The Commonwealth Court of Pennsylvania, in Hospital & Healthsystem Association of Pennsylvania v. Ins. Commissioner, 939 C.D. 2011 (Pa.Commw. 08/09/2013) was called upon to decide whether a governmental entity – acting like an excess insurer – overcharged health care providers and appropriated funds belonging to the providers. The health care providers and trade associations petitioned for review of an adjudication of the Insurance Commissioner that denied their challenge to the assessments imposed upon them by the Medical Care Availability and Reduction of Error (MCARE) Fund for the years 2009, 2010 and 2011. These assessments provide the monies used by the MCARE Fund to pay medical malpractice claims in excess of what the health care provider’s primary insurer pays. Petitioners assert that their assessments were excessive because they resulted in a collection of more monies than were needed by the MCARE Fund to pay claims for one year and provide a 10% reserve.

Background

Since 1975, the Commonwealth of Pennsylvania has been directly involved in providing medical malpractice insurance to health care providers. The General Assembly addressed the medical malpractice crisis by establishing a mandatory medical malpractice insurance system. A health care provider’s refusal to purchase malpractice insurance coverage in 1975 was, and continues to be, sanctioned by the provider’s loss of his professional license.

In 2002, the General Assembly enacted the Medical Care Availability and Reduction of Error (MCARE) Act. The MCARE Act addressed a newly perceived crisis, i.e., the cost of medical malpractice insurance. There was concern that the cost of medical malpractice insurance in Pennsylvania had increased to the point that physicians educated and trained in Pennsylvania were leaving to set up practice in other states where the costs of this insurance were lower.

Relevant to this case, the MCARE Act established the MCARE Fund. The MCARE Fund was set up to provide insurance coverage in excess of the mandatory levels of primary medical malpractice coverage. The MCARE Fund is scheduled for termination. To that end, the MCARE Act has established a schedule for continued increases in the amount of primary coverage that must be purchased by health care providers and continued decreases in the amount of excess coverage that will be available from the MCARE Fund.

The MCARE Fund is a “pay-as-you-go” program of what the general assembly called “insurance.” Unlike a private insurance company, it does not establish reserves to cover injuries that occur in the assessment year but do not become adjudicated awards for several years thereafter. Instead, the MCARE Fund is set up to raise only those funds necessary to “cover claims and expenses for the assessment year.”  The MCARE Fund projects its annual expected claim payments on the basis of the prior year’s payments. This means that the amount collected from health care providers in a given year may be more, or less, than what is actually needed to pay the MCARE Fund’s claims and expenses for that year.

In making its calculation for 2009, the MCARE Fund ignored its 2008 accrued unspent balance of approximately $104 million. Instead, in 2009, $100 million was transferred out of the MCARE Fund into the Commonwealth’s General Fund for the purpose of funding the operations of state government. The Court held that this transfer of funds was illegal. Petitioners appealed their 2009, 2010 and 2011 assessments on the theory that the MCARE Fund’s year-end balance should have been included in the aggregate assessment calculation for 2009 and the following years. Simply, the aggregate assessment must be “sufficient” to produce a balance sheet that replaces what was spent in the prior year and provides a reserve of 10%.

The MCARE Fund has the statute to mean that 110% of the prior year’s expenditures must be collected each year from health care providers, regardless of the starting balance. This exercise means that unspent balances will accumulate even as claims decline, consistent with the MCARE Fund’s scheduled termination, or as earnings on the 10% reserve increase.

Analysis

Construing statutes, courts must be mindful of what the legislature did not say as well as what it did say. Most importantly, the MCARE Act says nothing about the accumulation of unspent balances in excess of the 10% reserve. It does not authorize them. The MCARE Act provides no guidance on the income generated by an accumulation of unspent balances, which can be considerable given the present unspent balance of $104 million. The MCARE Act’s silence on these matters makes perfect sense only if the legislature never intended that such an accumulation would develop.

The legislature has addressed the possibility of an unspent balance in only one place in the statute. The MCARE Act provides that upon termination of the MCARE Fund, “[a]ny balance remaining in the fund” shall be returned to the healthcare providers who paid “assessments in the preceding calendar year.”  This presumes a small, if “any,” balance and suggests that there should not be an unspent balance in any other year.

The MCARE Act states that the MCARE Fund’s reserve “shall be” 10% of the prior year’s claims and expenses. Instead, after the 2009 assessment, the MCARE Fund had a reserve of 64%. Such a reserve cannot fit any reasonable interpretation of the stated purposes of the MCARE Act or the precise wording of the statute.

The aggregate assessment must raise funds “sufficient” to meet the specified purposes in the statute. This means that the MCARE Fund must begin its annual aggregate assessment calculation with its unspent balance and add to it the amounts “sufficient” to cover the prior year’s claims and expenses and to “provide a 10% reserve” not a 64% reserve.

The fact that the General Assembly chose to limit distribution of any balance in the MCARE Fund at termination to those that participated in the Fund in the preceding calendar year indicates that the legislature intended a direct correlation between the actual MCARE Fund balance at termination and the population of providers assessed in the prior year.

Requiring health care providers to fund a new 10% reserve every assessment year, without regard to the monies already held by the MCARE Fund, defeats the stated goal of the statute to provide affordable excess insurance. Such an approach repeatedly and needlessly charges participating providers an assessment in excess of what is necessary to fund the statutorily-required 10% reserve. Because the population of providers changes over time, the providers who enter such a system in the earlier years will end up subsidizing the participating providers in the later years. This is unfairly discriminatory.

For all of the foregoing reasons, the court reversed the order of the Insurance Commissioner and remanded this matter to the Commissioner to recalculate the MCARE assessments for 2009, 2010 and 2011.

Opinion

The MCARE law was designed to die over time. It, and its predecessor, is an example of why a governmental entity should never get involved in insurance because they do not understand what insurance is or how it works in the real world.

Medical Malpractice Insurance is a risk-sharing device where many health care providers pay into a fund so that there is sufficient money available to indemnify those who are sued for malpractice. The “crisis” laws like the MCARE law arose because doctors who erred were sued regularly and successfully until insurers found a need to raise premiums to a level necessary to cover the payments and make a profit. To solve the “crisis,” the government decided to provide a form of insurance rather than resolve the problem caused by its tort system.

Governments should not make profits and do not know what to do with a profit if it was made by accident or by a poorly-designed system that has no relationship to the long-term thinking of an insurer. The law here was made specifically to protect those who paid into the fund and to return excess, unspent monies to the providers who paid into the fund. It is not a premium but a tax where health care providers are compelled to buy both primary insurance in the market and excess from MCARE.

This case is instructive as government continues to place itself into the business of insurance where whatever the government calls insurance is, in fact, a method of government largess. For example, the National Flood Insurance Program, FAIR Plans, and the Affordable Care Act have nothing to do with insurance since they are not risk-sharing devises but are rather devices that take tax money from the country or state as a whole to provide insurance-like benefits to a special category of people like those who live near a river that regularly floods, people who live in high fire risk areas, or people who are ill but decided not to buy insurance. The Commonwealth of Pennsylvania, until slapped down by this court, took money intended to protect medical providers for its own use without legal authority.

Understandably, Part 1 of this article series has been met with some controversy and skepticism. The article is not designed to scare employers, as might have been suggested. Its intention is to educate employers about the many issues facing them when an employee becomes injured, that transcend the State Workers’ Compensation System and a workable solution to overcoming the challenges. Employers can no longer afford to bury their heads and rely on the exclusive remedy position. Yes, it may be here to stay, but it is becoming a bit frayed around the edges.

Coincidently, when Part 1 of this article was published, The National Football League (NFL) announced that it had reached a 765 million dollar settlement with players and their families for the settlement and consolidation of approximately 4,500 concussion claims. The players alleged that the NFL hid or ignored the facts that concussions caused brain injuries. Under the settlement, the NFL will pay 675 million dollars to retired players who demonstrate medical evidence of brain injury. Payouts of up to 5 million dollars each could go to players found to have Alzheimer's or Parkinson's diseases or other concussion-related conditions, or to their families. The settlement came just prior to the start of football season and will put an end to the mounting litigation that threatened the multi-billion dollar league.

United States District Presiding Judge Anita B. Brody appointed Judge Phillips to oversee the negotiations. Judge Philips said, “This is a historic agreement, one that will make sure that former NFL players who need and deserve compensation will receive it, and that will promote safety for players at all levels of football.”

 “This agreement lets us help those who need it most and continue our work to make the game safer for current and future players. Commissioner Goodell and every owner gave the legal team the same direction: do the right thing for the game and for the men who played it,” said NFL Executive Vice President Jeffrey Pash. “We thought it was critical to get more help to players and families who deserve it, rather than spend many years and millions of dollars on litigation. This is an important step that builds on the significant changes we’ve made in recent years to make the game safer, and we will continue our work to better the long-term health and well-being of NFL players.”

Once final documentation is completed, the settlement will be filed with Judge Brody, who will then schedule a hearing to consider whether or not to grant preliminary approval to the agreement. The retired players will then have the ability to file objections to the settlement.

One may ask what this has to do with Part 1 of this article.  An important component of this settlement is baseline testing. According to the settlement, baseline medical exams will be provided, the cost of which will be capped at $75 million. This will be a key element in ascertaining the conditions of current and retired players, gauging  the progression of any injuries they may have and having documentation of the medical status. This key component is the subject of Part 1 of this article. Baseline testing is not simply a self-promotion for the EFA-STM, but is a major part of helping injured workers, no matter what their occupations may be.

These cases are just the beginning, and it appears that the exclusive remedy provision for workers' compensation will no longer serve to prevent costly civil litigation as evidenced by the NFL settlement. An employer, insurance carrier/TPA and physician can take several steps to protect themselves. First, evidence-based medicine should always prevail. Objective medical evidence can help protect against claims for fraudulent denials of work-related injuries. Also, employers should accept only claims that arise out of the course and scope of employment (AOECOE). If an employer can objectively document AOECOE issues, fraudulent claims and fraudulent denials can be avoided and most importantly, correct treatment can be prevail.

A good approach to determining AOECOE claims is baseline testing, as it can identify injuries that arise out of the course and scope of employment. When a work-related claim is not AOECOE, as proved by objective medical evidence, such as pre and post assessments, then not only is there no workers’ compensation claim, there is no OSHA recordable claim, and no mandatory reporting issue. Conversely, if there is an injury, the injured worker can get the best site specific treatment and prevent inappropriate treatment and unnecessary progression of the underlying conditions.

The NFL recognized the importance of baseline testing with its recent settlement, and it is only the beginning. MSD for NFL players is also a significant problem. Why not baseline all football players, or, for that matter, all professional athletes, to address any injuries that may occur while playing and return them to the field sooner? This would promote better health and performance and might extend their careers. Professional athletes tend to play through their injuries, potentially causing more harm. An objective baseline test can assist all parties by providing objective medical evidence of an injury and outlining appropriate care. This truly is a win-win situation.

A proven example of a baseline test for musculoskeletal disorders (MSD) cases is the EFA-STM program. EFA-STM program begins by providing baseline injury testing for existing employees and new hires. The data is interpreted only when and if there is a soft tissue claim.  After a claim, the injured worker is required to undergo the post-loss testing. The subsequent comparison objectively demonstrates whether or not an acute injury exists. If there is a change from the baseline, site specific treatment recommendations are made for the AOECOE condition, giving the doctors more information and helping to ensure the injured worker receives the best care possible.

The case of the NFL settlement may not be a RICO claim, but, certainly, it tries the boundaries of the exclusive remedy provision of workers compensation. Baseline tests like the EFA-STM are a proven way to providing better work-related care. It is time for change and to think outside of the box to provide the answers so that we can become proactive, not reactive.

Workers' Compensation origins can be traced to the late Middle Ages and Renaissance times in the Unholy Trinity of Defenses, the doctrine that first outlined that work-related injuries were compensable.  This doctrine began in Europe and made its way to America with the Industrial Revolution.  There were so many restrictions with it that changes occurred and led to the doctrine of Contributory Negligence which outlines that employers are not at fault for work-related injuries. This principle was established in the United States with the case Martin vs. The U.S. Railroad. In this case, faulty equipment caused the injuries, but the employee did not receive compensation, as it was deemed that inspection of equipment was part of his job duties. Additionally, the case Farnwell vs. The Boston Worchester Railroad Company led to the "Fellow Servant Rule" where employees did not receive compensation if their injuries were in any way related to negligence from a co-worker.

For awhile, in the United States, we had the Assumption of Risk Doctrine that held employers were not liable for injuries because employees knew of job hazards when they signed their work contracts. By agreeing to work, they assumed all risks. These contracts were often nicknamed Death Contracts. The only recourse an employee had was civil litigation or tort claims. As the nineteenth century continued, employers were faced with increasing civil litigation and employee verdicts.

The basis of our exclusive remedy workers' compensation system had its roots in Prussia with Chancellor Otto Von Bismarck, who, in 1884, pushed through Workers' Accident Insurance which contained the exclusive remedy provisions for employers.  The first Federal Workers' Compensation law was signed in 1908 by President Taft, protecting workers involved in interstate commerce.

Work Reform was slower to progress to America. Early workers' compensation acts were attempted in New York (1898), Maryland (1902), Massachusetts (1908), and Montana (1909) without success.  Finally, in 1911, Wisconsin passed the first comprehensive workers' compensation law, followed by nine other states that same year. Before the end of the decade, thirty other states passed workers' compensation laws. The last state to pass workers' compensation laws was Mississippi in 1948.  The main issue in all the states workers' compensation acts is the no fault system, i.e. employers who participate in the states workers' compensation system are exempt from civil tort litigation, hence the exclusive remedy. In the United States this exclusive remedy for work related injuries has stood, for the most part, until recently.

Racketeer Influenced and Corrupt Organizations, more commonly known as RICO, is a federal law that provides for criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization. This act focuses specifically on racketeering, and it allows the leaders of a syndicate to be tried for the crimes which they ordered others to do or with which they assisted. It was enacted October 15, 1970 and was in widespread use to prosecute the Mafia. It has become more widespread and now plays a significant role in work-related injuries.

RICO on the Radar

One of the most recent significant cases is Brown, et al v. Cassens Transport, et al No. 08a0385. In summary, The United States Court of Appeals, Sixth District (Michigan), acting on a remand from the United States Supreme Court, has held that employees may have an action based on the civil provisions of the RICO Act against not only employers but their agents (carriers and doctors).  This is an important decision which could affect employers in the 6th district, Michigan and Illinois, because it involves a Federal statute where the United States Supreme Court has held that the plaintiffs need not prove reliance that the defendants’ actions resulted in detrimental consequences to the plaintiff.

In the instant case, Brown v. Cassens, decided October 23, 2008, the Supreme Court had merely restated its opinion in Bridge v. Phoenix, decided June 9, 2008, where it originally held that the plaintiff need not prove that it relied on the alleged RICO violation. This case allows the Plaintiffs to sue the Employer (Cassens Transport Company), the TPA (Crawford and Company) and the doctor (Dr. Margules).

The Plaintiffs allege that the defendants engaged in a civil conspiracy and racketeering to deny them workers' compensation benefits. Specifically, the Plaintiffs allege that the employer and TPA hired unqualified doctors to issue fraudulent medical findings to deny them workers' compensation benefits.  The case alleges at least 13 predicate acts of fraud by mail and wire all relating to the fraudulent denial of the workers' compensation benefits under the Michigan Workers' Disability Compensation Act. For more specifics, please refer to the case citations. Suffice it to say here that the Court has allowed this case to proceed forward, taking away the employers exclusive remedy. Furthermore, RICO cases are not covered by insurance, making this very costly for the employer, carrier and physician.

Many say that the this case has a long way to go before employers have to be concerned about  the exclusive remedy position being taken away, but that may no longer be true. In November 2012, a landmark settlement was reached in Josephine et al v.Walmart Stores, Inc., Claims Management, Inc., American Home Assurance Co., Concentra Health Services, Inc.; Defendants. Civil Action No. 1:09-cv-00656-REB-BNB (USDCT Colorado). This RICO case was allowed to proceed against defendants under a state RICO statute in Colorado in March, 2011. In November, 2012, a settlement was reached between the parties for $8 million.

And most recently, June, 2013, the Sixth Circuit heard arguments in Jackson v. Sedgwick Claims Management Serv. This RICO case will determine if Michigan’s workers’ compensation laws provide the exclusive remedy for injured workers, or whether injured workers can sue under RICO for an alleged conspiracy to file false medical reports to cut off workers’ compensation benefits. 

These cases are just the beginning and it appears that the exclusive remedy provision for workers' compensation will no longer serve to prevent costly civil litigation. An employer, insurance carrier/TPA and physician can take several steps to protect themselves. First, evidence-based medicine should always prevail. Objective medical evidence can help protect against claims for fraudulent denials of work-related injuries. Also, employers should accept only claims that arise out of the course and scope of employment (AOECOE). If an employer can objectively document AOECOE issues, then no claim exists, hence no fraudulent denials.

A good approach to determining AOECOE claims is baseline testing, as it can identify injuries that arise out of the course and scope of employment. If a work-related claim is not AOECOE, as proven by objective medical evidence such as a pre- and post-assessment where there is no change from the baseline, then, not only is there no workers’ compensation claim, there is no OSHA-recordable claim, and no mandatory reporting issue. If the baseline testing is evidenced-based medicine and objective, this can further protect employers against RICO claims.

A proven example of a baseline test for musculoskeletal disorders (MSD) cases is the EFA-STM program. EFA-STM Program begins by providing baseline injury testing for existing employees and new hires. The data is interpreted only when and if there is a soft tissue claim.  After a claim, the injured worker is required to undergo the post-loss testing. The subsequent comparison objectively demonstrates whether or not an acute injury exists. If there is a change from the baseline, site-specific treatment recommendations are made for the AOECOE condition, ensuring that the injured worker receives the best care possible.

This is Part 3 of a multi-part series on building and monitoring networks with intelligence. Part 1 can be found here and Part 2 can be found here.

California has defined how medical networks in Workers’ Compensation should be structured and managed. Part 1 and Part 2 of this series described how California’s SB 863 LC 4616 (b) (2) and LC 4616 (b)(3) takes medical provider network directives to a new level. The key imperative is, “Every MPN must establish and follow procedures continuously to review the quality of care, performance of medical personnel, utilization of services, facilities, and costs. However, a few additional key points should be considered when selecting and monitoring medical providers for the California MPN or any network.

Beyond legislation
Escalating problems in the industry with Opioid overuse and abuse, as well as physicians who are dispensing medications from their offices are additional factors that must be considered. While the California SB 863 legislation does not address these issues, the data should be scrutinized to identify physicians who demonstrate unfavorable prescriptive practices. Analyzing the data to evaluate physician performance in that regard is essential to vetting physicians for membership in a network. It is also crucial to monitoring networks going forward.

Opioid Over-Prescribers
Workers’ Compensation literature is replete with information about Opioid overuse and abuse with its disastrous human and resource waste. Unfortunately, measures taken to curb inappropriate prescribing behavior are few and vary widely across the country.

Simply stated, the best way to reduce Opioid abuse is to avoid Opioid over-prescribers. Analysis of the data will identify the perpetrators. They should never be a part of a Workers’ Compensation medical network.

Back to California - CURES
California has a program that approaches the problem by monitoring patient utilization of prescribed Schedule II drugs and making that information available to authorized prescribers and distributors (pharmacies) of controlled drugs.

California’s program is called CURES (Controlled Substance Utilization Review and Evaluation System, and PDMP (California Prescription Drug Monitoring Program).¹ The California Department of Justice, has a Prescription Drug Monitoring Program (PDMP) system which “allows pre-registered users including licensed healthcare prescribers eligible to prescribe controlled substances, pharmacists authorized to dispense controlled substances, law enforcement, and regulatory boards to access timely patient controlled substance history.

The California Attorney General's Office said that if doctors and pharmacies have access to controlled substance history information at the point of care it will help them make better prescribing decisions and cut down on prescription drug abuse in California. The role of the CURES/PDMP ensures that well-informed prescribers and pharmacists can and will use their professional expertise to evaluate their patients’ care and assist those patients who may be abusing controlled substances.

The state’s database known as the Controlled Substance Utilization Review and Evaluation System (C.U.R.E.S) contains over 100 million entries of controlled substance drugs that were dispensed in California. Each year the CURES program responds to more than 60,000 requests from practitioners and pharmacists. The online CURES/PDMP system will make it much easier for authorized prescribers and pharmacists to quickly review controlled substance information via the automated Patient Activity Report (PAR) in an effort to identify and deter drug abuse and diversion through accurate and rapid tracking of Schedule II through IV controlled substances.”

Submission Of Controlled Substance Data
Pursuant to Health & Safety Code Section 11190, and Business & Professions Code Section 1170, all licensees who dispense Schedule II through IV controlled substances must provide the dispensing information to the Department of Justice on a weekly basis in a format approved and accepted by the Atlantic Associates Inc. (AAI) and the Department of Justice (DOJ). Similarly, pursuant to California Health and Safety Code Section 11165(d), dispensing pharmacies and clinics must provide weekly dispensing reports to the DOJ on Schedule II, III, and IV prescription drugs.

For purposes of creating an intelligent MPN, ensure any physician under consideration for an MPN in California is a member of CURES/PDMP. That notwithstanding, the data should be monitored continuously to determine actual performance.

Physician-Dispensed Medications
Another prescription abuse issue not addressed by the California legislation is physician-dispensed medications. While it is portrayed as a patient convenience, and probably is, the medications are prepackaged and extraordinarily costly. Once again, this practice can be monitored in the data. Bills reflecting drugs dispensed by the treating doctor are not monitored by Pharmacy Benefits Managers (PBM). Rather, they appear in normal provider billing.

Networks With Intelligence
All medical provider networks serving any jurisdiction should analyze integrated data, meaning all data associated with claims. Integrated data is sourced from claims level systems, bill review systems, PBM systems, and other sources such as utilization review to understand the broad spectrum of claims and all individuals, organizations, and events touching them. The goal is to select best-in-class doctors by objectively identifying excellent provider performance.

Authors
Karen Wolfe collaborated with Margaret Wagner to write this article. Ms. Wagner is President and CEO of  Signature Networks Plus. She is considered an expert in network selection, monitoring and management, thereby creating Networks with Intelligence™ for clients.

¹ http://oag.ca.gov/cures-pdmp

Dave Ramsey is a Tennessee-based Christian author and talk-radio host, who advises on personal finance. As Jewish Northeasterners, my husband and I aren’t exactly his target demographic, but we have remained devoted fans for over eight years. Ramsey takes a common sense approach to managing money, as he puts it “we give you the same financial advice your grandmother would, only we keep our teeth in.”

It’s time we applied such common sense to healthcare spending, and a much-discussed new book does just that: Cracking Health Costs: How to Cut Your Company’s Costs and Provide Employees Better Care, by Tom Emerick and Al Lewis. This book should be required reading for every CEO and HR executive in the country.  I’ve gleaned the following five commonsense principles from the book and from Ramsey’s radio show.

1. Give Every Dollar A Job

Ramsey says every household should have a budget and know where your money is going. Cracking Health Costs says that companies should get and count results for every dollar they invest in healthcare. The book gives a checklist of some of the numbers that employers should ask their vendors to report on, such as: inpatient days fallen, imaging tests reduced, wellness-sensitive medical events declined. You should know what your pharmacy benefit manager makes in profit and what discounts you get.

That sounds simple enough, but far too often vendors obscure their results with fancy reports showing all kinds of supposed savings, even when the math doesn’t add up. The reports often leave employers scratching their heads, wondering why despite all this elaborate “savings” they are still spending more money than they did last year. Don’t put up with that, says Emerick and Lewis. The book has some great advice on spotting phony numbers and asking the right questions.

2. Cut Your Spending

Ramsey says you should get fired up to attack wasted spending and reach your financial goals. Your family will be better off if you direct your dollars toward your priorities.

Emerick and Lewis also say you should attack waste and spend less – and your employees will be better off if you do it right.

Believe it or not, this is unusual advice. Most advice to business leaders worried about health costs focuses on creative ways to spend more money. Vendor PowerPoints are filled with new ideas for employer spendfests aimed at reducing costs: new prevention programs, expanded primary care, bonuses for performance, etc.

Cracking Health Costs points out the largest item on most company’s healthcare expense reports and suggests you start cutting spending there: hospital costs. The authors detail two approaches.  First, give your employees and dependents the opportunity to travel to preferred hospitals for your highest-risk, highest-cost procedures. Author Emerick helped some Fortune 100 companies pursue this strategy with good result, identifying “company-sponsored centers of excellence” with a propensity for correct diagnosis, appropriate care plans and top quality care.

Second, demand safety and quality from all the hospitals in your network, and make that available to your employees. Of course, I was pleased to read the book’s suggestion that purchasers use my purchaser-driven nonprofit, Leapfrog, as the (free) source of information on hospital quality and safety, including an app and search engine grading hospitals.  But employers can also work with Leapfrog and business coalitions to apply pressure on hospitals to improve. Emerick and Lewis point to Leapfrog’s calculator of the hidden surcharge Americans pay for hospital errors to get a sense of how much money is on the table for them. Here’s a warning for the faint of heart: the amount of your wasted dollars will likely have nine figures.

Don’t shy away from the Emerick/Lewis strategies for managing your hospital spend: estimates are that inappropriate treatment, misdiagnosis, errors, and poor quality care may account for as much as a third of health costs in the U.S.

3. Avoid Get-Rich-Quick Schemes

Ramsey warns: if it sounds too good to be true, it probably is. Do the research.

Cracking Health Costs skewers the pay-now-save-later schemes sold to employers every day.

Some of those too-good-to-be-true ideas sound both good and true — or none of us would ever fall for them. Cracking Health Costs cautions employers on a number of programs that, structured poorly, can cost employers money, save nothing and produce zero demonstrable health advantages to employees. This includes certain kinds of screening programs, triage phone lines, health coaching and health risk assessments (HRAs) with incentives for participation.

Many of the very same vendors selling these programs know the truth about their ROI. As the authors point out, “Not one single publicly held company in the business of controlling medical care expenses actually provides financial incentives for their own commercially insured members to complete HRAs and talk to coaches.”

4. Be Generous and Giving

Ramsey advises people to set aside money for charity – even on a tight budget.

Cracking Health Costs proposes that companies focus on proving to their employees that they care about them — through generosity and actions that demonstrate concern.

There’s research behind this. The authors point to the Gallup-Healthways Well-Being Index and studies suggesting that companies that improve performance on the index can correlate with improved company performance. Healthways is a leader in this emerging field. And it appears from the research that a caring employer can significantly impact employee well-being.

Indeed, Ramsey too recommends a similar business strategy. He’s as hard-nosed a businessman as you get, but his book EntreLeadership attributes his company’s success to a culture of generosity and caring.

Ironically, poorly-executed wellness programs can undermine employee well-being. In part because of new provisions in Obamacare, today many employers are requiring that employees pay extra for their healthcare premiums if they refuse to participate in wellness programs.  Like it or not this sends a nefarious message from employer to employee: you, dear employee, are a depreciating asset, a drain to the bottom line, too stupid to know how to take care of yourself so we have to pay you to do it. This, of course, contradicts the message known to promote employee well-being, that your employer cares about you and values your service.

Penn State is learning this the hard way. They invested in an employee wellness program and withheld dollars from those who refuse to participate, no doubt hoping to show employees how deeply they care about their health. That’s not the message employees heard: they see it as Exhibit A of the pernicious motives of their employer—and this is an employer that really doesn’t need bad publicity right now.

Indeed, talented employees don’t depreciate over time, their contributions to the company improve as they accumulate experience. Talent is a precious asset to companies, the key to competitive advantage and essential to success—it should never be squandered to save a few (phantom) bucks on future healthcare premiums.

5. Your Best Financial Hope — And Your Greatest Financial Obstacle – Is In The Mirror 

Let’s face it, most of us at least once failed to stick to a budget or blew money on a dubious idea. How do we overcome our human tendency to defy common sense? Ramsey’s advice: Get fed up with yourself.  Get mad.  Passion is the key to change.

Similarly, Cracking Health Costs urges benefits executives to get mad. You are being taken to the cleaners. And worse, your employees may be suffering harm as a result. To succeed, benefits executives must not delegate their leadership to the usual bevy of vendors and health plans any more than you let your credit cards and bank supervise your personal finances. Executives that seize control of their health spending – and apply common sense – will honor their employees and thus help their companies succeed.

The most important part of the sale is the salesperson. Do you believe this statement? I am telling you from years and years of experience that this statement is 100% true. As a salesperson, you are not only in charge of selling the product, but selling yourself to the consumer. Knowing who you are and what you represent is very, very important.

What It Takes To Be A Salesperson
I hear this question all the time. What does it truly take to be an all-star, professional salesperson?

For one, it takes commitment. A professional salesperson is committed to improving. A professional salesperson is committed to being the best salesperson in the world. If a salesperson is not getting better each and every day, he or she is doing a disservice to his or her consumers and clients.

A salesperson's job is to convince a potential client to purchase a product or work with a service that the company provides. If that potential client decides to pass on the product or service, they are making a huge mistake — and a professional salesperson will tell them that! As a salesperson, if you do not sell yourself or the product, you are not doing as an effective or efficient job as you need to be! The funny thing is, I will end up apologizing to a client if I do not make that sale.

For example, a client will state that he or she is not going to do business with our company. I respond with the following:

"I have to apologize to you. I let you down. I was not as good of a salesperson as I should have been because you said no to me. I feel sorry that you will not be utilizing my product and services to grow your business. Therefore, I am sorry for not being as effective or as efficient as I should have been."

It takes a real salesperson to admit defeat. It also takes a real salesperson to improve after a defeat! A professional salesperson is someone who is working on themselves by constantly undergoing training, reading new books, and striving to grow. That is when a client will honor your service and you will make that sale. The sale begins with you — and your attitude.

A Rock Star And Positive Attitude Is Everything
Negative thoughts will yield negative results. Can you guess what positive thoughts will yield? You guessed it! As a salesperson, having a positive attitude is so important. Think to yourself for a second. How much do you like spending time with people who have a negative attitude? Chances are, not very much! What makes consumers any different? If a salesperson with a negative attitude is face-to-face with a potential client, you can bet that the chances of closing that deal are slim to none.

What type of salesperson does the consumer want to be around and buy from? A positive, enthusiastic, and genuine salesperson, of course! These are the people who give off energy. These are the people who enjoy life, like themselves, and like other people. In return, others will feed off their energy and like them. Attitude is everything as a salesperson. When you pick up a call from a client, you should be smiling. You should be enthusiastic. You should be helpful, upbeat, and positive. Even during those moments when a potential consumer is a little grumpy, you have to remember that everybody has a story. Some days are better than others, but that should not stop you from impacting his or her life in a positive way. Positivity is infectious, and that is what you must bring to the table when you are ready to make a sale. Why? Because the most important part of the sales process is the salesperson.

Are You Cut Out For A Career In Sales?
You may be starting to wonder: Wow, am I even cut out for a career in sales? Let's take a look at a few questions together and discover whether or not you are cut out for sales.

Question #1: Do you turn to the lowest possible price in order to make a sale?

The answer here is simple: If you need to turn to the lowest price and are an order taker, you are not a real salesperson. A real salesperson builds value in the products and does not devalue. The people who are the real deal will find a way around the situation!

Question #2: Has a potential client ever changed their cell phone number on you?

If someone has not done so, you probably have not followed up enough to close the deal. The greatest salespeople out there have had this happen to them!

Question #3: Has anyone every moved out of state or put a restraining order on you?

Kidding! This is obviously a little extreme, but the principle is simple. Consistently following up may seem aggressive but that is the way it works. If you have not tried a number of sales strategies on a client, you are not doing all that you can to service them. Your job is to find a way around a customer's insecurities and concerns. Once you figure out how to do this, you will make the sale.

The Life Of A Salesperson
The Death of a Salesperson — I know it is a cliché, but here is a new cliché for you: The Life of a Salesperson. Why should we add a negative word to such a fulfilling, wonderful career path? The salesperson is the most important part!

If you are a salesperson and you are reading this, I want you to remember this: The most important part of the sale is you. Sometimes, it is not necessarily about the product that you are selling, but it's about who you are as an individual. Consumers are looking to trust someone to help their business or brand. As a professional salesperson, it is time for you to realize that if you are not a good person, honest person, or a person who is consistently improving, you do not have the right to earn someone's business.

Today, the most important part of the sale is you.

This is Part 2 of a multi-part series on building and monitoring networks with intelligence. Part 1 can be found here. Part 3 will be published soon.

California has defined how medical networks in Workers' Compensation should be structured and managed. Part 1 of this series described how California's SB 863 LC 4616 (b) (2) and LC 4616 (b)(3) takes medical provider network directives to a new level. The key imperative is, "Every MPN must establish and follow procedures continuously to review the quality of care, performance of medical personnel, utilization of services, facilities, and costs."

California SB 863
The emphasis on network review is a chief imperative of SB 863, effective January 1, 2013. Many directives in the bill require continuous data monitoring to discover provider and network compliance and non-compliance. Some of the directives that require continuous attention are:

• Chiropractors are limited to a 24 adjustment maximum [LC 4600(c)].
• MPN's must have geo-coding of network physicians, updated every four years to insure access requirements are fulfilled.
• LC 4616 (b)(2) and LC 4616 (b)(3) state every MPN must establish and follow procedures continuously to review quality of care, performance of medical personnel, utilization of services, facilities, and costs.
• Anyone can complain, initiate an investigation, and petition to suspend or revoke an MPN.
• Injuries while under unapproved, non-MPN care are no longer compensable!
• Multiple conditions of escaping the MPN, non-MPN payment, and disputes must be monitored.
• Home Health Care must be prescribed by an MD or DO.
• MPN's are approved for four years from date of the most recent application or modification.

Provider Performance Analysis
Medical provider performance must be analyzed and monitored not only for compliance with SB 863, but also for acknowledgement of the nuances of Workers' Compensation in the treatment process. Work loss and disability payments, return to work and modified work, claimant legal involvement, along with frequency, duration, and costs of medical services should be analyzed and scored for individual providers, groups, and facilities, whether in California or another jurisdiction.

Provider Data Issue
A problem confronting many organizations is that their medical provider data is insufficient, making accurate analysis impossible. Unfortunately, most provider records in claim systems and bill review systems is severely lacking in quality and comprehensiveness.

Until now, these records were used only to pay bills, consequently, name, address, and FEIN (Tax ID) were adequate. Now, however, because of SB 863 and increased attention to the medical portion of claims nationally, much more information is needed.

Duplicate Records
Most systems contain duplicate provider records. Slight differences in data entry create multiple records for the same provider, each associated with different claims. Under those conditions, provider analysis is inaccurate and incomplete. Such duplicate records must be scrubbed and merged before beginning performance analysis.

Medical Specialty
Medical specialty or specialties should be included in provider records in the data. Those providers certified in a specialty should be compared with others who are similarly certified. Without the provider's specialty, analysis of performance is non-specific and often misleading.

For instance, pain management doctors' performance should be compared to that of other pain management doctors, rather than dermatologists or internists. Pain management physicians often receive cases when they are growing more complex and already costly. Analyzing providers of similar specialties is a matter of comparing "apples to apples."

Differentiating Individuals
Medical providers who are members of groups or facilities should be analyzed and selected for networks individually even if the group or facility is approved. Some believe all members of a group should be included in the MPN when the group is approved. Actually, individual members might be problematic and automatic approval should not be guaranteed.

Currently many doctors and other providers submit bills under a single Tax ID. Measuring collective performance quality is not acceptable for a network with intelligence. The way to differentiate individuals is to analyze their unique performance using specific identifiers such as the state medical license number or NPI (National Provider Identification).

Networks With ROI
Whether complying with California SB 863 or building Workers' Compensation medical networks anywhere in the country, developing quality networks will return huge savings. Medical providers, especially doctors who score poorly in comprehensive data analysis, drive complexity, high costs, and poor outcomes. Those should be avoided and injured employees should be directed to best in class doctors to receive the best medical care with the best medical and employment outcomes. The business of developing and managing Networks with Intelligence should be given high priority.

First Steps
The first step in building quality medical networks is to scrub and enhance medical provider data in the organization's systems. The next step is selecting best practice providers based on integrated and comprehensive data associated with the claim. Developing and monitoring medical networks requires analytical knowledge and technical skill. Because internal resources are often limited, a practical solution is to outsource to the experts for provider performance analytics and continuous monitoring.

Authors
Karen Wolfe collaborated with Margaret Wagner to write this article. Ms. Wagner is President and CEO of Signature Networks Plus. She is considered an expert in network selection, monitoring and management, thereby creating Networks with Intelligence™ for clients.

This is Part 1 of a multi-part series on building and monitoring networks with intelligence. Subsequent parts in the series will be published soon.

Background
Building a medical provider community for Workers' Compensation can be challenging, regardless of the jurisdiction. Nevertheless, carving out a legislatively-compliant, outcome-based, quality network is doable, and the return on investment is certain.

Injured workers deserve good medical treatment while employers and payers deserve transparent and fair costs. Moreover, industry research clearly shows that poorly performing providers are costly and lead to abysmal outcomes for injured employees, their families, and employers. This article features California SB 863 regarding MPNs (medical provider networks), but the concepts apply to creating intelligent medical provider networks anywhere.

Traditional Medical Networks
Medical networks in Workers' Comp are not new, in fact, PPOs (Preferred Provider Organizations) have been around in Workers' Comp since the early 1990s. Traditionally, the network administrator contracts with all physicians and other treating providers available. The trade-off is that providers exchange their discounted fees for increased patient volume. However, quality of medical care measured by outcomes and acknowledgment of Workers' Comp nuances such as return to work are not considered. Some jurisdictions have made attempts to modify this practice.

Old SB 899 — LC 4616 Medical Provider Network (MPN)
In April of 2004 the governor of California signed SB 899 into law. It addressed MPNs under section LC 4616 (d) stating "In developing a medical provider network, an employer shall have the exclusive right to determine the members of their network."

Encouragement to analyze provider performance is clear under section LC 4616.1: "Economic Profiling means the evaluation of a particular physician, provider, medical group, or individual practice associations based in whole or in part of the economic costs or utilization of services associated with medical care provided or authorized by the physician, provider, medical group, or individual practice association." In other words, quality and costs matter and should be analyzed and monitored.

Direction Of Care
An important opportunity in California and many other states is that employers and payers are allowed to direct care for injured employees to doctors and other medical providers in their medical provider networks. After selecting the best doctors for a network, injured workers can be directed to them, a win-win scenario.

Even in states where direction of care is not permitted, payers or employers who have intelligent networks can give injured employees information regarding who are the best-in-class doctors based on objective analysis. Doing so is a service to employees who will often make use of them in selecting a doctor.

Ramping Up — SB 863
The logic of creating an intelligent network with measureable outcomes was recently fortified with California SB 863, effective January 1, 2013. The old bill is strengthened under SB 863, LC 4616 (b) (2) and LC 4616 (b)(3) "Every MPN must establish and follow procedures continuously to review the quality of care, performance of medical personnel, utilization of services, facilities, and costs."

Quality Control
In other words, all MPN plans must have procedures in place to continuously review the quality of care and costs for medical providers in the network. The mandate is now even stronger to evaluate and monitor medical provider performance. No longer is it adequate to contract with medical providers, print the list of providers in the network, and forget it.

However, many employers and payers are at a loss about how to analytically select and continuously review provider performance.

Intelligent Networks
Legislative mandates and industry wisdom remove the question about whether to upgrade network quality through outcome analytics and monitoring. Yet, selecting the right doctors and other providers, then monitoring, and managing an intelligent MPN is a business in itself.

Most organizations do not have the appropriate resources and should outsource to companies that focus on intelligent network design, provider selection through analytics, review, and management. The following are some details for building and managing intelligent networks, whether they are legislated or not.

Gather The Data
The way to develop an intelligent network is to select the best in class medical providers determined by analysis of actual performance demonstrated in the data. Historic data must be combined with current and continually updated data to evaluate performance now and going forward. Reviews of updated data should be frequent and regular.

Additionally, the data must be derived from a broad spectrum of sources. Workers' Compensation organizations typically segment data into bill review data, claims, pharmacy (PBM) and other silos such as UR and Medical Case Management. All are necessary for provider performance assessment. Do not be misled by those who say bill review data is adequate to the task.

Integrate The Data
Integrate the data with claims as the focal point for a complete picture of the claim. Execute algorithms that analyze the data and score provider performance based on multiple performance indicators. Individual medical providers, groups, and facilities should all be analyzed in this regard.

Continuous data update and electronic monitoring insures network and individual provider quality going forward as prescribed in SB 863 legislation. Maximize medical network quality and cost control using analytics, thereby complying with legislation and maximizing positive benefits.

More About Building Networks With Intelligence
Part 2 of this series will add more details of California SB 863 regarding medical provider networks and how to create networks with intelligence using analytics and common sense, an imperative for all medical networks in all states.

Authors
Karen Wolfe collaborated with Margaret Wagner to write this article. Ms. Wagner is President and CEO of Signature Networks Plus. She is considered an expert in network selection, monitoring and management, thereby creating Networks with Intelligence&#153 for clients.

Workers' compensation laws protect people who are injured on the job. They are designed to make sure that employees who are injured or disabled on the job are provided with fixed monetary awards, removing the need for litigation.

The California Labor Code essentially tells us that anyone working for a homeowner will be an employee unless you can prove otherwise. Further, California Law tells employers — the homeowner in this case — that they must purchase workers' compensation insurance when any employee works for them.

The standard home policy, with liability insurance, includes coverage for "occasional workers' comp risks." By "occasional," the policy would be intended to provide insurance for your gardener that swings by once a week or your housekeeper that comes in twice a month, or other folks who perform small tasks at your home. The "occasional worker" is defined as someone who performs less than 10 hours outside of the house work or 20 hours inside of the house work.

When the homeowner is going to reach these thresholds, they should contact their insurance agent to change their Homeowner's policy to cover these new events. The costs for this change can vary quite considerably between companies, but it has been my experience that the additional charges are a fraction of the cost of worker's comp for a business operation.

How do you avoid all of these potential risks and threats, plus involvement in the insurance industry? Here is a short list of steps to simplify your life and avoid becoming an employer. First, hire licensed and insured contractors who have their own workers' compensation insurance. Next, hire other service providers who are licensed, if appropriate, and insured.

Any company or contractor that you hire should have liability and workers' compensation insurance. How to know if they are insured? This is the crucial point to understand. Before any organization, business or contractor begins work for you, ask them to provide you with a Certificate of Insurance which will list all of their insurance policies. This certificate will show that, on that date, there is a list of the insurance policies this business has in place listing their insurance companies, the amounts and types of insurance, and the dates the policy started and are to end.

The homeowner, to further protect themselves, should be listed as a Certificate Holder on this certificate. The Liability insurance listed on the certificate should list the homeowner as an Additional Insured, and the page of their insurance policy that confirms this is to be attached to the certificate.

The workers' compensation insurance should show that the business has provided a Waiver of Subrogation Endorsement on their policy. A waiver of subrogation endorsement requires one party on the contract to waive their right to sue for and recover damages from the other party.

In short, what do these worker's compensation terms mean to the homeowner?

First, the Additional Insured means the insurance for the hired business will provide you with some protection on their policy before your insurance policy may be involved in a claim.

Next, the Waiver of Subrogation means that when the businesses' employee is injured at the homeowner's home, the workers' comp insurance company paying for the employee's treatment can't come back to the homeowner to recover what they have paid injured workers.

When in doubt, call your insurance agent to guide you through this process. There are many talented and knowledgeable insurance agents who can help you. So, ask!

California homeowners have a duty to be aware of the workers' compensation rules to avoid fines and penalties. This knowledge can help them avoid legal problems in case a worker gets injured on their property.

In this video, Tom Searcy — an expert in large account sales and the founder of Big Hunt Sales — shares with agents and brokers three keys to maximizing their influence when first meeting with potential clients.

Recent research has revealed these three baseline concepts:

1. Information = Confidence. At your first meeting, your level of confidence will rise with the amount of information you have about the people with whom you are meeting. Doing your research before the meeting (through LinkedIn, Google, their website, etc.). Knowing background information on your potential client's representatives will give you something to talk or ask about.
2. Body Language. Eye contact, smiling, and handshake are common elements of the first meeting. But do you know which of the three should last the longest?
3. Say Something Specific.Use your research to introduce a question or comment that will help you frame future conversations.

Watch Tom's video above to learn more.