Treating the Behavioral Components of a Claim Is a Risk Transfer Strategy: Just Ask Carisk’s CEO Joe Berardo, Jr.
Catastrophic claims require an all-hands approach to treatment, and that includes involving your risk transfer team.
During an upcoming digital session at the National Workers’ Compensation and Disability Conference (National Comp), Carisk’s CEO Joe Berardo Jr. will discuss risk mitigation, transfer and control within the context of catastrophic workers’ comp claims.
Catastrophic claims and complex pain-related injuries drive up injury costs by up to 50%, the description for the session notes. When opioids or psychological challenges come into play, those costs can be even higher.
Ahead of the session, Berado sat down with Risk & Insurance® to discuss his career, risk transfer in catastrophic claims and the importance of the biopsychosocial claims approach. The following is a transcript of that conversation, edited lightly for clarity.
Risk & Insurance: Can you tell me a bit about your origins in workers’ comp and how you came into your current role at Carisk?
Joe Berardo Jr.: I spent a long time really in a business with both workers’ comp and group health lines of business. And so, I was very familiar with workers’ comp through what’s called an alternative dispute resolution program my former company ran. The program pretty much treated workers’ comp like a group health plan, with lots of injured worker interactions, concurrent reviews and navigating through the network. The program performed very well.
And the origins of coming over and creating Carisk was a function of what I saw going on in the workers’ comp world, and it still happens to this day. Over the years, it feels like we have carved up injured workers into body parts with various vendors that serve those body parts, whether it’s PT, radiology or billable medical equipment.
There were very few bundled programs out there other than Paradigm that were doing it on a catastrophic basis for a long time. What I found interesting was that Paradigm didn’t have a competitor. Candidly, I wanted to create a competitor, because I think the marketplace had room, and frankly I think workers’ comp, the injured worker themselves, and the payers could benefit from more of a bundled, value-based approach. I wanted to do it differently.
Back in 2015 into early 2016, there was a lot of information coming out of the workers’ comp world.
In particular, I was following Dr. Marcos Iglesias, who at the time was with The Hartford and is now with Travelers. He was publishing and writing a lot of articles about how the impact of behavioral health and the opioid epidemic was significantly influential on the trajectory of an individual’s recovery.
So, when Carisk set out to do this, I was coming to the table with a managed care perspective and believed it might be extremely difficult to introduce a behavioral health mindset into a managed care business focused on workers’ comp. By introducing a culture that is very much focused on the individual who we are taking care of versus the injury alone, we set out to yield better outcomes.
We entered the business back in October 2016 by acquiring a company called Concordia Behavioral Health, then renamed and rebranded to Carisk. The Behavioral Health business still exists, serving a half a million behavioral health members in various types of programs in the group health space.
We took that expertise and pointed it towards worker’s comp and then supplemented it with an experienced workers’ comp management team, technology, clinical resources and operations to build out our current programs.
R&I: What made you want to speak on the topic of risk transfer in workers’ comp at the National Workers’ Compensation and Disability Conference?
JB: Our process really does start with what we call meaningful patient engagement. That begins with what we call an integrated health assessment, including a comprehensive clinical interview with the patient, their family and their attorneys. Embedded in that conversation, over about an hour and a half discussion, are a series of questions and assessments that allow us to form a complete picture of the patients’ health and environment so that we can develop the customized care plan for their recovery.
So it’s a holistic, advocacy-based patient-centered approach where we work really hard for a meaningful engagement, a trusting relationship, with all parties.
We then work towards navigating them through the process. We’re uncovering many things such as pre-existing conditions that can often impact recovery but are often overlooked.
Has there been depression? What are their relationships at home like? Do they have stable housing? Do they have anxiety, PTSD or substance use disorder? All of these things are so important to understand as it relates to figuring out how we are going to assist somebody through their recovery.
Separately from a pricing perspective, what we found is that offering risk transfer for these large loss cases was well received by the market.
Our employer partners now have financial certainty for an outcome. We also discovered in this marketplace that there was a lot of dissatisfaction around thousands of complex cases out there where there was an agreed upon price, but then things turned out way better than initially predicted. The carrier knew that the case costs much less than what they had paid to have it done.
We considered all of this as we set out with a differentiated approach to the risk transfer offering. It is, in essence, risk-free risk transfer, because in this case, we will take episodic risk to deliver outcomes for a price and pay a dividend back to the payer or employer on any surplus up to a certain level that’s agreed upon in a contract.
While we have not seen any cases where we did not deliver on the outcome, we would, in that instance, keep the case and take the loss. This is a win-win opportunity for our clients.
The feedback we’re getting from industry partners responsible for the claims and the finance areas is they’re confident that they’re never going to look foolish for having sent us a windfall case. So, for the National Workers’ Compensation and Disability Conference, I was looking forward to the opportunity to offer a different approach, with guaranteed financial security and improved outcomes.
R&I: How can a good risk transfer program help manage catastrophic workers’ comp claims?
JB: What a good risk transfer program really is designed to do is give a sense of certainty of financial exposure, as well as certainty of outcome.
Our goal has been to make it very easy for these carriers and employers to make the decision to give us the referral, give us the opportunity to work with these patients without fear of having a financial scenario take place where either party feels slighted. It allows us to underwrite the cases and share the optimal care coordination plan, including all the potential risk factors, the associated probabilities of those risk factors, with our clients.
We typically engage in a clinical presentation with our clients’ clinical team, where we often find the most meaningful exchanges on the case.
Ultimately, we agree upon what the risks are or aren’t in some cases. We have had cases where the carriers say, “We don’t think that sepsis infection is going to be a problem. So can we pull that out of the price?” And we’re willing to do that as long as they understand that if it does come into play, they’re responsible for paying for the cost of that particular risk factor that was carved out.
R&I: Why is it essential for a risk transfer program to have flexible pricing?
JB: Frankly, every day I’m floored by some of the awful things that happen in the workplace. Even with the best data modeling, claims experts and clinical resources, there are exceptional cases that take a course nobody could have predicted.
My job is to try to figure out how to ensure those patients get what they need in order to recover to the fullest extent and also project the costs for this claim so I can set my reserves appropriately. We end up with the best possible outcome, both clinically and financially for all parties involved.
R&I: I know a lot of people don’t think about behavioral health when they think of risk transfer. So why should employers look for a risk transfer program that includes a behavioral health component?
JB: Clients that are aligned to our patient-centered approach agree they don’t want to settle for a program that does not include both behavioral health expertise and flexible contract options. What people have become very conscious of, and I actually think COVID has shined a bigger spotlight on, is just a different way of looking at claims.
There is a lot going on for catastrophically injured individuals that has as much to do with behavioral aspects and mindset as there are physical elements. In a lot of these cases, the patient has to accept and work towards what may be a new normal.
To make sure that you’re invested in and providing the therapies and support on the behavioral side concurrently while managing the physical medicine is as important as the physical medicine recovery plan alone. What I always find interesting is behavioral health therapies are not terribly expensive and certainly are not the big cost drivers of these catastrophic cases.
However when left unaddressed, they can significantly delay case closure, costing more in the long term. So it’s almost foolish not to invest in making sure you’re supporting that whole mind-body connection throughout the recovery.
R&I: What is one tangible thing the audience will take from your session?
JB: You don’t need to settle for limited financial protection or contract options for large loss workers’ compensation cases. You also don’t need to make a choice between treating the injury alone or addressing the full biopsychosocial aspects of recovery.
And you can have the benefit of both in one program offering that is grounded in evidence-based clinical best practices that allow for individuals to advance through the different phases of recovery.
Understanding the clinical focus of the mind-body connection, its impact, and being prepared for the risk adjustment factor in these cases is crucial. If attendees come away with that understanding, I would consider this a success. &