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Sharpening the Tools

Improving outcomes by using value-based purchasing, effective chronic pain management, and employing the talent that will help define success for insurers and their customers.
By: | December 14, 2016 • 9 min read

FROM LEFT, Dan Reynolds, Melanie Armstrong, Tron Emptage and Helen Weber.

Workers’ compensation claims specialists can take well-earned pride in their higher purpose. They help injured workers heal and get back to leading productive lives.

Tempering that glow of good feeling is the certainty that their burden never lightens.

Delivering the best service going forward will mean tackling the advent of medical marijuana use, polypharmacy issues, the challenge of appropriate opioid use, and controlling medical costs through more collaborative interaction with physicians, along with winning the competition to attract and retain the best claims management talent.

In July, Risk & Insurance® and the workers’ compensation and auto no-fault division of Optum convened a roundtable discussion in Chicago with veteran workers’ compensation claims management professionals to gain insight into the challenges that can vex claims management specialists, and what solutions they go to.

With 25 states having passed or enacted laws legalizing the use of medical marijuana, roundtable members agreed that the chronic pain management landscape in workers’ compensation is undergoing a dramatic shift.

Chicago roundtable participant Melanie Armstrong, medical services manager with American Mining Insurance Group, pointed to a number of challenges legalized marijuana presents. For one, she feels legalization has happened too quickly, with not enough consideration for the consequences.

“I think that it should be a slow, methodical process,” Armstrong said.

“For those medical conditions that it has been approved for, there’s not been enough time to look at outcomes and see if there is more benefit than risk.”


Tron Emptage, chief clinical officer for the workers’ compensation and auto no-fault division of Optum, agrees more research needs to be conducted especially in the area of chronic non-cancer pain and other work-related conditions.

The roundtable participants also discussed the ongoing battle against opioids. Due perhaps to the efforts of pharmacy benefit managers and the workers’ compensation community in general, the use of opioids is down, but the risk of misuse and abuse is still very much alive.

Having the right tools in place to insure that the use of a pain medication is appropriate is a key to pharmacy claims management. The good news is that detoxification programs, drug monitoring and pharmacy benefit management programs are not only available, but working. So too are functional restoration programs, when paired with claimant-specific weaning processes, and cognitive behavioral therapy.

“From a claims management standpoint, in partnership with our pharmacy benefit manager, it is important to have controls in place to verify the medical necessity of prescribed pain medications that could lead to misuse or abuse,” said Helen Weber, an assistant vice president and head of medical strategy for the Hanover Insurance Group.

Building the right monitoring systems so that payers, insureds and their workers are well protected is a pressing consideration, Emptage said.

“That’s where the tools in our toolbox have to be strong, in order for adjusters to engage the right resources and facilitate those conversations with physicians and the injured workers to support achieving the right outcome,” Weber said.

Yet another concern, according to Optum’s Emptage, is the use of benzodiazepines such as Valium. These medications can cause serious adverse events if not monitored closely and if taken in the wrong combinations, for example with marijuana, other illicit drugs or even an opioid.

Polypharmacy, disparate drugs whose combined effects can overwhelm a patient, are another ongoing worry, Hanover’s Weber said. “Do they understand the potential risks of taking an opioid?” she added.

img_2994-230“For those medical conditions that [marijuana] has been approved for, there’s not been enough time to look at outcomes and see if there is more benefit than risk.”

— Melanie Armstrong, medical services manager, American Mining Insurance Group

That’s one of the reasons why educating patients about the effects of medications, and how combining them can be so dangerous, is such a priority for the industry.

Value-Based Purchasing

It’s well known that pharmacy spend drives medical costs in workers’ compensation.

Getting physicians aligned with your organization’s treatment philosophies and expectations is another important area of claims management focus.

Armstrong manages risk for mining companies. On the one hand, that profession sees severe injuries that can be challenging to manage. On the other, mining is geography specific, so a clinic within a given region could be more easily leveraged to fall in line with a claims executive’s expectations regarding adherence to treatment guidelines and other medical management best practices.

Even with that claimant demographic, American Mining’s Melanie Armstrong impressed her fellow roundtable members with her creative approach to collaborating with prescribers.

Drawing from her background and years of expertise, she has started a new program in which a physician or group of physicians is hand-selected, based on their service and performance, to hold themselves and their peers accountable to best practice standards of care.


“You’ve got a group of physicians who are strategically placed to help you with the program, making sure that there is one physician in the group who can hold the others accountable. I’ve found that it drives outcomes,” she said.

So, how to accomplish that?

Armstrong says to find one physician who agrees with your company’s vision and objectives.

“You meet with them and you say, ‘This is the program. This is what we’re trying to accomplish. Do you agree with that?’”

“What we’re starting to see is this …,” Armstrong said. “This doc nudges that doc to do the right thing, who nudges this doc … and it just keeps going. In the end, you’re meeting your goals, you’re meeting your objectives because it’s peer-to-peer, and importantly, the claimant’s therapy plan is safer, more efficacious and cost-effective.”

That approach may be easier said than done when it comes to opioid use management, she said.

“Finding the right provider with the philosophies that are in line with our vision and making sure we are aligned in our approach has been quite difficult,” she said.

“It keeps me up at night finding the prescribers that will work with us,” she said.

Hanover’s Weber said that’s where she’d expect her pharmacy benefit manager to help out; utilizing their larger network to identify care providers focused on achieving improved functional restoration, recovery and return-to-work outcomes.

helen-230“How do we advertise to say you’re going to touch on all of these different skill sets and opportunities as an adjuster that you might not experience in another role?”

— Helen Weber, assistant vice president; head of medical strategy, Hanover Insurance Group

Emptage agrees that pharmacy benefit managers can assist a payer by leveraging prescription data to help identify prescriber trends across an entire book of business. Data mining can show global trends that might be missed in a smaller book of business or at an adjuster’s desk.

“Our most successful client partnerships include those who want to dig into our data as much as we do, and who use our data to have conversations with physicians, or allow us to do so,” he said.

“Some of our most successful clients include those that want to partner on data analysis whether to trend on prescribers with improved outcomes or new dispensing trends.”

The Talent Question

The third major bucket that the Chicago roundtable participants tackled was the talent question.

Drive down the highway and you see billboards. Turn on the radio and you hear advertisements.

Click on your favorite web page and you see pop-ups.

As integrated as insurance and risk management is in modern business, it’s a bitter irony in our marketing-saturated culture that the insurance industry struggles to market itself to new talent and faces a painful talent crunch in workers’ compensation claims management.

Our Chicago roundtable members have some good ideas in that regard. For one, according to Hanover Insurance Group’s Weber, getting a new generation to see the value in being a claims adjuster means taking over the narrative and giving it the proper color.

“It’s interesting when you think about what a claims adjuster’s responsibilities are,” she said.

“The adjuster wears many hats throughout the life of the claim; that of a skilled communicator, negotiator, problem solver, medical professional, and financier, to name a few. They interact with a wide variety of industries and individuals. They provide customer service. But most importantly, they help injured workers navigate the complex workers’ compensation system in order to receive the appropriate care to recover from their injury, restore their function, and get them back to their livelihood. How do we advertise to say you’re going to touch on all of these different skill sets and opportunities as an adjuster that you might not experience in another role?”


That quest for new talent can also find reinforcement in what we mentioned at the top. Workers’ compensation has a noble higher purpose. It’s about loss prevention and helping people get better if they do suffer an unfortunate accident.

That oft-discussed generation born in the 1980s — don’t call them millennials, they hate that — are saddled with a number of traits. Some that may be relevant are that they are technologically savvy and seek connectivity and higher purpose in their work.

What better place for this group than in workers’ compensation claims management, where data is king and the idea is to heal people?

Again, American Mining’s Armstrong reports some approaches that have produced good results.

She’s in frequent communication with nursing schools, seeking, as she put it, “the cream of the crop” and as staffing needs dictate, is bringing those candidates into her organization’s mentorship program.

“It’s been nice to have some fresh talent in our organization over the last couple of years,” she said.

tron-emptage-230“Our most successful client partnerships include those who want to dig into our data as much as we do, and who use our data to have conversations with physicians, or allow us to do so.”

— Tron Emptage, chief clinical officer, Optum Workers’ Comp

That fresh talent can also help more established workers over the technology hump. As many of us can attest, teaching up-to-date technology skills to someone in their 50s or 60s has its own challenges.

Inexperienced new hires may benefit from exposure to multiple areas in their first couple of years of their career, which also can foster continued engagement and help support the establishment of strong foundational claims expertise, according to Hanover’s Weber.

Back in the day, as we say, claims adjusters were trained across all lines of business. That approach has waned, many say.

“Building that foundational claims expertise that can be leveraged wherever the needs may take you as the business changes, allows us to be more nimble to feed the future of claims handling,” she said.

It can be said of many in the insurance industry that they weren’t quite sure what they wanted to do when they got out of college. They might enter an internship, or take that first job at an insurance company and wind up engaged for life.

Mention the terms “workers’ compensation” and “insurance” at a dinner party and some guests might start fiddling with their napkins out of boredom and embarrassment. But for those charged with managing workers’ compensation claims, there is plenty to keep them engaged.

There is so much yet to play out in the intersection of legal and illegal drugs and how they will impact workers’ compensation claims. Engaging a new generation in this field and taking advantage of their energy could be a game changer. Giving them the right tools to read, interpret and implement best medical practices could be a game winner.

Opinions of the roundtable participants are the opinions of each individual contributor and are not necessarily reflective of their respective companies.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Optum.

Healthcare Solutions, Helios and their subsidiaries, as Optum companies, collaborate with our clients to deliver value beyond transactional savings while helping ensure injured workers receive safe and effective clinical care. Our innovative and comprehensive medical cost management programs include pharmacy benefit management, ancillary benefit management, managed care services, and settlement solutions.

More from Risk & Insurance

More from Risk & Insurance

Risk Focus: Cyber

Expanding Cyber BI

Cyber business interruption insurance is a thriving market, but growth carries the threat of a mega-loss. 
By: | March 5, 2018 • 7 min read

Lingering hopes that large-scale cyber attack might be a once-in-a-lifetime event were dashed last year. The four-day WannaCry ransomware strike in May across 150 countries targeted more than 300,000 computers running Microsoft Windows. A month later, NotPetya hit multinationals ranging from Danish shipping firm Maersk to pharmaceutical giant Merck.


Maersk’s chairman, Jim Hagemann Snabe, revealed at this year’s Davos summit that NotPetya shut down most of the group’s network. While it was replacing 45,000 PCs and 4,000 servers, freight transactions had to be completed manually. The combined cost of business interruption and rebuilding the system was up to $300 million.

Merck’s CFO Robert Davis told investors that its NotPetya bill included $135 million in lost sales plus $175 million in additional costs. Fellow victims FedEx and French construction group Saint Gobain reported similar financial hits from lost business and clean-up costs.

The fast-expanding world of cryptocurrencies is also increasingly targeted. Echoes of the 2014 hack that triggered the collapse of Bitcoin exchange Mt. Gox emerged this January when Japanese cryptocurrency exchange Coincheck pledged to repay customers $500 million stolen by hackers in a cyber heist.

The size and scope of last summer’s attacks accelerated discussions on both sides of the Atlantic, between risk managers and brokers seeking more comprehensive cyber business interruption insurance products.

It also recently persuaded Pool Re, the UK’s terrorism reinsurance pool set up 25 years ago after bomb attacks in London’s financial quarter, to announce that from April its cover will extend to include material damage and direct BI resulting from acts of terrorism using a cyber trigger.

“The threat from a cyber attack is evident, and businesses have become increasingly concerned about the extensive repercussions these types of attacks could have on them,” said Pool Re’s chief, Julian Enoizi. “This was a clear gap in our coverage which left businesses potentially exposed.”

Shifting Focus

Development of cyber BI insurance to date reveals something of a transatlantic divide, said Hans Allnutt, head of cyber and data risk at international law firm DAC Beachcroft. The first U.S. mainstream cyber insurance products were a response to California’s data security and breach notification legislation in 2003.

Jimaan Sané, technology underwriter, Beazley

Of more recent vintage, Europe’s first cyber policies’ wordings initially reflected U.S. wordings, with the focus on data breaches. “So underwriters had to innovate and push hard on other areas of cyber cover, particularly BI and cyber crimes such as ransomware demands and distributed denial of service attacks,” said Allnut.

“Europe now has regulation coming up this May in the form of the General Data Protection Regulation across the EU, so the focus has essentially come full circle.”

Cyber insurance policies also provide a degree of cover for BI resulting from one of three main triggers, said Jimaan Sané, technology underwriter for specialist insurer Beazley. “First is the malicious-type trigger, where the system goes down or an outage results directly from a hack.

“Second is any incident involving negligence — the so-called ‘fat finger’ — where human or operational error causes a loss or there has been failure to upgrade or maintain the system. Third is any broader unplanned outage that hits either the company or anyone on which it relies, such as a service provider.”

The importance of cyber BI covering negligent acts in addition to phishing and social engineering attacks was underlined by last May’s IT meltdown suffered by airline BA.

This was triggered by a technician who switched off and then reconnected the power supply to BA’s data center, physically damaging servers and distribution panels.

Compensating delayed passengers cost the company around $80 million, although the bill fell short of the $461 million operational error loss suffered by Knight Capital in 2012, which pushed it close to bankruptcy and decimated its share price.

Mistaken Assumption

Awareness of potentially huge BI losses resulting from cyber attack was heightened by well-publicized hacks suffered by retailers such as Target and Home Depot in late 2013 and 2014, said Matt Kletzli, SVP and head of management liability at Victor O. Schinnerer & Company.


However, the incidents didn’t initially alarm smaller, less high-profile businesses, which assumed they wouldn’t be similarly targeted.

“But perpetrators employing bots and ransomware set out to expose any firms with weaknesses in their system,” he added.

“Suddenly, smaller firms found that even when they weren’t themselves targeted, many of those around them had fallen victim to attacks. Awareness started to lift, as the focus moved from large, headline-grabbing attacks to more everyday incidents.”

Publications such as the Director’s Handbook of Cyber-Risk Oversight, issued by the National Association of Corporate Directors and the Internet Security Alliance fixed the issue firmly on boardroom agendas.

“What’s possibly of greater concern is the sheer number of different businesses that can be affected by a single cyber attack and the cost of getting them up and running again quickly.” — Jimaan Sané, technology underwriter, Beazley

Reformed ex-hackers were recruited to offer board members their insights into the most vulnerable points across the company’s systems — in much the same way as forger-turned-security-expert Frank Abagnale Jr., subject of the Spielberg biopic “Catch Me If You Can.”

There also has been an increasing focus on systemic risk related to cyber attacks. Allnutt cites “Business Blackout,” a July 2015 study by Lloyd’s of London and the Cambridge University’s Centre for Risk Studies.

This detailed analysis of what could result from a major cyber attack on America’s power grid predicted a cost to the U.S. economy of hundreds of billions and claims to the insurance industry totalling upwards of $21.4 billion.

Lloyd’s described the scenario as both “technologically possible” and “improbable.” Three years on, however, it appears less fanciful.

In January, the head of the UK’s National Cyber Security Centre, Ciaran Martin, said the UK had been fortunate in so far averting a ‘category one’ attack. A C1 would shut down the financial services sector on which the country relies heavily and other vital infrastructure. It was a case of “when, not if” such an assault would be launched, he warned.

AI: Friend or Foe?

Despite daunting potential financial losses, pioneers of cyber BI insurance such as Beazley, Zurich, AIG and Chubb now see new competitors in the market. Capacity is growing steadily, said Allnutt.

“Not only is cyber insurance a new product, it also offers a new source of premium revenue so there is considerable appetite for taking it on,” he added. “However, whilst most insurers are comfortable with the liability aspects of cyber risk; not all insurers are covering loss of income.”

Matt Kletzli, SVP and head of management liability, Victor O. Schinnerer & Company

Kletzli added that available products include several well-written, broad cyber coverages that take into account all types of potential cyber attack and don’t attempt to limit cover by applying a narrow definition of BI loss.

“It’s a rapidly-evolving coverage — and needs to be — in order to keep up with changing circumstances,” he said.

The good news, according to a Fitch report, is that the cyber loss ratio has been reduced to 45 percent as more companies buy cover and the market continues to expand, bringing down the size of the average loss.

“The bad news is that at cyber events, talk is regularly turning to ‘what will be the Hurricane Katrina-type event’ for the cyber market?” said Kletzli.

“What’s worse is that with hurricane losses, underwriters know which regions are most at risk, whereas cyber is a global risk and insurers potentially face huge aggregation.”


Nor is the advent of robotics and artificial intelligence (AI) necessarily cause for optimism. As Allnutt noted, while AI can potentially be used to decode malware, by the same token sophisticated criminals can employ it to develop new malware and escalate the ‘computer versus computer’ battle.

“The trend towards greater automation of business means that we can expect more incidents involving loss of income,” said Sané. “What’s possibly of greater concern is the sheer number of different businesses that can be affected by a single cyber attack and the cost of getting them up and running again quickly.

“We’re likely to see a growing number of attacks where the aim is to cause disruption, rather than demand a ransom.

“The paradox of cyber BI is that the more sophisticated your organization and the more it embraces automation, the bigger the potential impact when an outage does occur. Those old-fashioned businesses still reliant on traditional processes generally aren’t affected as much and incur smaller losses.” &

Graham Buck is editor of gtnews.com. He can be reached at riskletters.com.