Risk Insider: Jason Beans

‘Drive-By Doctoring’ a Reason for Value-Based Purchasing

By: | September 16, 2015 • 3 min read
Jason Beans is the Founder and Chief Executive Officer of Rising Medical Solutions, a medical cost management firm. He has over 20 years of industry experience. He can be reached at [email protected]

When asked about problems with the U.S. health care system, I often refer to a New York Times article called “After Surgery, Surprise $117,000 Medical Bill From Doctor He Didn’t Know.

The article details a patient who received a $117,000 bill from an assistant surgeon he was unaware would be aiding the surgeon. The surgeon he chose was in-network; the assistant was out-of-network and came in while the patient was under anesthesia.

In what other industry, other than U.S. health care, can you receive a service while unconscious, are given no opportunity to learn of (much less agree to) the service or price, and afterwards there is a valid expectation of owing the bill?  I cannot think of one.

The Hidden Costs in Fee-for-Service

Two typical tricks outlined in this article were:

Drive-By Doctoring: It’s very common to have an additional doctor or specialist “pop by” during a treatment. This consultation and/or surgical assist may or may not be clinically supported. In group health, the article illustrates the devastating financial impact such unexpected charges may have on a patient. In workers’ comp, it demonstrates how critical it is to carefully analyze medical charges. While most payers and service providers will certainly notice a $117,000 charge, there can and will be many smaller charges that meet the “drive-by” criteria on a bill.

Out-of-Network Subcontractors: As we’re well aware, many providers (e.g. anesthesiologists, assistant surgeons) working out of a hospital may not, in fact, be hospital employees. It can be difficult to ascertain if out-of-network providers exist at network facilities, and to predict if an episode-of-care might result in subcontractor services.  It is imperative that we find alternate ways to control these unpredictable costs.

A Value-Based Track to Transparency

These practices discussed in the article are purposeful, dishonest and costly, but they need not exist. A transition from fee-for-service models to value-based purchasing in group health, and even slowly in workers’ comp, allows payers to more easily explore pre-negotiated, all-inclusive rate alternatives. These arrangements have many advantages, not the least of which is the elimination of “drive-by-doctoring” or other hidden fees. When everyone agrees to a fair, upfront price, the opportunity and incentive to “game the system” is removed.

The benefits of cost predictability in workers’ comp are readily apparent, but the outcomes and care coordination aspects of value-based purchasing make it equally compelling. These arrangements allow payers to work with providers who meet certain performance parameters, and are further incented to ensure positive outcomes in order to keep costs commensurate with agreed-upon rates. Bundled rates also promote effective coordination amongst multiple providers who are handling varied aspects of treatment and sharing in a single payment.

It’s encouraging to see the gradual shift towards value-based purchasing in workers’ comp. And while this evolution will take time, the momentum towards a model where we do not simply reward quantity of services, but focus on a more holistic approach to patient care and healthcare purchasing is something that workers’ comp is more than capable of.

More from Risk & Insurance

More from Risk & Insurance

Risk Focus: Workers' Comp

Do You Have Employees or Gig Workers?

The number of gig economy workers is growing in the U.S. But their classification as contractors leaves many without workers’ comp, unemployment protection or other benefits.
By: and | July 30, 2018 • 5 min read

A growing number of Americans earn their living in the gig economy without employer-provided benefits and protections such as workers’ compensation.


With the proliferation of on-demand services powered by digital platforms, questions surrounding who does and does not actually work in the gig economy continue to vex stakeholders. Courts and legislators are being asked to decide what constitutes an employee and what constitutes an independent contractor, or gig worker.

The issues are how the worker is paid and who controls the work process, said Bobby Bollinger, a North Carolina attorney specializing in workers’ compensation law with a client roster in the trucking industry.

The common law test, he said, the same one the IRS uses, considers “whose tools and whose materials are used. Whether the employer is telling the worker how to do the job on a minute-to-minute basis. Whether the worker is paid by the hour or by the job. Whether he’s free to work for someone else.”

Legal challenges have occurred, starting with lawsuits against transportation network companies (TNCs) like Uber and Lyft. Several court cases in recent years have come down on the side of allowing such companies to continue classifying drivers as independent contractors.

Those decisions are significant for TNCs, because the gig model relies on the lower labor cost of independent contractors. Classification as an employee adds at least 30 percent to labor costs.

The issues lie with how a worker is paid and who controls the work process. — Bobby Bollinger, a North Carolina attorney

However, a March 2018 California Supreme Court ruling in a case involving delivery drivers for Dynamex went the other way. The Dynamex decision places heavy emphasis on whether the worker is performing a core function of the business.

Under the Dynamex court’s standard, an electrician called to fix a wiring problem at an Uber office would be considered a general contractor. But a driver providing rides to customers would be part of the company’s central mission and therefore an employee.

Despite the California ruling, a Philadelphia court a month later declined to follow suit, ruling that Uber’s limousine drivers are independent contractors, not employees. So a definitive answer remains elusive.

A Legislative Movement

Misclassification of workers as independent contractors introduces risks to both employers and workers, said Matt Zender, vice president, workers’ compensation product manager, AmTrust.

“My concern is for individuals who believe they’re covered under workers’ compensation, have an injury, try to file a claim and find they’re not covered.”

Misclassifying workers opens a “Pandora’s box” for employers, said Richard R. Meneghello, partner, Fisher Phillips.

Issues include tax liabilities, claims for minimum wage and overtime violations, workers’ comp benefits, civil labor law rights and wrongful termination suits.

The motive for companies seeking the contractor definition is clear: They don’t have to pay for benefits, said Meneghello. “But from a legal perspective, it’s not so easy to turn the workforce into contractors.”

“My concern is for individuals who believe they’re covered under workers’ compensation, have an injury, try to file a claim and find they’re not covered in the eyes of the state.” — Matt Zender, vice president, workers’ compensation product manager, AmTrust

It’s about to get easier, however. In 2016, Handy — which is being sued in five states for misclassification of workers — drafted a N.Y. bill to establish a program where gig-economy companies would pay 2.5 percent of workers’ income into individual health savings accounts, yet would classify them as independent contractors.

Unions and worker advocacy groups argue the program would rob workers of rights and protections. So Handy moved on to eight other states where it would be more likely to win.


So far, the Handy bills have passed one house of the legislature in Georgia and Colorado; passed both houses in Iowa and Tennessee; and been signed into law in Kentucky, Utah and Indiana. A similar bill was also introduced in Alabama.

The bills’ language says all workers who find jobs through a website or mobile app are independent contractors, as long as the company running the digital platform does not control schedules, prohibit them from working elsewhere and meets other criteria. Two bills exclude transportation network companies such as Uber.

These laws could have far-reaching consequences. Traditional service companies will struggle to compete with start-ups paying minimal labor costs.

Opponents warn that the Handy bills are so broad that a service company need only launch an app for customers to contract services, and they’d be free to re-classify their employees as independent contractors — leaving workers without social security, health insurance or the protections of unemployment insurance or workers’ comp.

That could destabilize social safety nets as well as shrink available workers’ comp premiums.

A New Classification

Independent contractors need to buy their own insurance, including workers’ compensation. But many don’t, said Hart Brown, executive vice president, COO, Firestorm. They may not realize that in the case of an accident, their personal car and health insurance won’t engage, Brown said.

Matt Zender, vice president, workers’ compensation product manager, AmTrust

Workers’ compensation for gig workers can be hard to find. Some state-sponsored funds provide self-employed contractors’ coverage.  Policies can be expensive though in some high-risk occupations, such as roofing, said Bollinger.

The gig system, where a worker does several different jobs for several different companies, breaks down without portable benefits, said Brown. Portable benefits would follow workers from one workplace engagement to another.

What a portable benefits program would look like is unclear, he said, but some combination of employers, independent contractors and intermediaries (such as a digital platform business or staffing agency) would contribute to the program based on a percentage of each transaction.

There is movement toward portable benefits legislation. The Aspen Institute proposed portable benefits where companies contribute to workers’ benefits based on how much an employee works for them. Uber and SEI together proposed a portable benefits bill to the Washington State Legislature.


Senator Mark Warner (D. VA) introduced the Portable Benefits for Independent Workers Pilot Program Act for the study of portable benefits, and Congresswoman Suzan DelBene (D. WA) introduced a House companion bill.

Meneghello is skeptical of portable benefits as a long-term solution. “They’re a good first step,” he said, “but they paper over the problem. We need a new category of workers.”

A portable benefits model would open opportunities for the growing Insurtech market. Brad Smith, CEO, Intuit, estimates the gig economy to be about 34 percent of the workforce in 2018, growing to 43 percent by 2020.

The insurance industry reinvented itself from a risk transfer mechanism to a risk management mechanism, Brown said, and now it’s reinventing itself again as risk educator to a new hybrid market. &

Susannah Levine writes about health care, education and technology. She can be reached at [email protected] Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]