Wednesday, May 13, 2015

MSA News - CMS Issues a Final Rule for the SMART ACT

On April 23, 2015, The Centers for Medicare & Medicaid Services (CMS) established an appeal process for Applicable Plans under the Strengthening Medicare and Repaying Taxpayers Act of 2012 (the SMART ACT), including Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation Laws or Plans. Read more >>

Wednesday, April 22, 2015

Enterprise Risk Management (ERM) – Risk Profile Development – Evaluate and Treat the Risks

This installment in our series describes the process of risk evaluation and treatment for risk profile development. We will briefly describe the next steps to organize and execute strategies to eliminate or mitigate the risks.

The Enterprise Risk Management (ERM) evaluation and treatment process begins with a review of all of the information from the risk identification and analysis stages. Normally a group of interdisciplinary managers address the risks in a forum of open and honest discussion. They prioritize the risks by order of qualitative and quantitative importance. The teams often need outside professional assistance to measure the results of the risk analysis, and to have these persons or firms offer opinions about the appropriate future treatments.  This process is at the heart of what risk management executives balance every day to enhance organizational value. If the organizational risks are eliminated or mitigated, then the value of the organization increases.

To illustrate how this works, let’s review a few of our past examples. The risks are prioritized and evaluated by the level of qualitative or quantitative threat. From last month’s article, examples of ERM organizational evaluation questions may be:

• Now that we understand what our competition is planning with their new products, how will we change our plans or enhance our operations to face the competitive pressures of our current or new products with our existing or new infrastructure?

• Our industry is changing rapidly with the introduction of new technology. What steps do we need to take to improve our competiveness by investing in new programs to remove all unnecessary costs?

• With the introduction of new payment and communication programs for our client administration, what will we do to protect our reputation and client data from cyber threats?

• How will be more competitive by reducing costs in our existing risk management programs through the use of predictive analytics, and continuous monitoring systems?

The objective of evaluating and treating risks is to reduce the exposures and costs they may present to the organization. The environment, culture, personnel or tools of the organization, or specific function, may need to change by applying specific controls and treatments. By listing risks in an order of the most significant to the least significant, then identifying a range of options for treating the risks will help managers create action plans for implementing treatments.

Choosing the right treatment option is critical, and requires a significant amount of thought and communication with those persons affected. The teams should listen carefully to all concerned parties, and then take the appropriate steps to thoroughly measure the options against various threat scenarios. “Playing”, “experimenting” and “testing” the risk treatments are necessary actions to determine the final treatment option(s). Additionally, costs versus benefits should be measured to attempt to come up with the most effective treatment plans. Once the treatment is chosen, action plans should consist of:

• Projecting the set of task(s) to carry out the plans in an organized way
• Determining the resources required to support the action plans
• Assigning the personnel and related organizational duties
• Creating timeline to implement the plans
• Measuring the criteria for each task or desired outcome
• Reporting and monitoring requirements and tools

Since the initial draft plans will be fallible, there should be many testing activities built into the plan. The testing actions will act to “harden” the treatment options. Also, the options should be reviewed by many different disciplines such as governance, compliance, financial, legal, human resources, operations, and other management disciplines. These disciplines should attempt to measure and report the expected effectiveness against any social, political and economic factors.

There may be tasks within the timelines to run active pilot programs with limited scope, perhaps within a small section of the organization. This is a desirable activity if there is ample time to do so. It will allow the teams to observe real life simulation models to replicate and temper appropriately throughout the organization for the risks contemplated. Remember, being flexible and open to all ideas during the testing phases allows the treatment plans to gain acceptance throughout the organization. In the end, perhaps only a small group or single individual will decide the proper treatments for each risk profile. With the proper tools and flexibility the monitoring process will allow the entire organization to see what changes need to be made in real life circumstances.

Ultimately, the organization will know if the treatments are meeting the business objectives of risk elimination or mitigation for increased stakeholder value, and the executive team will take appropriate action to further evolve the evaluation and treatment plans. Stay tuned for the next installment in our series where we discuss risk mapping and monitoring.

Wednesday, March 11, 2015

Enterprise Risk Management, Claim Settlement and Healthcare News

Enterprise Risk Management (ERM) – Risk Profile Development – Analyze the Risks

Last month we described how to identify the risks organizations face, and how to create a framework for analyzing, measuring and managing them. In this next article of the series, we will explore how to analyze the organizational risks that have been identified. Read more >>

Excerpts from our e-newsletter for Enterprise Risk Management, Claim Settlement and Healthcare Solutions.

Claim Settlement, Medicare, and Medicare Set Asides

The Centers for Medicare and Medicaid Services (CMS) Will Start Using New Life Tables Beginning April 1, 2015. 

Centers for Medicare and Medicaid Services (CMS) Issues Final Rule for Medicare Secondary Payer Determinations. 

Centers for Medicare and Medicaid Services (CMS) Offers an International Classification of Diseases (ICD) 10 Resource Website.


Healthcare - Patient-Centered Outcomes Research Institute (PCORI) – Has the Time Come for an Expanded Mandate?

Under the Affordable Care Act (ACA), Congress took a step to create a source of trustworthy and understandable information about the costs and benefits of pharmaceuticals and other types of care. By creating the Patient-Centered Outcomes Research Institute (PCORI), Congress funded a research organization that specifically examines the comparative effectiveness of alternative therapies of all types.


Tuesday, February 10, 2015

Enterprise Risk Management (ERM) – Risk Profile Development – Identification of the Risks

A few months ago, we described the optimal Context of Risk Profile Development. This article in the series describes how to identify the risks organizations face, and how to create a framework for analyzing, measuring and managing them.

Even within an organizational culture of openness, flexibility and “ownership”, identifying risks and creating structures to measure and manage them are some of the most difficult tasks to undertake. Why? Because any threat to the current or future continuity and profitability of the organization requires the owners to address the risks immediately, and to determine the root causes and conditions of the situations. This takes time and specialized tools, many of which are not readily available.

It’s harder as organizations grow, when they tend to take on the personalities of the individuals and managers who are tasked with organizational stewardship. If the responsible persons have an “ownership” mindset, and are dedicated to preserve, protect and enhance the organizational value, the organization will embrace risks and flourish. To identify risks for profiling, the best place to start is to understand any significant threat to the mission, values and profitability of the organization.

To illustrate an Enterprise Risk Management example, let’s use Apple Inc.’s recent threat to its mobile business from Android devices. The mission statement of Apple recently reported on their website is “Apple designs and creates the iPhone, iPad, Mac notebooks and desktop computers, iOS 8, OS X, iPod and iTunes, and the new Apple Watch.” A risk to having this mission flourish has been the competitive pressures of Samsung’s Galaxy line of cell phones. As soon as the Galaxy line came out and gained rave reviews from analysts and consumers, Apple went to the drawing board to create the iPhone 6 and 6 Plus series. With enhancements and integration of the entire iPhone platform to meet what consumers wanted and needed for their everyday use, the company embraced the competitive risks and has consequently flourished around the world. As a measure of the results, Apple has just reported the largest quarterly profit success of any corporation, $18 Billion, largely based upon the reengineering and success of its new line of phones.

To demonstrate a traditional operational risk identification process, let’s use a Workers Compensation insurance (and self-insurance) example. Because these increasing labor-related costs are a significant threat to most organizations profitability, it requires the owners and managers to address the risks immediately with each occurrence. The past way of looking at identifying these risks has been to gather all of the information once per year (insurance policy, new operational details, claims history, loss control and safety procedures, etc.), ship the stack of paper or electronic files off to the broker, have the broker market the risks, and then hope for a few quotes that don’t break the bank for the renewal. Does this sound like your normal risk identification process? Is this what you are employing now?

Perhaps a better way to identify risk costs is to understand the components of your work force, how each segment contributes to your unique Workers Compensation Risk Profile, and how your unique composition compares to other companies in your industry. As you may know, there is an established industry premium rate history built around individual classes of workers, measured by the classification payroll. Once you calculate your unique composition, it is a relatively easy step to determine how your composition compares to your industry.

The big differences between companies within industries are the way in which they predict and execute strategies to reduce and eliminate claims.  The most severe actual or predicted chronic and legacy claims generally represent 5% of the frequency of occurrences. However, these claims represent 40-60% of the costs of the Workers Compensation Risk Profile. The remainder of the costs of the Risk Profile is administration (management, loss control, actuarial, etc.), allocated costs (adjustment, legal expenses, etc.) and single non-recurring expenses such as minor accidents where the persons return to work immediately.

By utilizing predictive analytical tools and professional services that identify excess costs for each existing or future chronic or legacy claim, the organization can ultimately reduce Risk Profile costs by 20-40%. Is this approach something you would like to consider employing in your organization? Call us to learn more about our products and services.

The next subject in our series will address the Risk Profile Analysis phase…so stay tuned for how to analyze Risk Profiles once you have identified the key components.

Tuesday, January 27, 2015

Enterprise Risk Management (ERM) – 2015 Goals and Strategies

Have you asked yourself how you are going to influence your ERM program for success in the coming year? There are 5 questions that you should ask yourself and your team to eliminate and mitigate key risks with the objective of driving earnings and asset value improvements for your organization.

As a leader of your organization, you are likely trying to catch up from the Holidays and figure out how to guide everyone to produce outstanding results for the coming year. As part of that planning, there are five key questions to consider for mitigating and eliminating risk costs.

Click here to