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

Exclusive | Hank Greenberg on China Trade, Starr’s Rapid Growth and 100th, Spitzer, Schneiderman and More

In a robust and frank conversation, the insurance legend provides unique insights into global trade, his past battles and what the future holds for the industry and his company.
By: | October 12, 2018 • 12 min read

In 1960, Maurice “Hank” Greenberg was hired as a vice president of C.V. Starr & Co. At age 35, he had already accomplished a great deal.

He served his country as part of the Allied Forces that stormed the beaches at Normandy and liberated the Nazi death camps. He fought again during the Korean War, earning a Bronze Star. He held a law degree from New York Law School.

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Now he was ready to make his mark on the business world.

Even C.V. Starr himself — who hired Mr. Greenberg and later hand-picked him as the successor to the company he founded in Shanghai in 1919 — could not have imagined what a mark it would be.

Mr. Greenberg began to build AIG as a Starr subsidiary, then in 1969, he took it public. The company would, at its peak, achieve a market cap of some $180 billion and cement its place as the largest insurance and financial services company in history.

This month, Mr. Greenberg travels to China to celebrate the 100th anniversary of C.V. Starr & Co. That visit occurs at a prickly time in U.S.-Sino relations, as the Trump administration levies tariffs on hundreds of billions of dollars in Chinese goods and China retaliates.

In September, Risk & Insurance® sat down with Mr. Greenberg in his Park Avenue office to hear his thoughts on the centennial of C.V. Starr, the dynamics of U.S. trade relationships with China and the future of the U.S. insurance industry as it faces the challenges of technology development and talent recruitment and retention, among many others. What follows is an edited transcript of that discussion.


R&I: One hundred years is quite an impressive milestone for any company. Celebrating the anniversary in China signifies the importance and longevity of that relationship. Can you tell us more about C.V. Starr’s history with China?

Hank Greenberg: We have a long history in China. I first went there in 1975. There was little there, but I had business throughout Asia, and I stopped there all the time. I’d stop there a couple of times a year and build relationships.

When I first started visiting China, there was only one state-owned insurance company there, PICC (the People’s Insurance Company of China); it was tiny at the time. We helped them to grow.

I also received the first foreign life insurance license in China, for AIA (The American International Assurance Co.). To date, there has been no other foreign life insurance company in China. It took me 20 years of hard work to get that license.

We also introduced an agency system in China. They had none. Their life company employees would get a salary whether they sold something or not. With the agency system of course you get paid a commission if you sell something. Once that agency system was installed, it went on to create more than a million jobs.

R&I: So Starr’s success has meant success for the Chinese insurance industry as well.

Hank Greenberg: That’s partly why we’re going to be celebrating that anniversary there next month. That celebration will occur alongside that of IBLAC (International Business Leaders’ Advisory Council), an international business advisory group that was put together when Zhu Rongji was the mayor of Shanghai [Zhu is since retired from public life]. He asked me to start that to attract foreign companies to invest in Shanghai.

“It turns out that it is harder [for China] to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

Shanghai and China in general were just coming out of the doldrums then; there was a lack of foreign investment. Zhu asked me to chair IBLAC and to help get it started, which I did. I served as chairman of that group for a couple of terms. I am still a part of that board, and it will be celebrating its 30th anniversary along with our 100th anniversary.

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We have a good relationship with China, and we’re candid as you can tell from the op-ed I published in the Wall Street Journal. I’m told that my op-ed was received quite well in China, by both Chinese companies and foreign companies doing business there.

On August 29, Mr. Greenberg published an opinion piece in the WSJ reminding Chinese leaders of the productive history of U.S.-Sino relations and suggesting that Chinese leaders take pragmatic steps to ease trade tensions with the U.S.

R&I: What’s your outlook on current trade relations between the U.S. and China?

Hank Greenberg: As to the current environment, when you are in negotiations, every leader negotiates differently.

President Trump is negotiating based on his well-known approach. What’s different now is that President Xi (Jinping, General Secretary of the Communist Party of China) made himself the emperor. All the past presidents in China before the revolution had two terms. He’s there for life, which makes things much more difficult.

R&I: Sure does. You’ve got a one- or two-term president talking to somebody who can wait it out. It’s definitely unique.

Hank Greenberg: So, clearly a lot of change is going on in China. Some of it is good. But as I said in the op-ed, China needs to be treated like the second largest economy in the world, which it is. And it will be the number one economy in the world in not too many years. That means that you can’t use the same terms of trade that you did 25 or 30 years ago.

They want to have access to our market and other markets. Fine, but you have to have reciprocity, and they have not been very good at that.

R&I: What stands in the way of that happening?

Hank Greenberg: I think there are several substantial challenges. One, their structure makes it very difficult. They have a senior official, a regulator, who runs a division within the government for insurance. He keeps that job as long as he does what leadership wants him to do. He may not be sure what they want him to do.

For example, the president made a speech many months ago saying they are going to open up banking, insurance and a couple of additional sectors to foreign investment; nothing happened.

The reason was that the head of that division got changed. A new administrator came in who was not sure what the president wanted so he did nothing. Time went on and the international community said, “Wait a minute, you promised that you were going to do that and you didn’t do that.”

So the structure is such that it is very difficult. China can’t react as fast as it should. That will change, but it is going to take time.

R&I: That’s interesting, because during the financial crisis in 2008 there was talk that China, given their more centralized authority, could react more quickly, not less quickly.

Hank Greenberg: It turns out that it is harder to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.

R&I: Obviously, you have a very unique perspective and experience in China. For American companies coming to China, what are some of the current challenges?

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Hank Greenberg: Well, they very much want to do business in China. That’s due to the sheer size of the country, at 1.4 billion people. It’s a very big market and not just for insurance companies. It’s a whole range of companies that would like to have access to China as easily as Chinese companies have access to the United States. As I said previously, that has to be resolved.

It’s not going to be easy, because China has a history of not being treated well by other countries. The U.S. has been pretty good in that way. We haven’t taken advantage of China.

R&I: Your op-ed was very enlightening on that topic.

Hank Greenberg: President Xi wants to rebuild the “middle kingdom,” to what China was, a great country. Part of that was his takeover of the South China Sea rock islands during the Obama Administration; we did nothing. It’s a little late now to try and do something. They promised they would never militarize those islands. Then they did. That’s a real problem in Southern Asia. The other countries in that region are not happy about that.

R&I: One thing that has differentiated your company is that it is not a public company, and it is not a mutual company. We think you’re the only large insurance company with that structure at that scale. What advantages does that give you?

Hank Greenberg: Two things. First of all, we’re more than an insurance company. We have the traditional investment unit with the insurance company. Then we have a separate investment unit that we started, which is very successful. So we have a source of income that is diverse. We don’t have to underwrite business that is going to lose a lot of money. Not knowingly anyway.

R&I: And that’s because you are a private company?

Hank Greenberg: Yes. We attract a different type of person in a private company.

R&I: Do you think that enables you to react more quickly?

Hank Greenberg: Absolutely. When we left AIG there were three of us. Myself, Howie Smith and Ed Matthews. Howie used to run the internal financials and Ed Matthews was the investment guy coming out of Morgan Stanley when I was putting AIG together. We started with three people and now we have 3,500 and growing.

“I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

R&I:  You being forced to leave AIG in 2005 really was an injustice, by the way. AIG wouldn’t have been in the position it was in 2008 if you had still been there.

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Hank Greenberg: Absolutely not. We had all the right things in place. We met with the financial services division once a day every day to make sure they stuck to what they were supposed to do. Even Hank Paulson, the Secretary of Treasury, sat on the stand during my trial and said that if I’d been at the company, it would not have imploded the way it did.

R&I: And that fateful decision the AIG board made really affected the course of the country.

Hank Greenberg: So many people lost all of their net worth. The new management was taking on billions of dollars’ worth of risk with no collateral. They had decimated the internal risk management controls. And the government takeover of the company when the financial crisis blew up was grossly unfair.

From the time it went public, AIG’s value had increased from $300 million to $180 billion. Thanks to Eliot Spitzer, it’s now worth a fraction of that. His was a gross misuse of the Martin Act. It gives the Attorney General the power to investigate without probable cause and bring fraud charges without having to prove intent. Only in New York does the law grant the AG that much power.

R&I: It’s especially frustrating when you consider the quality of his own character, and the scandal he was involved in.

In early 2008, Spitzer was caught on a federal wiretap arranging a meeting with a prostitute at a Washington Hotel and resigned shortly thereafter.

Hank Greenberg: Yes. And it’s been successive. Look at Eric Schneiderman. He resigned earlier this year when it came out that he had abused several women. And this was after he came out so strongly against other men accused of the same thing. To me it demonstrates hypocrisy and abuse of power.

Schneiderman followed in Spitzer’s footsteps in leveraging the Martin Act against numerous corporations to generate multi-billion dollar settlements.

R&I: Starr, however, continues to thrive. You said you’re at 3,500 people and still growing. As you continue to expand, how do you deal with the challenge of attracting talent?

Hank Greenberg: We did something last week.

On September 16th, St. John’s University announced the largest gift in its 148-year history. The Starr Foundation donated $15 million to the school, establishing the Maurice R. Greenberg Leadership Initiative at St. John’s School of Risk Management, Insurance and Actuarial Science.

Hank Greenberg: We have recruited from St. John’s for many, many years. These are young people who want to be in the insurance industry. They don’t get into it by accident. They study to become proficient in this and we have recruited some very qualified individuals from that school. But we also recruit from many other universities. On the investment side, outside of the insurance industry, we also recruit from Wall Street.

R&I: We’re very interested in how you and other leaders in this industry view technology and how they’re going to use it.

Hank Greenberg: I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.

R&I: So as the pre-eminent leader of the insurance industry, what do you see in terms of where insurance is now an where it’s going?

Hank Greenberg: The country and the world will always need insurance. That doesn’t mean that what we have today is what we’re going to have 25 years from now.

How quickly the change comes and how far it will go will depend on individual companies and individual countries. Some will be more brave than others. But change will take place, there is no doubt about it.

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More will go on in space, there is no question about that. We’re involved in it right now as an insurance company, and it will get broader.

One of the things you have to worry about is it’s now a nuclear world. It’s a more dangerous world. And again, we have to find some way to deal with that.

So, change is inevitable. You need people who can deal with change.

R&I:  Is there anything else, Mr. Greenberg, you want to comment on?

Hank Greenberg: I think I’ve covered it. &

The R&I Editorial Team can be reached at [email protected]