Can Wearable Fitness Devices Lower Healthcare Costs?

Businesses have been trying to crack the corporate wellness code for years to no avail.  The below article published on speaks to what possibly could be a positive trend for wellness and healthcare costs.

 A study by a healthcare analytics firm that tracks corporate wellness efforts found that employees using wearable fitness monitoring devices had lower healthcare costs over a two-year period.

Indianapolis-based Springbuk Inc. evaluated medical-related claims of those using the devices at a healthcare company with 20,000 employees. The study comes at a time when most of the nation’s large health insurers have or are about to offer discounts to employees and employers using such devices. From an employer’s perspective, they may be most valuable in motivating healthy lifestyles among employees who are at higher risk of incurring substantial medical claims.

“The analysis shows that after two years, employees who opt-in to the wearable program cost on average $1,292 less than employees in the control group,” said Phil Daniels, co-founder and vice president of Springbuk.

That amounted to a 46 percent cost reduction for those using wearable devices at the company. Springbuk did not identify the employer but said it is in the healthcare industry and has an active wellness program that includes the option to use Fitbit devices.

Such wearable devices, from an increasing number of manufacturers, monitor activity such as heart rates and the number of steps walked.

ABI Research in late 2013 estimated that more than 13 million wearable devices with embedded wireless connectivity could be integrated into employer wellness plans by 2018.

Lots of devices, lots of questions

Use of such devices – including those from Apple, Google and Samsung – is still small relative to the overall population. Just 1 to 2 percent of individuals in the U.S. have used them, but annual sales could hit $50 billion in 2018, according to data cited in a study last year by physicians at the Philadelphia VA Medical Center at the University of Pennsylvania.

Currently, those who wear them tend to be young, early adopter-types and not necessarily those who need them most: older, less-healthy populations. The study suggests that affordability of such devices – some starting at around $100 – will be a determinant in usage, though increasingly insurers or employers are picking up part or all of the cost.

Wearables have the potential to engage “less motivated” individuals, according to the study.

“Some of these devices may justify that promise, but less because of their technology and more because of the behavioral change strategies that can be designed around them,” the study reported.

Data from wearables has become an exciting new stream of information for companies like Springbuk, which helps some of the nation’s largest employers find ways to reduce healthcare costs through efforts such as wellness programs.

About 500 companies use Springbuk’s health analytics platform, which assembles and analyzes disparate sources of data. Grouping employees’ medical claims and pharmacy and lab records into a dashboard for employers to view helps model and predict future healthcare costs and take steps to reduce them.

There’s still more that can be learned from data captured from wearable devices, Daniels said.

“Does taking, say, 10,000 steps a day actually matter? Does it lower obesity rates?” he asked.

Answering such questions is key in helping employers justify expenses for wellness programs, let alone help them get a grip on ever-rising healthcare costs.

So far, “We really view wearable devices as just one more piece of the wellness concept,” Daniels said. “For us, this wearable piece is one more data stream.”

Insurer, employer rollout

Insurers and employers have been slowly gaining experience with the devices.

Last March, Minnetonka, Minn.-based UnitedHealthcare and San Diego-basedQualcomm Life rolled out the “Motion” wearable device. It’s now used in UnitedHealthcare wellness programs offered to about 120,000 people in over 40 states.

Workers and spouses covered under the plans can earn up to $1,460 per year toward their health savings accounts if they reach certain fitness goals. They may earn a smaller amount, however, if they hit some of the goals. That’s important, as some research has shown employees doubtful about fulfilling a heath goal may simply give up entirely.

UnitedHealthcare also caps the amount at which an employer’s health insurance premiums rise each year if employees achieve certain goals.

Craig Hankins, vice president of digital products at UnitedHealthcare, said the insurer applied a great deal of clinical analysis in developing those targets, looking at factors such “frequency, intensity and tenacity” of fitness exercises.

That means participating employees not only had to take so many steps per day – say 10,000 – but also keep heart rates up throughout the day to produce meaningful health benefits.

The Qualcomm device was designed to provide “nudges” throughout the day, in some cases buzzing to remind folks to get moving.

“People need that nudge. They get busy,” said Hankins, who himself wears one. “This was a program that was developed over a couple of years, with a lot of thought.”

Most all other major health insurers have devices as well. One of the earliest efforts was that of Indianapolis-based Anthem Inc., which began wearable device implementation four years ago. It has relationships with several wearable device companies and offers discounts to health plan members for wearables from Fitbit and Garmin.

Anthem piloted fitness tracker engagement with its own employees in 2012.

“We found that our own associates who had a chronic disease or were at risk of a chronic disease and used the Fitbit tracker for a period of six months experienced increased activity levels and weight loss,” said Anthem spokeswoman Geraldine Rodriguez.

The devices by themselves, however, weren’t the only component in positive health results.

“We did learn that coaching support and incorporating reinforcement strategies was instrumental in its success,” Rodriguez added.

“As a result, we determined it would be best offered through our disease management programs.”

Devices alone not the answer

Anthem may be on to something.

A University of Pittsburgh study published last month involving more than 400 people over a two-year period found that while those using a wearable device lost 7.7 pounds, those who received traditional counseling lost 13 pounds.

“Devices that monitor and provide feedback on physical activity may not offer an advantage over standard behavioral weight loss approaches,” authors stated in the study published in The Journal of the American Medical Association.

Both test groups had “significant” improvements in fitness, physical activity, body composition and diet, however.

UnitedHealthcare said it still needs more time to study patient experiences with the wearable devices. So far, about 60 percent of individuals at employers offering the devices have at least registered them, the company said.

“It’s about getting to: ‘How does it work and what do we need to understand about how people interact with it?’” Hankins said. “The early indications are promising.”

Chris O’Malley


Announced yesterday, NCCI filed the approved 14.5% rate increase with the OIR on October 4, 2016.  The effective date of the Workers’ Compensation increase is December 1st, 2016 and no amendment has been made to the ruling that this will only affect new and renewal policies.

12-1-16-fl-rates-by-code Click here for the spreadsheet of all updated rates by class code.

For more information visit:

Matthew Bearing Down On Florida

“One need only think of the weather, in which case the prediction even for a few days ahead is impossible.” Albert Einstein 

Perhaps not, but we are under a few days away and it would appear that we should predict a major event with Matthew’s landfall.  As such, it is important to focus on foremost our families and loved ones.   

While our offices will be closed Thursday and Friday we understand this is a time when our clients and friends depend on us in these rare moments where their insurance policy may be what replaces the roof over their kids or business.  That said, we will be accessible via cell and email.  If there is anything to support you or the business over the next few days please do not hesitate to call.  We are here to help. 

Please stay safe and Pro Libertate!

The Next Generation of Insurance?

A former associate has helped to found a company called Lemonade.  Unfortunately most people when they think of insurance think of lemons, not Lemonade.

The reputation of the insurance community has been suspect, especially to younger buyers of insurance.  The Lemonade model provides clarity to the insurance transaction which is rarely seen, especially at the individual consumer level.

Love this business model:

  • A transparent 20%
    fee to run everything
  • We pay claims
    super fast
  • If there’s money leftover,
    we give it back to causes

Here’s a good interview with their senior execs…

Kudos to this disruptive model and look forward to watching their success!  Always nice to see something new in the insurance world and this appears like Lemonade has legs.

Paul R Hughes

Libertate Insurance

Florida Workers’ Compensation Rates – What Now?

Are we at the end of the journey for proposed Florida workers’ compensation rates?  For now, it would appear yes.

Some background:

On May 27’th of 2016, the NCCI requested the State of Florida Office of Insurance Regulation (FLOIR) to affirm a rate increase of an aggregate 17.1% based on:

  1. First year impact of the “Castellanos” v “Next Door” case which lifted the caps on plaintiff attorney fees was estimated to require 15% more rate and;
  2. Senate Bill 1402 which increased health care provider reimbursements in the Florida system (Fee Schedule) by 1.8%

This 17.1% aggregate increase was to go into effect on 8.1.16 for all new, renewal and in-force policies.  A copy of the initial full filing here:

Then, on June 30’th of 2016, the NCCI amended their rate filing upwards another 2.2% or aggregate 19.6% to the FLOIR based on:

  1. “Westphal” v “City of St. Petersburg” case which increased the duration of temporary total benefits (TTD) from 24 months to 60 months in the Florida workers’ compensation

The combined 19.6% increase was to go into effect on 10.1.16 for all new, renewal and in-force policies.  A copy of the revised filing can be found here:

The FLOIR then held a town hall meeting in August as well as analyzed submitted and historical data to better understand what they view as the impact of these three events on the overall Florida workers’ compensation system.  With a 19.6% overall increase, Florida’s overall premium level would go from $2.931 B to $3.645 B, or an increase of $714,000,000.

It is at the sole determination of the FLOIR to approve any rates upon guidance of the NCCI and other credible bodies that provide data and opinion.  On September 27’th, the FLOIR rendered an order that denied the 19.6% rate filing, but upon an amended filing by October 4’th, 2016, the State has approved the 14.5% rate increase.  This order from the FLOIR can be found here:


  • The +1.8% rate filing for the increase in fee schedule was granted
  • The +2.2% filing due to the Westphal case (60 v 24 months for TTD) was granted
  • The +15% filing due to the Castellanos case was not granted, but instead a 10.1% increase was par an amended filing by 10.4.16 (which is when we should expect exact rates by classification code at the latest)

It is very apparent in the order that the NCCI and FLOIR were aligned until it came to Castellanos.  Some background on this issue of attorney caps that spans a 13 year period:

In 2003, the Florida Senate passed SB 50A which rolled back a 14% rate increase and prevented another double-digit increase in 2004.  More on the history of that event here:

  • Friend, workers’ comp attorney and coChair of the Workers’ Compensation Institute360,  Jim McConnaughhay noted from 2003 to 2016 for the AIF, “in excess of 60 percent rate decrease happened, suggesting what happened in 2003 “worked.” “The problem we addressed in 2003,” he said, “was rooted in escalated attorney’s fees.  It was not at all unusual for an injured worker’s attorney to get $100 in increased benefits and get a $20,000 fee … for minor issues that could have been resolved otherwise.  The incentive was to file claims. Litigate all you can,” McConnaughhay added.  “That was the reason for the cap on attorney’s fees, he said, restricting fees to a “percentage of recovery.”  Borrowed from Associated Industries of Florida.

The NCCI proved out that in analyzing claims files  pre-SB 50A (2000-2002) versus post (2005-2006) lead to a decline in overall loss costs of (12.2%) – (27.3%).  With the Castellanos case now having neutralized SB 50A, NCCI anticipates an increase in loss costs of +13.8% – +37.5%.

  • Of huge consequence is this rate filing will only impact new and renewal policies and not “in-force” policies as both filings from the NCCI requested.
  • Unsure of how Anniversary Rating Dates impact the adoption of this new rate set
  • As of June, the NCCI estimated $1 B of historical unfunded liabilities… this figure grows by the day.  Impact on collateralization and premium to surplus will be worthy of focus, especially for the rating groups.
  • The FLOIR has allowed the NCCI to provide further documentation to the difference in rate needed based on the Castellanos case as long as submitted by January.  It was fairly surprising that only one carrier outside of the NCCI produced data to help reinforce the uptick in litigated claims post Castellanos as noted in FLOIR order.
  • We are unknowing of whether a secondary rate filing will be submitted to the NCCI in accordance with the typical January 1 filing that is customary in Florida.  I would expect it with a far deeper data call as “word on the street” is petitions are up +20%

While there is some closure, certainly more discussion and analysis will ensue in Tallahassee, Boca Raton and beyond.

14.5% for now on new and renewal, with no impact on “in-force”, but smart money says this is an ongoing issue to monitor as the difference in what the state has accepted and what the NCCI forecasts is material.

– Paul R Hughes

Libertate Insurance


Florida Workers’ Compensation Rates to Increase +14.5% on December 1st (New & Renewal Business)

See below from the Florida Office of Insurance Regulation.

Office Takes Action on Workers’ Compensation Insurance Rates
Tuesday, September 27, 2016
Contact Info

Contact Information:
Amy Bogner/Karen Kees
(850) 413-2515                                 

TALLAHASSEE, Fla. – After a thorough review of the workers’ compensation insurance rate filing submitted by the National Council on Compensation Insurance (NCCI) and careful consideration of hundreds of public comments and testimony received from interested stakeholders, the Florida Office of Insurance Regulation (Office) has issued an Order that gives contingent approval to an overall combined average statewide rate increase of 14.5% versus the requested 19.6%.  Approval of the revised rate increase is contingent on NCCI amending the filing to include the recommended changes stipulated within the Order.  As ordered by the Office, the revised rate increase would become effective on December 1, 2016 for new and renewal business, with no change in rates for current in-force policies. The amended rate filing must be filed with the Office for review and approval no later than October 4, 2016.
The NCCI rate filing was originally submitted in May of this year and amended in June to address the impact of three recent legal changes, including two Florida Supreme court case decisions (Castellanos v. Next Door Company and Westphal v. City of St. Petersburg) and legislatively-mandated updates to the Florida Workers’ Compensation Health Care Provider Reimbursement Manual (HCPR Manual).

If NCCI submits the required amended rate filing and it is subsequently approved by the Office at an overall combined average statewide rate increase of 14.5%, the individual rate impacts will include:

·        A 10.1% statewide average rate increase for the April 28th Florida Supreme Court decision in the case of Castellanos v. Next Door Company, which  found the mandatory attorney fee schedule in Section 440.34, Florida Statutes, unconstitutional as a violation of due process under both the Florida and United States Constitutions.
·        A 2.2%  statewide average rate increase for the June 9th Florida Supreme Court decision in the case of Westphal v. City of St. Petersburg, in which the Florida Supreme Court found the 104-week statutory limitation on temporary total disability benefits in Section 440.15(2)(a), Florida Statutes, unconstitutional because it causes a statutory gap in benefits in violation of an injured worker’s constitutional right of access to courts. The Supreme Court reinstated the 260-week limitation in effect prior to the 1994 law change.
·        A 1.8% statewide average rate increase related to updates within the Florida Workers’ Compensation HCPR Manual per Senate Bill 1402. The manual became effective on July 1, 2016.
For more information about the NCCI public hearing and rate filing, visit the Office’s “NCCI Public Rate Hearing” webpage.

About the Florida Office of Insurance Regulation
The Florida Office of Insurance Regulation has primary responsibility for regulation, compliance and enforcement of statutes related to the business of insurance and the monitoring of industry markets. For more information about the Office, please visit or follow us on Twitter @FLOIR_comm and Facebook


Workers’ Compensation for PEOs and Their Employees

A very good article on the history of the PEO industry and its ability to provide workers’ compensation to American small business and their employees through the legal doctrine of co-employment.  Really nails it.

By Christopher Boggs of the Insurance Journal

One of the more important take-aways from this article is it provides further clarity to the process of staffing/leasing, which involves a transfer of labor by a staffing company to a client employer; where the employee is placed without any employer-employee relationship.  Coemployment on the other hand, helps the employer by sharing many of the non-occupational segments of being an employer; such as payroll, reg compliance, HR, major medical and of course workers’ compensation.  It allows “Joe the Plumber” to focus on plumbing and not the procurement of insurance as well as the menagerie of federal regulations business must follow such as the Affordable Care Act, FMLA, COBRA, Fair Labor Standards and over fifty others overseen by the Department of Labor.

“PEO contracts are co-employment arrangements whereby the professional employer organization and the client with whom it contracts both retain some right of control over the individual worker or workers collectively. Such relationship is wholly different than a leased employee or the use of a borrowed servant. Leased employees and borrowed servants are under the absolute control of the special employer. “Co-employment vests responsibility and control with both parties to the contract.”

Unfortunately, the issue or staffing versus leasing versus coemployment is confused in states like Florida where PEO statutes have not been properly updated to recognize the differences in these vls.  nice work on reinforcing these differences.ery different business mode

For further information on staffing versus coemployment, provides some excellent educational resources on the PEO industry and the nuances of its unique business model.

—  PRH


Libertate Creates Claimant-Driven Pharmacy Cost Management Model (PCMM) for PEO Large Group Medical and Workers’ Compensation that Guarantees Minimum Savings of Up to 15%


ORLANDO, September 26, 2016 / PRNewswire / — In an effort to vigilantly drive the occupational and non-occupational medical spends of our clients downward, we are proud to announce an exclusive partnership with Pharma Strategies to distribute and white label their product to the Professional Employer Organization (“PEO”) industry.  Pharma Strategies is a progressive pharmaceutical management company that has created heavily discounted prescription managed care networks for both workers’ compensation and health insurance.  This claimant-driven model aligns by state for workers’ compensation and utilizes the statutes in effect that allow direction of medical care.  On the major medical front, the Pharma Strategies platform provides incentives to the employee to go to in-network facilities by fully or partially-funding the employee prescription co-pay with the savings derived from the program.  In essence, go to the right pharmacy and the savings is at minimum 15% less than traditional major medical or workers’ compensation fee schedule.  It should also be noted that 99% of the drugs prescribed are eligible for the program.

According to Libertate CEO Paul Hughes, “the prescription drug increase in the workers’ compensation system was +11% overall just last year, and controlled substances such as opioids were up +16% just in the 2014 year.[1]  According to our friends at Milliman, prescription drug costs spiked significantly (on major medical), growing by 13.6% from 2014 to 2015.[2]  Furthermore, the pharma spend as a percentage of overall spend Prescription drug costs now comprise “15.9% of total healthcare spending for a family of four, up from 13.2% in 2001.”[3]

The PCMM is claimant-focused and not triggered by a specific line of insurance as pharmaceutical costs are equally impactful to major medical health insurance and workers’ compensation.  Mr. Hughes added, “Needless to say, the ability to save on the pharmaceutical spends of our clients is paramount in controlling their cost of both occupational and non-occupational health care.  Daily news events such as the recent +500% increase in the cost of the lifesaving allergic treatment EpiPen has illuminated the need to help our clients hedge against the drug makers in order to contain the overall health insurance spend.”

For more information, contact James Hughes at 813.335.1588 /

[1] “Workers Compensation and Prescription Drugs:  2016 Update”, National Council of Compensation Insurance (“NCCI”), May 5, 2016.

[2] Milliman Research Report, 2015 Milliman Medical Index “Will the typical American family of four be driving a “Cadillac plan” by 2018?”

[3] Ibid