Tag Archives: sedgwick

More States to Offer Work Comp ‘Opt-Out’?

As we are all too familiar, the handling of workers’ compensation is dictated by statutes in all states. Only Texas and Oklahoma offer the freedom to “opt out” of the statute, and their approaches are quite different.

In Texas, “non-subscription” has been around for more than 100 years. Practitioners have achieved dramatic costs savings and better outcomes for many claims. Over time, non-subscribers also often experience significant reductions in frequency and length of disability. All of these outcomes are what we work hard to help our clients achieve, but we are often frustrated by the statutory requirements of many states that bring bureaucracy and controversy to many claims.

In February 2013, the state of Oklahoma enacted workers’ compensation legislation, SB 1062, which allows any employer to exit, or opt-out of, the state’s statutory workers’ compensation system. While not exactly like  “non-subscription” in Texas, this new statute is a significant move forward in giving employers more options in how they respond to and finance employee injuries and related benefits. A key focus is on ensuring injured employees are treated respectfully and compensated fairly.

Just as there are significant differences between what Oklahoma has done and what has been in place in Texas for more than 100 years, there are state-specific opportunities to improve in many other states.

Enter the Association for Responsible Alternatives to Workers’ Compensation, or ARAWC (pronounced “A-Rock”). This national coalition of employers and workers’ compensation system providers has formed after many realized the benefits achieved in Texas and those anticipated in Oklahoma.

Where SB 1062 offers Oklahoma employers that choose to opt-out of the state system the opportunity to substantially reduce work-injury costs and avoid both the statutory system’s extensive regulation and litigation risk, similar goals for other states are being established by the leaders of ARAWC for the benefit of both employers and employees. Two key statistics show why Oklahoma changed:

  • Oklahoma employers said that workers’ compensation costs were the #1 reason they were either leaving the state or adding jobs at facilities located in other states, such as Texas.
  • National Council on Compensation Insurance (NCCI) statistics for 2012 showed Oklahoma loss costs to be 225% higher than those in neighboring states.

ARAWC is now developing strategies and plans that will identify the states where statutory change can bring the most benefit to both employers and employees through a more effective, efficient mechanism. The founders expect that their efforts will enable the delivery of better medical outcomes to injured workers and give employers more choice on how employee injuries will be managed. The organization will be announcing its first target state at the first of the year.

Currently, all but Oklahoma and Texas effectively mandate workers’ compensation insurance as the sole option for employers to cover employee injuries. The Texas and Oklahoma options are not currently available elsewhere. ARAWC’s mission is to expand the delivery of better medical outcomes to injured workers by expanding employer choice in other states. Experience under these alternative employee injury benefit platforms has proven to dramatically reduce employee injury costs, while achieving higher employee satisfaction and substantial economic development.

Over the past two decades, Texas non-subscribers have achieved better medical outcomes for hundreds of thousands of injured workers and saved billions of dollars on occupational injury costs. While ARAWC is not necessarily taking the Texas model forward into other states, it will leverage the learnings from more than 100 years of having options in Texas and from what emerges from the changes from Oklahoma’s new statute, to drive a strategy for process improvements and lower costs in selected states where change is overdue. It is important to remember that ARAWC views an option as a positive, competitive complement to workers’ comp, not necessarily a replacement to the current system.

Some of the core benefits that ARAWC will be seeking include:

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

This newly minted organization was established and is governed by a founding board that includes many Sedgwick clients that, in some cases, have tens of thousands of employees throughout the U.S. and have an intense interest in seeing those employees helped by a better-designed and -managed system.

The member companies of ARAWC aspire to refocus state-based mandates in response to growing gaps in quality medical care, efficient risk financing, effective return to work and other gaps in many current systems. Some of the other expected benefits of ARAWC’s strategy for employees are expected to be:

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

Nationwide, the experience under alternative employee injury platforms will provide employers the option of alternative mechanisms, which can result in:

  • A more competitive insurance marketplace — experience shows significant rate reductions when choice is introduced.
  • Improved incentive for existing workers’ compensation providers to improve services and pricing, knowing the employer has an option to be more engaged in helping injured workers recover and return to work more quickly and efficiently.
  • Incentives for medical providers to act in the best interests of the employee and improve levels of service
  • Expanding employee access to medical providers who do not accept workers’ compensation patients because of low fee schedules and paperwork.
  • An injury benefit plan that can more efficiently deliver care to and achieve better medical outcomes for injured workers.

ARAWC shows what an often inefficient system can motivate: change that can benefit all participants while reducing bureaucracy and many other negative elements.

As the conversations that ITL is driving are focused on disrupting the status quo, what better place to start than with choice in workers’ compensation?

Same-Sex Marriage: An Update on Handling Claims

The pace of legislative and judicial activity surrounding same-sex marriage has quickened.

Currently, 17 states plus the District of Columbia allow same-sex couples to marry. Several states have expanded the legal rights available to spouses in same-sex relationships through civil unions and domestic partnerships. On June 26, 2013 the U.S. Supreme Court ruled in  Windsor v. United States, No. 12-307 that section 3 of the federal Defense of Marriage Act (DOMA), which defines marriage, is unconstitutional. Since this decision, several state attorneys general have announced that they will no longer defend their state’s same-sex marriage bans.

Here is an update on the issue of same-sex marriage and claims handling considerations:

Same-Sex Marriage Overview

In the states that recognize these unions, the legal status of same-sex marriages is identical to opposite-sex marriages.

The first states that allowed same-sex marriage did so as a result of court decisions—Massachusetts in 2004, Connecticut in 2008 and Iowa in 2009. However, most states and the District of Columbia provided for same-sex marriage through legislation. Below is a summary of changes in the states over the past two years on this fast-moving issue:

2012

Washington

Legislation establishing same-sex marriage was approved February 2012, but opponents gathered enough signatures to put the issue on the November 2012 ballot. Voters upheld the law, and same-sex marriages began on Dec. 6, 2012.

Maryland

Gov. Martin O’Malley signed same-sex marriage legislation into law on March 1, 2012. However, opponents of the legislation obtained enough signatures to file a referendum challenging the law during the November 2012 election. The law was upheld by the voters and became effective on Jan. 1, 2013.

Maine

During the November 2012 election, voters approved a ballot measure legalizing same-sex marriage. The measure became effective Dec. 29, 2012.

New Jersey

The legislature passed a same-sex marriage bill in February 2012, but the measure was vetoed by Gov. Chris Christie. A legal challenge was raised to the state’s law that only provided civil unions for same-sex couples, and a lower court ruled that the state had to allow same-sex couples to marry beginning Oct. 21, 2013. After the New Jersey Supreme Court denied an appeal for delay, Gov. Christie announced that the state would drop its appeal, making same-sex marriage legal in New Jersey.

2013

Rhode Island

Gov. Lincoln Chafee signed legislation that legalized same-sex marriage, eliminated the availability of civil union and recognized civil unions and same sex marriage from other states on May 2, 2013. This bill became effective Aug. 1, 2013.

Delaware

Gov. Jack Markell signed into law on May 7, 2013, same-sex marriage legislation that also recognized civil unions and same-sex marriage from other jurisdictions. The law became effective July 1, 2013.

Minnesota

Following the defeat of a constitutional prohibition of same-sex marriage during the November 2012 election, the legislation passed a bill allowing same-sex marriage May 2013. The law went into effect on Aug. 1, 2013.

California

On June 26, 2013, the U.S. Supreme Court declined to decide the California challenge to Proposition 8, concluding that it had no authority to consider the question in the case. The effect of that decision was to reinstate the federal district court decision overturning Proposition 8, thus allowing same-sex marriage in California.

Hawaii

During a special session held in October and November 2013, same-sex marriage was passed after both houses agreed to the addition of an amendment that strengthened the exemption of religious organization from being required to provide facilities, goods or services for the marriage or celebration of the marriage if it violates their religious beliefs. Gov. Neil Abercrombie signed the bill on Nov. 13, 2013, and it became effective on Dec. 2, 2013.

Illinois

Gov. Pat Quinn signed Senate Bill 10 into law on Nov. 20, 2013, and same-sex marriages will be available beginning June 1, 2014. A ruling by a U.S. district judge allowed residents of Cook County, Ill., to begin marrying on Feb. 21, 2014.

New Mexico

The New Mexico Supreme Court ruled on Dec. 19, 2013, that same-sex couples are allowed to marry. The ruling went into effect immediately.

Of the 33 states that still prohibit same-sex marriage, 29 have done so through constitutional provisions. Efforts to overturn state constitutional prohibitions have been initiated in the federal courts and have moved, or are about to move, into four federal appellate courts.

  • The Virginia case, Bostic v. Rainey, is expected to be appealed to the U.S. Court of Appeals for the 4th Circuit in Richmond, Va.
  • The Oklahoma case, Bishop v. U.S., 04-cv-848, U.S. District Court, Northern District of Oklahoma (Tulsa) is to be heard before the U.S. Court of Appeals for the 10th Circuit in Denver, Colo., along with the Utah case, Kitchen v. Herbert, 13-cv-00217, U.S. District Court, District of Utah (Salt Lake City). Oral arguments are scheduled to be heard separately for these two cases in April 2014.
  • The Nevada case, Sevcik v. Sandoval, 12-17668, will be heard before the U.S. Court of Appeals for the 9th Circuit in San Francisco, Ca.

In all four cases, the rulings are stayed pending appeal, meaning marriages cannot occur at this time. It is anticipated that the U.S. Supreme Court will be again asked to review this issue in 2015 or soon thereafter. Meanwhile, more action through legislation and ballot initiatives is expected to occur this year.

Civil Unions

A civil union is a category of law created to extend rights to same-sex couples. These rights are recognized only in the state where the couple resides, and no federal protection is included.

In 2013, the Colorado legislature passed a bill to establish civil unions for same-sex couples. The bill also provides recognition of civil unions from other jurisdictions. Gov. John Hickenlooper signed  SB 11 into law on March 21, 2013, and it became effective on May 1, 2013.

Delaware and Rhode Island replaced their civil union provisions with same-sex marriage, as previously occurred in Connecticut, New Hampshire and Vermont.

In Hawaii, civil unions remain available to same-sex and opposite-sex couples alike. The status of civil unions in Illinois and New Jersey are not yet clear with the legalization of same-sex marriage.

Domestic Partnerships

Domestic partnership is a civil contract between same-sex or opposite-sex, unmarried, adult partners who meet statutory requirements. Laws vary among states, cities and counties for domestic partnerships. Several states register these partnerships.

Washington has recently announced that registered domestic partnerships for same-sex partners will be converted to marriages on June 30, 2014, if marriage has not occurred or the partnership has not been dissolved by that time. The conversion will not apply to the domestic partnerships of heterosexual couples.

Reciprocal Beneficiaries

A reciprocal beneficiary agreement is a consensual and signed declaration of relationship for two adults unable to marry each other. Reciprocal beneficiary laws in Colorado, Hawaii and Maryland allow some benefits of marriage such as workers’ compensation survivor and health-related benefits.

Claim-Handling Considerations and Suggestions

The definitions of “spouse,” “dependent” and “marriage” are changing, and these changes affect the handling of casualty claims as we determine who is an eligible dependent or has legal standing to file certain causes of action. It is important that we are mindful of the state laws and any case law in the particular jurisdiction relating to same-sex unions.

Some state insurance departments have issued bulletins regarding their compliance expectations. For example, the Minnesota Departments of Commerce and Health issued  Administrative Bulletin # 2013-3 to advise property and casualty insurers that any policy issued in Minnesota on or after Aug. 1, 2013, providing dependent coverage for spouses must make that coverage available on the same terms and conditions regardless of the sex of the spouse. The bulletin reminds insurers that defining a spouse in a way that limits coverage to an opposite-sex spouse would be discriminatory and unfair and a violation of Minnesota Statutes section 72A.20, subdivision 16.

When evaluating the eligibility of dependents, one area of uncertainty involves same-sex couples that have a valid marriage but move to a state that does not recognize their marriage. The U.S. Supreme Court decision in Windsor did not address Section 2 of DOMA, which does not require states to give effect to same-sex marriages performed under the laws of other states. In the past, most federal laws looked to the state of residence at the time benefits are sought, rather than where the marriage occurred.

In response to the U.S. Supreme Court DOMA decision, the U.S. Department of Labor published  Technical Release  2013-4 on Sept. 18, 2013. This release indicates that the rule of recognition to be applied is based on the state where the marriage was celebrated, regardless of the married couple’s state of domicile. Guidance is also provided on the meaning of “spouse” and “marriage,” as these terms appear in the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), and the Internal Revenue Code that the department interprets.

This release likely also applies to the following four major disability programs administered by the Department of Labor's Office of Workers’ Compensation Programs (OWCP):

  • Longshore and Harbor Workers' Compensation Program and its extensions, including the Defense Base Act
  • Energy Employees Occupational Illness Compensation Program
  • Black Lung Benefits Program
  • Federal Employees' Compensation Program

Additional recommendations include:

  1. Ascertain whom the employer shows as the spouse.
  2. In addition to determining marriage or civil union, domestic-partnership registration should be confirmed.
  3. If interviewing a claimant in a jurisdiction that recognizes same-sex unions, in addition to “spouse” add the terms “domestic partner or designated beneficiary” to the questions.
  4. It might be necessary to find out when and in what state the marriage occurred.
  5. Any questions or concerns should be discussed with your supervisor, team leader, manager or defense attorney.

Sometimes, our duties as claims examiners are affected by laws seemingly unrelated to insurance. It is important that we consider the impact of headlines and changes in the law on our handling of workers’ compensation claims.

Understanding the Challenges in Narcotic Management

At a cost of more than $1.4 billion annually, narcotics and opioids have rapidly become one of the highest-cost therapeutic categories for workers’ compensation injuries.* They are also among the most difficult to manage. No employer wants to have injured workers in undue pain or discomfort – and narcotics do alleviate pain. However, there are serious issues to consider with regard to prescription abuse and misuse, especially for opioids such as Oxycontin and Vicodin.

How can employers help injured workers while ensuring appropriate use of narcotics and reducing unnecessary costs? Comprehensive, clinically based narcotic management programs can help.

Over the past 10 years, opioids, a type of narcotic, have become more commonly used to treat chronic to severe pain associated with workers’ compensation injuries. Known by the generic names of morphine or codeine, and now more frequently by the brand names Oxycontin and Vicodin, opioids are powerful pain relievers.

However, many of these medications were initially intended for end-stage cancer, not for common workplace injuries. While there is likely some benefit in some cases for the use of such medications to treat workers’ compensation injuries, clinicians note that those benefits are typically seen by just a small percentage of patients. There is little evidence to support their long-term or widespread use in standard workers’ compensation injuries. In fact, a study reported by the American Insurance Association found that only a minority of workers with back injuries improved their level of pain (26%) and function (16%) with the use of opioids.** What’s more, there is a high risk for abuse, dependency, and overutilization with this classification of drugs. Indeed, the strongest predictor of long-term opioid use was when it was prescribed within the first 90 days post-injury; that means that every prescription – especially the first one – must be scrutinized to ensure appropriate utilization and optimal benefit. Employers are also concerned about the cost of narcotics. While narcotic use is concentrated among a small percentage of claimants, per-claim costs for narcotics have increased more than 50% over the past decade

Key statistics

  • From 1997 to 2007, the milligram per person use of prescription opioids in the U.S. increased from 74 milligrams to 369 milligrams – that’s an increase of 400%.
  • In 2000, retail pharmacies dispensed 174 million prescriptions for opioids; by 2009, 257 million prescriptions were dispensed – an increase of more than 40%.
  • Opioid overdoses, once almost always because of heroin use, are now increasing because of abuse of prescription painkillers.

White House Office of National Drug Control Policy

Managing narcotics is not about removing viable medications for mitigating pain from the therapies available to providers – it is about ensuring the best possible medications for workers’ compensation injuries are used.

As a result, claims examiners should be trained to look for red flags, such as:

  • Higher-than-normal physician dispensing.
  • Lower-than-average generic dispensing.
  • Higher-than-average prescribing of opioids such as Fentanyl Citrate.

But prescribing medications is a complex issue – reports and percentages alone don’t tell the whole story. So, it’s crucial to look beyond simple prescribing reports to uncover additional information that could indicate why prescribers’ patterns are outside the norm. For example, use of amphetamines could indicate that a patient has a traumatic brain injury, where such medications are a standard treatment protocol.

Drugs that are not suitable for the injury type and the age of the claim need to be identified at the point-of-sale, so claims examiners or nurses are alerted before a prescription that is outside the formulary is filled at the retail pharmacy and can intercede with drug management, if needed. This is particularly useful in the acute injury stage to eliminate early narcotic use where it is not appropriate. If a narcotic is prescribed, the injured worker’s entire medical history needs to be reviewed, using both in-network and out-of-network transactions and non-occupational associated medications to evaluate actual medication use and ensure appropriate utilization.

Follow-up appointments should be required, and only a few days of treatment should be authorized initially. This helps determine whether the medication has improved pain control and function.

Another critical step to managing narcotics is to thoroughly educate employees as to the benefits, dangers, and alternatives for narcotics. The education should include:

  • Training the injured workers about their medication, adverse side effects, and alternative medication options.
  • Required screenings for risk of addiction or abuse (history of drug or alcohol abuse, or regular use of sedatives).
  • Opioid use agreement/contract with urine drug screenings and avoidance of other sources for medication, such as emergency rooms.

A number of factors should trigger a review:

  • Narcotic-class medications for the treatment of pain (Oxycontin, Demerol, etc.).
  • Use of multiple medications excessively or from multiple therapeutic classes.
  • Using medications not typical for the treatment of workers’ compensation injuries.
  • High-cost medications.
  • Receiving high doses of morphine equivalents daily for treatment of chronic pain.
  • Using three or more narcotic analgesics.
  • Receiving duplicate therapy with NSAIDs, muscle relaxants or sedatives.
  • Using both sedatives and stimulants concurrently.
  • Using compounded medications instead of commercially available products.

* “Narcotics in Workers Compensation,” NCCI Research Brief, Dec. 2009

** http://www.aiadc.org/AIAdotNET/docHandler.aspx?DocID=351901