All posts tagged costs

Vehicle Crashes on and off the Job Cost Employers Dearly


The costs for businesses when their employees are involved in car accidents on and off the job are staggering, at $47.4 billion a year, according to a new study.

The “Cost of Vehicle Crashes to Employers – 2015” study, by the Network for Employers for Traffic Safety, looked at how much car crashes cost businesses in terms of workplace disruption and liability costs. While the costs to companies when their workers are in on-the-job automobile accidents are easily measured, the costs to businesses when their employees miss work after accidents while off the job are almost as steep.

Employers end up paying in some way for injuries to their employees on and off the job, and to their dependents. They also pay for injuries caused to third parties who are injured when an employee is involved in an accident while driving on the job.

In 2013, motor vehicle crashes killed 1,620 people and injured an estimated 293,000 while they were working, the study found. More than half of the injuries forced people to miss work.


The report, funded by the U.S. Department of Transportation, found that:

  • Costs totaling $20.6 billion were due to property damage, workplace disruption and liability costs.
  • Another $26.8 billion in costs to employers were due to health-related fringe benefits, including sick leave, health insurance and insurance covering work losses. They cover contributions to workers’ compensation

insurance, health insurance, sick leave, Social Security disability insurance, life insurance, and private disability insurance, as well as insurance administration and overhead.

  • Of those costs, fringe benefit costs of off-the-job crash injuries were $21.8 billion, accounting for 81% of the health-related fringe benefit bill.
  • The fringe benefits payments were split roughly equally between health care expenses and wage replacement, such as sick leave and life insurance, according to the report.
  • On- and off-the-job motor vehicle crashes involving employees or their dependents cost employers more than 1.6 million lost work days in 2013, and 90% happened outside of work, according to the analysis.


The top four causes of the accidents were speeding, distracted driving, driving under the influence of alcohol, and not wearing a seat belt.


What can you do?

The U.S. Centers for Disease Control has the following tips for employers:

  • If you have a fleet, implement a fleet driver safety program and maintain complete and accurate records of workers’ driving performance.
  • Check driving records of prospective employees and conduct periodic rechecks after hiring.
  • Ask your workers to periodically provide documentation of their insurance and to report any suspensions, revocations and convictions for vehicle-related offenses.
  • Establish schedules that allow drivers to obey speed limits and follow hours-of-service regulations where they apply.
  • Require newly hired workers to attend performance-based defensive driving courses, with mandatory refresher training at regular intervals.
  • Implement a driver safety program that emphasizes the link between driver safety at work and driver safety at home. Safe driving in the workplace benefits the worker’s family by reducing the risk of fatality or disabling injury. In addition, lessons learned on the job can increase workers’ awareness of the importance of safe driving outside of work hours.
  • In your training emphasize the need for wearing a seatbelt at all times.
  • Have a zero-tolerance policy for talking on the phone and texting while driving, both of which are already against the law in most states. Require that any employee who needs to make a call, pull over first when it’s safe to do so, regardless of whether they have a hands-free unit.



Telemedicine Can Reduce Premium Costs, Save Time

tele medicine

MORE AND more health plans and employers are embracing telemedicine as part of their health insurance offerings, in order to help enrollees who may live far from their doctor – and to save money.

A 2014 study by the consulting firm Deloitte calculated that there would be 75 million virtual doctor visits in Northern America that year, and another survey by Towers Watson in the same year found that 37% of employers planned to offer their workers telemedicine consultations in 2015 – with another 34% planning to do so by 2017.

More private insurers are paying for telehealth services, a trend experts say will grow as more people become accustomed to it.

Studies have found telemedicine can reduce the cost of delivering health care, particularly for routine office visits. After all, a $50 telemedicine visit to diagnose a sinus infection is much cheaper than a $500 trip to an emergency department.

This is also important when waiting times to see your doctor can be more than a week, by which time the infection may have worsened.


Fitting the digital lifestyle

One of the main benefits of telemedicine is that it can help rural health plan enrollees more easily access health services without driving some distance to the doctor’s office.

Also, telemedicine fits well into the digital lifestyle for Generation Y and others who prefer shopping online and ordering movies via Netflix.

Employers who have been surveyed about telemedicine say they want to offer modern conveniences to these connected employees, who expect on-demand services.

Insurers and employers alike are also hoping telemedicine will live up to its hype by keeping people out of more expensive health care settings.

Many large national insurers have been experimenting with telemedicine in various states to suss out potential cost savings.

The two issues they’ve been dealing with are what to pay doctors who are helping patients by live video chat, and what types of services can benefit from telemedicine and which ones should not be included.

And telemedicine is no panacea. Michael Radeschi, director of product management at HIghmark, a Blue Cross and Blue Shield affiliate in Pittsburgh, told the trade publication Modern Healthcare that technology can’t replace all of the nuances of in-person clinical care.

“If we found ourselves at 40% to 50% of professional services that were telehealth, we’d be a little nervous,” he said.


What can telemedicine cover?

Telemedicine includes everything from telephone consultations and live video feeds via Skype to digital CT scans and remote monitoring of intensive-care units. Here are some examples:

  • It can involve a primary care or allied health professional providing a consultation with a patient. This may involve the use of live interactive video or the use of store and forward transmission of diagnostic images, vital signs and/or video clips along with patient data for later review.
  • Remote patient monitoring, which uses devices to remotely collect and send data to a home health agency or a remote diagnostic testing facility for interpretation. Such applications might include specific vital sign data, such as blood glucose or heart ECG, or a variety of indicators for homebound patients. Such services can be used to supplement the use of visiting nurses.
  • Consumer medical and health information includes the use of the Internet and wireless devices for consumers to obtain specialized health information and online discussion groups to provide peer-to-peer support.


Telemedicine benefits

  • Improved access – It improves access to doctors and allows physicians and health facilities to expand their reach, beyond their own offices.
  • Cost efficiencies – Telemedicine has been shown to reduce the cost of health care and increase efficiency through better management of chronic diseases, shared health professional staffing, reduced travel times, and fewer or shorter hospital stays.
  • Quality – Studies have shown that the quality of health care services delivered via telemedicine is as good as that given in traditional in-person consultations.
  • Patient demand – The greatest impact of telemedicine is on the patient and their family. Using telemedicine technologies reduces travel time and related stresses for the patient.

Watch Out for the Newest Cyber Threat: Ransomware


The cyber-security stakes have gotten higher for enterprises with the recent news that a hospital in Los Angeles had to fork out $17,000 to pay cyber criminals after they crippled its network.

The ransomware that infected Hollywood Presbyterian Medical Center and the ransom they had to pay the hackers to unlock their system reflect the newest danger facing any organization that has a computer network.

The hospital’s case is not an isolated one, and experts are warning that cyber criminals have increasingly switched their targets from big companies to small and mid-sized businesses as their networks are easier to infiltrate, largely because they cannot afford the same sophisticated network security as large companies can.

The “Symantec 2015 Internet Security Threat Report” found that more than half of all cyber attacks were directed at small and mid-sized business, with hackers using an array of attack methods.

The “2015 U.K. Government Security Breaches Survey” found that 74% of small organizations had reported a security breach in the last year.

According to the Symantec report, 52% of spear phishing attacks – which are carried out using fake e-mails that contain links to malicious code – were targeted against SMEs.

The issue of cyber security for small businesses is made even more pressing by state laws that can result in fines for organizations that fail to notify authorities and anybody whose personal data or credit card information may have been breached in an attack.

The most common types of attacks on SMEs include:

  • Ransomware – This is a piece of malicious software, typically received via a phishing e-mail, that encrypts all of the data on a company’s network, with the perpetrators requesting a ransom (typically $1,000 to $2,000) in order to provide the decryption key.
  • Hack attack – A hacker manages to gain access to a company’s network, typically by exploiting an unpatched vulnerability within the software, allowing them access to the company data. The target will generally be personally identifiable information on a company’s customers, especially credit card information, or employees whose Social Security numbers and other identifiable information may be exposed for the purposes of identity theft.
  • Denial of Service attack – This is when a company’s website is overwhelmed by a volume of data pushed to its servers in a malicious manner. These attacks are increasingly easy and cheap to carry out, with some online tools costing as little as $30 per hour.
  • Human error – People are generally the weakest link in any security chain, and many breaches are the result of information being lost, or distributed to the wrong person. Even the seemingly mundane can have far-reaching consequences, particularly where sensitive personally identifiable information is involved.
  • CEO fraud – This is where a criminal poses as a senior person within a firm, either by hacking or “spoofing” their e-mail account, and convinces someone with financial authority to make a payment.


What you can do

There are several simple steps you can take to reduce your chances of being attacked:

  • Use secure passwords that contain a combination of lower- and upper-case letters, digits and other symbols.
  • Install antivirus and malware software on all company devices, including any mobile devices. You should also install such apps on any of your employees’ mobile devices if they are using them for company business, particularly if they connect to your VPN or access your network.
  • Conduct regular software updates that contain vital security upgrades and educating staff on cyber risks. If you have software and are notified that it needs to be updated, don’t hesitate to do so.
  • Develop and implement e-mail, Internet and social media policies for your employees to follow. The policy should include the requirement that your employees don’t click on suspicious links and that they report any suspicious e-mails.



Drug Testing in Workers’ Comp Skyrockets

Drug testing of injured workers by treating doctors has skyrocketed over the past seven years as painkiller abuse continues and physicians want to monitor their patients for staying with their prescribed drug regimen.

The use of urine drug testing on injured workers in California increased 2,431% between 2007 and 2014, according to the California Workers’ Compensation Institute (CWCI).

During that period, urine drug tests grew from 10% to 59% of all California workers’ compensation laboratory services, while drug testing reimbursements increased from 23% to 77% of all lab payments in the system.

The rapid increase reflects the growing concern among workers’ comp insurers and employers about workers getting hooked on high-strength pain medications known as opioids, and similar pain drugs.

Other studies by the institute have found that adding opioids into the picture can greatly increase the time an injured worker is away from work recovering, as well as the cost of the claim.

Also, doctors are increasingly using the tests to ensure injured workers are taking the medicines they prescribe. The downside is that the cost of the testing continues to increase and can easily be a few thousand dollars, adding significantly to the cost of claims.

And the trend is not unique to California. In a recent multi-state study by the Workers’ Compensation Research Institute on injured workers with long-term opioid use, the percentage of workers who received at least one drug test increased from 16% to 25%.

Not only are more injured workers being tested, but workers themselves are being tested more, as well.


Here are some other significant findings from the study:

  • Between 2003 and 2012, the average number of drug testing service dates for injured workers who received these services increased by 9% at 12 months post-injury; 35% at 24 months post-injury; and 350% at 36 months post-injury.
  • Among the injured workers who were drug tested, the average number of tests per employee more than tripled from 4.5 in 2007 to 14.9 in 2014, driving the average amount paid per date of service from $96 in 2007 to $307 in 2014 – a 220% increase.
  • The number of providers who were paid for testing injured workers climbed from 428 in 2008 to 876 in 2014. Much of that growth is attributed to a migration towards physician in-office testing, because testing equipment has drastically come down in price.
  • The amount paid for drug tests in California workers’ comp are based on Medicare billing rules. These rules were revised in 2010 and 2011, after Medicare determined there were questionable billing practices for drug tests taking place.
    The CWCI study found that after those changes were made, the mix of tests used on injured workers changed. Drug screens, which are used to identify the presence or absence of a drug, accounted for a smaller share of tests.
    Meanwhile, quantitative tests, which are used to measure the amount of a drug sample, increased sharply. The CWCI notes quantitative tests are not subject to the tighter Medicare billing rules, perhaps explaining the increase.


Is it necessary?

Drug testing is in part related to the increasing costs and prescriptions for drugs in the workers’ comp system, as well as the fact that testing has shifted from labs to doctors’ offices, which can now afford testing equipment that was too expensive in the past.

Several medical treatment guidelines do call for doctors prescribing opioids to also test for illicit drug use under certain circumstances, such as when addiction or abuse is detected or when patients are at risk for overdose and death, sources said.

Doctors need to identify patients abusing drugs because it is inappropriate to provide them opioids and it can change the treatment required for them.

Proponents of drug testing say it helps keep injured workers’ medicinal intake in check to ensure they are sticking with their drug regimens and also not abusing prescription pain medications.

Tests revealing that patients are using drugs for other than “clinical health” can also help workers’ comp payers arguing before a judge or hearing officer regarding their responsibility for the claimant.

The purpose of testing is to assist in medical management. Still, testing should be done based on medical necessity related to a claimant’s medical presentation, dispensed drugs and evidence-based medicine protocols.


Specialty Drugs Raising Concerns for Employers, Employees

While rapidly rising drug costs are starting to raise concern among employers, one major driver of health care costs is drug spending that’s not even part of the pharmacy benefits you offer your staff.

Most health plans never anticipated including in their drug benefits packages specialty drugs – a new class of pharmaceuticals that are tailored to individuals based on their genetic makeup or other factors.

The problem is that they typically have high price tags that can exceed $100,000 a year, and the costs are often difficult to detect since the cost is often listed as a medical billing, rather than as a pharmaceutical.

Specialty drugs – also called biologics – which treat serious and complex conditions such as cancer and rheumatoid arthritis, make up about 17% of employers’ total drug costs, even though just 1% of the workforce takes them.

The new medicines are prompting a rapid escalation in the cost of drugs and have become one of the biggest concerns facing employers and their employees in terms of their health care costs.


Unequal pricing

It’s not uncommon for specialty drugs that treat multiple sclerosis, cancer or heart disease to cost $50,000 to more than $100,000 a year. And because they are often administered in clinics or hospitals and not dispensed from pharmacies, they fall under medical benefit claims 47% of the time, according to data in a brief by Health Affairs.

These drugs have risen to the radar nationally thanks to the often shocking prices that have shown up on bills. <i>Forbes</i> recently had an article looking at the drug Harvoni, which completely cures the majority of people with the most common type of hepatitis C. But the maker, Gilead Sciences, charges $94,500 for the 12-week treatment, or about $1,000 a pill.

Prices for specialty drugs in the United States far exceed prices for the same drugs in other countries. Another Hepatitis C drug, Sovaldi, costs $84,000 in the U.S. per treatment. The same drug is priced at $900 in Egypt and $51,000 in France.

New drugs to treat common conditions are also driving up costs. For example, U.S. costs for powerful new cholesterol management drugs called PCSK9s are expected to be $7,000 to $12,000 per patient per year, compared with about $1,000 on average for conventional drug therapies.


Murky numbers

Unfortunately, employer-sponsored plans are often not able to get a clear picture of what those costs are, due to the complexities of billing for such drugs.

The Minnesota Health Action Group, a coalition of big businesses, municipalities and some government agencies in Minnesota, is trying to change that.

One of the group’s committees has been studying the issue of specialty drug costs in an effort to find a working solution for the problem. At this point it’s not even clear how much of health care dollars is spent on these drugs.

The Action Group is working with Minnesota employers and providers to identify the codes for specialty drug payments and get a better understanding of what is being spent on specialty drugs on the medical benefit side.


A political solution

The Action Group said it might be necessary to turn to legislators to bring price information to the public.

That’s already happening in some states. For example in California, the state Legislature is considering a bill, AB 339, that would cap the price that employees in employer-sponsored plans would pay for specialty drugs.

The legislation comes on the heels of Covered California, which, beginning in 2016, will cap at $150 or $250 the maximum amount silver, gold and platinum plan enrollees will pay for a prescription each month. Those with bronze plans will pay a maximum of $500 per month per prescription. The change is set to be reviewed in a year.

The Minnesota Health Action Group also plans to push for price transparency of specialty drugs, for health insurers to adopt coverage and benefit policies that encourage appropriate use of the drugs.


Call to action

The Action Group has formed a Specialty Pharmacy Learning Network to assist employer members find solutions to the specialty drug quandary.

The group recommends that employers:

  • Start by understanding their current specialty pharmacy drug spend, including the 50% of spend that is administered by health plans as part of their medical benefit.
  • Ask their health plans and pharmacy vendors to project specific future costs given their company’s population and drugs that are currently in the pipeline.
  • Evaluate their health plans and pharmacy benefit plan designs to make sure the plans aren’t inadvertently driving employees to higher-cost sites of care (like clinics, instead of hospitals) for specialty drug treatments.
  • If possible, work with their health plans to contract with providers who administer high-cost drugs on a fixed-fee basis.

Reporting Claims Later Can Double the Cost, Report Finds

A new report has found that when employers are late in reporting workers’ comp claims to their insurers, the cost of the claim often jumps by 50%.

The report by the National Council on Compensation Insurance found that claims for workplace injuries that were reported four weeks after the incident, ended up costing $19,936 on average, compared to $13,210 for claims reported one to two weeks after the injury. That’s a jump of 51%.

Interestingly, claims that were reported between one day and a week after the injury cost $13,844 on average. Claims filed three to four weeks after an injury cost $17,785.

The NCCI, which helps set rates in more than 30 states, found that claims that were reported more than two weeks after an incident were characterized by:

  • A lower medical share of total claims costs.
  • More attorney involvement.
  • More use of lump-sum settlement payments.
  • Claims that stay open longer, and that have a lower closure rate at 18 months after injury.


“These characteristics suggest that claims with a delay of more than two weeks are more complex to settle, take longer to close, and involve a longer period before the injured worker can return to work,” the NCCI wrote in its report.

Claims in which a worker’s injury was reported on the day of the accident had an average cost of $17,298 per claim, according to the NCCI.

The study said immediate reporting likely reflected higher costs because such claims tended to have “very severe injuries that require immediate medical attention,” as well as require extensive medical care and extended recovery times.

Involvement of attorneys becomes more common as the reporting lag increases. Claims reported immediately involve an attorney 13% of the time. This increases to 32% for claims reported after week four.

Claims that were delayed by more than four weeks had an average cost of $19,251, the NCCI said.


The takeaway

Delays in reporting claims will increase your costs and the potential for litigation.

Prompt reporting ensures your employee gets the proper medical care in a timely manner and can return to work more quickly, improves morale, and is effective cost management.

When you become aware of a workplace injury, you should start the claims reporting process as soon as possible. The longer you wait, the costlier the claim will be and the more chance your injured worker will enlist an attorney. Once that happens, the claim is likely to drag on for longer than usual and, as it stays open longer, the costlier it will become.

Establish a reporting protocol so all employees understand what their responsibility is when there is a workplace injury. Every employee should know to immediately report any work-related injury, no matter how small and regardless of whether they think they need medical treatment.

Every employee should know to whom they should report their injury, and there needs to be a system in place to ensure that report gets to the proper person so the next step can be determined.

If all employees are responsible for reporting injuries to their supervisor, every supervisor needs to know what their responsibilities are.



Protecting Your Firm as an Additional Insured

In the course of doing business, you may sometimes find yourself entering into contracts requiring that your business be named as an additional insured on another party’s insurance policies.

This is often done to make sure that your own insurance is not depleted by defense and indemnification costs for losses for which you may be legally liable as a result of the business relationship you have with the other party, and that are not due to your own firm’s direct negligence.

An additional insured is defined as an individual or entity that is not automatically included as an insured under the policy of another, but for whom the named insured’s policy provides a certain degree of protection.

There are many times when you may want your firm included as an additional insured on another’s policy. Here are just a few examples:

  • If you are a building owner, you want to be an additional insured on the property and general liability insurance of your tenants in case one of them damages your building or in case a visitor to the property is injured.
  • If you are the owner or a contractor on a construction project, you want to be an additional insured on the general liability insurance of your contractors and subcontractors in case there is an injury to one of their employees.
  • If you are a distributor or a retailer, you may want to be an additional insured on the insurance programs of the manufacturers of the products that you sell.
  • If a contractor comes onto your property to perform work of any type, including erecting displays or other maintenance or structural work, you will want to be named as an additional insured on their policy in case the display falls on someone, or someone is injured due to the work they are performing. You don’t want to be held responsible for any dangers or injuries created by their work.

If you are to become an additional insured on another company’s policy, you need to confirm that the other party has indeed named your company as an additional insured with its insurance company. Their word alone is not good enough.

You should demand a copy of the policy that explicitly lists your company as such. You want to see a copy of the policy and not the certificate of insurance, which is not sufficient proof that your company has been added.

Additional insured status is effectively conferred through an additional insured endorsement to the other party’s original insurance policy. An endorsement essentially serves as an amendment to the terms of an insurance policy that is incorporated into the relevant insurance policy. These amendments can take the form of an endorsement that specifically names a particular additional insured, or a general endorsement that identifies some class of parties as additional insureds.

But if there is ever a dispute about your company’s status as an additional insured, you will want to have in hand not only the other party’s certificate of insurance, but also a copy of the policy itself and the endorsement that makes your company an additional insured.

There are a few best practices that you can implement to help make certain your firm’s status as an additional insured has been properly secured:

  • At a minimum, always insist on receiving a copy of the relevant additional insured endorsement, as this is the instrument that establishes additional insured status;
  • An additional insured endorsement does not, however, state an insurance policy’s terms and conditions. In order to avoid being surprised by unexpected policy terms (such as strict notice requirement or unfavorable notice of cancellation provisions), you should ask for and receive a copy of the entire insurance policy under which you are an additional insured, and be sure to read it;
  • Retain additional insured endorsements and the relevant insurance policies for as long as there is any potential that claims triggering those policies might be made.

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