Workers’ Comp Drug Spend Continues to Drop, According to CompPharma’s 14th Annual Survey of Prescription Drug Management

MAGGIE VALLEY, N.C.–(BUSINESS WIRE)–CompPharma’s 14th Annual Survey of Prescription Drug Management in Workers’ Compensation showed an average 11 percent reduction in payers’ pharmacy spend, driven by a 13.3 percent reduction in opioid cost. The survey analyzed the 2016 pharmacy cost data of 23 workers’ compensation insurance carriers, third-party administrators, self-insured employers, and state funds.

Working with their pharmacy benefit managers, payers cut one of every six dollars in opioid spend, which the report called a “truly remarkable result.” In contrast, across all payer types, pain medication use declined by a scant 1 percent (Quintiles IMS).

“Clearly the efforts of workers’ comp regulators, payers, desk-level staff, PBMs and prescribers have paid off,” said Joseph Paduda, president of CompPharma, LLC. “While we have much left to do, this represents a dramatic improvement in the lives of thousands of patients.”

Payers are far from complacent, with all respondents expressing grave concerns about the risk of opioid addiction or dependency. Most are continuing to refine and improve programs to help patients address pain while minimizing use of opioids, relying on physician and/or pharmacist review of claims, early identification of potentially risky prescribing, and increased use of drug testing.

In contrast, compound drug utilization and spend has dropped dramatically and is no longer of great concern to payers.

A complimentary copy of the 2016 survey can be downloaded from https://tinyurl.com/CP2017RxSurvey.

Florida Orders Workers’ Comp Rate Decrease of 9.8%

Florida Insurance Commissioner David Altmaier has ordered a statewide overall workers’ compensation rate decrease of 9.8 percent, a slightly higher decrease than the 9.6 percent decrease filed by the National Council on Compensation Insurance (NCCI) back in August.

Altmaier’s order disapproving NCCI’s 2018 rate filing was issued by the Florida Office of Insurance Regulation on Tuesday, and stated NCCI’s rate request be amended and refiled by Nov. 7, 2017.

Altmaier’s order cited NCCI’s 2 percent allowance for profit and contingencies in its rate filing as the reason for rates being disapproved. The order states that the refiling should contain a profit and contingencies provision no greater than 1.85 percent.

The rate decrease will come as a welcome surprise for many Florida businesses that were expecting additional rate increases after the Florida Supreme Court issued two decisions – Castellanos v. Next Door Company and Westphal v. City of St. Petersburg, – in 2016 that sent rates up by double digits this year.

“Using new data, this experience based filing proposes a decrease in rate level based on data from policy years 2014 and 2015 valued as of year-end 2016,” the order states. “While some of the experience used as the basis for this filing occurred before the recent Florida Supreme Court decisions, a portion of the experience period includes claims that occurred after the decisions.”

At a rate hearing in mid-October, NCCI said a decline in claims frequency due, in part, to safer workplaces, enhanced efficiencies in the workplace, increased use of automation, and innovative technologies were partly behind the recommended decrease. NCCI said this trend is not unique to Florida but countrywide, and is expected to continue in the future.

According to OIR’s order, from 2011 to 2015, the cumulative decreases in the indemnity and medical loss ratios were 19.9 percent and 12.3 percent, respectively. The primary reason for the declining loss ratios is a significant reduction in the lost-time claim frequency which declined by 45 percent from 2001 to 2015 with over 8 percent of the decline occurring in 2014 and 2015.

“Even after considering the impact of the Castellanos and Westphal decisions, other factors at work in the marketplace combined to contribute to the indicated decrease, which included reduced assessments, increases in investment income, decline in claim frequency, and lower loss adjustment expenses,” the order states.

However, the order also mandates that NCCI provide detailed analysis of the effects of the Castellanos decision by the Florida Supreme Court in future filings, which accounted for 10.1 percent of the 14.5 percent increase in Florida workers’ compensation rates this year.

“To ensure workers’ compensation rates are not excessive, inadequate or unfairly discriminatory … it is imperative that additional quantitative analysis be conducted to determine the effect the Castellanos decision is having on the Florida workers’ compensation market and the data used to support future rate filings,” the order states. “The analysis may include alternative data sources and should examine changes to the Florida workers’ compensation market that are attributed to or observed as a result of the recent court decision.”

Approval of a revised rate decrease is contingent on the amended filing being submitted with changes as stipulated within the order. If approved by OIR, the revised rate decrease would become effective on Jan. 1, 2018 for new and renewal business.

Read Order: Florida OIR Workers’ Compensation Insurance Rate Decrease

By Amy O’Connor of InsuranceJournal.com | November 2, 2017

NAPEO Forms Cybersecurity Task Force

As an fyi, NAPEO has formed  a Cybersecurity Task Force to better understand the exposures of PEO and how to mitigate them.  A very timely and critical task force that I am very proud to be a part of – This is by far the most misunderstood exposure to PEO today.

“NAPEO recognizes the critical business and compliance risks faced by our members concerning cybersecurity. Although many member resources such as PEO Insider and various conferences have featured helpful information and programs for members on this topic, NAPEO recognized more is needed and formed the NAPEO Cybersecurity Task Force to help fill that gap. The Cybersecurity Task Force is comprised of a cross section of professionals with expertise in insurance, law, technology and the business environment of PEOs. Its primary mission is develop a set of best practices which NAPEO members could use to strengthen their compliance efforts and minimize their legal and business risks. The Task Force’s first step will be to survey members to gain a deeper insight into the cybersecurity concerns and exposures of members, which will be used to help shape the best practices the task force will produce. For more information, please contact Farrah Fielder.”

Florida WC Rate Decrease Hearing Set for Tomorrow

The Florida Office of Insurance Regulation will be discussing on the 18th of October NCCI’s proposed rate decrease of 9.6%.  Agenda shown below.  If you have any comments that you would like the state to hear, you can email ratehearings@floir.com with the subject line of your e-mail should read “NCCI” up until the 25th of October.

PUBLIC HEARING AGENDA
NATIONAL COUNCIL ON COMPENSATION INSURANCE
WHEN: October 18, 2017, 1:00 p.m.
WHERE: 412 Knott Building
404 South Monroe Street
Florida Capitol Complex
Tallahassee, FL 32399
GENERAL SUBJECT MATTER TO BE CONSIDERED: National Council on Compensation Insurance (NCCI) has
proposed an overall average decrease in rate levels of 9.3% for the voluntary market for all new and renewal workers’
compensation insurance policies written in the State of Florida, effective January 1, 2018. The filing also requests a
decrease to the fixed expense cost applicable to every workers’ compensation policy in Florida from $200 to $160 which
when combined with the rate level decrease results in an overall average workers’ compensation premium decrease of
9.6%.
1. Opening Remarks Office of Insurance Regulation (Office)
a) Introduction of Office personnel
b) Introduction of participating parties
2. Presentation National Council on Compensation Insurance
3. Public Comment Open to the Public
4. Closing Remarks
5. Adjourn
Any comments or concerns not addressed at the public hearing may be forwarded to ratehearings@floir.com; the subject
line of your e-mail should read “NCCI”. The record will be open for public comment until October 25, 2017.

PRESIDENT SIGNS ACA EXECUTIVE ORDER AND IMMEDIATELY FOLLOWS WITH ANOTHER BIG ANNOUNCEMENT ON ACA

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On Oct. 12, 2017, President Trump signed an executive order intended to change certain rules under the ACA, expanding access to association health plans, health reimbursement arrangements (HRAs) and short-term, limited-duration insurance. The executive order does not make any changes to existing regulations, but directs federal agencies to consider new regulations or guidance to implement the order’s policies. This Health Care Bulletin provides an overview of the executive order.  Click the attached document to continue reading…

President Signs Executive Order Designed to Change ACA Rules

On Oct. 12, 2017, the White House announced that it will no longer reimburse insurers for cost-sharing reductions made available to low-income individuals through the Exchanges under the Affordable Care Act (ACA), effective immediately. Because Congress did not pass an appropriation for this expense, the Trump administration has taken the position that it cannot lawfully make the cost-sharing reduction payments.

This decision follows the U.S. House of Representatives’ position in a lawsuit it filed against the Obama administration in 2014 challenging the federal government’s authority to fund these cost-sharing reductions. Click the attached document to continue reading…

White House Announces ACA Subsidies Will End 10-13-17

Will master Cyber policies be the next EPLI product for PEOs?

With two carriers now offering master PEO cyber programs, the question here is PEO’s be able to sell these as part of their overall package?

A recent 2017 RIMS survey has shown that 83 percent of organizations have a standalone cyber insurance policy (up 3 percent from 2016) and only 14 percent are utilizing the cyber coverage offered in their other insurance policies.

One reason for this statistic could be that Risk Managers want specific endorsements and add-on coverages that apply directly to their industry or are a result of a problem they’ve faced in the past.  This has been a crucial part of individual cyber policies over the past few years as the carriers try to keep up with the quickly evolving cyber space.

With the above in mind, it may be difficult for PEO’s to make this as part of their basic package as EPLI has become over the past decade.

I would like to note the PEO cyber program has one crucial endorsement, Social Engineering, that can be added on for an individual client company.  This has to be individually underwritten for each client company adding another layer for the PEO sales rep to cross-sell.

If you work in the PEO industry, please comment below with your thoughts of PEO’s offering cyber coverage to client companies. For more statistics from the RIMS survey please visit: http://www.insurancejournal.com/news/national/2017/08/25/462357.htm

 

-David Campbell

Risk Consultant at Libertate Insurance

Does your EPLI policy cover against employee harassment to a Third Party?

Most employers understand their Employment Practices Liability Insurance policy to cover against employee to employee or employer to employee harassment and discrimination.  But many of these employers could be liable for claims that they do not have coverage for under their current EPLI policy without the proper endorsements.  The most reoccurring of these claims have been third party claims against the behavior of your employee to the third party.  The language in a Lexington policy of an event resulting in a claim is: “allegation(s) of intentional or unintentional Discrimination, Harassment or any civil rights violations committed by an Insured and brought by a Third Party, whether such event against the Third Party occurs directly or through the Virtual Environment.”.  Their terminology for this coverage is Wrongful Business Environment.

So, we have coverage for your employee harassing or discriminating against a third party.  But what happens when the scenario is flipped and a third party discriminates or harasses your employee?  The employee would go to the employer or manager, and one of two things will happen: The employer will address the issue or the employer will ignore the issue.  In the first scenario, the employer and employee can work together on behalf of the employee to file a claim against third party’s employer.  Let’s hope they have third party coverage on their EPLI policy.  In the second scenario, where an employer fails to do anything, the employee can file a claim against the employer.  This would actually be looked at as a “hostile work environment claim” (your typical EPLI claim) and would be covered.  In this scenario, as well, the employee would also be able to go after the third party’s employer as well.

 

For more examples and details on this coverage, please visit: : http://www.propertycasualty360.com/2006/11/01/third-party-coverage-can-be-an-important-part-of-epli-policies

“Suppose a document messenger makes daily stops at a real-estate agency, where he greets the receptionist. After a number of visits, the messenger begins making suggestive sexual remarks. The receptionist complains to the owner of the business, who does nothing other than advise the receptionist to just tell the messenger to stop bothering her.

One day the messenger appears and makes suggestive remarks to the receptionist and even touches her inappropriately. Visibly shaken, the receptionist complains again to her boss, who takes no action. Not being able to endure the continuing harassment, the receptionist quits and sues her boss for emotional distress and failing to prevent an assault.

This is a clear example of an employer tolerating a hostile work environment, a typical EPL claim. The mere inaction of the employer makes him responsible. This also could be pursued as a third-party claim against the messenger’s employer.”

 

If you have any questions regarding your EPLI policy or would like a free audit of your current policy and coverage, feel free to reach out to David Campbell at dcampbell@libertateins.com or 407-613-5483.

The 72’nd Annual Workers’ Compensation Educational Conference – Orlando

Another year and another convergence of the who’s who in the field of workers’ compensation at the Marriott World Center in Orlando this week.  Known as the largest insurance conference in the country, the Workers’ Compensation Institute brings together “centers of influence” in law, medicine, claims adjusting, underwriting, brokerage, risk-bearing, managed care, regulation, legislation, staffing and of course coemployment.

Dating back over a decade, the Workers’ Compensation Institute and specifically Jim McConnaughhay and Steve Rissman have granted the PEO community a one day educational track.  Shortly thereafter, FAPEO and NAPEO threw their influence and sponsorship behind it.  Special thanks to the WCI, FAPEO and NAPEO for making this a success and bringing positive exposure to the PEO industry.

I am proud to participate on a panel Tuesday morning at 9:00 am with Andy Olwert (Next Level), Deb Hetzer (PEMCO), Phil Herron (Continuum HR) and Robert Barrett (Rissman, Barrett, Hurt, Donahue, McLain & Manganese’s, PA) titled “Accountability in the PEO Industry – Posting Wins for PEO’s and Their Claims Teams”.  More information on this data-driven session can be found on the WCI 360 site here:

http://www.wci360.com/conference/professional-employer-organization-breakout

Hope to see you Thursday morning and look forward to catching up with lots of old friends!