___ Contact emergency services by dialing 9-1-1.
___ Call the Company emergency hotline (as appropriate)/Corporate Office and Team Leader.
___ Contact the Corporate Safety Director.
___ Determine who the witnesses are and debrief as quickly as possible.
___ Initiate site control and determine if the site should be shut down.
___ Conduct a head count to make certain that all employees are accounted for.
___ Do not move anything that could be classified as evidence. Keep intact until Safety Representatives (or other appropriate company official) is onsite.
___ Ensure telephone coverage at the site. Restrict use of two way radios.
___ Inform site personnel to direct requests from outside groups to you.
___ Post workers to restrict entry to the site. Only those authorized will be permitted entry and identification must be shown.
___ Keep selected individuals on-site to help with the incident. Be aware of possible second entry attempts.
___ Notify the crisis management Team Leader.
___ Establish a command center.
___ Select a temporary spokesperson to issue a buy-time statement if the media arrives (see below).
___ If the site will be shut down, tell workers when they are to report back to work and that critical incident stress debriefing (CISD) will be available (if applicable). Also, to direct information requests from outside groups to you and to contact their families to let them know they are OK.
What To Say If The Media Calls
“My name is ( ) and I am (title) with (Company name). The incident has just happened and I am not prepared to answer any questions at this time. Please stay in this safety area so we can do our job and take care of the situation. I need to return to the site, but either (spokesperson) or I will be back at (time) with an update. Thank you.
Important: Do not take any questions at this time. If badgered, simply state that you need to get back to the site and you will return at stated time.
Step Two: Team Leader
___ Determine what happened, when/where it happened, and who is involved.
___ Verify the current status of the site (shut down?).
___ Determine whether you and/or spokesperson are needed on site.
___ Notify corporate management.
___ Advise the receptionist on how to route calls.
___ Identify potential spin-off crises.
___ Notify Corporate Human Resources and/or Corporate Industrial Relations.
___ Initiate conference call number and have time/number available for crisis management team for status updates.
Step Three: Safety Representative
___ Contact the Corporate Safety Director.
___ Call the Corporate emergency number.
___ Coordinate with team leader for critical incident stress debriefing (CISD).
___ Gather number/names of injured and/or fatalities and obtain phone number(s) of the spouse(s)/family(ies). Contact the team leader to determine who should notify the spouse(s)/family(ies).
___ Debrief workers who witnessed the incident.
___ Begin incident investigation.
___ If necessary, initiate a post-incident drug/alcohol test (call Industrial Relations).
___ Designate someone to stay with the injured worker(s) at the hospital until family members arrive.
___ Document the incident in writing and on film.
Step Four: Team Leader
___ If there is an employee injury/fatality, determine who will notify spouse(s)/family(ies). A fatality may require a personal visit.
___ If the injury/fatality is a subcontractor's employee, it is the subs responsibility to notify the spouse/family.
___ If a non-employee is hurt/killed, allow the authorities to make the notification. Call the Corporate emergency number.
___ Inform any surrounding areas that may be affected by the incident.
___ Instruct employees at the incident site to contact their families to let them know they are okay.
Step Five: Spokesperson
___ Write, and get clearance for, all statements and releases.
___ Designate someone to screen your calls from the news media.
___ Complete the media log sheets.
___ Anticipate media questions. If possible, role play a media interview with a colleague before going live.
___ Assemble necessary background information and literature.
___ If you elect to give the media a tour, make certain that the area is safe and that they are escorted by a company representative. Issue safety equipment and require a hold-harmless agreement be signed, if necessary.
___ Instruct reporters on your safety procedures before going on-site. If they violate any of the procedures, you have the right to ask them to leave.
___ Advise reporters of a time and place for future updates.
___ Follow-up on additional media inquiries.
Step Six: Team Leader Coordination With Corporate
___ Identify the audiences that need to be contacted for update purposes.
___ Gather details on past negative issues which the media may refer to.
___ Fax/e-mail/voice mail all employees and job sites to notify them of the incident and tell them to whom they should direct media/general information calls. Provide on-going updates.
___ Establish an emergency message mailbox for employees to access if office operations have been impacted.
___ Track all media coverage via a monitoring service and the Internet.
___ Secure and offer critical-incident stress counseling for employees who witnessed the incident or were nearby.
Step Seven: Executive Management
___ Maintain close contact with the team leader to determine involvement.
___ Approve all statements/communications to the outside world.
___ Work closely with legal counsel.
___ In the event of injury/fatality be prepared to make the visit/call to the family.
___ In the event of a highly visible crisis be prepared to make the initial statement to the news media…with no Q & A.
___ Establish and maintain communication with employee base and other audiences.
It is important to remember, this is the list of action items just within the first two hours of a crisis. This does not solve the whole crisis. This is one part of a comprehensive crisis communications plan. Training, education and practice are keys to success in this process.
Your front-line folks will do a marvelous job for you, yet need to know how this fits into the overall success of a company’s crisis communications plan. A crisis can go on for days, be prepared and be crisis plan smart!
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Nancy Moorhouse, CSP is a multi-faceted, multi-talented business partner in the risk management/workers' compensation/safety consulting industry. With more than 28 years of experience, she influences clients in culture change and progress.
There are some common sense approaches to Utilization Review that can minimize the unintended consequences, and make your program both effective, and efficient. Suggestions include:
Tighten protocols to allow Adjusters to approve standard diagnostic tests and treatments. Allow early physical therapy treatments to ensure that injured workers get started on treatment immediately and have the benefits of immediacy of care.
Review your costs carefully to be sure you are paying competitive rates. Dig deep to understand what the rates really are, given the wide variances in how charges are applied (See # 2 above). And consider the following ....
Evaluate your medical networks to focus on Physicians who achieve the outcomes that make a difference. Select the "best" Physicians to be in the medical networks — defining "best" based on outcomes (including return to work).
Empower those "best" Physicians to gain the trust of their patients by eliminating the delays and second guessing that comes with requiring the Physician to wait for Utilization Review approval. This can be accomplished by reserving Utilization Review for very complex or non-standard procedures. This can reduce expenses dramatically by eliminating the Utilization Review costs for treatments and tests that are reasonable, necessary and prescribed by Physicians we have identified as the "best."
You can then reserve Utilization Review (for those Physicians) for those types of procedures that may still benefit from a second look — i.e. surgeries, advanced rehab techniques, and non-standard therapies.
Not only can empowering "best" Physicians reduce costs, but it may very well reduce the litigation and protracted claims outcomes that may actually begin when we unintentionally drive that wedge between the treating Physician and the Injured Worker.
Continually measure outcomes in order to reevaluate which physicians are deserving of exemption. Provided physicians with benchmarks of their outcomes (i.e. Return to work, etc.) in order to give them a means to compare their performance and earn "best" status.
Ultimately, if Injured Workers are treated only by the "best," perhaps Utilization Review would become unnecessary. Perhaps we would eliminate the built in delays that Utilization Review causes, eliminate the expense of unnecessary Utilization Reviews, and focus all our resources on the Physicians and treatments that are likely to result in recovery and return to work.
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Judy Adlam is president and CEO of LWP Claims Solutions, an organization that leverages a culture of teamwork and excellence to consistently deliver results that are far superior to industry standards. She is a chartered property casualty underwriter (CPCU) and a senior claims law associate (AEI).
Can there be too much of a good thing? The answer here is a definite "yes." While Utilization Review can be used to ensure that medical treatment for injured workers is based on evidence-based protocols, it definitely comes at a cost — sometimes a very high cost. Too much Utilization Review can have several unintended consequences that impose "costs" — both monetary and otherwise. These include:
#1 — Delay In Treatment
Utilization Review is not instantaneous. Guidelines allow claims payers five days to turn around the Utilization Reviews. While five days is certainly reasonable in terms of the need for referral, review and approval/modification/denial, it is quite a long time when viewed through the lens of the waiting injured worker and the physician. It can mean five days of extra pain, and five days of added uncertainty.
#2 — Rising Costs
The cost of Utilization Review is not insignificant. Most range from $100 - $300 or more. Considering that this can be more than the cost of some therapies, it becomes evident that unnecessary UR reviews serve to drive up costs, rather than contain them.
#3 — The Wedge
This is likely the most serious of the consequences. Most of us have at some time experienced the frustration of being told by our physician that we need a procedure or a test, but that it has to first be approved by "the Insurance Company." Although we may have become used to this, it certainly causes us to leave the doctor's office uncertain about what the next steps will be.
In the case of Work Comp and Utilization Review, the regulations allows for up to five days for the UR process to be completed. Therefore, the Physician must wait before scheduling the procedure, diagnostic test or therapy session. And the irony is that in many cases, "the Insurance Company" selected the Physician or developed the network, and then is "second guessing" the network Physician, driving a wedge between the Physician and patient when we should be supporting the very relationship that is fundamental to returning the Injured Worker to pre-injury condition.
If I were an Injured Worker who visited a Network Provider at the direction of my Employer, and then was told by that provider that I'd have to wait for "the insurance Company" to approve the test, I might wonder why I should trust a Physician that "the Insurance Company" doesn’t even trust!
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Judy Adlam is president and CEO of LWP Claims Solutions, an organization that leverages a culture of teamwork and excellence to consistently deliver results that are far superior to industry standards. She is a chartered property casualty underwriter (CPCU) and a senior claims law associate (AEI).
Each employer in an acquisition transition should determine if its group health plans are subject to COBRA. If they are, the parties should decide how COBRA is going to be handled and make it part of the purchase agreement.|
Recently, we have received a number of questions from business lawyers and their clients regarding the responsibilities of the parties in an acquisition transaction (i.e., a stock sale or an asset sale) under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). As you probably know, COBRA requires many group health plans to offer to current participants and their beneficiaries the ability to continue coverage under the plan after certain qualifying events occur that would otherwise result in the termination of an individual's coverage. Here is an overview of how the COBRA rules work in an acquisition.
Questions That Need To Be Asked
In general, these are the questions that need to be asked and considered:
Has there been a stock sale or an asset sale?
If so, who (if anyone) has had a COBRA qualifying event?
If there has been a COBRA qualifying event, which employer is responsible for providing COBRA continuation coverage?
Stock Sale Or Asset Sale?
The Treasury regulations governing this area are phrased in terms of stock sales and asset sales. A stock sale is a transfer of stock in a corporation that causes the corporation to become a different "employer" taking into account the controlled group rules. For example, if Corporation A owns 100% of Corporation B and sells its stock in Corporation B to Corporation C (that is not related to Corporation A), a stock sale has occurred because Corporation B ceases to be a member of Corporation A's controlled group and becomes a member of Corporation C's controlled group. An asset sale is a transfer of substantial assets, such as a plan or division or substantially all the assets of a trade or business.
M&A Qualified Beneficiaries
If either a stock sale or an asset sale has occurred, we must identify the group of individuals who must be offered COBRA continuation coverage — the so-called "M&A qualified beneficiaries." An "M&A qualified beneficiary" is a qualified beneficiary whose qualifying event occurred prior to or in connection with the sale and who is, or whose qualifying event occurred in connection with, a covered employee whose last employment prior to the qualifying event was associated with:
The acquired organization in the case of a stock sale; or
The assets being sold in the case of an asset sale.
Qualifying Event
Once we have identified the M&A qualified beneficiaries, we must determine if they have experienced a qualifying event. COBRA continuation coverage need not be offered to an M&A qualified beneficiary unless the individual has had a COBRA qualifying event. In the case of a stock sale, the sale itself is not a COBRA qualifying event if the employee of the acquired organization continues to be employed by the acquired organization after the sale (even if the employee is no longer provided with group health plan coverage after the sale).
However, an asset sale results in a qualifying event with respect to a covered employee whose employment was associated with the purchased assets unless either (i) the buying group is a "successor employer" (see below) and the employee is employed by the buying group immediately after the sale, or (ii) the covered employee does not lose coverage under a group health plan of the selling group after the sale.
A "successor employer" is an employer that falls into one of the following categories:
It continues the business operations associated with the purchased assets without interruption or substantial change;
It results from a consolidation, merger or similar restructuring of the employer; or
It is a mere continuation of the employer.
Who Is Responsible?
If an M&A qualified beneficiary has had a COBRA qualifying event in connection with a stock sale or an asset sale, we must then determine which employer is responsible for providing COBRA continuation coverage. The "employer" that is responsible is either the "selling group" or the "buying group."
The selling group is the controlled group that either (i) includes the corporation being acquired in a stock sale or (ii) includes the trade or business that is selling the assets in an asset sale. The buying group is the controlled group that either (i) includes the corporation that has been acquired in a stock sale or (ii) includes the trade or business that is buying the assets in an asset sale.
If the selling group continues to maintain a group health plan, the selling group has the responsibility for making COBRA continuation coverage available to the M&A qualified beneficiaries. If, however, the selling group does not continue to maintain a group health plan in connection with the sale (a question of fact), the result depends on whether the acquisition transaction was a stock sale or an asset sale:
If it was a stock sale, a group health plan maintained by the buying group has the responsibility for making COBRA continuation coverage available to the M&A qualified beneficiaries.
If it was an asset sale, a group health plan maintained by the buying group has the responsibility for making COBRA continuation coverage available to the M&A qualified beneficiaries only if the buying group continues the business operations associated with the assets without interruption or substantial change.
Can You Negotiate Your Way Out Of COBRA Responsibility?
The seller and the buyer can allocate by contract the responsibility to make COBRA continuation coverage available to the M&A qualified beneficiaries. However, if the responsible party under the contract fails to perform, the party described above continues to have the responsibility for making COBRA continuation coverage available to the M&A qualified beneficiaries.
What To Do?
First, each employer should determine if its group health plans are subject to COBRA. If they are, the parties should decide how COBRA is going to be handled and make it part of the purchase agreement. If you need help with your COBRA obligations, please contact me.
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Ken Ruthenberg has practiced exclusively in employee benefits law since 1979, covering qualified retirement plans, nonqualified deferred compensation plans, and welfare benefit plans. He has served as chairman of the State Bar's Taxation Section's Employee Benefits Committee.
Legislative Rollback of Temporary Disability Reforms Could Cost Millions
There are cases where extended periods of disability may be warranted, and there are things that the legislature should consider, but an across-the-board increase in the length of disability is simply the wrong answer for California.|
In the seven years since Governor Arnold Schwarzenegger signed the sweeping reforms of Senate Bill 899 (SB 899) into law, the applicant's bar has been actively lobbying to roll them back. Most recently, through Assembly Bill 947 (AB 947) introduced this spring by Assembly Member Jose Solorio (D - Anaheim, Garden Grove, and Santa Ana), applicants' attorneys have targeted SB 899's 104-week cap on total temporary disability (TTD) benefits.
Before SB 899 became law, total temporary disability benefits which were intended to provide two-thirds of the average weekly wage could go on indefinitely thanks to legislation signed into law in 1978 by then- and now-Governor Jerry Brown, eliminating the previous 240-week cap. Under SB 899, applicants injured after April 19, 2004 will receive 104 weeks of temporary disability within five years of the date of injury unless they meet one of the exceptions for long-term injury such as severe burns, amputations, or chronic lung disease.
Advocates for AB 947 have argued that it often takes longer than two years for an applicant to recover from surgery or obtain necessary medical treatment. AB 947 would require that applicants who need treatment that could not be medically completed within 104 weeks can receive up to 240 weeks (approximately 4.6 years) of total temporary disability benefits within five years of the date of injury.
Temporary disability benefits are one of the highest cost drivers for carriers and employers and the maximum rates have expanded considerably from $490 per week in 2002 to $1,010.50 in 2012. According to the Senate Appropriations Committee, which reviewed research from the Commission on Health and Safety Workers' Compensation (CHSWC), in increasing the period of temporary disability, AB 947 could increase per-claim temporary disability benefits by up to $137,000. In total, the legislative analysts have predicted an annual increase of $188 to $238 million in total temporary disability benefits. This does not include the medical evaluation and treatment costs that will be required to justify and sustain applicants for extended periods of total temporary disability.
Further, the population of workers on total temporary disability could potentially double as many remain on disability rather than cycle back into an increasingly difficult workforce. The longer injured workers remain off work for even minor injuries, the more difficult it is to go back when disability benefits end, and with California's unemployment rate continuing to hover around 12%, it may be easier to claim extended disability than to embark on a daunting job search.
In 1978, the Department of Industrial Relations (DIR) recommended that Governor Brown sign SB 1851 into law removing any cap on temporary disability in order to account for the occasional case that required surgery more than five years after the date of injury. However, the courts interpreted the legislation as allowing unlimited continuous temporary disability. Instances of abuse of unlimited total temporary disability benefits brought about the reforms of SB 899 in 2004.
Because of its significant projected impact on an already fragile state budget, the California Department of Finance came out in opposition to AB 947 and on August 15, 2011 the Senate Appropriations Committee placed the bill in its suspense file pending a future vote.
Although the stated legislative intent of the AB 947 is to bridge the gap between 104 weeks and when an injured worker is medically eligible to return to the workforce, AB 947 is wide open to abuse by applicants and physicians who will continue to treat applicants as long as possible. Injury claims that are now resolved within 104 weeks could take over two-and-a-half years more to resolve.
There are cases where extended periods of disability may be warranted, and there are things that the legislature should consider, but an across-the-board increase in the length of disability is simply the wrong answer for California.
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Michael D. Peabody received his Juris Doctorate and Certificate in Alternative Dispute Resolution from Pepperdine University School of Law and was admitted to practice law in 2002. He has practiced in the fields of workers compensation and employment law, including workplace discrimination and wrongful termination.
The evaluation employers must make regarding an employe's potential return to work under the workers' compensation system is fundamentally different from the reasonable accommodation analysis mandated by the Fair Employment and Housing Act (FEHA). A precedent-setting decision in Cuiellette v. City of Los Angeles reinforces that even when a workers' compensation claim is managed and resolved perfectly, employers may still be at risk for a discrimination lawsuit when they fail to follow the separate Fair Employment and Housing Act process requirements.
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Such Decisions Are Entirely Separate From Your Reasonable Accommodation Process Under Disability Discrimination Laws
The evaluation employers must make regarding an employee's potential return to work under the workers' compensation system is fundamentally different from the reasonable accommodation analysis mandated by the Fair Employment and Housing Act (FEHA). A precedent-setting decision in Cuiellette v. City of Los Angeles reinforces that even when a workers' compensation claim is managed and resolved perfectly, employers may still be at risk for a discrimination lawsuit when they fail to follow the separate Fair Employment and Housing Act process requirements.
A Los Angeles Police Department officer was injured and placed on disability leave. His workers' compensation claim was resolved with 100% disability rating. He later expressed interest in returning to the police department to work in fugitive warrants unit, where he was uniquely qualified by prior experience. His treating physician wrote that he could perform "permanent light duty — administrative work only."
The note did not specify any restrictions. The City assigned him to the court or renditions desk in the fugitive warrants unit. At that time, the City had an "informal" policy and practice of allowing sworn officers to perform "light duty" assignments that did not involve several of the essential functions of a peace officer. The City decided to send him home when a workers' compensation claims examiner advised that the Los Angeles Police Department could not reasonably accommodate an officer who was designated through workers' compensation as "100% disabled."
He sued under the Fair Employment and Housing Act, alleging failure to engage in a good faith interactive process and failure to reasonably accommodate.
Initially, a judge threw his claim out on summary judgment, but the appeals court overturned because the 100% total permanent disability rating was not, as a matter of law, a legitimate nondiscriminatory reason for the adverse employment action. A jury then awarded him $1,571,500.
On an appeal following the verdict, the appellate court again ruled that the 100% disability rating did not absolve the City from its Fair Employment and Housing Act obligations. The Court concluded: "The testimony that no one could recall placing an officer with a 100% disability on 'light duty' is beside the point because workers' compensation and the FEHA require separate inquiries. For the Fair Employment and Housing Act, the question is whether (his) medical restrictions prevented him from performing the essential functions of the position that he held or that he desired to fill. In this case, plaintiff proved that he could."
Accordingly, the City should have evaluated whether he could perform the essential job functions of the position in the fugitive warrants division (desk job), and not his duties as a police officer.
The Cuiellette case underscores yet again the importance of adopting and consistently enforcing a Structured Return to Work Program The objectives of a structured program are typically to return employees with temporary work restrictions as soon as possible to a transitional assignment that is within their medical restrictions. Transitional work assignments are typically temporary assignments that assist the employee in returning to work from an industrial injury or illness at a level they are physically capable of performing until they have reached maximum medical improvement. Workers released to full duty can return to their regular job. If there are permanent work restrictions, employers must conduct an interactive process with that employee to evaluate whether those restrictions can be reasonably accommodated on a longer term basis.
California case law is quite clear that a structured transitional work program, when carefully crafted and consistently enforced, protects against a temporary light duty assignment being converted to permanent modified duty job. By spelling out the terms and conditions of the structured program in writing, it removes ambiguities about the employer's expectations, establishes specific timelines for follow up and avoids the potential that the worker will remain in a transitional position long enough to argue that it is permanent. It is especially helpful to periodically review the effectiveness of the transitional assignment when changed circumstances occur such as adjustments to the worker's restrictions, changes to the mix of essential and marginal job functions, or ongoing business needs.
Employers that don't enact and enforce a structured program (or who informally provide light duty to certain employees) risk converting temporary fixes into a permanent accommodation. As the Cuiellette case now makes clear, the principles and practices for a structured return to work program can — and should — be applied to employees with both temporary and more long term (even permanent) work restrictions.
Authors
Stu Baron collaborated with Patricia S. Eyres in writing this article. Patti Eyres is the Employment Law Partner for Stuart Baron & Associates and CEO/Publisher of Proactive Law Press, LLC.
This article is an excerpt from the July 2011 edition of From The Hotline published by Stuart Baron & Associates and Workers' Compensation Claims Control. It is used with permission under the copyright of Stuart Baron & Associates.
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Stu Baron is a nationally recognized expert on managing workers’ compensation claims. He is both President of Workers’ Compensation Claims Control and a principal in the law firm of Stuart Baron & Associates. Stu has been heavily involved in advocacy in Sacramento. He is quoted frequently by major workers’ compensation and trade journals.
Is the catastrophe market firming up or not? What will happen to my renewal in November? What did the Japan Earthquake do to the market?
Agents and brokers who work in the Catastrophe (CAT) insurance market field these questions every day and give many different answers. I will try and break this down looking at three main variables that may have the greatest impact on pricing with a focus on West Coast Earthquakes (EQ).
Losses
The fact is that catastrophe losses and their impact on pricing need to be looked at from a global perspective. In other words, even if we have not suffered a major earthquake in California for twenty years, we are subject to changes in the marketplace due to all insurable catastrophe losses worldwide. There are primarily two reasons for this.
First, many of the largest carriers and/or their affiliates write business in Asia, South America, and Australia, and the reinsurance treaties purchased by these carriers are also provided by international markets that are exposed to those events.
Second, most carriers purchase catastrophe reinsurance treaties on a combined basis that incorporates the perils of Earthquake, Wind and Flood. So a large earthquake in Japan, a flood in Australia, or an earthquake in New Zealand can impact Earthquake pricing in California.
Early in 2010, the thought was that it would take insurable loss amounts higher than the 2005 Hurricane Season to "harden" the catastrophe market (estimated insurable losses are at $75 billion for the three largest hurricanes — Katrina, Rita and Wilma). In the last twelve months, total insuranble losses from earthquakes, floods, wind/hail storms, tornadoes, etc. are estimated to be in excess of $85 billion and will likely exceed $100 billion as losses develop
Catastrophe Modeling
All insurers and reinsurers use some form of Catastrophe modeling to help control aggregates, price amounts, and report information to their respective reinsures and to rating agencies such as A.M. Best. One of the most widely used models is RMS (current version is 11.0) which provides analysis tools for major natural Catastrophes including Earthquake, Wind and Flood.
As development of Catastrophe losses takes place, and more information is available to modeling companies regarding how each location, building, construction type, roof type, type of soils, etc. performs in the event, this information is downloaded into the model to further refine its capabilities in predicting future performance in similar events.
Why is this important? With every change in the Catastrophe model comes potential change in how the results impact each carrier's existing portfolio, and how they will look at future accounts.
There was a major change to the RMS Catastrophe model in 2010 with most carriers adopting these changes by July 1, 2011. The general impact of RMS 11, for example, appears to show carriers that their exposures to Catastrophe Windstorm in most of the Southeastern United States is much greater than what they had thought. With their exposures to loss being higher, the potential to loss of surplus is greater, and the potential need for additional reinsurance (at a higher cost) can have an impact on all pricing.
Capacity
There is a "finite" amount of Catastrophe capacity in the marketplace at any one time. After major insurable events such as Hurricane Katrina, available Catastrophe capacity can shrink by 50% or more. Some of this is due to loss of surplus but most is due to market "loss of appetite" or taking a less aggressive "post event" as shareholders and Boards take a closer look at company portfolios and return on equity.
In the current global economic environment, the investment of capital in the insurance industry still seems relatively strong. Even with the string of global losses, as of July 2011, there has been only a slight reduction in available Catastrophe capacity (that was already high) for most accounts, and any new Catastrophe capacity that enters the market helps to keep rates competitive.
These three variables work in conjunction with and against each other, all at the same time. The one variable that does not change is individual risk characteristics of the specific account. Pricing and terms are based on how those specific characteristics are perceived against the changing variables of Losses, Catastrophe Modeling, and Capacity.
What does this mean as we head into the fourth quarter of 2011? There seems to be enough available Catastrophe capacity that on accounts where individual risk characteristics drive competition, pricing increases have been held to a minimum. On those accounts where the characteristics limit available carriers or capacity, there may be pressure for increased rates.
We will circle back around this subject to check and verify how these variables are working in current market conditions at that time.
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Jeff Bianchi has over 17 years' experience in underwriting, marketing and wholesale brokering. He is a Senior Vice President Property Broker at Swett & Crawford and consistently ranks among the top producers nationally at Swett & Crawford. His focus is on large property placements specializing in Catastrophe coverage including Earthquake, Hurricane, and Flood.
What Agents Must Know About The Mechanics Of America's Healthcare Delivery System
The fundamental problem with the American healthcare system is that we hardly spend any money on basic, general care which causes us to spend a whole bunch of money on specialty care. The fact is that five chronic diseases account for 70% of our country's $2.6 trillion annual healthcare expenditures. Those diseases are coronary artery disease, congestive heart failure, diabetes, depression and asthma. The status quo of the way we deliver healthcare is conducive to inadequate management of chronic illness.|
I believe it is very important that agents fully understand the mechanics of America's healthcare delivery system, why it is broken and what it might look like if it's successfully overhauled.The fundamental problem with the American healthcare system is that we hardly spend any money on basic, general care which causes us to spend a whole bunch of money on specialty care. The fact is that five chronic diseases account for 70% of our country's $2.6 trillion annual healthcare expenditures. Those diseases are coronary artery disease, congestive heart failure, diabetes, depression and asthma. The status quo of the way we deliver healthcare is conducive to inadequate management of chronic illness.
There's not a lot of money in educating a family on what brings on an asthmatic attack and what to do in case a child suffers from one. But there's a whole lot of money spent when an asthmatic is admitted to the hospital. The lack of proper care and management of diabetes can lead to very expensive care including amputations, dialysis at $10,000 a day and maybe even a new kidney at $250k. Outreach programs to help diabetics methodically check their blood chemistry, see their doctors regularly and gain access to nutritionists are generally poorly funded, if they exist at all. So it's no wonder that diabetes alone accounts for 35% of Medicare expenditures.
Shortages in access to primary care due to lack of financial incentives (why be a general practitioner when you can make three times the money being a specialist?) cost our system hundreds of billions of dollars a year. Unless our country does more to encourage chronic disease management, the healthcare cost curve will continue upward and ultimately drive our country off the edge of an economic cliff.
Having said this, our system appears to be in the early stages of changing for the better.
For example, Congress included within the Patient Protection and Affordability Care Act (PPACA) language to encourage development of Accountable Care Organizations (ACOs) to help save Medicare money.
According to Wikipedia, many healthcare leaders define the three core principles for ACOs as follows: 1) Provider-led organizations with a strong base of primary care that are collectively accountable for quality and total per capita costs across the full continuum of care for a population of patients; 2) Payments linked to quality improvements that also reduce overall costs; and, 3) Reliable and progressively more sophisticated performance measurement, to support improvement and provide confidence that savings are achieved through improvements in care. Living examples kind of look like Integrated Delivery Systems such as Kaiser and HealthCare Partners Medical Group. In other words, in this model, hospitals and specialists within an ACO would be rewarded for positive health outcomes even if they never see the patient.
While Congress had making Medicare more effective and efficient in mind when they incorporated ACOs into PPACA, my bet is that large employers will be watching the development of this model with a great deal of interest. One of the advantages that large groups have over small groups is the fact that they can realize a return on investment (in the form of lower premiums and higher employee productivity) by incorporating chronic disease management and wellness programs into their employee management regimen. And that's a good step towards lowering the cost of healthcare in our country.
But what about small employers?
Small employers don't have the advantage that large employers have because of how small group rates are pooled in our markets. An employer with 10 employees who tries to help his employees live healthier lives will not realize a meaningful decrease in his health insurance premiums for his efforts because his company's rates are pooled with thousands of others. But carriers being sensitive to the escalating cost of the delivery system and the threat this poses to the industry via reduced commercial enrollment are likely to take steps to modify their networks to look more like integrated delivery systems, ACO's and , yes, even fully capitated HMO's (remember those?).
Further, since the PPACA and its related changes to Medicare and Medicaid became the law of the land, the nature of conversations between providers and insurers appears to have changed for the better. So there is likely to be more productive innovation when it comes to developing future, new health care delivery models. Everyone realizes that unsustainable increases in cost are simply that: unsustainable.
Will these initiatives work? I think they will. All of this equates to more optimism that the healthcare delivery system has the potential to change and that the cost curve can begin to change course and begin to trend downward. But how long it takes to turn our system around and empower it to deliver and finance the level of care we expect for ourselves and fellow Americans for the long haul greatly depends on you, the agent.
The public needs to understand what we talked about above. The more they know about how the healthcare delivery system works, the more they will embrace and expect positive changes to it. Educating the public can bring you short term dividends, as well. The agent who typically explains away a rate increase by simply stating that this is "trend" is vulnerable to an agent who is on top of his game and can really explain what is behind the increase.
In the client's eyes, the agent who knows his stuff and can explain in simple terms the mechanics of our healthcare system will come across as being more credible than the other guy. Increasing your understanding of how our healthcare system works will empower you to become more successful at building and retaining your base of clients. If you would like real case examples of the benefits of managing chronic diseases, let me know by completing the contact form below, and I'll forward you the article. I promise you that it will find it eye-opening and inspirational.
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John Nelson has long been a champion of legislative and educational efforts in the health insurance industry. He is a Chief Executive Officer of Warner Pacific Insurance Services, one of the nation’s largest health insurance general agencies serving over 35,000 small employers with over $1.5 billion of inforce premium.
The First District Court of Appeal’s opinion muddies the waters and inspires litigation. Applicants have no clear path for rebutting the scheduled diminished future earning capacity, but this case — by giving applicants three vague methods — certainly should inspire the California Applicants' Attorneys Association to believe a rebuttal can be accomplished. The defense, on the other hand, is not left without weapons and defenses — but California's employers are rightly more interested in consistency, uniformity and objectivity than expensive trial tactics.
Rosa Moran was sworn-in as the Administrative Director of the Division of Workers' Compensation on July 25th. The entire industry should wish Ms. Moran good luck and God's speed as she takes on the task creating a new and improved Permanent Disability Rating Schedule that stops the permanent disability litigation craze called Ogilvie.
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Donald Barthel is a founding partner of Bradford & Barthel, LLP, an industry leader in the aggressive defense of Workers' Compensation, Subrogation, and Employment, and Labor matters. His entire legal career has been dedicated to the defense of employers' rights in the arenas of labor law, employment law, and workers' compensation.
How high do the stakes have to get for us to shift into a higher mode of clarity and preparedness? As business leaders, we are the ones who get to make that decision.|
Recently I was reading about the challenging environment of a nuclear aircraft carrier. Here are some of the characteristics:
Manned by a bunch of 20-year olds
Deadly jet engines that can suck a person into the jet intake if too close
Jet exhausts that can severely burn a man or blow him overboard
Jet fighter take-offs that reach 150 mph in 2 seconds
Landings that essentially are controlled crashes
Fueling aircraft with engines running
Handling of explosive materials
Yet, for all the hazards, accidents on flight decks are surprisingly rare. Because so many things could go wrong but almost never do, experts consider this a "high reliability organization." The clarity about responsibility for one's performance as well as interfacing with team members is astounding. The communication and heads-up performance is crucial for success. Success is dependent on each person understanding what is expected of him, and understanding how what he does complements the work of the rest of the team. Makes sense, right?
Many of us have participated in this level of preparation and attention to detail when the stakes have been high for the specific project we have been involved with. But think of what is needed to enable this level of performance every day!
Okay, let's shift gears. First, I have to admit I have not seen the level of high reliability performance you find on a flight deck of an aircraft carrier in very many midmarket businesses. I have seen small units in a business that had really embraced continuous improvement make some fantastic improvements. Let's face it. For businesses, the stakes are not as high as they are on a flight deck. But, the principle is there for us to apply — clarity and preparedness escalates the predictability of success.
Look at your business organization. Think about this outline of preparedness for each business unit:
Prepare the description of the 3-5 most important functions of each business unit (that contribute to key results for success).
What is necessary for each function to be performed optimally?
What should the measured results be for each results area (success criteria)?
What processes should be used to assure timely, accurate, high quality performance?
How will customer satisfaction (internal & external) and targeted results be measured and achieved?
How high do the stakes have to get for us to shift into a higher mode of clarity and preparedness? As business leaders, we are the ones who get to make that decision. If this is an area of leadership you would like to read more about, please contact me, and I will send you my white paper on Performance Management - Accountability Based Job Performance (Best Practice Summary). What a great time to concentrate on building high reliability into your organization.
Authors
Kurt Glassman collaborated with Hal Johnson in writing this article. Hal Johnson has been CEO of eight different companies in the US and the UK. His primary focus has been building management teams to produce outstanding performance.
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Over his 30+ year career, Kurt has started, acquired, and provided counsel to a variety of businesses and owners. He has built and led international and professional service organizations; created, through acquisition, a $50 million building materials operating entity; and developed multimillion-dollar real estate projects.
