The Obesity Battle

Weighing the Obesity Exposure

Obesity's classification as a disease raises a host of new risk management challenges.
By: | November 1, 2013 • 8 min read

The recent action by the American Medical Association to reclassify obesity as a disease has generated a great deal of discussion about its potential impact on workers’ compensation.

Notably, in August, the California Workers Compensation Institute (CWCI) issued a report suggesting that the reclassification could spark a rise in the number of work injury claims involving obesity.

This should raise some new red flags for risk managers, who may view this as a signal to revisit their workers’ compensation and employee wellness initiatives.

Not surprisingly, CWCI found that in workers’ compensation, obesity historically has been a comorbidity — a condition coincidental to, but independent of, an injury or other illness. Thus, medical providers might include an obesity comorbidity code on their bills when they believed the condition needed to be addressed so the work-related injury could be treated and the worker could recover and return to work.

An earlier CWCI survey (conducted in 2011) found that, while 28 percent of injured workers reported that they were obese, fewer than 1 percent of job injury claims from those workers included an obesity comorbidity diagnostic code.

So, at that point, obesity infrequently was found to be a condition that had to be addressed in order to treat most work injuries and illnesses.

Now, however, according to CWCI, that may change: “… if medical providers feel a greater responsibility to counsel obese patients about their weight and to treat the condition, especially if there is a greater likelihood that they will be paid for doing so. That could prompt an influx of claims that include obesity as a comorbidity, as well as an increase in cases in which obesity is claimed as a compensable consequence of injury (e.g., when an injured worker gains weight due to lack of exercise or a medication prescribed to them during recovery).”

The Cost of Obesity

By latest estimates, about two-thirds of American adults are overweight or obese. And the difference in medical costs is more than five times higher in severely obese workers than those with a normal Body Mass Index (BMI). Citing the Duke Health and Safety Internal Medicine Archives, NCCI described how workers’ compensation claims rose in step with workers’ BMI.

Consider the following medical claims costs per 100 workers:

*Normal BMI: $7,500

*Overweight: More than $13,300

*Mildly Obese: More than $19,000

*Moderately Obese: More than $23,300

*Severely Obese: More than $51,000

Indeed, when obesity is a comorbidity in workers’ compensation, its impact on medical costs is substantial.

With respect to indemnity costs, an NCCI study in 2012 found that claims involving obesity have five times the indemnity costs of those where obesity is not a comorbidity. The multiple jumps to six when permanent partial disability claims are included.

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The NCCI study follows a Duke University study, which pointed to substantially higher odds of injury for workers in the highest obesity category.

That study tallied workers’ compensation claims for Duke University and Duke University Health System employees over an eight-year window, and classified the employees according to six BMI categories ranging from underweight, to recommended weight, to overweight and three classes of obese.

The Duke study found that medical costs for morbidly obese employees were 6.8 times higher than for recommended-weight employees. Morbidly obese employees were also twice as likely to have a claim, and missed almost 13 times more days of work.

Beyond the studies, AMA’s classification of obesity as a disease adds a new wrinkle — and that’s whether workers might claim their disease stems from the forced sedentary lifestyle of the work environment.

Obesity and Modeling

In workers’ compensation management, the use of predictive modeling is rapidly gaining momentum. When identified early, obesity is an absolute driver in predicting the size and complexity of the loss. Obesity is one of the most effective “predictors” of serious injury.

Tracking the overall health of the workforce will allow risk managers to design proactive solutions to obesity and related conditions before a claim occurs.

However, after the claim occurs, risk managers will need to determine early on what solutions are available for changing the “predicted direction” of that claim, if the claimant is obese.

Here, the value in predictive modeling is if the claim is likely to be a large loss, then it is important to devise intervention strategies as soon as possible to change the claim’s trajectory.

The workers’ compensation industry has a wealth of data on obesity. Employer claims data with payment detail is rife with employer-specific information on comorbidities and costs.

To address the impact of obesity on the organization, it is necessary to tackle the data.

As the CWCI research found, diagnostic coding isn’t isolated around comorbidities consistently. That is a critical data element in prediction, intervention and return on investment tracking.

If it is difficult to gather program data, remediating that situation should be a top priority. Require vendors to make information readily available. Obesity is often voluntarily reported to doctors and available in diagnostic codes as claims begin creeping upward. TPA adjusters should be able to share that information with an employer’s defense attorneys. And the organization’s RMIS can be used to conduct a multivariate analysis.

Many employers have difficulty putting their fingers on their specific experience and losses. Try to fix that now. Scrub the current open claims. Extract the obesity information so it can be readily correlated with other information in reports.

With the help of the organization’s HR department, work with HR consulting firms — independent consultants or those associated with brokers — to seek out integrated claim and human resource analysis.

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In addition, the CDC’s Obesity Cost Calculator, available through the CDC website, can help employers estimate obesity-related costs to the organization, as well as compare the costs and benefits of obesity prevention programs.

For example, risk managers can develop the following estimates for their organizations:

*Total costs attributable to high BMI;

*Total annual medical costs attributable to high BMI;

*Total annual work loss costs attributable to high BMI;

*Number of employees with high BMI;

*Average attributable cost per high-BMI employee;

*Expected costs of interventions to reduce obesity;

*Potential reductions in medical costs and work loss resulting from interventions; and

*The number of years before a break-even period is reached.

Once there is a baseline, risk managers can see how obesity is driving the organization’s experience.

And when the actual costs associated with obesity (not assumptions or broad industry numbers) are known, employers can begin evaluating intervention options.

In workers’ compensation, the longer a claim is open, the more issues arise — and the higher the costs.

Teaming With Human Resources

Given the increasing costs and potential exposures associated with obesity, the time is right for risk managers to collaborate with their HR counterparts and educate senior management about obesity, workers’ comp and related issues.

With the AMA classification, employees might claim their new disease is a compensable consequence of injury, acquired through free meals or poor snack choices available in meetings and break rooms, and long work hours that reduce time available for exercise.

As risk managers initiate internal dialogues on obesity, the time is ripe for employers to revisit or establish policies that reduce exposure and strengthen wellness. They can improve available food options or eliminate them altogether.

Consider workplace interventions on obesity, including wellness programs. The Wellness Council of America estimates the annual cost per employee of $100 to $150 for a wellness program generates a return of $300 to $450. And several studies show wellness programs generally pay for themselves. Harvard health economist Katherine Baicker led a 2010 study considered the “gold standard” in measuring return on investment: It found that “medical costs fall about $3.27 for every dollar spent on wellness programs, and absentee day costs fall by about $2.73 for every dollar spent.”

In January 2014, wellness measures under the Affordable Care Act take effect. Some may help expand corporate wellness programs and improve their effectiveness in reducing obesity, including:

*Larger employer incentives. Starting in 2014, employers will be able to boost incentives for employee participation in health promotion and wellness programs by 20 percent to 30 percent.

*More robust wellness benchmarking. Federal workforce wellness programs will be evaluated and reported to Congress by the Department of Health and Human Services (HHS). Under the law’s Section 4402, the evaluations will include employee absenteeism, productivity, workplace injury rates, and “medical costs incurred by employees, and health conditions, including workplace fitness, healthy food and beverages and incentives.”

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*Long-term measurement. Surveys will be conducted nationwide on worksite health policies and programs, and assessed by HHS. Subsequently, surveys will be conducted periodically to measure the effectiveness of the programs. The surveys are outlined in Section 399 MM-1 of the bill.

*Funding assistance. Small business tax credits and grant money will be available for implementing wellness programs.

Incentives Don’t Guarantee Success

In addressing obesity, wellness programs to date haven’t been a panacea. Nearly three in four (74 percent) U.S. employers already offer some sort of incentive or wellness program, but many have had modest effects due to low employee participation.

Be aware that incentives alone don’t guarantee success. Experts at WELCOA (Wellness Councils of America) point to seven benchmarks of successful, results-oriented employer wellness programs:

*Capture CEO support.

*Create cohesive wellness teams.

*Collect data to drive health efforts.

*Craft an operating plan.

*Choose appropriate interventions.

*Create a supportive environment.

*Carefully evaluate outcomes.

So if the organization’s wellness program has limited participation, it may warrant revisiting it.

As cost issues associated with obesity gain more attention, risk managers recognize they cannot solve these challenges exclusively with traditional approaches. Consider intervention options. Understand the costs. And do the necessary analysis to be able to justify the investment in necessary risk management resources to stakeholders.

Misty Price is director of analytics for Adelson, Testan, Brundo, Novell & Jimenez. Mariah Baesel is director of wellness for Adelson, Testan, Brundo, Novell & Jimenez. They can be reached at [email protected]

More from Risk & Insurance

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R&I Profile

Achieving Balance

XL Catlin’s Denise Balan stays calm and focused when faced with crisis.
By: | January 10, 2018 • 6 min read

In the high-stress scenario of kidnap or ransom, the first image that comes to mind isn’t necessarily a yoga mat — at least, not for most.

But Denise Balan, senior VP and head of U.S. kidnap & ransom, XL Catlin, who practices yoga every day, would swear by it.

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“I looked at these opposing aspects of my life,” she said. “Yoga is about focus, balance, clarity of intent. In a moment of stress, how do you respond? The more clarity and calmness you maintain, the better positioned you are to provide assistance in moments of crisis.

“Nobody wants to be speaking to a frenetic person when either dealing with a dangerous situation or planning for prevention of a situation,” she added.

“There’s a poem by [Rudyard] Kipling on that,” added Balan’s colleague Ben Tucker. “What it boils down to is: If you can remain calm, you can manage through a crisis a lot better.”

Tucker, who works side by side with Balan as head of U.S. terrorism and political violence, XL Catlin, has seen how yoga influences his colleague.

“The way Denise interacts with stakeholders in this process — she is very professional and calm in the approach she takes.”

Yin and Yang

Sometimes seemingly opposite or contrary forces may actually be complementary and interconnected. In Balan’s life, yoga and K&R have become her yin and yang.

She entered the insurance world after earning a juris doctor degree and practicing law for a few years. The switch came, she said, when Balan realized she wasn’t enjoying her time as a commercial litigator.

Denise Balan, senior VP and head of U.S. kidnap & ransom, XL Catlin

In her new role, she was able to use her legal background to manage litigation at AIG, where her transition from law to insurance took place. She started her insurance career in the environmental sector.

In a chance meeting in 2007, Balan met with crisis management underwriters who told her about kidnap and ransom products.

She was hooked.

Because of her background in yoga, Balan liked the crisis management side of the job. Being able to bring the calmness and clearness of intent she practiced during yoga into assisting clients in planning for crisis management piqued her interest.

She then joined XL Catlin in July 2013, where she built the K&R team.

As she became more immersed in her field, Balan began to notice something: The principles she learned in yoga were the same principles ex-military and ex-law enforcement practiced when called to a K&R-related crisis.

She said, “They have a warrior mentality — focus, purpose, strength and logic — and I would say yoga is quite similar in discipline.”

“K&R responders have a warrior mentality — focus, purpose, strength and logic — and I would say yoga is quite similar in discipline.” — Denise Balan, senior VP and head of U.S. kidnap & ransom, XL Catlin

Many understand yoga to be, in itself, one type of meditation, but yoga actually encompasses a group of physical, mental and spiritual practices. Each is a discipline. Some forms of yoga focus on movement and breathing, others focus on posture and technique. Some yoga is meant to relax the mind and create a sense of calmness; other yoga types make participants sweat.

After having her second child and working full-time, Balan wanted to find something physical and relaxing for herself; a friend suggested yoga. During her first lesson, Balan said she was enamored with it.

“I felt like I’d done it all my life.”

She dove into the philosophy of yoga, adopting the practice into her daily routine. Every morning, whether Balan is in her Long Island home or on a business trip, she pulls out her yoga mat to practice.

“I always travel with my mat,” she said. “Daily practice is the simplest form of connection to routine to maintain my balance — physically and mentally.”

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She said the strangest place she has ever practiced was in Lisbon. She was on a very narrow balcony with a bird feeder swarming with sparrows overhead.

After years of studying and practicing, Balan is considered a yogi — someone who is highly proficient in yoga. She attends annual retreats with her yoga group, where she is able to rejuvenate, ready to tackle any K&R event when she returns.

In 2016, Balan visited Tuscany, Italy, where she learned the practice of yoga nidra, a very deep form of meditation. It’s described as the “going-to-sleep stage” — a type of yoga that brings participants to a state of consciousness between waking and sleeping.

“It awakens a different part of your brain,” Balan commented. “Orally describing it doesn’t quite do it justice. One has to practice Nidra to fully understand the effect it has on your being.”

Keeping a level head during a crisis is key in their line of business, Tucker said. He can attest to the benefit of having a yogi on board.

“I’ve seen her run table-top exercises where there is this group of people in a room and they run an exercise, a simulation of a kidnap incident. Denise is very committed to what we’re doing,” said Tucker.

“She brings that energy. She doesn’t get flustered by much.”

Building a K&R Program

When Balan joined XL Catlin, she was tasked with creating the K&R team.

Balan during a retreat in Sicily, Italy, 2017

She spent time researching and analyzing what clients would want in their K&R coverage. What stuck out most to Balan was the fact that, in these situations, the decision to purchase kidnap and ransom cover is rarely made because of desire for reimbursement of money.

“I asked why people buy this type of coverage. The answer was for the security responders,” she said.

“These are the people who sit with the family. They’re similar to psychologists or priests,” Balan further explained. “Corporations can afford to pay ransom. They buy [K&R] because it gives them access to these trained and dedicated professionals who not only provide negotiation advice, but actually sit with a victim’s family, engaging deep levels of emotional investment.”

“I’ve learned to appreciate all moments in life — one at a time. The ability to think clearly and calmly guides my work, my practice and my personal life.” — Denise Balan, senior VP and head of U.S. kidnap & ransom, XL Catlin

Balan described these responders as people having total clarity of purpose, setting their intentions to resolve a crisis — a practice at the very heart of yoga. She knew XL Catlin’s new kidnap program would put stock in their responders.

“I’ve worked closely with the responders to better understand what they can do for our clientele. These are the people who run into danger — warrior hearts married to dedication to our clients’ best interests.”

But K&R is more than fast-paced crisis and quick thinking; Balan also spent a good deal of time writing the K&R form and getting the company’s resources in order. This was a huge task to tackle when creating the program from the ground up.

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“A lot of my day-to-day is speaking with brokers and finding ways to enhance our product,” she said.

After a few months, she was able to hire the company’s first K&R underwriter. From there, the program has grown. It’s left her feeling professionally rewarded.

“People don’t often get that opportunity to build something up from scratch,” she said. “It’s been an amazing experience — rewarding and fun.”

“She brings groups of people together,” said Tucker. “She’s created a positive environment.”

Balan’s yogi nature extends beyond the office walls, too. Her pride and joy, she said, are her kids. And while it may seem like two large parts of her life are opposite in nature, Balan’s achieved balance through her passions.

“[Yoga] has given me the ability to see beyond only one aspect of any situation” she said. “I’ve learned to appreciate all moments in life — one at a time. The ability to think clearly and calmly guides my work, my practice and my personal life.” &

Autumn Heisler is a staff writer at Risk & Insurance. She can be reached at [email protected]