Public Risk February 2014

Published by the Public Risk Management Association

www.primacentral.org

FEBRUARY 2014

RISK RECIPES FROM THE CITY OF PLANO, TEXAS

MANAGING DENTAL CLAIMS THE TIME IS NOW FOR EMPLOYER GROUP WAIVER PLANS

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Volume 30, No. 2 | February 2014 | www.primacentral.org

The Public Risk Management Association promotes effective risk management in the public interest as an essential component of public administration.

PRESIDENT Betty Coulter Director of Risk Management and Insurance University of North Carolina at Charlotte Charlotte, NC

CONTENTS

PAST PRESIDENT Cindy B. Mallett, AIC, CWCP, ARM-P Risk Manager Gwinnett County Schools Lawrenceville, GA PRESIDENT-ELECT Regan Rychetsky, ABCP Director, HHS Enterprise Risk Management and Safety Texas Health and Human Services Commission Austin, TX

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6 RISK RECIPES FROM THE CITY OF PLANO, TEXAS

By Steven E. Haynes, ARM

Dean Coughenour, ARM Risk Manager City of Flagstaff Flagstaff, AZ Terri Evans Risk Manager City of Kingsport Kingsport, TN Matt Hansen, MPA Director, Risk Management Division City & County of San Francisco San Francisco, CA

12 MANAGING DENTAL CLAIMS

DIRECTORS Ed Beecher Risk Manager City of Pompano Beach Pompano Beach, FL

By Laura Gorman

Amy Larson, Esq. Risk and Litigation Manager City of Bloomington Bloomington, MN

17 THE TIME IS NOW FOR EMPLOYER GROUP WAIVER PLANS

Tracy Seiler Director of Risk Management Services Texas Association of Counties Austin, TX

By Samuel Fleet

EXECUTIVE DIRECTOR Marshall W. Davies, Ph.D. EDITOR Jennifer Ackerman, CAE Deputy Executive Director 703.253.1267 • jackerman@primacentral.org

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IN EVERY ISSUE 4 News Briefs | 19 Advertiser Index | 20 PRIMA Spotlight

ADVERTISING Donna Stigler 888.814.0022 • donna@ahi-services.com

Public Risk is published 10 times per year by the Public Risk Management Association, 700 S. Washington St., #218, Alexandria, VA 22314 tel: 703.528.7701 • fax: 703.739.0200 email: info@primacentral.org • Web site: www.primacentral.org Opinions and ideas expressed are not necessarily representative of the policies of PRIMA. Subscription rate: $140 per year.

Back issue copies for members available for $7 each ($13 each for non-PRIMA members). All back issues are subject to availability. Apply to the editor for permission to reprint any part of the magazine.

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Copyright 2014 Public Risk Management Association Reprints: Contact the Reprint Outsource at 717.394.7350.

FEBRUARY 2014 | PUBLIC RISK

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Message from PRIMA President Betty Coulter

THE EMERGING RISK ENVIRONMENT

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ostering a safe and healthy environment is inherent to the risk and safety function. OSHA standards, NFPA guidelines and other regulatory agencies make available adopted standards providing a roadmap for protecting our employees and the public. As we are continually presented with the daunting task of reducing the traditional hazard risks of our organizations, emerging risks present unknown elements that are challenging to quantify. Recent examples of emerging risk have been connected to occurrences of cybercrimes and data breaches; negative implications of social networking; unethical political and financial practices, and impudent social changes. The risk landscape is shifting evermore rapidly requiring innovative approaches and methods in the risk assessment process and framework.

One such emerging risk is the protection of minors.

Certainly, school systems have significant interaction with minors and have the necessary controls in place and are sensitive to the issues of protecting minors. However, a number of public entities and higher education institutions are providing programs attracting minors and youth to their facilities in programs that are offered by internal and external groups. Youth serving programs such as sports camps, academic camps and overnight camps, are now highly scrutinized due to the emerging risks of “protecting” unsupervised minors from abuse. Although the risk frequency is low, the severity of the risk is high and the fallout can be enormous. Recent incidents have prompted organizations to take a closer look at the newly emerging risks of protecting minors. Elements critical to the prevention and detection of abuse of minors include:

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Assessment of programs offered to children and minors Establish a policy addressing minors in the workplace Controlling access to children and minors Defining appropriate and inappropriate access to children for parents and employees Criminal background checks on all program personnel and volunteers National sex registry verification Offer training programs addressing signs of child abuse and unauthorized interaction with minors Establish reporting criteria if abuse is suspected Create a plan for risk mitigation Evaluate insurance policy for coverage associated with child abuse

Although the risk frequency is low, the severity of the risk is high and the fallout can be enormous.

Recent incidents have prompted

No single method is failsafe when addressing emerging risks. Continuous assessment and evaluation is necessary in today’s risk environment. Prepare a framework. Collaborate with experts. Evaluate insurance policies and other and contractual agreements to transfer risk. Understand the legal environment. Create a training environment.

organizations

As risk managers, we have to do what we can to protect those around us who are most vulnerable.

protecting minors.

to take a closer look at the newly emerging risks of

Sincerely,

Betty P. Coulter 2013–2014 PRIMA President Director of Risk Management and Insurance UNC Charlotte

FEBRUARY 2014 | PUBLIC RISK

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News Briefs

NEWS

BRIEFS

FLORIDA'S WELFARE DRUG TESTING LAW RULED UNCONSTITUTIONAL A federal judge has ruled that a 2011 law requiring welfare applicants to undergo drug tests is unconstitutional, striking a blow to Gov. Rick Scott's administration over the controversial tests, reports the Miami Herald.

Scott quickly said he would appeal U.S. District Judge Mary Scriven's ruling, the latest defeat for the governor in a drawn-out battle over drug testing some of the state's poorest residents.

Scriven ruled that the urine tests violate the Fourth Amendment's protections against unreasonable searches and seizures by the government.

In a harshly worded, 30-page opinion, Scriven concluded that "there is no set of circumstances under which the warrantless, suspicionless drug testing at issue in this case could be constitutionally applied."

Scott, who used the mandatory drug tests as a campaign issue, insists that the urine tests are needed to make sure poor children don't grow up in drug-riddled households.

"Any illegal drug use in a family is harmful and even abusive to a child. We should have a zero tolerance policy for illegal drug use in families — especially those families who struggle to make ends meet and need welfare assistance to provide for their children. We will continue to fight for Florida children who deserve to live in drug-free homes by appealing this judge's decision to the U.S. Court of Appeals," Scott said in a statement after the ruling.

At Scott's urging in 2011, the Legislature passed the law requiring all applicants seeking Temporary Assistance for Needy Families" — the "poorest of the poor" — to undergo the urine tests. Applicants had to pay for the tests, which cost about $35, up front and were to have been reimbursed if they did not test positive.

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IN CHICAGO, CRIME RATE DOWN, OVERTIME RATE UP Homicides dropped 18 percent in Chicago last year and crime overall was down 16 percent, according to statistics released by the Chicago police department.

The decline in homicides was a more modest 5 percent when compared with 2011, reports the Chicago Tribune.

The department reported 435 homicides in 2011, 503 in 2012 and 415 in 2013.

Shootings across the city dropped by 24 percent from 2012 and 16 percent from 2011, according to the department's numbers. Sexual assaults were down 6 percent from last year, robberies down 12 percent, serious battery down 16 percent, burglaries down 22 percent, motor vehicle thefts down 23 percent, thefts down 3 percent.

The reductions came at a price: Nearly $100 million in overtime pay, triple what was budgeted for 2013.

In addition to the hefty overtime pay, police officials credit several strategies including greater accountability from commanders and more aggressive attempts to prevent retaliatory shootings. The harsher winter weather, compared with unseasonably warm conditions a year earlier, also likely played a role.

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U.S. PERMANENTLY RELAXES RULES AIMED AT HEALTHIER SCHOOL MEALS U.S. regulators said they were permanently relaxing school meal rules that were designed to combat childhood obesity by reining in calories and portion sizes but aroused complaints the policies caused students to go hungry, reports Reuters.

The U.S. Department of Agriculture had initially loosened the rules in late 2012, suspending daily and weekly maximum amounts for grains and meat or meat alternatives. That allowed school districts to serve larger portions without penalty.

Simplifying saving lives worldwide.

"Earlier this school year, USDA made a commitment to school nutrition professionals that we would make the meat and grain flexibility permanent and provide needed stability for long-term planning. We have delivered on that promise," Kevin Concannon, USDA undersecretary for food, nutrition and consumer services, said in a statement.

The announcement was welcomed by North Dakota Republican Senator John Hoeven, who had introduced a bill with Arkansas Democratic Senator Mark Pryor to make the changes permanent.

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"Today, the USDA made the permanent changes we have been seeking to the School Lunch Program," Hoeven said in a statement. "A one-size-fits-all approach to school lunch left students hungry and school districts frustrated with the additional expense, paperwork and nutritional research necessary to meet federal requirements. These are exactly the changes included in our Sensible School Lunch Act." The rules had initially been adopted in 2012 as part of a law designed to improve school breakfasts and lunches.

The modifications were aimed at limiting fat and salt, reducing portion sizes and increasing fruit and vegetable servings. Some 31 million children in the United States receive free or low-cost school lunches and more than 10 million get free or discounted breakfasts.

Schools are an important focus because they provide meals to many low-income students, considered to be often the most at risk for being overweight or obese.

FEBRUARY 2014 | PUBLIC RISK

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RISK RECIPES

FROM THE CITY OF PLANO, TEXAS

By Steven E. Haynes, ARM

Texas is known for many things, most of which include the word big, including the biggest State Fair, biggest fire hydrant (really), big cowboy hats, enormous egos (though out here we just call it being proud) and of course, our world famous Texas barbeque. Ask any Texan about the secret to their barbeque and each will have a different opinion (and won’t be afraid to elaborate on it for many, many hours) but the common theme will be the recipe for the sauce.

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Risk management practices, to use an analogy, are similar to making the perfect barbeque sauce. It all begins with the right recipe. Award-winning recipes have been developed and refined over many years, involve a lot of trial and error and are almost always a work in progress. Many Texans consider their family recipes to be closely held secrets no less worthy of protecting than James Bowie and William B. Travis defending the Alamo. The risk management team here in the City of Plano, Texas, believes we have developed an award-winning recipe for risk management success and unlike our family barbeque recipes, are willing to share them with our colleagues.

The City of Plano is a suburb of Dallas with a population of approximately 266,000 citizens. Our city was voted as the #1 Best Run City in America (2013)1, Safest City in the Country (2010 and 2011)2 and #1 Best City to Live In (2010)3 among many other awards and accolades. Many criteria go into winning these accolades including the impact of the City’s risk management program on its ability to consistently meet defined strategic goals and objects developed by our elected and appointed leaders. In other words, developing the right recipe for risk management success involves many departments, individuals and support members. Risk management can’t be the “Lone Ranger;” success requires a team effort.

RISK RECIPE INGREDIENTS 2 CUPS OF LEADERSHIP The first and most important ingredient is always a solid base sauce—in our case, the elected and appointed leadership team. Risk decision-making is openly discussed throughout the organization and not something to be feared. Each of our department heads, management/supervisory team and front-line employees is a risk-owner who takes personal responsibility for daily operational decisions involving risk taking. Employees are encouraged to either take personal responsibility for a risky situation and resolve it or report it to a designated person if the necessary action is not one they can take. Our leadership team, starting with our mayor, the city council, city manager and executive team, provides a clear and concise roadmap to success by establishing comprehensive, achievable and fiscally sound strategies and goals for the City.

¾ CUP OF COMMUNICATIONS We have made an unprecedented effort to engage our citizens, visitors and employees through the use of various new and emerging social media. One innovative program, called “Fix It Plano,” allows citizens and visitors to make a report concerning any needed repair involving city premises, streets or parks to a dedicated resource by “Web

It-Call It-Text It-Snap-It”; there is also a local and 800 phone number available for citizens who may not choose to use or be familiar with newer social media.

These reports are then immediately forwarded to the appropriate city resource to affect the repair or otherwise remedy the hazardous situation. The target response time to implement the corrective action is by the close business the same day, if possible. Citizens can also search a map of the City to determine if the problem has already been reported. This force multiplier extends the eyes and ears of city staff by providing an avenue for non-city employees to be involved in addressing problems they come across.

This program has been a tremendous asset for risk management by providing an avenue to address problem areas and correct defects that may lead to a loss in advance, rather than simply responding after a claim has been filed.

½ CUP OF CLAIMS MANAGEMENT The City has implemented a large self-insured retention insurance program, which allows us to minimize the cost of insurance premiums while utilizing actuarial analysis reports provided every other year to ensure our loss fund accruals are realistic and sustainable. The City has not experienced a claim above the selected SIR for a general liability, auto, professional or workers’ compensation claim in the last 20 years. Since every claim within the SIR is ours to manage and pay, if appropriate, efficient and superior claims management practices and execution is crucial to maintaining a successful program while protecting the financial assets of the city. We have achieved this by integrating and aligning our claims processing in-house using a combination of City staff and outside contract adjusters. We have highly experienced professional adjusters co-located in our risk management office who are employees of a large nationwide third-party administrator. This allows them to have access to the claims management systems, in-house resources, training and back-room support functions offered by an outside TPA while coordinating daily claims activities and decision-making with the risk manager and staff. This brings many advantages over a traditional TPA service model such as improved ability to investigate claims and obtain information from city resources; better relations with claimants and injured employees, improved decision-making and shorter claims resolution times.

Another critically important asset this provides is the ability to obtain information from our claims team, not just data,

FEBRUARY 2014 | PUBLIC RISK

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Risk Recipes from the City of Plano, Texas

The first and most important ingredient is always a solid base sauce—in our case, the elected and appointed leadership team. Risk decision-making is openly discussed throughout the organization and not something to be feared.

as happens in the traditional model. The ability to sit-in on meetings with claimants and injured employees while they meet with our adjusters, discuss options for resolution on a frequent basis, understand what is going on with a claim in real-time and having the immediate availability of advice and counsel from our experienced adjusters are cornerstones of our commitment to superior claims service to our injured employees and citizens and to the success of our risk management program.

3 TABLESPOONS OF LEGAL SUPPORT The City’s legal team works closely with our adjusters and risk staff to coordinate their efforts in defense of suits, filing of court documents for recoveries and subrogation and providing expert advice on tort claims issues and liability.

We have established certain threshold criteria for referral of claims and suits to our legal team for involvement. The vast majority of our legal issues, approximately 90 percent, are resolved by our in-house attorney. The remaining 10 percent may be referred to outside local counsel if it involves a specific area of law or type of claim that will require an extensive amount of legal involvement. Quarterly stewardship meetings are routinely conducted to discuss ongoing claims and suits. One of the successes in our risk program involves our legal team’s assistance in subrogations and recoveries of property damage to City property. Rather than rely on outside service providers or pass this function off to our in-house adjusters, we have a dedicated senior claims analyst whose primary responsibility is recoveries and subrogation efforts. This area is a high priority for risk management since this is one area where we can provide a revenue source for our loss fund, which minimizes the need to supplement it with additional funding each year. Our analyst has received training and utilizes the various professional resources available through a national subrogation

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association. Through the efforts of our focus on subrogation and recoveries and the involvement of our legal team, the risk management team has been able to recover and return approximately 20-to-25 percent of all payments from the loss fund on a sustained year-over-year basis.

2 TABLESPOONS OF WORKERS’ COMPENSATION PROGRAM MANAGEMENT Plano is no different than most cities when it comes to workers’ compensation costs and employee injuries. We have, however, made significant improvements in various programs and tools that help us stabilize our costs and reduce the lost-time associated with injuries. We partner with a local occupational health clinic for injury referral and follow-on care after the initial visit. This is not unusual in itself; however, we have frequent joint meetings with the medical director of the clinic and our adjusters to discuss injury trends and treatment options. We also review the specialist referrals made with an emphasis on ensuring we obtain the best care for our injured employee. We are not averse to spending additional funds to ensure the injured employee is given every opportunity to make a full recovery.

The employee’s care and recovery are a higher priority, not controlling every single dollar spent. This seems counterintuitive but our average claims cost per injured employee is consistently lower by a factor of two than state, national and peer cities’ claims costs.

An additional secret we’ll share is to make use of the designated doctor examination when necessary to dispute an impairment rating or when questions arise about course of treatment or extent of injury. Though this is a commonly available tool in most state workers’ compensation programs, many entities are unaware of or

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JUNE 8–11 • LONG BEACH, CALIFORNIA

Risk Recipes from the City of Plano, Texas

CALENDAR OF EVENTS PRIMA’s calendar of events is current at time of publication. For the most up-to-date schedule, visit www.primacentral.org.

WEBINARS 2014 • March 19: (Don’t) Fear Social Media • May 21: HIPAA & The Affordable Care Act: What You Need to Know • July 9: Workers’ Compensation Market Hurdles and How to Combat ‘Em • August 20: Risk Reduction through Patrol-Based Video Recording Systems • September 18: Public Safety Operational Liability Issues and Controls • November 12: Contractual Risk Transfer and Flying Tomahawks

PRIMA ANNUAL CONFERENCES June 8–11, 2014 PRIMA 2014 Annual Conference Long Beach, CA Long Beach Convention Center June 7–10, 2015 PRIMA 2015 Annual Conference Houston, TX George R. Brown Convention Center June 5–8, 2016 PRIMA 2016 Annual Conference Atlanta, GA Hyatt Regency Atlanta June 4–7, 2017 PRIMA 2017 Annual Conference Phoenix, AZ Phoenix Convention Center

reluctant to use this asset. The cost of the exam may be $1,000 but the savings resulting in advantageous findings results in savings of hundreds of thousands over the life of the claim. Many entities spend significant claims dollars on treatment of injuries that may result from normal diseases of life or degenerative diseases due to an aging work force. This tactic coupled with a frequent and thorough review of prescription usage and costs will offer tremendous savings. Many doctors over time begin to prescribe drugs not related to the initial injury or illness and not medically necessary but this is often overlooked by an adjuster with a large case load. In a recent example, an employee with an injury several years old was being consistently prescribed medications by his treating doctor unrelated to the initial compensable injury. After referral to a designated doctor to determine the medical necessity of the prescribed medication, we were able to stop paying for the unrelated medication and will experience savings of over $267,000 during the life of the claim. Even though it may appear several of these tools could result in employee dissatisfaction, we conduct an employee satisfaction survey of all employees who receive medical treatment or indemnity benefits for the previous quarter and the customer satisfaction scores routinely remain in the high 80s to low 90s.

LOTS AND LOTS OF THE FINAL SECRET INGREDIENT The last and final ingredient is not really a secret but one that is often neglected during the hustle and bustle of daily activities. The risk manager and the entire risk management staff must, on a daily, ongoing and continuous basis, become part of the solution and not an additional problem. One of the biggest problems risk managers have experienced over the last 20 years is articulating the value they bring to the organization in a manner our leaders and peers can understand. An exceptional risk management program resolves this issue by engaging instead of talking.

Often times, the risk management role is perceived to be one of regulatory enforcement, preventing the operational departments from being able to accomplish an objective important for them…or in other words, just saying NO! A highly successful risk management operation must act like a collaborative internal business and risk consultant, an enthusiastic team player and a supportive colleague to the entire organization. A successful risk operation is not totally risk-avoiding. We must be risk experts and occasional risk takers; experts who can guide the organization with foresight, imagination and leadership by example. In a highly successful risk operation, we must be more interested in organizational success than personal success. The success of the organization and mission comes first, period.

In the end, the super-secret recipe, as it turns out, isn’t such a super-secret after all. To establish and maintain a highly successful risk management program simply takes a commitment to working as a team, willingly sharing useful information within that team, encouraging collaboration and cooperation at every opportunity and being a visionary for risk management today and every day.

Once you’ve done all that…it’s time to eat partner!

Steven Haynes, ARM, is the interim risk manager for the City of Plano, Texas.

OTHER MEETINGS November 3-7 PRIMA Institute 2014 Louisville, KY

FOOTNOTES 1

In the 24/7 Wall St. article, “The Best and Worst Run Cities in America,” Plano was named

2

In December, 2011, Forbes.com listed Plano as America’s safest city for the second year in a row.

3

AreaVibes named Plano the best place to live in America in its list of the 100 best places to live.

the best run city. 2013.

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PRIMA 2014

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MANAGING DENTAL CLAIMS

By Laura Gorman

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ork-related accidents—such as slips, falls, car accidents, being hit by moving objects or even incidents of workplace violence—can result in dental trauma and even tooth loss. Although dental injuries are less common than other types of workers’ compensation claims, they can present significant challenges, complications and costs.

Public agencies, as well as their claims and risk management staff (referred to as payers throughout this article), have come to realize that dental claims require specialized clinical knowledge and oversight. In this article, we outline strategies that can help to ensure appropriate, cost-effective dental claims management:

• REFERRALS TO QUALITY DENTISTS & DENTAL SPECIALISTS Workers’ compensation provider networks have not focused on recruiting dentists. As a result, identifying a dentist who has experience with the workers’ compensation claims process and is willing to accept such cases can be challenging and time-consuming. Even when claims adjusters and nurse case managers find a dentist, they have no way of knowing if the dental provider has a quality track record.

Using unqualified dentists can result in poor control of the claim, particularly in regards to costs and outcome.

Today, specialized dental networks and dental referral management companies have scheduling centers, which ensure a high level of service and efficient appointment coordination. Care coordinators typically schedule an oral exam within 24 hours of receiving a request and can identify a dental provider conveniently located to the claimant’s home or work.

These organizations utilize a comprehensive provider credentialing process, which ensures that injured workers are sent to quality dental providers and specialists (such as a periodontist, endodontist, or oral maxillofacial surgeon).

The care coordination team also helps dentists to fulfill workers’ compensation requirements, such as completing mandatory forms and ensuring appropriate authorization and billing procedures are followed.

• AN INJURY-SPECIFIC TREATMENT PLAN General dentistry involves treating the patient’s whole mouth to ensure good oral health, but in workers’ compensation, a payer may only be responsible for conditions related to the work-related injury.

For example, a worker may have fallen and chipped a tooth; a general dentist might send a treatment plan for four

cavities, periodontal disease, and gingivitis to the payer. To avoid this, a specialized clinical management team must work with the dentist to develop a treatment plan specific to the work-related injury.

The dentist will observe the overall condition of the claimant’s mouth and send documented notes to the clinical team, which usually consists of nurses, dental hygienists, dentists, and other dental specialists. This team performs a clinical review of the file and works with the dentist to identify whether special dental conditions exist.

In one case, a woman in her late 40s was hit by a valve.

The accident knocked out her two front teeth. In cooperation with the dentist, the clinical team determined that the claimant had a history of periodontal disease and possibly inadequate bone to support implants, which would have been a good restorative option, but the poor condition of the claimant’s mouth made it a high-risk procedure.

The dentist’s recommended treatment plan, involving a bridge, was sent to the adjuster for authorization. A clinical management team should have in-depth knowledge of dental procedures and pricing to help the adjuster understand dental services and set appropriate reserves. In this particular case, the payer saved $5,065 through effective treatment and discounted dental rates. Since the clinical management team also facilitated prompt care, it prevented further infection and minimized lost time, resulting in an additional $3,000 savings.

• HANDLING DENTAL CLAIM COMPLEXITY For proper clinical management, an organization must have access to dental expertise that can assist with—and when necessary explain—various types and levels of claims complexity.

Often to the detriment of cases, adjusters and nurses will rely on their personal experience with dentistry. For example, an adjuster may have had a sister who chipped her tooth and simply required a filling. However, an injured worker with a chipped tooth may need a root canal and crown.

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Managing Dental Claims

When people don’t take care of their mouths, bones break down and gum disease occurs.

Initially, adjusters and nurses may think their organization isn’t responsible for the claimant’s poor dental hygiene.

However, the claimant’s teeth were fully functional before the injury, and now to restore functionality, more extensive treatment may be necessary to first address the tooth decay and gum disease.

This adjuster may feel the dentist is trying to over-treat, while the dentist feels that given the claimant’s dental condition, he’s outlined a standard treatment protocol.

Dentists are often inexperienced in workers’ compensation, and therefore, may not adequately explain to the adjuster the treatment requirements in relation to the injury.

However, a clinical management team interacts with workers’ compensation professionals on a daily basis, so dental clinicians have communication strategies to explain why certain approaches to treatment are required.

In this case, the clinical dental expert explained that teeth are like porcelain. If there’s a small chip, it may be fixed with a filling, but if it extends into the structure of the tooth, as it did with this claimant, then it would require more extensive restoration, such as a root canal and crown.

• RESTORING 100% FUNCTIONALITY Teeth perform three vital functions: they enable people to eat, speak, and support the structure of their face. When an injury occurs that compromises these capabilities, the payer is responsible and must restore functionality.

When there is significant decay or another compromising condition, the way in which a dentist restores functionality differs greatly than if a claimant has healthy teeth, bone structure, and gums. It is sometimes difficult for adjusters and nurses to understand why different treatment options are necessary. When this occurs, analogies to more common cases, such as knee injuries, can be helpful.

Let’s say a male security guard in his late 50s falls at work and injures his knee. Over the years, he hasn’t taken good care of himself. He’s overweight, hypertensive, and smokes. He goes to physical therapy, but doesn’t

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get better. An orthopedic surgeon recommends knee surgery to restore his ability to walk. Adjusters and nurses readily understand that a knee replacement is necessary, even though deterioration already exists caused by the breakdown of the bone supporting the joint and hindering the claimant’s ability to walk. As such, they will likely authorize the surgery.

In the dental world, the situation is similar. When people don’t take care of their mouths, bones break down and gum disease occurs. Initially, adjusters and nurses may think their organization isn’t responsible for the claimant’s poor dental hygiene. However, the claimant’s teeth were fully functional before the injury, and now to restore functionality, more extensive treatment may be necessary to first address the tooth decay and gum disease.

A dentist may determine that the loss of functionality is 40 percent related to pre-existing conditions and 60 percent related to the injury. However, you cannot fix 60 percent of a claimant’s mouth and restore 100 percent functionality, and similarly you cannot replace 60 percent of a knee to restore 100 percent of the claimant’s ability to walk. Ultimately, you need to perform 100 percent restoration to achieve 100 percent functionality. With this type of analogy, claim handlers better understand the need for more extensive dental treatment.

• ADVISING ON DENTAL IMPLANTS In recent years, the use of implants as a restorative option to replace a single tooth or set of teeth has become more widespread—and with good reason. With careful consideration of any risk factors or complications, implants have been highly successful and long lasting. With proper care, implants can last a lifetime and generally have a success rate of 95 to 98 percent.

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RI SK MANAG ERS H U MAN RESOURCE PROFESSIONALS EMPLOYEE BENEFITS A D M I N I S T R ATO R S H E A LT H AN D SAFE T Y MANAG ERS A N YO N E W H O OV E R S E E S RISK FINANCING AND CLAIMS MANAG EM ENT PO O LI N G E XECU TIVE S AN D YO U !

Your Risk Management R I S K MANAG ERS H U MAN RESOURCE PROFESSIONALS Journey Begins HERE EMPLOYEE BENEFITS Are you taking advantage of all that PRIMA has to offer?

A D M I N I S T R ATO R S H E A LT H AN D SAFE T Y MANAG ERS A N YO N E W H O OV E R S E E S RISK FINANCING AND CLAIMS MANAG EM ENT PO O LI N G E X EC U T I V E S A N D YO U !

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Managing Dental Claims The main drawback is expense and time. An implant can cost several thousand dollars per tooth, and the entire process can take up to 12 months or longer (without complications). However, the benefits are proving to far outweigh the disadvantages, especially given the alternatives. Bridges and dentures often need to be replaced and refitted over time, and when the tooth is lost, bone atrophy can occur.

A clinical management team can help to identify if claimants may have potential risk factors or complications with this procedure, and identify specialists who have the right expertise to successfully complete this procedure, such as specialized training, appropriate years of experience, and a high five-year and 10-year success rate.

• MANAGING TMJ CASES Temporomandibular Joint (TMJ) disorder may be caused by a punch to the jaw or due to post-traumatic stress that triggers grinding of the teeth. It is one of the most problematic and potentially costly dental-related claims.

For example, a typical TMJ injury can call for joint replacement, fat grafting and injections, which can exceed $100,000. Recovery is challenging because patients cannot rest the jaw; personal stress or a bump can impede recovery and require treatment to begin over again. The complexity of treatment and ease of re-injury often result in injuries that become long-tail claims. The clinical management team will help to coordinate care and ensure the proper specialist is retained at the right time.

Providing Excess Workers’ Compensation Since 1990 For Single Entities, Groups & Public Entities Provided by an A.M. Best “A” (Excellent) IX Rated Carrier Highlights

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• Individual: $50,000 • Groups: $100,000

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• MINIMIZING FUTURE RISK & EXPOSURE The clinical team can also help to avoid future risk and exposure. In one case, a male in his late 50s was hit in the mouth and damaged his two front teeth. There were two treatment options. The first was a root canal and crown on each of the two front teeth. Since the patient’s teeth were in poor condition, the second option was to remove all the upper teeth and provide an upper denture.

The clinical team worked with the dentist and determined that the first option was the best, most appropriate treatment plan. It was 100 percent related to the injury, and the patient had adequate bone structure to support the crowns. This option would also avoid the risk and exposure of future denture replacements, relines, and adjustments that could eventually be required as the patient aged, a potential savings of $7,500 in future costs.

Throughout the clinical management process, organizations are also able to place a keen emphasis on injured workers, getting claimants the prompt service and quality dental care they need, so they are not only pleased with the outcome, but also benefit from restored functionality and early return to work. When claimants are satisfied, payers experience less contention and a lower overall rate of litigation over claims.

DENTAL MANAGEMENT BEST PRACTICES In summary, dental claims management must employ in-depth clinical expertise to help contain claims costs— first, through a carefully developed injury-related treatment plan; second, through a prompt and efficient referral and care management process, which ensures immediate treatment, restoration of functionality and return to work; and third, by providing clinical oversight that minimizes future risk and exposure. Excellence in the referral and scheduling process must include thorough documentation, appropriate billing, and compliance with workers’ compensation requirements.

Finally, providing claims adjusters and nurse case managers with continuing education (CE) courses and webinars, so they have a basic understanding of dental terminology and restoration techniques. With this type of training, claims professionals can better discuss dental injuries and treatment options, and have a realistic expectation regarding dental claims duration and cost.

Laura Gorman is vice president of clinical sales at One Call Care Dental + Doctor.

excessworkerscomp@midman.com 800.800.4007 midlandsmgt.com

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The Time is Now for

EMPLOYER GROUP WAIVER PLANS

By Samuel Fleet

When the City of Detroit declared bankruptcy last summer, it became known as the largest municipal bankruptcy filing in United States history and left many current and retired city workers worried about the future of their health benefits. Validating their concern, emergency manager Kevyn Orr announced in October that Detroit’s retirees had approximately one month to find new health insurance before the city-provided plans ceased to exist on January 1, 2014.

While bankruptcies are rare, public entities have always struggled with diminished revenue, increasing demands for service and the rising cost of employee benefits. Now that the public exchanges are open and the provisions of the Patient Protection and Affordably Care Act (PPACA) have become a reality, finding ways to finance retiree obligations needs to be a priority for public entities.

Municipalities used to fund retiree health benefits on a pay-as-you-go basis, but the new accounting regulations under PPACA are forcing them to reflect future costs in current budgets, creating a stark division between what is owed and available resources.

One of the biggest financial concerns for retirees is the cost of prescription drugs outside of a health plan. To ease this distress, public entities can look to Employer Group Waiver Plans (EGWPs, usually pronounced Egg Whips) as a solution to the problem of retiree drug coverage.

An EGWP is a plan that allows an employer to contract with a third-party Prescription Drug Plan (PDP) sponsor to provide drug benefits to retirees. The sponsor, on behalf of the employer, in turn interacts with the federal government and retains a fee but passes all of the government payments in the form of lower premiums or direct payments to the employer.

EGWPs have been around since 2006, but have previously been eclipsed by the Retiree Drug Subsidy (RDS) program created by the federal government to stop companies from dropping retiree drug benefits and enrolling their

retirees in Medicare Part D base plans. However, with the changes created by PPACA, RDS is taking a back seat and EGWPs are emerging as the more appropriate option. In addition, when an EGWP incorporates a “wrap” plan, it ensures that retirees will receive their prescription benefits, including drugs excluded drugs by Medicare if the plan currently covers those drugs. It also takes advantage of the additional drug coverage savings which are not currently allowable under RDS, commonly referred to as the Medicare donut hole manufacturer discount. When a wrap plan is added, EGWP+Wrap becomes an attractive solution for public agencies that are seeking more savings than what the RDS program offers.

Since EGWPs are self-insured programs, the strategy makes particular sense for public agencies. RDS was never a great fit for public agencies, but rather for private companies that could reap the substantial tax benefits from the program. Now, however, EGWP programs are a valuable tool for public agencies that want to save money while still supporting their retired workforce. The two integrated parts of these types of plans– EGWP and EGWP+Wrap – can be designed to mimic current retiree drug benefits or even to enhance those benefits. This is particularly important for employers who are bound by collective bargaining agreements as to what their benefits must cover.

The biggest benefit of EGWPs for public entities are the many opportunities to reduce current costs of funding retiree benefits. These include: •H igher federal subsidy. The EGWP+Wrap plan leads to lower costs because of the higher per-retiree federal subsidy, the availability of low-income subsidies, and the elimination of exposure to large risks because of the catastrophic coverage.

• Th e 50% Drug Discount Program. Created as part of PPACA, this program helps Medicare Part D beneficiaries with high enough pharmaceutical costs that they fall

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The Time is Now for Employer Group Waiver Plans

Now that the public exchanges are open and the provisions of the Patient Protection and Affordably Care Act (PPACA) have become a reality, finding ways to finance retiree obligations needs

into the donut hole. Normally under the new discount program, the patient receives a 50 percent discount.

However, under the wrap part of EGWP+Wrap, coverage can be provided that reduces the employer’s costs instead.

• Catastrophic care reinsurance. Under today’s guidelines, the EGWP+Wrap can easily be designed to make the employer eligible for the federal government’s catastrophic reinsurance program, an economical way to shift risk for high medical care costs to the government.

With the amounts paid under the 50 percent discount program counting toward the donut hole thresholds, more retirees are likely to qualify for this catastrophic coverage, making it even more valuable for employers.

While these savings can be significant, the Centers for Medicare & Medicaid Services reserve the right to make alterations to the program at any time.

to be a priority for public entities.

• Removing future drug benefit costs from current balance sheets. Because the EGWP+Wrap results in lower future benefit costs and obligations, public agencies

can reduce the amount reflected in their current budgets for retiree health benefits. Some experts have estimated EGWPs reduce these liabilities by about 20 percent.

Demonstrating the potential savings, a municipality in the Midwest with approximately 640 retirees recently switched from their RDS program to an EGWP+Wrap program, resulting in a savings of $44 per member per month above their RDS program. The savings represented an additional 14 percent cost reduction, equating to nearly 25 percent total savings against their plan cost during that period.

The best part of the switch was that it was seamless to the retirees and did not change their existing benefit structure.

EGWP+Wrap programs can be handled by third-party administrators who can bring expertise and economies of scale to the process while eliminating the public agency’s administrative burden. By working closely the administrators, public agencies can take advantage of this ripe opportunity to transfer risk, improve cash flow and lower plan costs.

Sam Fleet is the president of AmWINS Group Benefits.

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Advertiser Index

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Has your entity launched a successful program? An innovative solution to a common problem? A money-saving idea that kept a program under-budget?

Each month, Public Risk features articles from practitioners like you. Share your successes with your colleagues by writing for Public Risk magazine!

For more information, or to submit an article, contact Jennifer Ackerman at jackerman@primacentral.org or 703.253.1267.

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Keep up with what’s happening at PRIMA and connect with your risk management peers!

Visit us at www.facebook.com/primacentral.

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PRIMA Spotlight

NEW YEAR, NEW WEBINAR SERIES

I

f you have not participated in one of PRIMA’s Webinars, now is the time!

In 2014, PRIMA offers free member Webinars in topics that are highly relevant to today’s risk management job.

The 2014 Webinars include:

(DON’T) FEAR SOCIAL MEDIA Social media has changed how the world communicates, including public entities, and this has created increased exposure. In this session, attendees will learn how social media has changed public sector risk management and how social media supervision can be integrated into risk management programs.

HIPAA & THE AFFORDABLE CARE ACT: WHAT YOU NEED TO KNOW The provisions of the Affordable Care Act of 2010 (ACA) built on HIPAA with several new provisions including operating rules for eligibility and claims status, EFT and ERA, and engagement with standards and operating rules.

This Webinar will examine the recent amendments that the Affordable Care Act imposes on HIPAA. It will discuss strategies to assist public human resources managers in meeting their evolving obligations.

WORKERS’ COMPENSATION HURDLES AND HOW TO COMBAT ‘EM Workers’ compensation costs are increasing; benefits, medical costs, and premiums are all increasing at an alarming rate. What’s driving these changes? Can anything be done about it? This Webinar will review the escalating cost drivers and discuss strategies to help public entities manage them effectively.

RISK REDUCTION THROUGH PATROLBASED VIDEO RECORDING SYSTEMS Patrol-based video recording systems come in many forms.

What are the advantages and disadvantages of these systems? Is a recording-system right for your entity? The presenter will discuss the risk reduction strategies of videorecording systems including system design, implementation, capital and operating costs, policies and best practices and how to manage stakeholder expectations.

PUBLIC SAFETY OPERATIONAL LIABILITY ISSUES AND CONTROLS This Webinar will discuss the latest changes and court cases that impact public safety, what controls you should potentially implement and what controls you may need to consider to reduce your exposures to alligations from the general public and detainees.

CONTRACTUAL RISK TRANSFER AND FLYING TOMAHAWKS All day, every day, risk managers transfer risk, even if they don’t recognize it. This Webinar will discuss traditional risk transfer methods such as contracts, insurance, bonds and indemnification agreements; as well as non-traditional methods such as waivers and personal guarantees.

Whether you are new to risk management or an industry vet, PRIMA’s Webinars offer the most up-to-date information on topics affecting all levels of risk management. For more information, including dates and times of these live Webinar events, visit www.primacentral.org.

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