Medical Management

No Consensus on Treatment

Experts disagree on the involvement of risk managers in implementing treatment guidelines for injured workers.
By: | March 3, 2017 • 7 min read

Even as the nation’s 50 states inch towards consistency in medical treatment guidelines for workers’ compensation injuries, there is no consensus on the role of risk managers in enforcing them.

Dr. Robert Goldberg, chief medical officer, Healthesystems, a national workers’ compensation benefits management provider, said risk managers should delegate oversight of treatment guidelines and compliance to those for whom it is a core competency.

“Why should risk managers know anything about treatment guidelines?” he asked.

“Management of care is in the capable hands of physicians, nurse case managers, insurers, TPAs (third-party administrators) and utilization review (UR) organizations.”

Anne Kirby, chief compliance officer and vice president of care management, Rising Medical Solutions

Anne Kirby, chief compliance officer and vice president of care management, Rising Medical Solutions, said it’s impractical for risk managers, with their myriad tasks, to also take on micromanagement of thousands of pages of treatment guidelines.

For example, ODG’s treatment guidelines — the most widely used — include 46 pages related to opiod usage.

“It’s too much for any single risk manager to know.” Instead, she advised risk managers to “do due diligence on the UR company.”

Ettie Schoor, president, Prism Consultants, said, however, that risk managers shouldn’t offload responsibility for enforcement onto their TPAs or carriers because of the risk of errors. She noted that TPAs have a lot of turnover, carriers are always hiring new adjusters, and both have very high caseloads.

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2017 Power Broker® Dennis Tierney,  a senior vice president in Marsh’s claim practice, said that risk managers should “have some familiarity” with guidelines for the body parts where their exposures are highest, as well as rely on the expertise of their TPA, carrier and broker claims consultant partners.

“Should risk managers be aware of guidelines?” asked Mary O’Donoghue, chief clinical and product officer, MedRisk. “Absolutely. Should they expect TPAs to administer medical review appropriately? Absolutely.”

She advised risk managers to focus their attention on unusually long, complex and expensive claims.

Many states and a few Canadian provinces have adopted, adapted or developed medical, surgical, therapeutic and pharmaceutical treatment guidelines for a number of workers’ compensation maladies.

The most common claims, according to The National Law Review, are strains and sprains (30 percent), cuts or punctures (19 percent), contusions (12 percent), inflammation (5 percent) and fractures (5 percent).

Do Treatment Guidelines Work?

The cautious consensus is that, overall, treatment guidelines usually work.

“In states where care is managed and guided using excellent guidelines and strong utilization, workplace injuries may be handled at a higher level of care with a higher expectation of recovery,” said Goldberg.

And in states with limited or no guidelines, “injuries may linger and lead to longer disability, higher indemnity payments and loss of return-to-work,” he said.

The extensiveness of treatment guidelines make it “too much for any single risk manager to know.” — Anne Kirby, chief compliance officer and vice president of care management, Rising Medical Solutions

ODG points to statistics proving the effectiveness of guidelines.

States that adopted ODG guidelines, its website claimed, reported medical cost savings of 25 percent to 60 percent, average disability duration reduced from 34 percent to 66 percent, treatment delays from date of injury to initial treatment reduced 77 percent and insurance premiums reduced by 40 percent to 49 percent.

Only 13 states have no guidelines or none under consideration by the state legislatures, according to ODG.

Phil LeFevre, managing director, ODG, draws a bright line separating consensus-based guidelines characteristic to states that develop their own, and evidence-based guidelines “developed from comprehensive review of the medical literature, ranking and weighting thousands of studies based on design and quality, and tested for 15 years for optimal outcomes.”

A few states’ guidelines are mandatory — California and New York require compliance for certain injuries to most body parts, for example — but most are “guiderails” to keep treatment on track, said Goldberg of Healthesystems.

Some states adopt ODG and American College of Occupational and Environmental Medicine (ACOEM) guidelines, others develop their own, and yet others borrow from all of the above.

“Treatment guidelines give workers what they need, not what they want,” said Schoor. That brings a much-needed halt to excessive treatments that jack up medical and indemnity costs, she said.

Complex Cases Challenge Guidelines

Actual medical outcomes and return-to-work rates fall short of the promise of treatment guidelines, wrote Michael Gruber, partner, Pasternack Tilker Ziegler Walsh Stanton & Romano, LLP, a New York workers’ compensation law firm.

“ ‘Cookbook’ treatment rules effectively tie the hands of medical providers by not allowing them to use their judgment as to what treatment would be most beneficial for their patients,” he wrote in a newsletter for the American Association for Justice.

Most treatment guidelines are “pretty good” at predicting the medical treatment and return-to-work date of average claims, said Dr. Brian O’Malley, president, The Rehab Center in Charlotte, N.C., which treats complex worker injuries.

They’re not as good at guiding treatment for the outlying cases, which usually account for the largest expenditures, O’Malley said. “Guidelines may have a myopic view of an injury.”

For example, he said, most workers with a lumbar strain will return to work within 30 days. What happens to those who don’t?

“Decompression in the spine, spinal fusion, the condition deteriorates. The patient gets a spinal cord stimulator” — a highly dubious medical treatment in the workers’ compensation population, O’Malley said.

“Those end up costing the most money.”

Even with those lumbar strains that don’t lead to surgery, complex symptoms may follow: disturbed sleep due to pain, weight gain from inactivity, anxiety from disrupted routine and depression from isolation.

“It goes on and on,” O’Malley said.

“Many injuries need involvement by more than a spine specialist,” he said, including the emotional piece. Not all states compensate for mental health services.

Risk managers should “have some familiarity with guidelines for the body parts where their exposures are highest.” — Dennis Tierney, senior vice president and director, workers’ compensation, Marsh claim practice

Denied treatment prompts some injured workers to file claims under their private insurance or to pay for treatment out of pocket, Gruber wrote.

On the contrary, said Goldberg, the workers’ comp system is more prone to excessive care than denial of treatment.

Guidelines are designed to be flexible, permitting discretion for the treating physician, with room to file an appeal for denied treatment, said LeFevre.

Dennis Tierney, senior vice president and director, workers’ compensation, Marsh claim practice

Despite the good intentions behind guidelines, implementation can go awry, said Bernie Baltaxe, partner, Smith & Baltaxe, LLP, which specializes in workers’ compensation cases.

For example, a case now in the California Supreme Court alleges a UR doctor’s decision to decertify the sedative Klonopin in accordance with treatment guidelines led to seizures and additional injury. Klonopin was prescribed for anxiety related to a back injury.

Most guidelines are not mandatory, said Dr. Robert Hall, corporate medical director, workers’ comp division of Optum, but establish a starting point for treatment.

“If the current treatment plan isn’t working, there may be a good reason to deviate.”

If evidence points irrefutably to the optimal type and length of treatment for, say, a rotator cuff injury, why aren’t treatment guidelines the same across the country?

Inconsistent State Guidelines

“It boils down to the character of the state,” said Brian Allen, vice president, government affairs, workers’ comp division of Optum. “The handful of states that defer to market solutions tend to target specific conditions.”

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Some years ago, for example, “every time you turned around in Montana you saw another back surgery,” which is highly controversial because of cost and efficacy. Treatment guidelines brought the number down 70 percent.

States that seek solutions from regulations, such as Massachusetts, have “sweeping guidelines covering a gamut of treatments.”

The lack of uniformity inhibits consistent medical care, said O’Donoghue of MedRisk.

“Treatment guidelines give workers what they need, not what they want.” — Ettie Schoor, president, Prism Consultants

“Some states have a presumption of treatment” rather than mandatory protocols, said Tron Emptage, chief clinical officer, workers’ comp division of Optum, which can be the deciding factor in a dispute over compensability between the payer and treating physician.

“If the doctor presents evidence for deviation from the guidelines, generally the payer will help determine coverage for the expense under the claim,” Emptage said.

Different states have different recommendations for treating lower back pain, which accounts for one-third of occupational musculoskeletal injuries and illnesses resulting in work disability, according to the Department of Labor.

“Some doctors order an x-ray at the first visit,” said Hall of Optum. Without accompanying red flags, such as fever or weight loss indicating a more severe underlying condition, “imaging has low value because the worker hasn’t had a chance to heal. Guidelines can keep the treatment on track.” &

Susannah Levine writes about health care, education and technology. She can be reached at riskletters@lrp.com.

More from Risk & Insurance

More from Risk & Insurance

Alternative Energy

A Shift in the Wind

As warranties run out on wind turbines, underwriters gain insight into their long-term costs.
By: | September 12, 2017 • 6 min read

Wind energy is all grown up. It is no longer an alternative, but in some wholesale markets has set the incremental cost of generation.

As the industry has grown, turbine towers have as well. And as the older ones roll out of their warranty periods, there are more claims.

This is a bit of a pinch in a soft market, but it gives underwriters new insight into performance over time — insight not available while manufacturers were repairing or replacing components.

Charles Long, area SVP, renewable energy, Arthur J. Gallagher

“There is a lot of capacity in the wind market,” said Charles Long, area senior vice president for renewable energy at broker Arthur J. Gallagher.

“The segment is still very soft. What we are not seeing is any major change in forms from the major underwriters. They still have 280-page forms. The specialty underwriters have a 48-page form. The larger carriers need to get away from a standard form with multiple endorsements and move to a form designed for wind, or solar, or storage. It is starting to become apparent to the clients that the firms have not kept up with construction or operations,” at renewable energy facilities, he said.

Third-party liability also remains competitive, Long noted.

“The traditional markets are doing liability very well. There are opportunities for us to market to multiple carriers. There is a lot of generation out there, but the bulk of the writing is by a handful of insurers.”

Broadly the market is “still softish,” said Jatin Sharma, head of business development for specialty underwriter G-Cube.

“There has been an increase in some distressed areas, but there has also been some regional firming. Our focus is very much on the technical underwriting. We are also emphasizing standardization, clean contracts. That extends to business interruption, marine transit, and other covers.”

The Blade Problem

“Gear-box maintenance has been a significant issue for a long time, and now with bigger and bigger blades, leading-edge erosion has become a big topic,” said Sharma. “Others include cracking and lightning and even catastrophic blade loss.”

Long, at Gallagher, noted that operationally, gear boxes have been getting significantly better. “Now it is blades that have become a concern,” he said. “Problems include cracking, fraying, splitting.

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“In response, operators are using more sophisticated inspection techniques, including flying drones. Those reduce the amount of climbing necessary, reducing risk to personnel as well.”

Underwriters certainly like that, and it is a huge cost saver to the owners, however, “we are not yet seeing that credited in the underwriting,” said Long.

He added that insurance is playing an important role in the development of renewable energy beyond the traditional property, casualty, and liability coverages.

“Most projects operate at lower capacity than anticipated. But they can purchase coverage for when the wind won’t blow or the sun won’t shine. Weather risk coverage can be done in multiple ways, or there can be an actual put, up to a fixed portion of capacity, plus or minus 20 percent, like a collar; a straight over/under.”

As useful as those financial instruments are, the first priority is to get power into the grid. And for that, Long anticipates “aggressive forward moves around storage. Spikes into the system are not good. Grid storage is not just a way of providing power when the wind is not blowing; it also acts as a shock absorber for times when the wind blows too hard. There are ebbs and flows in wind and solar so we really need that surge capacity.”

Long noted that there are some companies that are storage only.

“That is really what the utilities are seeking. The storage company becomes, in effect, just another generator. It has its own [power purchase agreement] and its own interconnect.”

“Most projects operate at lower capacity than anticipated. But they can purchase coverage for when the wind won’t blow or the sun won’t shine.”  —Charles Long, area senior vice president for renewable energy, Arthur J. Gallagher

Another trend is co-location, with wind and solar, as well as grid-storage or auxiliary generation, on the same site.

“Investors like it because it boosts internal rates of return on the equity side,” said Sharma. “But while it increases revenue, it also increases exposure. … You may have a $400 million wind farm, plus a $150 million solar array on the same substation.”

In the beginning, wind turbines did not generate much power, explained Rob Battenfield, senior vice president and head of downstream at JLT Specialty USA.

“As turbines developed, they got higher and higher, with bigger blades. They became more economically viable. There are still subsidies, and at present those subsidies drive the investment decisions.”

For example, some non-tax paying utilities are not eligible for the tax credits, so they don’t invest in new wind power. But once smaller companies or private investors have made use of the credits, the big utilities are likely to provide a ready secondary market for the builders to recoup their capital.

That structure also affects insurance. More PPAs mandate grid storage for intermittent generators such as wind and solar. State of the art for such storage is lithium-ion batteries, which have been prone to fires if damaged or if they malfunction.

“Grid storage is getting larger,” said Battenfield. “If you have variable generation you need to balance that. Most underwriters insure generation and storage together. Project leaders may need to have that because of non-recourse debt financing. On the other side, insurers may be syndicating the battery risk, but to the insured it is all together.”

“Grid storage is getting larger. If you have variable generation you need to balance that.” — Rob Battenfield, senior vice president, head of downstream, JLT Specialty USA

There has also been a mechanical and maintenance evolution along the way. “The early-generation short turbines were throwing gears all the time,” said Battenfield.

But now, he said, with fewer manufacturers in play, “the blades, gears, nacelles, and generators are much more mechanically sound and much more standardized. Carriers are more willing to write that risk.”

There is also more operational and maintenance data now as warranties roll off. Battenfield suggested that the door started to open on that data three or four years ago, but it won’t stay open forever.

“When the equipment was under warranty, it would just be repaired or replaced by the manufacturer,” he said.

“Now there’s more equipment out of warranty, there are more claims. However, if the big utilities start to aggregate wind farms, claims are likely to drop again. That is because the utilities have large retentions, often about $5 million. Claims and premiums are likely to go down for wind equipment.”

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Repair costs are also dropping, said Battenfield.

“An out-of-warranty blade set replacement can cost $300,000. But if it is repairable by a third party, it could cost as little as $30,000 to have a specialist in fiberglass do it in a few days.”

As that approach becomes more prevalent, business interruption (BI) coverage comes to the fore. Battenfield stressed that it is important for owners to understand their PPA obligations, as well as BI triggers and waiting periods.

“The BI challenge can be bigger than the property loss,” said Battenfield. “It is important that coverage dovetails into the operator’s contractual obligations.” &

Gregory DL Morris is an independent business journalist based in New York with 25 years’ experience in industry, energy, finance and transportation. He can be reached at riskletters@lrp.com.