Public rRisk April 2014 by Moire Marketing Partners

Published by the Public Risk Management Association

www.primacentral.org

APRIL 2014

PLANNING TO

LOOK

BEFORE YOU

LEAP?

The Risks When HR & Social Media Collide

THE POT OF GOLD AT THE END OF THE MSP RAINBOW: USEFUL NUGGETS FOR EFFECTIVE COMPLIANCE FOUR STEPS TO A SUCCESSFUL SETTLEMENT

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Volume 30, No. 4 | April 2014 | www.primacentral.org

The Public Risk Management Association promotes effective risk management in the public interest as an essential component of public administration.

PRESIDENT Betty Coulter Director of Risk Management and Insurance University of North Carolina at Charlotte Charlotte, NC

CONTENTS

PAST PRESIDENT Cindy B. Mallett, AIC, CWCP, ARM-P Risk Manager Gwinnett County Schools Lawrenceville, GA PRESIDENT-ELECT Regan Rychetsky, ABCP Director, HHS Enterprise Risk Management and Safety Texas Health and Human Services Commission Austin, TX

Dean Coughenour, ARM Risk Manager City of Flagstaff Flagstaff, AZ

6 PLANNING TO LOOK BEFORE YOU LEAP?

The Risks When HR & Social Media Collide

By Joe Jarret

Terri Evans Risk Manager City of Kingsport Kingsport, TN Matt Hansen, MPA Director, Risk Management Division City & County of San Francisco San Francisco, CA

10 THE POT OF GOLD AT THE END OF THE MSP RAINBOW: USEFUL NUGGETS FOR EFFECTIVE COMPLIANCE

Amy Larson, Esq. Risk and Litigation Manager City of Bloomington Bloomington, MN Tracy Seiler Director of Risk Management Services Texas Association of Counties Austin, TX

By Aaron Frederickson and Rob Sokol

14 FOUR STEPS TO A SUCCESSFUL SETTLEMENT By Mark Pew

DIRECTORS Ed Beecher Risk Manager City of Pompano Beach Pompano Beach, FL

EXECUTIVE DIRECTOR Marshall W. Davies, Ph.D. EDITOR Jennifer Ackerman, CAE Deputy Executive Director 703.253.1267 • jackerman@primacentral.org

ADVERTISING Donna Stigler 888.814.0022 • donna@ahi-services.com

Public Risk is published 10 times per year by the Public Risk Management Association, 700 S. Washington St., #218, Alexandria, VA 22314 tel: 703.528.7701 • fax: 703.739.0200 email: info@primacentral.org • Web site: www.primacentral.org Opinions and ideas expressed are not necessarily representative of the policies of PRIMA. Subscription rate: $140 per year. Back issue copies for members available for $7 each ($13 each for non-PRIMA members). All back issues are subject to availability. Apply to the editor for permission to reprint any part of the magazine. POSTMASTER: Send address changes to PRIMA, 700 S. Washington St., #218, Alexandria, VA 22314.

IN EVERY ISSUE

4 News Briefs | 19 Advertiser Index | 20 Member Spotlight

APRIL 2014 | PUBLIC RISK

ANNUAL CONFERENCE REGISTRATION IS OPEN! For more information, visit conference.primacentral.org.

JOIN US!

PRIMA’s 2014 Annual Conference offers:

Don’t miss this opportunity to learn and network with other public risk management professionals from across the country.

· Three days of learning opportunities with daily general sessions and over 55 classroom sessions. · Multiple chances to meet with vendors who are ready with products and services geared to make the work of public sector risk managers more efficient and cost-effective. · Networking time, scheduled and spontaneous, with colleagues from across the country who “get” your successes and challenges.

Managing risk in our cities, counties, schools, municipalities, states and towns presents unique challenges and PRIMA’s Annual Conference is the only conference dedicated to YOU: public sector risk management professionals.

Return home energized and armed with new knowledge and ideas to help your schools, cities, towns and counties.

JUNE 8–11 • LONG BEACH, CALIFORNIA

Message from PRIMA President Betty Coulter

GET READY FOR REFINING RISK MANAGEMENT IN LONG BEACH!

re you getting ready for Long Beach? On behalf of PRIMA Board of Directors, the 2014 Conference Planning Committee and the PRIMA Staff, we are getting ready for YOU. This year will be another exciting time to attend the conference. We will offer more than 55 educational sessions addressing numerous public entity organizations such as; schools, cities, counties, municipalities, states and pools. Conference sessions will support learning opportunities for those working in risk management, human resources, emergency management, risk financing, and health and safety, to name a few. Our general session speakers are ready to jump start us each day with motivating and exciting topics that I am sure you will find educational. Let’s not forget the awards and scholarship luncheon—shhhhh don’t tell anyone, but I already know those being recognized and I am so excited!

and fun all aboard the Queen Mary. Come and find out why the Queen Mary is called “the Ship of Woods.” Keep up with all of the activities and meetings on our 2014 Mobile App, available in May. Features include session handouts, real-time conference alerts, exhibitor listing, and social media applications. There has never been a more exciting year to attend PRIMA’s Annual Conference and I hope to see you in Long Beach! Sincerely,

There has never been a more exciting year to attend PRIMA’s Annual Conference and I hope to see you in Long Beach!

Betty P. Coulter 2013–2014 PRIMA President Director of Risk Management and Insurance UNC Charlotte

Then step inside our trade show and exhibit hall to for an opportunity to meet vendors and network with other conference attendees. Please don’t miss our raffle prize drawings and maybe you will be the one to win a fully paid conference registration to next year’s conference. All work and no fun is not what “Refining Risk Management” is all about. Fun in the sun begins with our golf outing starting early Sunday morning, sponsored by the California chapter of PRIMA. Then join us for our opening and networking sessions held later during the conference. Please don’t miss PRIMA’s night of entertainment, food

APRIL 2014 | PUBLIC RISK

News Briefs

NEWS

BRIEFS Â TWO STATES SEEK TO RAISE SMOKING AGE TO 21 Two Western states with some of the nation's lowest smoking rates are considering cracking down even more by raising the tobacco age to 21, reports The Denver Post. Utah and Colorado lawmakers both voted favorably on proposals to treat tobacco like alcohol and take it away from 18- to 20-year-olds, a move inspired by new research on how many smokers start the habit as teenagers. "By raising the age limit, it puts them in a situation where they're not going to pick it up until a much later age," said Marla Brannum of Lehi, Utah, who testified in favor of the idea there. In Colorado, the testimony was similarâ&#x20AC;&#x201D;that pushing the tobacco age could make it harder for teens to access tobacco, and possibly reduce usage rates among adults. "What I'm hoping to do is make it harder for kids to obtain cigarettes," said Rep. Cheri Gerou, a Republican who sponsored the measure. Both proposals face several more votes. But they're the furthest any states have gone to curb access to cigarettes by teens. The director of tobacco studies at University College London didn't know of any other countries considering a tobacco age threshold of 21, but he said raising the tobacco age from 16 to 18 in the United Kingdom proved to be "a public health winner."

PLAN TO SPLIT CALIFORNIA INTO SIX STATES MOVES FORWARD A venture capitalist seeking to break California into six new states has won approval to begin collecting signatures needed to get his plan on the ballot in November, but experts said such a measure likely stands little chance of success, reports Reuters. The proposal, which would also require approval by the U.S. Congress, would split California into six new states called Jefferson, North California, Silicon Valley, Central California, West California and South California. Under the plan, Los Angeles and Santa Barbara would be part of "West California," while San Francisco and San Jose would be in "Silicon Valley." "California, as it is, is ungovernable," proponent Tim Draper, founder of the venture capital firm Draper Fisher Jurvetson, said in a statement released by his office. "It is more and more difficult for Sacramento to keep up with the social issues from the various regions of California. With six Californias, people will be closer to their state governments and states can get a refresh," Draper said. California Secretary of State Debra Bowen said that the proposal needs the signatures of 807,615 registered voters by July 14 to qualify as a ballot measure in November's elections.

PUBLIC RISK | APRIL 2014

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Your heart is racing. Your vision is blurred. Your mind is in a fog. And you’re not the one in cardiac arrest.

WASHINGTON POISED TO JOIN A HANDFUL OF STATES THAT GIVE FINANCIAL AID TO IMMIGRANTS The Washington State Legislature gave final approval to a measure expanding college financial aid to include Washington students brought to the country illegally as children, reports The News Tribune. Senate Bill 6523 passed the House on a 75-22 bipartisan vote and now goes to Gov. Jay Inslee, who strongly supports the measure. The bill is the first to pass both chambers of the Legislature this session, which ended March 13. "While we've opened the doors of our colleges and universities to students from all walks of life, too many still face an insurmountable financial barrier," Inslee said in a written statement issued after the vote. "This bill ensures that the young men and women we've invested in at our high schools and who aspire to become productive American citizens will now have fair access to the financial support they need to turn their dreams into reality."

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The Senate measure, called the "Real Hope Act," is nearly identical to a measure that passed out of the House last month and was called the Washington Dream Act. The measure expands state financial aid for college students in the country without legal status. The measure requires students to have received a high school diploma or equivalent in Washington state and to have lived in the state for at least three years before getting aid.

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APRIL 2014 | PUBLIC RISK

PLANNING TO

LOOK

BEFORE YOU

LEAP?

The Risks When HR & Social Media Collide By Joe Jarret

PUBLIC RISK | APRIL 2014

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egardless of how technologically savvy today’s public managers may be, few will deny the fact that the technologies shaping social media continue to explode. Gone are the days when employees learn about an entity’s goings-on through the monthly employee

newspaper. Further gone are the days when human resources (HR) managers restrict their investigations of prospective employees by calling references listed on a résumé. Social media now provides people with the ability to share news, personal and professional information in the blink of an eye. It also provides public HR managers with the ability to obtain information about prospective employees that was either difficult to obtain or patently unavailable just a couple of years ago. On a less positive note, Internet-based social networking sites have created a revolution in social connectivity that has attracted con artists, criminals and other dishonest actors bent on exploiting this capability for nefarious purposes. They have also created a hot bed of litigation founded in the improper use of information obtained by employers on social networking sites.

INFORMATION OVERLOAD The well-worn phrase, “It must be true, it’s on the Internet!” is an amusing one, until, that is, a public manager relies upon disinformation obtained from the Web. Morgan and Davis suggest that there are a number of potential pitfalls awaiting employers who use social media, or even simple Internet searches, to obtain information about prospective employees. For example: • False Identity: How does the employer know that the “John Smith” Facebook page belongs to the same John Smith applying for the position? • Inaccurate Information: How does the employer know whether the information posted is accurate? • Impermissible Subject Matter: While much of the information contained on an applicant’s social media page will be benign, information regarding protected characteristics (e.g., religion, disabled status, sexual orientation, marital status, genetic information, etc.) often is prominently displayed in social media.1

Needless to say, the risks inherent in relying upon misinformation or inaccurate information when making hiring, firing or disciplinary decisions can lead to claims or lawsuits founded in discrimination, wrongful discharge or breach of employment contract, regardless if you are operating in an at-will employment state.

THE LAW, OR LACK THEREOF As social networking and media sites continue to explode onto the scene at a dizzying rate, most of our state legislatures and courts at the federal and state levels, have not kept apace. This phenomenon begs the question, “Are public employers putting their entities at risk by 'mining' social media as part of the hiring process?” Unfortunately, not only are our legislatures and courts slow to answer this and related questions, the answers that are emerging are by no means consistent. Consequently, today’s risk manager is faced with a crazy quilt of court opinions, resulting in inconsistent rulings and no bright line rules. The majority of state legislative bodies have been slow to enact legisla-

APRIL 2014 | PUBLIC RISK

Planning to Look Before You Leap? The Risks when HR & Social Media Collide

A 2012 report by SilkRoad Technology revealed that 75 percent of employees access social media daily on the job, with 60 percent doing it multiple times per day. Only 23 percent of these same employees, however, reported receiving a social media policy from their employers. Even more disturbing is the fact that fewer than 10 percent had received any social media training whatsoever.4 Such statistics should give the risk manager pause.

tion that address social media from an HR or workplace context. The same holds true for the federal government. Last year, the United States Congress reintroduced (it was previously introduced in 2012) the Social Networking Online Protection Act, more commonly known as SNOPA. SNOPA is designed, in pertinent part, to prohibit employers from: ➊ Requiring or requesting that an employee or applicant for employment provide a user name, password, or any other means for accessing a private email account or personal account on a social networking Web site; or ➋ Discharging, disciplining, discriminating against, denying employment or promotion to, or threatening to take any such action against any employee or applicant who refuses to provide such information, files a complaint or institutes a proceeding under the Act.2 The bill is currently languishing in committee and, it appears, will be there for some time. Although the National Labor Relations Board (NLRB) has begun to acknowledge the various labor and employment issues that can arise as a result of an increased use of social media in the workplace, their primary concerns continue to be: • Employer policies should not be so sweeping that they prohibit the kinds of activity protected by federal labor law, such as the discussion of wages or working conditions among employees. • An employee’s comments on social media are generally not protected if they are mere gripes not made in relation to group activity among employees.3 Generally, when states or the federal government fail to establish policies that serve to delineate with consistency or clarity, it is to the courts we look. Unfortunately, although courts across the U.S. have issued rulings on workplace social media policies and practices, there has yet to be established a consistent, concise set of guidelines to assist public and private entities in determining the boundaries between lawful and unlawful social media policies and procedures. Consequently, it is imperative the risk manager seek counsel as to the mechanics of the law applicable in her or his state. For instance, several consulting groups are offering seminars and white papers urging employers to demand social media account information from their employees and in some instances, prospective employees. This is an interesting trend that will most likely continue, considering the fact that as

PUBLIC RISK | APRIL 2014

of the end of 2012, only California, Illinois, Maryland and Michigan had laws on the books prohibiting or limiting employers from asking employees for social media account information. It is important to note, however, that similar bills are pending in Delaware, Hawaii, Kansas, Maine, Nebraska, New Hampshire, New Jersey, New York, Oregon, Texas, Utah, Vermont and Washington. In 2013, Philadelphia became the first U.S. city to consider a similar prohibition. Needless to say, each of the aforementioned laws are unique. Consequently, although social media has proven to be a valuable tool for public sector HR managers, the pitfalls may outweigh the benefits, depending upon whether your state has established prohibitions against such usage.

SOCIAL MEDIA POLICIES A 2012 report by SilkRoad Technology revealed that 75 percent of employees access social media daily on the job, with 60 percent doing it multiple times per day. Only 23 percent of these same employees, however, reported receiving a social media policy from their employers. Even more disturbing is the fact that fewer than 10 percent had received any social media training whatsoever.4 Such statistics should give the risk manager pause. Because of inconsistent court rulings and legislation, it is inappropriate to suggest a “one size fits all” social media policy. Further, the risk manager must look at social media policies from two perspectives, namely, one for the HR manager considering social media as a recruitment tool and one for employees who access social media on the job. As to the former, if you are in a state that permits employers to examine social media, HR directors should be encouraged to either look at every prospective employee’s social media, or no one’s. Further, findings should remain confidential, lest employees outside of the hiring process decided to do a little looking on their own. Finally, in the event a claim of lawsuit if filed, the HR director should be prepared to defend his or her actions and be able to candidly state that the decision to reject a prospective employee was not based upon one of the protected classes provided by state and federal law. Public sector HR consultant Bonnie Jones 5 suggests, in the absence of a state statute or court permitting otherwise, that public employers: • should never ask for an applicant/employee’s social media user name or password; • should never ask that applicants/employees log into their accounts during the interview process; • should avoid asking the applicants/employees if they use certain social media sites, unless the question is job related;

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• should not “friend” an applicant or an employee unless the accounts are both job related (i.e., city business) and of a non-personal nature; • should not create social media accounts for the purpose of searching for information that is not intended to be public or that could potentially be a violation of the social media site’s terms and conditions. As to the latter, labor and employment lawyer Spencer Hamer suggests that employers should take the following steps when creating a social media policy as to their employees: ➊ Do Not Prohibit Protected or Concerted Activity. Under the NLRA, employees have the right to post or carry on conversations on social media sites regarding wage and working conditions. The policy should indicate that protected speech cannot be censored by an employer. ➋ Personal Complaints and Offensive Remarks Are Not Protected. Make it clear that legally protected activity does not include personal complaints or gripes; nor does it protect an employee's offensive, demeaning, defamatory, abusive or inappropriate remarks. ➌ Be Specific. A poorly drafted, overly broad policy could leave you subject to liability for potentially violating employee rights.

➑ Make Clear Who Owns Certain Material. Employers need to clearly describe in their social media policies what materials belong to the company and what belong to the employee. Blog posts created during non-working hours on topics unrelated to the business typically belong to the employee. ➒ Protect Confidential Trade Secrets. Protect confidential, proprietary information by instituting a social media policy that prohibits unauthorized dissemination. ➓ Educate and Enforce. Educate the workforce and make the policy readily available; then monitor and enforce the policy and update it regularly.6 Social media can prove to be an invaluable recruitment tool, provided, of course, its use has not been banned by the laws of your state. The savvy risk manager will confer with legal counsel prior to assisting the HR director in drafting and implementing a social media policy. In so doing, you go a long way in reducing the frequency and severity of claims founded in labor and employment discrimination. Joe Jarret is an attorney and former public risk manager on the faculty of the University of Tennessee, Graduate School of Public Policy and Administration

➍ Requiring Disclaimers on Certain Posts Is Acceptable. Employers can require employees to include disclaimers on their postings, such as, “The postings on this site are my own and do not represent the employer's positions, strategies, or opinions,” if the postings directly or indirectly relate to the employer.

FOOTNOTES

➎ Prevent Bullying, Discrimination and Harassment. Social media can become a forum for inappropriate, unwelcome remarks about employees by supervisors, or among co-workers. Be clear in your social media policy that this kind of behavior will not be tolerated.

3 The NLRB and Social Media, www.nlrb.gov

➏ Comply With State and Federal Laws. Remind employees not to post any information or engage in any online activity that violates applicable local, state or federal laws. ➐ Be Careful About What Gets Posted About the Company. Blogs and social media Web site postings may be reviewed, copied and disseminated by others, including competitors. LinkedIn specifically is a great way to share exciting company news—just make sure the news isn't proprietary or shared prematurely.

1 Heather A. Morgan & Felicia A. Davis, Social Media and Employment Law: Summary of Key Cases and Legal Issues, 2013. © 2013, Paul Hastings LLP, used with permission. 2 H.R. 5050 (112th): Social Networking Online Protection Act

4 Report, SOCIAL MEDIA & WORKPLACE COLLABORATION, 2012 Latest Practices, Key Findings, Hottest Topics. www.silkroad.com 5 Bonnie Jones, a consultant with the University of Tennessee, Municipal Technical Advisory Service, has published widely on the topic of the impact of social media on HR. 6 Hamer, Spencer, Creating an Effective Workplace Social Media Policy, 2012. Bloomberg, BNA Social Media Law & Policy Report

APRIL 2014 | PUBLIC RISK

AT THE END OF THE MSP RAINBOW: Useful Nuggets for Effective Compliance By Aaron Frederickson and Rob Sokol

n Irish folklore, the end of the rainbow is considered the location of a leprechaunâ&#x20AC;&#x2122;s secret hiding place for his pot of gold. However, as we learned as children, the end of that rainbow is impossible to reach. It is just an elusive optical illusion that races ahead of us as we continue our quest for hidden treasure.

Like this mythical pot of gold, the topic of Medicare Secondary Payer (MSP) compliance continues to elude risk management professionals in their never ending journey to better claims management processes. We hope this article will demystify the MSP compliance process and provide valuable nuggets of information to better mitigate risk in a changing environment.

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THE MEDICARE DOWNFALL In 1965, President Lyndon Johnson signed Title XVIII of the Social Security Act into law. Its intent was to provide guaranteed health insurance to people age 65 and older, regardless of income.1 This program became known as Medicare. In 1972, the Medicare program was expanded to allow younger people with permanent disabilities to receive the same medical coverage.2 Through a series of amendments, the Medicare Secondary Payer (MSP) Act was created in the 1980s, to help ensure solvency of the Medicare program. The MSP Act went largely unenforced until the mid-1990s, when officials at the Centers for Medicare & Medicaid Services (CMS) took a greater interest in workers’ compensation, no-fault/automobile and liability claims involving Medicare beneficiaries. Since that time, attorneys and claim handlers have taken note as the federal government increased its enforcement of the MSP Act.3 Initially, CMS’ interest in enforcing the MSP Act was limited to workers’ compensation claims. In 2001, the CMS issued its first policy memorandum about its current interpretation of their powers. These memoranda have led to confusion within the industry, as well as frustration for people on the front lines of legal disputes. Like it or not, the MSP Act is not going away any time soon. Measures are being debated in Congress. However, the lack of legislative support has failed to produce results. This article explores some of the challenges that come with Medicare Secondary Payer compliance and offers practical solutions for your practice.

WHAT IS SOMEONE’S MEDICARE STATUS? Determining a claimant’s Medicare status is key to successfully navigating the MSP maze. Often the wrong questions are asked or, in other cases, no questions are asked regarding a person’s Medicare status. Medicare beneficiaries are confused about what benefits they receive (e.g., Medicaid, Medicare, private disability, etc.). This is complicated by matters when the claimant is suffering from the effects of personal injury. Treatment may be the person’s priority, while they also try to effectively manage daily family matters. Learning a new health coverage plan at this point in their life can be demanding. The expansion of Medicare with Medicare Advantage plans further complicated matters. Here a few useful nuggets about determining Medicare status: • It is important for risk managers to train their claim management teams to determine a claimant’s current or

potential Medicare status as soon as possible. For claim handlers, asking all claimants their Medicare status should be an important piece of information documented when opening a claim, asked during a recorded statement, or obtained by the attorneys during discovery and examinations under oath or depositions. • Problems also arise when dealing with claimants who have a “reasonable expectation” of Medicare entitlements in the foreseeable future. Mandatory Insurer Reporting (MIR) alone will sometimes only provide part of the picture. On the other hand, verifying a claimant’s SSDI/Medicare status through the Social Security Administration will help clear up any confusion. • Remember to inquire about any interest a Medicare Advantage plan has in the case. Medicare Advantage plans, known as Part C, provide coverage equivalent to original Medicare as well as prescription drug/Part D coverage, in most cases. These plans are offered by private health insurance companies, and CMS does not include information on conditional payments made by these plans in their conditional payment letters.

MEDICARE SET-ASIDE (MSA) SUBMISSION GUIDELINES Since 2001, CMS has implemented a series of policy memoranda regarding Medicare Secondary Payer compliance in workers’ compensation matters. When the first memorandum was issued on July 23, 2001, by Deputy Director Parashar B. Patel, it was one of the first instances where the term “Medicare Set-aside” was used by CMS. Additionally, the memo introduced thresholds at which a Medicare Set-aside Arrangement (MSA) could be submitted to CMS for review. While it is important to know and understand these review thresholds, it also is important to know that the Workers’ Compensation MSA (WCMSA) review process is voluntary. Insurance carriers are also challenged by what appears to be unclear guidance in the WCMSA Reference Guide where CMS informs submitters that if they do not submit an MSA to CMS for review, CMS is not bound by the set-aside amount. However, if they do gain review and agreement from CMS, there is still not a “safe harbor.” Useful Nuggets for MSA submissions: • Remember that the review/approval process of a WCMSA is not required, as clearly and repeatedly stated by CMS. However, if a reviewed and approved WCMSA amount is funded and properly exhausted, Medicare will subsequently pay related medical bills for services covered by Medicare. • It is important for every insurance carrier to perform a complete MSP risk assessment in partnership with their legal counsel. Every carrier must perform their own risk assessment and make decisions for their book of business based upon their tolerance for risk.

APRIL 2014 | PUBLIC RISK

Useful Nuggets for Effective Compliance

It is important for risk and claim management teams to remember that compliance demands a careful analysis of the MSP Act, rules, regulations and the CMS’ myriad policy promulgations. All claims involving Medicare beneficiaries or future Medicare beneficiaries require close attention from all parties involved. These steps include communicating with each other regarding expectations, closely evaluating all claims and cooperating when working to reach settlement.

• Do not use a cookie cutter approach when it comes to MSP compliance. An effective claims management team will create guidelines, not hard policies. In this process, there should be an open dialogue with the claim management team and their attorneys regarding the WCMSA process and when cases should be submitted to CMS for review. • The key is early, effective planning! Investigate, evaluate and communicate regularly through the life of the claim.

THE MEDICARE CONDITIONAL PAYMENT CHALLENGE Conditional payments are payments for past medical care and treatment by Medicare that arise in disputed claims. However, conditional payments also may be needed when CMS was not yet aware of a workers’ compensation claim, or due to billing errors by a provider’s billing office. Based on these unique circumstances, the settlement of conditional payments can be a barrier to settling a case in a timely manner. Useful nuggets for uncovering a timely conditional payment: • Responsible Reporting Entities (RREs) should report their workers’ compensation claims timely and accurately so that CMS can keep the most updated file regarding accepted, denied and disputed body parts. • Double check your MIR program by proactively notifying CMS through the Benefits Coordination & Recovery Center (BCRC) at the beginning of the claim or lawsuit settlement process. • The BCRC will continue to use Web-based technology to deliver conditional payment information to litigants and attorneys. It is important to take advantage of these tools to obtain information in a timely manner. These Web-based tools can be found at www.myMedicare.gov. • It is too soon to determine what impact, if any, the SMART Act and its accompanying regulations will have on the conditional payment resolution process. Notwithstanding this uncertainty, a successful claims management team should keep themselves aware of pending SMART Act developments.

PREPARATION FOR MEDIATION, SETTLEMENT OR HEARING/TRIAL MSP compliance while preparing a case for mediation, settlement or hearing/trial is often overlooked. Medicare considerations often are an afterthought following settlement. This can be a barrier for attorneys who seek to settle a case timely, as well as claim handlers who fail to adequately set their reserves for a claim. Useful nuggets to avoid MSP surprises at settlement: • Examine litigation goals and objectives during the litigation process. Identifying Medicare’s potential

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interest in a claim will help avoid surprises. • Involve all parties to reach a desirable outcome. The claims management team should use their staff, attorneys, or MSP experts to recognize claims early for Medicare-related exposure. • Obtaining a medical allocation or cost-projection analysis is critical. From an insurance defense perspective, this is important for setting reserves, mitigating future exposures and most accurately anticipating settlement potential. • Addressing Medicare’s past and future medical interests prior to mediation or settlement is most important. Awareness of Medicare issues is on the rise in personal injury and workers’ compensation claims, so parties can no longer bury their heads in the sand. Not confronting these issues head-on will derail your plans for settlement. Remember that under current regulations, CMS may consider a settlement null and void if it shifts the burden to Medicare. • Identify other methods of cost-effectively meeting WCMSA funding needs. For example, carriers are increasing their use of structured settlements to provide cost-effective, stable, guaranteed settlement payouts. For claimants, structured settlements help them better manage their future medical care and treatment, as well as protect their access to future Medicare benefits. Structured settlements also help the defendant bridge the financial gap between settlement offer and demand.

FINDING THE POT OF GOLD Early identification of a claimant’s Medicare status in workers’ compensation and personal injury litigation is only a part of the challenge when searching for gold at the end of MSP’s proverbial rainbow. It is important for risk and claim management teams to remember that compliance demands a careful analysis of the MSP Act, rules, regulations and the CMS’ myriad policy promulgations. All claims involving Medicare beneficiaries or future Medicare beneficiaries require close attention from all parties involved. These steps include communicating with each other regarding expectations, closely evaluating all claims and cooperating when working to reach settlement. Aaron Frederickson is Allsup’s director of Medicare Secondary Payer Compliance. Rob Sokol is Allsup’s director of Medicare Secondary Payer Compliance. FOOTNOTES 1 The Social Security Amendments of 1965, Pub.L. 89-97, 79 Stat. 286, were enacted on July 30, 1965, and can be found at 42 U.S.C. §§1395ff.

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2 “Social Security” refers to the Old-Age, Survivors, and Disability Insurance (OASDI) federal program, as codified in section 205(c)(2) of the Social Security Act, or 42 U.S.C. §405(c) (2). 3 The Medicare Secondary Payer Act is codified under 42 U.S.C. §1395y (b) (2) (A) (ii). 4 The current WCMSA “review thresholds” are set forth in detail in the May 11, 2011, CMS policy memorandum. 5 See the March 16, 2010, CMS Telephone Townhall call, Barbara Wright (acting director of the Medicare Debt Management Division at CMS) stated, “As we’ve said on many calls, CMS has a formalized process to review proposals for workers’ compensation, Medicare set-aside amounts. It does not have the same formalized process for liability Medicare set-aside arrangements. The process for worker’s compensation is voluntary.” Page 41 6 See also 42 USC §1395y (b) (2) (B) (i), which states, “Authority to make conditional payment…under this subchapter with respect to an item or service if a primary plan…has not made or cannot reasonably be expected to make payment with respect to such item or service promptly…. Any such payment by the

Secretary shall be conditioned on reimbursement to the appropriate Trust Fund in accordance with the succeeding provisions of this subsection.” 7 As of February 1, 2014, the Coordination of Benefits Contractor (COBC) and Medicare Secondary Payer Recovery Contractor (MSPRC) were merged and will collect, manage and report all insurance coverage for Medicare beneficiaries. Information regarding this change can be found at http://www.cms.gov/ Medicare/Coordination-of-Benefits-and-Recovery/ Coordination-of-Benefits-and-Recovery-Overview/ Overview.html 8 Bruton v. Carnival Corp., 2012 U.S. Dist. LEXIS 64416 (S. Fla. 2012), provides an illustration of the many perils attorneys can face by failing to agree on what type of “Medicare provisions” are incorporated into a settlement release. In this instance, the plaintiff and defense attorneys did not have a meeting of the minds on what exactly should be included. As a result, the court ordered defense counsel to issue payment and included unfavorable language in the approved agreement regarding Medicare Secondary Payer compliance matters.

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APRIL 2014 | PUBLIC RISK

FOUR STEPS to a SUCCESSFUL SETTLEMENT By Mark Pew

utual distrust often sets the tone for settling a complex workers’ compensation claim, making it an adversarial process. It doesn’t have to be that way.

Antagonism arises from disparate stakeholder motivations, compounded by complexities of the system and accentuated by the dollars at stake. Multiple stakeholders participate in settling a worker’s comp claim: the injured worker (aka claimant, plaintiff or applicant, depending on the jurisdiction); the injured worker’s attorney; the treating physician; the payer (employer, insurance carrier or third-party administrator); the defense attorney. It comes down to injured worker vs. employer, and often they are looked at as opposing sides with very little in common. However, when it comes time to settle, they all have a lot in common— they want to settle. If the goal is to only win for “your side” then that biases all of the tactics towards ensuring there is a winner and a loser.

PUBLIC RISK | APRIL 2014

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Let’s examine the goals and motivations of the primary stakeholders from both optimistic and cynical viewpoints. STAKEHOLDERS

GOAL (OPTIMISTIC VIEWPOINT)

GOAL (CYNICAL VIEWPOINT)

Injured Workers

Settle the claim so they can get on with life

Maximize the payout by embellishing the injury and treatment so they can retire

Injured Worker’s Attorneys

Settle the claim so their client can be properly reimbursed

Maximize their fees by driving up indemnity and medical payments

Treating Physicians

Provide treatment that drives MMI (maximum medical improvement) for the patient

Maximize their revenue by the need for continued office visits and treatment

Employers

Settle the claim to fairly reimburse their colleagues and set a goal for RTW (return to work)

Minimize their payout to reduce their worker’s comp costs with no thoughts of the human impact

Payer and/or TPAs

Settle this claim fairly to focus on managing other claims

Minimize the benefits paid (and profits made) by finding a way to say “no” and keeping the claim open

Defense Attorneys

Settle the claim so their employer clients can close their books

Minimize the payout with aggressive tactics to lessen the benefits

Notice the keywords “maximize” and “minimize,” goals that are obviously not complimentary. Unfortunately, in worker’s comp, both parties often distrust the other and question their motivations and actions. While some injured workers do “game” the system for personal gain, and some employers aggressively seek new and creative ways to say “no,” and some treating physicians are more motivated by their own revenue than patient well-being, these are the exceptions, not the rule. Changing stakeholder attitudes, goals and expectations will change the game.

(WCMSA) should not be submitted until the patient has achieved maximum medical improvement or MMI. Unfortunately, this term is often misunderstood as their treatment being “stable” or some level of status quo has been reached. Properly defined, a patient has reached MMI when their medical condition cannot be improved by further treatment. Injured workers may still be in pain and not be back to where they were pre-injury, but when health is as good as it will ever be, they have reached MMI.

SET A “WIN-WIN” EXPECTATION

MMI does not mean the patient remains at a low function with a low quality of life fueled by a pain-masking drug regimen with side effects such as constipation, sleep disorders and hormonal imbalance frequently seen with long-term opioid use.

Stakeholders need to agree that there are no enemies and no winners and losers in the process. This calls for alignment of the needs for both the injured worker and employer. Injured workers need their medical conditions appropriately treated and to be fairly compensated so that the funds received will restore their quality of life. Employers need to feel they have invested money wisely in medical treatment, that the injured worker has been returned to as close to original health as possible and that the settlement allows them to permanently close the books on this claim. Everyone wants the same outcome—settlement—so leveraging that unanimity at this unique point in time by breaking through any hard feelings or misperceptions is very important. Any past issues should be addressed that contributed to mistrust and underscore the new approach as a collegial and transparent alignment.

OBJECTIVELY EVALUATE MMI The Centers for Medicare and Medicaid Services repeatedly stress that a Workers’ Compensation Medicare Set-Aside

Assessing MMI provides the first opportunity to build consensus among the stakeholders. It requires a collegial discussion between the treating physician and whoever is providing the objective assessment. For states that have ex parte restrictions, such as Connecticut and North Carolina, it also creates the first chance for the two attorneys to work as a team. This evaluation can be performed by a medical intervention company or peer review or through the independent medical examination (IME)

Set a “win-w in” exp Object ectatio ively e n v a l u a te MM Enact t r I e cha ng atment r e e facilita , if applica b gimen te clin le, to i c a l MM Create I a co mpl safety ne ia nce t for APRIL 2014 | PUBLIC RISK

Four Steps to a Successful Settlement

A key contributor to success is appointing a quarterback to coordinate the treatmentchange process, communicate with stakeholders and manage to a defined strategic goal… The designated quarterback helps ensure that every potential participant in the process (especially the injured worker) understands the current and targeted state and that progress is being made towards the defined strategic goal.

process, but it must be a clinical MMI assessment and not one defined by statute. Note that utilization review (UR) is not mentioned, primarily because it is inherently adversarial and often does not allow the time (e.g., Alabama mandates a one-day turnaround time for UR) or broad enough focus for an in-depth dialogue about the current and ongoing treatment. The MMI assessment also should be based on a standard of care (e.g., Official Disability Guidelines (ODG) in Texas, ACOEM/MTUS in California, Colorado Medical Treatment Guidelines); even if the jurisdiction does not mandate a standard of care (e.g. using ODG for Georgia claims). Using evidence-based medical guidelines prevents the conversation from becoming an adversarial set of opinions.

ENACT TREATMENT REGIMEN CHANGE, IF APPLICABLE, TO FACILITATE CLINICAL MMI If the assessment shows that the injured worker’s condition can still improve and more appropriate treatment options exist to achieve MMI, focus on clinical initiatives to implement change. For some, this may mean an MRI to rule out any structural lesions for ongoing pain. For others, this may mean a detoxification because the drug regimen (and the corresponding side effects) has created more problems than it is resolving. For still others, a functional restoration program (FRP) might be in order to deal with the psychological (coping skills) and physical fitness factors that are impeding the injured worker’s progress. These changes can take time, which often is the enemy of the settlement process because everyone wants to settle now…not in nine months. The proverb “patience is a virtue” is indeed true here, because waiting for better health outcomes for the injured worker will not only send the proper message (the goal is return to health) but also facilitate a fairer compensation. A key contributor to success is appointing a quarterback to coordinate the treatment-change process, communicate with stakeholders and manage to a defined strategic goal. This can be a nurse case manager or a medical director or a medical intervention company with expertise in dealing with complex claims, but treatment change must be strategically driven. The designated quarterback helps ensure that every potential participant in the process (especially the injured worker) understands the current and targeted state and that progress is being made toward the defined strategic goal.

the drug mix and dosage are reduced over time. This also involves connecting the dots for the utilization review and/ or bill review company to manage, support and control the changing treatment. Too often, these services occur in isolated silos and the clinical approval of a service can be denied for payment elsewhere. For example, the revised treatment plan calls for cognitive behavioral therapy (CBT) but bill review denies it because it was submitted with an unexpected CPT or billing code..

ONCE TRUE MMI IS ACHIEVED, CALCULATE THE SETTLEMENT AMOUNT Various experts, such as structured settlement specialists, Medicare Set-Aside vendors and life-care planning companies can determine the anticipated lifetime costs for medical care as well as an appropriate reimbursement for “pain and suffering.” If the process leading up to this has been fair and transparent, there should be no surprises. The injured worker (and his/her attorney, if applicable) has been kept apprised as to the goals, and even more importantly, the motivation behind the changes. The treating physician has participated in the objective assessment of care and either implemented the appropriate changes or involved in the delivery of that care through a specialist. The employer and the carrier and/or TPA representing the employer have been involved throughout the process through open dialogue. This may sound naïve and unattainable, especially to cynical worker’s comp veterans who have lived through extremely frustrating settlement attempts in the past, often seeing them fail completely because neither party felt like they could achieve their goals. However, if the goal is not “winning,” but instead to ensure MMI for the injured worker, this consensual approach can indeed facilitate settlements. The key elements are: • Focus on establishing MMI for the injured worker • Consistent and collaborative communication among all stakeholders • Connecting the dots so clinical decisions are not interrupted • Assigning a quarterback to oversee and manage the process

CREATE A SAFETY NET FOR COMPLIANCE

Exerting the effort to over-communicate during this process can yield much better results than if both “sides” infer and assume improper motivations. Settlement of a worker’s comp claim is not that different than any other relationship or negotiation, as mutually determining common goals that allow everyone to achieve (to some degree) their individual goals will provide a much more satisfying result.

Create an infrastructure for ensuring that changes take place and stay in place. This includes creating a customized formulary in the pharmacy benefit manager (PBM) as

Mark Pew is the senior vice president, product development, for PRIUM.

PUBLIC RISK | APRIL 2014

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CALENDAR OF EVENTS PRIMA’s calendar of events is current at time of publication. For the most up-to-date schedule, visit www.primacentral.org.

WEBINARS 2014 • May 21: HIPAA & The Affordable Care Act: What You Need to Know • July 9: Workers’ Compensation Market Hurdles and How to Combat ‘Em • August 20: Risk Reduction through Patrol-Based Video Recording Systems • September 18: Public Safety Operational Liability Issues and Controls • November 12: Contractual Risk Transfer and Flying Tomahawks

PRIMA ANNUAL CONFERENCES June 8–11, 2014 PRIMA 2014 Annual Conference Long Beach, CA Long Beach Convention Center June 7–10, 2015 PRIMA 2015 Annual Conference Houston, TX George R. Brown Convention Center June 5–8, 2016 PRIMA 2016 Annual Conference Atlanta, GA Hyatt Regency Atlanta June 4–7, 2017 PRIMA 2017 Annual Conference Phoenix, AZ Phoenix Convention Center

OTHER MEETINGS November 3-7 PRIMA Institute 2014 Louisville, KY

PUBLIC RISK | APRIL 2014

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Advertiser Index

ADVERTISER INDEX AED Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 5 CIMA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 18 Genesis Underwriting Management Company.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Back Cover Markel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 13 Munich Reinsurance America.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inside Back Cover POMS & Associates Risk Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 17 Travelers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inside Front Cover

Has your entity launched a successful program? An innovative solution to a common problem? A money-saving idea that kept a program under-budget? Each month, Public Risk features articles from practitioners like you. Share your successes with your colleagues by writing for Public Risk magazine! For more information, or to submit an article, contact Jennifer Ackerman at jackerman@primacentral.org or 703.253.1267.

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APRIL 2014 | PUBLIC RISK

Member Spotlight

GWINNETT COUNTY BRINGS ALL OF RISK MANAGEMENT TOGETHER IN ONE PLACE Each month, Public Risk features a member who has gone above and beyond

he risk managers at the Gwinnett County (Ga.) Board of Commissioners, like most risk management departments, wanted to keep their customers happy, informed and safe. Their “customers” are not the general public, but the county staff.

in a feature column titled “Member Spotlight.” Do you know someone who deserves recognition, has made a contribution or excelled in their profession?

In 2014, the risk management department launched a risk management Intranet, which was created to give employees easier access to various types of risk management information, all in one place. Employees can now go to the risk management Web site and receive information related to safety and risk management and access several new features including:

were located in other sites in the county’s Intranet, which made the process for filing claims difficult for users.” In addition, Swiger said, some information that was beneficial to all employees was restricted to authorized users. The process to update information was equally difficult, as employees were faced with updating the same information in several locations throughout the Web site. The county was able to cut costs on the project by utilizing county resources and personnel for the creation of the site. As a result, staff time from February 2013 through November 2013 was the only cost associated with the project.

If so, we’d like to hear from you for this exciting column, as PRIMA shines the spotlight on its members. To be considered for the Member Spotlight column, contact Jennifer Ackerman at jackerman@primacentral.org or 703.253.1267.

• Electronic claim forms with instructions on how to submit a claim. • Workers’ compensation procedures. • Emergency response plans for Gwinnett County facilities. • A comprehensive safety manual • Safety training options, including class listings and online presentations. • Copies of the county’s insurance policies • FAQs on safety, risk management and workers’ compensation topics. “Before the risk management Web site was created, the risk management team faced the challenge of consolidating information in one location in order to improve employee accessibility,” said Bill Swiger, risk manager. “Documents

Swiger says that the site can serve as an example for other organizations that are looking to create a customer-focused education tool with limited resources. For more information on Gwinnett County’s risk management intranet site, contact Bill Swiger at bill.swiger@gwinnettcounty.com.

All risk-related information is now easily accessible, in a centralized location, which will ultimately increase employee efficiency…

PUBLIC RISK | APRIL 2014

“

“All risk-related information is now easily accessible, in a centralized location, which will ultimately increase employee efficiency,” said Swiger. “For example, having our insurance policies on the site allows our attorneys to access the information when needed versus asking someone to send it to them. Employees can also easily access our risk management annual report.”

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