Tag Archives: Healthcare Reform

D.C. Luminaries Headline Boston Workers Comp Conference

Insurance Information Institute vice president of Media Relations, Michael Barry, previews the upcoming Workers Compensation Research Institute (WCRI) annual conference:

Seldom have the political waters roiled as they have during the first weeks of the Trump presidency. A pair of political veterans will look at what that means for workers compensation insurance at a conference next month in Boston.

Former U.S. Senator Tom Coburn and former U.S. Representative Henry Waxman are appearing jointly in Boston on Thursday, March 2, to kick off the WCRI Annual Issues & Research Conference.

U.S. Senator Coburn, a Republican from Oklahoma, and U.S. Representative Waxman, a Democrat from California, will discuss the ‘Impact of the 2016 Election’ for health care, labor, and workers compensation at the Westin Copley Place Hotel in Boston, MA. Their session begins at 9:15 a.m. and will conclude at 10:30 a.m.

The two distinguished former federal legislators bring impressive credentials to these issues. Before his election to the U.S. Senate (2005-2015), Dr. Coburn, a medical doctor, was a U.S. representative (1995-2000) from Oklahoma.  Former Rep. Waxman served for four decades in the U.S. House of Representatives (1975-2015) and was chairman of the House Energy and Commerce Committee.

The theme of this year’s WCRI conference is Persistent Challenges and New Opportunities: Using Research to Accelerate the Dialogue.” The two-day program highlights WCRI’s latest research while also drawing upon the diverse perspectives of nationally respected workers compensation experts and policymakers.

The Insurance Information Institute will also be represented. Chief Actuary James Lynch will be blogging here at Terms + Conditions from the conference.

The WCRI conference is a leading workers compensation forum for policymakers, employers, labor advocates, insurance executives, health care organizations, claims managers, researchers and other interested parties.

For additional information about the conference, or to register, log onto http://www.wcrinet.org/conference.html

Annual Workers’ Comp Conference To Focus On Opt-Out Legislation

I.I.I. chief actuary James Lynch previews the upcoming Workers Compensation Research Institute (WCRI) annual conference:

My job involves a lot of travel, and the travel tends to be in the spring and the kickoff always seems to be the WCRI conference in Boston, which this year will be March 10 and 11 at the Westin Copley Place. It’s a great place to start.

This is my third conference. The first two have been both important and controversial.

In (my) year one, Jonathan Gruber spoke about the Affordable Care Act. It generated a lot of media coverage because he is considered one of the big thinkers behind Obamacare and its Massachusetts predecessor.

I blogged about it at Terms + Conditions. He said health care reform should help the workers comp system. Fewer workers would be uninsured, and those newly insured would be less likely to try to game their malady into a comp claim.

Last year’s conference also had a preview of research that WCRI would release formally later in the year documenting the way that Obamacare’s structure promises to shunt millions of dollars in medical costs onto workers compensation.

The short story: Obamacare encourages health plans in which doctors receive a set amount from health insurers for each patient in the doctor’s practice. If one of those patients is a borderline case between workers comp and traditional health insurance, the doctor has an incentive to call it a comp claim–it brings him more money. In his research, Dr. Richard Victor, who then was in his final months as WCRI’s executive director, showed that when presented with a similar health plan–the HMO–doctors appear to behave just that way.

In another talk, Victor said ACA’s impact will be like a hurricane. I wrote:  “Like a storm whose path is not quite defined, health care reform could take a significant toll, but we don’t know where.”

Dr. Victor has retired; his replacement is Dr. John Ruser, formerly at the Department of Labor.

This year I’m looking forward to a discussion of whether employers should be allowed to opt out of the workers compensation system. An employer that opts out of the comp system still has to provide injured workers protection but can be sued for negligence by injured employees.

Texas has always allowed qualified employers to opt out. Oklahoma became the second state to permit opting out with legislation passed in 2014. Opt-out proponents hope Tennessee and South Carolina will be next.

Insurers generally oppose opt-out legislation, feeling that the workers comp system remains a fair tradeoff of tort rights for quick, sure recovery in case of injury.

WCRI will spend a big part of its first day discussing the issue. One panel will spell out what opt out is and will feature Bill Minick, an attorney who is one of the movement’s strongest promoters. He will be joined by Trey Gillespie of the Property Casualty Insurance Association of America, which looks much more skeptically on the idea.

The second panel will include advocates on both sides of the issue, representing insurers, regulators, workers and employers.

The highlight of Day Two, for me, will be seeing my boss, Robert Hartwig, speak about how the sharing economy is likely to impact the workers compensation system. The idea: If sharing economy workers are not employees, as companies like Uber contend, they are ineligible for workers comp benefits. What will happen when those workers get hurt?

As most insurance observers know, Bob is leaving the I.I.I. in August to join academia–teaching risk management, insurance and finance courses at the University of South Carolina. He is likely the most dynamic speaker in the insurance world, and in the future he won’t be speaking nearly as frequently as he does now (that is unless you become one of his students!) So I plan to enjoy Bob’s show as often as I can the next few months.

Details on the conference, including registration information, can be found here.

WCRI Looks At Impact of Affordable Care Act On Workers Comp

I.I.I. chief actuary  Jim Lynch reports from the Workers Compensation Research Institute (WCRI) annual conference:

An important cost-control mechanism of the Affordable Care Act could end up annually shifting hundreds of millions of claim dollars into the workers compensation system, preliminary research by the Workers Compensation Research Institute (WCRI) indicates.

The mechanism is the Accountable Care Organization (ACO), and WCRI researchers used the ACO’s similarity to Health Maintenance Organizations (HMOs) to estimate the nature of the cost shift as well as give a general idea of its magnitude.

An ACO is a network of doctors and hospitals that share the financial and medical responsibility for a group of patients. The ACO receives a set amount per patient for a year, regardless of the services each patient receives, a structure known as a capitated plan. HMOs are another type of capitated plan. The difference: an ACO can be paid more if it saves money while providing high quality care.

This difference gives some health experts hope that ACOs can rein in healthcare costs better than HMOs do. They believe healthcare will respond to the profit incentive ACOs offer.

The Affordable Care Act encourages ACOs and other capitated plans.

WCRI’s research indicates that capitated plans tend to push sprains, strains and other soft tissue injuries into the workers compensation system, WCRI Executive Director Richard Victor told about 300 attendees at the organization’s annual conference in Boston on March 5.

Often it is hard to tell exactly what caused a strain like a sore back, Victor said. It may have come while at work or at home. Usually the classification is the doctor’s decision.

In an ACO or any other sort of capitated plan, the doctor has a choice: call the injury work-related and bill the workers compensation insurer or decline to do so and collect no additional fee. The financial incentive is obvious.

The WCRI study looked at a nationwide sample of more than 700,000 claims from 2008 to 2010, about 17 percent of which came from HMOs. It classified states into two buckets, depending on how prevalent HMOs were.

In states with a relatively large HMO presence, HMO doctors put 26 percent of soft tissue injuries into workers comp. That was 30 percent more often than doctors in traditional fee for service arrangements.

For injuries like a broken arm, where it was easy to know what caused the injury, HMO and fee-for-service doctors put about the same percentage of claims into workers comp.

States with fewer HMOs didn’t exhibit the same shifting, the study indicated.

It is harder to estimate the financial impact, because it’s hard to say how popular ACOs will become. To develop an estimate, Victor hypothesized that ACOs could increase the percentage of workers in capitated plans by 25 percentage points. Such an increase would allow capitation plans to regain the 15 percentage points of market share they have lost since 2000 and then some.

Under that scenario, cost shifting in Illinois would push $90 million of claims into workers comp. In Pennsylvania, the shift would cost workers comp insurers $55 million.

A Revisit: Impact of Obamacare on Workers Comp

I.I.I. chief actuary Jim Lynch previews the Workers Compensation Research Institute’s (WCRI) Annual Issues & Research conference:

This time last year, property/casualty insurers worried how the Affordable Care Act’s rollout would affect workers compensation insurance. The debate seemed to disappear as the law took hold, but research to be unveiled at a March workers compensation conference in Boston might return the issue to the limelight.

The big fear a year ago was cost-shifting, and both health insurers and comp insurers felt costs would be shifted onto them. The issue was the borderline claim, one that could arguably be a health claim or a comp claim.

Consider a person with a lingering back injury. The injury could have been caused by heavy lifting at work or at home, and the injured person might be able to make a claim on either health insurance or workers comp.

Comp insurers worried that the ACA was tightening health insurance cost controls better than comp insurers were allowed to. As the cost containment took hold, cases that straddled the border might drift into the workers comp world.

Health insurers, meanwhile, worried that they would take on claims of the previously uninsured, some of whom used to find a way to make that borderline case into a workers comp claim.

Research swung both ways. As the law has rolled out, the issue dissipated, at least among the mainstream media. If there was an impact, it appeared to be too small to measure.

Now the Workers Compensation Research Institute (WCRI), a Cambridge, MA, not-for-profit organization has looked at the ACA/comp issue again, specifically the potential effect of accountable care organizations on the workers comp system.

Accountable care organizations add to health care’s alphabet soup by being known as ACOs. They are groups of doctors, hospitals and other health care providers that combine to form networks that coordinate patient care. If they can save money while keeping quality high, they share in the savings. Kaiser Health News has a Q&A with details on how ACOs work.

The health care law offers incentives to create ACOs, but WCRI’s research indicates that “as ACOs become the norm, the number of workers compensation claims is very likely to increase,” said Richard A. Victor, WCRI executive director. The dreaded cost-shifting may be on its way.

Details of WCRI’s analysis will be released at the organization’s annual Issues and Research Conference March 5 and 6 in Boston. Other sessions at the conference will cover physician-dispensing of drugs, low fee schedules, a look at workers comp reform over the past two decades and look at challenges the line of business faces in the years ahead.

The I.I.I. has an Issues Update on workers compensation, one of the oldest casualty lines of business and one of the most complex.

Impact of ACA Like Hurricane, Says WCRI Exec Victor

I.I.I. chief actuary James Lynch reports from Day  2 of the WCRI annual conference in Boston:

Health insurance and workers compensation are sort of kissin’ cousins, in that changes that affect one inevitably affect the other.

But that’s my metaphor. Dr. Richard Victor, executive director of the Workers Compensation Research Institute (WCRI), likens the impact of health care reform to a hurricane.

Like a storm whose path is not quite defined, health care reform could take a significant toll – but we don’t know precisely where. Since workers comp differs from state to state, the impact of the Affordable Care Act (ACA) will differ from state to state. Like a good weatherman, Dr. Victor told an audience of about 400 at WCRI’s annual conference in Boston on Thursday he could make some educated guesses what might happen.

He is assuming the ACA is enacted exactly as written – a tough assumption but as good a starting point as any. In that case, the increase in insured Americans will increase demand.

The marketplace might decrease the use of doctors, relying instead on well-trained nurses or even sophisticated computers to help provide care.

Or doctors might raise prices in the face of rising demand.

What actually happens will differ by state. Some states make it difficult to take diagnosis and treatment out of the doctors’ hands. In those states, medical costs – and their kissin’ cousin, comp costs — are likely to rise. Elsewhere, the effect will be muted.

Other insights:

â–  Health care reform will result in a healthier work population. This will tend to help the comp system, because healthy workers are less likely to get hurt on the job, and if they do get hurt, they get well faster.

â–  Changes in billing, Dr. Victor said, will “absolutely† lead to upcoding – in which a doctor exaggerates the severity of a treatment to receive a bigger reimbursement. The practice is well-documented in workers comp, he said, citing examples from Florida and California.

â–  Changes are likely to shift into workers compensation. That’s because many employers are increasing deductibles that employees pay for treatment. Workers comp, meanwhile, has no deductibles and no co-pays – giving an employee the incentive to label an injury as work-related.

I blogged about Day  1 of the conference here. Other highlights from Day 2:

â–  Alex Swedlow, president of the California Workers Compensation Institute (CWCI) noted that even after all appeals are exhausted only about five percent of denials of comp claims are overturned. Swedlow also said evidence-based pain management guidelines effectively control costs; and a comparison of California and Washington pharmaceutical costs show that more cost savings are possible.

â–  Harry Shuford, chief economist of the National Council on Compensation Insurance (NCCI), argued that underwriting cycles are closely linked to bond yields and that when it comes to managing their business, insurers in the long run “do a much better job than other financial intermediaries† like banks.

IRC: P/C Insurers Not Immune to Effects of Affordable Care Act

The Insurance Research Council (IRC) has taken a closer look at the potential effects of the Affordable Care Act (ACA) for property/casualty insurers.

Its analysis – which doesn’t make any specific estimates of the potential cost implications for the P/C industry – identifies the possible ways in which P/C insurance claim costs will be affected by the Act.

The upshot is that the IRC believes the most significant impact will be cost shifting by hospitals and other providers from public and private health insurers to p/c insurers.

According to the report:

Cost shifting will occur in response to increased cost containment efforts by public and private health insurers, and will appear in the form of higher charges and a higher volume of billed services.†

And:

Cost shifting will be particularly severe in state jurisdictions and with coverages where the differences between public and private health insurance reimbursement levels and property-casualty reimbursement levels are greatest.†

The potential magnitude of the cost-shifting is likely to be major, the IRC notes.

To mitigate this potential impact, the IRC suggests that P/C insurers should consider options to ensure that the prices paid as reimbursement for medical services are consistent with prices paid by public and private health insurers.

While market-based fee schedules and bill review authority are among the tools often applied to address medical pricing issues, the IRC says P/C insurers should also consider alternatives to ensure that only medically necessary and appropriate treatment is provided to P/C insurance claimants and reimbursed by insurers.

Utilization review authority, evidence-based treatment guidelines, and the authority to deny reimbursement for unnecessary or inappropriate treatment are among the tools that P/C insurers should consider, the IRC suggests.

PC360 reports on the IRC analysis here.

Health Care Reform and Potential Impact on P/C Industry

The Affordable Care Act (ACA) will have both potential positive and negative effects on the property/casualty insurance industry, according to a recently published paper by Travelers.

In the paper, Travelers notes that medical trends impact workers compensation, general liability, and auto insurance costs, which make up about 5 percent of health care revenue.

Key ACA components expected to affect the P/C industry are:

— Extended healthcare coverage – a 15 percent increase in demand for a fixed supply of healthcare services

— Black lung presumptions – any miner (or surviving spouse) with 15 or more years of underground coal mine employment and a totally disabling respiratory or pulmonary impairment is presumed to be disabled due to pneumoconiosis and eligible for Black Lung benefits.

— Pharmacy and durable medical equipment (DME) taxes and assessments – the potential to increase costs 1.5 percent and 2.3 percent, respectively.

— Medical data – enhanced electronic record-keeping and sharing of data among providers.

Some of the potential positive effects of the ACA on P/C insurers include increased wellness – a healthier and better conditioned population – and a decreased incentive to file questionable P/C claims, Travelers says.

However, on the negative side, the ACA could result in decreased access to care, increasing indemnity costs as prompt access to physicians is reduced and return to work is delayed, the paper notes.

Travelers also cautions that there could be increased cost shifting from Medicare to P/C payers by physicians and hospitals due to declining Medicare reimbursement rates.

Hat tip to Claims Journal for its report on P/C insurer impacts of the ACA here.

Marsh: Health Care D&O Risks Rise As Reform Takes Effect

Health care organizations are facing a much more challenging directors and officers (D&O) liability insurance market as they adapt to changes arising from the Affordable Care Act (ACA), according to a new report from Marsh.

It reveals that average primary D&O rates for midsize and large health systems increased by 9.6 percent in the third quarter of 2013, while total program D&O rates renewed with 7.9 percent increases on average.

Nearly all organizations – 91 percent – renewed with rate increases, according to its findings.

Marsh notes that since the passage of the ACA in 2010, the health care industry has undergone rapid consolidation resulting in organizations working more closely together and sharing information.

As a result, many health care organizations face increased exposure to antitrust risks and this has insurers concerned.

In some cases D&O insurers have lowered their antitrust sublimits and increased antitrust-related coinsurance requirements and retentions, Marsh says. In addition to raising rates, some D&O insurers are also pulling back on offering full policy limit defense coverage.

It quotes Mark Karlson, Marsh’s FINPRO Health Care Practice Leader:

Ongoing merger and acquisition activity and the transition to accountable care organizations and similar networks are creating new exposures for many health care organizations, including antitrust risks.

This has resulted in a much more challenging D&O market for health care companies. Risk managers should expect to face additional rate increases in 2014 and be prepared to provide underwriters with detailed answers about their response to health care reform.”

PC360 has more on this story.

Check out I.I.I.  information on  D&O liability insurance.

Cavalcade of Risk #194: Is this just fantasy?

Is this the real life? Is this just fantasy? Either way, we’re delighted to be taking our first turn at hosting Cavalcade of Risk #194. For those of you who, like us, are new to this, the CavRisk blog carnival is a round-up of risk and insurance-related posts from around the blogosphere.

Our debut as a Cav host kicks off with a post on fantasy insurance in which Hank Stern of InsureBlog poses the question: What if your Fantasy Footballer gets sidelined in real life? The good news is there’s an insurance policy for that. Game on.

Next up, at Workers’ Comp Insider, Julie Ferguson, brings us back to real life with a roundup of the impact that the government shutdown is having on workplace health & safety and various regulatory and employment-related matters. It’s her second, and hopefully last, roundup on the shutdown, Julie notes.

Another real world post comes from Jason Shafrin of Healthcare Economist about how the Affordable Care Act (ACA) mandates insurers to have a medical loss ratio (MLR) of at least 80 percent. In his post What’s up with the ACA’s Medical Loss Ratio rules?  he considers whether capping MLR is a good way to reduce premiums.

Also keeping it real on the topic of the ACA, Louise Norris of Colorado Health Insurance Insider, dispels another ACA myth that just won’t die as she talks about part of the House amendment to “delay Obamacare† in House Republicans Want To Strip Congressional Staffers Of Their Health Insurance Benefits.

Last but certainly not least, in his post Patients should not be responsible for telling doctors to wash their hands David Williams of Health Business Blog ponders the absurd situation in which patients are being cast in the role of “hand washing police.†

Over and out from us. Jason Hull at http://www.hullfinancialplanning.com will host the next Cavalcade of Risk.

Hospital Cost Shifting Hits Auto Insurers

There’s been a lot of talk about how the property/casualty insurance sector may be affected by landmark healthcare legislation enacted by Congress last month. One of the concerns among p/c insurers is cost shifting. A new study from the Insurance Research Council (IRC) shows that hospitals have been shifting costs to auto insurers for some time because of low reimbursements from public health insurance programs, such as Medicare and Medicaid. This raises auto injury claim costs and forces auto insurers to more closely scrutinize and negotiate hospital bills prior to payment.

According to IRC estimates, in 38 tort and add-on states, cost shifting for bodily injury claims in 2007 resulted in $1.2 billion in excess hospital charges. However, the full impact of hospital cost shifting, including that occurring in other insurance coverages and in other states, may be much greater. Over to Elizabeth Sprinkel, senior vice president of the IRC:

The conventional wisdom is that hospitals aggressively seek to shift costs from public insurance programs to private payers such as auto insurance companies. With this study, we now have information on the magnitude of cost shifting and a better understanding of the need for supportive state laws and effective tools that will enable auto insurers to pay hospitals appropriately and help control auto injury claim costs.†

Hospital cost shifting to auto injury claims also illustrates the complex relationship between p/c insurance and the broader healthcare and insurance system, according to Sprinkel:

Healthcare legislation enacted by Congress last month underscores the complexity of this relationship. It will take months, if not years, to understand the full impact of the reforms on hospital cost shifting and the auto insurance system.†

To explore the relationship between key health system features and auto injury hospital costs, IRC developed a statistical model of average hospital charges for auto injury claims in different states. Key predictors of average hospital charges confirmed by the model are the percentage of a state’s population without health insurance coverage and the percentage of the population covered by Medicaid. To estimate excess hospital charges due to hospital cost shifting, IRC compared average hospital charges for BI liability claims in Maryland with average charges in 38 other tort and add-on states. Some 22 insurers, representing 58 percent of the private passenger auto insurance market in the United States in 2006, participated in the study. Check out I.I.I. facts and stats on auto insurance.

†¢ On a separate note, we’re honored to have been named a top 50 hospital administration blog by Hospitalicious in the “Health Insurance and Disease Management† category.