Too often workers’ compensation legacy claims that linger are the result of a status quo mentality, according to workers’ compensation experts. When claims are on autopilot and claimants refuse to settle, there are strategies that can be employed to move towards resolution.
A variety of events can trigger the need for a legacy claim settlement initiative, said Dan Anders, chief compliance officer at Fla.-based Tower MSA Partners.
“Mergers, acquisitions, a change in management or sometimes just the sheer volume of old claims will prompt a payer to act,” said Anders.
Legacy claims can also accrue into a book of claims where claimants have reached maximum medical improvement (MMI) but continue to draw down medical, the result of ongoing treatment or medication – considered the costliest aspect of these types of claims.
Michael Stack, principal at workers’ comp costs savings provider Amaxx, added that after a merger or change in providers, old claims may remain with a past carrier or third party administrator.
Yet another definition, he said, are “those cases that you’ve tried a lot of things or you’ve looked at them and you haven’t been able to settle them.”
When developing a proactive settlement initiative, Anders said the key is to have one person at the employer who will act as the point person driving the initiative.
The next step is to triage legacy claims and review cost drivers. Anders said some red flags include evidence of high use of opioids, brand name medication, multiple prescribers, inconsistent medical records, outdated records and outstanding medical/surgical recommendations.
“It’s really up to the client, the employer to decide what their criteria is for cases that they want to place into this type of initiative,” Anders explained. For example, the focus could be on cases that are several years old or cases pending in a particular state.
“The sky’s the limit as to deciding what claims you want to put into this type of settlement initiative process. But once you have done that, most of the time you’re looking at future medical concerns, because that tends to be the issue that has kept that case out there for so long,” said Anders.
Stack recommended using an intentional approach when reviewing legacy claims, examining current and future medical treatment and utilizing tools such as evidence-based injury guidelines.
Anders said Tower’s role tends toward medical records and prescription history review to identify red flags.
“Is this an individual that has high use of opioids? Or even if not opioids, other medications, perhaps brand name that are driving up the cost of, not only, ongoing medical care, but also the cost of treatment,” said Anders. “Multiple prescribers tend to be a red flag. Are there outstanding surgical recommendations? Spinal cord stimulators, knee replacements, hip replacements, etc., that drive up the cost.”
Inconsistent medical records where prescription history and medical treatment records sometimes contradict is common, he added.
“You see that more and more now with just the level of data that’s put into medical records.” said Anders. “In some situations, we see where the employer or their TPA, hasn’t paid for treatment…in a couple years. The question, then, is has this person actually stopped treating or are they continuing to treat but they’re putting their bills through a group health plan, perhaps, because a spouse has a plan? Or they may even be putting the treatment through Medicare.”
In addition, there may be a list of several medications the claimant has taken at some point during treatment, but records continue to erroneously note them as current medications.
Once the review is complete, Tower will offer recommendations that drive the targeted claims into three buckets:
- Settlement. If claimant is no longer treating or if the projection for future medical care is reasonable and fits in with the employer’s expectation of the value of settlement.
- Intervention. If projected future medical care falls outside of what the employer thinks is reasonable in terms of settlement, then intervention is considered. There may be an opportunity to clarify with both the claimant and the treating physician whether certain medication is still being utilized.
- Physician peer review. If claimant is on an assortment of different medications, a physician peer reviewer can review and compare them against evidence-based guidelines to determine if the medication regimen is appropriate for the claimant’s particular condition. Alternative medications may also be discussed.
When case intervention is necessary, there are a variety of vendors and disciplines to choose from. Anders said intervention might call for field case management, a structured settlement broker or a Medicare Set Aside (MSA) vendor.
“You’re working with various partners…to ultimately reach this goal of settling cases and reducing the claim count,” Anders said.
Intervention can also occur by assigning a professional administrator to continue claims management for the worker post-settlement.
“Sometimes the best practice is not necessarily see no evil, hear no evil, say no evil,” Anders explained. “Especially when it comes to cases where you’re ultimately going have to settle out that future medical. Instead, really just taking on and address the appropriateness of that treatment or medication as it’s ongoing. And if there’s a need to address opioid use, to do that earlier rather than later. And that really becomes a win-win situation for an employer, as well as the claimant, given the risk of long-term narcotic usage.”
Sometimes claimants aren’t inclined to settle due to a fear they will run out of money and won’t be able to provide for their family, Stack said.
“There’s a lot of elements of fear, of emotion that are involved,” he added.
Others are concerned they may lose treatment options or don’t want to take on the burden of Medicare on their own.
Stack recommended using soft tactics to alleviate fear. Adjusters can do this by establishing clear communication, expressing empathy and working to understand the claimant’s needs, fears and desires.
It helps to have settlement in mind even at the start of a claim.
“Having a settlement mindset from day one. Before I did this, I was a defense attorney where I handled workers’ compensation claims, and you can get frustrated with claims, claimants or claimants’ attorneys,” Anders said. “But at the end of the day, you want to make sure that you’re…limiting the medical cost on the claim, and ultimately, looking to close out the case,” said Anders. “And for the most part, keeping the claim open’s not going to be the answer to these cases. Especially where there’s ongoing medical care that continues to drive up the cost on the claim.”
Considering settlement early in a claim drives closer scrutiny to various aspects of it.
“What we see is once you go down this road of completing a settlement initiative…there is much more attention placed on newer claims to address medications and other open-ended treatments earlier on, which then translates into lower Medicare set-asides over the long term. Because those costs are being addressed earlier in claims handling,” said Anders.
Beth Savelli, the former manager of Swissport USA, explained how a settlement initiative led to changes in the way she manages workers’ comp claims.
“What happened was we were doing claims review and I kept hearing ‘they don’t want to settle, they don’t want to settle.’ And I said ‘well, has anybody asked them why they don’t want to settle? Especially when we’re looking at claims that dated back to 2000 and they went up to 2014. That was kind of the theme overall,” said Savelli.
Savelli, who worked with Tower MSA and Anders on the legacy claim settlement initiative, said it was necessary to push the five TPAs that shared a portion of Swissport’s claims.
“It was really getting people to dig deeper as to why don’t they want to settle,” said Savelli.
Another issue was that as the claim aged, so did the employee. Co-morbidities surface, clouding an injury’s cause and effect.
Assumptions that an MSA would come back high was another hinderance, she said.
She explained they used a variety of methods to resolve claims, including hiring a vendor to administer future medical care for those claimants reluctant to take on that responsibility.
Swissport, an employer in a high-risk industry, shrunk its open claims by one-third within eight months and reduced the amount of its average MSA from $72,712 to $28,857, according to Anders.
Savelli said the experience changed the way she mages claims. Besides target claim review focus calls, she scrutinizes TPAs, evaluating the philosophy of the TPA and the adjuster through interviews to discern their level of creativity and empathy.
She offered two tips to prevent claims from sitting and accruing costs. The first relates to Anders’ emphasis on having a settlement mindset from day one.
“Too often companies ignore the elephant in the room. You leave the claims just sitting there and quietly bleed money…instead of taking a look at them and deciding does it make sense to get rid of it now. What is the exposure on it? Am I going to slowly bleed $150,000 or am I going to pony up $75,000 and be done with it,” Saville said.
The second is to monitor claims from the start.
“The second piece is ‘what do you do with your claims from the very beginning to make sure they don’t turn into an “old dog” claim?'”