokers and sales offices of the insurance company, which will always have access to updated information. This, in turn, makes your products more accessible and appealing. An advanced CRM system will also make reporting and reviewing analytics easier, allowing insurers to identify issues more easily and respond to them more quickly. Activity tracking is also an important feature. Having an accurate record of changes and updates is important in both relationship management and regulatory compliance. Regulators increasingly demand insurers be able to document compliance. Finally, you want to make sure your CRM software has configuration options that will maximize its utility for your company and brokers. Every company is unique, and CRM software that forces you into its box isn’t useful. You should be able to tailor a CRM system to make it work more efficiently for you, not have to work around it. CRM software isn’t just about tracking and storing information—it’s about creating a collaborative environment among product managers, brokers, carriers and clients. Let the data flow—in a well-organized, transparent way that treats every person as a distinct individual with her own needs and expectations.

As a veteran of the worker’s compensation claims trenches, I saw first-hand how the expensive nature of the system drove employers out of business. It sad to see businesses go belly-up, and it was equally sad for the workers who were suddenly unemployed. It was definitely a case of lose-lose. One way to combat the high costs of workers' compensation was to opt out of the traditionally expensive system in states that allowed it. By opting out, employers were forced to be more engaged in the administration of their program and focus more on the outcome. The result was a less expensive system, providing quality benefits to the injured workers and improving the overall outcome. Oklahoma was one of the states that seemed to have found the right mix. So I was quite dismayed to learn of the recent decision by the Oklahoma Workers’ Compensation Commission (WCC). The case, Vasquez v. Dillard’s Inc., involved a worker for Dillard’s who was denied benefits after a work injury that was determined to be an aggravation of a pre-existing injury. The WCC declared the opt-out portion of the workers’ compensation system unconstitutional because they felt it created a dual system where the injured worker is treated differently. The most intriguing facet is how the WCC abandoned its traditional administrative role for that of a judiciary in deciding what law is, and is not, constitutional. That, I suppose, is another story. However, the WCC completely ignored the already approved opt-out option and remanded the case back to the administrative law judge within the traditional workers’ compensation system. Not only am I concerned about that sort of pretzel logic, but I also see it as another attack on exclusive remedy. Right now, my company doesn’t do business in any of the opt-out states. That doesn’t mean we wouldn’t consider it if that option presented itself down the road. But that is probably on hold as any state considering moving forward with the opt-out system has now been stopped dead in its tracks. Best to sit tight for now. As for whether the Oklahoma ruling will change what I do with regard to workers’ compensation remains to be seen. As I’m sure many employers will do now, I’ll wait on the sidelines and see how this plays out. This is basically what I was doing before the Oklahoma ruling … observing from afar to see if the opt-out system (if it came to my states) was not only cost-effective but also fair to the workers. I would never consider an alternate workers’ compensation system unless I was convinced it offered our injured workers the same, or better, benefits as the traditional system. I would also need to be convinced that it produced better outcomes.

I recently interviewed more than 200 ultra-productive people: seven billionaires, 13 Olympians, 20 straight-A students and more than 200 successful entrepreneurs. I asked them a simple, open-ended question: “What is your No. 1 secret to productivity?” After analyzing their responses, I coded their answers into 15 unique ideas. SECRET #1: They focus on minutes, not hours Average performers default to hour and half-hour blocks on their calendar. Highly successful people know where each of the 1,440 minutes in a day goes, and they know there is nothing more valuable than time. Money can be lost and made again, but time spent can never be reclaimed. Olympic gymnast Shannon Miller told me, “To this day, I keep a schedule that is almost minute by minute.” You must master your minutes to master your life. SECRET #2: They focus only on one thing Ultra-productive people know their Most Important Task (MIT) and work on it for one to two hours each morning, without interruptions. Tom Ziglar, CEO of Ziglar Inc., shared, “Invest the first part of your day working on your No. 1 priority that will help build your business.” What task will have the biggest impact on reaching your goal? What accomplishment will get you promoted at work? SECRET #3: They don’t use to-do lists Throw away your to-do list; instead, schedule everything on your calendar. It turns out only 41% of items on to-do lists are ever actually done. And all those items that aren't done lead to stress and insomnia because of the Zeigarnik effect. Highly productive people put everything on their calendar and work and live from that calendar. Jordan Harbinger, co-founder of The Art of Charm, advises, “Use a calendar and schedule your entire day into 15-minute blocks. It sounds like a pain, but this will set you up in the 95th percentile." SECRET #4: They beat procrastination with time travel Your future self can’t be trusted. That’s because we are “time inconsistent.” We buy veggies today because we think we’ll eat healthy salads all week, then we throw out rotting green mush in the future. I bought P90x because I thought I would start exercising vigorously, yet the box sits unopened one year later. What can you do right now to make sure your future self does the right thing? Anticipate how you will self-sabotage in the future and come up with a solution to defeat your future self. SECRET #5: They make it home for dinner I first learned this secret from Intel’s Andy Grove, who told me, “There is always more to be done, more that should be done, always more than can be done.” Highly successful people know what they value in life. Yes, they value work, but what else should they value? There is no right answer, but, for many, values include family time, exercise and giving back. They allocate their 1,440 minutes a day to every area they value (i.e., they put it on their calendar), and then they stick to the schedule. SECRET #6: They use a notebook Richard Branson has said on more than one occasion that he wouldn’t have been able to build Virgin without a simple notebook, which he takes with him wherever he goes. In one interview, Greek shipping magnate Aristotle Onassis said, “Always carry a notebook. Write everything down…That is a million-dollar lesson they don’t teach you in business school!” Ultra-productive people free their mind by writing everything down. SECRET #7: They process email only a few times a day Ultra-productive people don’t check their email throughout the day. They don’t respond to each vibration or ding to see who has intruded into their inbox. Instead, like everything else, they schedule time to process their email quickly and efficiently. For some, that’s only once a day; for me, it’s morning, noon and night. SECRET #8: They avoid meetings at all costs When I asked Mark Cuban to give me his best productivity advice, he quickly responded, “Never take meetings unless someone is writing a check.” Meetings are notorious time killers. They start late, have the wrong people in them, meander in their topics and run long. You should get out of meetings whenever you can and hold fewer of them yourself. If you do run a meeting, keep it short. SECRET #9: They say “no” to almost everything Billionaire Warren Buffett once said, “The difference between successful people and very successful people is that very successful people say 'no' to almost everything.” James Altucher colorfully gave me this tip: “If something is not a 'hell, yeah!', then it’s a 'no!' " Remember, you only have 1,440 minutes in every day. Don’t give them away easily. SECRET #10: They follow the 80/20 rule Known as the Pareto Principle, in most cases 80% of outcomes come from 20% of activities. Ultra-productive people know which activities drive the greatest results, and they focus on those and ignore the rest. SECRET #11: They delegate almost everything Ultra-productive people don’t ask, “How can I do this task?” Instead, they ask, “How can this task get done?” They take the “I” out of situations as much as possible. Ultra-productive people don’t have control issues and are not micro-managers. In many cases, good enough is, well, good enough. SECRET #12: They create themes for days of the week Highly successful people often "theme" days of the week to focus on major areas. For decades, I’ve had “Mondays for Meetings” to make sure I’m doing one-on-one check-ins with each direct report. My Friday afternoons are themed around financials and general administrative items I want to clean up before the new week starts. I’ve previously written about Jack Dorsey’s work themes, which enable him to run two companies at once. Batch your work to maximize your efficiency and effectiveness. SECRET #13: They touch things only once How many times have you opened a piece of regular mail—a bill, perhaps—and put it down, only to deal with it again later? How often do you read an email and close it, leaving it in your inbox to deal with later? Highly successful people try to “touch it once.” If it takes less than five or 10 minutes—whatever it may be—they’ll deal with it right then and there. This reduces stress because it isn't in the back of their mind, and it is more efficient because they won’t have to re-read or reevaluate the item in the future. SECRET #14: They practice a consistent morning routine My single greatest surprise while interviewing these more than 200 highly successful people was how many of them wanted to share their morning ritual with me. Hal Elrod, author of The Miracle Morning, told me, “While most people focus on ‘doing’ more to achieve more, The Miracle Morning is about focusing on ‘becoming’ more so that you can start doing less, to achieve more.” While I heard about a wide variety of habits, most people I interviewed nurtured their body in the morning with water, a healthy breakfast and light exercise. They nurtured their mind with meditation or prayer, inspirational reading and journaling. SECRET #15: Energy is everything You can’t make more minutes in the day, but you can increase your energy—which will increase your attention, focus, decision-making and overall productivity. Highly successful people don’t skip meals, sleep or take breaks in the pursuit of more, more, more. Instead, they view food as fuel and sleep as recovery, and they pause with “work sprints." Tying It All Together You might not be an entrepreneur, Olympian or millionaire—or even want to be—but their secrets just might help you get more done in less time and help you to stop feeling so overworked and overwhelmed.

According to the Bureau of Labor Statistics (BLS), the incidence of musculoskeletal injuries (MSD) cases for heavy and tractor-trailer truck drivers increased to 355.4 cases per 10,000 full-time workers in 2014, up from 322.8 in 2013. This is more than three times greater than the rate for all private sector workers.

Companies are faced with increasing exposure from MSD claims, not only from state regulations but from compliance with federal mandates that increase potential exposure for these types of injuries. (The Centers for Disease Control and Prevention (CDC) defines MSD as injuries or disorders of the muscles, nerves, tendons, joints and cartilage as well as disorders of the nerves, tendons, muscles and supporting structures - the upper and lower limbs, neck and lower back - that are caused, precipitated or exacerbated by sudden exertion or prolonged exposure to physical factors.)

Safety will always play a role in mitigating risks, but, no matter how safe an environment, an employer will always have MSD claims. In the transportation industry, the higher rates of injury can be attributed, in part, to several factors.

The nature of the work is one. Many drivers maintain a poor diet, rarely get enough sleep and are sedentary. As a result, they find themselves more susceptible to heart attacks and diabetes, as well as a myriad of strains, sprains and other musculoskeletal disorders.

Additionally, the percentage of older workers is higher in transportation than in most industries, with the Transportation Research Board estimating as many as 25% of truck drivers will be older than 65 by 2025; that translates into more severe musculoskeletal disorder claims.

So, how can a transportation company turn this around and provide a win for all parties? Let's explore through a case study:

Marten Transport is a multi-faceted provider of transportation services offering over the road (OTR), regional, intermodal and temperature-controlled truckload services. The company has 15 operational centers and more than 3,670 employees and contractors. It needed to provide better care for MSD injuries while not accepting liability for injuries occurred outside the scope of work. Marten decided to institute the EFA Soft Tissue Management (EFA-STM) program in February 2015 to determine which injuries were work-related and which were not, as well as to provide better care.

According to Deborah Konkel, the work comp claims manager for Marten, the company uses the EFA-STM "as a fact-finding tool to help us, our employees and their medical providers better understand the nature of their injury and determine the best course of action going forward." Under the EFA-STM program, workers are given a baseline test that is unread; after a reported injury, a second test is conducted. That data is compared with the baseline test to identify the new acute condition, distinct from any pre-existing chronic conditions.

The EFA-STM program is a paradigm shift in workers' compensation because it provides benefits for all stakeholders by accurately separating work-related injuries from those that are not work-related and by providing objective information and, thus, better care for the work-related condition. The key question is what the physical condition of the employee was before the incident and what needs to be done to return him to pre-injury status. EFA-STM provides the required data.

To determine the benefit of the EFA-STM program, Marten's workers' compensation claims data from 2010-2014 was compared with claims data from 2015. The average rate of MSD injuries per 100 hires from 2010-14 was compared with the 2015 rate. The result was a 60% drop in the rate of MSD injuries per 100 hires in 2015. This translated into almost 40 fewer MSD claims in 2015. Using the 2010-14 average cost per MSD claim, the EFA-STM program yielded a direct ROI of 3.7: 1.

"Based on these results, we believe that the EFA-STM program has been a win for all parties involved and a must for companies, especially in the transportation industry" Konkel said.

There is a big PR problem brewing, one receiving very little attention in the media or in industry publications. It's one I think will resonate among those who typically support the politicians who supported the Affordable Care Act. The issue stems from the delay in the 1094/1095 reporting under section 6055 and 6056 of the IRS code specifically created under the Affordable Care Act. In English: This is the reporting requirement for carriers and employers that lets the government know if an offer of coverage was made to a particular employee, if it met certain requirements and if it was “affordable” according to one of several calculations set forth by the bill. If an “applicable large employer” does not report or does not meet the minimum requirements for coverage and affordability, there are serious fines at play. The deadline for the first reports, barring any further delays, is March 31.  (The initial deadline was pushed back because of the burden on employers.) Why is this important? Well, Obamacare established subsidies to help reduce out-of-pocket costs. The subsidy amount is based on household income in relation to the federal poverty level. Your job also must not offer insurance that meets the requirements about the base level of coverage and affordability. Without employer reporting, however, the government has, thus far, relied on individuals' assessments of coverage and affordability. Even if the employer plan meets the affordability test, most people would still call their plans through their employer “unaffordable.” The confusion is compounded by something the industry refers to as the “family glitch.” Let’s say I am offered coverage at my job, and my employer pays 80% of the premium for me. But my employer pays nothing toward the cost of carrying my dependents, an all-too-common scenario. This coverage would likely meet the affordability test for my coverage alone, on the lowest-cost plan my employer offers. If my employer pays nothing toward my family, however, it could easily cost me $1,000 or more per month out of my pay to cover my family. That's clearly not affordable to most Americans, but, because my coverage met the test, the entire household becomes ineligible for a subsidy. You could have hundreds of thousands of people who honestly believed their coverage was not affordable, didn’t think their employers plan met the coverage requirements or outright lied because there appeared to be no one checking. These people received what could amount to significant subsidies they weren't entitled to. Technically, they received an advanced tax credit. If it is determined you were not eligible for that tax credit, you now have a liability, and it is widely believed the IRS will have the right to garnish wages, freeze assets and place liens on property. How much are we talking here? Well, I have seen subsides as big as $1,500 per month. The average is around $2,890 per year, per person (according to the Kaiser Family Foundation). So, if a family of four owes the entire year back at the average subsidy, we are talking more than $10,000 a year plus (most likely) penalties and interest from the IRS. What is the average working person going to do if he gets a demand for $1,000 from the IRS? $10,000?  More? And if the IRS exerts the same force it does on normal tax debts, things such as frozen bank accounts, liens and garnished wages could follow pretty quickly. All in all, this reporting we are now preparing for employers will likely have significant financial impact on many American workers who should not have received the subsidy to begin with. In all likelihood, many did not fully understand that. The timing of all this will largely depend on how quickly the government aggregates the data it is collecting from numerous sources. But get ready for what I believe will be a vocal, angry and desperate group of people with compelling stories facing a very difficult financial situation.

The first three articles in this series by David Toomey and me are here, here and here. Over the last few years, the buzz in the healthcare industry has been about accountable care organizations (ACOs), and the next wave will be the promotion of “value-based contracting.” These are similar approaches, different words. Generally, an ACO is formed around a physician group or a hospital linked to physicians. The basic concept is for the provider system to be accountable for patients, with the providers financially motivated to affect their patient population’s overall costs. Makes sense, right? For the past 25 or so years, physicians have been linked to independent practice associations, medical groups and management services organizations. Many of these provider organizations have had financial incentives tied to performance. Data have been available to assess physician performance. So, what’s different now? Today the Feds are re-emphasizing performance in their physician contracting under the new Medicare Access and CHIP Reauthorization (MACRA), which replaces the current reimbursement formula. Beginning in 2019, the existing incentive programs now used for Medicare physicians will be replaced by a new performance-based model with four components. Those components are 1) quality, 2) resource use, 3) meaningful use of technology and 4) clinical practice improvement. Based on the Medicare physicians’ results, the reimbursements can be decreased by as much as 4% (adjusting to 9% by 2022). The program will have upside incentive for achieving exceptional performance of as much as 12% in 2019. As the largest purchaser, Medicare is striving to establish per-unit cost consistency in every market. Yet Medicare’s 2014 costs vary from $6,631 to $10,610 across markets. Why? Even if the cost per unit of service is standardized, extremely wide variation exists in how patients are treated for given conditions. When wide variation in care plans exists, some are right and some are wrong, as regular readers of Cracking Health Costs know. Some are better, and some are worse. Period. It’ll be interesting to see if the four new performance measures under MACRA will have a better impact than what’s in place today. Self-insured employers don’t need to wait four or five years to see the results. They can leverage their purchasing scale with the providers to drive out both inappropriate care and unit price variations. The time to start is now.