Workers’ compensation claims cost employers, their insurers and government agencies billions of dollars every year. While employee safety should be every employer’s first priority, the desire to reduce the costs of compensation claims can add to that emphasis.

So, how can you reduce the cost of workplace accidents?

One of the most effective and efficient ways is to look for patterns in workers' comp claims. By identifying their patterns, employers can address the workplace issues that most frequently lead to the most expensive claims.

Using Patterns to Identify Workplace Risks

Spotting a pattern to workers’ compensation claims starts with identifying the factors that contribute to accidents in your business. The list may be longer than you think. Consider the following:

• Company morale
• Employee experience and training
• Employee physical and mental health
• Employee socioeconomic status
• Facility architecture, age and repair
• Geographic location
• Quality, age and repair of equipment, machinery and tools
• Weather patterns
• Workplace conditions

While not all of these will be relevant to all employers, they are still all factors that can affect the likelihood of a workplace injury. More importantly, they are factors that employers can address  to mitigate both injury risk and the cost of valid claims.

Reducing Risk of Injury

Of course, the most effective way to reduce the cost of workers’ compensation claims is to avoid them in the first place. While going 100% claim-free may be unrealistic, there are certain measures that can be taken to reduce the likelihood and frequency of injuries on the job.

Reducing risk starts with the hiring process. Careful, targeted pre-employment screening and interviews can help employers identify high-risk individuals. Here, “high-risk” can mean a number of different things: inexperienced, lacking proper training, suffering from problems with drugs or alcohol or even a history of worker’s compensation claims. For existing employees, employers can re-assess records from the hiring process to identify patterns among injured workers. This information can then be fed in to the new-hire process.

Pattern evaluation can be used to identify other areas for improvement, as well. Are injuries more common at a specific location? At a specific time of day? Is a recurring mistake the cause of frequent injuries?

Once identified, these are all issues that can be addressed to reduce the risk of future injuries.

Reducing the Cost of Valid Claims

Pattern analysis can also aid employers and their insurers in avoiding overpayment on valid claims. Understanding what questions to ask and what to look for during the investigation allows companies to pinpoint the relevant issues and tailor the adjustment process accordingly. The more data you have at your disposal, the better able you will be to thoroughly and accurately assess workers’ compensation claims as they arise.

Using Patterns to Spot Fraudulent Claims

Finally, looking for patterns is an effective measure for combating the rising cost of fraudulent claims. Fraud can occur at both the employee and health-care provider levels and, by some measures, accounts for anywhere from 5% to 20% of all compensated claims. While clearly not conclusive, the following are examples of factors that may indicate a fraudulent claim:

• Refusal to submit to diagnostic testing
• Inability to provide details about the accident
• Delayed submission of the injury report (all injuries should be reported immediately)
• Lack of witnesses to corroborate the claimant’s story
• Healthcare costs that far exceed what would be expected for the alleged workplace injury

Harness the Power of Data to Manage Your Workers’ Compensation Costs

Understanding the factors that contribute to workers’ compensation claims is the first step toward mitigating the costs of workplace injuries. By identifying patterns before, during and after the claim process, employers and their insurers can improve workplace safety while also benefiting the bottom line.

Innovation continues to be a key topic within the industry, attracting greater attention in the last few years because companies like Google, Walmart, Apple and others have raised the bar with strong innovation cultures that are challenging existing companies and industries, including insurance, in a multitude of ways. Their commitment to create, nurture and inspire a culture that mobilizes their creativity and resources is breathtaking and is also backed by the commitment of top leadership to ensure innovation is seen, heard and acted upon each and every day.

In this rapidly changing marketplace, innovation is no longer a nice-to-have initiative. It is a must-have, strategic business capability and core mandate that is defining a new era of market leaders across all industries, including insurance. The change and disruption are not from any one influencer, but rather a combination of influencers that together are creating a seismic shift in business models, customer expectations, products and services and infrastructure. As result, companies are increasingly embracing innovation to address the challenges and opportunities of this disruption … and insurers must, too.

Many insurers are on the journey to becoming a Next-Gen Insurer by reinventing the business of insurance. Unfortunately, too many are only retooling their traditional business elements such as products, services and processes. These varied approaches expose a wide and dangerous gap in the levels of innovation maturity. Based on our research results, only 13% have a strong innovation culture, 35% have a formal innovation team, 26% have formal innovation processes and 36% are using collaboration tools. The diversity and small amount of engagement in these four critical areas suggests that only about a quarter of insurers would likely have the necessary foundation in place to achieve mover or market leader status, leaving the majority of insurers at the laggard or "mainstreamer" level.

What does this reveal? Insurers appear to be significantly behind -- especially when compared with new challengers that are moving at a high pace and level, with innovations and capabilities emerging regularly through their own development, acquisitions or partnerships. The new challengers are transforming other industries, and the insurance industry is being threatened, both directly and indirectly. Retail with Amazon, taxi service with Uber, banking with Lending Club, venture capital funding with Kickstarter, automotive with Google and insurance with Google all illustrate ways that innovative capabilities are being introduced and that industry boundaries are being eliminated. A commitment to innovation is at the heart of growth and success.

The implications for insurance are vast. If insurers fail to achieve a robust level of innovation maturity, they will increasingly fall behind and risk becoming irrelevant in a changing marketplace, just like Kodak, RadioShack, Borders and others. But those that embrace the inevitable nature of the seismic shifts that will affect almost every line of business and every product within the insurance industry’s portfolio will be well-positioned to lead their organizations’ innovation initiatives beyond traditional comfort zones.

This report provides a framework to help insurers assess their current innovation maturity level compared with where they want to be. By doing so, they can best determine strategies to establish innovation as a core business capability to help win in today’s world.

In a world of rapid change, new competitors, emerging technologies, advancing innovation and fading industry boundaries are intensifying the challenge to traditional insurance business assumptions. How insurers respond to these changes – with a fresh set of views that combine both inside-the-industry and outside-the-industry perspectives within a robust innovation process – will very likely influence their future.

So how should insurers respond?

• Insurers must assess their current innovation maturity level, define the desired maturity and formulate a plan to move the organization forward on their journey as a Next-Gen Insurer. Evaluate your current state across key elements and provide executives a baseline from which to define and develop mature innovation capabilities necessary to compete today and in the future.
• Insurers should establish an innovation mandate and business capability by leveraging best-practice methodologies, like the SMA innovation framework, to guide and implement the desired innovation maturity level within the organization. Ensure that innovation becomes a sustainable and robust capability similar to other core capabilities like program management, financial management or product management.
• An organization must focus on the level of strategic and organizational commitment, on tracking and assessing inside and outside industry trends, on being willing to embrace open innovation and an ecosystem, on the ability to develop long-term scenarios and on investment of resources. They will define the level of innovation maturity and determine future success.
• Insurers must create and participate in robust ecosystems of internal and external resources to gain insights.
• The commitment to innovation should be viewed no differently than the organizational and financial commitments needed for any strategic initiative, new market entry or new business. Market leaders are embracing innovation as a requirement for fueling the organizations’ potential and securing their market leadership.

Innovation is a must, and time is of the essence. Leading futurists, including David Smith and Erik Qualman, suggest that 40% of the Fortune 500 companies won’t exist in 10 years. It is reasonable to expect a similar ripple effect through all companies. It is imperative that insurers assess their current state of innovation maturity and commit to a future state that is fully capable of fulfilling their vision for a viable future. Those that embrace innovation and capitalize on the disruption and influencers stand to make the biggest gains and remain relevant in the future. But those that hesitate will fall short in both competitive position and financial stability. What is your next move?

Click here to learn more about SMA’s research.

Last year, I highlighted the mission and objectives of the newly minted Association for Responsible Alternatives to Workers’ Compensation (ARAWC) organization that was established by a collaborative group of employers and their provider partners. With Sedgwick as a founding member of this organization, I can report that we moved quickly to stand up the association, hiring experienced staff, lobbyists and others with expertise in passing legislation. We are putting in so much effort on behalf of U.S. employers to ensure this organization stays focused and delivers on its mission. Before I give you the really good news, here is a recap of the central issue on options in work comp. Workers' compensation is dictated by separate statutes in every state. Only Texas and Oklahoma offer the freedom to “opt out” of the statute, and, in each case, the way this is practiced is quite different. In the case of Texas, opting out is known as “nonsubscription” and has been around for more than 100 years. Practitioners have achieved dramatic costs savings and better outcomes for many claims. Over time, nonsubscribers also often experience significant reductions in frequency and length of disability. All of these outcomes are what we work hard to help our clients achieve, but we are often frustrated by the statutory requirements of many states that bring bureaucracy and controversy to the resolution of many claims. Back in 2013, Oklahoma enacted new workers’ compensation legislation in SB 1062, which allows any employer to exit, or opt out of, the state’s statutory workers’ compensation system. While not exactly like  “nonsubscription” in Texas, this new statute is a significant move forward in giving employers more options in how they respond to and finance employee injuries and related benefits. Regardless of the mechanical operations in the free market alternatives to WC, the key focus is ensuring injured employees are treated respectfully and compensated fairly in the aftermath of on-the-job injury. Just as there are significant differences between what Oklahoma has done and what has been in place in Texas for more than 100 years, there are state-specific opportunities to improve the financing for and response to employee injuries in many other states. Where Oklahoma’s SB 1062 offers Oklahoma employers that choose to opt out of the state system the opportunity to substantially reduce work-injury costs and avoid both the statutory system’s extensive regulation and litigation risk, similar goals for other states are being established by the leaders of ARAWC for the benefit of both employers and employees. Two key statistics reflect a clear basis for why Oklahoma changed and improved their approach to employee injuries:

• Oklahoma employers cited that WC cost was the # 1 reason they were either leaving the state or adding jobs at facilities located in other states such as Texas
• 2012 NCCI statistic’s showed Oklahoma loss costs to be 225% higher neighboring states.

Currently, all but these two states effectively mandate workers’ compensation insurance as the sole option for employers to cover employee injuries. ARAWC’s mission is to expand the delivery of better medical outcomes to injured workers by expanding employer choice in other states. Experience under these alternative employee injury benefit platforms has proven to dramatically reduce employee injury costs, while achieving higher employee satisfaction and substantial economic development. Over the past two decades Texas nonsubscribers have achieved better medical outcomes for hundreds of thousands of injured workers, and saved billions of dollars on occupational injury costs. While ARAWC is not necessarily taking the Texas model forward into other states, it will leverage the learnings from over 100 years of having options in Texas and what emerges from the changes from Oklahoma’s new statute, to drive a strategy for process improvements and lower costs in selected states where change is overdue. The key core benefits that ARAWC is seeking in these states include but won’t necessarily be limited to:

• Delivering better medical outcomes and higher process satisfaction for injured workers without the cost and burden of traditional workers’ compensation.
• Driving state economic development through the attraction of employer savings.

Providing employers more choice in financing and responding to employee injuries can positively impact employees, employers and health care providers. Experience supports that competition to traditional workers’ compensation insurance can reduce premium rates and improve services. Enabling choice of program design increases employers participation into the process which allows them to hold all service providers accountable for results and outcomes. It also enables employees to access medical providers that do not accept workers’ compensation clients because of low fee schedules and paperwork required. In the absence of statutory mandates, responsible employers create high quality benefit plans for occupational injuries, enabling improved access to better medical talent leading to higher employee satisfaction, better medical outcomes, and lower cost claims. The member companies of ARAWC aspire to refocus state-based mandates in response to growing gaps in quality medical care, efficient risk financing, effective return-to-work and other areas in many current systems. Some of the other expected benefits of ARAWC’s strategy are expected to be:

• Improved workplace safety and training supporting injury prevention
• Expanded access to quality medical providers providing exceptional care
• Opportunity for expanded benefits through custom designed plans
• Opportunity for reduced waiting periods for wage replacement with greater benefits
• More expedient medical treatment and more immediate referral to specialized medical treatment to enhance recovery
• Early identification of potentially complicating medical conditions and securing appropriate medical treatment to aid recovery
• Improved communications with injured workers to address benefit questions and assist early return-to-work

I am happy to bring further news that the strategic plan is moving along nicely, including the identification of the first two target states for option legislation. In fact, on Feb. 12, a bill was introduced in the Tennessee legislature by Sen. Mark Green that will bring a version of the option to Tennessee employers soon, if passed by the legislature and signed by the governor. If achieved this year, the speed of change will have accelerated dramatically because it took approximately four years to move similar legislation in Oklahoma. Several other states are continuing to be vetted for prioritized change efforts. Even better, we have assisted in drafting legislation in the first state, secured a highly respected bill sponsor, gained the endorsing support of major employers in the state and begun the formal process of socializing and educating key stakeholders instrumental to passing legislation in the state. While this state’s legislative session is relatively short, things are moving quickly enough to believe that there is a good chance of getting some form of this bill passed this year. This would be an amazing result. As you can see, ARAWC is already fulfilling its mission funded by its current members. Active membership recruitment remains a priority as the nature of this beast is that it will take some time to achieve WC legislative change in the many states that will clearly benefit from giving employers an option that can hope to achieve the type of results seen in Texas and hoped for in Oklahoma. More to come soon.

Many companies think they are staying nimble during product innovation by setting up pilot projects to validate concepts before they’re rolled out at scale. But pilots aren’t the answer, either, at least not on their own. Once something gets anointed as a “pilot,” it’s no longer an option—it’s the destination. There are typically no graceful ways to kill a pilot, and even course corrections are too hard to make. Systems such as software have all been done at the production level, with the assumption that the pilot will work and will need to be quickly rolled out at scale. Changes are seen as a sign of defeat, and digging into production code can be complicated. Besides, problems at the pilot stage often get hidden. A pilot is very public, and some senior people have a strong interest in success, so they may work behind the scenes and use their connections to make it successful. I once watched a client be all over a pilot in a single state, so thoroughly covering the pilot with senior-management attention that the client learned little before initiating a national roll-out. The executives knew what they were doing, but they couldn’t help themselves. They were so invested in the success of the pilot. The solution is to rephrase the issue. There needs to be less planning and more testing. The only way to accomplish that is to defer the pilot stage and stay in the prototyping phase much longer than most companies do. The difference between a prototype and a pilot is that there’s no possibility or expectation that a prototype will turn into the final version of the product or service. Prototypes are just tests to explore key questions, such as whether the technology will work, whether the product concept will meet customer needs or whether customers will prefer it over the competitive alternatives. The early prototypes should be all chewing gum and baling wire. They shouldn’t have hardened processes or the people required to go live. Yet they should provide real insight that informs further development. Each stage of prototyping should minimize costs and maximize flexibility. To borrow a term from computer programming, new products and services should be explored using “late binding”; they should take final form as late as possible, based on the most up-to-date learnings that can be generated. Pixar has made a religion of prototyping through what the company calls “story reels.” The company doesn’t just write a script; it creates storyboards that provide a sort of comic-book version of a prospective movie, then adds dialogue and music. The story reels cost almost nothing, compared with the fully animated versions of Pixar’s movies, yet provide a great sense of how a story will flow and allow for problems to be spotted. The story reels can also be changed easily. Here’s a fascinating video in which the creators of Toy Story describe their storyboarding process: https://www.youtube.com/watch?v=QOeaC8kcxH0#action=share Every regular review of progress on the prototypes should begin with a demo, much like what Pixar does with its storyboards. My old friend Gordon Bell, who designed the first minicomputer while at Digital Equipment, likes to say that “one demo is worth a thousand pages of a business plan,” and that notion applies to every stage of prototyping. It’s easy to get lost in talk of value propositions, competencies and market segments. A demo makes an idea tangible in a way that no business plan ever will. At Charles Schwab, in the lead-in to the company’s great, early successes with the Internet, executives talked about a hamster on a wheel. Schwab would test potential services by having people working behind the scenes answering questions, looking up information, and so on, running just as fast as their little (metaphorical) legs could go. Anything that didn’t work or didn’t resonate with customers was easily set aside. Only once Schwab had a sense of what customers truly wanted would it start building the capabilities into software. Prototypes and demos are part of what has made Apple products so successful. Steve Jobs always used prototypes of products to drive his thinking. For example, early in the process of figuring out the right screen size for the iPad, Jobs had Jonathan Ive make 20 models in slightly varying sizes. These were laid out on a table in Ive’s design studio, and the two men and their fellow designers would play with the models. “That’s how we nailed what the screen size was,” Ive told Walter Isaacson in his biography of Jobs. Admittedly, it helps when you have a genius like Jobs playing with the devices, but even he couldn’t envision everything. He needed many alternatives of something tangible. As Isaacson quoted him as saying, “You have to show me some stuff, and I’ll know it when I see it.” If Steve Jobs thought it was critical to prototype, shouldn’t you?

As many employers offer wellness programs, they focus on increasing their employees’ physical health but often neglect to offer any mental health component to their wellness programs. If employers do offer a mental health component to their wellness programs, the focus is usually on depression, the most common mental health issue. Yet, there is a prevalent mental health disorder that affects 30 million Americans and often goes untreated – eating disorders. Employers that provide incentives for weight loss programs without a mental health component are putting themselves at risk by not being able to detect employees who develop unhealthy eating and exercise habits. Twenty million women and 10 million men will be affected by an eating disorder at some point in their lifetime, according to the National Eating Disorder Association (NEDA).  Research shows that 35% of normal dieters progress to pathological dieting and, of those, 20% to 25% develop partial or full eating disorders. There is a common misperception that eating disorders are simply an obsession with eating or dieting. Eating disorders are serious mental health disorders that have the highest mortality rate of any mental health disorder. Individuals with anorexia nervosa are eight times more likely to attempt suicide than the general population, and suicide is the leading cause of death for those with this disorder. Eating disorders also often occur along with other mental illnesses, and approximately 50% to 75% of those with an eating disorder also suffer from major depressive disorder. However, because of the stigma surrounding eating disorders and mental health, only one in 10 will seek treatment. Mental health disorders, such as eating disorders, need to be viewed and treated like physical illnesses. As with most illnesses, early intervention and detection are the keys to recovery. How Employers Can Help

1. Learn the signs and symptoms of eating disorders:

• Constant adherence to increasingly strict diets, regardless of weight
• Habitual trips to the bathroom immediately after eating
• Secretly bingeing on large amounts of food
• Hoarding large amounts of food
• Exercising compulsively, often several hours per day
• Avoidance of meals or situations where food may be present
• Preoccupation with weight, body size and shape, or specific aspects of one's appearance
• Obsessing over calorie intake and calories burned via exercise, even as one may be losing significant amounts of weight

The National Eating Disorder Association provides more information on the types of eating disorders and signs and symptoms.  Learn the signs and symptoms of suicide:

• Talking about wanting to die or to kill themselves
• Talking about feeling hopeless or having no reason to live
• Talking about feeling trapped or in unbearable pain
• Talking about being a burden to others
• Increasing the use of alcohol or drugs
• Acting anxious or agitated; behaving recklessly
• Withdrawing or isolating themselves
• Showing rage or talking about seeking revenge
• Displaying extreme mood swings

Stopasuicide.org provides more information on the signs and symptoms of suicide and how to help. Provide employees tools to check in on their mental health:

• Online screenings are a great first step toward treatment and offer employees an anonymous, confidential way to learn if they have signs or symptoms of an eating disorder or other mental health disorder.
•  Online screenings consist of a series of questions designed to indicate whether symptoms of an eating disorder are present. The screenings also includes a question about suicide. If an individual provides a positive answer during this question, a pop-up message appears that provides the individual with emergency resources such as 911 or the National Suicide Prevention Helpline, if needed.
• After completing the screening, participants receive immediate feedback and referral information to local resources for further information or treatment.

Connect with resources

• The Workplace Task Force, a component of the National Action Alliance for Suicide Prevention, provides support for employers and works with them to implement a comprehensive, public health approach to employee wellness.

The best way to address employee mental health is to ensure it is a key component of any employee wellness program. In addition, employers that publicly show a commitment to employee mental health help to reduce the stigma surrounding mental health disorders and increase help-seeking among those suffering. National Eating Disorder Awareness Week is Feb, 22-28, providing employers with a great opportunity to increase awareness of eating disorders among their employees. Screening for Mental Health in partnership with the National Eating Disorder Association provides anonymous online mental health screenings at http://mybodyscreening.org/.

With spring fast approaching, the continuing labor dispute at 29 West Coast ports could affect the ability of suppliers and retailers to stock seasonal merchandise. The backlog of ships at these ports — exacerbated in some instances by work slowdowns and closures — has delayed deliveries of agricultural and manufactured inputs and goods, depleted inventories and potentially harmed businesses across several industries. This situation has resulted from a seven-month impasse between the International Longshore and Warehouse Union and the Pacific Maritime Association, which represents shipping lines and port terminal operators, following the expiration of their labor contract. The White House dispatched Labor Secretary Thomas Perez to San Francisco to reinvigorate negotiations, which resumed on Feb. 17. Previous talks had stalled over the process for arbitrating allegations of work slowdowns, discrimination and other issues. The economic damage from port disruptions could be significant. According to the National Retail Federation, cargo moving through the 29 involved ports represents 12.5% of U.S. gross domestic product. In recent earnings calls, several publicly traded retailers have identified the labor impasse as a potential risk, noting the possible impact on seasonal merchandise. Food and beverage distributors, meanwhile, have reported that port delays have led to spoilage of perishables. And parts shortages attributed to congestion at West Coast ports have led some auto manufacturers to announce plans to halt or cut back production. Although the reinvigorated talks have brought some hope for a quick resolution, retailers and other affected businesses should still consider taking steps to mitigate potential losses from continued disruptions and future work slowdowns, stoppages, or strikes. Specifically, you should:

1. Diversify your supply chain. The work slowdowns and port closures, coupled with the potential for a strike, have led many businesses to diversify their ports of entry, turn to domestic suppliers or make raw material and finished product substitutions as necessary. Although such actions may bring financial and other costs, they may enable your company to remain competitive until the dispute is resolved. If you have identified alternate suppliers or workaround procedures, consider implementing those strategies and engaging additional or alternate resources now. If you have not identified such resources, now is the time to do so.
2. Develop crisis management and business continuity strategies. If they are not already significant, the business implications for your organization may soon become so. Consider activating your crisis management and other business incident response teams. Your teams should think about the immediate impacts and workarounds from the current situation and forecast potential impacts should these interruptions continue or a strike occur, allowing a strategy to be developed and executed.
3. Review your insurance coverage. Some insurance coverage — such as marine cargo and property damage policies with extensions for business interruption (BI) and contingent business interruption (CBI) — may only respond in the event of a strike or port disruption where there is also actual physical damage to insured cargo or property. Your organization should review whether it has or consider obtaining the following additional coverage options:

• Voyage frustration endorsements to marine cargo policies, which can provide coverage for ground transportation costs and other extra expenses in the event that a shipment is diverted to an alternative port. Such endorsements do not typically provide indemnity for lost sales, contractual penalties or other financial losses.
• “Seasonal merchantability” coverage, which can sometimes be added to marine cargo policies. This coverage provides indemnification for actual loss in sales as a result of a delay in arrival of goods but may not respond in the event of a strike and usually comes with a lengthy waiting period.
• Trade disruption insurance (TDI), supply chain insurance and specialty BI insurance policies, which can protect against supply chain disruptions resulting from a variety of causes, including embargoes, acts of terrorism, windstorms and other natural catastrophes, supplier bankruptcy and other events.

For more information, read West Coast Port Disruptions: Insurance and Risk Management Implications.

Personal auto insurance fraud is a problem. According to Verisk Analytics, it’s a problem on the rise. Between 2008 and 2011, the National Insurance Crime Bureau saw a 34% increase in questionable claims. Auto fraud is also an expensive problem. Industry estimates show that soft fraud accounts for about 10% of paid losses and loss adjustment expenses a year. In 2011 alone, the total amounted to well over $13 billion. The problem, it seems, is that many Americans don’t consider small mistruths to be fraud. They seem to think it’s OK to slightly change the facts if it saves them money! False garaging addresses and mileage estimates One of the most common types of soft fraud, lying about where the car is garaged to receive auto insurance rates for a more affordable ZIP code, has traditionally been a tricky one to track. But with the data that smartphone apps for usage-based insurance (UBI) are designed to collect, it’s much easier to compare the reported garaging address with the actual garaging address. The same is true regarding the estimation of annual mileage. While untruths about garaging and mileage may seem harmless, they add up to big profit loss. In fact, insurancefraud.org reports that premium rating errors account for nearly 10% of the $161.7 billion in personal auto premiums written. The group found that drivers are five times more likely to report midterm mileage changes that reduce premiums than they are to report changes that may increase premiums. The website quotes a 2010 Quality Planning study that found that vehicle-garaging rating errors account for more than $2 billion in annual premium leakage. How to step up your defense against soft fraud Verisk puts it this way: “Basically, carriers need to step up their game in a big way. They’ve made large investments deploying technology and data to improve the customer and agent experience. But they’re falling behind in the race to identify fraud and rate evasion -- a race they can’t afford to lose.” While most auto insurers think of UBI as a strategy to improve customer attraction, retention, pricing and loss ratios, it might be time to expand UBI thinking to include the objective of fraud deterrence. When you add in the potential savings of eliminating even 10% of premium leakage from auto insurance soft fraud, the ROI for UBI becomes even more compelling.

Functional capacity exams (FCEs) are in dire need of quality standards. Employers who want better workers' compensation claim results must take the lead. The FCE is intended to objectively test a patient's thresholds of pain, strength and movement. An FCE should play a major role in things like qualifying a claimant to return to work, ascribing reasonable permanency awards, calculating objective settlement valuations, indicating malingerers, providing defense evidence and essentially helping you close cases. As I see it, the FCE has been under a quality assault because of fee-squeezing managed care schemes. Managed care means only steering work to those "in-network," which emphasizes use of the lowest-fee providers. The overriding value premise of “managed care” is fee reduction, not quality assurance. As such, the peripheral specialty of functional exams has gone unchecked. They have become a perfunctory step in a chain of litigation activities, conveniently extending an adjuster’s diary with the appearance of action. When was the last time your WC case turned on FCE results? When was the last time your defense counsel’s essential witness or deposition list included the FCE provider? The answer may escape you, just as has the missed opportunity to leverage and move churning cases. Quick Tip: Demand Quality FCE Standards and Expect Actionable FCE Results Institute FCE standards in your claim account service instructions. Craft them from the checklist to follow. Require that you or your WC coordinator pre-approve FCE referrals to ensure quality in the application and outcome expectations. Along with selecting a quality provider, you need to provide adequate medical history and other background while asking specific questions. When it comes to provider selection, apply this quality-question checklist: Who is performing the test and what is her certification? Demand licensed physical therapists, optimally with enhanced related certifications. Do not accept PT assistants, sports trainers, vocational counselors or others who are less qualified. Is modern computerized instrumentation used for validity? Do not accept manual systems, which involve subjectivity and simple gauge reading. For example: A manual hand-squeeze test shows pounds of squeeze strength, while modern testing measures isometric contraction and provides an actual “force curve” indicating effort, true point of muscle fatigue and pain. Simply stated, modern computerized systems can indicate real physical capacity while pointing out faking subjects. Will raw data be fed into appropriate computer applications for reliable objective results? Functional exams need to process individual body-part tests and things like coefficient of variance formulas to ascertain whole-body determinations such as “lifting capacity” or other job-specific activities. Calculating these aspects by hand, based on assumptions, is not reliable, and the results may crumble under legal cross-examination. Will heart rate and blood pressure be monitored during testing? This is essential to establishing consistency and overall patient effort. Will the process measure distracted testing? This is a specific technique whereby one test is cross-checked by the appearance of a separate test. For example, back-bending angles are first tested; later, a “straight leg raise” test is performed, which actually re-creates the back bending angles and can be compared with the thresholds of prior back-angle results. This is a critical part of establishing patient credibility. Will the results be admissible as strong evidence? Adherence to aforementioned aspects combined with early communication and input from defense counsel will strengthen evidence. In conclusion, employers must confront a status-quo claims service process to demand FCE standards. Agree to pay for higher-priced FCE providers if you can establish the appropriate quality level. Pick your cases wisely and use detailed oversight. The power of a good FCE will help you move cases.

It’s a new day when healthcare providers choose to compete on quality metrics instead of their new edifices and images of smiling nurses on billboards. I ran into a sterling example of competing on value when the Orthopedic & Sports Institute (OSI) in Appleton, WI, was pitching employers on its bundled prices and its quality. OSI offers all-in prices from pre-op to surgery to rehabilitation. That is the ultimate of transparency -- a pre-set price for the whole episode of care. No bills with a multitude of line items; no incomprehensible codes; no separate bills for radiology, anesthesiology or rehab. Just one fixed price. OSI offers employers a fixed pricing menu for a range of orthopedic procedures. So confident about its outcomes is OSI that it includes a 90-day warranty on its surgeries. Readmissions are on the house, as they should be. OSI is not alone. The Orthopedic Hospital of Wisconsin (OHOW) in Glendale offers similar deals to corporate payers. Employers/payers in the private sector and local government are looking for that kind of value proposition, especially when coupled with the best healthcare metrics on quality. OSI President Curt Kubiak led his presentation with the clinic’s .3% infection rate in 2013, a very low number on a life-and-death metric. (Bloodstream infections, known as sepsis, kill more than 200,000 Americans per year in hospitals.) Also in good shape at OSI were these three measures for 2013:  Readmission rate of .8% (vs. a national average of 4%).  Patient “fall” rate of only 3.9%.  Pain management rate (5 or less on scale of 1 to 10) of 17.8% vs. a normal range of 40% to 60%. Kubiak added that OSI’s goal is to get surgery patients back to work or to their lifestyles in an average of 20 days faster than other providers. OSI is winning direct but non-exclusive contracts from employers as far away as Eau Claire. It believes that, if it does a great job, it doesn’t need to lock companies into exclusive contracts. They will return willingly. Sounds like a bit of a marketplace for healthcare, doesn’t it? OSI executives remain somewhat frustrated at the slow pace of adoption of new pricing and delivery models. But they are winning business, and 10 years ago there was nothing like this model around. The train is moving pretty quickly down the tracks, at least by the standards of the enormous healthcare industry. For the record, I have no connection to OSI, other than to steer Serigraph employees to what we call “centers of value” like OSI and OHOW. We believe that steering employees to such centers with financial incentives is not only the smart thing to do from a cost perspective; We believe it is the ethical thing to do. Don’t employers have a moral obligation to help their people find the best medical outcomes?