Public Risk March/April 2021

PUBLISHED BY THE PUBLIC RISK MANAGEMENT ASSOCIATION MARCH/APRIL 2021

SOCIAL DETERMINANTS OF HEALTH DRIVE OUTCOMES AND COSTS FOR INJURED WORKERS PAGE 6

ALSO IN THIS ISSUE

HOW FORT WORTH DROVE DOWN WORKERS’ COMPENSATION COSTS WHILE GETTING INJURED EMPLOYEES BETTER CARE PAGE 10

BEST OF THE BLOG PAGE 15

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Trends in Self-Funded Health Insurance MARCH 24 | 12:00 – 1:00 PM EST SPEAKERS: Belva Hale, Vice President, Business Development, Sherrill Morgan Terri Evans, Vice President, Employer Advisory Services While self-funding a health insurance program is not a new concept, it is gaining in popularity as healthcare costs continue to rise. This webinar will cover concepts in self-funding, including issues to consider when evaluating a self-funded health plan and how to evaluate a plan design. Newer “add-on” concepts to self-funding, like direct provider contracts or on-site health centers, will also be discussed.

ATTENDEE TAKEAWAYS: 1. Understanding self-funding 2. What to evaluate to determine if self-funding is right for your organization 3. Current trends in self-funding

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MARCH/APRIL 2021 | Volume 37, No. 2 | www.primacentral.org

CONTENTS

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

PRESIDENT Sheri D. Swain Director, Enterprise Risk Management Maricopa County Community College Tempe, AZ PAST PRESIDENT Scott J. Kramer, MBA, ARM County Administrator Autauga County Commission Prattville, AL PRESIDENT-ELECT Melissa R. Steger, MBA, CRM Asst. Dir., WCI & Unemployment Ins. University of Texas System Austin, TX DIRECTORS Forestine W. Carroll Manager of Risk Management Memphis Housing Authority Memphis, TN

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Social Determinants of Health Drive Outcomes and Costs for Injured Workers

By Tammy Bradly

Lori J. Gray Asst. Director of Finance for Risk and Wellness Services County of Prince William Woodbridge, VA JamiAnn N. Hannah, RMPE Risk Manager City of Gallatin Gallatin, TN Laurie T. Kemper Sr. Risk Management Consultant City/County Insurance Services Salem, OR Adam Maxwell Director of Admin Services City of Westerville Westerville, OH Michael S. Payne, ARM, HEM Risk Manager City of Reno Reno, NV NON-VOTING DIRECTOR Jennifer Ackerman, CAE Chief Executive Officer Public Risk Management Association Alexandria, VA EDITOR Claire Howard Manager of Marketing & Communications 703.253.1261 | choward@primacentral.org ADVERTISING Claire Howard Manager of Marketing & Communications 703.253.1261 | choward@primacentral.org

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How Fort Worth Drove Down Workers’ Compensation Costs While Getting Injured Employees Better Care

By Scott Roloff, Bill McCallum, Mark Barta & Jody Moses

IN EVERY ISSUE

15 Best of the Blog | 4 NEWS BRIEFS

Public Risk is published 6 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.

POSTMASTER: Send address changes to PRIMA, 700 S. Washington St., #218, Alexandria, VA 22314.

Copyright 2021 Public Risk Management Association

MARCH/APRIL 2021 | PUBLIC RISK

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IS YOUR ENTITY READY FOR COVID?

As we enter a new year, count on PRIMA to continue to provide COVID-19 education, including return-to-work planning, for the public risk management community.

COVID-19 education includes webinars, podcasts, blogs, and more!

Check out the latest at primacentral.org/education/center/

MESSAGE FROM PRIMA PRESIDENT SHERI D. SWAIN

A

Fine Line Between Compliance and Compassion

s risk management professionals, we juggle a multitude of tasks from a variety of sources, daily. We find ourselves managing insurance coverages, contractual language, occupational safety, health and environmental issues, injured employees, property and casualty claims, ever-changing laws and regulations, etc. Let us not forget, COVID-19. Risk management helps to protect organizations from risks that can create non-compliance. It can be a vicious cycle. An organization cannot have a successful risk management program without compliance-based policies and procedures.

While much of the work that risk management professionals perform is compliance based, typically the human aspects that we deal with are rarely black and white, as codes, regulations and laws are. The human aspects of our work require that we cultivate the skills that enable us to effectively manage risk while being empathetic to our employees, stakeholders, claimants and the community.

We all know how noncompliance can adversely affect our organizations, via citations, fines, lawsuits, financial losses, etc., but often we forget about the long-term ramifications such as reputational risk, public trust and loss of revenue. If we don’t project compliance by implementing corresponding policies and procedures, then employees will follow our lead. Some of these tasks are regulated by deadlines and regulations and leave little room for flexibility. But inflexibility to the needs of individuals can also create risks in the form of discrimination/harassment, civil rights and ADA claims.

While much of the work that risk

management professionals perform is

compliance based, typically the human

aspects that we deal with are rarely black

and white, as codes, regulations and laws

are. The human aspects of our work require that we cultivate the skills that enable us to effectively manage risk while being

empathetic to our employees, stakeholders, claimants and the community.

It is crucial to find an acceptable balance between compliance and compassion, we must learn to meld our hard skills (knowledge based) and soft skills (communications) in order to have a robust risk management program.

Sincerely,

Sheri D. Swain PRIMA President 2020–2021 Director, Enterprise Risk Management Maricopa County Community College Tempe, AZ

MARCH/APRIL 2021 | PUBLIC RISK

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NEWS BRIEFS

NEWS Briefs

HOW PANDEMIC-DRIVEN REVENUE SHORTFALLS COULD AFFECT STATE PENSION CONTRIBUTIONS As states respond to the COVID-19 pandemic, many also face severe revenue shortfalls because of the economic downturn. These gaps between resources and planned spending pose immediate challenges for policymakers, who must balance budgets while addressing increased demand for public health and other essential services. Some states have already tried to cut costs by reducing or delaying contributions to public pension plans, and others may consider doing so if federal aid to states does not materialize.

The pandemic’s effect on state budgets has been significant. Fiscal year 2020 marked the first time that state general fund revenues declined since the Great Recession, with preliminary projections issued since March showing that states expected fiscal 2021 revenues to fall below initial estimates by about 10 percent, on average.

Policymakers in some states are looking to improve their overall fiscal outlook over the near term by making changes to the funding policies for public employee pension plans. Certain states have already adjusted planned pension payments in response to anticipated budget shortfalls. Among those are: California. The state’s fiscal 2021 budget canceled $500 million from a $3 billion payment authorized in 2019 to pay down unfunded pension liabilities through fiscal 2023 and redirected $2.4 billion remaining from the initial allocation to instead pay pension contributions owed by school districts and community colleges.

Colorado. An annual $225 million supplemental payment toward unfunded pension liabilities was canceled for fiscal 2021.

Kansas. The state placed a one-year moratorium on contributions to the Public Employees

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Retirement System’s Death and Disability Fund, which were expected to total $46.7 million in fiscal 2021. The change reduced overall employer contributions to the state’s retirement plans by 7 percent.

Oklahoma. Lawmakers reduced the apportionment of tax revenues dedicated to pension systems by 25 percent through fiscal 2022, with the reductions to be repaid between fiscal 2023 and 2027. This will reduce contributions toward teachers’ pension plans by about $70 million in fiscal 2021 alone.

Oregon. The Legislature redirected $35.2 million from the Employer Incentive Fund and $11.5 million from the School Districts Unfunded Liability Fund to the state’s general fund. Lawmakers created the funds in 2018 to make supplemental payments toward unfunded pension liabilities.

South Carolina. Lawmakers adopted a continuing resolution delaying a contribution increase scheduled for fiscal 2021. The measure instead holds pension contributions steady at fiscal 2020 levels, resulting in a payment of $1.74 billion rather than the expected $1.86 billion.

In contrast to these states, which reduced scheduled pension payments to help address current fiscal pressures, New Jersey is an example of a state increasing pension contributions in fiscal 2021. After postponing a $951 million pension payment due in September to the start of the state’s fiscal year on Oct. 1, New Jersey committed to making a pension contribution of $4.7 billion in fiscal 2021. That represents the largest pension contribution in state history and continues a planned ramp-up of pension funding to overcome decades of underfunding in the state’s public employee retirement system.

State policymakers contemplating temporary changes to pension contributions will need to consider not only near-term budget needs, but the longer-term costs to their plans as well. Despite the recent recovery in investment markets, an analysis

by Pew this summer estimated that the 50-state pension funding gap had risen at that point to close to $1.4 trillion, a historic high. If plans are further underfunded because of missed contributions, states will face additional costs in the future.

At the same time, potential market shocks could put additional strain on pension systems.

Changes to pension contributions may be an appropriate tool for states seeking to balance their budgets while maintaining critical services during the pandemic. And in cases where states are cutting back on supplemental payments to their plans above and beyond the minimum actuarial determined contributions, budget relief can occur without causing long-term fiscal distress thanks to sound planning. At the same time, underfunding pension systems ultimately creates future costs that states will need to address. Tools such as stress testing can help policymakers make choices that meet their current fiscal needs while ensuring the long-range health of pension plans that they oversee.

FLORIDA LEGISLATION COULD BOLSTER POLICE USE OF DRONES A bill unanimously passed by the Florida Senate’s Criminal Justice Committee looks to expand the use of drones by state law enforcement and government agencies to assist with traffic management and the collection of information related to crime scenes.

As currently written, Senate Bill 44 states that drones can be used in four ways: to assist law enforcement agencies with traffic management, though a law enforcement agency cannot issue a traffic infraction citation based on images or video captured by a drone; to assist law enforcement agencies in collecting evidence at a crime scene or traffic crash scene; to allow state and local agencies to use drones to assess damage after floods, wildfires and other natural disasters; and to assist fire department personnel in performing tasks within the scope and practice authorized under their certifications.

“This bill will greatly improve law enforcement’s ability to protect our communities and keep people safe,” bill sponsor Sen. Tom Wright said in an email. “Law enforcement has this technology available, and we must ensure our laws are kept up to date to enhance public safety in our state.”

However, privacy concerns regarding the legislation resulted in a recent amendment prohibiting the use of drones to get an aerial perspective of a crowd of 50 people or more.

Privacy and civil rights advocates say there were concerns when looking at the bill through the lens of free speech.

“The concern with using drones or any type of surveillance tech to survey, for example, protests, violates peoples’ first amendment rights,” Matthew Guariglia, a political analyst for the Electronic Frontier Foundation, said. “If at every protest drones were flying overhead and they used facial recognition tech to identify the individuals attending these protests, it would make people less inclined to be politically active and violate their privacy.”

In terms of using drones to assist local law enforcement in collecting evidence, Guariglia said, “a lot of police departments have been

This bill will greatly improve law enforcement's ability to protect our communities and keep people safe.

Bill sponsor Sen. Tom Wright

excited at the prospect of using drones, however, there has been very little evidence that they help in these situations.”

Another potential misuse of this technology is for the enforcement of social distancing guidelines in response to COVID-19.

One example, he said, is currently on display in Baltimore, Md., where surveillance tech has been used in a similar capacity. The program, which received backlash from residents and civil liberties groups, resulted in the firing of Baltimore’s former police commissioner, Kevin Davis, in 2018 for collecting and refusing to share over 300 hours of footage used by the police to investigate alleged crimes.

“We have recently seen that surveillance companies have pitched to law enforcement agencies the use of drones to fight against COVID by enforcing social distancing guidelines, but what happens after COVID is over?” Guariglia said. “Those drones won’t be sitting in a warehouse; they will be used for something else.”

“The problem,” he said, “is that no matter what a drone intends to look at, it usually ends up picking up more than expected. It sets a precedent for using this technology to look into areas that law enforcement wouldn’t necessarily be able to access without a warrant.”

As for the status of the bill, it is currently being reviewed by the Senate's Military and Veterans Affairs, Space, and Domestic Security Committee.

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SOCIAL DETERMINANTS OF HEALTH DRIVE OUTCOMES AND COSTS FOR INJURED WORKERS

BY TAMMY BRADLY

I

n the last five years terms such as advocacy, engagement, coaching, and even “whole-person approach” have been much talked about within workers’ compensation—for good reason.

The discussion around a whole-person approach generates a number of important questions. For one, how do we support the whole person by offering one comprehensive solution? And what part do digital health programs play in meeting the needs of injured workers and improving outcomes as demonstrated by reduced disability durations and optimal recovery? Further, how do we deliver a personalized experience and meet injured workers where they are in their journey to recovery?

Social determinants of health are a big part of the answer to any of these questions. According to the nonprofit Robert Wood Johnson Foundation, 80 percent of health outcomes are determined by non-clinical factors. Given that, it only makes sense to examine the social determinants of health and their impact on

recovery and return-to-work. As we do this, we should look for ways to align our caremanagement approach to identify and address non-medical barriers.

WE’VE ALWAYS KNOWN SOCIAL DETERMINANTS ARE IMPORTANT

As case managers, it is hard to ignore social determinants of health even if we haven’t always applied that term to what we were observing. Consider that we often meet injured workers in their homes or workplaces. We often get to know their spouses and other individuals in their lives and most likely know more about the workers than anyone else involved in their claims. This relative intimacy presents unique opportunities to deliver support through a variety of methods: phone calls, video conferences, and, of course, face-to-face visits. As a best practice, case managers should make every opportunity to connect with and support the injured worker.

The more we know about people the better we can engage with them at their comfort level to improve their experiences. We can help ensure that our clinical programs avoid the pitfalls of treating the primary diagnosis only. Instead, we can look at the whole person and identify

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SOCIAL DETERMINANTS OF HEALTH DRIVE OUTCOMES AND COSTS FOR INJURED WORKERS

Social determinants of health are a big part of the answer to any of these questions.

According to the nonprofit Robert Wood Johnson Foundation, 80 percent of health outcomes are determined by non-clinical factors. Given that, it only makes sense to examine the social determinants of health and their impact on recovery and return-towork. As we do this, we should look for ways to align our care-management approach to identify and address non-medical barriers.

those social determinants of health that might be impeding recovery.

We’ll take a look at the following factors, which have been identified as social determinants of health: • Economic stability • Physical environment • Education • Access to healthy food • Community and social context • Health care system ECONOMIC STABILITY More often than not, an injured worker’s income is reduced while off work. Given that nearly eight in 10 U.S. workers live paycheck to paycheck, a reduction in earnings can disrupt recoveries by causing stress over finances. A 2017 survey from the job website CareerBuilder revealed several startling statistics related to debt, budgeting, and making ends meet. Among the major findings: • More than half of minimum-wage workers say they have to work more than one job to pay their bills.

• More than a quarter—28 percent—of workers making $50,000–$99,999 usually or always live paycheck to paycheck and seven in 10 are in debt.

• Nearly one in 10 workers making $100,000 or more lives paycheck to paycheck.

• More than one in four workers does not put aside savings each month.

• Nearly three in four workers say they are in debt—and more than half think they always will be.

PHYSICAL ENVIRONMENT It is important to assess housing, transportation, and safety needs of injured workers.

Do they have transportation to their medical appointments? Do they live in a clean and safe environment that promotes healing or is there risk of infection or re-injury?

EDUCATION In order to connect with injured workers, we need to understand their literacy level and ensure our communication and education about their condition(s) is easily comprehendible.

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FOOD Having access to healthy food options is an important part of promoting strong recoveries.

Unhealthy eating can lead to weight gain and myriad chronic conditions such as high blood pressure, diabetes, and heart disease, among others. Beyond that, unhealthy food options might also lead to malnutrition on the other end of the spectrum. Both scenarios can lead to complications and prolonged recoveries.

COMMUNITY AND SOCIAL CONTEXT The role that other people play in promoting injured workers’ recoveries can be overlooked.

Do the injured workers have support systems?

Can they care for themselves? Will they need outside support during their recovery to assist with activities of daily living? Are they socially isolated because their only means of socialization was work?

HEALTH CARE Do injured workers have access to quality medical treatment? Are they compliant with the recommended treatment plans? Is return-towork incorporated into the treatment plan?

As case managers, we are always looking to help the people we serve achieve the best possible outcomes. We usually define such outcomes as return-to-function or return-to-work—and more broadly, return to their pre-injury lives.

We are in a unique position to listen to our patients and ask the right questions. Active listening has long been a core component of good case management though it is a skill that requires training and reinforcement.

The U.S. Department of Health and Human Services reports only 12 percent of Americans are proficient in health literacy such that they are able to understand their health and health issues well enough to make decisions and take care of themselves without support.

WE’LL NEED TO COMMUNICATE MORE AS THE WORK FORCE CHANGES The challenges around health literacy and communicating important health information are only likely to grow as the nation’s labor force further diversifies. The U.S. population is seeing an increase in the percentage of people

who are of Hispanic and Asian descent. In 2017, foreign-born workers made up 17.1 percent of the labor force. (Hispanics/Latinos represented about half that group while Asians comprised about a quarter.) By 2024, Hispanics/Latinos are projected to be nearly one-fifth of the work force as a result of being the fastest-growing ethnic group.

As a result of these and other demographic shifts, coaching and educational tools are expanding beyond an English and Spanish offering. This will be critical to improving the ability of injured workers to access information, make informed decisions, and improve their health literacy. Added languages could include Arabic, Bengali, Bosnian, Chinese (Simplified), Farsi, French, Haitian Creole, Korean, Nepali, Polish, Portuguese (Brazil), Russian, Somali, Tagalog, and Vietnamese.

Even speaking workers’ native languages, however, isn’t enough on its own. We must always look to reinforce our clinical competencies.

WE CAN GET TO KNOW WORKERS BY KNOWING WHAT’S AFFECTING THEM

All of these efforts are designed around the idea that meeting workers where they are and understanding the challenges they face gives us the best chance at helping them achieve the best-possible outcomes. If we have deeper knowledge of the circumstances that surround injured workers we can intervene in ways that are more impactful. Plus, we know how important trust is in workers’ recoveries.

Most injured workers will appreciate that we’re showing interest in their circumstances.

Beyond knowing about the hurdles that might be present, it’s important for workers to simply know we want to know. Understanding the social determinants of health affecting workers is crucial to understanding workers and to seeing their path to recovery.

Tammy Bradly is the Vice President of Clinical Product Development for Coventry and has more than 30 years of industry experience.

MORE THAN HALF of minimum-wage workers say they have to work more than one job to pay their bills.

MORE THAN A QUARTER— — of workers making $50,000–$99,999 usually or always live paycheck to paycheck and seven in 10 are in debt.

28%

1 10

NEARLY IN workers making $100,000 or more lives paycheck to paycheck.

1 4

MORE THAN IN workers does not put aside savings each month.

3 4

NEARLY IN workers say they are in debt—and more than half think they always will be.

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How Fort Worth

DROVE DOWN

Workers’ Compensation Costs While Getting Injured Employees

BETTER CARE

BY SCOTT ROLOFF, BILL MCCALLUM, MARK BARTA & JODY MOSES

T

HE BIGGEST MYTH IN HEALTHCARE IS THAT BETTER CARE COSTS MORE. The City of Fort Worth, Texas busted that myth. Using advanced analytics to establish and monitor a provider network, the city got its injured employees better care, while driving its workers’ compensation costs down, not up.

In 2015, Fort Worth had 6,250 employees and its total workers’ compensation costs—claims plus indemnity payments—were $9.7 million.

After implementing the provider network, the city’s costs in 2016 fell to $9.1 million; and they’ve fallen every year since. In 2020 the costs were only $8.2 million, despite the city’s number of employees increasing to 6,900.

HOW?

How did the City of Fort Worth do it? The city created a physician panel under Chapter 504 of the Texas Labor Code that would be available to

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its employees only. To identify the providers to include, the city applied the outcome algorithms described below to two juxtaposed data sets and found the providers achieving the best outcomes for each injury type—who cost the city less, not more.

Healthcare is not a commodity. We all think that our doctor is the best‒or at least above average‒but we don’t live in Lake Wobegon where all the children are above average. Exactly half of all children are above average, and exactly half are below. It’s the same with doctors‒and the

specialists and surgeons that they refer us to, and the hospitals that they put us in.

Although counter-intuitive, going to a good doctor costs less overall than going to a bad one. Thirty percent of healthcare costs are unnecessary, the result of poor or ineffective care. Good doctors don’t incur those excess costs because they: • • • •

Make fewer errors; Perform fewer unnecessary procedures; Experience fewer patient complications; and Get their patients better faster.

So how can you do what Fort Worth did? First, you need access to the two data sets on which to run the analytics—your medical and pharmacy claims and your employee absence records. If you’ve self-insured your workers’ compensation program, like the City of Fort Worth does, then you own the medical and pharmacy claims.1 You still engage a third party administrator (TPA) to process those claims for you, but you are at actuarial risk for them, and therefore you own them. If on the other hand you’re fully insured‒you pay the insurance company a premium and the insurance company bears the risk—then you won’t own the claims and won’t be able to perform these analytics, although your insurance company could.

If you have the claims, then you match them against the absence records to identify the time that the employee missed from work because of the injury. You can do so in two ways. First, juxtapose the claim dates against your Human Resources (HR) Department’s time and attendance records to find the days missed because of the injury and value that time off at the employee’s pay rate or a normalized rate.2 Alternatively, you can use the indemnity payments to the employee as a proxy for the absence costs. When a TPA or insurance company uses these analytics this is the route that they take because they don’t have access to the employer’s HR records.

Next, you must have the ability to direct care‒ tell the employee which provider to go to. Every state has its own rules. In Texas, an employer can do so.3 This can include establishing referral protocols and criteria for medical procedures that don’t require pre-authorization‒decreasing

the wait times to obtain care, and thereby driving down lost days and indemnity payments.

Accordingly, if you have these three things read on and learn how you too can drive down your workers’ compensation costs while improving the care for your injured employees.

QUANTIFYING OUTCOMES

We begin with the premise that a “good outcome” is getting an employee back to work and keeping them there. We therefore accumulate all the costs to do so; and then rank the providers based on the outcomes that they achieve.4 First, let’s look at the claims. The chart below shows the average claims costs for 14 specialists treating back injuries. Specialist #1 on the far left is the best with average claims costs of $1,000, while Specialist #14 on the far right is the worst at $8,600. (See Chart 1) The claims, however, are only half of it—sometimes less than half. You have to add the absence costs, the amounts that the employer paid the employee while out with their injury. Not only are these absence costs a real cost to the employer, but they double as an indication of the effectiveness of the care. The quicker the doctor got the employee better and back to work, the more effective the doctor was. This chart adds each specialist’s average absence costs on top of their claims.

(See Chart 2) Now Specialist #2 goes from being second best to second worst; and Specialist #9 is doing a better job than we originally thought because that doctor is getting their patients better and back to work faster.

There’s one more step, however. If you ask any doctor why their costs are more than another doctor’s, they’ll always give the same answer.

“Because my patients are sicker.” And sometimes they’re right.

Sicker patients cost more and take longer to get better. If you have two employees with the same back injury, one of them young and otherwise healthy, while the other older, overweight and diabetic, the older employee is going to

cost more. So we adjust for comorbidities by assigning each employee a risk score. That way our rankings are based solely on the provider performances, not the patients that they treated.

There are a number of risk scoring systems.

One that is open-source is the Chronic Illness and Disability Payment System (CDPS). CDPS was designed by the University of California, San Diego and is employed by many Medicaid programs around the country. Accordingly, it is demographically appropriate for a working age population.

The CDPS system looks at various demographic and clinical data, including age, gender, diagnoses, and the prescription drugs that a patient is taking, and assigns the patient a score: 1.00 being an individual of average health, below 1.00 healthier than normal (the lower the score, the healthier), and above 1.00 sicker (the higher the score, the sicker).

As you would expect, the higher the risk score—the less healthy the employee—the more time that they miss.

Going back to our back specialists, when we risk-adjust their patients and level the playing field the results change again. (See Chart 3) Now the doctors’ total costs and rankings are based on their performances, not the patients that they treated. Doing this, we see that Specialist #13 was doing a better job than we initially thought. This doctor would now be ranked 10th, not 13th.

When we re-order the doctors based on their average risk-adjusted total costs, Specialist #1 is still the best, and Specialist #14 is still the worst.

But other than Specialist #12, the order has completely changed. The green arrows show the doctors that moved up, and the red arrows show the ones that moved down. (See Chart 4)

FORT WORTH’S PROVIDER NETWORK

Fort Worth used these analytics to identify the best providers by injury type and then placed them in its own workers’ compensation provider network. An injured employee must stay within this panel when seeking treatment.

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HOW FORT WORTH DROVE DOWN WORKERS’ COMPENSATION COSTS

But Fort Worth didn’t just look at its workers’ compensation claims and rank the doctors handing its current cases. Instead, it threw in its health plan claims too. That way it identified great doctors not currently handling workers’ compensation cases, but who the city wanted to in the future.

(ODG) for benchmarking and predictive analytics too. ODG is a nation-wide database of workers’ compensation and occupational health injuries owned by the Hearst Health Network.

Using these guidelines, Fort Worth not only compares the providers in its network against one another, but benchmarks them against national and regional best practices and averages for claims, time off work and other metrics.

These other metrics include whether the doctor is seeing the employee more often than usual for a particular type of injury, or whether the doctor is billing unusual procedure codes (which could be either good or bad, but bears investigating).

In addition, comparing claims against the

By sending injured employees to the best doctors, the City of Fort Worth achieved fantastic results—a decrease of 23 percent in its costs while getting its employees better care!

BENCHMARKING & PREDICTIVE ANALYTICS

The City of Fort Worth didn’t stop there, but incorporated the Official Disability Guidelines

Fort Worth also uses the guidelines to perform predictive analytics. When an injury occurs, the city predicts the claims and lost time based on specific factors, and then monitors the case and intervenes early when the actual results begin to stray from the predicted ones. For example, using ODG, the city predicts 47 days off and $7,925 in total expenses for an employee suffering a lower back sprain with the following particulars: • 40 years old • Living in Texas • Job involves “medium” physical demands (not sedentary, like an office worker, or heavy, like a construction worker) • No risk factors or comorbidities • Case involves some time off work, so it is more severe (80 percent of all workers’ compensation cases involve only medical expenses, no lost time)

CHART 1: BACK SPECIALISTS: AVERAGE CLAIMS EXPENSE $20,000 $17,500

database allows Fort Worth to categorize them as being within the normal range for that injury type—which the city can pay without further scrutiny—or outside those norms, in which case the city flags the claims for investigation.

Average Claims Expense

$15,000 $12,500

HEALTH PLANS

$10,000

You can use these analytics for your health plan too. When doing so, there are two differences.

$7,500 $5,000 $2,500 $0 #1

#2

#3

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SPECIALISTS

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So how do you get your employees and their dependents—your health plan members—to the best doctors for what they need? You could ask your TPA to include only the best doctors in the provider network, or at least eliminate the worst ones, but your TPA usually won’t do that. In fact, many of the contracts that TPAs sign with health systems preclude the TPAs from excluding any of the health system’s providers from the network or steering patients away from them.

CHART 2: BACK SPECIALISTS: +AVERAGE ABSENCE EXPENSE $20,000 Average Claims Expense Average Absence Expense

$17,500 $15,000 $12,500 $10,000 $7,500 $5,000 $2,500 $0 #1

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PUBLIC RISK | MARCH/APRIL 2021

#6

#7

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SPECIALISTS

#9

#10

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#12

#13

As discussed above, in workers’ compensation, many states permit the employer to direct care. In most health plan settings, however, you can’t do that. You can only encourage someone to go to the best doctor. They can go to whoever they want.

#14

Although you won’t be able to set the network, you can stratify it. Tier the network and decrease or eliminate co-pays and out-of-pocket costs when members go to the best doctors. If you have an HDHP (High Deductible Health Plan) married with HSAs (Health Savings

Accounts), you can even pay employees to go to the top ranked doctors by contributing to their HSAs when they do so.

The second difference is that your health plan will have not only employees in it, but their dependents too. You won’t be able to use the algorithms above on the dependents because you won’t have any absence data to match against their claims.

Instead you can use a different algorithm on the dependents that uses only the claims data. For the employees, we combine the claims and absence data and ask how much it cost and how long it took to get the employee back to work and keep them there?

For the dependents we flip the question, and ask how much it cost in claims to keep them well?

We define being well in terms of healthy days, which we can see in the claims. Healthy days are days that the person does not spend in the healthcare system (e.g. hospital stays, doctor’s visits, etc.) or at home in a non-functional state (e.g. recuperating or otherwise unable to carry out their normal activities).

We put this information in a fraction. The numerator is the patient’s risk-adjusted claims for a particular root diagnosis during the year; and the denominator is the patient’s healthy days during that year. We then rank each provider by root diagnosis, from the best with the lowest average risk-adjusted claims per healthy day when treating patients with that condition, to the worst with the highest.

FOOTNOTES

2 Using a normalized rate doesn’t penalize a provider for treating highly paid employees.

This usually isn’t an issue in workers’ compensation, but when using these analytics in a health plan it can be.

Scott Roloff is the President of IntegerHealth Technologies.

Bill McCallum is IntegerHealth’s Chief Information Officer and the executive in charge of its workers’ compensation practice.

Mark Barta is the City of Fort Worth’s Assistant Director of Human Resources and its Director of Risk Management.

Jody Moses is the Managing Director, Public Entities, Pooling & Associations at Sedgwick.

4 You can use these analytics to rank other things too. For example, you could rank the adjusters handling your workers’ compensation cases based on the outcomes that they achieved.

CHART 3: BACK SPECIALISTS: RISK-ADJUSTED $20,000 $17,500

Average Claims Expense Average Risk-Adjusted Absence Expense

$15,000 $12,500 $10,000 $7,500 $5,000 $2,500 $0 #1

#2

#3

#4

#5

#6

BETTER CARE @ LOWER COSTS

The City of Fort Worth busted the myth that better care costs more. By sending injured employees to the best doctors the city drove down its costs, while getting its employees better care.

3 The states where an employer can direct care to at least some degree (e.g. direct the employee to a specific provider, establish its own workers’ compensation provider network or panel, give the employee a list of providers from which the employee must choose, or provide such a network, panel or list while giving the employee the ability to opt out of it, etc.) are: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Massachusetts, Michigan, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, West Virginia and Wisconsin.

1 In Texas, private employers can opt out of the workers’ compensation system.

Those who do are referred to as “nonsubscribers.” Many non-subscribers nevertheless establish injury benefit plans under which they arrange medical care and make indemnity payments similar to the statutory workers’ compensation system.

The difference is that these employers can set their own rules and payment schedules, while the employees retain the right to sue their employers over their injuries.

Non-subscribing employers can use these analytics too.

#7

#8

SPECIALISTS

#9

#10

#11

#12

#13

#14

#12

#2

#14

CHART 4: BACK SPECIALISTS: RE-ORDERED $20,000 Average Claims Expense Average Risk-Adjusted Absence Expense

$17,500 $15,000 $12,500 $10,000 $7,500 $5,000 $2,500 $0 #1

#3

#4

#9

#6

#5

#10

#7

SPECIALISTS

#11

#13

#8

MARCH/APRIL 2021 | PUBLIC RISK

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CREATING AN EFFECTIVE SUCCESSION PLAN

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BY JANI JENNINGS

ou’re finally ready to set the date.

You’ve got big plans to sell the home, buy that RV and travel across the country! You’ll be free to hit the open road in 12 months. But if you’re like many successful public risk managers, you have spent years building a valued and respected risk management program within your entity and you do not want to leave your “baby” in the hands of just anyone. How may an effective succession planning program help you?

Succession planning is a process that ensures your entity is prepared for the future and is able to achieve its goals without suffering a leadership shortage. Typically, the public sector has been behind the curve when it comes to its leadership training and development. The fact that the public sector faces the challenges of changing administrations, politics and priorities are all the more reason developing a strong, sustainable succession planning program is important.

Here is a brief guide to get you started: • Create an organized, voluntary leadership development educational program for interested employees. Focus on building leadership skills and performance rather than planning for a replacement. You will then be able to establish an entire pool of would-be replacements. Leadership development planning won’t just help you build a future for employees you consider to be promotable, but it will also expose the employees who aren’t promotable.

• The employees with the highest potential will be those who are self-aware, socially aware and willing to keep learning.

They’ll also be great problem-solvers, adaptable and able to take on more responsibility. Risk managers have to have great people skills and be able to multi-task gracefully. You have established important relationships with physicians, brokers, vendors and other internal managers. You want to see a smooth

transition with your replacement.

• Include job shadowing in your succession planning program that enables participants to have a hands-on opportunity to see what a risk manager encounters on a daily basis.

• Make sure you have senior and line management buy-in. Remember to keep your legal team on board and to not subvert any personnel policies.

• Do not groom an “heir apparent” without giving consideration to participants in the program but do not assume your pool of candidates are only those program participants.

• You may discover great leaders within your organization when you least expect it. Perhaps you took notice of a pandemic response committee member who always volunteered and did their homework for meetings.

The best succession plans are living, breathing things that get reviewed and refreshed on a regular basis. Your leadership training should reflect what will be required of your key employees not only today but in the future.

MARCH/APRIL 2021 | PUBLIC RISK

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BEST OF THE BLOG

DOCUMENTING COMPLEX CLAIMS AFTER A NATURAL DISASTER

T

BY FRANK RUSSO

here are many ways you can go about succession planning. The best succession plan is the one that fits your entity. The best successor for you is the person who has been given the tools to learn how to be a great risk manager and allow you to say farewell knowing your department and your organization will be left in safe hands. You’ll be able to sleep well at night in that RV!

contractor estimates for repair to demonstrate the ultimate costs as you choose the vendor to commence. Or, if claim items are too early to quantify, such as business interruption, include the item as “to be determined” or “TBD.” This will help the adjuster and examiner consider the worst-case scenario, including potential future claim items as they set the insurance reserve.

Global natural disasters continue to rise year over year, with 2020 totaling $210 billion of losses.

2. Be sure to tell the claim story in narrative form: Another critical component of the claim submission, aside from detailed costs submissions, is the inclusion of a narrative or summary explaining the timeline and reasons for each decision made and where/how they are connected to an area of coverage in the insurance policy and/ or FEMA grant. Often an organization misses the need to put a “story behind the numbers” in a claim submission, leading to confusion on what occurred. Keep in mind a complicated insurance claim can take between 6-18 months to settle, so a detailed narrative recounting all pertinent facts is crucial to memorialize actions and context when the time approaches for a settlement.

As the frequency of these events rises, it is critical to have a sound plan for managing through the cost recovery phase of a significant impact on your organization. Public entity insurance/risk managers have the unique challenge of clearly documenting, segregating then correctly assigning the claim costs to potential areas of recovery existing in both insurance and FEMA for the same event.

An essential item to remember in any complex claim submission is to be proactive from the start.

Keep in mind, it is the organizations’ responsibility to present the claim and the receiving party’s responsibility to review and adjust it.

Also, even though FEMA may be “the payee of last resort” following the conclusion of an insurance claim submission, it is critical to start with a holistic claim submission that includes all of your insurance policy “buckets” or assumed areas of collectability as well as potential eligible FEMA categories that may apply.

Three additional items for consideration include: 1. Prepare a Rough Order of Magnitude of your loss within the first two weeks: To have the full view of the potential loss put into context, be sure to prepare a summary identifying all areas of your loss with associated estimated or expected costs. For example, if there is building damage, obtain

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PUBLIC RISK | MARCH/APRIL 2021

3. Remember how cash-flow is key to fund your recovery: Lastly, an effective claim presentation with proper insurance coverage can become a tool for cash-flow during a loss. Remember that the insurance claim doesn’t have to be paid only at the end of the process. The adjuster can release funds as items are agreed to and supported. As the organization proves damages through the adjustment process, ask for partial payments, always work to minimize the “undisputed amounts,” and then ask for the money. This will help the organization maintain cash flow during the recovery process and ultimately speed up the phase for FEMA to reimburse eligible remaining cost items not paid through your insurance policy.

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.

PRIMA ANNUAL CONFERENCES June 2021 PRIMA 2021 ANNUAL CONFERENCE Virtual June 5–8, 2022 PRIMA 2022 ANNUAL CONFERENCE San Antonio, Texas Henry B. Gonzalez Convention Center

PRIMA WEBINARS March 24 Trends in Self-Funded Health Insurance April 21 Tips and Insights for the New Risk Manager May 19 After Action Review June 29 Property Underwriter’s Perspective on the Renewal Process July 21 Effective Safety Committees: Making Them Work for You! August 18 COVID & Litigation Against Public Health Agencies September 15 Law Enforcement Liability Issues October 20 Starting an Enterprise Risk Management Program from Scratch November 17 Exploring the Unique Challenges Faced by Injured Workers December 15 Leadership and Motivation

Register for PRIMA’s APRIL WEBINAR

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Tips and Insights for the New Risk Manager APRIL 21 | 12:00 – 1:00 PM EST SPEAKERS: James Curbeam, CPCU, ARM, AIC, Director of Risk Management, Las Vegas Valley Water District Jennifer Hills, ARM-P, CRM, Director of Risk Management, King County (WA) Rodney Escobar, Director, State of Tennessee, Treasury Department, Division of Claims and Risk Management This webinar will focus on helping new risk managers establish a foundation of basic risk management philosophies and strategies. Learn how to build credibility to influence operational changes you seek with leadership. Attendees will also learn how data can assist with understanding where to improve operations and the importance of establishing internal/external professional relationships with risk management.

ATTENDEE TAKEAWAYS: 1. Knowing the importance of establishing a basic foundation 2. Knowing how to build credibility to influence operational changes for your organizations 3. Understanding the importance of data to discovering the underlining causes of loss and creating programs to improve operations that cause losses 4. Knowing the importance of professional relationships 5. The benefits of an enterprise-wide risk management program, in good times and in bad

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N O W AVA I L A B L E A N Y T I M E

Diversity & Inclusion Series PRESENTED BY MAU RICIO VEL A SQU EZ , PRE SID ENT A ND CEO O F DIV ERSIT Y TR AININ G GROUP PRIMA’s next members-only education series is a vital and timely look at workplace diversity and inclusion, taught by a subject matter expert and presented over five weeks.

• WEEK 1: Diversity & Inclusion, Being a D&I Change Agent • Week 2: Age Diversity - Multiple Generations in the Workplace • Week 3: Sexual and General Harassment Prevention • Week 4: Toxic Employee-Toxic Workplaces, How to Deal with Them • Week 5: Emotional Intelligence - The New Interpersonal Frontier

L O G I N AT P R I M A C E N T R A L . O R G