Tag Archives: Accountable Care Organization

Where Is the Elon Musk of Healthcare?

I have been following and interested in space and rockets since I was a child. In April, I was honored to give the distinguished lectureship at the University of Mississippi Medical School, School of Population Health, titled SpaceX, Moonshots and Diabetes in Mississippi.

The announcement that the U.S. Air Force has contracted with SpaceX for a launch of its Falcon Heavy brought that point home again.

The gist of my presentation compared the current efforts to launch rockets into space with our healthcare system.

In the space race, there are two major players at this time, United Launch Alliance, composed of Boeing and Lockheed Martin, with decades of experience and strong government relationships, and SpaceX, the Elon Musk company.

ULA is like our current healthcare system — big names, big contracts, major impact on and strong relationships with our federal government — and the rockets cost a lot of money. In fact, ULA could also be compared to the Cancer Moonshot, which also has big names with strong government relationships and has big bucks. The Cancer Moonshot approach of using big data analytics, biologics and CRISPR to edit out the genetic defect are all needed and are all great ideas. They are also shiny objects, and they will most likely cost a lot of money.

See also: 10 Reasons Healthcare Won’t Be Disrupted  

As Buckminster Fuller said,

“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”

SpaceX is the upstart that is doing just that. It is based on Elon Musk’s original vision to re-energize the public to space exploration by putting a greenhouse on Mars. This initial vision has become the goal of “enabling people to live on other planets.” He quickly discovered that he could not do it with the rockets developed because they cost too much. So what did he do? He devised a new system/rocket and removed the waste, the waste of throwing away the rocket, resulting in lower costs and making his dream reasonable. Well, he did that and much more. His launches are considerably cheaper than those of the big guys of ULA. His Falcon Heavy is only the latest example:

“The launch contract will cost the U.S. Air Force $130 million, far less than the $350 million average cost of United Launch Alliance’s Delta IV, previously the heaviest lifter in the U.S. arsenal.”

So what does that have to do with healthcare and diabetes in Mississippi?

  • In 2015, Mississippi ranked first in the nation for overall diabetes prevalence, with more than 333,000 adult Mississippians living with the disease; that’s more than 14.7% of the adult population
  • Diabetes accounted for more than 1,000 deaths in Mississippi in 2015
  • In 2013, direct medical costs (e.g., hospitalizations, medical care, treatment supplies) accounted for about $2.4 billion, of which Medicaid spent almost $1 billion.
  • MS has an estimated 30% of adults with pre-diabetes, creating the potential that more than 600,000 Mississippians are on the path to develop type 2 diabetes

Yet we know that perhaps 80% of type 2 diabetes is preventable. We also know that an estimated 30% of healthcare is waste, fraud and abuse. So that’s roughly $800 million in waste, etc. that if freed up from the system could be applied to the social determinants of health that are driving this disease.

Imagine that, the money to solve the problem is locked up in the system itself.

Why not create a grand mission just like Elon Musk’s mission to Mars. A mission that people can work toward, as they do the incremental changes needed to create the new system to make it happen. Lifting a quote from President Kennedy, I said:

We chose to eradicate every case of lifestyle-related type 2 diabetes and pre-diabetes in the state of Mississippi, for no more than we are spending today on healthcare. We chose to eradicate every case of lifestyle-related diabetes and pre-diabetes, not because they are easy, but because they are hard; because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one we intend to win. 

So how do we do this?

By creating an Accountable Health Organization, implementing a broad-based population health program, changing the reimbursement to the healthcare system to a value-based approach, perhaps to capitation, and using the savings to fund the social services.

It’s a heavy lift, no pun intended, and it will take decade(s), but it can be done. It will require new systems, a long-term approach and a lot of small changes to get there. If we created the system to do this with diabetes, we could then apply it to the rest of the preventable issues, for we will have developed solutions for diet, exercise, patient engagement, adherence, appropriate medical care, rural care, urban approaches, personalization and on and on.

See also: How to Optimize Healthcare Benefits  

In fact, the UMMC School of Population Health and the Jackson Hinds-Comprehensive Health Center FQHCs have begun just such an effort by starting with pre-diabetes. Can you imagine the look on all our faces when we succeed…?

You can find the article originally published here on LinkedIn.

The True Face of Opioid Addiction

It’s likely that when people hear about the growing opioid addiction problem in America, the face that comes to mind is the one commonly shown on TV and in the movies, which is a very broad generalization : the young, strung-out heroin addict living on the streets. Or dying of an overdose.

Heroin abuse is definitely a growing problem in America. But it’s not the only opioid-related issue we’re facing. In 2012, an estimated 2.1 million people were suffering from substance abuse disorders from prescription opioid use, and deaths from accidental overdoses of prescription pain relievers quadrupled between 1999 and 2015. Sales of prescription opioids also quadrupled during this period.

While prescription pain killers are often seen as a gateway drug to heroin among the young, the issue is much broader than just one demographic group. The reality is that the face of opioid addiction could be the soccer mom down the block who has been experiencing back pain. It could be the marathon runner who is trying to come back after knee surgery. It could be your grandmother baking cookies as she works on recovering from hip replacement surgery.

In fact, it could be anyone. And that diversity is what has made prescription opioid addiction so difficult to manage.

Drivers of addiction

What is driving this explosive growth of such a potentially dangerous substance? Part of it, quite frankly, has been the incredible improvements in healthcare over the last 20-some years. Hip replacements, knee replacements, spinal surgery and other procedures that were once rare are now fairly common. More surgeries mean more patients who need pain relievers to help them with recovery.

The greater focus on patient satisfaction, especially as the healthcare industry shifts from fee-for-service to value-based care, has also had some unintended consequences. Physicians concerned about patient feedback from Healthcare Effectiveness Data and Information Set (HEDIS) measures or Medicare Star ratings have additional incentive to ensure patients leave the hospital pain-free. Physicians may prescribe opioids, particularly if patients request them, rather than relying on less addictive forms of pain management.

See also: In Opioid Guidelines We Trust?  

Here’s how that translates to real numbers. An analysis of 800,000 Medicaid patients in a reasonably affluent state showed that 10,000 of them were taking a medication used to wean patients off a dependency on opiates. This particular medication is very expensive and difficult to obtain – physicians need a specific certification to prescribe it. So it is safe to assume that the actual number of patients using prescription opiates is two to three times higher.

Those numbers aren’t always obvious, however, because the prescriptions may be obscured under diagnoses for other conditions such as depression. Indeed, more than half of uninsured nonelderly adults with opioid addiction had a mental illness in the prior year and more than 20% had a serious mental illness, such as depression, bipolar disorder or schizophrenia, according to the Kaiser Family Foundation. The result is that, without sophisticated behavioral analytics, it can be difficult to determine all the patients who are addicted to opioids. And what you don’t know can have a significant impact on care, costs and risk.

Complications, risk, and prioritization

Opioid addiction tends to interfere with the treatment of other concerns, especially chronic conditions such as depression, congestive heart failure, blindness/eye impairment and diabetes. As a result, physicians must first take care of the addiction before they can effectively treat these other conditions.

That is what makes identifying patients with an addiction, and prioritizing their care, so critical. Failure to do so can be devastating, not just clinically but financially – especially as healthcare organizations take on more risk in the shift to value-based care.

Take two patients with an opioid addiction who are on a withdrawal medication. Patient A also has eye impairment while Patient B is a diabetic. If the baseline for cost is 1, analytics have shown that Patient A will typically have a risk factor of 1.5 times the norm while Patient B, the diabetic, will have a risk factor of 5 times.

Under value-based care, especially an Accountable Care Organization (ACO) where the payment is fixed, the organization can lose a significant amount of money on patients who are costing five times the contracted amount. For example, if the per member per month (PMPM) reimbursement for the year is $2,000, this patient — who is using this medication for withdrawal from an opiate dependency and is a diabetic — will end up costing $10,000.

It is easy to see why that is unsustainable, especially when multiplied across hundreds or thousands of patients. Yet the underlying reason for failure to treat the diabetes effectively – the opioid addiction – may not be obvious.

Healthcare organizations that can use behavioral analytics to uncover patients with hidden opioid dependencies, including those on withdrawal medications, will know they need to address the addiction first, removing it as a barrier to treating other chronic conditions. That will make patients more receptive to managing conditions such as diabetes, helping lower the total cost of care.

They can also use the analytics to demonstrate to funding sources why they need more money to manage these higher-risk patients successfully. They can demonstrate why an investment in treating the addiction first will pay dividends in the long term with a variety of chronic conditions.

See also: How to Attack the Opioid Crisis  

Many faces

It’s easy to see that opioid abuse in all forms has reached epidemic levels within the U.S. What is not so easy to see at face value is who the addicts are — or could be.

Despite popular media images, the reality is that opioid addition in America has many faces. Some of them may be closer to us than we think. Behavioral analytics can help us identify with much greater clarity who the likely candidates are so we can reverse the trend more effectively.

Why Healthcare Costs Soar (Part 4)

The first three articles in this series by David Toomey and me are here, here and here.

Over the last few years, the buzz in the healthcare industry has been about accountable care organizations (ACOs), and the next wave will be the promotion of “value-based contracting.” These are similar approaches, different words.

Generally, an ACO is formed around a physician group or a hospital linked to physicians. The basic concept is for the provider system to be accountable for patients, with the providers financially motivated to affect their patient population’s overall costs. Makes sense, right?

For the past 25 or so years, physicians have been linked to independent practice associations, medical groups and management services organizations. Many of these provider organizations have had financial incentives tied to performance. Data have been available to assess physician performance. So, what’s different now?

Today the Feds are re-emphasizing performance in their physician contracting under the new Medicare Access and CHIP Reauthorization (MACRA), which replaces the current reimbursement formula.

Beginning in 2019, the existing incentive programs now used for Medicare physicians will be replaced by a new performance-based model with four components. Those components are 1) quality, 2) resource use, 3) meaningful use of technology and 4) clinical practice improvement.

Based on the Medicare physicians’ results, the reimbursements can be decreased by as much as 4% (adjusting to 9% by 2022). The program will have upside incentive for achieving exceptional performance of as much as 12% in 2019.

As the largest purchaser, Medicare is striving to establish per-unit cost consistency in every market. Yet Medicare’s 2014 costs vary from $6,631 to $10,610 across markets. Why? Even if the cost per unit of service is standardized, extremely wide variation exists in how patients are treated for given conditions. When wide variation in care plans exists, some are right and some are wrong, as regular readers of Cracking Health Costs know. Some are better, and some are worse. Period.

It’ll be interesting to see if the four new performance measures under MACRA will have a better impact than what’s in place today.

Self-insured employers don’t need to wait four or five years to see the results. They can leverage their purchasing scale with the providers to drive out both inappropriate care and unit price variations. The time to start is now.

How Work Comp Can Outdo Group Health

We all know the current healthcare system in the U.S. delivers erratic quality at unsustainable, yet ever-increasing, costs. Workers’ compensation medical care is affected by those costs. 

A major shift in the health industry, value-based healthcare, will benefit workers’ compensation. Embracing selected new medical management methodologies put forth in value-based healthcare has the potential to be powerful.

Value-based healthcare means restructuring how medical care is organized, measured and reimbursed. It moves away from a supply-driven system organized around what physicians do to a patient-centered system organized around what patients need. The focus is shifted from volume and profitability to patient outcomes (quality care). When fully implemented, the overall impact will be nothing less than staggering.

Porter and Lee, healthcare industry strategists at Harvard, have described six value strategies necessary to achieve healthcare industry transformation. Many of the changes are now underway in ACOs (accountable care organizations) such as the Cleveland Clinic, proving the concept. These defined initiatives produce desired results—quality care at less cost. 

Six components of value-based healthcare

The following briefly describes the methodologies necessary to transform healthcare, according to Porter and Lee.

  1. Integrated practice units (IPUs)—meaning multiple specialists practice together, resulting in comprehensive and integrated medical care rather than fragmented, duplicated services
  1. Measure true outcomes and costs for every patientWhen outcomes are measured and reported publicly, providers are under pressure to improve. Fraud and self-dealing are reduced.
  1. Bundled paymentsPayment bundles are capitated single payments for all the patient’s needs during defined episodes of care, such as specific surgical procedures. Providers are rewarded for delivering quality while spending less.
  1. Integrate care delivery systemsServices are concentrated and integrated to eliminate fragmentation and to optimize the quality of care delivered at any given location.
  1.  Expand geographic reachCenters of excellence are developed where expertise is gained through higher volume of similar procedures.
  1.   Information technologyData mining powerfully enables the first five initiatives and informs services and decisions.

As Porter and Lee say, “Whether providers like it or not, healthcare is evolving from a proficiency-based art to a data-driven science, from freelance physicians to hospital-employed physicians, from one-size-fits-all community hospitals to vast hospital networks organized around centers of excellence.”

Value-based medical management in workers’ comp

The goal of value-based medical care is to enhance quality outcomes for patients (injured workers) while reducing costs. Focusing on quality (what the patient needs) actually reduces costs.

For group health, the measures are physical and philosophical, requiring widespread disruption in how services are organized, delivered and reimbursed. However, workers’ compensation payers can benefit by incorporating three of the six value measures into their medical management process now.

  1. Measure true outcomes and costs for every patient (the injured worker)

Physician performance is scored based on injured workers’ experience and outcomes along with cost. Providers who score poorly can be avoided.

  1. Bundle payments

Bundling is capitating payments for all the services required for procedures such as specific surgical procedures, including all associated pre-op and post-op care. The costs are kept in line because providers need to stay under the cap to be profitable. They also focus on quality, because re-dos, redundancy and complications add cost to the service bundle, thereby diminishing profits. Prepare to see bundled payment options available to workers’ compensation sooner rather than later.

  1. Information technology

The data in workers’ compensation, while in silos, is all organized around individual claims and injured workers. When the data is integrated at the claim level, patient experience, provider performance, outcome and cost analysis opportunities are unlimited. The more comprehensive and accurate the data, the greater the opportunity for gain.

Those who cling to traditional seat-of-the-pants medical management will be left behind. Those in group health may be hampered by slow regulatory change, organizational upheaval and resistant providers, while workers’ compensation payers are free to adopt transformative value measures now. Organizations that progress rapidly to implement the value agenda will reap huge benefits.

20 Work Comp Issues to Watch in 2016

In an “Out Front Ideas with Kimberly and Mark” webinar broadcast on Jan. 12, 2016, we discussed our thoughts around the issues that the workers’ compensation industry should have on its radar for 2016. What follows is a summary of 20 issues that we expect to affect our industry this year.

  1. Election Cycle

Everyone knows that this is a presidential election year. But election time also means governor and insurance commissioner seats are available. State insurance commissioners are elected in 11 states and appointed in the other 39. In the coming election, there are 12 gubernatorial seats and five insurance commissioner positions to be decided. The workers’ compensation industry needs to be paying attention to these elections because the insurance commissioners can have significant influence over procedures, policies and enforcement in their states.

  1. Viability of Workers’ Compensation

It is important for all of us to consider the continuing viability of workers’ compensation. Is the grand bargain still doing what it was established to do? There is a growing debate around the gaps and shortcomings of workers’ compensation. Our industry needs to engage in a critical analysis of these issues.

  1. Federalization

In October 2015, 10 high-ranking Democrats on key Senate and House committees sent a letter to the Department of Labor asking it to conduct a critical review of state workers’ compensation systems. Some are concerned that this is a sign we could see federal government involvement in state workers’ compensation systems.

In some ways, the federal government is already involved in workers’ compensation. For instance, OSHA has a tremendous impact on workers’ compensation. Medicare Secondary Payer Compliance is another example of federal law affecting the system.

Recent criticisms of workers’ compensation have focused on the vast benefit differences between states. There is also growing concern that workers who are permanently disabled are pushed off workers’ compensation and onto Social Security disability. With Social Security raising solvency concern, lawmakers will be receptive to discussions on how to keep workers’ compensation from shifting long-term claims to the federal government.

This is a substantial issue to watch in the coming years, and there is a significant chance that the federal government will suggest minimum benefit recommendations to the states at some point. This could especially affect states that have hard caps on the total amount of indemnity benefits that an injured worker can receive.

  1. Affordable Care Act

The Affordable Care Act (ACA) will continue to be a subject of discussion in 2016.

The implementation date of the high-cost, employer-sponsored health plans tax, dubbed the “Cadillac tax,” was recently delayed from 2018 to 2020. It imposes an excise tax of 40% on health plans whose value is more than $10,200 for individual coverage and $27,500 for a family. Regardless of the delay, employer-sponsored benefit plans have evolved over the past five years in preparation to avoid the additional tax. The formerly rich benefit plans were dropped in an effort to provide benefit plans within ACA’s requirements and often replaced by higher-deducible plans with reduced benefits.

NCCI and WCRI have both conducted studies on how the ACA has affected workers’ compensation. Results have not conclusively tied treatment delays or actual cost shifting to workers’ compensation. We believe continuing studies by these organizations and others are important to evaluate the impact of ACA on workers’ compensation.

Other issues that should be monitored include consolidation of health systems, providers and insurers. In 2015, there was more than $700 billion of consolidation in the healthcare marketplace. This is driven, in part, by the ACA, because scale and size assist providers with efficiency, purchasing power and the need to provide a continuum of care.

Another issue where the ACA could affect workers’ compensation is changing reimbursement models. Medicare is looking to shift into a value-based reimbursement model, and many state fee schedules are based on Medicare rates.

Although not specifically related to ACA, a healthcare topic to keep an eye on is drug pricing. Drug pricing will continue to be a topic within the media, PBMs, employer benefit managers, health plan experts and the political arena. Prescription drug pricing increased more than 10% in 2015, and this trend is expected to continue. This has an impact on the cost of workers’ compensation claims.

  1. Holes in Workers’ Compensation

What many people do not realize is that workers’ compensation protections are not available to all workers within the U.S. In 14 states, smaller employers with five employees or fewer do not have to secure coverage. In 17 states, there is no legal requirement for coverage of agricultural workers. Half of the states do not require coverage for domestic workers, and five states specifically exclude coverage for these employees. There are also states that create exceptions for certain types of workers, such as state employees in Alabama. Finally, we have seen from court cases around the country that occupational diseases that take several years to develop are often barred by the statute of limitations, leaving workers with no recourse for benefits.

These holes are yet one more thing that critics point to when talking about the inadequacy of workers’ compensation. The occupational disease issue is particularly concerning because it is very easy to question the fairness of barring a claim under the statute of limitations and, at the same time, denying the injured worker the ability to pursue a claim in civil court under the exclusive remedy protections of workers’ compensation. This is another area where we will not be surprised to see the federal government give recommendations.

  1. Blurred Lines Between Workers’ Compensation and Group Health

The employee health model is evolving. Employers are finding the need to provide a consistent healthcare experience for their workforce and plan members. Employers would like to find a model that provides both quality care and consistency for their employees, regardless of whether the need for treatment arises from a work injury or at home. Because a healthy workforce is a productive workforce, employers also feel that there is a need to tie health and productivity together.

We will continue to see health systems build accountable care organizations (ACO) and enter the health plan, insurance and risk-bearing arena with the goal of directly selling to and partnering with employers. ACOs are an attractive model for employers supporting a healthier workforce by extending the culture of health philosophy from work to the home for their employees and their families.

Mental health is a top driver for absence across employers and not simply a health cost concern. Mental healthcare should be as important as physical healthcare and is currently a focus of population health and employer programs. Employers are looking for healthcare models, which consider the person as a whole and offer consistent, engaging behavioral health and wellbeing programs for the workforce.

Workers’ compensation key stakeholders should be a part of the evolving health model discussions and early stage planning so as not to be left in the dark as health models change.

  1. Options to Workers’ Compensation

We all know that Texas has a unique system that allows employers to completely opt out of workers’ compensation benefits. The term “opt-out” refers only to the Texas system. Employers in Oklahoma have an option to workers’ compensation that allows them to develop a private benefit plan that replaces state-mandated workers’ compensation. It is this concept of an option that is looking to spread to other states. Bills on this issue will be reintroduced in Tennessee and South Carolina this year, and other states have begun preliminary discussions.

Some employers feel that they can provide better benefits to their injured workers at a lower cost with these option programs. Others are concerned that these programs lack the controls and oversight of state workers’ compensation. One thing is certain: This issue is not going away any time soon. Perhaps these discussions around options to workers’ compensation can lead to discussions about workers’ compensation reform, including employer medical control, increasing thresholds of compensability and reducing the bureaucracy of the workers’ comp system.

  1. Evolving Claims Model

There are significant discussions around the evolving claims model. The industry realizes that we need to focus more on the injured worker as a consumer. The model needs to focus more on advocacy, but what does this really mean? Should there be a person who assists the injured worker in understanding the claims process, or is there a need to change the culture of our industry to be less adversarial?

Other parts of the evolving model involve who actually touches the claim. Are there elements that could be automated? Should there be more specialization with different individuals performing different tasks instead of the current model where the claims adjuster is a generalist performing multiple tasks across multiple jurisdictions?

The claim handling model also needs to adapt to new technology and the way in which different generations want communication. Some injured workers prefer text instead of e-mail or phone calls. Some like to access claims information in an app on their mobile device or simply, 24/7, as they want it that moment. The model must evolve to take full advantage of new technology and communication methods.

The March 15 “Out Front Ideas with Kimberly and Mark” webinar will focus on the evolving claims model and include guests who are passionate about an advocacy-based design.

  1. Florida Supreme Court

Over the last two years, four cases challenging the constitutionality of various aspects of the Florida workers’ compensation statutes have made it to the state’s Supreme Court. The first of those cases, Padgett, ended in late December when the Supreme Court declined to review it. That case had been thrown out on procedural grounds during the appeal process, so the Court of Appeals and Supreme Court never addressed the underlying constitutional challenge.

There are three cases still to be decided:

  • Westphal, which deals with caps on temporary disability benefits.
  • Castellanos, which addresses limitations on attorney fees.
  • Stahl, which focuses on post MMI medical co-payments and the elimination of permanent partial disability payments.

The expectation is that the Florida Supreme Court will address all of these cases in 2016, but nobody knows when that will occur.

  1. Bureaucracy

Workers’ compensation is one of the most highly regulated lines of insurance, and regulators are increasingly aggressive in pursuing fines and penalties. Every form filed and every payment transaction is an opportunity for a penalty. EDI allows regulators to automate the fines and penalties. Some states perform retrospective audits on activity five to 10 years in the past. The IMR process in California adds administrative cost to claims without necessarily improving outcomes, and states with self-imposed penalties may be driving up the cost of doing business beyond the benefit of the penalty payment. Lobbying is becoming an increasingly important area for payers and service providers to consider.

The significant costs associated with the bureaucracy of workers’ compensation regulations are not improving the outcomes on claims. Most of the money collected from the fines and penalties is paid to the states. The programs may cover the operating costs of state workers’ compensation division and not be paid to the injured worker or medical provider.

This topic is an important issue to watch in 2016 and will be the topic of our Feb. 9 “Out Front Ideas with Kimberly and Mark” webinar.

  1. Regulatory Change

There are four states in particular that we should be keeping an eye on in terms of potential regulatory reforms in 2016:

New York

Employers in New York are continuing to push for additional workers’ compensation reforms to reduce their costs because the savings projected with the last round of reforms never fully materialized. Whether there is enough momentum to get a bill through this year remains to be seen, but the efforts are there.

Florida

In Florida, the situation is going to depend on what the state Supreme Court does with the cases mentioned earlier. If any of those cases punch holes in the constitutionality of the workers’ compensation law, then the legislature is going to need to address this. Again, this is a waiting game.

Illinois

Illinois Gov. Rauner has made it a priority to enact workers’ compensation reforms to reduce employer costs. But his efforts have been blocked by the state legislature, and there is a budget stalemate in the state. There has been much political back-and-forth on this budget and the workers’ compensation reforms. It remains to be seen if the governor has the political muscle to get his legislation passed.

California

Ever since the Schwarzenegger workers’ compensation reforms in 2004, and continuing with SB 863 passed by Gov. Brown, the California legislature has been trying to undermine these workers’ compensation reforms. Every year, multiple bills are passed by the legislature, and every year both Gov. Schwarzenegger and Gov. Brown have vetoed those bills. Gov. Brown is committed to preserving his workers’ compensation reforms, and there are three years left on his term. Once he is gone, there is concern about what could happen with workers’ compensation in California. But, for now, significant change is not expected.

  1. Talent Acquisition

Talent acquisition and retention is probably the biggest issue facing the entire insurance industry. Consider:

  • 25% of insurance industry workforce will retire by 2018 (McKinsey)
  • There are 2.3 million workers in the insurance industry. More than 1 million will retire in the next 10 years, and 400,000 positions will be left open by 2020 (Deloitte and Jackson Group)
  • Workers over the age of 45 represent 48% of the insurance workforce

Are we doing enough with colleges to show the career opportunities in the insurance industry? Although more colleges and universities are offering risk management programs, the reality is that there are very few of these programs nationwide. Our industry needs to support these programs with both grants and internship opportunities.

In workers’ compensation, we need to be looking at the role of the examiner. Are there tasks that we could automate and reduce workload need? Millennials say they want to work with purpose. The role of the claims adjuster is to assist injured workers in their recovery. Could we be doing more to highlight the positive aspects of the claims adjuster role to make it more attractive to millennials?

We also need to be looking at ways to be flexible with work schedules and at whether someone is tied to the home office or able to work from a remote location. Finally, we need to continue to focus on promoting diversity and inclusion within our workforce.

In May, we will be doing an “Out Front Ideas with Kimberly and Mark” webinar devoted to this topic.

  1. Market Conditions

You cannot forecast the coming year for the workers’ compensation industry without talking about rates. Recently, for the first time in years, the Fed increased interest rates. This is good news, but the change is still insignificant and will not have a material impact on the workers’ comp industry. Because investment opportunities are limited for carriers, they continue to be very diligent with their underwriting. What does this mean for rates? Right now, the market is relatively stable. Accounts with good loss histories could see steady to slightly decreased rates, while accounts with poor loss histories will likely see slight increases. Overall, significant rate changes across the nation are not expected in the coming year.

  1. Predictive Analytics

Predictive analytics have been a buzz word in our industry for a number of years. Most data models identify at-risk claims, which may benefit from additional intervention in terms of nurse case management or a more skilled adjuster. The goal of the intervention(s) is to change the trajectory of the claim, to do something different than in similar prior claims, so the result is improved over the past experience. Although most payers reflect having predictive analytics and a variety of models available, there are limited published results on the outcome and effectiveness. Watch in 2016 to see if organizations begin sharing outcomes as a way to market their business or provide industry thought leadership on what is working and should be considered to drive success.

There is a need to evolve predictive analytics and big data models so that some human tasks are automated. Instead of just identifying cases where intervention is necessary, we should also identify claims where minimal intervention is needed. This approach frees resources and allows attention on claims, which will benefit from the touch. Future claims models will benefit from analytics using learning models similar to IBM Watson-type smart analytics.

  1. OSHA

OSHA continues to be a challenge for employers. Going into 2016, OSHA has increased reporting and recordkeeping requirements. It is also increasing its focus on certain industries, including healthcare, and employers are seeing a significant increase in fines. This is an area that is constantly evolving.

Our April 5 “Out Front Ideas with Kimberly and Mark” webinar will focus on these continuing developments and discuss the continuing issues that employers should track.

  1. Utilization Review

There is industry buzz and sidebar conversations around utilization review (UR) and the current approach deployed by employers, payers and service providers. Physicians are asking more than ever how they can help streamline treatment requests, obtain decision outcomes electronically and more quickly and provide timely, appropriate care for patients.

Utilization review should ensure that injured workers receive appropriate care within the right setting and for the correct duration. But what is the right UR model? Should all treatment be subject to UR or select treatment requests? Is UR a process strictly addressing the request for treatment and medical documentation submitted against guidelines of care or collaborative with adjusters, providers and the injured workers? Are denials of care driving up litigation unnecessarily? Do utilization review referral triggers change if the physician providing care is part of a high-performance network or known to be a top-performing physician? These are questions being raised by industry veterans and newcomers alike and are likely worthy of a review and further dialogue.

In the consumer-driven health world where we find ourselves, there is greater interest from injured workers to understand treatment options and outcomes. If not a part of UR, is your case management or claim model providing medical treatment option education, inclusive of outcomes awareness? Transparency is becoming increasingly important to consumers.

  1. Exclusive Remedy

Plaintiff attorneys are always trying to find ways around the exclusive remedy protections of workers’ compensation, and these efforts are becoming increasingly successful. In early January 2016, the District Court of Appeals in California allowed an injured worker to pursue a civil claim against a utilization review provider because the provider failed to warn him about the potential risks of medication withdrawal.

More and more, judges are allowing such litigation to survive a motion to dismiss on summary judgement because of workers’ compensation exclusive remedy protections. This creates enormous costs for employers and carriers, which then must spend hundreds of thousands of dollars or more defending such lawsuits and face the risk of a jury award that could be worth millions. In addition, an employer’s liability award based on the “intentional actions” of the employer may have issues with insurance coverage. The entire industry should be paying close attention to this area of increased litigation around exclusive remedy.

  1. ICD-10

The ICD-10 medical classification came along last year with a lot of hype and a significant amount of work effort to update systems and train teams. There was concern that the new diagnosis codes would result in slowed claims processes and treatment decisions. Thus far, workers’ compensation key stakeholders report little to no impact from the change. This may be because states did not mandate the use of ICD-10 for workers’ compensation and most organizations continue to accept ICD-9. Bill review receipt to pay timeframes have not lengthened, and e-billing rejections did not increase, which were two areas to watch after the ICD-10 go-live.

In 2019, Medicare plans to roll out an incentive-based reimbursement model tied to patient outcomes (MACRA). The American Medical Association believes this will be a significant reimbursement change for physicians. Changes to Medicare reimbursement could impact workers’ compensation because some state fee schedules are Medicare based.

History has proven Medicare does not always follow through with what it says it is going to do in terms of changing reimbursement models, but the MACRA implementation is an issue worth monitoring.

  1. Marijuana

Thus far, New Mexico has been the only state allowing medical marijuana for treatment under workers’ compensation. But as the use of medical marijuana spreads, it is inevitable that we will see other states take on this issue. The answer is simple –if states put something in their statutes barring medical marijuana under workers’ compensation, then that solves the problems. Some medical marijuana states have already indicated that insurance is not responsible covering medical marijuana. State legislators and regulators can stop this before it becomes a legitimate problem.

The bigger issue is employment practice concerns. Many expect the federal government to reclassify marijuana as a Schedule 2 drug, possibly by the end of this current administration. Once that happens, it will no longer be an “illegal” drug. Employers are going to need to adapt and drug test for impairment rather than just testing the presence of the drug. Standards are going to need to be developed on what constitutes “impairment” with marijuana. The science needs to catch up with the realities of this new normal when it comes to marijuana in the U.S.

  1. On-Demand Economy

The on demand economy is creating new concerns about what constitutes an employee/employer relationship. Is an Uber driver an employee of Uber or an independent contractor? What about a repair person you hire through Angie’s List?

While the on-demand economy is a newer dynamic, determining what constitutes independent contractor vs. an employee has been a challenge for the workers’ compensation industry for many years. In July 2015, the Department of Labor issued an interpretive memorandum indicating that the DOL feels “most workers classified as independent contractors are employees under the Fair Labor Standards Act’s broad definitions.”

So perhaps the issue to watch here is not so much the on-demand economy, but instead whether we are going to see the Department of Labor push for fewer and fewer workers to be classified as independent contractors. This could have a significant impact on many industries as well as significantly changing the business model of services like Uber and Lyft.