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Headaches are such a headache.  This will hardly be news to anyone working in claims or human resources.  Whether the headaches are wholly personal (FMLA), work-related, or accident-related, employees and claimants with permanent and persistent headaches pose a unique challenge.  A new study reported on in Medical News Today suggests that instead of taking a conservative approach to managing headaches, which is the most effective and lowest cost treatment modality, many medical providers are instead opting to order expensive and typically useless advanced neuroimaging tests for their headache patients.  The study specifically found that, “rather than talking to patients about the causes and potential sources of relief from headache pain, clinicians are increasingly ordering advanced imaging and providing specialist referrals, both of which are considered to be of little value in the treatment of routine headaches.” 

Generally speaking, conservative treatment such as stress-relief counseling and avoiding dietary triggers are the preferred treatment modalities for managing most routine headaches.  As John N. Mafi, M.D., lead author of the study, notes, “the assessment of headaches depends on identifying the relatively rare instances where serious underlying causes are suspected” and that “despite the publication of numerous practice guidelines, clinicians are increasingly ordering advanced imaging and referring to specialists while less frequently suggesting first-line lifestyle modifications to their patients.

The problem with the overusing imaging studies rather than treating conservatively is multifold.  First, and most obviously, ordering unnecessary imaging studies unnecessarily increases costs.  Second, overusing imaging studies may result in incidental findings that “provoke unnecessary patient anxiety, can lead to more invasive procedures and often require follow-up testing," as Dr. Mafi stated, further increasing costs unnecessarily.  Third, ordering unnecessary imaging may in fact delay recovery from acute episodes and hamper control over chronic headaches because most patients are not being offered the most effective treatment for most headaches.  This invariably will lead to greater absenteeism and greater levels of perceived disability.

The truth is, by and large most headaches do not require any type of neuroimaging or laboratory testing.  For example, “in the absence of neurologic findings, episodic migraine does not require imaging studies…”  Also, “[p]atients who have had a stable headache pattern for at least six months rarely have significant intracranial pathology” and “in the absence of worrisome features, these patients do not require imaging.”  One reason that imaging studies are usually not required for headache is that “[i]n adults, it is unusual for headache to be the presenting symptom of an underlying systemic disease in the absence of other symptoms.”  This is why additional testing, including neuroimaging, is not recommended in the absence of red flag signs and symptoms that suggest an underlying dangerous pathology might be causing the headache.  According to the American Academy of Family Physicians, red flag signs and symptoms in the evaluation of acute headaches that require additional testing (and the testing recommended) include:

  • First or worst headache of the patient’s life – neuroimaging
  • Focal neurologic signs, not typical aura – blood tests, neuroimaging
  • Headache triggered by cough or exertion, or while engaged in sexual intercourse – lumbar puncture, neuroimaging
  • Headache with change in personality, mental status, level of consciousness – blood tests, lumbar puncture, neuroimaging
  • Neck stiffness – lumbar puncture (meningitis)
  • Older than 50 years – erythrocyte sedimentation rate, neuroimaging
  • Papilledema (optical disc swelling) – lumbar puncture, neuroimaging
  • Rapid onset (seconds to minutes, thunderclap headache) – lumbar puncture, neuroimaging
  • Systemic illness with headache – blood test, lumbar puncture, neuroimaging, skin biopsy if rash present
  • Tenderness over temporal artery – erythrocyte sedimentation rate, temporal artery biopsy
  • Worsening pattern – neuroimaging.

Fortunately, headache management is surprisingly simple and requires little “medicine” in the conventional sense.  Perhaps this is part of the problem:  patients expect high tech, advanced imaging to “figure out what is wrong” with them when high tech, advanced imaging will do no such thing for the vast majority of headache patients.  Instead, the more pedestrian truth is that physicians do not know why most patients with chronic or episodic headaches have them and that the most effective management techniques often involve lifestyle choices to reduce stress and avoid headache triggers: 

Behaviors that help to prevent headache flares include establishing a habit of regular mealtimes, sleep and awake times, and exercise.  It is useful to help the patient identify any connection between psychosocial stressors and headache flares.  Most headache patients can benefit from basic stress-reduction techniques such as yoga and meditation.  There is compelling evidence for the efficacy of biofeedback, relaxation techniques, and cognitive-behavior therapy for headache prophylaxis. 

Headaches are not all that difficult to treat.  The results of the above study are disappointing because advanced imaging studies (and other diagnostic tests) are contraindicated in the vast majority of patients with episodic and chronic headaches.  Episodic and chronic headache are difficult because the etiology is usually unknown and the treatment is dispiritingly low tech for a patient population accustomed to seeing fancy drug ads and hearing about exciting technological breakthroughs on a regular basis.  The key to treatment is for patients to accept responsibility for their condition and to take steps to manage the condition effectively.  From a claims or an employee management perspective, knowing the evidence-based treatment guidelines for episodic and chronic headache will help keep a handle on what treatment is being proposed and authorized and will help ensure that doctor and patient alike are following the guidelines.    

We previously began a series on how to improve decision making while managing claims.  The series was based on a paper by Jeffrey Brewer.  In the paper, Brewer identifies 10 strategies for improving decision making:

  1. Consciously raise the questions, “What do we know…?  How do we know…?  Why do we accept or believe…?  What is the evidence for…?” when studying or approaching a problem.
  2. Be clearly and explicitly aware of gaps in available information.  Recognize when a conclusion is reached or a decision is made in absence of complete information and be able to tolerate the ambiguity and uncertainty (which can be painful in the medico-legal-claims environment where the goal is total predictability).  Recognize when one is taking something on faith without having examined he “How do we know…? Why do we believe…?” questions.
  3. Discriminate between observation and inference, between established fact and subsequent conjecture.
  4. Recognize that words are symbols of ideas and not the ideas themselves.  Recognize the necessity of using only words of prior definition, rooted in shared experience, in forming a new definition and in avoiding being misled by technical jargon.
  5. Probe for assumptions (particularly the implicit, unarticulated assumptions) behind a line of reason.
  6. Draw inferences from data, observations, or other evidence and recognize when firm inferences cannot be drawn.
  7. Perform hypothetico-deductive reasoning, that is, given a particular situation, apply relevant knowledge of principles and constraints and visualize, in the abstract, the plausible outcomes that might result from various changes one can imagine being imposed on the system.
  8. Discriminate between inductive and deductive reasoning; that is, be aware when an argument is being made from the particular to the general or from the general to the particular.
  9. Test one’s own line of reasoning for internal consistency and thus develop intellectual self-reliance.
  10. Develop self-consciousness concerning one’s own thinking and reasoning process.

Prior entries addressed strategies 1-6.  This entry will examine Brewer’s seventh strategy for improving decision making:

Perform hypothetico-deductive reasoning, that is, given a particular situation, apply relevant knowledge of principles and constraints and visualize, in the abstract, the plausible outcomes that might result from various changes one can imagine being imposed on the system.

In this directive, Brewer challenges us to remove emotion and bias when we examine claims.  It is easy to make assumptions based on first impressions and intuitions when you first receive a claim.  Hence, one may think a claim is bogus or fraudulent because of the claimant’s long history of unwitnessed soft tissue injury claims instead of analyzing the claim and what the likely outcomes will be based on the available evidence.  The claimant’s history of making dubious claims is relevant, but focusing on that history without first examining the available objective facts and the inferences to be drawn from them would be a mistake.  The claimant’s history impacts her credibility; the claimant’s credibility impacts the likelihood of the claimant succeeding at hearing or trial, which is nothing more than a probability function that helps determine the dollar value of the claim.  Even if evidence of actual fraud arises, the information will reduce the claim to a zero or negative value.  [By negative value I mean that the claimant could owe penalties or restitution that would inure to the benefit of the employer or insurance carrier.]  Regardless, even in a case of outright and uncontested fraud, the ultimate effect is an economic one despite the moral outrage one may personally feel about the claimant’s fraudulent (and probably criminal) behavior.

If we cannot separate our personal feelings about a claim or a claimant from our analysis of the claim, we are likely to make poor decisions regarding both the value of the claim and how the claim should be managed.  For example, in our fictitious claimant with a long history of dubious claims, we may be inclined to put more resources into surveillance than the facts and exposure on the claim would otherwise suggest is appropriate.  Also, we may be prone to understate the claim’s value because we are likely to transfer our suspicion into our calculation of the exposure and our likelihood of successfully defending the claim at hearing or trial.  In both the management and valuation of the claim, we may potentially set ourselves up for an unpleasant surprise if we judge a claim based on our visceral response to the claimant’s history rather than the actual demonstrative evidence.

A better way to address claims is to run it through “hypothetico-deductive reasoning” to visualize the possible outcomes based on the actual demonstrative evidence.  This process of analysis has the virtue of forcing us to consider possible outcomes that may run counter to our emotions and intuitions (which are unlikely to be based on the actual demonstrative evidence before us).  The process of dissociating ourselves emotionally from claims to engage in this reasoning process helps ensure that the decisions we are making are based on objective evidence and not on unsupported evidence or personal bias.

Let’s consider an example based on the above discussion.  Let’s say Hank has worked for the Acme Corporation for 22 years assembling road runner retention and destruction devices for a certain loyal, if misguided, customer who happens to be a member of the species canis latrans, more commonly known as a coyote.  In 13 of his 22 years at Acme, Hank has made a worker’s compensation claim.  Remarkably, in 8 of the 13 claim years Hank suffered an unwitnessed soft tissue injury within weeks of the opening of gun deer hunting season.  (The Acme Corporation happens to be located in Wisconsin where some consider the opening of gun season to be a bona fide sacred holiday).  In 4 of the remaining 5 claim years, Hank suffered unwitnessed soft tissue injuries in suspiciously close proximity to various legally recognized holidays.  In short, Hank and his claim history are sources of enormous frustration for his employer who rightfully regards the claims with more than a modicum of suspicion. 

Now entering his 23rd year of service for the Acme Corporation, Hank claims to have injured his shoulder assembling a pair of roller skates that are fitted with expandable jet engines for the misguided coyote.  In what is a running joke among the human resources and risk management departments, the injury occurred while Hank was working alone and a mere 3 days before the opening of gun hunting season, during which Hank has neglected to take any vacation days.  Aside from rolling eyes and jokes at Hank’s expense, the employer is sincerely and understandably frustrated with the amount that the claim will cost the company.    Accordingly, they have communicated their suspicion regarding the veracity of this claim to their insurer.  Such is the employer’s level of frustration that the employer has demanded that their insurer take a scorched earth policy in investigating and, they have no doubt, in denying and subsequently litigating the claim.  Included in this demand is the employer’s “suggestion” that surveillance be performed.

The claims handler assigned to the case reviews Hank’s claims history and discusses the current claim with the employer and, understandably, is left with the distinct impression that the claim is suspicious at best.  Based on the information from the employer, the claims handler is inclined to believe that Hank is undoubtedly faking the injury to get off work for deer hunting season and that she should arrange, post haste, for surveillance to catch him enjoying his worker’s compensation-funded vacation. 

However, the claims handler has additional information available at the time she ordered surveillance.  First, the employer had a physical demands analysis conducted on the job Hank was performing when he claims to have injured his shoulder.  The occupational medicine specialist performing the analysis concluded that the job Hank was performing put employees at a moderate-to-high risk of sustaining shoulder injuries because of the combination of the forces involved and the awkward, overhead positioning.  Second, the injury report documents that Hank reported the injury two thirds of the way through his shift on a Wednesday, that he reported the injury immediately, and that he went to the emergency room immediately after reporting the injury. 

At this point, if we apply hypothetico-deductive reasoning to the available facts we have essentially two likely scenarios.  First, Hank’s claims history suggests that he may be using an unwitnessed “accident” to get time off from work with TTD benefits to go deer hunting.  Second, the physical demands analysis, the fact that it occurred mid-shift/mid-week, Hank’s prompt reporting, and Hank’s prompt treatment suggest that perhaps the claimed injury may be legitimate.  Under the principles of hypothetico-deductive reasoning, we should at this point consider what information we would need to make one scenario more plausible than the other.

We know that Hank went to the emergency room.  We should find out, if possible, what diagnostic tests were done, the results of the physical examination, whether a definitive diagnosis of an objective injury was established, whether the diagnosis was wholly based on subjective complaints, etc.  We would also want to know if other employees suffered similar injuries doing the same or similar jobs.  We should interview Hank before conducting surveillance.  Perhaps his claims history suggests that he has not been credible in the past, but we want to base our judgment on present information.  We would want to know how he described the incident he claims caused an injury.  We would want to know whether the incident was acute, definable, and resulted in immediate pain versus a more nebulous scenario in which pain arose gradually and was not attributed to a specific motion or incident.  We would want to know what the emergency room doctor or PA told him was the diagnosis.  We would want to ask him about his deer hunting plans.

Let’s start with the emergency room visit.  If the diagnosis is shoulder instability/subluxation (also known as a partial dislocation) based on x-ray evidence, this would probably trump any suspicions we might have based on his prior claims history.  On the other hand, normal imaging studies and a shoulder strain diagnosis based wholly on subjective complaints would bolster our suspicion that Hank is acting consistently with his prior questionable claim history.  The same analysis would apply to the other pieces of information obtained in the investigation.  Our gut instinct might tell us the Hank or any other employee is manipulating the system and fabricating an injury, but we should test our assumptions and instincts using hypothetico-deductive reasoning so that we engage in the most thorough investigation possible, are unsurprised when the investigation follows a plausible path (even if it conflicts with our gut instinct), and make our claims decisions based on reason rather than emotion.  In this way, we can make the best decisions when managing claims, even if that decision is at odds with our gut.

On a related note, one of Hank’s co-workers completed the roller skates with the expandable jet engines.  The roller skates were successfully shipped to the coyote in an otherwise nondescript wood box stamped all over with “Acme Corporation” in bright red letters.  Fortunately for the coyote, the skates worked precisely as expected.  After hiding behind a large cactus conveniently located next to a long stretch of single lane highway in Monument Valley, the coyote heard the approaching “Beep, beep” of his longtime avian prey and foe.  As the roadrunner sped by, the coyote activated the jets and took off with remarkable alacrity after the bird.  Unsurprisingly, the jet-powered roller skates soon brought coyote even with and then past the roadrunner who, in typical form, gave out a nonplussed “Beep, beep” as the coyote wooshed by. 

The coyote realized too late his error in not requesting from Acme Corporation that some sort of braking mechanism be added to the skates/jet engines.  Specifically, the immense power and speed of the jet-powered skates propelled him the entire length of the straightaway and quickly brought him to a 90 degree turn in the road at the apex of which stood the rock face of a mesa.  With roller skate wheels lacking the necessary friction coefficient to execute the turn and 375 miles an hour, the coyote surrendered himself to inevitability with a resigned and slightly plaintive look, and struck the rock face with a “poof,” causing a rather large cloud of dust to appear.  Miraculously, coyote walked away from the crash.  He had, however, reached a breaking point.  Instead of contacting Acme Corporation for a new and ridiculous contraption for catching the roadrunner, he contacted a products liability attorney in Phoenix…

1/5/2015 in Blog Categories, News

Christopher Tidball has a good piece at propertycasualty360.com on strategies to curb the rising cost of bodily injury claims.  As Tidball notes, bodily injury claims continue to rise at rates faster than inflation.  He focuses on taking proactive steps on the front end of claims to ensure that a complete investigation is performed so that damages do not get out of hand without the claims professional’s awareness.  A few suggestions are particularly useful as these investigation techniques sometimes fall under the radar:

  • Was the claimant indexed? Are there any hints of prior claims?
  • Was a background check run to identify marriages, known associates, criminal history, professional licensure and assets completed?
  • Were state licensure databases checked for the treating medical providers and attorney?

Perhaps the most useful suggestion is to pay exceptionally close attention to the actual medical bills.  Specifically, Tidball notes that coding is frequently used to increase reimbursement.  In a telling example of how coding can be manipulated to drive up costs,

Consider a basic lumber MRI with and without contrast. A provider may bill 72148 and 72149, which would be appropriate for these as individual diagnostic tests. However, when they are conducted together, the appropriate code should be 72158, which is the bundled code [and will result in a lower overall bill].  (Parenthetical and emphasis added).

In addition, Tidball reports that using fee schedules or benchmarks to evaluation medical bills will help to contain costs and keep bodily injury expenses reasonable and under control.   

The article is short, but provides some useful strategies for controlling costs in bodily injury claims.  As is the case with most claims management, the key is to get in front of the claim from the beginning.  Conducting thorough background checks on all parties involved and carefully examining billing codes and reimbursement rates are some strategies that will help claims professionals get in front and stay in front.  

A recent development finds an alternative to postoperative pain management in knee replacement surgery that appears to offer more effective pain relief and potentially speedier recovery.  Researchers found that when they injected “a newer long-acting numbing medicine called liposomal bupivacaine into the tissue surrounding the knee during surgery…[p]atients had pain relief for up to two days after surgery and better knee function compared with the traditional method."  One of the study’s authors noted that “many patients were able to walk comfortably within hours after surgery.”

It is estimated that more than half of American adults diagnosed with knee arthritis will have a knee replacement at some point.  Given the prevalence of knee replacement surgery both in the general patient and worker’s compensation patient populations, any development that can improve pain relief and increase early knee function could have a profound impact.  Prescription pain reliever abuse continues to vex society and intraoperative techniques that can reduce the need for postoperative narcotic pain relief can only help the problem.  In addition, faster restoration of knee function has the potential to speed rehabilitation and end of healing.  If this new technique fulfills its early promise, it could have a significant and positive effect on reducing costs and recovery time of knee replacements.  In the worker’s compensation setting, this would be a welcome development.

Andreas Goebel, a lecturer in molecular and clinical pharmacology at the University of Liverpool, has an article at The Conversation about an exciting development in the understanding of how chronic pain works, which offers possible insight into treating Complex Regional Pain Syndrome (“CRPS”), among other chronic pain conditions.  Historically, CRPS has been considered primarily a brain problem.  The article points out that recent research suggests autoantibodies are implicated in CRPS by “binding to peripheral tissues, prompting sensory nerves to misfire.”  The working theory is that trauma, even minor trauma, induces inflammation which causes the binding/misfiring sequence and this in turn causes the central nervous system to become “wound up.”  Once the central nervous system is wound up, it malfunctions, causing the unusual and often intractable symptoms of CRPS.  As Goebel reports, the discovery of autoantibodies’ role in pain development is important because “there are treatment methods … designed to reduce or remove antibodies,” which may well prove effective in treating CRPS, especially if treatment is initiated early in the progression of the disease.  These findings could prove important as claims involving CRPS typically have high disability and medical expenses and are difficult to process and close in a timely manner.  Any effective treatment options would have the potential to change CRPS claims processing radically for the better.

11/19/2014 in Blog Categories, News

Cognitive psychology and behavioral economics have taught us that our unconscious biases matter.  In numerous preceding posts, I have discussed the problems that these biases can cause in our decision-making process and have offered strategies to overcome many of those biases.  One common factor in the discussion of biases has been the incredible strength and persistence of our beliefs, especially those that our unconscious biases shape.  Previously I have discussed our biases and beliefs as negative cognitive tendencies to be overcome.  Fortunately, our beliefs have a positive aspect as well.

One area in which our beliefs have a positive effect on our cognition involves how we think about willpower.  Despite what can seem like a deluge of research arguing that we have less control over ourselves and our environment than we think, there is a significant body of research developing that demonstrates that our beliefs about willpower, regardless of the factual accuracy of the belief, can impact our ability to perform on cognitively demanding tasks that happen over time, such as learning new things.  In short, the research demonstrates that if we believe that willpower is important, we perform better on tasks requiring us mentally focus over an extended period of time.

For example, Miller et al. conducted a study of students who were given a tasks requiring sustained engagement with “a strenuous mental task that taxes working memory.”   One group was primed to believe that willpower was limited and easily depleted while the other was primed to believe that willpower was unlimited and not easily depleted.  The authors found that students who were primed to believe that willpower was unlimited “increased in accuracy” of the second half of the test while students primed to believe that willpower was limited and easily depleted did not improve their performance over the second half of the test.  As a result, the authors concluded that, “only participants in the non-limited willpower condition sustained learning for the entire duration of the task.”   As they note, “this experiment suggests that people’s beliefs about the nature of willpower can also limit or facilitate the acquisition of a cognitive skill.”

These findings demonstrate that our beliefs can make a positive difference on performance.  While I am personally given to skepticism, I recognize that how we approach problems is different than how we judge the information we receive.  In the case of approaching tasks or problems at work that require sustained attention such as learning or problem-solving, it is important that we tell ourselves that willpower matters, that sustained engagement is energizing, and that difficult problems strengthen our focus.   In short, we should be optimists when we need to get the job done.

Too often we associate health and well-being with physical, or bodily, health, forgetting that we are creatures of mind.  In many ways our mental health and well-being are more important than our physical health.  Not long ago we reported on research demonstrating that well-being was more important in predicting workplace absence than physical health.  Now Employers Health, an Ohio-based employer coalition,has data demonstrating just how significant mental health and well-being is to the workplace:  2 in 5 U.S. worker’s report missing work due to depression.  Each episode costs employers an average of 10 workdays due to depression.  Medical researchers estimate that depression costs employers $100 billion annually, including $44 billion in lost productivity.  This really is a staggering figure when one considers that the total costs to employers related to musculoskeletal disease has been estimated to be approximately $130 billion.  

Of course the million, or in this case, billion dollar question is what, if anything, can employers do to lower the costs of employee depression?  Most importantly, research “suggests every one dollar invested by employers in enhanced depression care yields approximately three dollars for the company in the form of productivity gains by employees.”  Hence, employers will likely reap economic benefit from ensuring that employees have access to adequate mental health care and support.  In addition, mental health diagnoses, including depression, continue to carry a stigma that makes it harder for many employees to admit when they are having a problem and to seek appropriate treatment, which in turn affects performance negatively and leads to workplace absences.  Employers can, and many do, have proactive programs to ensure that employees are aware of the confidential support services available to them and that employees understand that there is no stigma attached to using such support services.   Continuing to promote the psychological health of employees and to publicize the programs available to help employees maintain their psychological well-being can go a long way to reducing the stigma of mental health issues and reduce the associated costs for employers.

Yet another reason to quit smoking:  smokers are three times more likely to suffer chronic back pain than non-smokers (subscription required), according to Northwestern University Feinberg Medical School researchers.  Interestingly, the researchers found the link between smoking and increased back pain is in the brain and not the back.  The lead author of the study noted that smoking “affects the way the brain responds to back pain and seems to make individuals less resilient to an episode of pain.”  Researchers found that two areas of the brain are critical in to developing chronic pain (nucleus accumbens and medial prefrontal cortex, NAc-mPFC).  As researchers reported, “That circuit was very strong and active in the brains of smokers … but we saw a dramatic drop in this circuit's activity in smokers who … quit smoking during the study, so when they stopped smoking, their vulnerably to chronic pain also decreased.”   

Smoking is frequently a vexing component of claims involving back problems.  We know smoking can predispose persons to back problems and significantly reduces the likelihood that back surgery will succeed.  This study demonstrates that smoking also changes the way the brain behaves, which appears to make the physical problems worse.  Claim handlers and medical professionals should exercise whatever power they have to convince persons with back problems or injuries to quit smoking immediately.  While smoking is a personal choice, worker’s compensation premiums should not underwrite the costs of that choice when, for example, a minor back strain becomes chronic, intractable, and expensive to treat because of a person's decision to smoke.    

Chronic and terminal pain cause myriad personal, interpersonal, and socioeconomic problems.  In what can only be described as sadly ironic, the most effective pain relievers currently available, all of which are opioids, have side effects that can cause problems that are as bad as the pain the drugs are administered to control.  The most troublesome and well-known side effects include altered mentation/sedation, physical dependence, respiratory depression, constipation, and androgen deficiency.  For example, cancer pain can be managed effectively with powerful opioids, but at the expense of rendering the person suffering from the pain nearly comatose.  In non-terminal, chronic pain patients, physical dependency can lead to job loss and ultimately death by respiratory failure from overdose.

Our current ability to manage chronic and terminal pain puts many sufferers in a catch 22:  treat the pain but get the side effects, avoid the side effects but live with the pain.  The ideal solution to the chronic and terminal pain conundrum would be to develop or discover methods to control pain that are as effective as opioids but without the systemic side effects.  In short, new pain relief treatments should only target that which is generating the pain.  Fortunately, a group from Flinders Medical Centre in South Australia is doing just that.  Medical News Today reports that lead researcher, Associate Professor Nick Spencer, and his team have developed a technique to identify precisely which nerve endings detect painful stimuli.  They then developed a method to inject a harmless virus into the site from which the pain originates that travels to the spinal cord and shuts off a channel to the affected nerve endings that is essential for pain perception.  As Spencer noted, “shutting off the pain is not instant, it can take days to weeks, but the big advantage is that pain can be suppressed for long periods without the classic side effects of current pain therapies.” 

The team’s current research focused on incurable pain located in the stomach and intestines, but Spencer believes the technique will have broader applications.  This would be exciting news for everyone and would be especially welcome in the claim handling community as chronic pain cases are often vexing, expensive, and resource intensive.  Any development that could eliminate or at least reduce the use of opioid pain medications in the chronic pain context would have a significant and positive effect on the management of claims involving chronic pain.  

Choice architecture is the idea that the way in which choices are framed influences the actual choices that are made.  The idea arose out of findings in psychology of persistent and pervasive cognitive biases and decision-making heuristics.  The thought behind choice architecture was something like this:  if we know how biases affect decision-making, then we should be able to structure choices to “nudge” or push people toward the choices we want them to make by taking advantage of people’s cognitive biases.

Cognitive psychology has given us numerous examples of the way in which framing choices influences what choices are actually made.  An interesting example involves default options and organ donation.  In countries where the default option is to donate and persons must affirmatively check off a box to show one does not want to donate, the vast majority of persons opt for the default (85-99%).  To the contrary, in countries where the default option is to not donate and one must affirmatively check a box to show one wants to donate, the vast majority of people opt for the default (80-95%).  The conclusion from this finding is that we can take advantage of the status quo bias (the default option) to achieve a result we want.

Some of the findings regarding cognitive biases are relevant to claims administration.  For example, the anchoring bias is the common human tendency to give too much weight to the first piece of information one receives when making subsequent decisions.  In the claims setting, this bias could suggest when to make a settlement offer and how much that offer should be.  I know many people express frustration at the negotiation process (and I was one such person) and think, shouldn’t we just offer what the claim is worth and be done with it?  Unfortunately, the answer is probably “no.”  While it may seem easier to price a settlement like it was a piece of merchandise on the shelf at Target, the effect of doing so would likely be deleterious.  Even if the offer is fair, it will likely have the effect of convincing the other side that they can get a higher or better settlement because they will judge the settlement value in part based on the first offer they receive which by habit they will consider to be your floor.  To take advantage of the anchoring bias, initial offers to settle claims should be sufficiently low so that the other side’s calculation of settlement value is influenced downward.  Although this results in the typical tit-for-tat negotiations, it is probably the best way to handle an initial settlement offer given what we know about the anchoring bias.

Another cognitive bias that could potentially be used to one’s advantage in settlement negotiations is the endowment effect.  This bias is the tendency of people to value giving something up more than they value acquiring the same thing.  The clearest example in cognitive psychology involved basketball ticket prices.  When Duke University students were told they won tickets to the NCAA basketball tournament Final Four they valued them considerably higher than students who were told that they had to buy the tickets.   In that experiment, students who won the basketball tickets said they would sell the tickets at an average price of $2,400.  Students who were told they would have to buy the same tickets said they would buy the tickets for an average of $170.  Obviously this is an extreme example, but other research consistently finds that persons value a thing they own 2.5 times higher than the identical thing that they have to purchase. 

In the settlement context one might be able to influence outcomes by framing the discussion not as something being given up but rather as something being gained.  When claims are settled, employees (for example) tend to think that “I have a claim worth X dollars” so that any settlement is a reduction in the value of “their” claim.  Perhaps the discussion could be reframed to suggest that the employee has a claim worth zero dollars because of an IME or a factual defense.  In this way, the claimant is not giving anything up but is rather acquiring something, which could potentially lower the value at which they accept a settlement.  Obviously represented claimants have an attorney to get through, but still this has the potential to be an effective negotiating strategy.  Certainly it is something that one could use at mediation to tell the mediator how one would like any settlement offers to be presented.

So is choice architecture real?  It appears to be a legitimate method to influence decision-making under the right circumstances.  While nothing can guarantee that using choice architecture will lead to better results, it is a tool that claims professionals can use in situations where cognitive biases are present to try to shape the decision-making process.  Choice architecture will generally have little or no cost and potentially has significant benefits.  Hence, it is a strategy worth considering the next time you are trying to settle a claim.

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