2015 Power Broker
Tackling Soft Tissue Claims
Travis Biggert was one of the first to adopt a new diagnostic and treatment system for soft tissue injuries from Carlsbad, Calif.-based Emerge Diagnostics.
The new system offered a baseline measurement of soft-tissue injuries, which was helpful for one nursing home client with a high number of such injuries.
When the client hires a new employee, the employee is tested using five baseline measurements identified as the important indicators of a current or pre-existing soft tissue injury.
If the employee suffers a soft tissue injury on the job, doctors are able to ascertain whether it is an old injury or one that has exaggerated an existing injuring or a new injury.
The baseline testing has also proven to be a great help to occupational physicians treating the injury. It allows them to better diagnose the injury and identify the best treatment options.
The nursing home client reported excellent results — the frequency and cost of soft tissue injuries declined by more than 50 percent.
Loss costs were dramatically down, the experience modification factor (which measures past losses) is declining, and employees return to work more quickly because of more effective care.
In addition, the baseline testing has proven to be excellent in cases where the injury is not work related and has been accepted in legal proceedings as evidence. Typically, workers’ compensation doesn’t pay for treatment of pre-existing injuries, except in some circumstances.
“This has been a game-changer. It’s a win-win,” the workers’ comp executive at the client company said.
In workers’ comp, there’s analytics and then there are Sharon Brainard’s analytics.
“She and Beecher Carlson have this process that involves a really deep dive into our data. It covers the usual issues, but goes down to the branch and even the adjuster level,” one workers’ comp manager said.
Compared with the analysis that a carrier typically performs, it’s done on a monthly basis and with fast follow-up. Monthly, the broker, the carrier and the TPA meet to identify issues based on the data and to devise strategies to resolve them.
The client brought Brainard into their operations last year after it was clear that claim trends, particularly indemnity claims, were going in the wrong direction. Brainard proposed an 18-month plan and also offered the risk manager new tools to help show senior management the importance of the improved results.
“We have been extremely pleased,” the risk manager said. Losses are trending down. The client, because of the access to analytics, was in a far better negotiating position during the insurance renewal process. “We ended up changing carriers much to our benefit,” he said.
With the new carrier, the client achieved a half-million dollar reduction in premium.
“Even better, collateral became an issue because we were changing carriers. With our data, including a far deeper dive on specific claims, we were able to get a huge credit on the collateral requirements,” he said.
Now the company is looking at applying its new analytical skills to other risks and lines of insurance.
Driving Down Claims
It’s hard to find any business or occupation that has greater workers’ compensation risks than operating foundries. And this industry also has thin margins, making management of the costs of workers’ compensation even more important.
There is little wiggle room for losses.
The work can be dangerous. There are hazards throughout the manufacturing process and the work requires physically demanding skills and effort.
Burg’s foundry client faced an increasingly higher volume of claims and escalating losses.
Two issues emerged — the need for more active incident management and accident investigations, and a more aggressive claims policy. Burg developed a new program for the company built on three tenets.
First, he emphasized the importance of a comprehensive program that improved investigation and focused on disability management, including return to work.
Second, he suggested that accountability for prevention and management be pushed down to the department level, including managers and business unit leaders.
Third, he called for the creation of a new insurance-based risk transfer program. The program also took into account greater emphasis on claims management.
The result was that claim counts dropped by 25 percent in 2012-2013, and that trend was expected to continue. Losses also dropped by 23 percent and it is anticipated that losses in 2014 will be 43 percent lower than 2013.
Always There for Clients
Previous Power Broker® award winner Karen English is an acknowledged expert in disability management.
The challenge for any disability management process is to integrate all the absence management issues, including both occupational and non-occupational injuries.
Health care institutions can be among the most complex disability management environments.
Last year, a major health care system undertook a comprehensive analysis looking to more effectively integrate and manage all leaves of absence, regardless of the cause.
Working with the client, English developed a branded absence management program that focused on effective HR policies. Workflow and compliance issues are essential to the new program and the result was the effective integration of all leaves of absence (ranging from workers’ comp to sick time and the range of paid and non-paid leave policies.)
“She’s always there when we need her,” said one disability manager. She travels constantly and is focused on client service and providing the best answers and solutions.
English has a background as both a risk manager and as a broker. “She’s exceptionally effective and she brings an essential, knowledgeable perspective to her work and advice,” a client said.
In addition to her absence management work, she has created employee benefit captives for a number of her clients. “It’s a vehicle that has served us well,” said one manager. English is well known among the alternative risk financing community for her expertise.
Carol Murphy’s cadre of blue-chip clients regularly sing her praises with enthusiasm.
One client was in the midst of reducing the number of its plant locations, both closing and consolidating operations.
That situation can be difficult — employees facing a job loss will tend to file workers’ compensation claims. Also, as payroll costs decline, pressure builds from the carriers to raise rates.
Murphy marketed the policy to a number of carriers and explained why the short-term issues really were an exception to the ongoing trends with claims and losses.
She achieved rate reductions instead of increases. In addition, collateral requirements were reduced.
For large companies, collateral costs are always a major issue. Clients either need to purchase what can be costly credit lines for the collateral requirements or provide additional capital to the carrier.
For a number of clients in this economy, that has proven to be even more difficult. One client in particular had suffered from bad press about the ongoing strains on its financial position. The publicity provoked requests for additional collateral from the insurer.
With an excellent claims record, Murphy and the client were able to convince the underwriters that losses were decreasing and that the firm’s financial position would support the lower collateral requirements.
Murphy is also an aggressive user of Aon’s GRIP database and analytics. She and her team developed a unique “multivariable” pricing model. It gives her clients essential information in negotiations with insurers and enables them to more effectively negotiate.
Revamping Claims Management
PRISM founder Ettie Schoor created an almost unique and aggressive claims management system that she linked with safety and loss control programs, resulting in significant reductions in losses and premiums.
Large premiums, in excess of $1 million, have been cut in half.
“Ettie has done tremendous work for us. She has a unique system that monitors claims. The result — my premium costs dropped by 80 percent over five years,” said one client, head of a skilled nursing facility, small hospital and home health care operation and other long-term care facilities. “If I need her, I can get her right away.”
Another client, an operator of long-term drug rehab clinics, had trouble obtaining workers’ comp coverage because the insurance market rated its rehab under a payroll code for doctors and therapists working in a private office.
The incumbent broker could not resolve the issue and the incumbent carriers refused to write the risk. The only alternative left to the company would have been the extremely costly state assigned risk pool, which would have also created additional problems because the firm operated facilities in different states.
The incumbent broker was dismissed and Schoor took over. She was able to secure an A-rated carrier that offered some unusual programs including a loss-sensitive component and more flexibility on payroll class codes.
Significant savings and improved coverage resulted.
The owner of a nursing home chain said, “When she says they are going to manage your claims, she means it. Her techniques can have a huge impact.”