Here’s what I see happening in the world of workers’ comp and WC services in 2013… three today, three tomorrow and the last four Wednesday – unless other news intrudes.
1. Vendor consolidation
There are two main drivers – the dramatic increase in private equity involvement in workers’ comp services and large payers seeking to internalize services to increase their top lines and bolster profits. And we ain’t seen nothing yet. Expect several of the larger players to join forces/be acquired/become “platform” companies that PE firms use to build large, diverse service providers.
2. Higher medical costs driven by facilities
We have seen harbingers of the future in WCRI’s report on cost drivers in Indiana and other research. Facilities – hospitals, health care systems, vertically-integrated delivery systems – whatever version or name you want to give them – are becoming an increasingly large, and increasingly expensive provider of medical services to work comp claimants. According to the latest data, about a third of all physicians are employed by hospitals - and that data is a couple years old. And, provider consolidation is accelerating – driven by PPACA and market forces as well as much higher Medicare reimbursement (procedures billed by hospitals get paid at higher rates than those billed by docs).
Most WC fee schedules are based on Medicare – or on some mechanism that is even more lucrative. Thus, as health care systems acquire occ med practices, work comp payers are going to see the same procedure cost more – just because it is billed by a facility rather than a doc. Providers will figure out work comp is a really profitable line of business. When they do, they’re going to be upgrading their occ med departments and tying them much more closely to orthopedics, home care, PT, and related services.
3. Continued ignorance of opioids’ impact on long-term costs and outcomes, coupled with inaction by most payers.
When insurers finally figure out how bad this problem is, they’re going to either go catatonic or their heads will explode. We will know that top execs really understand how bad this is when they get very focused on this issue internally and externally and very demanding of their staff, vendors, and regulators. This will manifest itself through aggressive efforts to identify and address existing claimants – and not just attempt to prevent extended use of opioids by new claimants. To those who would argue this is already happening, I would respond “perhaps in some small ways at a relatively few payers and in a handful of states, but the response to date is all out of proportion given the size of the problem.”
Three more tomorrow…