August 2007 Archives

August 30, 2007

 

Jane Hiebert-White has a special edition of Cavalcade of Risk posted at Health Affairs Blog. In addition to the usual smörgåsbord, she has a special focus on examining risk two years after Katrina. She links to some excellent articles: one on risk analysis; another being a rather depressing account of the state of health care disaster preparation; and another discussing the ways that many of Katrina's ills simply represent a super-sized version of problems facing the country as a whole, from health care and homelessness to infrastructure and crime.

Our thoughts have also been on Katrina. USA Today featured a report on the challenges facing small businesses, which we found quite interesting. Unsurprisingly, insurance tops the list of challenges facing businesses that are trying to put the pieces back together.

"Everything I sell goes to pay insurance," says Harrison of Loretta's Authentic Pralines. She's paying $17,000 a year for insurance on the 3,000-square-foot candy warehouse, compared with less than half that amount before Katrina for coverage on the same space as well as a shop in the French Quarter. (The shop is closed while the building is renovated.)

Insurance costs were already high before Katrina, and many owners couldn't afford to fully insure their business. "You buy what you can," says Leah Chase, who owns Dooky Chase's restaurant in Treme, one of the oldest African-American neighborhoods in New Orleans, with her husband, Edgar. "If you can't pay $5,000 or $10,000 a month, you don't buy it, because (the policy) will be canceled. You never think you'll lose everything in one shot."

Since the storm, more businesses — small and large — are underinsuring out of financial necessity, just hoping the next hurricane won't wipe out their livelihood. In Gulfport, Miss., Jeffrey O'Keefe of Bradford-O'Keefe Funeral Homes has one-eighth the coverage on his five funeral homes and a crematorium that he had before Katrina. Buying more, he says, would be a financial hardship. Even so, his overall premium has risen 45%, to $88,612 a year.

While there are certainly opportunities for some business sectors -- banks and construction companies are booming -- small family-owned businesses are among those that have been hardest hit. As they are in any community, these small businesses were the backbone of the community, and they greatly contributed to the particular character of New Orleans.
While nearly one in four businesses is ringing up more sales than before Katrina, almost half of small businesses have 75% or less revenue than before — even with fewer competitors, the council found. Overall, two of every three small-business owners — those with fewer than 25 employees — are bringing in lower revenue than before Katrina, its research shows.

"What this means," Turner says, "is staff reductions, salary cuts, the inability (of businesses) to fulfill credit obligations."Many common business practices need to be rethought in the wake of a disaster. For example, while many small businesses would have qualified for SBA grants or loans, they ran into a catch 22: they needed a home for collateral and many no longer had homes.

In another status update at the two year point, Insurance Journal reports that the majority of all Katrina claims - some $40.6 billion involving 1.7 million claims - have been paid. This compares to 790,000 claims in Hurricane Andrew, with a 2006 settlement value of about $22.2 billion. The article also notes that although litigated claims have been prominent in the news, the Insurance Information Institute estimates that fewer than two percent of homeowners claims in Louisiana and Mississippi were disputed either through mediation or litigation.

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August 28, 2007

 

Survival stories are a magnet for many and I am no exception. Whether they be stories of people who escaped death by seconds in the World Trade Center, shipwrecked sailors who spent weeks on a life raft, or cancer survivors who prevailed, there's something inspiring and fascinating about the indomitable will to survive against all odds. But no prior accounts quite prepared me for the utterly gruesome story of Dave Holland's survival of a work-related accident. Be warned, unless you are a physician or someone similarly inured to severe injuries, his story of being scalped by an industrial drill is a difficult read.

Three years on, sleep still comes uneasily. His head hits the pillow and he flashes back: Caught up in the spinning and metallic screaming and the wet cracklepop sound of tearing flesh. The coppery tang of blood. The thing dragging him closer. The fear and the pain.
Beyond the sheer horror of his story, the article resonated on many levels: the medical miracle that was his survival; the window into the fierce will to live that kept him alive; the detailed account of the steep toll of an industrial accident, both when it occurs and in the aftermath; and the case history of post traumatic stress disorder. In reading this, it's also hard not to wonder about his co-workers. How does one return to the workplace after witnessing an event of this kind? How does one get over the fear of the environment?

Dave's survival may make him unique, but an injury of this nature is unfortunately not unique. I recall sharing a table with claims managers at an insurance trade event a number of years ago, and losing my appetite as they exchanged stories of "worst claims" cases they'd handled, such as scalpings and deglovings. Machine-related injuries are commonly recorded as caught or crushed injuries or the more prosaic contact with objects and equipment. These types of accidents result in about 18% of all work fatalities each year, as well as tens of thousands of injuries that do not result in death, such as Dave's.

In reading other reports of "caught or crushed" injuries, there are some recurring themes: The worker is often working alone. The worker often wasn't trained to use the equipment, or hadn't been alerted to the dangers. The worker was often young. The equipment often didn't have safeguards, or sometimes those safeguards had been manually overridden by either worker or boss. Hair and loose clothing were often the first point of contact. Ponytails and braids are particularly troublesome - a few strands may give way, but a thick plait that is caught could well be a death sentence.

There's not a lot more to say beyond what Dave's story already imparts: workers, be safe - speak up if you have unease or need training, and don't work with hazardous equipment while alone. Employers, ensure that your workers are safe - you don't want a Dave Holland on your conscience.

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August 27, 2007

 

Jay Fishman, CEO of The Travelers, offers an interesting perspective on the current state of hurricane risk. (As the piece appears in the Wall Street Journal, availability is limited to subscribers.) The article is entitled, "Before the Next "Big One" Hits." That's ironic, of course, because nothing meaningful will be done until well after the next big one hits. Nonetheless, Fishman's perspective is worth examining.

Fishman looks at the current chaos governing state regulated coastal property insurance from Maine to Texas. Not surprisingly, he sees a lot of problems. With over half the American population living within 50 miles of the coast, with coastal development continuing at an alarming pace, and with the prospect of bigger and more powerful storms developing in our oceans, many carriers are running for higher ground. Fishman believes that they might be more inclined to stay if the rules governing property insurance had some federal oversight. That's an unusual perspective, coming from a CEO.

Bring in the Feds
Fishman would like to see a federally regulated "Coastal Hurricane Zone" running from Texas to Maine. The feds would regulate and oversee wind underwriting by private insurers, including pricing. A federal role would increase consistency from state to state and offer a more stable set of rules - rules that might provide insurers with the confidence to make long-term commitments and investments of capital. Premiums would be subject to regulation: if they exceed the payouts over a period of time, property owners would receive a rebate. If the rates prove inadequate, they would be allowed to rise. A federal presence might pre-empt the current absurd situation in Florida, where tax payers enjoy depressed rates for coastal coverage, with the prospect of mortgaging the future when the next big storm hits (see our "Risk Management for Dummies" posting here). A federal role would benefit consumers by providing more transparent pricing and standardized "rights and responsibilities."

Fishman recognizes that some coastal risks exceed reasonable rate making. In these situations, he recommends temporary, transitional subsidies, extending 10 or 15 years. Here, those unable to pay the rates associated with the risk would receive a tax credit; on the other hand, those able to pay might face a surcharge to help balance the books. This is Robin Hood in a rain slicker, perhaps, but it's an idea worth further scrutiny.

Wind and Water
Risk mitigation under global warming's unprecedented and poorly understood circumstances must go beyond the pricing and wording of insurance policies. Fishman would like to see a proactive approach with some serious traction in two key areas:
- establishment and enforcement of credible building codes
- improved land management, with the preservation of coastal wetlands a major priority

Fishman is careful to call all of this "wind underwriting." He clearly is not contemplating an expansion of standard policies to include water damage. (Did someone say Dickie Scruggs?) From his CEO perspective, risk transfer must be both reasonable and profitable. The fact that he welcomes a federal role in developing the rules is a clear indication that the current situation is untenable. The free market for coastal property insurance is floundering on the rocks. Fishman is not alone in looking to the federal government to build the needed lighthouse.

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August 23, 2007

 

Health Wonk Review - Daniel Goldberg is this week's host of Health Wonk Review and he offers up an abundance of varied links with interesting context and commentary. And while visiting HWR, please be sure to check out Daniel's excellent Medical Humanities Blog. In today's posting, he offers a good introduction to the nature of medial humanities as a discipline and the role that medical humanists play in health care. His blog is well worth an extra look-see, encompassing a literature review, a medical humanities lexicon, and an information exchange on events and conferences, among other things. His sidebar links are extensive and also give a good window into the multi-disciplinary nature of medical humanities as a subject matter.

Ohio - One of our readers kindly sent us a link to an interview with the new Administrator of the Ohio Bureau of Workers' Compensation, Marsha Ryan, who says that the state's $21 billion system is "pretty broken." She also states that it may take years before public trust is restored, unsurprising in the wake of wide-ranging corruption in the Bureau that led to 16 convictions. She also indicated that she plans to review group discounts that have been offered to business alliances, such as the Ohio Chamber of Commerce or National Federation of Independent Business. According to a recent investigation, some companies were given discounted rates, a practice that raised questions about fairness but which turned up no illegalities.

California - In news of another state workers comp body that is seeking to restore trust and transparency, the State Compensation Insurance Fund (SCIF) has named Janet Frank as new president as of October. She will take the reins from interim president Lawrence E. Mulryan who was appointed after the prior president, James C. Tudor, and vp, Renee Koren, were fired. Sally Roberts of Business Insurance reports that there are a number of ongoing investigations to learn if misconduct or illegal activities occurred, particularly in relation to the payment of administrative fees in connection with SCIF's group insurance programs.

More on fraud - On Tuesday, Tom Lynch blogged about a judge indicted for insurance fraud. One of our readers noted that the same issue of Insurance Journal also included another fraud item about four workers comp claimants in Texas sentenced for cheating the system. The four claimants collected a combined total of $17,346 for double-dipping, or collecting benefits while gainfully employed. Unlike the case of the judge, there was no suspension with pay for these folks: Penalties for the four included probations ranging from 1 to 5 years, community service requirements, and restitution. While fraud is certainly wrong and to be condemned under all circumstances, we agree with our reader that the juxtaposition of the two fraud cases and the disparity of the consequences present a study in irony. Presumably, the judge will have his day in court, and if the charges are proven, will have a steeper penalty imposed.

BP contests OSHA fines - According to Occupational Hazards, BP is contesting $92,000 in recent OSHA penalties for violation of safety rules related to process safety management and hazardous conditions at the Texas City refinery. This is the site of the March 2005 disaster in which 15 workers were killed and many others injured. For a recap of the investigations of that event, see Josh Cable's excellent article, Anatomy of a Tragedy, a sad case study in safety and prevention gone awry. He notes, "Perhaps the real tragedy is that federal investigators believe that the accident - like so many other workplace accidents - was entirely avoidable."

Health & safety resources
OSHA added a Health Care module to its Compliance Assistance Quick Start tool, which offers online free compliance assistance resources. The purpose of the module is " ...to help employers understand OSHA regulations applicable to the healthcare industry, including recordkeeping, reporting and posting requirements. It also contains information on developing a comprehensive safety and health program and on training employees."

Dale Lindemer offers a practical overview of Scaffolding Good Practices in the August issue of Occupational Health & safety - a good resource on "dos and don'ts" to help prevent the most common hazards: falls from elevation; collapse/overturning of the scaffold;being struck by falling tools, work materials, or debris; and electrocution, principally due to proximity of the scaffold to overhead power lines.

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August 21, 2007

 

For unadulterated audacity and out and out gall, Michael Joyce, a Pennsylvania Superior Court Judge, may currently hold the lead in this year's gold medal competition.

Scanning Insurance Journal Online today, we learned that last Wednesday, federal prosecutors indicted Judge Joyce for mail fraud and money laundering, claiming that he cheated the Erie Insurance Group and State Farm Insurance out of $440,000, a charge the judge denies as he protests his innocence.

Judge Joyce came to our attention not for what he is accused of doing, but for how he is alleged to have done it. According to the indictment, Judge Joyce, while parked in his Mercedes-Benz sedan in 2001, was rear-ended by an SUV traveling about 5 mph. That's right, five miles per hour – I’ve crested middle age and I still can run that fast.

Following this horrendoma of a crash, no police or medics were called to the scene, yet the Judge asserted that the impact rendered him unable to exercise or play golf for more than a year. He was paid $390,000 by his insurer, the Erie Group, and $50,000 by State Farm, which insured the poor SUV driver.

Unfortunately for Judge Joyce, the indictment alleges that, not only was he playing 18- hole rounds of golf shortly after the "accident," but he was doing it on vacation in Jamaica. It also claims that he was scuba diving, inline skating (I’ve never gotten the hang of that) and working out in his local Gym. The man must be a medical and physical marvel.

At any rate, Judge Joyce has announced that, infirmities and indictments notwithstanding, he will continue his run for a second ten-year term in this fall's coming election.

The state's Supreme Court last Friday suspended Judge Joyce, with pay, "to protect and preserve the integrity of the Unified Judicial System, etc…"

And what, you may ask, did Judge Joyce do with his new-found wealth? Well, according to the indictment, he used it to buy a motorcycle and make down payments on a house and an airplane, which, of course, he intended to fly. We know that, because on the application for his pilot's license he asserted that he had no injuries or physical problems that would preclude his flying up, up and away, which he then did about 50 times.

There is terrible injustice here. We’ll let the courts decide whether it has been done to the Judge, or by him.

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August 20, 2007

 

Last week, the Dallas News reported that fifteen former workers and residents exposed to vermiculite from a West Dallas mineral processing plant are exhibiting signs of asbestos-related illnesses such as asbestosis and cancer, a development one physician termed as "alarming." More than 400 employees, family members and nearby residents of the vermiculite plant have been tested, and of the 252 analyzed so far, about 6 percent are showing signs of asbestos related illness. The sample group represents only a portion of the total workers and nearby residents who may have been exposed from 1953 to 1992. The Agency for Toxic Substances and Disease Registry (ATSDR) has issued an exposure evaluation fact sheet for Texas Vermiculite's site in Dallas.

The Libby Montana connection: W.R. Grace trial set for September; Libby, Montana documentary to air
The Texas Vermiculite plant was operated by W.R. Grace & Co., and was one of a number around the nation that processed vermiculite from the company's mine in Libby, Montana. For those who may not be familiar with the infamous events surrounding Libby, Montana, I would recommend a High Plains documentary film of the same name - "Libby, Montana - that will be airing on P.O.V. on August 28th at 10 PM. (Check your local PBS for times). The film tells the very troubling story of massive public health crisis affecting hundreds of ex-miners, their families, and the townspeople who have been stricken by asbestos-related illnesses. The exposure has been associated with more than 200 deaths to date. At least 1200 former workers and town residents have been stricken with asbestos-related illnesses. Many in the town are charging the EPA with foot-dragging in the emergency clean-up.

The documentary will provide background both for the TX exposure and for the W.R. Grace criminal trial scheduled to begin this September. In February 2005, W.R. Grace and seven of its executives were indicted in the Libby asbestos deaths.

Additional information on Libby, Montana
- Jordan Barab's extensive coverage of Libby at Confined Space
- The Seattle Post Intelligencer's Special Report series: Uncivil Action - A town left to die
- Trailer for Libby, Montana:

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August 15, 2007

 

The most dangerous job in the U.S. - The nation has been following the desperate efforts to rescue 6 miners in Utah, our thoughts are with the miners and their families. The Pump Handle posts about the outreach bySago victims, who are offering support to Utah miners’ families. Wall Street Journal notes that this awful vigil underscores the failure of the safety overhauls initiated last year. And while all eyes are on the Utah situation, Tammy at Weekly Toll reports on 3 miners who died on the job in Indiana last week. Workplace Prof Blog notes that mining is still the most dangerous job in the U.S..

Frequency continues down, severity is up - Roberto Ceniceros of Business Insurance reports that in its annual study, NCCI states that workers comp frequency - the number of claims that occur - continues in its multi-year downward trend, and is pervasive across all industries. However, the cost of those claims continues to rise, as wage replacement and medical costs continue to increase. However, the rate of the severity increase is slowing. Ceniceros notes that "Increases in average medical cost per claim “remain substantial” and rose 7.5% in 2006, NCCI said. Medical costs per claim have increased an average of 8.5% per year over the last five years, which is less than a 10.3% annual increase from 1997 to 2001."

NCCI's full report on the 2006 drop in claim frequency (PDF) attributes the trend to a combination of factors:

  • Continued emphasis on workplace safety in all employment classes
  • Increased use of robotics
  • Increased use of modular design and construction techniques
  • Increased use of power-assisted processes
  • Advances in ergonomic design
    # Proliferation of cordless tools
  • More and better job training
  • Improved fraud deterrents

High employer fraud in CA - a new report says that employer fraud in CA is rampant, and may be as high as $100 billion in under-reported payroll. The report studied rates from 1997 through 2002 because there is a significant time lag in reporting rates to the public.
The 42-page report was released last week by the Committee on Health and Safety and Workers' Compensation from the University of California Berkeley researchers Frank Neuhauser and Colleen Donovan. It is the first to quantify the extent of fraud in workers' comp payroll reporting in California. An article on the fraud report in the San Francisco Chronicle explains how this type of fraud works and how it results in honest employers paying significantly higher rates.

"To insure a roofer, he said, the employer may have to pay a dollar in workers' comp premium for every dollar in payroll. In other words, it costs the honest boss about twice as much per hour to send a worker up on the roof than the paycheck would suggest. But to get workers' comp coverage for a clerk in that same office, the boss may have to add only a penny in workers' comp costs for every dollar in payroll.

So one easy-to-commit but tough-to-detect fraud, Walters said, is to classify a roofing foreman as a clerk. That person's cost , instead of doubling, is increased a tiny fraction. But if the fake "clerk" falls off the roof, the insurer still has to pay all the costs of treating them because, under law, the worker is not at fault.

Meanwhile, the insurer, who bases premiums for all roofers on the total number of accidents for all the workers in that class, has been robbed of 99 cents that should have gone toward covering the costs of such accidents."


Filing deadline extended for NYC Recovery workers - N.Y. extends deadline to sign up for 9/11 benefits. Responders who aided in the rescue, recovery and cleanup efforts now have until August 14, 2008, to register with the New York State Workers' Compensation Board to maintain eligibility for the federally funded benefits. This isn't registering for benefits; rather it is putting a stake in the ground to establish eligibility should a need later arise. Many recovery workers are experiencing delayed onset of respiratory illnesses.

Health and safety - Good news on the CPR front. The length of time that typical trainings take - 3 to 4 hours - is often a factor that discourages more people from taking the classes. But new studies show that CPR training can occur in as little as a half hour. In preliminary studies, these shorter courses are proving as effective as longer ones. Thanks to Healthbolt for this item, and also for this great link to Learn CPR - You Can Do It!, a collection of online videos and illustrated guides offered in a variety of languages.

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August 13, 2007

 

Workers comp coverage for independent contractors is the issue that just won't go away. A while back we blogged reform efforts in Delaware, which almost became the first state to require comp coverage for sole proprietors. Almost, but not quite.

Delaware has a long-established (and well-deserved) reputation for being a comp disaster zone. That may no longer be the case, as they have implemented far-reaching reforms that should bring down costs substantially. They decided, however, not to become the pilot state for requiring coverage on all sole proprietors. There was a tremendous push-back from independent contractors, who argued (not without reason), that the cost of coverage would be prohibitive. It would put many of them out of business.

So Delaware backed down. The revised statute [s. 2311(a)(4)] reads as follows:

All independent contractors governed by this subsection shall be covered under this chapter. Independent contractors shall have an option to purchase coverage to satisfy this requirement, or alternatively shall be insured by the general contractor, subcontractor or other contracting entity for which they perform work or provide services...Partners and sole proprietors, when working in an independent contractors role, shall be subject to the requirements of this subsection...

Delaware, in effect, has chosen to implement the Massachusetts's solution: allow sole proprietors to choose coverage, but don't force it. However, when sole proprietors exercise their opt-out option, the burden of their coverage falls unambiguously on the general contractor. At premium audit, Delaware GCs who cannot produce a certificate of insurance with proof of coverage for their sole proprietor subs will be billed for the payroll portion of the subcontract. My guess is that many will try to pass this cost back down to the sole proprietors, who might well end up paying for the coverage they said they cannot afford.

New Jersey
John Geaney, Esq., our go-to guy in New Jersey, summarizes a new law that comes down hard on employers who deliberately misclassify employees. Bill no. 4009 makes it a criminal offense to knowingly fail to properly classify an employee. In other words, general contractors are presumed to be the employer of everyone on the job site, unless they can prove otherwise. Proof would likely require a certificate of insurance and a contract for the work. In addition, New Jersey will probably follow something similar to the three step test currently in use in MA:
1. The sub must run an independent business and be in complete control of the work at all times
2. The sub must work for others
3. The sub must be in a trade distinct from the trade(s) performed by employees of the GC.

Crack Down
These recent actions in New Jersey and Delaware are part of a strong national trend. States are determined to crack down on the wide-spread practice of avoiding the payment of benefits in the construction industry: not just workers comp benefits, but social security and unemployment insurance as well. Historically, when independent contractors have been injured on the job, state funds have provided coverage. Now it appears that general contractors are going to be held accountable: when sole proprietors opt out, GCs - willingly or not - will have to pick up the tab.


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August 9, 2007

 

Kudos to some of our Health Wonk Review "usual suspects" who were included in Managed Care's July story on health care blogs. Author Alan Adler, MD, who is the Medical Director, Independence Blue Cross, offers a brief intro into what blogs are and a sampling of various health care blogs. I think he did a great job explaining blogs. For example, how true is this:

If you've only heard of blogs from the consumer press, you might think they consist entirely of blather about pop culture and outrageous fulminations from the political far left and far right, but the fact is, there are many serious, well written blogs, and the major health care issues of the day are discussed on blogs — before, and more extensively, than they are or could ever be discussed in academic articles.
We're glad to see some of the HWR crew cited. In the four years since we began blogging, we've really seen health care grow to be an exciting and thriving blog sector, and as Adler points out, there's something for everyone.

OK, on to this week's issue of Health Wonk Review. When I agreed to host in August, I thought I would have things easy, with just a few skinny posts here and there. Not so - lots of submissions rolled in, so settle down for a big fat issue and a good long read.

First up to bat, Dr. Roy M. Poses of Health Care Renewal blogs about another death in a gene therapy trial. In this case, the death occurred in an early phase trial of gene therapy for arthritis. The story includes troubling allegations of irregularities in the trial and odd connections between this trial and the infamous trial of gene therapy in the late 1990s, which also led to a patient death. Roy notes that despite the the story raising many intriguing questions and providing few answers, it has garnered little attention in the mainstream media.

Bob Laszewski of Health Care Policy and Marketplace Review asks why President Bush is suddenly so willing to veto spending bills. He notes that the President threatened to veto a highly popular bipartisan deal to reauthorize the State Children's Health Insurance Plan (SCHIP), along with just about every other spending bill the Democrats have offered, including those with substantial Republican support. In the first six years he didn't veto a single spending bill. What's going on here? Bob has some ideas.

Jason Shafrin of Healthcare Economist discusses a study which appeared in the August issue of JAMA demonstrating that violence is a vicious cycle. The study included interviews with more than 2500 adults in northern Uganda to examine how exposure to war crimes affects views about peaceful negotiations.

What's the secret to reforming health care? Dr. Brian Klepper from The Doctor Weighs In suggests that the answer lies in the private business sector, a group that must come together with common purpose to drive reform. And in assembling this coalition, he has a prescription for success: Don't invite anyone from health care.

David Williams of Health Business Blog is apparently better natured than we are. He managed to get a laugh out of news reports that MA premiums were being held down by the health reform law since his own premium is going up 26.3%! I guess it's laugh or cry. That was bad news for him to come home to. David has been on the road to see hospitals in Singapore, and kept a seven-part record of his travels at Singapore Medical Tourism Diary.

At HealthBlawg, David Harlow informs us that the Centers for Medicare & Medicaid Services (CMS) is slouching towards pay for performance (P4P). He notes that while private-sector payors and CMS demonstration projects have begun P4P work in earnest, CMS is still in the pay-for-reporting phase of development, but is broadening the scope of this program.

Joe Paduda of Managed Care Matters tells us that when Medicare sneezes, the rest of the health care sector catches a cold. (Or some might even suggest pneumonia, Joe). He offers a quick guide to the primary impending Medicare changes.

Shock! Horror! Matthew Holt of The Health Care Blog disagrees with Uwe Reinhardt. Well, sort of. This week, he tackles the prickly subject of physician compensation.

Cheesy Insurance? What do swiss cheese, NFL teams, and insurance have in common? InsureBlog's Bob Vineyard thinks that Wisconsin's latest effort toward "universal health care" may get sacked before the first play, mainly because it's full of holes.

Adam J. Fein of Drug Channels raises some heretical questions about the AMP war, including why we need the "Saving our Community Pharmacies Act of 2007" (H.R. 3140), which was proposed last week by Reps. Nancy Boyda (D-KS) and Jo Ann Emerson (R-MO). He cites economic data showing that the rhetoric about patient welfare has been overblown by the pharmacy lobby. He may also raise the hackles of the drug lobby in questioning whether the U.S. may actually have too many retail pharmacies.

According to Jay Norris at Colorado Health Insurance Insider, things aren't looking too favorably for the "independence" of the independent commission established by newly elected Colorado Gov. Bill Ritter, which had the laudable goal of drawing up a plan for the future of health care in Colorado. It turns out that despite good intentions, the commission is now being run by bigwigs in the insurance industry.

Rita Schwab of MSSPNexus blogs about court decisions that signal a new era for hospital liability. Both Putnam General Hospital in WV and Silver Cross Hospital in IL have both been on the losing side of lawsuits involving negligent or sub-standard credentialing practices.Increasingly, malpractice attorneys are looking, not just at the physician’s skills, but also at the credentialing process in the hospital that granted the physician access to the facility.

In his post about why New York medical malpractice insurance jumped 14%, Eric Turkewitz of New York Personal Injury Law Blog suggests that "lousy government policy on the insurance end has caused a 'crisis' that affects health care."

Michael F. Cannon of Cato@Liberty has a conversation with one of the WTC rescue workers who appeared in Sicko. If you've seen the film, you know that Michael Moore took 3 rescue workers to Cuba for health care that they couldn't get here. Michael wrote an op-ed in a NY paper, and one of the workers posted a comment. Read the exchange.

Dmitriy Kruglyak of Trusted.MD looks at People Powered vs. Consumer Directed Healthcare and discusses what he sees as the very real differences between the two. The post offers his assessment of what is really wrong with Consumer-Directed Healthcare and how he thinks the private sector can fix things without turning everything over to the government.

Here at the Workers Comp Insider homestead, my colleague Jon Coppelman discusses the impending problems that are likely with the Homeland Security's scheme to get tough on illegal immigration. Employers will be required to fire workers who have Social Security numbers that come up false.

The next issue of Health Wonk Review is just two weeks away. It will be hosted by Daniel Goldberg at Medical Humanities Blog. Keep up with the schedule and the archives at Health Wonk Review.

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August 8, 2007

 

With Congress failing to pass immigration reform, Homeland Security is about to turn up the heat on big businesses. We read in the New York Times that new rules are about to be issued, requiring employers to fire workers who use false social security numbers. Homeland Security is also planning to step up the raids on workplaces across the country. In the chess game that is immigration policy, the pawns are about to get crushed.

"We are tough and we are going to get even tougher," says the aptly named Russ Knocke, a spokesman for Homeland Security. "There are not going to be any more excuses for employers, and there will be serious consequences for those that choose to blatantly disregard the law."

Wrong Numbers
Here's how the new enforcement program will work: Social Security will issue no-match letters to large employers where they find a significant number of incorrect numbers. These letters are issued only to employers with at least 10 mismatches, when these workers represent at least one half of 1 percent of the total workforce. Do the math: the enforcement effort is limited to employers with at least 2,000 employees. The key target of the enforcement effort is big business.
FOLLOW UP NOTE: Redo the math! A reader points out (see comments) that this new program may well impact much smaller employers, with as few as 50 employees. So the impact is potentially much greater than I originally thought. And as for mistakes in my math, alas, this is by no means the first.

Once employers receive the no-match letters, they have 14 days to check for clerical errors and consult with the employees to correct any mistakes. If they cannot come up with a valid social security number, they must fire the employees or face fines of up to $10,000.

Immigrant advocacy groups fear the consequences: massive lay offs accompanied by a surge in the "underground" workforce. Add to this the complete absence of safety enforcement for most undocument workers and you have a truly volatile mix.

There is an over-arching irony in this situation: most of the undocumented workers who will lose their jobs under this program are performing valuable and valued work. They have taken on jobs that credentialed workers traditionally reject: work that is too hard, with pay that is too low and working conditions that are too miserable. Many of these important jobs will remain vacant. Beyond the misery of the families and communities hosting these workers, we will all see a signficant increase in the cost of living. Sure, it's trouble for American business. But soon enough it will become trouble for all of us.

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August 7, 2007

 

In response to a workers comp crisis, state legislatures are often tempted to set up their own insurance companies. Unfortunately, the insurer of last resort frequently becomes the one and only insurer: bloated by patronage and the recipient of unfair market advantages, the state fund can become a monstrous leviathan, dwarfing other carriers and all but eliminating competition in the marketplace.

Take Rhode Island. Beacon Mutual dominates the market. It would be nice to report that the dominance is based upon fair pricing and sheer competence, but it isn't. Studies last year (one by Guiliani Associates) revealed that the fund made political payoffs, undercharged companies with ties to politicians and misspent millions. (See The Insider's perspective when the scandal first broke here.) Rhode Island might be small, but when it comes to corruption, they think big.

Governor Carcieri did not mince his words:

Specifically, this market conduct examination shows that Beacon Mutual’s former leadership fostered a corporate culture that suffered from weak management and controls; inappropriate producer, agency and vendor relationships; favoritism and bias in pricing; inappropriate and lavish spending; and a total disregard for public oversight and for Beacon’s public mission and purpose. In short, Beacon Mutual’s conduct was completely inappropriate and reprehensibly abusive of the public trust.

Underwriting for Gangsters
In response to these rather embarassing findings, Beacon Mutual has made a a lot of promises. You can find 79 specific recommendations and Beacon Mutual's response here. Let's focus for the moment just on the underwriting process: the way an insurer evaluates risk and prices policies. It's supposed to be objective and fair. It's supposed to operate the same way for every risk in a given class. Here's how it operated under Beacon Mutual:

Underwriters priced accounts any way they liked. If you were well connected, you might enjoy a substantial discount over your competitors. Two companies, same work, very different cost of insurance (with no relationship to prior losses).
- Now Beacon Mutual promises to file pricing plans and rigidly apply the same criteria to all risks.

The former head of underwriting had no background in insurance or underwriting. He maintained a "VIP list" of companies that should receive favorable rates, including the companies of board members and those with ties to high-ranking managers and certain Rhode Island politicians. Apparently, the only risk assessment he was concerned with involved not getting caught. (He screwed that one up, too.)
- Now Beacon Mutual has hired a professional underwriter as a Vice President.

The unusual underwriting process at Beacon Mutual involved a committee comprising, among others, of the human resource director and the VP for information Systems. I'm sure that those folks had interesting things to say about risk, but their opinions were on the level of the proverbial "man in the street."
- Beacon Mutual promises more "transparency and control" in the underwriting process.

There were no written procedures for underwriting. The process was whatever political expediency dictated at the time.
- Beacon Mutual now has an underwriting manual. (Gee, I hope they follow it.)

Documents at Beacon Mutual had no date stamp, so it was pretty easy to retrofit documentation when the need arose.
- Beacon Mutual now has a date stamping machine (and they promise to use it).

Finally, if Beacon Mutual liked an agent, they cut a bigger commission check. Conversely, if an agent dared to write a policy with some other carrier, they would likely see a reduction in their future commissions. Agents had to think long and hard about writing business with an outside carrier.
- Beacon Mutual now promises to eliminate higher commissions for preferred agents.

Open Market in RI?
Until recently, if an outside carrier offered a policy to a RI company, Beacon could arbitrarily lower their rates to keep the business. No one can compete against that kind of advantage.

So is Beacon Mutual really going to play fair? Is this a good time for other carriers to re-enter the RI marketplace? Maybe. Beacon Mutual has made a lot of promises. They have committed to the kind of transparency that governs virtually all other comp carriers. Beacon Mutual has long ruled RI, the way a bully rules a neighborhood. Bullies don't like to give up control. Only time will tell if Beacon Mutual and the state's traditionally lax regulators are really serious about leveling the playing field.

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August 1, 2007

 

Jason Shafrin at Healthcare Economist hosts this week's edition of Cavalcade of Risk - check it out!

Tammy Miser gives us The Weekly Toll. Find out who, where, when and why American workers are dying on the job. Often, work-related deaths are relatively quiet affairs in terms of media coverage, but one tragedy played out on the national stage last week when four newsmen lost their lives in a helicopter crash. It was distressing to hear their colleagues choking back their emotion as they covered the tragedy on air. None of us go to work expecting to see our colleagues die.

Joe Paduda at Managed Care Matters talks about the increasing severity problem dogging workers comp, with the culprit being medical costs running amuck. His post was sparked by the release of a recent Conning Research study, Workers’ Compensation: Getting a Handle on Severity, which warns that the increase in severity in the face of a steady reduction in frequency portends trouble. In this and a follow-on post about a recent report issued by Marsh on controlling workers comp, Joe takes both industry giants to task for not digging deeper to identify some of the fundamental medical cost drivers.

According to a recent study by the Finnish Institute of Occupational Health, most lifting programs are ineffective at preventing back pain or reducing disability claims. The study, reported in Occupational Hazards, finds that most devices such as back belts and lifting equipment and most safer lifting techniques don't really work. Another expert quoted in the article agrees, noting that such efforts may be "well intentioned but probably pointless" and that exercise may be the only effective intervention. (We note that a NIOSH study on the effectiveness of patient lifting equipment in nursing homes found the equipment was effective at preventing injuries).

Ergonomics In the News has been following an interesting debate which was sparked by an article in PC Magazine, Ergonomics Is a Crock. Follow-on responses include Gearlog's Why Ergonomics is Not a Crock and BellaOnline's Ergonomics - Growing Pains or Just Misunderstood? and the discussion board at PC Magazine.

The bloggers at Hazards Recognized offer an on-the-job's eye view of various safety issues. Barton Jones challenges the idea that work injuries are inevitable and promotes a "zero accidents" philosophy and goal. Jason Heilpern uses a real-life example to point out the difficulty that a safety manager can have when worker safety conflicts with work schedules. Tom Lash talks about the hazards of fishing and farming.

Thanks to rawblogXport, we learn that a new law in New Jersey targeting the new law in New Jersey targeting the misclassification of full-time construction workers as independent contractors. Labor Commissioner David J. Socolow said two out of every five construction contractors audited last year had misclassified their employees. One of the bill's primary goals is to ensure that workers are covered by workers' comp. The law includes fines of up to $75,000 and jail time for knowingly misclassifying employees. The state can also halt construction on a second violation, and the employer could lose eligibility to bid for public contracts.

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