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Medical Marijuana

Solutions Needed for Marijuana Concerns

An exploratory program may help identify answers for some of the thorny issues surrounding medical marijuana in workers' comp.
By: | October 18, 2017 • 7 min read

The steady march of medical marijuana legalization is leaving employers and workers’ comp insurers in a tricky position — especially now that courts have begun to accept the substance as a covered medication for workers’ comp patients.

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For starters, marijuana remains a Schedule 1 drug on the federal level, which means payers can run afoul of the law if they purchase it for an injured worker. There’s also no concrete way for payers to control the dosage.

So far, there have been no easy answers, but some experts are actively thinking outside the box. Safety National embarked on a pilot project aiming to bring the industry closer to solutions.

The St. Louis-based workers’ comp carrier is currently participating in a pilot program with a third-party vendor that manufactures and distributes medical marijuana in the forms of patches or gel, said Sherri Hickey, Safety National’s assistant vice president of medical management.

When Safety National deems medical marijuana an appropriate treatment for an injured worker, working with this manufacturer changes the dynamic so that Safety National is not directly buying marijuana but purchasing a method of medicinal delivery — the patches or gel.

Sherri Hickey, assistant vice president of medical management, Safety National

The carrier is legally allowed to pay for this service, and the manufacturer can be paid by check, unlike dispensaries, which can only accept cash because of marijuana’s federal drug classification.

The use of patches or gel as a delivery method allows the carrier to control the amount and type prescribed. The vendor employs nurse practitioners who evaluate a patient’s height, weight, diagnoses and other medications to determine the strain and dosage most appropriate for each individual. The vendor then works with the injured worker’s personal physician on a written treatment plan.

A Viable Alternative

Hickey said the conversation about how to approach medical marijuana has been ongoing at Safety National.

“A lot of jurisdictions are requiring workers’ comp to start covering medical marijuana as an option for injured workers, and judges are saying that is reasonable and appropriate and that you’ve got to pay for that,” she said.

But in practice, most payers are still largely in uncharted territory. Hickey said Safety National noticed on one large claim a young man was taking Dronabinol, a pharmaceutical manufactured synthetic cannabis.

“While it is a generic, it was still very expensive,” Hickey said. “So we thought, what if we gave the patient the real thing — what would that cost? We had several conversations with different sources and found that it is significantly less than the generic synthesized cannabis.”

Starting with that case, Safety National obtained input from experts in the field on how the carrier could address many of his medications in this category.

“That created a huge savings, and we said to ourselves, maybe this could actually work,” she said. “That’s where we started.”

The carrier found several injured workers in its book of claims purchasing medical marijuana on their own. They had previously been on large dosages of opioids, along with a range of medications needed to counter the side effects of the opioids. These workers stopped the other medications on their own and were using medical marijuana instead.

“There are studies showing that the states that have legalized marijuana have a 25 percent lower death rate from opioids than the states that have not. Coincidence? I don’t think so — I think there’s probably some meaning there.” — Sherri Hickey, assistant vice president of medical management, Safety National

“As a result, their pharmacy bills were extremely low or zero — and they were off all of their opioids,” Hickey said. “We said to ourselves, there is something to this.”

Safety National is conducting its pilot program on a case-by-case basis in jurisdictions that allow the use of medical marijuana for the patient’s particular condition, she said. The carrier is now looking at several additional injured workers who might benefit in replacing their opioids with medical marijuana.

“There are studies showing that the states that have legalized marijuana have a 25 percent lower death rate from opioids than the states that have not,” Hickey said. “Coincidence? I don’t think so — I think there’s probably some meaning there.

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“Now that medical marijuana is becoming legalized in more states, there is more research going on that will soon be telling us the outcomes and benefits of medical marijuana and not just anecdotal information.”

There are now 29 states, Washington D.C., Puerto Rico and Guam that have legalized medical marijuana and there are another dozen or so states with pending legislation, she said.

“As more and more states pass these laws and more research is done, it will just be a matter of time [until] the federal government will change marijuana from a Schedule 1 drug,” Hickey said. “I predict that will happen within the next two or three years.”

Richard Krasner, who blogs on workers’ comp topics, said the Safety National pilot program “is a positive step.”

“It’s a good sign that they are willing to put themselves out there to see if there is a scientific basis for claims that medical marijuana has benefits,” Krasner said.

“If the use of medical marijuana in workers’ comp cases helps [injured workers] to avoid using opioids that would lead to worse outcomes, then I say go ahead and start doing that,” said Krasner, noting that opioid users are increasingly going down the slippery slope to heroin and eventually overdose.

Even if workers stay on opioids alone, they can get hooked, which keeps them wanting the drugs more and more, Krasner added.

Medical marijuana, by contrast, does not have the deleterious effects of the traditional smoked marijuana, which contains THC. Moreover, medical marijuana has been shown to improve outcomes for pain management like opioids — but without developing a dependency.

Impairment Concerns

Most employers are also worried about how they can maintain a drug-free workplace even while recovering workers may be using the drug. Zero tolerance policies and drug testing programs don’t align easily with medical marijuana use.

Hickey agreed that testing for marijuana is a challenge.

“Testing for the presence of THC from recreational marijuana has been around for a long time,” she said. “However THC is metabolized through the liver and remains in the liver for days or even weeks. So when someone is tested, it is only documenting that they smoked marijuana sometime in the past couple of weeks. It does not measure a level of impairment, it is just a matter of presence or not.”

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However, the standard marijuana testing does not test for the presence of cannabidiol, or CBD, which it the most common type of medical marijuana, Hickey said. CBD is metabolized through the blood stream and leaves the body within 24 hours.

“There is no impairment from CBD as it has no psychotropic effect, so there is no need for impairment testing of CBD,” she said.

Interest Is Widespread

Dr. Tom Denberg, senior medical director at Pinnacol Assurance in Denver, said the carrier would be “very interested” to see what Safety National experiences with its pilot program.

“Like other carriers across the country, we are very intrigued about other effective treatment options for injured workers who are experiencing chronic pain,” Denberg said.

Currently, Pinnacol promotes minimal and more appropriate prescribing of opioids, encourages the use of non-steroidal anti-inflammatories as first-line therapy, and makes available a variety of complementary and alternative treatments that are helpful for some patients, including therapeutic massage and acupuncture, he said.

“We do suspect that medical marijuana is more benign and less addictive than opioids, but the science and clinical experience aren’t yet at a point that make us comfortable.” — Dr. Tom Denberg, senior medical director, Pinnacol Assurance

One of the challenges within the industry is that there’s still not a high level of evidence for the use of medical marijuana, and like many carriers, Pinnacol is very focused on utilizing evidence-based treatment guidelines, Denberg said.

“The level of evidence for the use of marijuana in the treatment of chronic, non-cancer pain is probably similar to the level of evidence currently available for opioids, but many stakeholders promoted opioids too aggressively and now we’ve gotten ourselves in a big mess,” he said.

If there was stronger evidence for the use of marijuana, more knowledge about effective dosing and more understanding about which patient groups benefit the most, workers’ comp programs could minimize the risk that marijuana could adversely affect large numbers of patients “in ways we don’t yet understand.”

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“We do suspect that medical marijuana is more benign and less addictive than opioids, but the science and clinical experience aren’t yet at a point that make us comfortable,” Denberg said. “We’d like to see Safety National’s experience with the gels and patches.”

Denberg said marijuana’s Schedule 1 classification remains a point of concern for now.

“This is a primary reason we’ve decided not to use medical marijuana in workers’ comp programs at this time,” he said. “If this changes, it will be easier for us to consider programs like Safety National’s.” &

Katie Kuehner-Hebert is a freelance writer based in California. She has more than two decades of journalism experience and expertise in financial writing. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

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 [email protected]