Tag Archives: Workers Comp

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

Most Serious Workplace Injuries Cost More Than You Think

$60 billion is a lot of money. Think about it.

For example, insured losses from global disaster events were around $49 billion in 2016, according to Swiss Re.

That’s a large number too, but not as large as the $59.9 billion cost to U.S. employers of the most serious workplace injuries and accidents in 2014, per the just-released 2017 Liberty Mutual Insurance Workplace Safety Index.

By the way, the most serious ones are injuries that cause employees to miss six or more days of work.

The nearly $60 billion in direct workers compensation costs to U.S. businesses translates into more than $1 billion a week that companies spend on these injuries, the index suggests.

As big as it sounds, the total cost actually fell from $61.9 billion in 2016, according to Liberty Mutual.

The 10 leading causes of the most disabling work-related injuries account for $49.9 billion, or 83.4 percent of the total cost of $59.9 billion.

The top three causes of the most disabling work-related injuries are:

–Overexertion ($13.8 billion, 23 percent)

–Falls on same level ($10.6 billion, 17.7 percent)

–Falls to lower level ($5.5 billion, 9.2 percent)

Collectively, these three causes represent almost half the cost of the leading accidents. Check out the chart:

Screen Shot 2017-01-25 at 2.19.16 PM

Developed annually by the Liberty Mutual Research Institute for Safety, the index is based on information from Liberty Mutual Insurance, the U.S. Bureau of Labor Statistics (BLS) and the National Academy of Social Insurance.

The index helps employers, risk managers and safety practitioners make workplaces safer by identifying critical risk areas so that businesses can better allocate safety resources.

Here are some useful additional facts and statistics on workers compensation from the Insurance Information Institute.

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.

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.

NCCI Conference Roundup

Insurance Information Institute (I.I.I.) chief actuary James Lynch is on the road.

Spring is heavy conference season. I type this from an Orlando hotel room on May 14, after day one of the Annual Issues Symposium put on by the National Council on Compensation Insurance (NCCI). Ahead are trips to Colorado, Philadelphia and Atlanta, as well as two meetings close to home, in New York.

The NCCI conference is perhaps best known for president and  chief executive officer  Steve Klingel’s summary of the workers compensation line in a single word or phrase. This year: Calm now . . . but turbulence ahead. With premium up 4.6 percent and the combined ratio (98) at its lowest since 2006, workers comp results have been good, but outside pressures could make the ride bumpy.

One pressure is low interest rates. Years can pass from the time an insurer collects premium and injury claims get paid, and insurers in the meantime invest that premium, with the proceeds helping pay for claims and bolstering profits.

Interest rates have been so low for so long that the industry can’t rely on interest rates to deliver results anymore.

Another is the sharing economy. As  Dr. Robert Hartwig, president of the I.I.I. and an economist, noted later that day, the smartphone has made it easy to summon people to do ad hoc jobs, with the best known being Uber’s ride-sharing battalion.

Those workers are independent contractors (though that has been challenged) and as such don’t get traditional benefits, including workers comp coverage. As the sharing economy grows, workers comp could shrink.

The third is a series of attacks on the basic principles of workers compensation. News reports suggest workers comp doesn’t compensate injuries equitably; lawsuits suggest the line has violated the Grand Bargain that gives up a big tort payoff in exchange for a steady flow of benefits; and a nascent movement would let employers opt out of the workers compensation system altogether.

But workers comp has survived a lot in the century since it took hold in the United States and seems well-equipped to handle the, well, turbulence.

“While I am confident that we will work our way through these challenges,” Klingel said, “it is important to be realistic about current conditions and to recognize that the current positive results may not last.”

The I.I.I. has more workers comp  facts and statistics available here.

Too Few Aware of Opioid Risk

I.I.I. chief actuary Jim Lynch brings us some surprising numbers on America’s addiction to opioids:

Americans are grossly misinformed about the dangers of opioid drugs, according to a recent survey by the National Safety Council (NSC).

Opioids are commonly prescribed painkillers like Vicodin, OxyContin and Percocet. The drugs are meant to mimic the nervous system actions of heroin and morphine and all too often lead to similar levels of addiction and suffering. More than 170,000 Americans have died from opioid overdoses this century, nearly triple the number of U.S. military deaths in Vietnam (see my earlier post).

I wrote about the epidemic in Contingencies magazine, focusing on the toll the drugs have taken in the workers compensation system.

Too few Americans are aware of this risk, according to the survey of 1,014 adults, reported in the March 24 edition of Workers’ Compensation Report. Just one in five considered opioids to be a serious safety threat. Only 12 percent said addiction was a concern; two-thirds were unconcerned about any side effects from the drugs.

Education is part of the problem. Only 29 percent of respondents said they had taken or been prescribed an opioid in the past three years, though the number jumped to 42 percent once they were provided with a list of common opioids.

Nearly 60 percent of users had at least one addiction risk factor. Common risk factors include alcoholism, depression, use of psychiatric medication or being the victim of physical, mental or sexual abuse.

Users held opioids in high esteem. For example, 78 percent said they were the fastest method of pain relief, 74 percent said they were stronger pain relievers than alternative prescriptions, and 71 percent said they were the best way to relieve pain.

They underestimate the risk. Though 16,235 people died from prescription drug overdoses in 2013, just 19 percent of survey respondents said they had major concerns about the risk of injury or death from the drugs.

That’s less concern than they had about injury or death from severe weather or a natural disaster, from which 586 people died in 2013, and about the same level of concern as riding in a commercial airliner in the U.S., an activity that in 2013 killed eight, roughly 0.5 percent as many as opioids.

Details on the NSC survey can be found here.

Opioid Battlefield

Here’s a simple chart that compares the number of people killed in the opioid epidemic from 2000 to 2013 with the number of soldiers killed in the Vietnam theater, writes I.I.I. chief actuary Jim Lynch.

2015.03.20 LYNCH opioid graphic

Opioids are legally prescribed drugs designed to safely mimic the painkilling effects of heroin and morphine. They have not proved as safe as had been hoped.

The drugs killed more than 170,000 over 14 years, about three times as many as this country lost in Vietnam. The Centers for Disease Control and Prevention (CDC) provides the data for opioids, and Vietnam statistics come from the Congressional Research Service (CRS) and National Archives.

I compare the epidemic to warfare because I became aware of the issue at a 2014 Workers Compensation Research Institute (WCRI) conference, when a Boston poll noted (if memory serves) that for every Massachusetts fatality in Iraq or Afghanistan, there were eight opioid victims. It’s also valuable, I think, to compare the War on Drugs with the more traditional battlefront.

Sometimes opioids like OxyContin, Vicodin and Percocet are referred to with the general term narcotics, as I did in an article for Contingencies magazine that traced the epidemic’s impact on workers compensation insurance:

Chances are good that if you’ve made a workers comp claim, you’ve had opioids in [your] medicine cabinet. Narcotics made up 25 percent of workers comp drug costs, according to the National Council on Compensation Insurance (NCCI), and more than 45 percent of narcotics costs pay for drugs containing oxycodone.”

There is some relatively good news. Opioid deaths appear to have peaked in 2010 at 16,917, the CDC reported last month. In 2013 the toll was 16,235.

By contrast, 16,899 died in Vietnam in 1968, the most violent year of the war. So the opioid epidemic has leveled off to deliver tragedy as frequently as the worst year of the Vietnam War.

On another front the news is not good. Opioid addicts often turn to heroin when their prescriptions run out, and the number of heroin-related deaths rose 39 percent last year, to 8,257, the CDC reports. That’s in addition to the opioid toll.

Together, opioids and heroin killed 215,031 between 2000 and 2013, about 80 percent more than the approximately 120,000 U.S. military deaths since World War II.

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.