Monthly Archives: July 2015

Change for Change’s Sake: What Real Change in Workers’ Comp Looks Like

Note: This is my 200th post, so I think you will find it to be one of the best articles I have written so far.

Every industry has its share of conferences, conventions and meetings around the country. The insurance and risk management industries, which includes the workers’ comp industry, is no exception.

In the early stage of my career, I worked for a small, retail insurance broker on New York’s Long Island, and the men in my company would attend the Risk and Insurance Management Society (RIMS) Conference every year.

I am sure they went there to learn about things other brokers were doing, make connections with insurance company executives, and workers’ comp service providers. But typically, these conferences allowed the participants to hang out with their buddies at the bar, and play a round or two of golf.

So I was mildly amused when I read an article posted today in The Workers’ Compensation Daily from Safety National Insurance Company, titled “It’s Time to Change Workers’ Compensation”.

The article discussed a recent meeting of the Harbor Health Systems 2015 MPN (Medical Provider Networks) Medical Directors, in which an executive from Sedgwick gave the keynote address. His address discussed the need for change in the approach to workers’ comp claims handling.

Harbor Health Systems is based in California, and through the writings of my fellow blogger, David De Paolo, and the personal experiences of two women I previously wrote about, “Ms. X” and “Ms. A”, the California workers’ comp system could use more than a keynote address to change the problems and abuses injured workers are receiving in that state.

FYI, Harbor Health Systems is a subsidiary of One Call Care Management, a company that for the past two years or so has been gobbling up smaller companies, especially in the pharmacy benefit management arena, as well as other smaller workers’ compensation service providers, and as Joe Paduda reported earlier this week, One Call Care Management has acquired an imaging company called MedFocus.

According to Joe, this acquisition consolidates One Call’s stranglehold on the market, so if this is the kind of change Mr. North of Sedgwick was referring to, then it is more of the same.

The article goes on to say that the role of a medical director is to be there to help injured workers to recover from their injuries and resume their lives. I believe “Ms. X” and “Ms. A” would beg to differ.

The article also goes on to say that for years, the workers’ comp medical networks have focused on two things: discount and proximity. They would send injured workers to the physician closest to the employer’s location who would agree to accept a discount on the treatment provided.

Over time, they realized this approach was flawed, and that they should identify the medical providers who produce the best outcomes and incentivize them to treat injured workers by compensating them fairly.

They are learning that when they find these superior physicians, they need to get out of their way and let them practice medicine. The rest of the article details how the industry needs to evolve in how they devote resources to claims, how to better explain the workers’ comp system and protections it provides, and to avail themselves of the opportunities the ACA provides to evolve the way medical care is delivered.

According to Mr. North, when it comes to change, there are three main categories of people:

  • Innovators – people who are truly creating change
  • Learners – people who take what innovators created and work to evolve it
  • Ignorers – people who are uncomfortable with change and have a tendency to ignore it as long as possible

He said that workers’ comp cannot evolve if they are unwilling to take risks and become innovators; otherwise change will not happen.

I agree with his analysis, and my posts have attested to that fact time and time again. Therefore using his categories, it is clear that I would be considered an innovator, since I have been advocating implementing medical travel into workers’ comp.

Workers’ comp needs to take risks, and medical travel affords them of one of those risks.

Yet, those who have derided my idea, or who have not paid any attention to what I am saying, are ignorers, and there may even be people who would see to it that medical travel never becomes part of workers’ comp.

So I would like to add a fourth category to this list. Call them defenders of the status quo, or preventers, or even saboteurs, if it ever got that far.

So what is this change Mr. North is talking about? Is it real change, or just change for the sake of change? And what does real change look like?

Real change is not keeping injured workers and the system locked in a padded cell, wrapped in a straitjacket.

Real change is not buying up smaller companies and cornering the market, so that the very idea of competition is tossed on the dustbin of history.

Real change is not doing the same things over and over again and expecting different results.

Real change is not being afraid to look outside of one’s comfort zone, and outside of one’s national borders at a time when your industry is facing challenges from the expansion of out-out legislation that threatens to destroy workers’ comp, rising medical costs, physician shortages, questions of the constitutionality of exclusive remedy, negative media reports, changes in technology and diversification, and other “seismic shifts”.

Real change is becoming a learner, and I am looking for learners to work with. Real change is being fearless and recognizing that Americans are not the only ones who are able to provide quality medical care.

Real change is going with the flow of change in the world today and joining the globalized world; otherwise you stagnate and die. Time is running out. Real change is possible, but you must go after it.

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I am willing to work with any broker, carrier, or employer interested in saving money on expensive surgeries, and to provide the best care for their injured workers or their client’s employees.

Call me for more information, next steps, or connection strategies at (561) 738-0458 or (561) 603-1685, cell. Email me at: richard_krasner@hotmail.com.

Ask me any questions you may have on how to save money on expensive surgeries under workers’ comp.

Connect with me on LinkedIn, check out my website, FutureComp Consulting, and follow my blog at: richardkrasner.wordpress.com. Share this article, or leave a comment below.

Tomorrow Is Today: Medical Travel Must Include Workers’ Comp

My fellow blogger, James Moore, has written a short, but to the point article about what might happen if workers’ comp disappeared tomorrow.

The outcome of such an occurrence would not only throw the workers’ comp industry into disarray, but clog up the courts with lawsuits from one end of the country to the other.

Without going into any great detail, I will let you the reader, decide for yourself if this is as dire as he predicts, by letting you read his article here.

What does this mean for the medical travel industry?

It means you need to get your act together, start marketing your services to insurance carriers, employers, insurance brokers so that they are aware that should workers’ comp disappear, there is an alternative to long delays in getting medical care for work-related injuries.

Plastic surgery, reconstructive surgery, dental care, and all the other medical services that medical travel currently provides will need to be supplemented by offering orthopedic and occupational injury and illness services that will save employers and carriers money, and provide the injured worker with the best medical care at the lowest cost, with a better outcome.

But none of this will matter if the industry does not seize the day, or as the Romans would say, “Carpe Diem”. This market will not come to you; you must go to it. And right now.

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I am willing to work with any broker, carrier, or employer interested in saving money on expensive surgeries, and to provide the best care for their injured workers or their client’s employees.

Call me for more information, next steps, or connection strategies at (561) 738-0458 or (561) 603-1685, cell. Email me at: richard_krasner@hotmail.com.

Ask me any questions you may have on how to save money on expensive surgeries under workers’ comp.

Connect with me on LinkedIn, check out my website, FutureComp Consulting, and follow my blog at: richardkrasner.wordpress.com. Share this article, or leave a comment below.

CMS to Require Bundling of Reimbursements for Hip and Knee Surgery

The Centers for Medicare & Medicaid Services (CMS) announced last week that they will soon require the bundling of reimbursements for hip and knee surgeries, according to an article yesterday on Health Leaders Media.com.

The article, by Gregory A. Freeman, stated that hospitals and health systems will respond quickly and ruthlessly to the CMS announcement.

According to a former CMS official cited in the article, mandatory bundled payments for hip and knee surgeries would shutter one in four skilled nursing facilities and trigger “demand destruction in areas such as diagnostic testing, hospital stays, and avoidable readmissions.”

The move by CMS is not surprising, says Mark Bogen senior vice president of finance and CFO at South Nassau Communities Hospital on New York’s Long Island.

Bogen referenced the initial demonstration project set up through CMS whereby many providers selected the DRG’s (Diagnostic Related Groups) 469 and470 (major joint replacement or reattachment of lower extremities, with or without major complications or comorbities), as a way to test moving forward to a value-based payment system.

CMS demonstrated through this project that more than half of the cost of providing care for joint replacement occurred post-surgery, Bogen stated, and that the bulk of the cost occurred in either the acute inpatient rehab units or sub-acute rehab units of skilled nursing facilities (SNF’s).

Deidre Baggot, former lead of CMS’s Acute Care Episode Demonstration (ACE) Bundled Payment Pilot, said the evidence to support bundled payments as a more cost-effective alternative to traditional fee-for-service is clear.

Baggot also said that on the hospital side, we can expect to see demand destruction in areas such as diagnostic testing, hospital stays, and avoidable readmissions, which she says is a good thing.

“Post-acute providers will see a significant hit to inpatient rehab and skilled nursing facility utilization as providers search for lower cost alternatives such as home health services.

David Friend, consulting managing director with the Center for Healthcare Excellence and Innovation at BDO Consulting, said that hospitals are likely going to cut their one- and two-star SNFs to mitigate the risk of penalties during the post-discharge period.

Twenty-five percent of the SNFs are expected to close soon, Friend noted, while medically advanced SNFs will flourish.

Another way the bundling of reimbursements will be disruptive is that rather than having a “blank check for services”, reimbursements will be based on a fixed amount of money, says Mike Lessila, director of business development with Vestica Healthcare.

Lessila said that if hospital systems successfully complete the episode of care for less than the contracted cost, they gain financial profit, but if problems arise due to poor episode management, a preventable hospital readmission, or another complication such as a hospital-acquired infection, the provider will bear the cost of fixing them as well as penalties from CMS.

Finally, bundled payments introduce several complexities to care that hospital systems must deal with, said Lessila. One complexity is that hospital systems must think through its care coordination for these procedures, or the likelihood of failure is high.

Additional resources will be required to ensure the patients’ experiences are good and they follow all of the recommended steps to ensure a successful episode. Bundling will also motivate providers and facilities performing the services to streamline and improve communication.

Lessila said that “financial administration of the bundle becomes far more difficult since a single bundle procedure will involve payments to one or many physicians, medical devices and hospital facility charges. The hospital system must understand who gets paid how much and in what form, and be able to track all of the details to determine whether the bundle is profitable or not in the end.”

What does this mean to you?

The closing of skilled nursing facilities, even one- or two-star facilities will back up the rehab process, not only for general health care, but for workers’ comp, since hip and knee surgeries are common procedures in workers’ comp claims.

Diagnostic testing, hospital stays and avoidable readmissions will also impact the claims process for workers’ comp, and may add more costs to the total hospital bill that employers and insurers will pay.

The confusion that may result from basing the reimbursement on a fixed amount rather than a blank check will force the hospital systems taking a greater financial risk and guaranteeing the outcome of the surgery.

Lastly, the complexities of bundling will impact the financial administration of hospital systems, with most legacy billing systems unable to administer these contracts and aggregate the data, according to Lessila.

What does this mean for medical travel?

The disruptive effects of bundled payments may make it possible to implement medical travel into workers’ comp since there is a clear beginning, middle and end to the episode that can be better managed by facilities not covered by CMS rules that will bottleneck the process of adjudicating and settling claims.

But this will only happen when the medical travel industry convinces the workers’ comp industry and employers that they can provide the required procedures at a lower cost than even bundled payments can offer, and with a better guarantee of positive outcomes.

In my article, “What Role Can Medical Tourism Play in Physical Therapy and Rehabilitation for Workers’ Compensation?”, I said that medical tourism can package rehabilitation and physical therapy services the same way the other medical services are packaged, along with the cost of treatment, airfare and accommodations.

Medical travel facilities can take up the slack from the shuttered skilled nursing facilities that may result from the implementation of bundled payments. The medical travel industry and their destination partners should consider offering their services as a better alternative.

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I am willing to work with any broker, carrier, or employer interested in saving money on expensive surgeries, and to provide the best care for their injured workers or their client’s employees.

Call me for more information, next steps, or connection strategies at (561) 738-0458 or (561) 603-1685, cell. Email me at: richard_krasner@hotmail.com.

Ask me any questions you may have on how to save money on expensive surgeries under workers’ comp.

Connect with me on LinkedIn, check out my website, FutureComp Consulting, and follow my blog at: richardkrasner.wordpress.com. Share this article, or leave a comment below.

Advocacy Group Petitions Florida Supreme Court to Review Work Comp Constitutionality

As I reported three weeks ago in “Breaking News on ACA and Exclusive Remedy”, the issue of constitutionality of Florida’s workers’ comp system was settled by the 3rd District Court of Appeal.

However, Stephanie Goldberg reported today in Business Insurance that an advocacy group has petitioned the Florida Supreme Court to review the case that challenges the constitutionality of the state’s workers’ comp system.

The Florida Workers’ Advocates filed an appeal with the Court to review The State of Florida v. Florida Workers’ Advocates et al.

The case questions whether workers’ comp is an adequate exclusive remedy for injured workers. This issue was discussed in my previous articles, “Constitutionality of Workers’ Comp Challenged: What that could mean for Medical Travel” and “Update on Constitutionality of Work Comp in Florida“.

As far as Florida Workers’ Advocates are concerned, the issue of the constitutionality of workers’ comp has not been settled, so expect more on this in the future.

What does it mean for you?

Probably nothing, because the Supreme Court will probably uphold the District Court of Appeal ruling that the plaintiffs had no legal standing to challenge the constitutionality, and that will settle the matter.

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I am willing to work with any broker, carrier, or employer interested in saving money on expensive surgeries, and to provide the best care for their injured workers or their client’s employees.

Call me for more information, next steps, or connection strategies at (561) 738-0458 or (561) 603-1685, cell. Email me at: richard_krasner@hotmail.com.

Ask me any questions you may have on how to save money on expensive surgeries under workers’ comp.

Connect with me on LinkedIn, check out my website, FutureComp Consulting, and follow my blog at: richardkrasner.wordpress.com. Share this article, or leave a comment below.

Workers’ Comp Costs to Increase Due to Medical Care Inflation

Stephanie Goldberg reported last week on Business Insurance.com that medical care inflation could cause workers’ comp costs to rise.

Citing several sources, including NCCI, Moody’s Analytics and the US Bureau of Labor Statistics, Stephanie said that “increased pressure on medical costs per workers’ comp claim is expected as medical care inflation picks up”, according to a briefing published last week by NCCI.

Stephanie also stated that NCCI said that while medical care costs inflation has been muted for the past two years, it is expected to rise at a faster pace, this year and next year.

The following chart illustrates this.

medical cost inflation

*2015 and 2016 inflation rates are projected.

Source: National Council on Compensation Insurance Inc., Moody’s Investors Service Inc. and the U.S. Bureau of Labor Statistics

NCCI said that by measuring only changes in price, medical cost inflation will remain below 4% for both years. That compares with 2.4% in 2014 and 2.5% in 2013.

However, price alone is not enough to predict medical costs, according to the sources cited in the article. Factoring changes in price, as well as utilization, a report released in June by PricewaterhouseCoopers, projected a medical cost trend of 6.5% for next year. An earlier projection claimed a 6.8% increase.

PwC also said that the medical cost trend is influenced by changes in the price of medical products and services, changes in how often these products and services are used. Other factors include expensive specialty treatments, and investments to guard personal health data. The PwC report does not focus on workers’ comp specifically.

When contacted by email by Stephanie, Joe Paduda said that medical benefits could exceed two-thirds of claim costs on a national basis within three years. He also said that in many states, medical benefits already make up more than half of total benefits.

Matt Engels, another of my LinkedIn connections, vice president of network solutions at Corvel, said that “one of the contributors to a potentially disproportionate rise in medical costs is a siloed management.”

I wrote about how we have siloed general medical care and workers’ comp medical care into two different silos in my article, “Betting the Farm”, so Mr. Engles’ observation is accurate.

Stephanie’s article focused on what steps workers’ comp payers should take to control higher medical costs per claim, her sources said, and Joe Paduda said that another way they could control medical costs is by identifying and, where they can, direct injured workers to the best providers.

It is rare that I ever disagree with Joe, as I have always trusted his reporting on workers’ comp and managed care issues, but as my readers know, I have a better way for workers’ comp payers to control costs. There are other alternatives.

Medical travel is one of those alternatives, and it is high time that Americans look beyond our borders for lower cost medical care for injured workers.

It is wrong-headed and quite illogical to ignore the facts that have been presented in the Goldberg article, as well as all other articles, reports and surveys of the costs of workers’ comp medical care.

And it is also wrong-headed and quite illogical to assume that only Americans practice quality medical care. That is like saying that Japanese and Koreans can’t play baseball, that only Canadians can play hockey, and that Russians and Lithuanians and Croats can’t play basketball, and so on.

Our stubborn devotion to “American exceptionalism” has a very high price. If you want to keep paying that price, go ahead, but you’d be foolish to continue do so. The choice is yours, pay higher costs, or look for lower cost health care. Medical travel is the answer.

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I am willing to work with any broker, carrier, or employer interested in saving money on expensive surgeries, and to provide the best care for their injured workers or their client’s employees.

Call me for more information, next steps, or connection strategies at (561) 738-0458 or (561) 603-1685, cell. Email me at: richard_krasner@hotmail.com.

Ask me any questions you may have on how to save money on expensive surgeries under workers’ comp.

Connect with me on LinkedIn, check out my website, FutureComp Consulting, and follow my blog at: richardkrasner.wordpress.com. Share this article, or leave a comment below.