Work Comp Roundup -

Selection Criteria for New Third Party Administrator (TPA)

May 22, 2019 by Michael B. Stack Leave a Comment

Whether you are just starting your self-insured claims program or have decided it is time for a switch to a new third party administrator (TPA), the selection of the new TPA is one of the most important decisions you can make in the administration of your self-insured program.

Employers switching TPAs often ask questions of potential new TPA partners that address the issues they have had with their current TPA. Employers frequently make the mistake of not asking the new potential TPA partner about areas where the current TPA performs well.

Areas that need to be explored with all potential TPAs before selecting the next TPA include:

Obtaining a copy of the TPA’s Best Practices to confirm their claim handling standards
Obtaining a list of the current clients and former clients to contact for their impression of the TPA’s abilities
Verifying the TPA has a claims office in each state where you have business locations
In large states, verifying the claims office(s) are located near your business locations
Verifying the TPA will assign dedicated adjusters to your account in areas where your claim volume is large enough to occupy all of one or more adjusters, and will assign a designated adjuster to handle all claims in locations where you have inadequate claim volume to keep one adjuster busy
Determining the claim reserving authority the adjusters will have
Determining the claim settlement authority the adjusters will have
Confirming the experience level of each of the dedicated or designated adjusters
Determining the frequency of the claim file reviews by the claim supervisors and the extent of the directions and guidance provided by the supervisors
Confirming the licensing of each adjuster and each claims office
Establishing the claims intake process
Establishing the maximum number of claims that will be assigned to each adjuster
Establishing who the legal defense firm(s) will be when defense counsel is needed
Establishing who the medical triage company will be
Establishing who the medical management company will be when medical management is needed
Establishing who the pharmacy benefit manager will be
Establishing who will provide the medical fee schedule reviews
Determining the capabilities of the claims management system used by the TPA
Determining whether your claims management system can be integrated with the claims management system of the TPA and who will be responsible for maintaining the systems integration
Verifying that the TPAs claim management system will be able to provide all the data and claim management reports needed to manage your claims programs
Determining who will be responsible for correction of data errors that occur
Determining the security measures the TPA will take to protect the confidentiality of your data and financial information
Determining the nature and extent of the financial data available on each claim file
Determining if the TPA data system will allow the creation of ad hoc reports
Verifying the TPA will allow annual independent claim file audits to verify compliance with Best Practices including the prevention of claim leakage

This list provides just some of the areas that need to be considered when selecting a new TPA. By addressing these issues during the TPA selection process, further problems with the new TPA can be reduced, if not eliminated.

Michael Stack - Amaxx Author Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center .

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Filed Under: TPA and Claims Administration

NCCI Report Highlights Early Identification of Prescription Drug Abuse

May 21, 2019 by Michael B. Stack

Prescription drugs continue to contribute to a significant portion of medical costs in workers’ compensation claims nationwide. This is due in part to opioid addiction and its negative impact. Gains are being made, which means proactive members of the claim management team need to be continually engaged and implement best practices to avoid addiction and reduce the portion of claims consumed literally by prescription drugs.

NCCI Report Highlights the Problem

The National Council on Compensation Insurance (NCCI) recently released a report regarding prescription drug costs in workers’ compensation case. The report sets forth the following encouraging conclusions:

Physician dispensing and use of more expensive brand name prescription medications are declining;

While the prescription drug share of medical costs in workers’ compensation cases is at 13.7%, this amount declined by 2% in 2015, and 4% in 2016; and

Main drivers in prescription drug usage include Lyrica, OxyContin, and Gabapentin, which account for more than 15% of prescription drug costs in 2016.

While some of these trends are positive, it should still be understood that more can be done by proactive claim handlers to control the costs of prescription drugs in workers’ compensation claims and run a more effective program.

Early Identification of Prescription Drug Abuse

All interested stakeholders should be on the look-out of for overuse and abuse of prescription drugs. Signs of misuse include the following:

Identification of injured employee’s with risk factors that include past/present history of substance abuse, family history of substance abuse, and various psychological and/or psychiatric conditions;

Injured employees that specifically request prescription medications by their name brand and refuse to accept generics; and

Instances where someone regularly claims to lose their prescription drugs and is requesting a refill.

The existence of a pain management agreement is a common feature in most workers’ compensation laws in instances where an employee is using opioid-based drugs. This agreement should be strictly followed. There should also be a renewed effort on the part of everyone to direct an injured employee back to work, even if it is in a light-duty/sedentary capacity. Studies suggest strong return-to-work efforts significantly reduce the medical spend on any type of personal injury claim.

Multi-Faceted Approach to Reducing Prescription Medical Expenses

Proactive stakeholders in the workers’ compensation system can advocate for change to reduce the cost and human toll prescription drugs – mainly opioid-based – take on injured employees. This includes an effective three-pronged approach.

Prevent new cases of opioid-based prescription medication abuse from occurring: This all starts with the use of a pain management agreement – and making sure it is strictly enforced. This zero-tolerance approach will ensure powerful pain medications are not misused or abused. Terms within the agreement should include exactly how the medications are to be used, random drug testing and consequences for false/positives, failed tests and missed testing, how replacement medications are to be dispensed and where all prescriptions are to be filled – avoiding physician dispensing protocols.

Treat people who are addicted with compassion: No process is foolproof, and anyone can become addicted. It is important to treat individuals who suffer from this consequence are treated with respect and dignity. All reasonable and necessary forms of treatment should be made available; and

Use drug utilization measures to better target prevention and treatment: This is one of the most effective tools available to members of the claim management team in combating the abuse and overuse of opioid-based prescription medications. Drug utilization review (DUR) is the process of reviewing all aspects of prescription drug usage – prescribing, dispensing, and use of medication. It examines the individual usage of someone against predetermined criteria based on evidence-based medicine to ensure an effective and efficient result. The recent NCCI report also credited the effective use of DUR in driving down the amount of money spent on prescription drugs in workers’ compensation claims.

Conclusions

There are many negative consequences of prescription drug abuse and misuse in workers’ compensation cases. Steps are being taken to hold these adverse effects in check and also reducing workers’ compensation program costs. This can be accomplished by implementing an effective approach that includes drug utilization review in your program.

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Filed Under: Prescription Drug Use & Abuse

Workers’ Comp Mediation – Getting to “YES”

May 20, 2019 by Michael B. Stack

Workers’ comp mediation and other alternative dispute resolution methods can be effective in the settlement of workers’ compensation cases. It also helps promote program efficiency that frees up funds set in reserve, which in turn can be used to settle other claims. Notwithstanding the benefits of using dispute resolution mechanisms, it is important for members of the claim management team and other interested stakeholders to prepare. Failure to do so can waste everyone’s time and energy.

Selecting the Right Mediator

In most jurisdictions, there are no specific requirements or training someone needs to have to serve as a mediator. The result is the parties to the workers’ comp mediation have the unfettered right to select the person to serve as the neutral. With this in mind, it is important to note every mediator brings a unique skill set to the table. This should include someone knowledgeable in a particular workers’ compensation act, and have a reputation for being able to cut through the smoke and mirrors of contentious litigation and get everyone to “YES!”

Preparing for a Successful Workers’ Comp Mediation

A mediator may often ask that parties submit a confidential mediation statement in advance. This document can serve as the framework for reaching a favorable settlement and avoid wasting time. Each mediator may have their own preference as to what is covered in the mediation statement. Common points that should be considered can include:

An itemization of the benefits claims/defenses and potential recovery/exposure: The value of a workers’ compensation case is the starting point for settlement. This often includes calculations for the employee’s average weekly wage (AWW), exposure for various indemnity benefits (TTD, TPD, PPD, and PTD) and medical benefits. Other items to consider include the need for vocational rehabilitation services and the possibility of retraining. All parties should consider the strengths and weaknesses of defenses such as causation issues, the reasonableness/necessity of medical care.

Expectations regarding a reasonable settlement range: The goal of mediating a case is to find common ground. This requires compromise on the part of the defense interests and injured employee. Attorneys, settlement consultants, and other interested stakeholders need to evaluate their cases and have an understanding as to where this case may settle. This will allow the mediator to work with all sides in reaching an agreement.

The status of any prior negotiations, offers, and demands: Any settlement needs to start with a settlement demand. This information should be communicated by the employee or their attorney to the employer/insurer before mediation takes place. In the same regard, the defense interests should obtain reasonable settlement authority. A claim handler ideally will be physically present at the mediation and able to get additional authority if necessary.

An honest assessment of your cases that includes its strengths and weaknesses: All parties needs to be honest about settlement and participate in good faith. Attending a mediation just to see how the other side views the case can be unproductive and delay settlement on other cases. A good mediator will challenge the parties if there is a sense they are not negotiating in good faith.

Confirmation that all intervenors and/or interested parties have received proper notice. It is important that all interested medical providers, private insurance carriers, and government agencies such as Medicare or Medicaid be made aware of their potential right of recovery. This should be completed well in advance of settlement negotiations so they can provide all parties with an updated benefit resume.

Conclusions

Reaching a settlement on every case is not practical given the contentious nature of workers’ compensation litigation. Notwithstanding these barriers, all parties should consider workers’ comp mediation as a tool to resolve cases. It can also deliver the “win” all parties are looking for as they work hard in resolving disputes.

Michael Stack - Amaxx Author Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is the founder & lead trainer of Amaxx Workers’ Comp Training Center.

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Filed Under: Settling WC Claims

Case Study: More than $1.5 Million in Savings Through Generic Substitutes

May 15, 2019 by Michael B. Stack

The latest Drug Trend Report from myMatrixx once again showed a substantial cost difference between brand-name and generic drugs. In fact, while the costs of brand name drugs are increasing, prices for generics are steadily decreasing. Unfortunately, some workers’ compensation stakeholders overlook this issue when preparing Medicare Set-asides.

Medications prescribed for the injured worker are expected to be included in the MSA to gain approval by the Centers for Medicare and Medicaid Services. There are exceptions; however; such as when it can be demonstrated the injured worker is no longer taking the medication. But switching from brand-name to generic medications is one of the most efficient and effective ways to reduce costs.

Generics vs. Brand-Names

Some people are concerned that generic drugs are of lower quality than brand-name medications. The Food and Drug Administration stipulates that all generic drugs must be equivalent to their brand-name counterparts. Additional FDA requirements include:

That generic drugs have the same active ingredient, strength, dosage form, and route of administration as the brand-name drug.
The generic manufacturer must prove its drug is the same (bioequivalent) as the brand-name drug.
All manufacturing, packaging, and testing sites must pass the same quality standards as those of brand-name drugs.
Any generic modeled after a single, brand name drug must perform approximately the same in the body as the brand name drug.

The FDA also points out that many generic drugs are made in the same manufacturing plants as brand-name drugs.

Are there differences between generics and brand name drugs? Yes, but as the FDA points out: “There will always be a slight, but not medically important, level of natural variability just as there is for one batch of brand name drug compared to the next batch of brand name product. This amount of difference would be expected and acceptable, whether for one batch of brand name drug tested against another batch of the same brand or for a generic tested against a brand name drug.”

Generic drugs are cheaper than brand-names because the manufacturer making the generic version does not have to go through costly clinical trials that new drugs do. Also, they don’t generally pay to advertise, market or promote the drug, since the brand-name maker has already established the drug in the marketplace. The competition created by multiple manufacturers developing a generic version of a brand-name medication further drives down the price of the medication.

The only reason for any patient to use a brand-name over a generic medication is if the generic drug causes unusual side effects to a particular person or, in rare cases, is less effective. In the vast majority of cases, patients do just as well with generic medications as with their brand-name counterparts.

The biggest difference between generic and brand name medications is the price. A case study of a recent MSA is a dramatic example of this.

Case Study (Provided by Tower MSA Partners): More than $1.5 Million in Savings Through Generic Substitutes

An injured worker who had been diagnosed with Post Traumatic Stress Disorder, anxiety and mood disorders was taking a variety of medications to treat his conditions. Among the more costly drugs were Wellbutrin, Klonopin, Rozerem, and Neurontin — all brand-name medications.

When discussions about settling the claim began, the initial MSA included $1,657,022 for medications and $30,058 for future medicals.

Total MSA Exposure — $1,687,081.

Solution

After identifying the brand-name medications as the key cost drivers in the initial MSA allocation, Tower recommended working with the injured worker’s attorney and the treating physician to switch to generic substitutes. The switch from brands-to-generics took several months to complete, to ensure the effectiveness of each.

When the conversion was completed, a physician’s statement was obtained confirming the switch from brand to generic, as well as an updated prescription history documenting ongoing generic use. Tower promptly submitted an MSA with an allocation of $112,572.

Results

CMS approved the MSA within eight days, allowing the parties to settle. The switch from brand-name to generic medications resulted in savings of $1,574,509 — and assured the injured worker would have enough funds for his future medicals and medications.

Conclusion

Developing and getting FDA approval for a medication is a long, complicated process. Drug manufacturers charge for a medication based on their expenses for creating and bringing the drug to market. Once the patent expires for a particular medication, other manufacturers are free to produce the same drug — as long as it meets the FDA standards for generics; i.e., it is the same drug.

The cost difference between generic and brand-name medications continues to grow further apart. By carefully looking at the medications prescribed for an injured worker and working with various stakeholders involved, an appropriate, cost-effective MSA can be created.

Author Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center.

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Filed Under: Medicare Set Asides (MSAs)

11 Tips for Safe Use of NSAIDS to Treat Pain in Workers’ Compensation

May 14, 2019 by Michael B. Stack

There’s good news about the latest drug usage in the workers’ compensation, although it comes with a word of caution. The good news, according to the latest Drug Trend Report from myMatrixx is that the use and spend on opioids have once against decreased. Alternative medications treatments are being used more often to treat pain. While that’s good in the effort to prevent unnecessary use of opioids, one class of medications need to be taken with caution.

NSAIDs — nonsteroidal anti-inflammatory drugs— have become one of the medications of choice to treat pain. These can be very effective and don’t carry the risks of addiction or dependence of opioids. However, the problem is the potential negative effects on the cardiovascular system. Care needs to be taken when prescribing them, especially to older workers.

The situation is something of a Catch-22; older injured workers often have pain, but they are typically more vulnerable to problems of the cardiovascular system. Payers can help protect injured workers who are prescribed these medications by understanding the risks, educating patients and exercising caution.

NSAIDs and Cardiovascular Issues

NSAIDs are often used to treat mild to moderate pain. They are especially helpful for pain caused by inflammation, such as arthritis or a sports-type injury.

NSAIDs are drugs with analgesic, anti-inflammatory, and antipyretic activity. Some of the commonly used over-the-counter varieties are ibuprofen, such as Motrin and Advil; and naproxen sodium, or Aleve and Anaprox. Prescription NSAIDs include Celecoxib, or Celebrex; and diclofenac, known as Cataflam and Voltaren. Aspirin, which is an NSAID, does not pose a risk of heart attack or stroke and is commonly used to prevent those conditions.

Gastrointestinal problems associated with NSAIDs are well known. But researchers have also found that these medications can increase blood pressure and lead to congestive heart failure, as well as acute myocardial infarction.

The Food and Drug Administration warned of the potential risks of heart attack or stroke from NSAIDs in 2005. Ten years later the agency strengthened its warning, based on the advice of an expert panel that had reviewed additional information.

The risk was especially noted when the drug rofecoxib, or Vioxx, was on the market. It was removed in 2004, after being associated with as many as 140,000 heart attacks in the U.S. during the five years it was sold. It prompted further research about the risks of heart attack and stroke from NSAIDs in general.

According to the FDA:

The risks of heart attacks and strokes increase even with short-term use of NSAIDs and may begin within a few weeks of taking the medications.
The higher the dose of NSAID, the higher the risk. Also increasing the risk is the length of time the medications are taken.
People most at risk are those who already have heart disease, although others can also be at risk.

Patients taking diuretics may be at the highest risk of heart attack or stroke, especially during the first few weeks of taking NSAIDs.

Preventing NSAID Risks

Taking NSAIDs for a few days to relieve pain generally carries just a small risk, for most people. Employers and payers can help ensure injured workers are less at risk of developing heart attacks or strokes from the medications through the following strategies:

Monitor for signs and symptoms of adverse effects.
Educate injured workers and family members on the risks, especially those more at risk.
Prescribe the lowest dosage possible.
Prescribing taking the drugs for only a limited period of time.
Try alternative remedies for people who have heart disease, if at all possible.
Do not take more than one type of NSAID at a time.
Try alternative medications, such as acetaminophen. Be aware, however, that this drug can cause liver damage if the daily limit exceeds 4,000 milligrams or if the person drinks more than three alcoholic beverages a day.
Suggest week-long NSAID ‘holidays’ on occasion.
Advise the injured worker to get medical attention immediately if he experiences chest pain, shortness of breath or sudden weakness or difficulty speaking.
For muscle or joint pain, suggest hot or cold packs or physical therapy before NSAIDS, for those more at risk.
Injured workers already taking aspirin to prevent a heart attack should talk with their physician first, as some NSAIDs may hamper the aspirin’s effectiveness.

Conclusion

The workers’ compensation industry has made inroads in curbing the unnecessary use of opioids. However, care needs to be exercised before giving an injured worker a blanket recommendation or prescription for NSAIDS, especially for people who have pre-existing heart-related conditions. As with all medications, moderation is key.

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Filed Under: Prescription Drug Use & Abuse

Tips to Get the Most from Your Workers’ Comp Adjuster

May 13, 2019 by Michael B. Stack

Hey there, Michael Stack here with Amaxx. So Happy Mother’s Day to all the mothers that are out there. Hopefully you had a lovely celebration over this past weekend celebrating Mother’s Day. We certainly did for my wife, the mother of my four children. We did coffee and pancakes in bed and taken out to a really nice lunch. We had a really lovely day, and hopefully it was the same for you or your mother as well.

But it got me thinking about this sort of this day of demonstration of gratitude for mothers and how really for the amount of work that they do, one day is just not enough. It pales in comparison to demonstrating that gratitude. It needs to be delivered on a regular basis.

Gratitude for Your Workers’ Comp Adjuster

And it got me thinking about this other group, sort of this other role within the work comp industry that’s the same way that doesn’t get even a day at all, and that’s your adjusters. For the amount of work that your adjusters do on a day in, day out basis, the importance of their role within the work comp industry, the amount of gratitude that they get is very, very low. There are no pancakes delivered to them in bed, there’s no taking them out to lunch to have a lovely day.

So two things I want to talk about and focus on getting the most out of these adjuster relationships in today’s video. First one is demonstrating gratitude. How to demonstrate gratitude and the second thing is about how to set these up. How to set up these adjuster relationships.

So very simple, when I talk about gratitude you’re asking your adjuster for a thousand different things every day. Send me this form, send me this recorded statement, I need this, I need this, did you do the investigation, did you the three-point contact, what was this, blah, blah, blah, and it’s coming out in rapid fire all day long via phone, email and now often times text messages. So all these different places that they’re getting demands to respond to regularly.

Say Please & Thank You

Say please, say thank you to your adjuster. May I please have that investigation report? Can you please send me that witness statement? Whatever it is that you’re asking your adjuster, and when they send it to you, say thank you. Say thank you. This is a lost art within our world today. Don’t just apply this to adjusters, apply it to your regular daily life.

We have gotten to be so bold in the way that we interact with people that this has been forgotten. Very simple, very necessary, and it’s going to demonstrate a little bit more of that gratitude for your adjusters. And oh, by the way, maybe take them to lunch every once in a while too. They always like that.

Second thing is I want to talk about your set up within your account handling instructions. So when you set this up when you’re with your TPA when you’re with your carrier, if you’ve been with them for a long time it’s worth revisiting definitely at least on an annual basis. But a lot of time we like to talk about your account instructions as a living document, something that you can alter or change as necessary throughout the course of your claims handling relationship.

Set-Up In Workers’ Comp Account Handling Instructions

So let’s talk about the set up. Couple of things that I want you to look for in your account instructions when you’re initially setting it up or if you’ve been with them for a while to potentially modify.

Dedicated vs Designated Adjuster

So you can have a dedicated versus a designated adjuster. Now this is about how to set this up as far as who is serving you and what it costs. So who is serving you and what it costs. So dedicated versus designated, I want you to look at their case loads and I want you to look at their experience.

So what type of adjuster, who is that individual who is going to be assigned to your case? Again, in your instructions as you’re setting this up or as you’re potentially modifying it on an annual basis.

A dedicated adjuster is one that only works directly for you. So you work with Jane Smith, Jane’s your go to girl. She’s there handling all of your cases, or Jane and John if you’ve got more than one. Designated means that Jane or John works only for you, but they also work for XYZ Company as well.

You can develop a relationship. We talk about having your adjuster so much as being this key part of your team, demonstrating them gratitude, bringing them along, really having them as a main cog in your wheel. Setting up these relationships is a great way to do this. You could spend more money on a designated or dedicated adjuster. It’s going to cost you more out of the gates, but it can save you a huge amount.

Adjuster Case Loads

Same thing as we’re looking at these case loads. So adjusters with lower case loads do a better job. Adjusters with lower case loads do a better job. You don’t need a lot of research to figure that one out. It’s just common sense. If you’re handling 50 cases versus 500 cases, you’re going to do a better job on the 50 then you are going to do trying to handle the 500.

So one little quick tip here, this is something that you can define within your instructions. Also, do they have an admin support? So does your adjuster have administrative support? They can have a higher case load and do an equally good of a job if they have an admin support helping them to process a lot of that paperwork.

So something to think about and look at and ask your carrier, ask your TPA if this is an option and then look at those outcomes of how you can really best set that up.

Adjuster Experience Level

Then your experience level, do they have five years, do they have ten plus years of experience? You can negotiate this in your contract. You can negotiate I want my adjusters to have ten years plus experience, or I want them to have ten years plus experiences on these certain types of cases, the lost time cases, the catastrophic cases, whatever it is. You can define that.

Another thing you might want to do is if you look at this and they say, “Sure we can that but it’s going to cost you action.” You kind of choke up on that amount. You could say, “We want a mix step. We want ten years plus experience to be working with some of the newbie adjusters on those medical only files so that they have that supervision, they can deliver those outcomes.”

So all different things to look at and think about as you’re setting up these adjuster relationships. Once you do, then show them that gratitude. Bring them that coffee in bed. Take them to lunch. Show them that gratitude for the work that they’re doing. When you do, they’re going to deliver much better outcomes.

Again, my name is Michael Stack. I’m the CEO of Amaxx, and remember your work today in worker’s compensation can have a dramatic impact on your company’s bottom line. But it will have a dramatic impact on someone’s life.

So be great.

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Filed Under: TPA and Claims Administration

Stop The Bleeding! Control Workers’ Comp Leakage

May 8, 2019 by Senior Editor

Self-insured employers and insurers understand that workers’ comp leakage costs money. The overpayment of medical cost, indemnity benefits and claim expenses is a waste of money and weakens the overall financial stability of the employer or the insurer. What to do about workers’ comp leakage is a frequent topic of discussion.

When there is no doubt that a payment should not have been made (example: a non-recovered duplicate payment), it is referred to as hard leakage. When a payment is made that is questionable and is subjective (example: a higher than normal settlement), it is referred to as soft leakage.

Employers and insurers frequently attempt to mitigate both hard and soft workers’ comp leakage by providing additional training to the claims staff. Additional training definitely has benefits and will reduce leakage, but additional training normally addresses only the issues the work comp supervisor or claims manager has identified. This approach will often continue to overlook different types of leakage that is not on the company’s radar.

Independent Claims Auditors Bring Perspective

To identify leakage that is being overlooked, companies have been turning to independent claims auditors who bring in an outside perspective when reviewing claim files. Senior management often recognizes adjusters, supervisors and even claims managers have a built-in conflict of interest in identifying every source of leakage – the more leakage they identify, the lower their level of competency appears to be.

The independent claims auditor can be completely objective, as the independent claims auditor does not have to worry about the impression the results of a workers’ comp leakage audit will create. The outside auditor is looking for the financial mistakes (leakage) in an effort to assist the insurer or self-insured employer to lower its overall claims costs without the worry that senior management may be critical of the adjuster’s/ supervisor’s/claims manager’s performance.

Hard Workers’ Comp Leakage

The independent claims auditor will identify types of hard workers’ comp leakage including:

Payment of non-compensable claims
Payment of claims occurring outside of the insurance policy period
Failure to utilize the medical bill fee schedule for all medical bills covered by the schedule
Payment of the same medical bill, including overlapping medical bills, more than once
Incorrect calculation of the employee’s average weekly wage
Incorrect calculation of the employee’s indemnity benefit
Incorrect calculation of the number of days or weeks of indemnity benefits owed
Incorrect handling of the waiting period and the retroactive period
Erroneous payment of indemnity benefits after the employee has return to work
Failure to properly calculate the impairment rating value
Failure to utilize the pharmacy benefit management program
Failure to apply offsets including unemployment benefits, social security benefits, over governmental programs
Failure to identify and pursue subrogation
Failure to obtain Second Injury Fund recoveries
Failure to obtain reinsurance company recoveries
Failure to arrange for modified duty work when approved by the medical provider
Payment of temporary total disability benefits when temporary partial disability benefits are owed
Overpayment of medical mileage
Over reserving of the long-term claim resulting in a higher than appropriate experience modification factor with Underwriting

Soft Workers’ Comp Leakage:

The independent claims auditor will identify possible soft workers’ comp leakage including:

Failure to thoroughly investigate the claim prior to acceptance of compensability
Failure to complete the Insurance Services Office inquiry
Failure to properly evaluate future medical benefits when settling a claim
Poor settlement negotiations
Failure to properly manage defense counsel
Failure to properly utilize medical case management, either overutilization or underutilization
Failure to utilize medical triage
Failure to settle dispute claims at the optimum cost point

Controlling Workers’ Comp Leakage Can Mean Large Savings

Controlling leakage is frequently the difference between an insurer or self-insured employer making or losing money. While no claims operation will eliminate all leakage, a five percent (5%) leakage factor on a small self-insured program with $20 million in paid claims each year is an extra $1 million dollars spent, and 3% leakage on a $100 million a year paid out by an insurer is an extra $3 million dollars spent.

The above lists of how leakage occurs in workers’ compensation are not complete. There are various other ways leakage can occur. For a workers’ comp leakage audit to provide the maximum benefit to the insurer or self-insured employer, an auditor with a high level of expertise in workers’ compensation is needed.

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Filed Under: Claim Management

Surveillance in Workers’ Compensation

May 7, 2019 by Michael B. Stack

Surveillance in workers’ compensation plays an important role in resolving claims and detecting fraud. Given its expenses, there are various factors members of the claim management team need to consider before hiring a service provider to conduct surveillance. If these issues are not considered, the bottom line of a workers’ compensation claims program will suffer.

Surveillance in Workers’ Compensation Basics

The purpose of hiring an investigator in workers’ compensation cases is to observe and document the movements of an injured employee. This allows the defense interests to introduce first-hand evidence into a hearing on the merits to demonstrate what someone is doing and their functional abilities – when they do not think someone is watching.

The first and most important step in hiring a service provider to assist with this activity is to find someone who is credible, ethical, and experienced. Failing to take these factors into consideration can result in adverse findings.

When Should Surveillance be Used?

Not every case requires the use of a private investigator. Instances where surveillance in workers’ compensation can either be helpful or have an effective impact include the following:

Instances where credible information of fraud is received and the injured employee’s movements and activities need to be closely monitored;

Cases where the employee is working an unreported second job or engaging in “cash” driven business activities. This can include employees who might be more active in certain times of the year;

Claims involving employees with a long history of work and other personal injuries. “Frequent fliers” should always be given special attention;

Employee’s who exhibit signs of malingering or are presenting at their medical appointments with conflicting pain complaints; or

Injuries that occur under unique or interesting circumstances. Examples include the “Monday morning” injury, injuries that occur before or after lay-offs, or during times of labor disputes.

Getting the Right Background Information

Background information on the injured employee’s habits is important before using an investigator for surveillance in a workers’ compensation case. Given the cost and time involved, it is important to know when someone will be at a particular location and at what times. Information that can be useful and collected via discovery can include:

Dates and times of doctor appointments;

The date and location of the independent medical examination or various workers’ compensation proceedings;

Places where the employee frequents such as attending religious services, social events and clubs, and restaurants or sporting events; and

Hobbies and other activities such as gardening, other yard work, or coaching a sports team.

Other Sources of Free Information

The advent of the Internet has created a treasure trove of free information. This includes where they were born, lived (including specific address), and photographing or postings commonly found on social media. Members of the claim management team who use social media for background information on an injured employee should be mindful of some simple rules:

Research on information open to the public is generally fair game when it comes to access by an adverse party. If someone does not closely lock down their security settings on platforms such as Facebook, Twitter, or Instagram, the information in the public domain can be used;

Use of a third party or “straw man” to connect to an injured employee is generally unethical and can result in information obtained from the query to be inadmissible; and

Asking for passwords from an injured employee is illegal in some states. That does not prevent defense counsel from bringing a motion to compel to obtain a court order for passwords. Case law in this area is developing.

Interested stakeholders should look beyond social media and access genealogy websites. Again, if information is published online and not obtained via mischievous means, it will likely be admissible. Any useful information online should be printed and/or electronically stored immediately. This is because information can be deleted, removed, or locked down just as quickly as it is posted.

Conclusions

Surveillance in workers’ compensation will always be a part of strong defense. When used, it should be done in an ethical and legal manner. It must also be used in a cost-effective manner to avoid excessive spending and preserving the stability of a workers’ compensation program.

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Filed Under: Fight Workers Comp Fraud & Abuse

Case Study: Double the Ongoing Medical Treatment From Injury Settlement

May 6, 2019 by Porter Leslie

Injured individuals across the country are settling claims every day and often they have no idea how much a professional administrator could help maximize the money they receive for their ongoing medical care.

Professional administrators establish a bank account for the injured party’s medical settlement funds and pay all their healthcare needs on their behalf, but at significant discounts. The best administrators save the injured individual substantial sums of money on every healthcare bill. The discounts they can command can sometimes be up to 90% of that which was billed for the treatment!

Using an administrator to secure discounts can make the settlement funds last much longer which can result in the injured party potentially getting double, sometimes triple or more medical treatment from their settlement funds.

Traditionally, professional administrators have been thought to help only catastrophically injured individuals manage their care; however, they can be used for all cases that have future medical needs. Administrators have also been thought of to help with complex reporting requirements from the government for Medicare Set Aside accounts. These two uses of the service are still very relevant as they protect the injured party and everyone involved in the settlement as well as save them time, but for most injured individuals and their attorneys, the most powerful benefit is saving money for the injured party on medical bills. Let’s look at three examples of how this happens*:

Case Study Examples (Provided by Ametros)

Case Example 1

The money saved by the administrator stays in Beth’s account for her future healthcare needs. Beth now has more existing funds should she need another operation down the road. Without Ametros, Beth would have simply paid the bill and not have had the additional funds saved to put towards her future care needs. When Beth (injured individual), settled her case and needed a spinal cord stimulator implanted a year later, she faced some extremely daunting bills. The original billed amount of $132,777 was reduced to $47,551! That is a savings of over $80,000. In this case, much of the savings comes from reducing the bill to the appropriate fee schedule amount because her account was a Workers’ Compensation Medicare Set Aside (MSA).

Case Example 2

Roger settled his case in 2013 and recently needed a procedure done to replace his catheter implant and graft some tissue. The sticker price billed was $15,359. After review, his bill was reduced to $1,886, a savings of about $13,500.

For this procedure, Roger saved about 87% off the original billed charge.

Case Example 3

Discounts for medical costs do not just apply to large bills or individuals that have settled with an MSA.

Take Josefina for example. She settled her third-party liability case and two years later needed an X-Ray of her ankle for an unexpected complication.

The bill was reduced from the original total price of $529.00 to $201.83. In this situation, Ametros leveraged its facility network to save $327.17 for Josefina.

Final Thoughts

When you are assessing if a particular professional administrator is a good fit, you should ask them for a cost estimate: how much prescriptions, treatments and equipment will cost on their platform. Most will provide it for free. By doing this, you can easily determine lifetime costs and find the company that offers the biggest discounts and the highest savings.

If you are involved in settling a case where the injured party will have future medical costs, you can greatly assist the injured party by helping them not pay the sticker price for future medical costs. An administrator is a powerful ally and advocates for the individual after settlement.

*The medical bill examples shown are real bills with real discounts provided. The names of the clients and their personal identifying information has been redacted for privacy.

Author Porter Leslie, President Ametros. Porter directs the growth of Ametros and works with its many partners and clients. He built his career leading customer-focused businesses in the healthcare and financial services industries. Prior to Ametros, Porter worked in investment banking, private equity and corporate development. Porter earned a B.A. in Economics from Columbia University, as well as an MBA from the Wharton School and an M.A. from the Lauder Institute at the University of Pennsylvania. Porter is fluent in Spanish and Portuguese and resides in Boston with his wife, Ruth, and son, Camilo.

Filed Under: Professional Administration

Successfully Communicate With Your Work Comp Claims Adjuster

May 1, 2019 by Michael B. Stack

A good insurance adjuster can help minimize the costs of a workers’ compensation claim. For your adjuster to do their best job for you, you must give to and get from them thorough information. You must completely document workers’ compensation claims, starting at the time of the injury. As your employee recovers or even worsens, you need to have every step in the process documented. Because a proactive adjuster will coordinate and manage the employee’s medical care and return to work, you need to maintain contact with the adjuster to check on the claim status of your employees’ comp cases.

Communication is Key

After your initial contact with the adjuster following the injury, you must periodically have follow up communication. A good adjuster is a good communicator that documents all contact. Open communication allows for the exchange of information between the employer and adjuster about the claim and ideas on assisting the injured employee while moving the claim forward. The best adjusters completely document each phone call, e-mail, medical bill, medical report, attorney letter, state filing, etc. in their files.

The adjuster also needs to have good communication with the injured employee. When an adjuster establishes rapport with an injured employee early on in the process, the probability of future attorney involvement is decreased. The adjuster will also be better able to identify any compensability issues and to make timely payment of benefits. In a severe claim, early employee contact will help with immediate medical management.

Use a contact form designed to gather information. Initially, you should use the form for a live interview. On subsequent contacts, you might want to continue to have live conversations rather than just having the adjuster fill out the form. This allows both of you to sign off on the document.

We have a form that will help you to remember to ask all appropriate questions in every case. You will also be using the same language each time you have a workers’ compensation claim. This will remove individual personal differences from what should strictly be a professional arrangement.

Gathering Information

Include all the basics. Even if this information is documented elsewhere, it is important to include all basic data. It is easy for a simple mistake or misread number to be repeated if just copied over and over. These typographical mistakes can lead to big hassles in getting employee medical records if not corrected. Be sure to include:

o Employee social security number

o Date of injury

o Your company name

The employee’s current condition. The adjuster should be informed about the injured employee’s current medical condition and whether the injury requires physical therapy or surgery.

The employee’s medical history. The adjuster needs to know about the injured employee’s medical history as this may affect the causality of the injury, the course of treatment and what a typical timeline for recovery may be.

The relationship with the doctor. Ask the adjuster what their relationship is with any medical providers and whether thorough communication is being provided.

Claim validity. Document if there are any questions as to the validity of the claim and about the employee’s attitude about returning to work.

Specific time deadline. Give your adjuster a deadline, no more than 24 hours in advance, for the adjuster to get back to you with specific suggestions as to how to resolve the case.

Workers’ Comp Cost Containment Program

Your adjuster can also help you implement your workers’ comp cost containment program. Once you implement your program, gain your adjusters’ cooperation and participation by telling them you appreciate them.

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Filed Under: Claims Adjuster & Employer Relationship