Here’s Why Value-Based Care Is the Medical Approach Workers’ Comp Needs to Embrace

Value-based care will transform the way that medical providers treat injured workers. At the upcoming National Workers’ Compensation and Disability Conference, experts from Healthesystems will explain how it can work at your organization.
By: | November 13, 2018 • 3 min read

Value-based care remains a few years away from broad application in workers’ compensation, but the conditions are ripe for its expansion into injured worker medical treatment.

Described as a “patient-centered approach,” value-based care refers to health-provider reimbursement models expected to incentivize doctors and others to improve patient outcomes. It’s an alternative to the currently dominant medical-provider reimbursement system called fee-for-service.

Silvia Sacalis, vice president of clinical services, Healthesystems

Fee-for-service arrangements reward doctors for specific activities, such as paying them a set amount for each patient visit. That can promote quantity of care over quality of care, observers argue. Value-based care, in contrast, rewards medical providers for outcomes resulting from their treatments for a patient’s specific injury or health condition.

Workers’ comp lags in adopting value-based care, unlike its ongoing application across the nation’s general health care systems. Value-based care or value-based reimbursement outside of workers’ comp is farther along, in part, because Medicare shifted its provider reimbursement arrangements to encourage its expansion.

But claims-payers’ desire to manage rising workers’ comp medical costs by improving injured-worker treatment will drive value-based reimbursement’s advancement into workers’ comp, said Silvia Sacalis, vice president of clinical services at Healthesystems.

“I do think it is imminent in workers’ compensation that we will get to that place because health-care costs are unsustainable,” she said. “I am very encouraged, in talking with payers, that they have a significant focus on the injured worker and the true improvement of clinical outcomes for injured workers.”

It may not happen within the next year or two, but “we will get there in the next three to five years, if we want to ensure we are managing costs effectively,” Sacalis added.

Sacalis will speak on “Delivering and Measuring Value-Based Care Within Workers’ Comp” during the 2018 National Workers’ Compensation and Disability Management Conference & Expo being held Dec. 5-7 at Mandalay Bay in Las Vegas. Adam Seidner, chief medical officer at The Hartford, will join Sacalis to deliver the presentation.

Healthesystems’ Silvia Sacalis discusses the spread of value-based reimbursements into workers’ comp.

Sacalis is also confident value-based care will expand into worker’s comp because claims payers share a common challenge with Medicare and purchasers of commercial health care insurance. The challenge lies in attempting to align value with the price of care.

Value-based reimbursement can help address the challenge by fostering the use of evidence-based treatment guidelines and state-specific drug formularies to obtain desired return-to-work objectives and the functional restoration of injured workers.

Matt Hewitt, executive vice president, general manager of pharmacy benefit management, Healthesystems

“All the ingredients are there” for value-based care’s spread into workers’ comp, agreed Matt Hewitt, executive vice president, general manager of pharmacy benefit management at Healthesystems.

Value-based care provides an opportunity to step back from narrowly focusing on the price of medical treatments, or prescription drugs, toward unlocking processes and interventions that improve patient outcomes and return to work, Hewitt said.

Those “value-creating processes” would integrate technology, regulatory information, and evidence-based tools that can help pharmacies, claims adjusters, and doctors improve their decision making, Hewitt elaborated.

There is a lot of value in that,” Hewitt said. “That is about providing the right care to the patient.”

While value-based care’s expansion into workers’ comp will come, work remains to develop the necessary infrastructure, such as analytics, that can track and measure the success of outcomes.

Healthesystems’ Matt Hewitt elaborates on value-creating processes.

“We would need to be working really closely and partnering with our payers to come up with an aligned set of outcome measures that we want to start tracking and measuring that can actually lead to better return to work as well as functional restoration,” Sacalis said. &

Roberto Ceniceros is senior editor at Risk & Insurance® and chair of the National Workers' Compensation and Disability Conference® & Expo. He can be reached at rceniceros@lrp.com. Read more of his columns and features.

High Net Worth

High Net Worth Clients Live in CAT Zones. Here’s What Their Resiliency Plan Should Include

Having a resiliency plan and practicing it can make all the difference in a disaster.
By: | September 14, 2018 • 7 min read

Packed with state-of-the-art electronics, priceless collections and high-end furnishings, and situated in scenic, often remote locations, the dwellings of high net worth individuals and families pose particular challenges when it comes to disaster resiliency. But help is on the way.

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Armed with loss data, innovative new programs, technological advances, and a growing army of niche service-providers aimed at addressing an astonishingly diverse set of risks, insurers are increasingly determined to not just insure against their high net worth clients’ losses, but to prevent them.

Insurers have long been proactive in risk mitigation, but increasingly, after the recent surge in wildfire and storm losses, insureds are now, too.

“Before, insurance was considered the only step in risk management. Now, our client families realize it is one of the many imperative steps in an effective risk management strategy,” said Laura Sherman, founding partner at Baldwin Krystyn Sherman Partners.

And especially in the high net worth space, preventing that loss is vastly preferable to a payout, for insurers and insureds alike.

“If insurers can preserve even one house that’s 10 or 20 or 40 million dollars … whatever they have spent in a year is money well spent. Plus they’ve saved this important asset for the client,” said Bruce Gendelman, chairman and founder Bruce Gendelman Insurance Services.

High Net Worth Vulnerabilities

Laura Sherman, founding partner, Baldwin Krystyn Sherman Partners

As the number and size of luxury homes built in vulnerable areas has increased, so has the frequency and magnitude of extreme weather events, including hurricanes, harsh cold and winter storms, and wildfires.

“There is a growing desire to inhabit this riskier terrain,” said Jason Metzger, SVP Risk Management, PURE group of insurance companies. “In the western states alone, a little over a million homes are highly vulnerable to wildfires because of their proximity to forests that are fuller of fuel than they have been in years past.”

Such homes are often filled with expensive artwork and collections, from fine wine to rare books to couture to automobiles, each presenting unique challenges. The homes themselves present other vulnerabilities.

“Larger, more sophisticated homes are bristling with more technology than ever,” said Stephen Poux, SVP and head of Risk Management Services and Loss Prevention for AIG’s Private Client Group.

“A lightning strike can trash every electronic in the home.”

Niche Service Providers

A variety of niche service providers are stepping forward to help.

Secure facilities provide hurricane-proof, wildfire-proof off-site storage for artwork, antiques, and all manner of collectibles for seasonal or rotating storage, as well as ahead of impending disasters.

Other companies help manage such collections — a substantial challenge anytime, but especially during a crisis.

“Knowing where it is, is a huge part of mitigating the risk,” said Eric Kahan, founder of Collector Systems, a cloud-based collection management company that allows collectors to monitor their collections during loans to museums, transit between homes, or evacuation to secure storage.

“Before, insurance was considered the only step in risk management. Now, our client families realize it is one of the many imperative steps in an effective risk management strategy.” — Laura Sherman, founding partner, Baldwin Krystyn Sherman Partners

Insurers also employ specialists in-house. AIG employs four art curators who advise clients on how to protect and preserve their art collections.

Perhaps the best known and most striking example of this kind of direct insurer involvement are the fire teams insurers retain or employ to monitor fires and even spray retardant or water on threatened properties.

High-Level Service for High Net Worth

All high net worth carriers have programs that leverage expertise, loss data, and relationships with vendors to help clients avoid and recover from losses, employing the highest levels of customer service to accomplish this as unobtrusively as possible.

“What allows you to do your job best is when you develop that relationship with a client, where it’s the same people that are interacting with them on every front for their risk management,” said Steve Bitterman, chief risk services officer for Vault Insurance.

Site visits are an essential first step, allowing insurers to assess risks, make recommendations to reduce them, and establish plans in the event of a disaster.

“When you’re in a catastrophic situation, it’s high stress, time is of the essence, and people forget things,” said Sherman. “Having a written plan in place is paramount to success.”

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Another important component is knowing who will execute that plan in homes that are often unoccupied.

Domestic staff may lack the knowledge or authority to protect the homeowner’s assets, and during a disaster may be distracted dealing with threats to their own homes and families. Adequate planning includes ensuring that whoever is responsible has the training and authority to execute the plan.

Evaluating New Technology

Insurers use technologies like GPS and satellite imagery to determine which homes are directly threatened by storms or wildfires. They also assess and vet technologies that can be implemented by homeowners, from impact glass to alarm and monitoring systems, to more obscure but potentially more important options.

AIG’s Poux recommends two types of vents that mitigate important, and unexpected risks.

“There’s a fantastic technology called Smart Vent, which allows water to flow in and out of the foundation,” Poux said. “… The weight of water outside a foundation can push a foundation wall in. If you equalize that water inside and out at the same level, you negate that.”

Another wildfire risk — embers getting sucked into the attic — is, according to Poux, “typically the greatest cause of the destruction of homes.” But, he said, “Special ember-resisting venting, like Brandguard Vents, can remove that exposure altogether.”

Building Smart

Many disaster resiliency technologies can be applied at any time, but often the cost is fractional if implemented during initial construction. AIG’s Smart Build is a free program for new or remodeled homes that evolved out of AIG’s construction insurance programs.

Previously available only to homes valued at $5 million and up, Smart Build recently expanded to include homes of $1 million and up. Roughly 100 homes are enrolled, with an average value of $13 million.

“In the high net worth space, sometimes it takes longer potentially to recover, simply because there are limited contractors available to do specialty work.” — Curt Goetsch, head of underwriting, Private Client Group, Ironshore

“We know what goes wrong in high net worth homes,” said Poux, citing AIG’s decades of loss data.

“We’re incenting our client and by proxy their builder, their architects and their broker, to give us a seat at the design table. … That enables us to help tweak the architectural plans in ways that are very easy to do with a pencil, as opposed to after a home is built.”

Poux cites a remote ranch property in Texas.

Curt Goetsch, head of underwriting, Private Client Group, Ironshore

“The client was rebuilding a home but also installing new roads and grading and driveways. … The property was very far from the fire department and there wasn’t any available water on the property.”

Poux’s team was able to recommend underground water storage tanks, something that would have been prohibitively expensive after construction.

“But if the ground is open and you’ve got heavy equipment, it’s a relatively minor additional expense.”

Homes that graduate from the Smart Build program may be eligible for preferred pricing due to their added resilience, Poux said.

Recovery from Loss

A major component of disaster resiliency is still recovery from loss, and preparation is key to the prompt service expected by homeowners paying six- or seven-figure premiums.

Before Irma, PURE sent contact information for pre-assigned claim adjusters to insureds in the storm’s direct path.

“In the high net worth space, sometimes it takes longer potentially to recover, simply because there are limited contractors available to do specialty work,” said Curt Goetsch, head of underwriting for Ironshore’s Private Client Group.

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“If you’ve got custom construction or imported materials in your house, you’re not going to go down the street and just find somebody that can do that kind of work, or has those materials in stock.”

In the wake of disaster, even basic services can be scarce.

“Our claims and risk management departments have to work together in advance of the storm,” said Bitterman, “to have contractors and restoration companies and tarp and board services that are going to respond to our company’s clients, that will commit resources to us.”

And while local agents’ connections can be invaluable, Goetsch sees insurers taking more of that responsibility from the agent, to at least get the claim started.

“When there is a disaster, the agency’s staff may have to deal with personal losses,” Goetsch said. &

Jon McGoran is a novelist and magazine editor based outside of Philadelphia. He can be reached at riskletters@lrp.com.