The first Out Front Ideas with Kimberly and Mark webinar of 2018 provided our thoughts on the 20 top workers compensation issues for 2018. What follows is a summary of the issues discussed.
The original webinar was held January 8, 2018. Listen to it here: "Workers' Compensation—20 Issues To Watch in 2018."
The healthcare industry continues to evolve at a rapid pace, and the evolution is vast, encompassing everything from pharma to practice to technological disruptors.
Consolidation and mergers and acquisitions in the healthcare space will continue in 2018. As CVS looks to broaden with the acquisition of Aetna, do not be surprised if Amazon, Walmart, and other large employers expand their reach into health as well. Health systems have been merging for years. In some of the mergers, we are now beginning to see hospital and facility exits resulting in local disruption for patients, providers, insurers, and the benefit and risk programs of those impacted.
For many years, health plans have been in the business of delivering patient care. Probably the best example is Kaiser Permanente, operating as both a health plan and healthcare provider. Similar to UHG's announcement of its DaVita acquisition, we will likely see more payer/practice intermix in 2018. Drug companies are purchasing other drug companies and, given their research and development cycles, generic and biosimilar opportunities, we do not anticipate this to decrease.
Under Dr. Scott Gottlieb's oversight at the Food and Drug Administration, expect to see approval and safety pathways accelerated in 2018, which will enable speed to market for new generic drugs, digital health software, and medical devices.
A few additional hot topics will include the following.
Thirty-four of the 50 state governors are currently Republicans. This, combined with the fact that insurance rates are down in most of the United States, means we have not seen a significant push for workers compensation reforms the last few years. However, there are still some states where significant activity is expected in 2018.
We have seen a positive trend in states adopting treatment guidelines and drug formularies, which can help injured workers get proper, timely care and help to reduce unnecessary treatment.
In 2018, California, New York, and Arkansas will all be implementing new treatment guidelines or drug formularies. Montana is also implementing a drug formulary, but the timeline for this is not set yet.
Georgia, Pennsylvania, North Carolina, and Louisiana all considered either treatment guidelines or drug formularies in 2017, and we expect them to revisit this again in 2018.
Every year around the country, judges modify the practice of workers compensation in their state based on their interpretation of the statutes. These interpretations can significantly expand or restrict workers compensation benefits in the state. It is as important to monitor the court decisions in your state as it is to monitor legislative activity.
Along those lines, challenging the constitutionality of workers compensation statutes is a trend that is expected to continue in 2018. Last year, Pennsylvania joined the list of states to have a portion of their workers compensation statutes found unconstitutional by the state Supreme Court. There is a case on appeal in Kansas right now challenging the constitutionality of a portion of their statute as well. It is worth noting that the basis for these constitutional challenges exists in many other states.
Finally, last year, a judge in Alabama declared the state's entire workers compensation statutes unconstitutional. This was appealed, and the case settled on appeal, so that decision ultimately was rendered moot. However, the issues raised in that court case regarding benefit adequacy are something we could see again anywhere.
Companies are working to raise workplace violence awareness. Whether they are engaging consultants to assist with planning or conducting revised employee training, risk managers and human resources (HR) are working together to ensure they have a solid program in place. There is an uptick in patient attacks on healthcare workers. This is happening all too often, ranging from emergency room to mental health facilities and nursing home care settings.
Given that 2017 marked an unprecedented awareness of sexual harassment in the workplace, we are adding workplace harassment as an issue to watch. Employers small and large are looking at their sexual harassment policies, training, and complaint investigation processes.
Workers compensation is a state-based system, and the variation among the states is something that has been attracting consistent attention. Two people performing the same job for the same company in different states can receive significantly different workers compensation benefits. The very definition of an employee varies by state. From the administrative side, a lack of consistency with regard to state forms, data templates, and even the definition of disability is very challenging to payers.
The US Department of Labor started looking into these issues in late 2016, but those efforts stopped after the election of President Donald Trump. However, those issues are still very real and need to be addressed. Now is probably the best time to establish standards between state workers compensation systems—now when the federal government is not pushing for it. If no action is taken, it is likely that the federal government will push for this in the future.
Everyone is keenly aware of the opioid crisis and the importance of tapering narcotics, narcotics avoidance, formularies, and deaths related to opioids. This year provides the opportunity to advance our understanding of these issues and willingness to change treatment protocols for patients in prepain, acute pain, and chronic pain states. With pain, one size does not fit all. Personalization of care and working in partnership with the patients, their families or support systems, and providers to collectively create a treatment pathway for the patient is important to ensure success.
2017 was an unprecedented year for natural disasters in the United States with multiple major hurricanes and widespread wildfires. Natural disasters can have a big impact on workers compensation and healthcare systems, including the risks faced by first responders, the disruption to your workforce, challenges to the benefit delivery system, and supply chain disruption.
Every company has cyber risks and preparedness, and recovery is a daily priority for the chief information officer. Cyber risk reaches beyond hacking and selling personal identifiable information on the Dark Web. It can be a life-and-death concern. Health systems locally and worldwide were hit with ransomware in 2017, shutting down hospital and practice computer systems while demanding money in exchange for digital keys to unlock the systems. Patient data hacks have resulted in medical device malfunctions and treatment delays. A recent cyber attack on Merck impacted its ability to produce medicines.
Workers compensation payers, service providers, and stakeholders are equally at risk. Past history shows companies without a solid cyber-insurance program put their business at risk. Companies and customers will place even greater emphasis on cyber risks in 2018.
For the last few years, workers compensation rates around the country have been flat to down in most states. This is in spite of the fact that National Council on Compensation Insurance (NCCI) data shows that, over the last 20 years, the average medical and indemnity costs per lost time claim have increased at rates greater than inflation.
In 2017, 2 of the top 10 writers of workers compensation posted multimillion-dollar reserve increases to cover their developing losses. This attracted the attention of rating agencies such as A.M. Best, which in a September report raised concern about the threat of inflation on workers compensation tail costs and the impact this could have on industry reserves.
Multiple brokers have indicated that the workers compensation rate outlook for 2018 is relatively flat. But with workers compensation being such a long-tail business, premiums collected today must cover losses 30 years into the future. As losses continue to climb, it is inevitable that insurance rates will need to increase in the future to offset those losses.
Job accommodation silos within companies reside in multiple return-to-work policies, both formal and informal. Return to work is not a workers compensation issue alone. The issue is inconsistent job accommodations across organizations. Whether an employee is injured on the job, requests an accommodation as part of a disability or leave of absence, or has the need for an accommodation, in general, does not alter the way in which an accommodation is handled. In 2018, we encourage you to break down the right-to-work silos and get comfortable outside your typical area of responsibility. We should not only meet Americans with Disabilities Act requirements but also provide employees the accommodations they deserve.
In 2018, recreational marijuana is now legal in more states than ever before, with California becoming the largest state to allow use. However, the reality of recreational marijuana is that this likely means that a percentage of your workforce is impaired on the job. Many employers stopped preemployment drug testing for marijuana because too many potential workers failed the drug test and because the presence of marijuana in your system does not mean you are currently impaired. That's the problem.
Right now there is no reliable method for employers to determine if their employees are impaired on the job. There is no "marijuana breathalyzer" that can quickly and accurately show whether a person is impaired. The bottom line is that the science of marijuana has not caught up with the social realities of marijuana.
What can employers do? Courts have consistently ruled that employers with drug-free workplace policies can terminate an employee who tests positive for marijuana, even if they are using medical marijuana. There is one notable exception. Last year, a Maryland court allowed an employee to pursue a wrongful termination claim under these circumstances. Will other states follow the Maryland precedent or the cases in California, Colorado, Michigan, and other states where the termination was allowed?
In addition, what happens now that the Department of Justice has rescinded the Obama administration's policy memo that indicated the federal government would defer to the states to enforce marijuana laws. Does this mean the federal government will start to arrest marijuana users and producers? No one knows for certain. Perhaps this will force Congress to take action on marijuana.
Digital health is a broad term related to the use of technology and health. Examples include mobile health apps, telemedicine products, tools to track consumer/patient data, education and patient reminder programs, and treatment adherence. For those working in the digital health space, connectivity is the issue. There are plenty of technology solutions—the issue is how to connect all of the stakeholders: patients, doctors, and service providers, pharmacists, and payers. Without connectivity, silos remain, and the system is too clunky to be effective.
Probably the most common digital health discussion in workers comp is telehealth. We have been slow to adopt comprehensive programs, whereas the benefits space has been at it for over 5 years. Group health has moved past triage of physical symptoms to treating mental health and, in 2018, moving into chronic disease management. Look for more hospitals to offer telehealth services as they diversify care offerings and seek to enhance their offerings. Technology has improved, and consumer awareness and interest are growing, so now is the time for workers comp to jump on board.
Under the Obama administration, the Occupational Safety and Health Administration (OSHA) had a publicly stated policy of "shaming" employers into compliance. That meant frequent press releases highlighting violations, even if those violations were later rescinded. In 2016, there were over 200 OSHA press releases on enforcement actions.
OSHA under President Trump has been much more focused on education than penalties. As of late October, they had issued less than 20 press releases on enforcement actions. Scott Mungo, who worked for FedEx Ground, was nominated by President Trump to head OSHA in October. In December, his nomination was approved by the Senate committee, and it is expected he will be confirmed by the full Senate soon.
What should we expect from OSHA under President Trump? If the first year of his term is any indication, we will see less new regulations and perhaps even a rollback of some existing regulations. The approach has been more consultative with employers rather than combative.
HR, risk managers, and executive leaders recognize that workforce well-being impacts both top and bottom line performance of an organization. Benefits are a talent attraction and retention tool in 2018, and HR officers are deploying programs to address physical, emotional, and financial wellness—the three pillars of health. Well-being programs place emphasis on an individual's personal needs and considerations for both health and productivity.
Workplace well-being programs in 2018 expand far beyond weight loss and smoking cessation. They may also include financial planning tools as well as resilience and mental health awareness training. To promote the use of benefits, HR departments need to break down the benefit silos. The whole health model at Sedgwick is a great example because it integrates group health, leave of absence, workers compensation, short-term disability, and job accommodations. Benefit integration and ease of use drive engagement, which, in turn, positively impacts business performance.
When you hear about workers compensation fraud, the first thing that comes to mind is videos showing allegedly disabled workers engaged in a variety of physical activities they claim to be unable to do. While these videos are sensational, the reality is that true fraud from injured workers is rare.
The most common source of workers compensation fraud comes from employers in the form of premium fraud. Underreporting payroll, misclassifying workers, and incorrectly classifying workers as independent contractors is something that happens all too often. Employers that commit workers compensation fraud drive higher premiums for honest employers and also create an unfair competitive business environment. The construction and staffing industries have been dealing with this issue for many years. Many states have been aggressively cracking down on this type of fraud, but it continues to be a significant problem.
Medical provider fraud is another area of workers compensation fraud getting more attention lately. In the last 2 years, we have seen several high-profile prosecutions of medical providers in California. The fraudulent treatment alleged in these cases amounts to billions of dollars. We have not seen medical fraud like this in other states, in part because California's system has a high percentage of postinjury cumulative trauma claims, which allows unauthorized treatment and the filing of a lien by the medical provider. These elements create an environment that is ripe for fraud and abuse. Hopefully, we will not see this fraudulent behavior spread to other states, and California will continue its diligent prosecution of these cases.
We are living in a consumer's world today. The pace with which we want our services delivered and the high standard of excellence expected has led all sectors in business, including health and workers compensation, to consider their definition of consumer. Failure to engage a consumer leads to complaints and negative public relations, possibly lack of treatment adherence, whereas high levels of consumer experience lead to positive outcomes.
You will hear more about the use of net promoter score (NPS) to understand consumer experience and link to engagement in 2018, and we believe the use of NPS has potential in workers compensation. Now is the time to engage consumers in the conversation around our products, services, and certainly program design. The injured worker's voice is often missing in the workers compensation system.
The aging workforce, the evolving workforce, and technology are all having a significant impact on the workers compensation industry. In the coming years, we will see a significant exodus of talent from our industry due to retirement. How do we attract the next generation and compete against other industries for people? What will the office of the future look like? How will changes in technology impact the way we do our jobs, including how we communicate with injured workers?
If you have not checked out the latest conversations in insurtech, 2018 is the time. The market has grown considerably in the last 3 years with a worldwide platform. What's insurtech? Insurtech is the use of technology to bring efficiencies to the insurance industry. Those engaged with insurtech believe new tech players will disrupt the current insurance market by bringing coverage to a digitally savvy customer base. Customer expectations of seamless, instant transactions are increasingly the norm, and insurtech's use of blockchain and artificial intelligence are promising—although yet to be proven in most scenarios. Much of the focus of insurtech is on personal lines; however, it is starting to move into commercial segments.
McKinsey reported last year that 46 percent of insurtech companies are focused on property and casualty, 33 percent on health, and the remaining on life. They target primarily pure risk insurance, where they have developed access points to the value chain on innovations.
Finally, immigration reform is something that has been talked about politically for years, but Congress has not been able to advance any meaningful discussions in this area. Will that change in 2018? Our country and Congress appear deeply divided on this very important issue. The outcomes of these discussions could have a significant impact on the millions of undocumented immigrants currently working in this country without the benefit of workers compensation coverage or other workplace rules and regulations.
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