Category Archives: Bundling

Large Variations in Payments for Hospital Outpatient Care to Injured Workers

Back in April of this year, I wrote about a study by the Workers’ Compensation Research Institute (WCRI) in which it was found that fee schedules may increase the number of workers’ comp claims.

Today, the WCRI released a new study that said that “hospital outpatient payments per surgical episode varied significantly across states, ranging from 69 percent below the study-state median in New York to 142 percent above the study-state median in Alabama in 2014,” according to Dr. Olesya Fomenko, co-author of the study and economist at WCRI, and who also is mentioned in my previous post.

The report also stated that “variation in the difference between average workers’ compensation payments and Medicare rates for a common group of procedures across states was even greater—reaching as low as 27 percent (or $631) below Medicare in New York and as much as 430 percent (or $8,244) above Medicare in Louisiana.”

Here are the major findings:

  • States with no workers’ compensation fee schedules for hospital outpatient reimbursement had higher hospital outpatient payments per episode compared with states with fixed-amount fee schedules—63 to 150 percent higher than the median of the study states with fixed-amount fee schedules. Also, in non-fee schedule states, workers’ compensation paid between $4,262 (or 166 percent) and $8,107 (or 378 percent) more than Medicare for similar hospital outpatient services.
  • States with percent-of-charge-based fee regulations had substantially higher hospital outpatient payments per surgical episode than states with fixed-amount fee schedules—32 to 211 percent higher than the median of the study states with fixed-amount fee schedules. Similar to non-fee schedule states, workers’ compensation payments in states with percent-of-change based fee regulations for common surgical procedures were at least $3,792 (or 190 percent) and as much as $8,244 (or 430 percent) higher than Medicare hospital outpatient rates.
  • Most states with fixed-amount fee schedules and states with cost-to-charge ratio fee regulations had relatively lower payments per episode among the study states. In particular, for states with fixed-amount fee schedules, the difference between workers’ compensation payments and Medicare rates ranged between negative 27 percent (or -$631) and 144 percent (or $2,916).

Still think that workers’ comp is doing okay? Still think that keeping the status quo is the best option for injured workers? Still think that thinking outside the box, and considering alternatives to the ever increasing cost of medical care for workers’ comp is stupid, ridiculous and a non-starter?

Or do you believe, as Joe Paduda wrote about today in his blog, that workers’ comp is no longer needed for 90% of America’s employees, as the workplace has become safer than the non-occ environment.

The idea brought forth, and as Joe said, it is an intriguing, but wrong one, is that the medical care can be provided under health insurance, and the disability coverage can be added to long-term or short-term disability insurance.

Whichever way you look at the issue, workers’ comp is not going away, but it is getting more expensive to pay for medical care. The problem here is, too many Americans are slavishly wedded to outmoded ways of thinking, outmoded economic policies and models, as well as an outmoded economic ideology, to think rationally and seriously about alternatives.

Lastly, there are too many cooks (or should that be crooks) with their hands in the pot who have a vested interest in keeping things the way they are. If that is so, then the WCRI is only telling us what we should already know…injured workers are screwed and so are the carriers and employers. As long as outside interests have a hand in the system, and those who profit from higher costs block real change, this situation will only get worse.

I am sure glad it is not my money being wasted like this.

As always, to purchase the study click this link:

http://www.wcrinet.org/studies/public/books/hci_5_book.html

 

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A Little Disruption is a Good Thing

Staying on the topic of single payer, this time discussing its impact on workers’ comp, David De Paolo wrote an article today that describes Colorado’s Amendment 69 as a disruption of the status quo, and he points out that the tech industry has disrupted business models and industries for several decades and that the work comp industry needs to be disrupted as well.

He goes on to say that ColoradoCare (Amendment 69) is a debate and idea that is long overdue. The arguments against the idea, De Paolo writes, of a single payer system strikes him as simply entrenched interests seeking to protect their turf and business models.

Earlier this week, Workers’ Comp Insider published an article, “It’s A Colorado Rocky Mountain Low” that opposed the approval by Colorado voters this November of the amendment, using the reasons David cites in his piece, and some of the usual misleading distortions that only confuse voters on substantive issues such as this.

Readers will recall my previous two posts, the first, “Colorado Gets Real on Workers’ Comp and Health Care” which introduced the Amendment and the push to bring the two silos of workers’ comp and health care together, and the second, “Colorado “Single Payer” in Health Care Industry’s Sights” which described the health care industry’s attempts to derail the amendment’s approval.

The issue of combining the two silos was brought up by yours truly in an earlier post, “Betting the Farm“, and as I wrote then, not an original idea of mine. Yet, by reading David’s post, and the one by LynchRyan, you get the feeling that the only reason not to combined the two is greed and protection of vested interests.

Yet, in the business world, mergers happen all the time. And while it is true that some are not approved by the Justice Department or other government agencies, most mergers do take place.

The argument about issues like return to work being the purview of insurance companies under work comp is specious at best, because if we consider two patients, both of whom injure the same body part and require the same surgery to repair that injury, one must be put in a return to work program because he is covered for his injury under work comp; the other does not because his injury is not work-related, but did cause him to miss time from work. Does that make sense? Doesn’t the second patient also need to get back to work?

It is not logical to divide injured individuals by who picks up the check. It is more logical to treat all injuries the same, and to treat all medical issues the same, no matter if they are work-related or not. Getting cancer from occupational exposure to carcinogenic chemicals is no different than getting cancer from smoking, or being genetically predisposed as in breast cancer, or other types of cancer. They both are going to be seen by an oncologist, maybe even the same one if they live in the same area.

So keeping workers’ comp and health care separate and unequal, like education and social accommodations once did to African-Americans, is not only stupid, it is wrong. ColoradoCare is one way this can be accomplished, and as David points out, “Nobody really knows how all of this will play out.”

Maybe it is time we find out.


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.

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

I am also looking for a partner who shares my vision of global health care for injured workers.

I am also willing to work with any health care provider, medical tourism facilitator or facility to help you take advantage of a market segment treating workers injured on the job. Workers’ compensation is going through dramatic changes, and may one day be folded into general health care. Injured workers needing surgery for compensable injuries will need to seek alternatives that provide quality medical care at lower cost to their employers. Caribbean and Latin America region preferred.

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.

Will accept invitations to speak or attend conferences.

Connect with me on LinkedIn, check out my website, FutureComp Consulting, and follow my blog at: richardkrasner.wordpress.com.

Transforming Workers’ Comp Blog is now viewed all over the world in over 250 countries and political entities. I have published nearly 300 articles, many of them re-published in newsletters and other blogs.

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Colorado Gets Real on Workers’ Comp and Health Care

A shout out today to David DePaolo of Workers’ Comp Central for publishing an article today about a subject I discussed about a year ago, the combining of the silos of workers’ comp and general health care.

Voters in Colorado, the first state to legalize pot (talk about a real ‘Rocky Mountain High’) will decide in November on a ballot initiative that would create ColoradoCare,  a state-run program that will would pay for medical treatment provided to all residents of the state, including those who are hurt on the job.

According to the initiative, “ColoradoCare shall assume responsibility for payment of all reasonable and necessary medical expenses incurred by workers who suffer injuries or illnesses arising out of and in the course of their employment after the date ColoradoCare assumes responsibility for health care payments,”

The law, David writes, will levy (must be Jewish?)  a 3.33% payroll tax on workers and a 6.67% payroll tax on employers, as well as a 10% health care premium tax on non-payroll income to raise $25 billion to pay for medical care.

A 21-person board of trustees would be created to oversee the program. And, employers would still have to carry workers’ comp insurance to cover indemnity benefits (lost wages).

This would be something left up to legislators to figure out, says DePaolo, because the law is only intended to consolidate health care and eliminate the myriad of silos that create delay, confusion and ultimately heath care consumer angst.

It is David’s opinion that the measure will pass, but that is up to the voters of Colorado to decide (are you listening, Maria?).

So what this will mean is this: should the measure pass in November, it is possible that injuries sustained on the job that requires surgery could be achieved through medical travel, since what is possible now under health care would also be possible in workers’ comp (see my post, “Medical Tourism and Workers’ Comp: What’s Good for the Goose is Good for the Gander“).

When it passes, the following warning should be issued to all potheads in Colorado:

Before going abroad for surgery under the provisions of ColoradoCare, should they allow you to do so, please leave all of your “medicine”, in whatever form you take it in, and the paraphernalia that goes with it home, or else you will end up like Billy Hayes in a Turkishmaninacanstan prison.

But the hospitals in Turkishmaninacanstan are much better, and that is one reason why you are going there in the first place. For world-class health care at a lower cost.

Final Rule for Bundled Hip and Knee Replacements Published

Four months ago today, I wrote a piece called, “CMS to Require Bundling of Reimbursements for Hip and Knee Surgery”, that said the Centers for Medicare & Medicaid Services (CMS) will require the bundling of reimbursements for hip and knee surgeries.

Today, Health Affairs blog published an article reporting that CMS has recently published the final rule for the Comprehensive Care for Joint Replacement (CJR) model, which is a mandatory bundled payment model for lower extremity joint replacement (LEJR) services in certain geographic areas.

The article, by Patrick H. Conway, Rahul Rajkuma, Amy Bassano, Matthew Press, Claire Schreiber and Gabriel Scott, said that hip and knee replacements are the most common inpatient surgery procedures for Medicare beneficiaries, and can require long recovery and rehab periods.

The authors said that in 2014, more than 400,000 beneficiaries received hip or knee replacement, which cost more than $7 billion just for hospitalization.

They also reported that the quality and cost of care for these surgeries varied significantly by region and by hospital, and was true for both the care received in the hospital and for post-acute care outside.

The variation, they said, is due to the way Medicare pays for this care today, spread among multiple providers, with no single entity accountable for the total patient experience.

Care can be fragmented, they wrote, which leads to adverse outcomes.

Here are the key takeaways from the final rule:

  • the CJR model seeks to incentivize Medicare providers and suppliers to work together to improve the quality and reduce the costs of care for patients undergoing lower extremity joint replacement
  • the acute hospital where the procedure occurs will be accountable for aggregate Medicare expenditures and the overall quality of related care
  • the model will include participant hospitals located in 67 Metropolitan Statistical Areas (MSAs) throughout the country
  • acute hospitals paid under the Inpatient Prospective Payment System (IPPS) and located in the selected MSAs will be included in the model, with the exception of hospitals currently participating in Model 1 or Models 2 or 4 of the Bundled Payments for Care Improvement (BPCI) initiative
  • depending on the hospital’s quality and aggregate spending performance, the hospital may receive an additional payment from Medicare, or need to repay Medicare in the second year if spending exceeds targets
  • hospitals will need to work with physicians and post-acute care providers, such as home health agencies and skilled nursing facilities, to ensure patients get the care they need

This is in contrast to what I reported on in July, when I said that a former CMS official was cited in the Freeman article as saying that 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.”

Whether or not this final rule will do what the authors of the Health Affairs article says it will do remains to be seen, but judging by past CMS programs to affect quality and costs, this may be wishful thinking on the part of the authors.

The insistence that one more new initiative, or more incentives, or one more new model or new rule will change the way health care is being provided in the US, just goes to show that until we adopt a single-payer, “Medicare for All” system with less rules and less incentives, some people will continue to game the system, then we will see a radical change in the American health care system.

And if workers’ compensation follows changes in health care under Medicare, especially how it determines reimbursements for hip and knee surgeries, which are also common to workers’ comp, we can expect to see issues in workers’ comp.

Alternatives must be considered to an ever expensive and poor quality of health care for workers’ comp. That alternative is medical travel.

Challenges Remain in Physician Payment Reform

Following up on my post yesterday about shared savings, John O’Shea writes today in the Health Affairs blog, that challenges remain with regard to physician payment reform, now that President Obama has signed the Medicare Access and CHIP Reauthorization Act (MACRA) in April.

MACRA repeals the Sustainable Growth Rate (SGR) mechanism of updating fees to the Physician Fee Schedule (PFS).

The SGR has been blamed for causing instability and uncertainty among physicians for over a decade, and that led to 17 overrides of scheduled fee cuts, at a cost of over $ 150 billion.

The passage of MACRA, O’Shea wrote, raises new questions about where the US health care system is headed in the post-SGR world of payment and delivery reform.

Yet, before MACRA was signed into law, HHS Secretary Burwell announced a major initiative calling for 30 % of Medicare payments to be value-based through the use of alternative payment models (APMs) by 2016, and 50% by 2018.

HHS also set a goal of tying 85% of all traditional Medicare payments to quality or value by 2016, and 90% by 2018.

O’Shea reported there are reasons for caution. These policy changes, following calls to move from the current volume-based, fee-for-service (FFS) system to a value-based system that pays for patient outcomes, rather than for individual services, present major challenges to achieving the goal of value-based health care, the goal of any real health reform initiative.

One of the APMs O’Shea discussed is Value-based purchasing (VBP), which is the concept behind APMs, includes a broad set of performance-based payment strategies that attempt to use financial incentives to influence provider performance, such as the Shared Savings Program mentioned yesterday.

Another APMs is the Merit-Based Incentive Payment System (MIPS) [don’t you just love how the government comes up with these abbreviations?], a modified FFS system, which is basically a Pay-for-Performance (P4P) program.

The overall early results of these initiatives, as well as possible flaws, make the long term viability of these models uncertain.

With regard to P4P programs, a 2014 RAND report looked at 49 studies examining the effect of P4P on process and intermediate outcome measures, and found that the overall results were mixed, and that any identified effects were relatively small.

According to the lead author of the study, Cheryl Damberg, “The evidence from the past decade is that pay for performance had modest effects on closing the quality gap.” A basic flaw in the model is the reality that meaningful patient-centered outcome measures remain elusive.

ACOs, as I wrote about yesterday, are another APM; and O’Shea reported that their ability to generate savings to share with participants is so far not encouraging. He points to early results from the Pioneer ACO program that determined that of the 23 ACOs that participated in 2013, only 11 earned any shared savings, which totaled about $41 million. Six ACOs lost a total of $25 million. The results from a similar study in 2014 showed improvement, but the long-term outlook is still unclear.

What is the impact on the practice of medicine?

What O’Shea found was that physicians currently labor under an increasingly burdensome and often meaningless number of reporting requirements that take time away from patients, and fail to help them improve quality of care.

Accordingly, a commentary O’Shea cited from the New England Journal of Medicine said that, “the quality-measurement enterprise in US health care is troubled.”

A recent CMS report, O’Shea mentioned, said that 40% of Medicare providers will face 1.5% cuts for failing to submit data to the Physician Quality Reporting System.

Because of this, many public and private payers are tying larger amounts of provider payments to a growing number of largely meaningless measures.

O’Shea said that there are two areas of concern, given the plethora of payment and delivery reform initiatives: the administrative burden on physicians, and the push towards greater consolidation.

Nearly half, or 46% of doctors who reported said that they felt burned out in 2014. A main reason cited by the physicians was the increasing administrative burden.

What does the mean?

Well, having slogged through an online Health Care Quality course as part of my MHA degree program, the myriad abbreviations mentioned in Mr. O’Shea’s article does not surprise me. CMS and HHS has for years developed all kinds of initiatives and programs to influence and alter behavior of all stakeholders in our health care system.

As “Uncle” Walter Cronkite once said, “America’s health care system is neither healthy, caring, nor a system.” And that was before the passage of the ACA.

But for the purposes of this blog, and in keeping with the point of the last article where it was said that what happens in health care affects workers’ comp. then I think you can agree that these initiatives and programs, while well-meaning, may make things worse in the future, but not because the idea behind the ACA or the law itself is bad, but because we Americans cannot do anything right until we try everything else, a la Winston Churchill.

If that is the case, then believing that by doing the same things over and over again, that by following everyone else off the cliff of unregulated, employer-based, multi-payer health care, and by not opening the workers’ comp system to real alternatives, especially for surgery, then nothing will ever change.

We will continue to see more new initiatives and programs from CMS, and the results will be dismal, and the impact on workers’ comp will be felt eventually. That is, unless you open up your minds to new ways of thinking.

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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.

Employers Turn to Medical Travel for Healthcare Solutions

Note: The following is a re-post from Medical Travel Today’s Managing Editor, Megan Kennedy, who has posted several of my earlier articles on their newsletter. I am returning the favor, as her article spells out just how medical travel can be implemented into work comp, just as it is being done for group health.

As healthcare costs in the U.S. continue to surge, employers are looking for ways to maximize value. Today, approximately 15 percent of the nation’s 50 largest employers are turning to a medical travel benefit – also known as “travel for treatment programs” — as a way to provide high-quality, cost-effective care for their employees. Today, an increasing number of plan members are communicating a positive receptivity around the concept of traveling for care as a way to offset the astronomical co-pays, deductibles and other forms of cost-sharing that they are now responsible for as a result of healthcare reform.

In the past, large employers have taken to the idea of a medical travel offering, but recently more mid-size and smaller employers have begun to note the many benefits of traveling for care.

As the medical travel industry continues to develop, employers and their employees are accessing care at the country’s top hospitals, also known as Centers of Excellence (COEs), and doctors-at a predetermined cost.

In fact, some of the top hospitals in the U.S. are now offering bundled payments – “a single payment for all services related to an episode of care,” according to the American Academy of Orthopedic Surgeons.

Benefits of bundled pricing include:

  • Transparent and “up front” cost of care and treatment
  • Coordination among providers
  • Optimal continuum of care
  • Decrease in unnecessary procedures
  • Reduced re-admissions

According to Laura Carabello, executive editor and publisher, Medical Travel Today, “Employers of all sizes build in incentive programs to prompt workforce uptake of the benefit, including waiving co-pays and deductibles, and covering both patient and companion/caregiver travel expenses. One of the drivers is the documented track record of a COE to achieve better results for specific procedures, mitigating complications, repeat procedures, and readmissions-which can be very expensive in terms of hard costs, time lost from work and the health of employees.  Care that is delivered with bundled pricing at predictable costs is generating wide receptivity.”

by Megan Kennedy, Managing Editor, Medical Travel Today

Full article can be found at:

http://www.medicaltraveltoday.com/newsletter/v8-17-full.html#story10

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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.