Author: WorkCompAcademy

An article in Risk and Insurance speculates that as more insurance distribution channels are being created, the potential disruption of the ordinary course of business for underwriters and brokers increases. One of those channels, although details are hazy, involves Overstock.com Inc., a Utah-based e-commerce site that survived the dot-com bust by selling dying Internet companies’ inventories.

Since April 2014, Overstock.com has sold insurance, including auto, property, liability and workers’ comp for businesses, through an exchange where consumers receive live quotes, pick which the coverage they like, and then have a policy bound for them. But who is really doing the the underwriting? Apparently, the underwriters’ names had been confidential, but when asked Dave Nielsen, Overstock.com’s senior vice president, said shared some of them: 21st Century, Progressive, Safeco and American Strategic (ASI). Overstock.com is “seeing good traffic” on the site, Nielsen said, and he’s expecting to “see [sales] continually increasing month over month” as the company adds more products. The logistics of claims and other policy-servicing depends on the carrier, Nielsen added. Overstock services some accounts in-house; others it transfers directly to carriers. But no matter what, policyholders contact Overstock first.

Most of the insureds probably care little about the identify of the underwriters, said Denise Garth, partner and chief digital officer at consultancy Strategy Meets Action (SMA). As far as the insurance buyer goes, they’re a customer of Overstock.com. “[Overstock is] definitely the channel where it’s been sold, and it’s the channel where the customer is going to go to for service,” Garth said.

And it’s just one channel of many it seems that are on the verge of disrupting well-tread insurance distribution networks. In particular, according to a report from London-based market risk and consulting firm Finaccord, as many as 281 retail brands around the world are selling insurance, up from 232 retailers in 2010. Global names like Walmart, Tesco, Marks and Spencer, and Carrefour are “leveraging” their brands and huge customer bases to sell mainstream insurance products, said Finaccord Director Alan Leach. “They can supplement the thin profit margin that they can earn from their core business by selling financial services,” Leach said. They wield data they already collect on their customers to empower cross-selling. If they know which of their customers buy pet food, they know which of their customers to market pet insurance to.

At this point, however, this trend of retailers selling insurance is “not so much” in the United States, Leach said, and in many cases, they’re selling personal lines products to consumers. But retailers are just one group the traditional insurance world must confront. Some observers, like Garth, argue that this trend doesn’t just put the insurance distribution process at stake, but affects the industry’s business model as a whole. Some of the savviest, brawniest, data-driven companies in the world are coming. Alibaba, of the recent record-breaking IPO, launched an online insurance platform in 2013 called Leyebao, aimed at Alibaba’s online store owners and their employees. Google forayed into the insurance space in the U.K. in 2012, with a car insurance comparison tool. They’re coming because consumers apparently want them to.

“Competition in the insurance industry could quickly intensify as consumers become open to buying insurance not only from traditional competitors such as banks but also from Internet giants,” said Michael Lyman, global managing director for management consulting within Accenture’s insurance industry practice, when he announced the Feb. 2014 research. The disruption will not be as black and white as an Alibaba launching an insurance company or Walmart taking jobs away from Main Street agents. The invaders seem to care less about the means than the end result. “They want to own a customer for a lifetime,” Garth said.

Their success at that could leave insurers as mere “manufacturers” of insurance products, and agents and brokers as mere customer service representatives, for the companies that will own consumer loyalty and lifetime customer value.

Jesus Cordova was awarded 100% disability and future medical care as a result of his injury while employed by Graventa Enterprises who was insured by the State Fund. The current dispute involved the future medical care, and the UR process. The WCJ found that the defendant issued utilization review non-certification notices on June 28 and July 19,2013 and that neither denial was communicated timely to the applicant’s primary treating physician or accompanied by the required Independent Medical Review form, thereby rendering the denials inadmissible. The WCJ awarded the contested medical treatment, penalties, and attorney’s fees.

In a Petition for Reconsideration, the State Fund claimed in essence, that the WCJ erred in awarding the contested medical treatment, penalties, and attorneys fees, arguing that the Appeals Board lacks jurisdiction to decide a dispute over a utilization review decision which was communicated to the primary treating physician on or after July l, 2013 and in refusing to apply Labor Code section 4610(9)(6) to a request for treatment which issued within 12 months of a utilization review decision denying the same treatment. Defendant also contends that the WCJ is without power to award an attorney fee for enforcement of a medical award.

The WCAB panel in the case of Cordova v Graventa Enterprises that Labor Code section 4610.5, which provides for independent medical review of utilization review decisions, applies to “any dispute over a utilization review decision if the decision is communicated to the requesting physician on or after July  l, 2013, regardless of the date of injury. However none of the disputed denials of treatment were communicated to a requesting physician on or after July 1.2013, thus none of the disputed utilization review decisions are subject to independent medical review.

Labor code section 4610(9)(6) provides that “A utilization review decision to modify, delay, or deny a treatment recommendation shall remain effective for 12 months from the date of the decision without further action by the employer with regard to any further recommendation by the same physician for the same treatment unless the further recommendation is supported by a documented change in the facts material to the basis of the utilization review decision.” The record had insufficient evidence to determine whether the utilization review decision or decisions were timely made and whether defendant relied on section 4610(e)(6) or submitted additional requests for that prescription to utilization review. Thus this issue was deferred with jurisdiction reserved at the trial level.

On the issue of penalties, defendant’s delay of treatment that was authorized by a utilization review physician was unreasonable. However, with respect to the denied prescription for Nucynta, defendant could reasonably rely on the utilization review denial. Accordingly,the Findings and Award was amended to award a penalty and an attorneys fee on the delayed provision of Neurontin. Applicant’s attorney is entitled to a fee pursuant to Labor Code section 5814.5 for successfully enforcing an award.

The WCAB also decided to “admonish defendant that applicant has an award of medical treatment and the utilization review cycle of denials and authorizations for applicant’s prescription medications appears arbitrary. While defendant is entitled to submit every prescription request to utilization review, we suggest that defendant should consider whether doing so is cost effective and fulfills its obligation to provide applicant with medical treatment to cure or relieve him from the effects of his industrial injury.”

Portable X-ray services are becoming more popular as patients seek medical care in familiar surroundings.

According to the Report in Reuters Health, proponents say-home X-ray services help frail patients avoid difficult and potentially hazardous trips to hospitals. Other patients seek in-home providers out of convenience, as an ankle or chest X-ray can take less than 20 minutes. “We go to the patient and take the X-ray, rather than having the patient go to the doctor’s office,” said Paul Fowler, founder of Specialty Portable X-Ray, Inc. in New York. “Usually, in about an hour after we take an X-ray we give these results directly to the doctor,” he told Reuters Health. “With the digital X-rays, we are using probably less exposure than you would at the hospital.”

Patients must have a doctor’s prescription for an x-ray, or for an ultrasound exam, which can also be done at home. Fowler’s company charges about $300 for a visit for patients without health insurance, he said. Some celebrities seek his services to avoid paparazzi and unwanted attention.

Jacob R. Wuerstle, president of Diagnostic X-ray Service, Inc. in Pennsylvania, said portable X-rays are also used in assisted living facilities and prisons. “We keep the patients in a setting that they’re familiar with, that they’re comfortable with,” he told Reuters Health. The option for home X-rays is especially helpful for elderly patients in snowy parts of the country. His technicians scan more than 30,000 patients per year. Sessions cost about $200. “We use state-of-the-art equipment and we transmit right from the patient’s bedside to the radiologist,” he said.

Dr. James C. Carr, a professor of radiology at Northwestern University’s Feinberg School of Medicine in Chicago, believes trained technicians using portable machines can provide quality scans for patients in rural areas or unable to move. “As long as the equipment is being regulated and the technologists are satisfactorily trained, concerns can be mitigated,” he told Reuters Health.

But portable X-ray machines, while convenient, may be less accurate. Dr. David Levin, professor and chairman emeritus of the Department of Radiology at Thomas Jefferson University Hospital in Philadelphia said he would not recommend in-home X-rays for mobile patients. “The quality of those images is usually not very good. If you compare the quality of those kinds of studies with the quality of a study that was performed in a hospital in a radiology department or in a private radiology office, there is going to be no comparison,” he told Reuters Health. “If a portable X-ray is absolutely necessary because of the patient’s clinical condition, then it’s justifiable.”

As the portable X-ray market grows, state and federal regulations for radiation protection must be followed, said Dr. William Thorwarth, Jr., chief executive officer of the American College of Radiology in Virginia. “You want to be very certain that the technologist who’s acquiring the images is appropriately trained and qualified,” he told Reuters Health. “There needs to be appropriate precautions so that other people in the house are not exposed.”

The California Department of Justice was one of five law enforcement agencies investigating a Los Angeles “Pill Mill” medical clinic that lead to the arrest of five suspects after a federal grand jury issued a 33-count indictment, Authorities allege this was a narcotics trafficking ring in which illegal prescriptions were sold for a flat rate of $500 at the now-closed Southfork Medical Clinic in Los Angeles and the drugs obtained with those prescriptions were shipped to Texas for sale on the black market. Prescriptions were allegedly sold for drugs that included oxycodone, hydrocodone, alprazolam (best known by the brand name Xanax), carisoprodol (a muscle relaxant) and promethazine with codeine (a cough syrup sold on the street as “purple drank” and “sizzurp”).

Those arrested include Jagehauel Gillespie, 39, of Houston, the operator of Southfork, and alleged ringleader. Investigators seized nearly 10,000 pills from his home in January 2013 and 48 bottles of promethazine with codeine from a car driven across Texas by Gillespie and another suspect in July 2010. Gillespie is also charged with using fake identities and fraudulent driver’s licenses to fill prescriptions at Los Angeles-area pharmacies. Gillespie faces up to 149 years in federal prison if convicted.

Also arrested was Dr. Madhu Garg, 63, of Glendora, the medical doctor who wrote prescriptions at Southfork, allegedly without any medical necessity, before the Medical Board of California revoked her license in late 2013. Garg, issued more than 10,000 prescriptions – with nearly 80 percent of those for hydrocodone or alprazolam, most of which were at the maximum dosage – over a 15-month period, according to records maintained by the State of California. In addition to drug counts, Garg is charged with money laundering for allegedly wiring money obtained from the drug conspiracy to an account in Kuala Lumpur.

According to records at the California Medical Board, in 2011 Garg “was a partner with Southern California Permanente Medical Group and worked at Kaiser Baldwin Park Medical Center-West Covina Medical Offices, practicing family medicine. On or about October 24, 2011, she reported for work and was asked to undergo drug testing as she appeared to be “out of it.” The results of that drug test were received on or about October 31, 2011, and were noted to be positive for amphetamines, methamphetamines, and hydrocodone. Respondent was placed off-work.” Medical Board Records also reflect that she claims to have practiced “occupational medicine.” These and other allegations led to the revocation of her medical license.

Diane Nunez, 24, of Long Beach who oversaw day-to-day operations at Southfork was also arrested along with Daniel Clay, 45, of Houston, who allegedly shipped controlled substances from Southern California to Texas. Ray Steven Benton, 56, of Baldwin Hills, was arrested and is allegedly, a “capper” who allegedly recruited patients to obtain prescriptions at Southfork. Benton is also charged with firearms offenses and with using fake identities and fraudulent driver’s licenses to fill prescriptions at Los Angeles-area pharmacies.

“Los Angeles is a major source of the deadly and addictive prescription drugs that are diverted to street sales across the Western United States,” said Acting United States Attorney Stephanie Yonekura. “This case is the latest in a series of prosecutions clearly demonstrating that law enforcement is committed to stemming the tide of drugs being diverted to the black market, as well as putting an end to medical professionals who abuse their prescription pads and their ethical obligations.”

The indictment describes multiple undercover operations conducted during the investigation. During an October 2013 meeting at Southfork, Gillespie allegedly agreed that Garg would prescribe oxycodone and promethazine with codeine for an undercover cooperator in exchange for the person returning to the clinic with bottles of the prescribed cough syrup. Later that day, Garg allegedly gave the undercover witness prescriptions for those drugs and agreed to issue more prescriptions later that week under a different patient name. Six days later, during another meeting at Southfork, Gillespie allegedly gave the undercover witness forged prescriptions for oxycodone and promethazine with codeine using another doctor’s name and medical license number.

Two other suspects named in the indictment are currently being sought by authorities. Those two fugitives are: Jessica Poe, 32, of Inglewood, California, Gillespie’s girlfriend, who allegedly forged a doctor’s signature on prescriptions; and Joseph Tyree Boyance, 35, whose whereabouts are presently unknown, an alleged “capper” who recruited patients to obtain prescriptions at Southfork.

This case is the product of an investigation by the Drug Enforcement Administration’s Los Angeles and Houston field divisions, Internal Revenue Service-Criminal Investigation, the Los Angeles Police Department, the California Department of Justice, and the Texas Department of Public Safety.

Medical treatment reimbursement schemes continue to evolve over time. Decades ago, health practitioners we paid for “procedures” no matter how well they worked. The more procedures one was able to accomplish over time resulted in more revenue. This was a disincentive for quality, and a huge incentive for simple quantity. Today the emphasis is moving in the direction of higher payment for better outcomes. A recent article in Property Casualty 360 predicts this evolution to continue into workers’ compensation this year.

Larger employers are developing outcome-based networks, not only for workers’ compensation, but for their group health as well. They’re contracting directly with the healthcare networks to ensure that their workers receive the best medical care and tying compensation to outcomes. We’re seeing a shift from a focus on price to programs with an understanding that better outcomes lead to increased productivity and overall lower costs.

Employers also are recognizing the importance of mental health to wellness. We’re seeing a wellness revolution more focused on the patient as a whole person and the importance of managing health both physically and mentally.

The evolving health care model is tied directly to an evolving viewpoint on disability management. More employers are realizing the importance of managing all disability, not just that associated with workers’ compensation claims. This integrated disability management model is reportedly the future of claims administration. Employers who retain risk on the workers’ comp side usually do the same thing with non-occupational, short-term and long-term disability.

Coventry advertises the most recent addition to its suite of network offerings, an Outcomes-based Network program aimed at identifying workers’ compensation providers who have been statistically shown to contribute to effective patient outcomes and controlled claims costs. The Outcomes-based Network was developed in response to the market’s desire for smaller occupational health focused networks whereby clients can increase utilization with doctors who are associated with their most desirable outcomes. The Outcomes-based Network claims to differ from other focused network offerings as it addresses the importance of identifying providers based on total claims outcomes.

Sedgwick embarked on a mission to create a truly outcomes-based network solution with two main components. Deploy the network solution throughout the daily claims and medical management process. Measure how medical providers are doing across a broad spectrum of data points by creating scorecards. In a recent evaluation of 107,000 claims, using high-scoring providers resulted in: 40% faster claim resolution, 61% less incurred expense, 62% less incurred medical expense and 73% less lost time days. A company white paper provides details of its approach.

Liberty Mutual has Outcomes Based Networks in fifteen states including California. Provider selection was based on an in-depth analysis of medical and return to work outcomes for point of entry providers and orthopedic surgeons and extensive field knowledge of regional medical directors and claims and managed care professionals for all other providers.

Yet others are not convinced that this new payment model will deliver as promised. Aaron E. Carroll, a professor of pediatrics who writes a column for the New York Times, said after reviewing the medical literature in 2014 that pay for performance in the U.S. and U.K. has brought “disappointingly mixed results.” Sometimes even large incentives don’t change the way doctors practice medicine. Sometimes incentives do change practice, but even when they do, clinical outcomes don’t improve. Critics say that pay for performance is a technique borrowed from corporate management, where the main outcome of concern is profit.

Responding to public backlash to managed care in the 1990s, California health care plans and physician groups developed a set of quality performance measures and public “report cards”, emerging in 2001 as the California Pay for Performance Program, now the largest pay-for-performance program in the country. Financial incentives based on utilization management were changed to those based on quality measures. Provider participation is voluntary, and physician organizations are accountable through public scorecards, and provided financial incentives by participating health plans based on their performance.