Column: Workers' Comp

Disquiet on the Workers’ Comp Front

By: | July 6, 2017 • 3 min read

Roberto Ceniceros is senior editor at Risk & Insurance® and chair of the National Workers' Compensation and Disability Conference® & Expo. He can be reached at [email protected] Read more of his columns and features.

With the Affordable Care Act’s fate tied to Washington politics, it must be challenging for workers’ compensation insurers and anyone else needing a longer-term view of how claim expenses will trend.

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Perhaps one of the biggest challenges is the unknown of how any changes to the ACA will impact the number of Americans able to purchase health coverage.

In an April commentary, Phil Kalin, CEO of Colorado’s Pinnacol Assurance, warned that business leaders in his state “regardless of their opinions on the ACA — should be aware of how its dismantling could slow a favorable trend for their work comp costs.”

His premise: a lack of health insurance leads to more claim shifting onto workers’ comp.

Before joining Pinnacol, a state-chartered workers’ comp insurer, Kalin served as CEO of the Denver-based Center for Improving Value in Health Care, an organization supporting moving away from fee-for-service health care to quality care. He has also served in hospital system senior-management roles. It makes sense he would opine on how shifts in health insurance coverage will impact worker’s comp costs.

The uncertainties of Washington and health care insurance’s future make it even more imperative to bet on the certainty of strategies that embody proven risk management concepts.

Workers’ comp claims and costs have slowed in recent years as more Americans obtained health insurance, Kalin wrote. He supports his premise by citing statistics from Colorado and other states showing “there is a clear association” between more Americans covered by health insurance and a decline in workers’ comp claims.

From 2010 to 2016 medical only claims insured by Pinnacol dropped 28 percent. Although other factors played a role, Kalin believes the ACA’s impact was significant.

Similarly, a Fitch Ratings report released in May stated that workers’ comp has been a bright spot among commercial lines insurance with the line exhibiting combined ratios of 95 percent in 2015 and 2016. Employment growth, stable claims trends and macroeconomic improvements contributed to workers’ compensation’s profitability.

“Implementation of the Affordable Care Act and a corresponding shift of individual medical care delivery away from workers’ compensation to other markets may also be a factor that bears further study,” Fitch’s report stated.

By contrast, information released nearly two years ago by the venerable Workers’ Compensation Research Institute forecasted that “case shifting” caused by the ACA could migrate hundreds of millions of dollars in costs from group health onto workers’ compensation.

The premise: The ACA’s capitation of medical provider reimbursement would encourage doctors to find more injuries to be work related so they could tap into more lucrative worker’s comp medical care payments.

That prognosis, right or wrong, was made in 2015 when the ACA enjoyed President Barrack Obama’s protection, making its future seem more certain.

Now, as I write this column, the ACA’s future is in the hands of a Republican president and Republican-dominated Congress that are searching for a way to deliver on campaign promises of eliminating the ACA and finding a replacement.

What that replacement would look like, if indeed it comes about, remains a big mystery, especially with the Republicans crafting legislation out of public view.

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That makes it impossible to venture a guess on how any new legislation might impact workers’ comp claims and expenses. Add in the normal uncertainties of making such forecasts, even when information is readily available, and you get a very difficult environment for predicting the impact on a line of insurance with a long tail exposed to medical inflation.

“We are sitting here with bated breath,” a Pinnacol spokeswoman told me.

The rest of us will have to join her.

Meanwhile, there are the risk management fundamentals we know consistently work no matter the political landscape. They are the investments and actions good risk managers and insurers can engage in to improve operations overall.

They are the things that always reduce costs, like driving accident rates even lower, immediately getting injured workers quality medical care, and fortifying return-to-work efforts.

The uncertainties of Washington and health care insurance’s future make it even more imperative to bet on the certainty of strategies that embody proven risk management concepts.

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]