Tag Archives: WCRI

Whither the Grand Bargain?

Insurance Information Institute chief actuary James Lynch reports from the final session of #WCRI17:

The Workers Compensation Research Institute’s annual conference saved the best for last, a provocative look at comp and the Grand Bargain.

That bargain, that workers sacrifice the right to sue for workplace injuries in exchange for a predictable set of benefits irrespective of fault, is threatened, some say, by a decades-long winnowing of those benefits. The rebuttal: comp is a resilient system changing with the times.

John Ruser, WCRI president and CEO, led the discussion. Panelists were Dr. David Michaels, a former assistant secretary of labor at OSHA; Bruce Wood, former general counsel at the American Insurance Association; Emily Spieler, a Northeastern University professor specializing in workers comp and labor issues; and David Deitz, a consultant with more than 20 years’ experience designing claims management systems in both workers comp and group health.

I have some background on the debate, presenting at a symposium on the Grand Bargain last year in Camden, N.J. I’ll oversimplify a bit here by calling it a faceoff between lawyers and insurers.

The lawyers say that reforms over the past 20 years or so have continually whittled away at worker benefits, so much so that the Grand Bargain is, from the workers’ point of view, no bargain. Insurers note that both medical and indemnity benefits have been rising faster than inflation for decades and that many of the supposed benefit cuts are controls on medical costs that have little if any effect on the actual treatment that the injured worker receives.

That debate is of long standing, but Wood pointed out that the discussion used to be fairly narrow.

Several states have debated whether employers should be able to opt out of the workers comp system entirely and provide a supposedly parallel set of benefits. Opt out passed in Oklahoma (but was found unconstitutional last year) while at least two other states (Tennessee and South Carolina) have kicked the idea around.

Wood compared the changes in the debate to a football game. The old discussion shuttled between the 45-yard lines, he said. Opt out “takes the debate between the goal lines.”

 

 

Some Facts About Medical Marijuana

Insurance Information Institute chief actuary James Lynch reports from last week’s Workers Compensation Research Institute (WCRI) conference: 

I shock no one, I hope, by saying the nation’s attitude toward marijuana has loosened. More than half the states allow marijuana use, either as a medicine or just for fun. The federal government still forbids its use.

It’s a tough spot for insurers. Auto insurers worry that high drivers will cause auto accidents. Workers compensation workers are concerned that high employees will cause work accidents. Insurers want to obey the law, but federal law conflicts with the law in most states.

There are also questions about using marijuana to treat pain, as an alternative to opioids.

Not surprising that weed was the topic of conversation several times at last week’s WCRI conference in Boston.

Alex Swedlow of the California Workers Compensation Institute noted the following:

  • Six states require workers comp insurers to reimburse injured workers who use medical marijuana: Connecticut, Maine, Massachusetts, Minnesota, New Jersey and New Mexico.
  • Six states forbid insurers from reimbursing for medical marijuana: Arizona, Colorado, Michigan, Montana, Oregon and Vermont.
  • The federal laws against marijuana mean it is illegal to use the banking system to purchase marijuana. So an insurer can’t write a check against to pay for the drug. They use cash.

Dr. Dean Hashimoto of the Massachusetts Department of Industrial Accidents provided these facts. They are taken from a National Academy of Sciences report published in January, which is itself a summary of all research on the issue:

  • There is conclusive evidence or substantial evidence that marijuana:
    • Improves the lot of adults in chronic pain.
    • Increases the risk of motor vehicle crashes.
    • Increases the risk of developing schizophrenia and other psychoses.
  • There is moderate support suggesting that marijuana:
    • Improves short-term sleep outcomes for people with fibromyalgia or chronic pain.
    • Increases impairment of learning, memory and attention span.
    • Increases dependence on alcohol, tobacco and illicit drugs.
  • It is not possible to determine whether marijuana use is statistically correlated with occupational injuries.

The California WC report is here www.cwci.org/document.php?file=3090.pdf. The National Academy of Sciences report is here.

Conference Shows How Workers Comp Wheels Are Turning

March brings my annual trip to the Workers Compensation Research Institute (WCRI) conference in Boston, writes Insurance Information Institute chief actuary James Lynch:

Workers comp is an intricate dance among regulators, lawyers, employers, insurers and the medical community. WCRI’s annual conference is one of the better places to catch up on the direction the many gears are turning on the workers comp machine.

Agenda items I’m looking forward to:

  • Alternatives to opioids: The opioid epidemic, until recently, was the silent mass killer in America. I first heard about this particular scourge at the 2014 WCRI conference. That year almost 19,000 people died from opioid overdoses, yet I had never heard the term opioid. After the conference, I wrote about how the workers’ comp world grappled with the epidemic for Contingencies magazine.
    This year the conference has an update on those efforts. It also has a session on emerging alternatives like mindfulness and other cognitive approaches. Included in that session is a look at medical marijuana, an issue most insurers are approaching with grave caution.
  • Appraising the Grand Bargain in 2017: Comp, of course, is the result of the Grand Bargain. Injured workers give up the right to sue and employers agree to indemnify the injured, regardless of fault. Most insurers will tell you that bargain holds up well more than a century after it was struck. But some challenge that idea. I attended a conference last year baldly titled, “The Demise of the Grand Bargain.” And a 2016 Department of Labor (DOL) study alleged states were engaged in a “race to the bottom,” scuttling benefits to keep employers happy.
    A new president may send DOL priorities in other directions, of course, but there’s still a discussion to be had. WCRI’s conference will end with a debate among experts representing government, insurers and the legal community.

The conference is, March 2 and 3 at the Westin Copley Place, Boston. Details and registration here.

 

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

WCRI Insight Into How Well Workers Comp Process Works

Insurance Information Institute chief actuary James Lynch brings us another highlight from the Workers Compensation Research Institute conference:

A preliminary WCRI study showed little difference across states in how well workers recover from injuries but showed some significant differences in how satisfied injured workers were with the treatment they received.

WCRI researcher Bogdan Savych presented the results of a 15-state survey of 6,000 injured workers. The workers were interviewed three years after their injury. The goal was to learn how well workers recovered and to gain insight into how well the workers compensation process works, at least from the injured person’s point of view.

The health of workers was assessed on a 100-point scale in which the typical American’s health is at 50. Before they were injured, Savych said, workers were assessed at a 56. That score fell to 26 immediately after injury. Three years later, the median injured worker was 46, mostly recovered but not entirely.

Not all workers recover fully, Savych said. Depending on the state, between 9 percent and 19 percent of workers reported they had not fully returned to work. The 15-state median was 14 percent.

WCRI undertook the survey in part to determine how states differ in both recovery rates and patient satisfaction. The organization found that the severity of injuries was comparable across states, as was the level of recovery.

But worker satisfaction varied considerably. In the typical state, 17 percent of workers reported “big problems” getting the medical services they wanted. Wisconsin workers reported the best experience–only 11% reported big problems–while 21 percent of Florida workers said they had big problems getting the services they wanted.

Similarly, in the typical state, 14 percent reported “big problems” getting the medical provider they wanted, with Wisconsin the lowest and Florida the highest.

And 10 percent of Wisconsin workers said they were “very dissatisfied” with their overall care. Nineteen percent of Florida workers made the same assessment. In the typical state, 14 percent were very dissatisfied.

Savych noted that costs per claim were higher in Wisconsin than in the typical state, but the survey provides evidence that claimants from that state may be getting better outcomes for the cost.

WCRI Conference Highlights

Insurance Information Institute chief actuary Jim Lynch attended the Workers Compensation Research Institute (WCRI) conference last week in Boston. Here are some highlights:

Preliminary research from WCRI indicates that New York City residents sometimes get surgery done across the river, in New Jersey, where surgical costs can triple.

WCRI researcher Bogdan Savych outlined how the research organization uncovered this fact. It was akin to unraveling a mystery.

Researchers noticed a 37 percent increase in the average payment for knee arthroscopies at ambulatory surgical centers from 2011 to 2012. Shoulder arthroscopies rose a similar amount.

This was a surprise because New York workers comp claims follow a fee schedule. Normally researchers expect to see claim sizes spike when fee schedules change, but not in other years. Yet New York’s schedule hadn’t changed in years.

Then they noticed that all of the expensive surgeries were done in New Jersey.

It turns out a quirk in New York law exempts out-of-state providers from being paid according to the fee schedule. Instead they receive the usual customary and reasonable charge.

For knee arthroscopies, that means the NJ surgeries paid 266 percent more, an additional $4,954 on average. For shoulders, the cost is $8,551 more – a 326 percent increase.

Preliminary WCRI research indicates that fee schedules in health insurance can drive workers compensation claims higher.

The issue emerges because in many states, workers compensation fee schedules pay more than do group health schedules, said WCRI president and CEO John Ruser.

That creates an incentive for doctors to call an injury work-related–particularly if the cause of the injury is murky, like a strain of the knee or shoulder.

Workers also have an incentive to say the claim comes from work. Workers comp doesn’t have co-payments or deductibles, so the workers save money while the doctor receives more.

“This is not about fraud,” Ruser said, though the study showed that “financial incentives might have a role to play” in the classification of some injuries.

The study showed that when workers comp schedules are 20 percent richer than group health, the odds of a soft-tissue injury being called work-related grows by 6 percent.

Total cost: 1.5 percent of comp claims.

Putting a claim in the workers comp world creates additional hits for employers. First, they pay more for the medical treatment because the comp fee schedule is more expensive. Second, injured employees receive payments for lost income; the payment is covered by workers comp, but eventually the employer pays for it through higher premiums. Finally, where comp benefits are higher, claims can last longer – an additional cost.

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.

Annual Workers Comp Conference Beckons

Next week Jim Lynch will be in Boston for the annual conference of an I.I.I. subscriber, the Workers Compensation Research Institute (WCRI). Here’s  his preview:

WCRI is known for its painstakingly objective analyses of workers comp trends in more than a dozen large states. Lately mainstream media have noticed WCRI, particularly this New York Times article, in which researchers found that when the prices of common dosages for back pain were capped, California doctors switched to dosages whose prices were not capped. This allowed them to charge about five times more per pill.

Physicians tend to charge considerably more than pharmacies when they dispense drugs, a phenomenon WCRI studies regularly. The costs and consequences of physician prescriptions is one of the main topics of the first morning of next week’s conference. (Registration and other details here.)

Day Two will feature a topic in which I’ve become more interested in recent weeks — the ability to opt out of the workers comp environment entirely.

For about a century workers comp has been a pact that has bound employers to employees in liability law. Workers give up their right to sue if they are injured on the job. Employers agree to pay for all injuries at work, regardless of how they occurred.

For decades Texas was the only state that didn’t follow these rules. Employers could opt out of the system, but they lost the considerable common law defenses employers usually enjoy. Workers’ Comp Insider has a nice overview of the Texas system.

In 2014 Oklahoma became the second opt-out state. Tennessee lawmakers have proposed their state become the third, even as Oklahoma’s law faces a constitutional challenge, as Business Insurance reports.

At the WCRI conference opt-out will get a hearing. A representative from retailer Nordstrom, which supports opt-out measures, will discuss the matter with an AFL-CIO representative and one from PartnerSource, a company that helps successfully opt-out.

Follow my live-tweeting of the conference @III_Research and check back for another blog post.

Update: Aw, shucks. I learned early Thursday that the opt-out session at the WCRI conference has been canceled. I’ll still be going to the conference.

I.I.I. offers facts and statistics on workers compensation.

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.

Loss Trend Factors Unearthed

I.I.I. chief actuary James Lynch digs into the data in an informative piece on loss trend factors:

Actuaries can be buggy about numbers, to say the least, and my article in this month’s Actuarial Review — a publication of the Casualty Actuarial Society (CAS)  – looks at a couple of sources of loss trends that can act as useful benchmarks.

One looks at workers compensation medical costs in 25 states. It is produced by the Workers Compensation Research Institute (WCRI), an organization I work closely with in my role as I.I.I. chief actuary.

The other looks at comp loss trends plus those of about a dozen other lines of business and has information going back to the 1930s, if you do a little digging. Older actuaries remember it as the Masterson Index, named after a Stevens Point, Wisconsin, actuary who created it and maintained it until relatively recently. Now Towers Watson actuaries have taken over the calculation.

As a sidebar, I also looked at the way the federal government measures auto inflation, including how it handles the introduction of predictive models and other overhauls to rating plans.