Texas is Doing Something Right - But What?

The Texas work comp system is subject to a unique "report card" process where the Department of Insurance (DOI) uses data supplied by carriers and the Division of Workers' Compensation (DWC) to evaluate the performance of the state's system.

One of the goals of the report card process is to measure the effectiveness of medical care provided injured workers, and the value returned to the system.

Texas measures not only the cost of treatment but also compares that to return to work rates and trends costs over time.

According to the report by the state Department of Insurance's Workers’ Compensation Research and Evaluation Group the average cost of medical care in Texas' workers' compensation system was higher for health care networks than for  non-network care in 2010, but  average medical costs in networks increased less after six months of services compared to non-network care, and networks had higher return-to-work rates for injured employees than did non-network employees.


This was a surprising conclusion to me. But assuming the accuracy of the report's conclusion, there is clearly something Texas is doing that other states should emulate.


There are 34 networks certified by the DOI, with coverage in 250 of Texas’ 254 counties. And there are two types of networks: networks operated by public entities under Chapter 504 of the Labor Code, which are not subject to many of the requirements for private employer networks operated under Chapter 1305 of the Insurance Code.


Networks were introduced into the Texas system with HB 7 in 2005. As with any new feature, there was quite a bit of consternation at the outset of the networks, with confusion about building them, operating them, etc. Now networks are more mainstream so the data measuring their effectiveness is more reliable and consistent.


Other findings in the report include:

• All networks showed claims had shorter times for first non-emergency care than non-network claims.
• Network claims overall tended to show lower use of hospital services, but higher use of professional and pharmacy services, than non-network claims.
• All networks had lower use of physical medicine services.
• Interestingly, network employees overall reported lower levels of access to, and satisfaction with, medical care, but networks provided faster non-emergency care to their injured workers.

A key finding in the report was that when 12 months of additional data were added to the study, average claims costs for non-network injured employees increased by 41%, compared to 27% for network injured employees. This is critical because it is the long tail nature of workers' compensation claims that have the most dramatic impact on rates and premiums employers pay.


The study is incomplete but provides direction for future studies. For instance, what is going on with Texas networks that provide better return to work results and better control over long term medical costs?


Regardless, the rest of the workers' compensation community needs to see what Texas is doing right, because its system costs on a relative scale (i.e. based on percentage of payroll, and other relative scales) are significantly less that its neighboring states, and other big states such as California, Florida and New York aren't even close.


For instance the average Texas loss cost proposed in the last NCCI loss cost filing is $0.66 per $100 of payroll, compared to $1.03 in the region (Arkansas, Louisiana, New Mexico and Oklahoma) and $0.93 countrywide.

What is also interesting is that Texas spends more on medical cost containment services than most states according to the Workers' Compensation Research Institute - I find this surprising because the traditional thought is that cost containment interferes with the delivery of medical care.

So the Texas study produced some surprising results, but really opens the door to more questions that need study - not only by Texans but other states as well.
WorkCompCentral

Loan From UEBTF to Create More Bureaucracy

I've whined about this before, but the wheels of government continue to move, sometimes forward, sometimes backward.

California Gov. Jerry Brown on Friday signed AB 436 by Jose Solorio, D-Santa Ana, authorizing a $4.3 million loan from the Uninsured Employers Benefit Trust Fund (UEBTF) to establish a program for monitoring prevailing wages on public works projects.


The UEBTF is an employer-funded account that pays for benefits when employers are uninsured. It is financed through a tax on workers' compensation insurance policies and a separate assessment on self insured entities.


The UEBTF nearly became insolvent in September 2010, because more claims were filed than the Division of Workers' Compensation (DWC)  anticipated. The division was not able to loan money to the trust at that time because a budget had not been approved. As a consequence thousands of claimants were almost left penniless.


DWC documents show assessments for insured employers increased from $22 million in 2010 to $44 million in 2011. Assessments for self-insured employers increased from $3.8 million to $13.5 million over the same period.

Good job government in taking care of it's population ... NOT!

AB 436 establishes a Compliance Monitoring Unit within the Department of Industrial Relations to make sure contractors are complying with prevailing wage requirements on public works projects. The legislation creates the State Public Works Enforcement Fund to pay for the department's monitoring efforts.

Maybe I'm missing something important here because I did not attend the hearings on this bill and don't understand the arguments for the bill, but it seems to me that that last thing we need is another regulatory agency placing additional burden on business while taking money away from a program that plays a very important role in today's economy - especially in today's economy.

Brown signed AB 436 but did not include a signing message with the bill.

Dean Fryer, a spokesperson for the Department of Industrial Relations, told WorkCompCentral in a Sept. 1 story that once funds from bond money come in, the Compliance Monitoring Unit will be self-sufficient and the "loan will be promptly paid back."

We'll see. Past history of government manipulation of public funds does not give me confidence.

WorkCompCentral

The Medical Cost Control Debate Lacks Value

The debate in California following the most recent rate filing by the state's Workers' Compensation Insurance Rating Bureau (WCIRB) is whether utilization review (UR) is worth the expense.

Medical costs have increased 40% since lawmakers made utilization review (UR) mandatory in 2003, the WCIRB said in its 2012 pure premium rate filing.

Insurance Commissioner David Jones and his chief actuary, Ronald Dahlquist, both asked at a rate hearing held in San Francisco on Tuesday whether this means utilization review isn't working, and that is a valid question especially in light of the fact that UR costs have increased dramatically.

Dave Bellusci, chief actuary for the Rating Bureau, responded that while UR is a significant cost driver and one of the most rapidly growing components of medical costs since 2005, that doesn't mean it isn't working.

Bellusci's statement brings out one of the faults of the current structure of defining medical costs by the WCIRB - that UR is a medical cost. I disagree.

UR is an employer/carrier administrative cost. While it is a component of medical cost control, it is a voluntary cost control measure that is instituted at the employer/carrier level, not at the physician/medical delivery level.

A component that was not discussed relative to whether UR works is the impact UR might have on other claim costs - whether delays in claims management caused by UR denials and then subsequent appeals adds to the costs of indemnity, both temporary and permanent, and to later medical costs.

Bellusci said he expects UR costs to level off, even though that trend hasn't appeared yet in data collected by the WCIRB. He also said he agrees with the recommendation in a Rand Corp. study published by the Commission on Health and Safety and Workers' Compensation (CHSWC ) in October that suggests studying whether employers are getting the maximum benefits from UR and how frequently treatment decisions should be reviewed.

Another cost driver that is part of the WCIRB equation on medical costs, and which should be attributed to administrative costs, is medical bill review. 

Both UR and bill review are big businesses and generate giant revenues for these service provider owners. I think that both cost components need to be analyzed for their relative benefit to the work comp community, and whether there are better methods for maximizing the dollar value of medical services.

Note that I said "dollar value" of services. I am not convinced that controlling costs on an itemized basis is the best way to determine whether any particular medical constituent is being fairly reimbursed for services or goods provided.

The state should follow the recommendations of CHSWC and contract with Rand Corp. to study UR, and bill review, on a global claims cost basis, to determine if in fact these services are returning value to the community, if so how much and what that value is, and whether there may be other more efficacious methods of looking at the relationship of medical care delivery in the total claim cost equation.

WorkCompCentral

Does a "Culture of Caring" Have A Place in High Turnover Businesses?

The California Workers' Compensation and Risk Management conference that began on Monday and ended on Wednesday in Dana Point, California, had many sessions about claim management from various levels - macro to micro.

The overall theme in each of these claims management sessions was communication: early and frequent communication with the injured worker and the relay of that information to various sources tasked with management of the claim.

While most of the presentations on communication focused on gathering and timely dissemination of information, one aspect that was lightly touched on and which I think makes a bigger difference in claims management is that the communications with the injured worker reflect a "culture of caring."

The "culture of caring" was coined by author and New York broker Adam Friedlander in his book "How to Save Big on Workers' Compensation" (which I reviewed in an earlier blog post).

Friedlander argues that, "If you need to get an employee back to work, you need to take care of that with the employee by the culture you establish and by the follow-up you do that shows you want the employee back."

Early return to work is almost universally acknowledged as the single biggest factor in controlling claim costs.

Friedlander's axiom may not be entirely applicable to a business with traditionally high employee turnover, such as a fast food business that relies on low wage, young labor.

At the conference, Michael W. Simmons, El Pollo Loco's director of risk management, said the chicken-fueled fast food franchise does its best to ensure that it never breaches its $250,000 deductible by using a team to quickly react to each claim within the first three days of the accident, before the case ever reaches an attorney.

"There is a very fine line and a very delicate balance there where we want to trust our employees, but clearly we have also got to verify their intentions," Simmons told our reporter. "Of our employees, we have 165 restaurants, 4,600 employees, and about 120% turnover at that employee level. For us, we are seeing new employees of up to 6,000 a year. So for us, it is very important that we trust but verify."

I don't know what the experience is for a fast food chain such as In 'N Out Burgers, which boasts one of the highest pay and benefits schemes for its employees and one of the lowest employee turn over rates in the fast food industry. Does the way In 'N Out Burgers treat its employees also result in lower workers' compensation costs?

I did some quick research to see if I could find some answers to this, but couldn't get the answers in time for my blog deadline. I'm hoping that someone from In 'N Out Burgers can provide me with some comparison data that would give me an indication of whether or not overall employee treatment has an effect on workers' compensation experience.

WorkCompCentral

The Passing of Judge Greenblatt and My Introduction to Comp

Rather than my daily rant about workers' compensation, I am taking today to remember something special - the day my professional and personal life changed irrevocably; the day I became indoctrinated into the California workers' compensation system and the work comp industry.

I got the news late yesterday evening that former California Workers' Compensation Judge Larry Greenblatt had died.

Judge Greenblatt served as the Presiding Judge at the Ventura and Agoura Boards and after his retirement, as an annuitant in Marina Del Rey.

Judge Greenblatt was also my introduction into workers' compensation, and what an introduction it was.

I was a very young lawyer at the time, having just been admitted to the bar several months earlier. My focus for the law firm, Miller & Folse, at the time was real estate and business litigation. The firm's dedication was workers' compensation - primarily defense but we also handled many applicant cases too. The firm's partners, John Miller and Rene Folse, wanted to expand the scope of practice of the firm so I was the youngster that was going to help them do that.

I was having a nice quiet afternoon in the office, reviewing a case file and preparing answers to some interrogatories when Miller came into my office with a big fat accordion file.

"David, I don't have any lawyers here except for you and I need you to take this file down to the Ventura board to get this settlement approved," he said. "Don't worry, everything is taken care of. The settlement papers are all signed, the applicant's attorney has approved and the judge is waiting for you."

Okay - sounded simple enough to me. Miller assured me, "It's no problem, a piece of cake. This is routine in workers' compensation and you don't need to know anything. Just get the judge to sign off on the settlement."

I wrapped a tie around my neck and headed on down to the Ventura board, which at the time was located on Ralston Street just off Victoria (I had a tough time finding it on this first occasion - it later became a very well known venue to me).

Indeed, at about 3 p.m. I found myself wandering the only downstairs hallway at the Ventura venue and knocking sheepishly on the presiding judge's door - Judge Greenblatt.

I don't remember the exact intercourse that started the discussion, but I probably said something stupid like, "John Miller sent me here to get this settlement approved and he said that you were waiting for me to sign the paperwork," which of course set Judge Greenblatt off.

"Sit down," he told me as I handed him the settlement papers. He looked them over through his bi-focals, painfully slow in my young, impatient, attention deficit distorted anxiousness - I just wanted to get back to the office.

As he perused the paper work, with various facial expressions indicating surprise, I looked around his office. Memorabilia of trains and baseball (specifically the Los Angeles Dodgers) hung on the walls and rested on shelves.

Judge Greenblatt scowled at me and very calmly said, "This is inadequate. I'm not going to approve this. Call your client and get more money."

What? Are you kidding me?

"Miller said you knew about this and that all I had to do was to get this signed," I replied.

Greenblatt raised his voice a bit more, scowled at me even more looking over his glasses that had slid down his nose from looking at the documents and VERY firmly suggested that I leave his office, "tell Miller this isn't the deal I was expecting," and to get more money.

I was completely paralyzed! I didn't know anything about workers' compensation, much less how to spell it properly. I didn't know the file and I sure as heck didn't know the client. I was about to be made a fool!

I called Miller on the downstairs exterior pay phone (we didn't have cell phones then) in a complete panic. The anxiety killed me. I wasn't doing my job. I was frightened about calling the client. I was even MORE frightened of calling the senior managing partner to tell him the bad news. And I was petrified of having to bring something back to Judge Greenblatt that he might not approve - he had a great way of making me feel very, very small.

The balance of that afternoon was 2 high anxiety hours of calling, getting calls, walking into and out of Judge Greenblatt's office until he was satisfied that the settlement was proper for the injured worker.

"Welcome to workers' compensation," Judge Greenblatt said as he handed me the signed Order Approving.

I saw Judge Greenblatt often after that and he always treated me with respect and courtesy, engaging me with stories about trains, or how the Dodgers were doing that season. And always making sure that all of the details in a case file were resolved. Greenblatt hated files coming back from storage so he was a stickler for making sure that all of the issues were closed, including unpaid bills and liens.

And I'm sure, in his own way of training the newly initiated, thrilled that someone new was entering the industry.

By the way, I don't recall who the applicant attorney was, but he obviously was quite amused ... at my expense of course!

I haven't seen Judge Greenblatt in several years and am sad of his passing. He will be greatly missed.

I'm also sure most everyone in this industry has a similar story of their introduction to workers' compensation. Use the comment feature here to tell me yours.

WorkCompCentral

Gary Hall, Jr. - Don't Accept What Can't Be Done

Gary Hall, Jr., former Olympic swimming medalist, was the key note speaker at the California Workers' Compensation and Risk Management Conference in Dana Point, California yesterday, providing the audience with an insight into why athletes are not a good comparison to the general population when dealing with injury or disability that may affect job performance.

Hall is a type 1 diabetic and was diagnosed with the life threatening disease in 1999. Two independent doctors told Hall that his competitive swimming days were over.

You can take the athlete out of competition, but you can't take the competition out of the athlete.

Hall decided that he didn't have to accept the doctor's determinations and he sought out the assistance of a team of contrarians with the attitude that "it's possible" to continue competing.

International competitive swimming is marked by some of the closest margins of any sport, and some of the greatest odds. The chances of making the United States Olympic swimming team, said Hall, is 0.00014%. The time between first place winner in the 1996 Olympic 50m freestyle, Alexander Popov, and second place Hall was measured in the hundredths.

But these close margins cannot compare to the great odds Hall faced when diagnosed with diabetes. Imagine the devastating impact of being told by not just one, but two specialists that your competitive days are over.

Thousands of injured workers are told this every single day - that they will no longer be able to be "competitive" in the work place.

The difference between Hall and these injured workers is that Hall did not accept the prognosis. He found a way to deal with his condition and to continue competing, very successfully, becoming the oldest American Olympic swimmer in history at age 29 and winning another gold medal.

Hall had a motivation that extended beyond the financial reward of getting a pay check again. Athletes are like that - competition is a huge motivator for the athlete. It's not just about being better than the other person, it's about being better than you think you can be - pushing yourself to the body's limits so much that you throw up 13 times in an hour from over-exertion.

The average injured worker doesn't have that motivation, doesn't have that attitude, doesn't have people providing the encouragement about what CAN be done.

What the average injured worker does have, similar to Hall, are people telling him or her what can NOT be done - work restrictions, disability ratings, etc.

And like Hall, the challenge for workers' compensation is getting people to realize the possibilities, to act contrarian, and find the motivations that reward positive behavior and accomplishment. A huge challenge, no doubt, but entirely possible too.
WorkCompCentral

9/11 Claims Report Demonstrates Limited Relevancy of Work Comp

The most recent report by the New York State Workers Compensation Board (SWCB) concerning the ratio of 9/11 claims being controverted versus the rate of "normal" claims should not be surprising to anyone that reads this blog.

SWCB said 5,109 of the 12,296 workers' compensation claims filed by people who worked at or near Ground Zero and those involved in the rescue and cleanup – or about 41% -- were controverted by insurers or employers.

By comparison, 161,744 of the 986,849 claims not related to the World Trade Center attack – or 16% -- analyzed by the board between 2001 and 2007 were controverted by employers and insurers.

Robert Grey, a claimants' attorney and chairman of the New York Workers' Compensation Alliance, told WorkCompCentral that the disputes filed by private carriers most often involve disagreements among multiple insurers over which carrier is responsible for paying but that the New York City Law Department is routinely disputing 9/11 claims filed with SWCB.

SWCB reported that private employers controverted 61.5% of the 9/11 claims filed with SWCB. New York City agencies disputed a little more than half -- 50.2% -- of the claims.

The City denies any systemic distinction involving claims arising out of 9/11.

Robert Grey, a claimants' attorney and chairman of the New York Workers' Compensation Alliance, said carriers and the city found that by dragging out claims with disputes workers often give up before the claim is resolved.

In response to complaints from District Council 37 of the American Federation of State, County and Municipal Employees (AFSCME), the 19-member Worker Protection Task Force was created by the New York Legislature in 2005, assigned its Workers' Compensation Committee to review allegations that claims by rescue and clean-up workers were more frequently litigated.

The committee reported in May 2009 that it had found "strong evidence" that the union's contentions were valid. The committee said rescue, recovery and clean-up (RRCU) claims were being controverted at more than three times the typical rate.

Workers' compensation is a cash flow industry. In an economy as difficult as the one we have been in since 2008, it is no wonder that 9/11 claims - which are very expensive to compensate with claims of pulmonary disease, cancer and mental health injuries predominant - are going to face greater scrutiny, and greater delay.

Lee Clarke, occupational safety director for AFSCME's District Council 37, said, "It's taking 18 months to three years to get these claims resolved. It's making it difficult to get medical care for the first responders."

Three years to resolve a dispute. That's sounding more like the time frame of a civil law suit.

And when a civil law suit is resolved, that's the end of the case at least (pending appeals, which apply likewise to workers' compensation cases). A workers' compensation case is not over unless there's some final cash out settlement, which means that three years is only the beginning of a controverted claim going through the litigation process.

Is this evidence of the limited relevancy of workers' compensation to today's society as it is currently constructed and applied? I think so.

WorkCompCentral