2008 Annual Meeting ● Assemblée annuelle 2008Québec

Canadian Institute

of Actuaries

L’Institut canadien desactuaires

Session PD-31LTD Claims Management

Moderator:Jeff SchuhVP & Sr. Actuary, Disability ReinsuranceING Reinsurance

Panel: Charles TremblayDirector of ClaimsMunich Re

Peter GoveSenior Director, Disability ManagementSSQ

An update on LTD claims management current practices focusing on:

1. General Claims Management 2. Early Intervention 3. Fraud Prevention 4. Third Party Providers

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The impact of LTD Claims Management on Actuarial Practice:

o Reserves and pricing sensitive to changes in claim practices and trends

o Claim trends/management could cause future development to differ from past results

o Actuarial must work closely with Underwriting and Claims departments to identify potential shifts from current pricing and reserving assumptions

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The Three “R”s (Rates) of Disability Pricing:

o Incidence Rates

o Termination Rates

o Interest Rates

LTD Claim Management can affect 2 out of 3!

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Update on LTD claims management

Charles TremblayCharles TremblayDirector, Claims Department, Munich ReDirector, Claims Department, Munich Re

General management of LTD claimsGeneral management of LTD claims

General management of LTD claimsGeneral management of LTD claims

TWO CASE STUDIES FOR DISCUSSIONTWO CASE STUDIES FOR DISCUSSION

General management of LTD claimsGeneral management of LTD claims• Case study #1: A policeman submits a claim under his

STD policy following a cervical sprain with treatment including anti-inflammatory drugs, physiotherapy and a 3-month prognosis for RTW.

Do you think this is a payable claim?Do you think this is a payable claim?

General management of LTD claimsGeneral management of LTD claims• The STD claim is paid according to the

AP’s prognosis for 3 months• When the claim adjudicator contacts the

claimant to confirm the return-to-work date, the claimant indicates that he will not be returning to work due to his depression

• New APS is received for the LTD claim: Dx: adjustment disorder Tx: anti-depressantWork issues identified as stressors and the prognosis is undetermined.

General management of LTD claimsGeneral management of LTD claims

Is there an opportunity that was missed to Is there an opportunity that was missed to prevent this claim from extending into LTD?prevent this claim from extending into LTD?

General management of LTD claimsGeneral management of LTD claims

• Case Study # 2: A 32-year old welder has been on disability since

March 2006 for a Dx of Chronic Obstructive Pulmonary Disease (COPD) and disc herniation L5-S1. LTD benefits have been issued since July 2006. In July 2007, the APS indicates that both claimant’s conditions have not improved and surgery is not recommended for his back problems.

General management of LTD claimsGeneral management of LTD claims

In March 2008, the claim adjudicator conducts a reassessment of the claim for COD occurring in July 2008. The following information is obtained from the AP: unable to do his job on a permanent basis but able to do an office job permitting him to change positions frequently and without any physical effort.

Considering that the claimant has been a welder all is working life

and that he only completed high school, the claim adjudicator decides to accept the claimant as being ANYOCC and refers him to CPP.

General management of LTD claimsGeneral management of LTD claims

Is there a way that the prolongation into Is there a way that the prolongation into ANYOCC could have been avoided??ANYOCC could have been avoided??

General management of LTD claimsGeneral management of LTD claimsHow can we ensure:• Only legitimate claims are approved?• The RTW process is initiated as soon as

possible?• Relapse does not occur after RTW?• LTD incidental rates stay low?• LTD termination rates stay high?• Keep group premiums at a concurrent

level with a positive group experience?

General management of LTD claimsGeneral management of LTD claims Based on the LTD experience of our Clients

throughout Canada, the best answer for successful disability claims management is:

PROACTIVE AND EARLY INTERVENTIONS

DE-MEDICALIZATION OF CLAIMS MANAGEMENT

CLAIM ADJUDICATORSARE THE REAL DECISIONS MAKERS

General management of LTD claimsGeneral management of LTD claimsDe-medicalization of disability claims

management?• Claim management must not rely only on

medical aspects of the disability but also on early knowledge and resolution of the non-medical issues that may be the real drivers of the claim (professional/family/life habits/issues);

• Life circumstances can have a direct impact on onset and duration of claims not only in cases of mental and subjective illnesses but also physical illnesses.

General management of LTD claimsGeneral management of LTD claims

• To recover is not always typical with treatment in mental, subjective and even physical claims. Control of and decrease in symptoms, and improved capacity may be the result of treatment we are looking for to permit RTW.

• Claim management is oriented towards actions in RTW interventions that consider claimant’s residual capacities and his/her transferable skills.

General management of LTD claimsGeneral management of LTD claims

Claims management tools to focus on in a de-medicalized approach:→Telephone interviews with claimant and

employer at initial assessment is the most effective and economic tool for early identification of claimant’s professional/family issues, life habits and transferable skills

→Field visits to claimant, employer and the attending physician allow us a more complete overview of claimant’s situation if the telephone interview proves insufficient.

General management of LTD claimsGeneral management of LTD claims

→Information contained in the APS and the attending physician’s progress notes regarding the non-medical stressors, evolution of symptoms and claimant’s life habits

→Telephone contacts between the internal medical consultant and the attending physician

General management of LTD claimsGeneral management of LTD claims

→ Rehabilitation is oriented not only to vocational rehabilitation but also to early return-to-work interventions focusing on identification and resolution of the non-medical barriers to return-to-work and to secondary earnings related to the claim without having to wait for improvement of symptoms.

→ Early identification of claims that could pass the COD date because of claimant’s poor transferable skills or/and limited residual physical/mental capacities to be referred to intensive rehabilitation programs.

General management of LTD claimsGeneral management of LTD claims

Claim adjudicators are the real decision makers?

• Claim adjudicators must keep control of the claim file at all stages;

• They are not considered as technical/administrative employees any longer but as professionals with expertise in a broad range of fields: contractual, medical, verbal and written communication, knowledge of the available internal/external resources, understanding the full impact of said resources, and the optimal moment to use them while ensuring cost containment

General management of LTD claimsGeneral management of LTD claims

De-medicalized and responsible approach to disability management should be applied to all disability claims:

• Non-medical issues can drive claims, not only those with mental/subjective illnesses but also the physical conditions, by creating unjustified prolongations of disability;

• A non-confrontational approach where claimant, employer/policyholder and insurer look toward a win-win situation;

General management of LTD claimsGeneral management of LTD claims

• Each claimant’s particular professional and familial situation are considered, and return-to-work interventions are adapted to specific needs;

• An approach to disability management adapted to:– The shortage in workforce which will become

more problematic in the future– Employers’ needs to ensure qualified

workers resume work as soon as possible because they are difficult to replace.

Challenges involved in proactive claims management

• Employers should consent to and adopt early Interventions programs

• LTD incidental rates demonstrate that employers should consider group coverage with Early Interventions instead of STD coverage

• A corporate culture that attracts and recognizes expertise and experience in case management and encourages quality in disability management instead of quantity.

Challenges involved in proactive claims management

• Ensure level of caseloads permitting claim adjudicators to conduct detailed telephone interviews and give complete training and intensive coaching in the use of telephone interviews

• Obtain job descriptions including complete information on physical and mental/cognitive requirements

• Claim adjudicators should make sure that employers and claimants are aware of their rights and obligations related to the reasonable accommodations in the return-to-work process

Challenges involved in proactive claims management

• Attending physicians should be involved in the return-to-work process: getting their collaboration and their buy-in is a major incentive for claimant’s participation

• Ensure that the structure of the claims department permits early and effective referral of claims for return-to-work interventions

CONCLUSION The six steps to proactive disability claims

management:1. Identify claims that will not need any

interventions/investments (claimant already RTW / obvious TPD cases)

2. For all the other claims: initial management should be oriented to identification of the non-medical issues, claimant’s residual capacities and transferable skills

3. A RTW Action Plan should be established further to the identification of all medical and non-medical trends driving the claim which need to be resolved through an exploration of all possibilities for each case, while filling the gap between residual capacities and returning to work

CONCLUSION4. The claim adjudicator must identify the most

effective internal or/and external resources that may assist in the formulation of the Action Plan

5. Early and effective referrals of claims to external resources by establishing concrete goals and obtaining a detailed rehabilitation action plan

6. Claim adjudicators must monitor and be responsible for decisions on all claims referred for RTW interventions and be able to identify claims for which a de-medicalized approach is not suitable or doesn’t give results.

Thank you for your interest!

QUESTIONS? ctremblay@munichre.ca

Update on LTD claims management

Peter GovePeter GoveSenior DirectorSenior DirectorDisability & Rehabilitation Services, SSQDisability & Rehabilitation Services, SSQ

Early Intervention & FraudEarly Intervention & Fraud

Early Intervention – Trends and Practices

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Definitions:

Absence Management

Employee Health and Wellness20

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Sometimes it’s difficult for HR to determine reason for

absence……

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Recent Developments

• Employers are seeing steadily increasing rates of absence

• Privacy issues are making employers more wary of managing confidential medical information

• Complexity of medical conditions and management requires outside expertise

• Insurers have not offered much service with their STD offerings.

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Absenteeism

• Depending on the specific industry, we are seeing employers willing to look more closely at absenteeism rates and benchmark their performance against their peers.

• Organizations that are performing relatively poorly are looking for solutions

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Privacy

• Employers are appropriately wary of dealing with confidential medical information

• Anecdotally - a trend toward employees much more willing to take legal action against an employer if there is perceived bias secondary to diagnostic information.

• Collective agreements frequently define what information employers are permitted.

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Complexity

• Work absence is not a straightforward problem.

Diagnoses are subjective, complex and hard to measure.

Psycho Social issues may be playing a role (work avoidance, family issues, etc)

Physicians don’t have the time nor the inclination to understand work conditions

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STD

• Insured STD programs have typically been very transactional, process driven and haven’t offered much value with respect to absence management.

• Traditional STD plans offer very little in the way of management for casual absence.

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Plan Design Trends

• A movement away from traditional STD plans to either extended duration waiting period or self insured.

Extended Duration waiting periodThe LTD waiting period is extended to as

long as 18 months and the LTD premium savings are used to fund a third party absence management company

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Standard Absence Management Program Design• Insurers and third party providers are

offering programming.• Much of the programming looks very

similar, but there are significant variations in quality.

• Standard program design involves establishing a number of days of absence after which the absent employee is referred to the service provider.

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Program Design

• Service provider then engages in a process to manage the absence.

• Process can include telephone interviews, medical information review, establishing functional abilities and restrictions, developing return to work programs, etc.

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Best Practices

• The employer/program client should have clear, written policies regarding absence available to employees

• The provider needs to understand that they are an agent of the employer and therefore governed by the same rules/legislation as the employer.

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Best Practices Cont’d

• The employer/client should have significant ability to track and measure rates of absenteeism amongst employees

• The service provider should have significant “real time” capability to report on a case by case, and aggregate data basis.

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Questions to Ask Your (prospective) Service Provider• How long have you been in

business?• How many staff do you have and

what are their qualifications?• How many years of claims

experience do they have?• What is your staff turnover rate?

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Questions the (prospective) Service Provider should be

asking• Do you have a written attendance policy?

• Are there exclusions? (refusal of modified duties, cosmetic surgery, etc.)

• Do you have data?• Do you have policies regarding return

to work programs?

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Future Trends

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Psycho Social Determinants of Health

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Future Trends

• Employee health, wellness, and attendance is a complex, psychosocial issue.

• Early intervention will need to address a wide range of issues – economics, behavioural health, employee satisfaction, etc.

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Future trends

• Here is one example of what might be a useful direction

JAMA Vol 298, Sept 26, 3007Telephone Screening, Outreach, and Care

Management for Depressed Workers….-All employees screened by HRA (Health

Risk Appraisal).-Employees with factors positive for possible

depression where invited to participate

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JAMA

• Intervention – Structured telephone intervention program – assessed treatment, treatment adherence, provided structured psychotherapy intervention

• Outcome – intervention group had higher job retention and significantly more hours worked.

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Fraud- Disability Insurance

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“Floor Effect”

A B C1 2 3a b c I II III

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“Floor Effect”

The person being assessed fails on tests that that even very impaired persons are able to answer correctly.

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Fraud –What is it?

• Where there is potential for financial gain, there is potential for abuse.

• 5 to 15% of claims paid – no good data on whether these numbers are accurate

• In the claims environment, almost everything is grey, including fraud.

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Definitions

• deceit, trickery, sharp practice, or breach of confidence, perpetuated for profit or to gain some unfair or dishonest advantage. (Dictionary.com)

• Problem – it is never that clear in the disability environment.

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Definitions

• Non deliberate distortion – “colourings” of truth that result from observing the world through tinted glasses

– Omission– Confabulation20

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Definitions

• “before I hurt my back, I was heading to the Mr. Universe competition…”

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Definitions

• Deception – pictures carefully painted to lure others into believing in a new reality

– Secrecy– Fabrication– Lying2008

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Lying?

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Malingering and Other Disorders

DisorderMalingeringFactitiousConversionSomatoform

MotivationConscious (Financial)Conscious (Emotional)UnconsciousUnconscious

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It is extremely Difficult to Distinguish between these

disorders!!!

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Clinical Context Vs Insurance Context

Physicians are extremely reluctant to diagnose malingering.

1996 clinic based study13% of patients seen where suspected

or viewed as malingeringOnly 40% of patients who were

strongly or definitely suspected were confronted with the suspicion!!!

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What is Current?

• “subjective” (fibromyalgia, chronic pain, etc) conditions continue to be the most troubling.

• We continue to use the standard tools to assess credibility of claimant report.

• It is “risky” to establish anything more than very general protocols as any standardized practices can be produced in court.

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What is Current?

• We do not have the kind of data that allows for sophisticated systems tracking of billing patterns, etc.

• The focus needs to be on training of claims staff. The better they understand the phenomenology of the genuine disease, the easier it will be to detect faking.

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Traditional Tools

• Telephone interviewing• Site visits• Collateral contact• Surveillance (surveillance is “gold” in

court)• FAE/IME/Psychological testing with

internal validity checks

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Newer “Web” Tools

• Internet search for all new claim applicants as part of initial claims protocol.

• Examples – i) Disability claimant running a driving schoolii) Disabled massage therapist running an internet retail store for massage therapy equipmentiii) Disabled Real Estate agent maintaining extensive listings.

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Side Businesses…..20

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For “Red Flag” cases

• Facebook and My Space searches can result in the discovery of significant information that is contrary to the claimant’s self report

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Keep in Mind…..

• “The principle that courts will stigmatize a claimant as a malingerer only upon positive and convincing evidence justifying such a conclusion is so well embedded in our jurisprudence as to preclude the necessity for specific citations.” (Miller v United States Fidelity and Guaranty Co. 1957)

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Legal Case Study

• 32 year old male claimant. Soft tissue injuries from an MVA.

• Surveillance indicates that he is working full time in an autobody shop.

• Claim settled for benefits to definition change.

• Arguments regarding bad faith behaviour, contract language, continued disability, etc.

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