In the past, I have discussed the need to make employees who are injured on the job aware that they can retain their own doctors at their own expense.

We are now seeing the injured employee's attorney trying to gain medical control by claiming that pursuant to the Labor Code, you did not offer immediate medical treatment or, if it was provided it was not in a timely manner. As such, they are claiming that you (really your carrier) have waived your right to medical control under your Medical Provider Network. As such, applicant's attorneys are now trying to move their client to their medical provider(s) to see just how many new body parts they can add to the claim. So, when you are the first to receive notice of a claim, here is what we recommend you do.

Immediately schedule an appointment for the injured employee with your clinic and provide the employee with a written notice telling them when and where to go. That way, we will have foiled any attempt by the applicant attorney to grab medical control because of our alleged failure to provide treatment.

To help you facilitate the process, I have added language regarding this medical appointment to the "Acknowledgment of a Claim" letter I recommend you use (see below). The goal is to ensure that your injured employee understands that they must go to our doctors for treatment, as well as at the same time telling them that they are free to obtain medical treatment outside of your Medical Provider Network but that it will be at their own expense.

We have already seen this approach work keeping the injured employee treating within our Medical Provider Network. Injured employees are showing your letter to them to their attorney and are asking if they really have to go to our doctor(s). They are also asking if their attorney is going to pay for any treatment by the attorney's directed non-Medical Provider Network doctor. The answer is almost always "No," and we find ourselves retaining medical control with a minimum of effort on our part, which we all know is critical to the timely closure of any claim.

You will note below the revised language I recommend you use. You will also note that it should be on company letterhead and given as soon as you first learn of the claim. A copy should also be sent to the examiner for this claim. This way, no time will be lost and there will be no argument over whether or not you have waived any of your rights to retain and maintain medical control.

I have put the medical appointment language in italics so that you understand that it should only be used when you are the first served with notice of a claim. Otherwise, simply leave this out and only use the language about their ability to obtain their own doctor at their own expense.

(On Company Letterhead)

Name
Address

Re: Recent work related injury - (Date of Injury)

Dear (Employee's first name if possible or Mr/Mrs ...)

We were sorry to learn of your recent on the job injury. We want to take this opportunity to assure you that our workers' compensation insurance company has been notified. They will be in touch with you to discuss your injury and to make sure that you receive all the benefits necessary to help you with a speedy recovery.

We want to be sure that you know your rights under California law (Labor Code 4605) which says:

"You have the right to provide, at your own expense, a consulting physician or attending physician(s)."

We also understand that you probably feel the need to be seen by a doctor as soon as possible. We want you to know that medical treatment is immediately available at (insert your clinic's name here). They are located at (address and phone number).

An appointment has been made for you at (call the clinic and get a specific time for the injured worker to be seen). If this time is not convenient for you, call the clinic and reschedule at your convenience. You will be receiving further information directly from our workers' compensation carrier regarding your claim.

Please do not hesitate to contact (fill in the name of the person) if you have any questions about your injury or benefits.

Again, we wish you a speedy recovery.

Signed.

Cc - Your insurance carrier

Workers' compensation continues to be a challenged line, with historically poor results, a benign interest rate environment, and diminished prior year reserve redundancy. Another issue worth noting is the uncertainty around the potential 2014 extension of the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA), which has heightened the focus on aggregation of workers' compensation risk.

Employee Concentration
For years, carriers have monitored workers' compensation exposure aggregations (their cumulative exposures in a geographic area) as a way of assessing the potential impact that an earthquake would have on their book of business. Such analysis has been commonplace in earthquake prone areas, such as California, for many years. However, after the September 11, 2001 terrorist attack, workers' compensation carriers and reinsurers immediately began to focus on employee concentration in large cities which were deemed high risk targets for terrorist events.

Insurance carriers continue to view risks from a concentration perspective — both on an individual accounts basis as well as the aggregate across their portfolio and correlated lines of business. Some carriers will decline a risk outright simply because they are "overlined" in a particular zip code or city. Or, the carrier might impose a surcharge on the premium for the use of their limited capacity for a particularly large workers' compensation risk.

Reinsurers similarly set a maximum amount of capacity they can offer in a particular geographic area and for catastrophic loss scenarios. Insurers purchase this capacity as one way to reduce their potential to incur an outsized catastrophic loss and manage their modeled worst case scenario within their financial risk tolerance.

To that end, catastrophic models have been developed. Catastrophic models allow carriers to gauge their potential exposures in a geographic area under a variety of different event scenarios that are either probabilistic or deterministic in nature. During the last 10 years, carriers have made adjustments to their books of business according to the output of these models to limit their potential exposure to terrorist events — sometimes across multiple product lines.

A unique consideration with workers' compensation over other insurance contracts is workers' compensation policies have statutory coverage (in this case being synonymous with unlimited) rather than a stated limit which could cap a carrier's liability for a certain loss. Given the statutory nature of the coverage, it is difficult for carriers to estimate their maximum exposure to workers' compensation.

The issue of employee aggregation affects any employer with a large number of employees in a single location, but is highlighted in industries such as financial institutions, hospitals, defense contractors, higher education, hotels, professional services, and nuclear.

Impact Of Pending TRIPRA Expiration
Because of the significant financial impact of the September 11 terrorist attacks, Congress created the Federal Terrorism Risk Insurance Act (TRIA) to provide a financial backstop to the insurance industry that would cap losses in the event of another large-scale terrorist event. The Act was initially set to expire at the end of 2005, but because of the ongoing risk of terrorism, and the reliance on it by insurance carriers, it has been extended several times. It is now set to expire on December 31, 2014.

When most people think of TRIA/TRIPRA, they think of the property insurance marketplace. Without this backstop in place, many high-profile properties would not be insurable in the commercial marketplace. However, workers' compensation is also deeply impacted, as there are large amounts of people working in highly concentrated areas.

Although the expiration of the Terrorism Risk Insurance Program Reauthorization Act is almost two years away, the impact of this is already being seen in the marketplace. Employers in certain industries, employers with large employee concentrations, or in certain cities can expect less available capacity with some carriers scaling because of the increased exposure to their balance sheet created by losing some or all of the protections provided under the Federal Terrorism Risk Insurance Act. This trend has the potential to escalate and broaden as we get closer to the TRIPRA expiration date.

In addition, more employers may face increased rates for their workers' compensation coverage because of the combination of less competition and capacity, as well as an increased potential exposure for the carriers. If a policy is being issued that provides coverage beyond the TRIPRA expiration date, and the future of the legislation is not known, carriers will likely price this under the assumption those protections will be allowed to sunset or may be significantly modified.

What To Expect At Renewal
When faced with a potentially challenging renewal and one that may be impacted by this issue, what can you do? We recommend starting the renewal process early, at least 120 days (or more) prior to the policy or program effective date. In the case of Marsh, we will work with you to develop a communications strategy and presentation tactic around all key risk exposures, including modeling and risk analytics in support of your renewal objectives.

For carrier presentations and Q-and-A, insureds must be thoroughly conversant with details of exposures and operations; mergers, acquisitions, and divestitures; loss trends, safety programs, and risk management practices; and future plans, to the extent that they can be shared publicly.

We will help you be familiar with respective insurers' cost of capital and pricing strategy — understanding how carriers evaluate your firm's experience and risk profile, and how they initially develop rates and premiums.

High quality data differentiates employers in the eyes of insurance carriers. In today's environment, it is imperative that organizations provide underwriters with complete, accurate, and thorough data and analysis in order to differentiate their risk profile.

There has already been a significant increase in questions that carriers are asking at renewal that focus on the risks associated with a potential terrorist event. Employers with a large concentration of workers, especially those in major metropolitan areas, should be prepared to provide the following details to carriers:

• Information on employee marital/dependency status.
• Employee telecommuting/hospitality practices and impact on concentration.
• Physical security of the building including information about guards, surveillance cameras, parking areas, HVAC protections.
• How access to the building is controlled.
• Construction of the building and location of the offices.
• Management policies around workplace violence, weapons, and employment screening.
• Employee security procedures.
• Emergency response/crisis management plan.
• Fire/life safety program.
• Security staff.
• Crisis management procedures.

In addition, carriers may wish to send their loss control engineers for a physical inspection of larger facilities and to interview building/facility management.

The Increasing Demand For Better Data
Because both insurance carriers and reinsurers focus on catastrophic models, it is extremely important that employers provide the highest quality of employee accumulation data, as this will ensure they are favorably differentiated by insurance carriers.

If your company has multiple shifts or operates in a campus setting, make sure you report both the total number of employees and the number working during peak shifts — as well as the actual buildings where the employees are located.

The number of employees working during peak shifts is the actual exposure to a terrorist event, not the total number of employees. Also, some businesses have a large percentage of their workforce in the field or telecommuting, rather than the office where their payroll is assigned. Providing this information to carriers significantly reduces the potential exposures associated with employee concentration. In addition, identifying the actual building where employees work on a campus — rather than a single building — helps overcome pitfalls of the catastrophic model. This also better reflects an employer's exposure to catastrophic losses.

As options about future real estate plans are considered (i.e. in terms of consolidation of employees from multiple locations in a city to a single location, or the impact of closing or consolidating satellite locations and relocating employees in major metropolitan areas), it is wise to review and consider the potential impact on workers' compensation pricing and capacity.

Because of the current political and economic climate in the US, renewal of the TRIPRA by Congress is far from certain. Marsh is continuing to monitor this issue closely, and we are working with employers and insurance industry representatives to raise awareness of the important role that TRIPRA plays in the insurance marketplace.

For years, California has been one of the few states with specific, independent pregnancy disability protections. The protections include freedom from discrimination and the right to take time off from work. Further protection was added last year with the mandate to continue employer-paid health care benefits during a pregnancy disability leave of absence.

California's new pregnancy disability regulations recently took effect. If you are responsible for human resources in your organization, you likely already knew. You may have already seen summaries of the new regulations, or even reviewed the entire 28 pages yourself. If not, a brief summary of the notable changes follows. After the summary, we use the complexity of new regulations to show the importance of careful planning and documentation when handling an employee's pregnancy.

Summary Of New Regulations

Expanded Definition Of "Disabled by Pregnancy"
California law has long stated that a woman is disabled by pregnancy if, in the opinion of her health care provider, she is unable because of pregnancy to perform any essential function of her job or to perform the essential functions without undue risk to herself. The new regulations add a host of specific conditions that could meet the definition of "disabled by pregnancy." One such condition is "bed rest." The regulations go on to state that the list of conditions is non-exclusive and illustrative only. The regulations do provide that lactation, without medical complications, is not a condition requiring pregnancy disability leave, but it may require transfer to a less strenuous or hazardous position or other reasonable accommodation.

Amount Of Pregnancy Disability Leave Allowed
The law allows up to four months of unpaid leave for women who are disabled due to pregnancy. The new regulations change the definition of "four months." The new regulations provide that it is the number of days the employee would normally work within four calendar months (one third of a year equaling 17 1/3 weeks), if the leave is taken continuously, following the date the pregnancy disability leave commences. If an employee's schedule varies from month to month, a monthly average of the hours worked over the four months prior to the beginning of the leave shall be used for calculating the employee's normal work month. Thus, the total amount of leave available will be based on a "one third" year measurement of an employee's normal work schedule. The regulations provide several examples of the calculation.

Intermittent And Reduced Schedule Leave
The law continues to allow an employee who is disabled due to her pregnancy to take her leave in less than four month increments. Under the revised regulations, an employer may account for increments of intermittent leave using an increment no greater than the shortest period of time the employer uses to account for use of other forms of leave, provided it is no greater than one hour.

More Guidance On Reasonable Accommodations And Transfers
The new regulations included detailed provisions on the employer's obligation to provide a pregnant employee with reasonable accommodations and/or transfers to alternative positions. While the regulations should be consulted to guide the handling of a specific situation, the new regulations closely track the employer's obligations under the state and federal disability law to engage in an "interactive process" and provide reasonable accommodations.

Reinstatement Rights And Rules Expanded
Under state and federal family/medical leave law, a returning employee must be reinstated to the same or an equivalent position. The new regulations provide that an employee returning from pregnancy disability leave must be reinstated to her "same" position. The alternative of a "comparable" position is only available if the employer is excused under the regulations from returning the employee to her same position.

The employer must "guarantee" the right of reinstatement in writing upon request of an employee. The guarantee must be honored, whether or not in writing, unless an exception applies.

The new regulations do not contain the previous language that permitted an employer to deny reinstatement if it would undermine the employer's business. Reinstatement must be made within two business days, or if that is not feasible, as soon as possible after the employee notifies the employer of her readiness to return. The new regulations specify that a position is considered "available" for the employee if the position is open on the day of the employee's scheduled return or within 60 calendar days thereafter. The employer has an affirmative duty to provide the employee with notice of available positions.

Perceived Pregnancy Protection Added
The new regulations specify that it is unlawful for an employer to discriminate against an employee or applicant because of "perceived pregnancy." Perceived pregnancy is defined as being regarded or treated by an employer as being pregnant or having related medical conditions.

Employer-Paid Health Benefits
Beginning last year, California employers became obligated to continue paying for health care benefits for employees on pregnancy disability leave at the same level and under the same conditions as if the employee had continued working. The new regulations provide the details on this requirement and its relation to the similar requirement under family and medical leave law.

Notice Requirements Changed
The regulations continue to require employers to provide notice to employees of their pregnancy disability leave rights, but provide more detail on how employers must meet the requirement and the consequences for failing to do so. The standard form notices created by the government have been modified to reflect the changes in the law.

Example Of The Importance Of Careful Planning And Documentation

The regulations state that an employee who takes pregnancy disability leave is "guaranteed a right to return to the same position." They state further that the employer must provide the "guarantee" in writing to the employee if it is requested. After reading or being told of these mandates, an employer with limited time and limited global understanding of the regulations might prepare the following letter and give it to an employee heading out on pregnancy disability leave:

Dear Debbi,

We have received your request to take pregnancy disability leave. We have also received your doctor's certification stating that you will need to be off work for four months. We guarantee that you will be reinstated following your leave.

Sincerely,
Well-Meaning Employer

Well-Meaning Employer has created multiple problems, but we will focus on just one. The new regulations provide that an employee is not entitled to reinstatement if the employee's job would have ended notwithstanding the pregnancy leave. For instance, if the employee's position is eliminated or the employee is included in a layoff for reasons that have nothing to do with the pregnancy or leave. Let's assume that Debbi's position is legitimately eliminated during her leave. She has no right to reinstatement under the regulations.

The regulations, however, also provide that a position is "available" and must be provided to the employee if the employee is entitled to the position by "company policy" or "contract." The letter and the statement "We guarantee that you will be reinstated..." could certainly be interpreted as a contract entitling Debbi to reinstatement, even though her position was eliminated and she has no reinstatement rights under the pregnancy disability law.

The new regulations were designed to provide employers with clarity, and in many cases, they do. Because of the complexity, however, they also create traps for those employers who fail to carefully plan and document pregnancy leaves.

"Audiences in the Washington area have been erupting in whoops, whistles and applause when actress Helen Hunt, playing the single mother of a chronically ill child, denounces HMOs with a string of unprintable epithets," the Washington Post recounts in a story in 1998. "Hunt's character quickly apologizes for the outburst, but actor Harold Ramis, playing a physician, assures her that the apology is unwarranted. 'Actually, I think that's their technical name,' he says."

While most people may not remember this movie, "As Good As It Gets," they certainly are familiar with HMOs — and how unpopular they were with the public in the Clinton era, as embodied by this scene. Today, most purchasers and payers who once championed HMOs as the next great answer to health costs and quality are much more cautious about them: Less than 38 percent of employers offer an HMO benefit to their employees, almost always as one among many plan options.

Yet the basic principles behind HMOs remain appealing to employers. They can realign payment systems to incentivize prevention. If a procedure appears unnecessary, they don't pay for it — or they can require clinical evidence that it is indeed necessary. They can pivot services around the needs of the patient and coordinate care.

Employer reliance on HMOs has receded, but the problems HMOs were designed to address have only grown exponentially larger in recent years. Health costs exploded since "As Good As It Gets" debuted, and the persistent problems of fragmented services, inadequate prevention and unnecessary care waste at least a third of all money spent on healthcare, according to the Institute of Medicine (IOM). But consumers hated HMO restrictions on choice and resented interference with the doctor-patient decisio-nmaking, and that doomed HMOs, however good their intentions may have been.

So purchasers moved in a new direction, aiming to uphold the original principles behind HMOs without interfering with patients' choices. Instead of tightly managing the services provided to employees, purchasers would take a hands-off approach and give consumers more information so they could make their own decisions about the right care at the right price. Instead of managed care, we'd have manage-your-own-care. The manage-your-own-care philosophy ultimately led to the accelerated growth of high deductible health plans, now the fastest-growing form of health insurance, in which employees and dependents enjoy a high level of choice of doctor and procedure but pay for much of it out of their own pocket. This gives consumers the incentive to "shop" for the best provider, search out the right prices, and make sure that the procedure and the costs are warranted.

In line with this development is a trend among purchasers to call for price transparency, including a demand for plans and individual providers to publicly report on how much employees must pay for services they seek. I support price transparency, with an important caveat: Price reporting must be interwoven with quality reporting, in all venues, every time. By contrast, price reporting decoupled from quality reporting could inspire the same backlash HMOs did. Here's how:

• Your costs will grow. Anyone who has worked in healthcare knows that the current pricing and chargemaster scheme are nonsensical and are in no way correlated to the quality of care. What that means is you can't predict the quality by the price. But consumers don't understand that, and studies show that given the pricing options, they will select the highest priced provider — assuming that's automatically the highest quality provider. When you only show pricing, without coupling the dollar figures with an easily comprehended indicator of quality, consumers will head toward the highest priced option, especially after they have already satisfied the deductible and it's the purchaser's dime (i.e. during an inpatient stay). If a purchaser or plan tries to restrict choice of hospital, it will be perceived as a cynical effort to cut costs at the expense of patient quality — since the employee does not see for themselves that price is unrelated to quality.
• Your company CEO will appear as the villainous businessman sweating on 60 Minutes. Employees will accuse their companies of choosing "cheaper" providers rather than the "best" providers, without any information on whether the less-expensive options are actually lower in quality. Comparing pricing information with quality information allows employers to make informed choices, and in turn, inform employees, too.
• Your health plan will be treated as evildoer. If your employees continue to shop services by price alone, they will not appreciate any efforts by health plans to restrict choices of hospitals or otherwise make demands on hospitals. Health plans that try to do this on behalf of purchasers or as part of the exchanges will be subject to Helen Hunt-style vitriol for sacrificing quality as soon as the employee exhausts the deductible.

In the new movement away from managed care and toward manage-your-own-care, purchasers and payers are at a crossroads. They must take steps to educate their employees on how to select the best provider, including the weirdness of a market in which price tells you nothing about quality or vice-versa. Only by assuring full transparency of both quality and pricing — always coupled together — will the public learn the strange truth about getting the best care for themselves and their families. Purchasers and payers deserve credit for pushing for higher quality care, so they should insist on giving employees what they need to work toward that same goal. Don't be cast as the villain again.

Or do high profits create the opportunity for a safe workplace?

The success of Paul O'Neill as CEO of Alcoa Corporation has resurfaced in the book, The Power of Habit: Why We Do What We Do in Life and Business, by Charles Duhiggs.

Prior to becoming US Treasury Secretary in the Bush Administration, O'Neill took on the task of turning a "tired" and "floundering" company into a highly profitable and efficient organization. To simplify his formula for success, he created and led a new mindset of safety in the workplace no matter the cost. Employee safety became the main goal of Alcoa.

Critics emerged from everywhere questioning O'Neill's belief that a goal of zero workplace injuries would result in high corporate earnings. The facts proved the critics were wrong, and history continues to show continuous financial growth after O'Neill retired from the company.

From 1987 to 1991, the employee injury rate decreased 50%. Because of the culture O'Neill created, the injury rates continued to decrease even after he retired from Alcoa and continue to do so today.

During his leadership, company sales increased 15% each year, and the earnings per share increased seven times the level when he joined Alcoa.

Obviously, most employers are not the size and financial stature of Alcoa. But, what can all organizations gain from the "O'Neill Formula for Financial Success?"

No one can argue that making sure employees leave work for home as healthy as they arrive at work is a bad idea. Let's face it — creating a safe work environment should always be the top priority for any organization. Most employers believe safety is important, but they feel they don't have the time or resources to adequately address all issues. The solution to the employer's dilemma is to align themselves with a risk insurance advisor who can help an employer plan, implement and lead their organization through a consistent process to achieve measurable results of improvement.

If an employer's risk insurance advisor relationship does not have the interest, resources, knowledge and experience to be a coach and leader for a program like this, it should be time to find a new relationship. Keeping valuable assets safe, like employees, and helping to keep an organization financially sound are of the utmost importance.

Financial success can be achieved at different levels — the O'Neill approach will rally all stakeholders and result in outcomes that you could not have imagined. Certainly, O'Neill's detractors felt that way until they saw the results.

What has your risk insurance advisor done for you lately to help you achieve your financial goals?

AOECOE - Not Just Another Acronym

California Senate Bill 863 was passed in the fall of 2012 and went into effect on January 1, 2013. Senate Bill 1062 was just signed into law by Governor Mary Fallin of Oklahoma and will take effect January 1, 2014. On April 30, 2013, Tennessee Governor, Bill Haslam, signed into effect Senate Bill 200. House Bill 154 is expected to go into effect in Georgia in July, 2013. What are these bills? The first of many sweeping Workers' Compensation reforms. A common theme in these bills and other pending reforms is to level the playing field for employers and accept only those claims that arise out of the course and scope of employment, AOECOE.

A well-known term of art in the Workers' Compensation arena, AOECOE is not just an acronym. It is transitioning from a term of art to a statement with teeth, as reforms are actually including such wording into bills. The purpose of doing this is to establish whether an employee's alleged injury is work-related and happened in the course and scope of employment, or whether the injury is non-industrial or affected by third parties.

Workers' Compensation is a no fault system and thus benefits the injured worker, as, in order to receive benefits, he or she does not need to prove that the employer was negligent. However, it is the injured party's burden to show that the injury did, in fact, occur while at work, while employed as an employee and while undertaking some activity for the benefit of the employer. The injury itself must have been caused by the accident or employment conditions, and not from some other non-industrial related factors or degenerative factors.

The determination of AOECOE has long been an OSHA policy. OSHA's Injury and Illness Recordkeeping Regulation Section 1904.5: Determination of work-relatedness contained under section (a) basic requirement states in order for an injury or illness to be work-related an event or exposure in the work environment is either caused or contributed to the resulting condition or significantly aggravated a pre-existing injury or illness. Work-relatedness is presumed for injuries and illnesses resulting from events or exposures occurring in the work environment.

California's SB 863 was signed into law by Governor Brown on September 18, 2012, for a January 1, 2013, effective date. While certainly not the first bill to consider AOECOE issues, it is one of the most significant Workers' Compensation reform bills to specify AOECOE language. SB 863 calls for an Independent Medical Review (IMR). While this process may be problematic for an employer, since an IMR can be requested only by an injured worker following a denial, modification, or delay of a treatment request through the utilization review (UR) process, the bill specifically states that this does not apply if the injury is in question for AOECOE reasons.

On May 8, 2013, Oklahoma Governor Fallin signed into law historic Workers' Compensation reform, Senate Bill 1062. The bill defines compensable injury as arising out of the course and scope of employment and does not include: any strain, degeneration damage or harm to disease or condition of the eye or musculoskeletal structure or other body part resulting from the natural result of aging, osteoarthritis, degenerative process or pre-existing, except if a treating physician clearly confirms an identifiable and significant aggravation arising out of AOECOE.

On April 29, 2013, Tennessee Governor Haslam signed a Workers' Compensation reform bill into law, SB 200. It specifies that injuries arise out of and in the course and scope of employment only if proven by a preponderance of evidence that employment contributed more than 50% to causing the injury, AOECOE.

In my experience, the majority of injuries are real, but they are not AOECOE. Injured parties may exaggerate the severity and extent of their injuries or may attempt to hide pre-existing conditions. So how do any employers determine if injuries are AOECOE? The answer is simple. They need to ascertain what the employees' statuses are pre-injury. This is effectively done with baseline testing.

Baseline testing is a bookend solution. To be effective, it should be objective, meet the criteria for evidenced-based medicine, be job related and consistent with medical necessity. It needs to be specific to the metrics being evaluated. A good example of a specific baseline test that is recognized in some jurisdictions by statute is audiometric testing. Hearing tests are routinely done in environments with high noise exposure to determine a baseline that is referenced once a claim is filed. This is commonly referred to as the lock box defense.

Audiometric testing is beneficial for documenting hearing loss but is not designed to address other conditions such as musculoskeletal disorders (MSD). MSDs are the most frequent and costly claims for an employer. In order for a baseline test to be utilized for MSD, it must not only be objective and reproducible, it must contain measurements to ascertain electromyography (EMG), range of motion (ROM) and function.

In addition, baseline testing must be legally defensible. In 1990, Congress enacted the Americans with Disabilities Act that outlines what makes a legally defensible test. To be legally defensible, the testing needs to be job-related and consistent with business necessity i.e. the employer must show that it "substantially promote[s]" the business' needs. It must be repeatable, objective and address functionality. Also, since baseline testing is considered to be a medical exam, it needs to evaluate some functions of the job.

Baseline testing is not a post-offer, pre-placement test, as it can not identify disability because the data is not read and no hiring decisions are made with baseline evaluations. When a work-related injury occurs, a post loss test is conducted, at which time the baseline test is read and compared to the post loss results, hence the bookends.

When compared, the results can determine if an injury exists and if it has arisen out of the course and scope of employment, thus determining an employer's true responsibility. Good baseline testing is non-discriminatory and prevents "false" claims. The sweeping Workers' Compensation reforms allow for a new definition of "false" claim: one that is not AOECOE. A false claim no longer means fraud! A proven example of an effective baseline test is the EFA-STM.

Workers' Compensation statutes are helping employers by allowing them to accept the claims that are only AOECOE. Employers need to see that they comply with legislation, and baseline testing now gives them an objective assessment to do just that.

For most states offering health care exchanges, rate filings were due by May 1, 2013. Each carrier hoping to operate within the exchange had to finalize their benefit offering and related rate filing. Some of the results are gradually emerging as regulators review the filings. Some have been rejected, some have been accepted and approved, some are going through various stages of review and revision. The interesting result of this process is finding out what rates will be and what costs carriers expect.

Prior to the actual submission process, multiple reports were issued prognosticating what rate levels might emerge. Some of these reports suggested that the anticipated morbidity levels (i.e., claim levels) for those enrolling in these programs would be higher than current individual benefit programs. This was logical to most — the hard part was the anticipation of what was a reasonable load in light of what other companies might assume and use in their pricing.

We learned of estimates ranging from a low of at or above 10% to a high approaching 45% - 50%. An important consideration is the nature of the current individual products offered in the marketplace (i.e., are they individually underwritten or were they guarantee issue). In those states where health plans and carriers were permitted to medically underwrite the product, the transition to a guarantee issue product will be greater than in those states where the product was already a guarantee issue product.

Early results from several states show that some major carriers assumed lower than expected morbidity factors, with other carriers attempting to withdraw their filings and resubmitting more competitive rates. We are not aware of any exchange where carriers decided to withdraw and raise rates.

The unintended consequence of this is very interesting. Rates will be lower than many experts predicted. The market pressures have been significant with companies trying to reduce their rates. Whether this is the result of competitive pressure or a knee-jerk reaction to stay in the market, it is unclear at this time what this will do to financial performance. Under health care reform, carriers are at risk to enroll individuals that have a higher health status and risk profile. These individuals were uninsured in the past and now are going to enroll in some program or be subject to financial penalties.

For those individuals who were skeptical about the cost effectiveness of health care reform, this will have an interesting impact on premium levels. For those who anticipated some cost reductions, it is unclear that they anticipated this type of response. It is our understanding that complete rate results will be released in the State of California later this week. It will be very interesting to see how different carriers developed their rates.

The bottom line is that carriers have responded in somewhat of an unexpected way, a rather bullish approach which will have a favorable impact on health premiums.

It was almost a miracle, an immediate answer to my question about the cost of an ultrasound.

"$196 including the interpretation, and we price-match if you find a better price somewhere else."

In my eight years having a health savings account (HSA), clear, immediate information about cost has been extremely rare. Most often, "How much?" provokes the dismissive evasion of "It depends" or irritation, followed by "We have no way of knowing."

In other instances, office personnel launch into detailed explanations about how deductibles and insurance work in an effort to convince me I don't really need to know. Another tactic is to stall: "A representative can call you with an estimated price in 3-5 days, but it will only be an estimate." Or the sad response, accompanied by a look of pity, "So you can't afford insurance?"

When I asked a surgeon about the hospital-acquired infection rates in the hospital where he performs his operations, he had the audacity to give an annoyed don't-worry-yourself-about-such-things expression and report that "In my area of the hospital," patients don't get infections. This contradicted my knowledge that some of his own patients had, in fact, developed infections.

Asking questions about care is a hassle, an inconvenience, and sometimes a frustrating battle against a system unfamiliar with sharing information or control. By tradition, we can't get a test without a doctor's order, we can't receive our own test until the doctor gets it first, we can't know how much things cost, and we can't refill a drug for the 100th time without getting another prescription exactly the same as the first 99.

In an environment built on layers of permission — have the pharmacist call the doctor who can call the insurance company — do-it-yourself requests aren't welcomed. Some providers seem genuinely insulted by requests for information. "How could you question my ________ (fill in the blank with abilities, record, skill, safety, intentions)?"

Choices in health care can be overwhelming. Which treatment? Which doctor? Which hospital? How much should I spend? What metric should I trust? In some ways it was easier when we had strict gatekeepers and coverage that paid for everything. Relying on mother-may-I rules assigns responsibility for everything to someone else, including the bill.

So why make the effort?

First, because 25-30% of the care we receive is unnecessary or could be handled with a less-invasive alternative. When employees of GE are told they need a heart procedure, transplant or back surgery, they have the option of an all-expenses paid trip with a family member to the Cleveland Clinic for a second opinion. In about one-quarter of the cases referred so far, the experts at Cleveland Clinic have determined the procedure isn't their best choice of care¹. No matter how nice or qualified one doctor may be, he or she has a specific preference for how to treat a problem. That preference may not be the best option for every patient. Ask for a second opinion, you might get a very different answer.

Second, where we get care can drastically change the outcome. Check on sites like Leapfrog.org, healthgrades.com, or consumer reports and you will find huge differences between hospitals in the likelihood of being harmed by errors in care. As many as forty-thousand patients per day experience an error, such as infections, wrong medications, or falls, many of them life-threatening. At an estimated 180,000 fatal events per year, medical errors are the third-leading cause of death, behind heart disease and cancer².

What we know is that almost half of all medical errors are preventable through low-cost efforts and policies. Yet, fewer than one-in-five hospitals implements the safety procedures known to work. This is one area where the worst offenders resist transparency, and hope you don't ask. Plus, it seems doctors themselves recommend a hospital based on familiarity, not outcomes³.

The differences are meaningful: go to a top-ranked hospital and you reduce your risk of a mistake by almost half⁴. If it is not an emergency, do your homework and choose wisely.

Lastly, there are two reasons to be concerned about the cost of care. One is a societal concern: at over 18% of GDP⁵, health care costs threaten to cripple our economy. Insurers do not choose their networks based on price or quality of care. So, it will be up to payers and consumers to put constraints on spending growth.

If you aren't motivated by the national economy, the second reason is our personal budget. With ever-increasing deductibles, it matters to our own pocketbooks to push back on providers whose prices far exceed others of similar quality. As more and more of us ask about cost and choose based on the best value, more providers will respond.

Perhaps slowly, things are changing.

More of us are inserting ourselves: If I have to pay for this, and it is happening to my body, I should know what it costs and what the results will be. We see self-serve examples like AnyBloodtestNow.com offering blood tests at a known price without having to see the doctor first⁶. Here's a good idea: bring the cholesterol results to your check-up so you can talk about them without scheduling another follow-up visit.

Also, some facilities, such as the $196-priced group mentioned at the beginning of this blog, are responding to increased price sensitivity by offering an upfront, guaranteed price. At least it eliminates one of the many unknowns we face during a medical episode. As a comparison, another preeminent facility took five days to answer my cost question for a simple ultrasound. The price? $625 for the test, and another $650 for the mandatory visit with one of their doctors. "But," they said, "we can't be held to this price, it is only an estimate." As you might guess, I chose the former.

It's not easy getting involved in these choices. I totally empathize and understand those who give up and simply go with the easiest option. My compliments to fellow health care explorers trying to navigate a seemingly endless list of decisions. I admire those who stick with it. It can make a difference.

This article was first posted on Altarum.org.

¹ Lynch WD. Personal Communication. 2012.

² Levine B. The Hospital Harm Factor. Patient Safety, Natural Health Blog [Internet]. 2011; 2012. Available from: http://www.jonbarron.org/article/hospital-harm-factor.

³ Morsi E, Lindenauer PK, Rothberg MB. Primary care physicians' use of publicly reported quality data in hospital referral decisions. Journal of hospital medicine : an official publication of the Society of Hospital Medicine. 2012;7(5):370-5. Epub 29 FEB 2012.

⁴ HealthGrades. Patient Safety Excellence Award™ 2011 [cited 2012 October 31]; Available from: http://www.healthgrades.com/ratings-and-awards/2011-patient-safety-excellence-award-announcement.

⁵ Martin AB, Lassman D, Washington B, Catlin A. Growth in US health spending remained slow in 2010; health share of gross domestic product was unchanged from 2009. Health Aff (Millwood). 2012;31(1):208-19. Epub 2012/01/11.

⁶Any Lab Test Now! 2012 [cited 2012 October 31]; Available from: http://www.anylabtestnow.com.

Yes, but be careful! There is no denying that the use of social media sites such as Facebook, Twitter and LinkedIn has exploded. The explosion includes both personal and business use of social media. It also includes use that is beneficial to employers and use that can be very damaging. Unfortunately, the influx of employment lawsuits that have followed the explosion have had limited practical value in guiding employees and employers on the permissible use and oversight of social media in the workplace. While many questions remain, the California State Legislature's recent enactment regulating employer use of social media does provide some guidance.

California Labor Code section 980 was enacted to prevent employers from (1) requesting an employee disclose usernames or passwords for personal social media accounts; (2) requiring an employee to access his or her personal social media in the presence of the employer; or (3) requiring an employee to divulge any personal social media to the employer. Applicants are protected in the same way as employees. The new statute, coupled with existing privacy laws, limits what employers may monitor when it comes to the personal social media of employees and applicants.

Definition Of Social Media
In what appears to be an effort to account for the ever increasing development of new social media, the new statute broadly defines social media as an "electronic service or account, or electronic content, including, but not limited to, videos, still photographs, blogs, video blogs, podcasts, instant and text messages, e-mail, online services or accounts, or internet web site profiles or locations."

Prohibitions On Employers Monitoring Social Media
Employers may not require, or even request, that an employee or applicant:

• Disclose a username or password for the purpose of gaining access to the employee or applicant's personal social media;
• Access their personal social media in the employer's presence; or
• Divulge any personal social media.

Employers are also prohibited from retaliating or threatening to retaliate against an employee or applicant who refuses to comply with a request or demand that violates the statute.

Despite the statute's broad definition of social media and its restrictive prohibitions on employers, it does provide some exceptions under which employers may request and gain access to employees' personal social media. For each exception, however, pitfalls exist. Employers need to know them in order to avoid costly mistakes.

Accessing Social Media As Part Of An Investigation
The statute does not affect an employer's existing rights to obtain personal social media "reasonably believed to be relevant" to an investigation of employee misconduct. Under this exception, the employer may only access the employee's personal social media under the condition that it is used strictly for purposes of the investigation or a related proceeding. While the statute does not define what "reasonably believed to be relevant" means, California Courts evaluate employee privacy concerns utilizing a balancing test, weighing the employee's reasonable expectation of privacy against the employer's legitimate business needs for accessing the information. It is wise for employers to evaluate each instance carefully before requesting an employee to divulge his or her personal social media under this exception.

Employer-Issued Electronic Devices
The statute does not preclude an employer from requiring an employee to disclose a username and password for the purpose of accessing an employer-issued electronic device such as a computer, smartphone or e-mail account. Employers should exercise caution, however, before digging through an employee's use of personal social media on the employer-issued device.

It is a violation of the federal Stored Communications Act to access a restricted or password protected site without the owner's consent. So, while it is permissible for an employer to require an employee to provide his or her password for access to the employer-issued device, an employer may be violating the law by accessing social media information on the device. For instance, having the IT department look up the employee's Facebook password stored on the employer-issued device in order to gain access the employee's personal Facebook page.

Adverse Action Against Employees
The statute does not prohibit an employer from terminating or taking adverse action against an employee or applicant if otherwise permitted by law. For instance, an employer may discipline an employee for violating company policy and using personal social media during work time. Nor does the statute specifically prohibit employers from accessing publicly available social media. This means that employers may view the personal social media of its employees that is available to the general public on the internet, such as blogs and other websites that do not restrict user access.

But, before taking any adverse action against an employee based upon the content of his or her personal social media, employers must keep in mind that California law prohibits employers from discriminating against an employee based upon the employee's lawful conduct occurring away from the employer's premises during non-work hours. Moreover, the National Labor Relations Board has held that employees may use social media to voice concerns over working conditions. While an employee complaining about working conditions or an issue with a manager on his or her Facebook page may reflect negatively upon the organization, the employee's use of social media to criticize working conditions may qualify as protected speech for which an employee cannot be lawfully disciplined.

What Is An Employer To Do?
First, be patient. The law develops at a snail's pace compared to the development of new technology and cultural trends. More guidance will come. In the meantime, employers should approach social media issues with careful consideration and planning. This should start with the development of a written social media policy, and not a sample or template policy. The policy needs to be specifically tailored to the employer and should discusses the importance of social media, the impact that social media has on the workplace, and how employee's use of social media reflects upon the organization. The policy should also define the permitted use of technology owned by the organization and employee's expectations of privacy or lack thereof.

If an employer elects to have a policy restricting personal social media use during work hours, it should ensure that the policy is applied even-handedly to avoid claims of discrimination. Employers should also consider the pros, cons and legal issues that relate to restrictions on supervisors' social media interaction with subordinates. For most organizations, it would be advisable to inform employees that they are not required to interact with supervisors on personal social media and will not be retaliated against for refusing to interact with supervisors.

A carefully planned and well written social media policy that outlines the organization's goals and expectations of employees' use of personal social media can help ensure compliance with the new rules and prevent costly disputes with employees.

For many years, insurance companies built their reserves by focusing on investment strategies. The recent financial crisis changed that: insurers became incentivized to shift their focus as yields became more unpredictable than ever. As insurance carriers looked to the future, they know that running a profitable underwriting operation is critical to their long term stability.

Profitable underwriting is easier said than done. Insurers already have highly competent teams of underwriters, so the big question becomes, "How do I make my underwriting operation as efficient and profitable as possible without creating massive disruptions with my current processes?"

There are three core challenges that are standing in the way:

• Lack of Visibility: First, the approach most companies take to data makes it hard to see what's really going on in the market and within your own portfolio. Although you may be familiar with a specific segment of the market, do you really know how well your portfolio is performing against the industry, or how volume and profit tradeoffs are impacting your overall performance? Without the combination of the right data, risk models, and tools, you can’t monitor your portfolio or the market at large, and can't see pockets of pricing inadequacy and redundancy.
• Current Pricing Approach: You know the agents that underwriters engage with every day want you to give them the right price for the right risk, and it's not easy. In fact, it's nearly impossible. Underwriters are often asked to make decisions based on limited industry data and a limited set of risk characteristics that may or may not be properly weighted. As an underwriter reviews submission after submission, you need to make decisions such as, "How much weight do I assign to each of these risk characteristics (severity, frequency, historical loss ratio, governing class, premium size, etc.)?" Imagine how hard it is to do the mental math on each policy and fully understand how the importance of the class code relates to the importance of the historical loss ratio or any other of the most important variables.
• Inertia: When executives talk about how to solve these challenges around visibility and pricing, most admit they're concerned about how to overcome corporate inertia and institutional bias. The last thing you want to do is lead a large change initiative and end up alienating your agents, your analysts, and your underwriters. What if you could discover pockets of pricing inadequacy and redundancy currently unknown to you? What if you could free your underwriters to do what they do best? And what if you could start in the way that makes the most sense for your organization?

There's a strong and growing desire to take advantage of new sources of information and modern tools to help underwriters make risk selection and pricing decisions. The implementation of predictive analytics, in particular, is becoming a necessity for carriers to succeed in today's marketplace. According to a recent study by analyst firm Strategy Meets Action, over one-third of insurers are currently investing in predictive analytics and models to mitigate against the problems in the market and equip their underwriters with the necessary predictive tools to ensure accuracy and consistency in pricing and risk selection. Dowling & Partners recently published an in-depth study on predictive analytics and said, "Use of predictive modeling is still in many cases a competitive advantage for insurers that use it, but it is beginning to be a disadvantage for those that don't." Predictive analytics uses statistical and analytical techniques to develop models that enable accurate predictions about future event outcomes. With the use of predictive analytics, underwriters gain visibility into their portfolio and a deeper understanding of their portfolio's risk quality. Plus, underwriters will get valuable context so they understand what is driving an individual predictive score.

Another crucial capability of predictive modeling is the mining of an abundance of data to identify trends, patterns and relationships. By allowing this technology to synthesize massive amounts of data into actionable information, underwriters can focus on what they do best: they can look at the management or safety program of an insured, anything they think is valuable. This is the artisan piece of underwriting. This is that critical human element that computers will never replace. As soon as executives see how seamless it can be for predictive analytics to be integrated into the underwriting process, the issue of overcoming corporate inertia is oftentimes solved.

Just as insurance leaders are exploring new methods to ensure profitability, underwriters are eager to adopt the analytical advancements that will solve the tough problems carriers are facing today. Expecting underwriters to take on today's challenges using yesterday's tools and yesterday's approach to pricing is no longer sustainable. Predictive analytics offers a better and faster method for underwriters to control their portfolio's performance, effectively managing risk and producing better results for an entire organization.