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FSCO 5 Year Review Strategies for Health care providers

FSCO 5 Year Review Strategies for Health care providers. Presentation by Claire Wilkinson Rob Deutschmann (July 15, 2009). Background. 2003 was the last significant change in auto insurance legislation Automatic 5 year review inserted in legislation Intervening years – “tweaking”:

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FSCO 5 Year Review Strategies for Health care providers

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  1. FSCO 5 Year Review Strategies for Health care providers Presentation by Claire Wilkinson Rob Deutschmann (July 15, 2009) Presented by Claire Wilkinson and Rob Deutschmann 2009

  2. Background • 2003 was the last significant change in auto insurance legislation • Automatic 5 year review inserted in legislation • Intervening years – “tweaking”: • Designated Assessment Centres (DACs) to Independent Medical Assessments (IMEs) • Treatment provider rates slashed by 1/3 • Lease company and employer liability limited Presented by Claire Wilkinson and Rob Deutschmann 2009

  3. FSCO ReportEconomic / Political climate • Loss costs (the costs to provide) for accident benefits saw the largest relative increases during the past five years. • Accident benefits rose by 16.3% since 2003 but since 2004, the increase has been 34.6%. Presented by Claire Wilkinson and Rob Deutschmann 2009

  4. Loss RatioMeasure of performance • The loss ratio is a fraction where the numerator is the claims paid plus loss reserves and the denominator is the premiums collected. • Two types of loss ratios: • Accident Benefits; and • Bodily Injury claims Presented by Claire Wilkinson and Rob Deutschmann 2009

  5. Loss ratiosIt’s all about the bottom line • The lower the loss ratio, the better for the insurer ($$$) • For example, if the claims paid plus reserves is $60 in a year and the premiums collected $80, the loss ratio is 60/80, or 75%. • A loss ratio of 75% means an insurer is making a profit. A loss ratio of 90% may represent a loss to the insurer. Presented by Claire Wilkinson and Rob Deutschmann 2009

  6. Accident Benefit loss ratioVaries among insurers - 2008 • Co-operators - 72% • Pilot Insurance - 180%. • Average for all Canadian P/C insurers – 125% • Bodily injury loss ratio - 69% Presented by Claire Wilkinson and Rob Deutschmann 2009

  7. Statistics according to IBC • No-fault injury claims in Ontario cost much more than similar claims in other provinces. • Alberta - $3,000 per claimNew Brunswick - $11,700 per claimOntario - $38,000 per claim Presented by Claire Wilkinson and Rob Deutschmann 2009

  8. Statistics according to IBC • in Alberta, 40% of sprain and strain claims are still open after 6 months. In Ontario, that figure doubles to 80%. • This is part of the IBC attack on treatment providers Presented by Claire Wilkinson and Rob Deutschmann 2009

  9. Here’s the scary part – according to FSCO • Rate increases have not kept pace with rising loss costs and the insurance sector reports significant rate inadequacy in the system. Presented by Claire Wilkinson and Rob Deutschmann 2009

  10. FSCO’s “bottom line” • Declining profitability, significantly lower earnings and loss cost increases will accelerate in 2009 in the absence of structural changes to stabilize costs. • Read between the lines – premiums will need to increase if costs are not controlled. Presented by Claire Wilkinson and Rob Deutschmann 2009

  11. Lest we forgetInsurers have done very well • 2003 to 2007 were record years for insurers • Return on Equity: • 2003 – 11.9% • 2004 – 19.0% • 2005 – 16.5% • 2006 – 20.1% • 2007 – 16.1% • 2008 – 7.5% Presented by Claire Wilkinson and Rob Deutschmann 2009

  12. Problems with the insurance debate in Ontario • No one knows what the true numbers are • Numbers are not shared by the IBC • HCAI has not been successful • Anecdotal evidence • Assessment mills • Multiple assessments to overwhelm adjuster • Increasing requests for in-home assessments Presented by Claire Wilkinson and Rob Deutschmann 2009

  13. Policy vs. Politics • It’s all about the politics • Nothing strikes fear in the Ontario provincial government more than the risk of increasing premiums. Presented by Claire Wilkinson and Rob Deutschmann 2009

  14. IBC and Premium increases • Recent news stories – IBC has talked about the need to raise premiums • Cause: • Investment losses • Rising costs in Med and Rehab treatment Presented by Claire Wilkinson and Rob Deutschmann 2009

  15. The IBC plays on fears of higher premiums • On average, drivers in Ontario pay higher premiums than drivers in all other provinces where auto insurance is sold competitively by private companies – 25% more than in the “private” jurisdiction with the next highest premiums, Alberta. (IBC submission July 2008) Presented by Claire Wilkinson and Rob Deutschmann 2009

  16. FSCO Report • 39 Recommendations • There are a few controversial recommendations • General theme – reducing Cost and Complexity The changes will have the most significant impact on non-CAT seriously injured Presented by Claire Wilkinson and Rob Deutschmann 2009

  17. Health care providers • What has changed from your perspective? • What should you be aware of and new strategies to apply? • How do you continue to be an effective advocate on behalf of your patient? Presented by Claire Wilkinson and Rob Deutschmann 2009

  18. Not quite the same • The catastrophically injured will still have access to a higher level of benefits BUT there will be G A P S in the system Presented by Claire Wilkinson and Rob Deutschmann 2009

  19. Current Catastrophic definitions • There is no change AT THIS TIME • The “straight forward” definitions: • GCS – 9 or less • Paraplegia or quadriplpegia • Amputation or impairment causing total and permanent loss of use of both arms or an arm and a leg • Total loss of vision in both eyes. Presented by Claire Wilkinson and Rob Deutschmann 2009

  20. The problem areas: • The whole person impairment rating of 55% or higher • The combining of physical and psychological impairments • Marked impairment Presented by Claire Wilkinson and Rob Deutschmann 2009

  21. Why is it a problem? • The injured person has to wait for assessment: • Until health practitioner says persons condition has stabilized; or • Two years elapsed since the accident To determine whether Catastrophically impaired Presented by Claire Wilkinson and Rob Deutschmann 2009

  22. One big reason it’s a problem • The most controversial change recommended by FSCO . . . Presented by Claire Wilkinson and Rob Deutschmann 2009

  23. Recommendation #22Reducing the med rehab cap • Reduce the cap for medical and rehabilitation benefits for non-catastrophic claims to $25,000. • Introduce a $100,000 optional medical and rehabilitation benefit along with the existing $1 million optional benefit. Presented by Claire Wilkinson and Rob Deutschmann 2009

  24. Why did FSCO recommend this?FSCO Report • Provide consumers with more choice and would allow them to customize coverage according to their needs. • The insurance industry has proposed that a reduced cap of $25,000 would adequately meet the needs of many consumers. • Consumers that feel they need a higher level of coverage could be provided the option of purchasing $100,000 Presented by Claire Wilkinson and Rob Deutschmann 2009

  25. “Consumers will appreciate it”FSCO Report • Considering the rate inadequacy that currently exists in Ontario, consumers will appreciate opportunities to reduce coverage that they may not need and avoid possible premium increases. • As an alternative, the cap could be reduced to $50,000 but this would reduce the opportunity for consumers to realize savings. Presented by Claire Wilkinson and Rob Deutschmann 2009

  26. Coverage under Tort claimFSCO Report • Some auto accident claimants would be eligible for compensation beyond the $25,000 by suing an at-fault driver. • Those eligible would have to have injuries that exceed the existing “serious and permanent impairment” threshold in the Insurance Act Presented by Claire Wilkinson and Rob Deutschmann 2009

  27. Reducing the med rehab cap • Controversial recommendation • Alliance of Community Medical & Rehabilitation Providers have actively lobbied primarily on this recommendation • No one aware until they are a victim – too late • Potential for an increase in cap to $50,000 Presented by Claire Wilkinson and Rob Deutschmann 2009

  28. Reducing the med rehab cap • Accident victims suffering from catastrophic injury will not be affected as long as they are deemed Catastrophically impaired immediately • Will have access to enhanced medical and rehabilitation benefits and attendant care benefits. Presented by Claire Wilkinson and Rob Deutschmann 2009

  29. Future considerations:A third level of coverage • Some consideration should be given to a more generous level of benefits for group of very seriously injured claimants with serious orthopaedic or brain injury who will not immediately meet the catastrophic test. Presented by Claire Wilkinson and Rob Deutschmann 2009

  30. Even the IBC made a recommendation(July 2008) A. For non-Catastrophic (CAT) claimants, establish the maximum limit for payments for medical/rehabilitation and provider-initiated assessments at $25,000, but retain the $100,000 limit for injured persons admitted to a public hospital for at least two consecutive days in the immediate aftermath of the injury; Presented by Claire Wilkinson and Rob Deutschmann 2009

  31. So what does this all mean • Some seriously injured people will fall into the $25,000 to $1million GAP • They will use up the AB funds well before 2 year mark • They may include: • Patient with a GCS of 10 or higher • Patient with significant orthopaedic injuries but not complete loss as per CAT defn Presented by Claire Wilkinson and Rob Deutschmann 2009

  32. What do these victims do • They are facing the prospect of trying to get by with $25,000 for 2 years • Future needs will have to be assessed immediately so that strategies can be considered • Contact a personal injury lawyer to develop and implement strategies Presented by Claire Wilkinson and Rob Deutschmann 2009

  33. What should you be looking for? • Copy of the patient’s insurance policy, or some confirmation, to determine if optional medical coverage was obtained ($100,000 or more) • Determine what other medical benefit plans are available – employer; dependant • Some lose employment and medical benefits Presented by Claire Wilkinson and Rob Deutschmann 2009

  34. Why a personal injury lawyer? • Victims, not at fault, can claim in tort for future medical costs from the at fault party • Defining regulation makes access more restricted • Often considered later in the process due to the availability of accident benefits but will become important early in process Presented by Claire Wilkinson and Rob Deutschmann 2009

  35. Strategies for medical benefits • Seek an advance for medical treatment costs from the at fault insurer • Tort insurer incentive: • the sooner the victim receives treatment, • the quicker the recovery • the lower the future damages Presented by Claire Wilkinson and Rob Deutschmann 2009

  36. Strategies for medical benefits • Guarantee payment to third party provider from tort settlement • Cash flow problems for treatment providers • Persuade AB insurers to pay for additional treatment if it can bring injured person back to work sooner • Insurer can minimize Income Replacement Benefits exposure Presented by Claire Wilkinson and Rob Deutschmann 2009

  37. Advances spent on other priorities • There are some who say we cannot give the victim these medical funds • Medical funds not applied to future medical needs but to household debt • Personal injury lawyer could administer the funds • Onus on injured person to use funds for treatment – would reflect poorly at trial Presented by Claire Wilkinson and Rob Deutschmann 2009

  38. Third party lenders • Financial assistance in the form of “bridge loans” to plaintiffs facing financial pressures in advance of the resolution of their legal claims. • Flexibility regarding terms • Carefully review repayment options, payment priorities and interest rates Presented by Claire Wilkinson and Rob Deutschmann 2009

  39. Other Optional benefits:Housekeeping and Caregiver • Recommendation #29 • Make housekeeping and home maintenance expenses and caregiver benefits optional. Reimbursement for housekeeping and home maintenance expenses and for replacement caregivers needs to reflect actual economic losses. Presented by Claire Wilkinson and Rob Deutschmann 2009

  40. Optional coverage issues • FSCO view is that as long as the option is available consumers have access and are protected • Optional coverage will not guarantee all have access if the communication / information process is insufficient • The role of the Insurance Broker becomes more important Presented by Claire Wilkinson and Rob Deutschmann 2009

  41. Housekeeping and Caregiver • FSCO relying on information provided by the IBC • “increasing at a significant rate … contributing to rising claim costs” • Insurer reports high proportion of payments … although no numbers were provided • Anecdotal evidence – receive claims from multiple family members Presented by Claire Wilkinson and Rob Deutschmann 2009

  42. Housekeeping and Caregiver • FSCO is “concerned about growing cost of the benefit” • 5 other provinces do not provide caregiver benefit • Solution – optional coverage Presented by Claire Wilkinson and Rob Deutschmann 2009

  43. Optional coverage • One approach to address rising costs and utilization is to provide consumers with more choice by converting a number of mandatory benefits to optional benefits. Presented by Claire Wilkinson and Rob Deutschmann 2009

  44. Optional coverage • This would provide consumers with the ability to customize coverage according to their needs. • When do we know what we need. Presented by Claire Wilkinson and Rob Deutschmann 2009

  45. Insurance brokers role • Insurance brokers have to step up and educate their clients/customers on the options • Mandatory disclosure – sign off sheet • Form – outlines the following: • all optional coverages outlined • Rationale for purchasing coverage • Premium associated • Client to initial off Presented by Claire Wilkinson and Rob Deutschmann 2009

  46. Broker liability • Well established in law that the broker owes a duty to client to advise and review Presented by Claire Wilkinson and Rob Deutschmann 2009

  47. Recommendation #10CAT definition • Further consultation with experts in the field is needed to amend the definition of “catastrophic impairment.” • FSCO - The goal for this review should be to ensure that the most seriously injured accident victims are treated fairly. Presented by Claire Wilkinson and Rob Deutschmann 2009

  48. FSCO concerns • Confusion based on evolving decisions on CAT definition • Particularly combining physical and psychological • Despite Desbiens and subsequent decisions FSCO unsure whether appropriate to combine • Expanded definitions have exposed system to “potential abuse” Presented by Claire Wilkinson and Rob Deutschmann 2009

  49. FSCO concerns • FSCO is searching for a “clear and fair” definition of catastrophic impairment Presented by Claire Wilkinson and Rob Deutschmann 2009

  50. IBC has already started the process • The Insurance Bureau of Canada (IBC) approached the Ontario Neurotrauma Foundation to form an expert panel to review the current science and evidence with which to measure and define brain impairment. • Evidence Based Classification of Brain Impairment: Application to Catastrophic Impairment Classification Presented by Claire Wilkinson and Rob Deutschmann 2009

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