Tag Archives: workcompwire

To Bundle or Not to Bundle?

To purchase services on a bundled or unbundled basis is a question that risk managers have debated for many years. In the past, conventional thinking among many risk professionals was to purchase services from distinct service providers. This decision was typically based on which vendors were perceived to offer the highest quality or lowest-priced services.

In recent years, however, there appears to have been a shift in thinking, as bundled programs have become more popular. Technology advancements are helping drive this change. In large part, this is because of the improved efficiencies and outcomes that a packaged program can provide.

Examining the process will underscore the benefits that bundled services offer. However, no two programs are alike, and customization must continue to be part of the discussion for any employer.

The bundled approach
As businesses strive for increased savings and productivity, services such as clinical consultation, pharmacy management, provider selection and bill review are more commonly sought from a single services provider and integrated into the overall claims management process. Robust technology systems tie these service components together and provide risk managers with comprehensive access to complete and real-time information like never before. All professionals managing the injury make better, more informed decisions and ultimately improve outcomes.

Clinical consultation
When a workers’ compensation injury occurs, early response and appropriate treatment are critical. Integrating clinical consultation services ensures that an injured worker talks with a nurse by telephone shortly after an incident occurs. The two parties discuss the injury and related symptoms along with other health conditions that might affect the injury and recovery process.

Using his medical knowledge, the nurse can then discuss recommended treatment options. Depending on the severity of the injury, this can range from self-care to an occupational clinic visit to emergency room treatment. One of the key advantages to this approach is that it removes recommended treatment input from the manager or supervisor.

Provider selection
In a well-designed program, the nurse will have access to a listing of prequalified medical providers. These providers will have been selected based on a demonstrated ability to deliver desired outcomes on a consistent basis.

The providers also will have shown that they understand the workers’ compensation system and employer expectations. This contributes greatly to return-to-work initiatives. Quantifiable physician rating programs are preferred over an expansive listing of physicians who have been selected solely based on their willingness to negotiate price.

Pharmacy management
Management of prescription drug costs can also be part of a bundled services package. Most successful programs will employ injury-specific formularies. These are listings of drugs approved for certain types of injuries or conditions. Given today’s increased use of opioids in treating work-related injuries, these custom formularies can be a valuable asset in preventing unnecessary or extended use of such powerful narcotics.

A pharmacy management program can be structured so that a claims examiner receives an alert if a particular drug is prescribed or requested. The examiner can then place a call to the physician or pharmacist to see if there are alternative drugs available. Often, unnecessary or inappropriate drugs can be blocked at the point of sale.

The use of network pharmacies can also add value. These pharmacies are selected based on quality, price and an understanding of program expectations. Drugs here are much preferred and often less expensive than prescriptions obtained from a physician’s office.

Network pharmacists also understand the value of generic drugs versus brand name prescriptions and recommend these when appropriate. They are available to educate injured workers about the benefits or risks associated with any given drug.

Bill review
Bill review is becoming more commonly purchased as part of a bundled program. An effective bill review program goes beyond applying fee schedules and physician provider organization (PPO) discounts and is really driven by how information is processed.

Bill review services seek all possible reductions on every bill. Accurate coding should be applied throughout the process, and it should reflect the lowest possible allowance for any code and provider. Additional savings are then typically charged as a percentage of savings. The more discounts obtained early on, the lower the service fee will be.

Technology has really increased the attractiveness of bundled service programs. Detailed and immediate information empowers professionals to make sound decisions and take steps to move a claim toward closure and return an injured employee to work more readily than ever before.

As an example, when a clinical consultation nurse and claims adjuster share a single technology system, appropriate notes can be exchanged seamlessly and early details can be accessed that may later affect the case. Such a system also allows for a complete and up-to-date listing of prequalified medical providers and injury-specific drug formularies to be easily updated and maintained. This information is essential when an injured worker is seeking initial medical treatment or a claims adjuster is monitoring prescribed drugs. Also, when participating physicians and pharmacies are on a single system, medical bills are easily accessed and reviews performed more readily.

Additionally, technology associated with these types of services can produce valuable data used to measure performance and identify trends. It is then possible to develop strategies to improve outcomes in care management and at the desk level based on quantifiable information. When services are bundled and one system ties them together, gaps in data are avoided.

Business trends will continue to evolve, as will debates over bundled versus unbundled services programs. However, today’s discussion is different than those in the past because of the advancement of technology and its resulting impact. Risk managers are looking to innovation to drive enhanced capabilities seeking improved efficiencies and effectiveness. Given the high stakes associated with increasing productivity and lowering costs, this debate is likely to intensify in the future, with technology adding zest to the conversation.

This article first appeared on WorkCompWire.

What’s the Cost of the Polar Vortex?

Long-range forecasts don’t all agree on the weather or how we label it, but another winter of extreme cold may be upon much of the nation. I’m personally convinced one is because even where I live, in Tennessee, my dog, Max, is vocally rejecting his outdoor house at night — and that doesn’t usually happen until January. While Max and I, having lived in the South all our lives, may be wimps when it comes to the cold, conditions are clearly calling for an alternate plan. And that brings me to today’s topic: From a workers’ comp and safety perspective, did last year’s polar vortex provide any important lessons?

Slips and falls

Slips, trips and falls, according to OSHA, contribute to 15% of all workplace fatalities — second only to motor vehicle accidents. WorkCompWire recently reported that nearly one-third of all workers’ comp claims in the Midwest last year were because of slips and falls on ice and snow, doubling the rate of the previous year.

This data, from the Accident Fund and United Heartland, represents only five states, so I don’t want to say we have a national trend — but I am eager to see 2013-2014 data from the Bureau of Labor Statistics or other major sources. Would it be surprising if percentages were even higher in areas where extreme winter weather is rare?

While it will be another year before the first “polar vortex” slips and falls from late 2013 show up on experience mods, I thought it would be interesting to set up a few scenarios and with the help of ModMaster illustrate how an increase in these accidents might affect an employer’s experience mod and premium.

The cost in terms of mod points – and increased premium

For the following scenarios, I assumed an average slip and fall on the ice would cost $22,000, which is in range of varied statistics I found on the web. Of course, an actual slip-and-fall expense could vary from very little to tens of thousands of dollars, depending on complications and time away from work. As you see below, whether the loss is kept as a medical-only loss or involves indemnity makes quite a difference – although, in actuality, an indemnity claim is probably going to be quite a bit higher than $22,000. As a reminder, in most states, medical-only losses are reduced by 70% because of the experience rating adjustment (ERA) rule of the experience rating formula.

For the first scenario, let’s imagine a relatively small machine shop with about $1.5 million in annual payroll. This company’s minimum mod is 0.79, and the manual premium is $75,000. As you can see below, a single average slip and fall would increase the mod by 8 points (on a scale of 100) and increase the premium by 10% – unless the claim is kept medical-only, in which case the impact would be only 3 mod points and about 3% of the premium.


In a second scenario, let’s imagine another small company, one that consists of office workers. Because this company’s expected losses (not shown) are much less than in the first scenario, the company’s minimum mod isn’t as low as our first example. Furthermore, the impact of a single slip and fall is much more significant in terms of mod points. However, this company’s manual premium is only $5,000 — so while the premium impact of the slip and fall may not seem too significant in dollars, the percentage increase of their premium is notable.


Finally, I wanted to see what kind of impact  several slips and falls might have on a larger company. My mind is already on holiday baking, so let’s imagine a cookie factory of several hundred employees and about $20 million in annual payroll. Then let’s imagine that, during a particularly bad patch of weather, seven people slip and fall in the parking lot and three more slip and fall in an entryway that has become wet with melting ice. For this company, which has a minimum mod of 0.43 and a manual premium of $500,000, those 10 slips are still a hefty impact if they’re not held to type 6.


For the examples above, I’ve depicted companies whose workers are not primarily assigned to environmentally challenging conditions. Imagine the spike in injuries and cost for companies whose employees are exposed to cold stress.

‘The tip of the iceberg’

Slips and falls certainly aren’t the only winter issue. Workers’ comp and insurance news and blogs are populated with lists and stories of all types. Consider just a couple:

1.  A recent story in Business Insurance concerns an employee injured when her employer gave her a ride in the floor of a company van during a snowstorm. While the employer was clearly trying to help out its employees, this employee is due benefits, a NY court ruled, because she was still on the clock, and the employer “took responsibility for the inherent risks of transporting its employees from the worksite.”

2.  Although it’s not mentioned as a weather-related issue, it’s easy     to imagine that a situation like this wet floor case could have developed because of rain or snow. The moral of this particular story? A “wet floor” sign is a safety device that an employer must ensure is utilized, not just made available to custodians.

Regardless of the cause of any injury, a popular analogy in risk management is that the cost of workers’ compensation insurance is just the “tip of the iceberg.” In addition to direct insurance, medical and indemnity costs, the full costs include administrative expenses, potentially significant impacts to a company’s productivity and the injured employee’s overall well-being. By the most conservative estimates, an average slip of $22,000 may actually cost twice that — and by some estimates may approach $100,000 in total costs.


As the examples above show, the experience mod and cost impact of winter-related accidents are sure to vary considerably from one accident and one company to the next. Regardless of exact cost, the reported uptick in slips and falls on ice and snow should serve as a flare on a snowy roadside, reminding us that every company, regardless of its size or geographic location or the type of work it does, needs some level of preparation for extreme weather in terms of policy, operations and equipment. (Broker Briefcase is a good resource to help.)

Even before I read the news about the increase in Midwestern slips and falls, a prevalence of winter-related slips and falls had stood out to me in loss runs that I occasionally see in the process of assisting clients. Have you seen evidence of this, as well? How are you helping your client or company understand the potential cost of just one winter weather loss, and to prepare as much as possible for avoiding or mitigating that loss?

I’d love to hear your thoughts in the comments below.