Thanks for…

I wanted to do a post on all the things work-related I’m thankful for – but there aren’t enough pixels to include them all. So, here are the top few.

Most of the people in the work comp industry are committed to doing the right thing. Whether it’s getting injured workers the best care possible along with their indemnity checks, paying good docs fast and well, or helping employers lower their costs and increase productivity, the folks who do the work (mostly) do it well and diligently.

I’d like to single out a few organizations, jobs, and people:

  • Medical directors are a way under-appreciated force for good. Payers need to use them more effectively, elevate their importance and give them more responsibility.
  • The workers in the trenches – case managers, adjusters, bill processors. You are the “sharp point of the spear”, where all those brilliant ideas from home office end up in your work flow along with every other to-do.  How you manage we’ll never know.
  • Research organizations – specifically CWCI and WCRI, and the leaders thereof.  Rick Victor has remade WCRI into a more relevant, proactive, insight-delivering organization that uses social media quite effectively; his replacement at WCRI has enormous shoes to fill.  CWCI’s Alex Swedlow is brilliantly effective; a great speaker, Alex and his team are able to get more relevant research done faster than humanly possible, and present it in a way that demands attention.
  • Bob Wilson of  Bob’s coverage of Plotkin-Gate is one of the best examples of what social media can do and how effective it can be. We don’t agree on much anything politically, but we both agree Bob’s efforts have been a major force for good. Actually Bob probably thinks they’re even better than that…
  • The American Insurance Association, and especially Bruce Wood and Leigh Ann Pusey.  AIA’s leadership on critical issues, tireless advocacy, and commitment to doing the right thing for employers and injured workers has deeply impressed me. These are very good people.
  • The new crop of entrepreneurs and the companies they are running are shaking up the industry, finding under-served or poorly-served niches and fighting for business.  Whether run by newbies or veterans of other successful start-ups many of these new entrants are making a mark.
  • The work comp PBM industry.  Sure, I’m biased, as I run a trade group for PBMs – that also gives me a very good view into the business.  There’s no other segment of the industry that has been as effective in its core responsibility – delivering the right medical care at the best price to the most injured workers.  Across the industry customer service satisfaction is high, costs continue to decline, access continues to be a non-issue, and the quality of care improves with tighter controls on dangerous and inappropriate drugs.
  • Finally, the 5706 subscribers to  I deeply appreciate your readership, comments, views and contributions.  Even when I don’t agree.

Enjoy the holiday.  You’ve earned it!


Leaving Las Vegas

Quick takes from the blur that was NWCDC.

MedRisk’s Restore presentation was sitting-room-only; the company’s new venture is a comprehensive approach to managing delayed RTW – Restore targets all factors including psychosocial issues and involves comprehensive physical therapy, opioid-withdrawal management, and delayed recovery treatment.  (yes, MedRisk is a client)

Heard former Coventry CEO David Young is back in the game as CFO of a new venture with an old name – Occusystem.  No details available yet…

Speaking of Coventry, stopped into their booth yesterday to say hello.  Learned that their perspective on the move of AIG’s bill review business – and pending move of Liberty’s – is (surprise!) different from mine.  They noted that Coventry had informed both parties a couple years back that they would no longer be in the BR application business, therefore they took issue with my statement that they’d “lost” the business. I suggested that if the business was no longer their’s, then they had indeed “lost” it. Rather than argue semantics, I’ll report.  You decide.

Spoke with several investment types about Coventry’s possible re-emergence on the auction table.  As I’ve said ad nauseum, it’s value is the network, which is declining in effectiveness/size/discounts; the re-contracting effort is going to take a long time, and there’s not much else of value. (no, Coventry is not a client)

HealtheSystems has added Johns Eastern as a PBM client- word is things are going well.

Had a great time jousting with Bob Wilson, Becki Shafer, and David DePaolo at the bloggers’ roundtable.  Was hoping for a bit more “Jane you ignorant slut” and a bit less “I agree with…”

Caught up with Foresight Medical – they’ve engineered a pretty interesting surgical implant solution that is gaining traction.  Working with Broadspire and Medata, so they’ve already gone thru the virtual endoscopy.  (no they are not a client)

Ascential Care is growing fast.  Adding clients and getting more business from old ones, thanks to a focus on quality that’s like no other CM firm I’ve ever seen. The case management company also has one of the best websites in the business – and those people are actual AC folks. (no, they’re not a client either)

Finally, had a great session with three private equity executives.  Can’t thank Camilo Horvilleur, Jeff McKibben, and Hunter Philbrick enough – as the brains and dollars behind deals involving PMSI, MSC, OneCall, Align, Sedgwick, Mitchell, and many other work comp companies, this was a rare opportunity to hear about the process, understand what investors look for, get their views on leadership, management, and execution, and find out where they think the market is going.

Hope the conference was blindingly successful for you. Unless you were that ass in the elevator.  


Size isn’t all that.

The work comp services market is bifurcating. The big are getting (much) bigger, the $100-$250 million companies morphing into giants as they merge together or are acquired by private equity backed firms.

Meanwhile a whole host of new entrants are appearing – more on that in a minute.

Much of this has been rather mysterious to most. A good bit of light will be shed on the big-getting-bigger phenomenon today in a session at the NWCDC. I’ll be moderating a panel of three eminent investment executives tasked with explaining the whys and hows and whats; it kicks off at 10:45. Don’t be late as this is going to be very popular.

One of the key topics will be the factors that make some of the newly-constructed companies succeed while others don’t. There are a couple firms that provide real-world examples…

Back to the little gals and guys. I lead with gals because women seem to be inordinately represented among the CEO ranks of these emerging companies.

Whether its transportation or home health/DME or SIU, the exhibit floor and attendee ranks are brimming with hyper-motivated, very focused, totally committed small companies looking to take advantage of distracted, stodgy, slowly moving megacorps seemingly more focused on managing perceptions than service.

Many will succeed.

The long-rumored York acquisition will not close during the show, but it will close. Final details are being wrapped up and regulatory approvals obtained. Knowing the parties and principals involved, it’s very likely they will not make the same mistakes  noted above.


Comp conference day 1

The first day is more ease-into-it than jump-in-with-both-feet. For we East Coasters that’s a good thing as we can’t keep up with the late night events after waking at 3:30…

One noteworthy item and a couple observations from Tuesday.

The Coventry bill review RFI is out and rumor has it – it is Bill Review only. As in no other services needed. And lots and lots and lots of requirements. And the info required in a response is voluminous.

There is a rather limited pool of potential respondents; as in fewer than five. The business potential, while large, is shrinking. With the loss of AIG and pending loss of Liberty any successful bidder is going to have to staunch the bleeding.

Or more accurately, hope Coventry does.


As noted last year, what happens in Vegas gets posted to youtube. On an elevator departing a social event last night several men were commenting loudly and often in vulgar terms on the physical attributes of a woman. Who was also on the elevator.

I’m looking forward to meeting these boys on the exhibit floor. And their boss. I hope she’s a woman.


No one cares about your product or service. They care about their needs, which you don’t and can’t know unless you ask questions, shut up and listen.

Much more going on, but alas I heard “this is off the record” all too often yesterday.






Women in Work Comp

The first Women in Work Comp Forum took place today.  As Healthcare Solutions CEO Joe Boures said: “long overdue.”

The good news is there was a similar meeting held a block or two away, so we’re catching up quickly.

Some are focusing on the “conflict” between these two meetings, a focus that is misplaced.  Rather, it’s a good thing – two separate sets of people motivated to bring attention to an ongoing issue/opportunity.  There were about 300+ in attendance, indicating there’s a big demand…

A few observations from panelists worth remembering.

  • Danielle Lisenbey, CEO Broadspire – be flexible and adapt; be true to yourself; know the numbers too
  • Nanette de la Torre – VP Zenith – embrace opportunities as they come; don’t take things so much to heart, not everyone’s going to like you and that’s OK.
  • Nina Smith-Garmon EVP Mitchell Int’l – have sponsors who will support you and mentors who will provide direction – and don’t worry about titles.
  • Michelle Weatherson – Director Claims Medical and Regulatory Div, State Fund of CA – take risks, temper what you do when necessary
  • Eileen Ramallo EVP Healthcare Solutions – don’t ignore conflict, address it and seek to understand issues

An impressive group with some very useful insights.  As the father of two smart, motivated, successful professional women, I was wishing the younger Padudas were in attendance.

Kudos to Healthcare Solutions for taking the initiative.


And the first real news in Vegas is…

While no one from Medata will comment, word is the company has just implemented their bill review platform for AIG.

This has been very long in the making; we first heard rumors about the deal a couple years back.  It was all over the room at last night’s Medata event; evidently AIG went live within the last week or so.

There are at least two significant implications.

First, bill review application firm Medata is a force to be reckoned with.  Long a relatively small player, this relationship clearly moves them into the top tier with Xerox and Mitchell. No disrespect to Tristar, PMA, Amerisafe, and Medata’s other customers, but adding the 5 million plus bills flowing thru AIG is a whole different ballgame.

Second, AIG moved from Coventry.  This is a major loss for Aetna/Coventry’s bill review business; with Liberty Mutual likely switching over to Xerox the writing is on the wall.

Expect Coventry to either make a major investment in bill review (highly unlikely) or outsource the application to a third party (highly likely).


The Comp Conference begins…

I’ll be blogging from the NWCDC this week – here’s what we’ll be looking for…

  • latest and greatest new thing on the Exhibit floor.  In the past (waaaay past), it has been MSAs, drug testing, PBMs, disaster recovery, security.  What’s big now?
  • new announcements that are actually “new” and worthy of announcement. Every year we (pseudo) media types get flooded with press releases announcing hugely exciting events/deals/breakthroughs – many of which are not a) exciting or b) news.
  • best, most useful, and well-done presentation – looks like there will be several potential ones
  • wildest rumor on the floor. What will it be this year?
    • Aetna decides to invest in workers comp?
    • Examworks and MES are actually the same company?
    • Bob Wilson is a closet liberal?

And of course, we’ll be hoping the Latin Grammys are in the Mandalay Bay again this year. Gotta have some really exciting new stuff!


Bringing a knife to a gun fight

Employers, taxpayers and insurers got a very loud wake-up call last month. If there was any doubt about the financial power of dispensing companies and their owners (we’re talking you, ABRY) – and the unbelievable profitability of dispensing – that has been put to rest.

Physician dispensing companies spent over a half-million dollars on lobbying efforts to allow physician dispensing to continue in Pennsylvania.  Unlike battles in other states – Maryland, Florida, Hawaii come to mind – doc dispensing opponents were able to prevail despite an overwhelming disadvantage in financial resources.

In most other battles, we have lost, lost repeatedly, and lost badly.  That’s what happens when you bring a knife to a gun fight.


Yes, employers, injured workers, and taxpayers did win in PA, but only because we were there early, in force, and coordinated – an unfortunately uncommon event.  We managed to overcome dispensing companies’ overwhelming financial resources only with a concerted effort on the part of many, many people and organizations coupled with strong leadership from key influencers and committed and persistent legislators.

Meanwhile, we’re finding that the measures taken in Connecticut to reduce costs of physician dispensed repackaged drugs aren’t working out so well.  A just-released WCRI study indicates that, while prices are down from pre-reform days, doc-dispensed drugs still cost 30 to 60 percent more than the same drugs bought from a retail pharmacy.  In my view, there are a few reasons…

  • Docs are dispensing a lot of over-the-counter drugs at prices far higher than the OTC retail price.  We’re talking generic Tylenol(r), Prilosec, etc.
  • Dispensing companies are likely sourcing their drugs from manufacturers with high AWP prices; these manufacturers give dispensers a big discount, allowing them to make more money on the “spread” between their cost and what they charge work comp payers.
  • The “contract” manufacturers that have targeted the work comp dispensing industry are selling direct to dispensing companies at prices very close to – if not more than – the repackagers. This allows them to get around the “original manufacturer” price that’s set as the cap in CT.
  • PBMs get a hefty discount below the fee schedule which reduces employers’ costs rather dramatically – this discount isn’t available from doc-dispensed drugs.

What does this mean for you?

1.  Employers, insurers, and their allies need to get serious about physician dispensing.  It is costing taxpayers and employers about a billion dollars a year.

2.  Regulations/legislation based on “original manufacturer” language, while helpful, are readily circumvented by dispensing companies.

3.  Banning dispensing outright – as Texas, Ohio, Washington, North Dakota, Massachusetts, and New York do – is by far the best answer.



More on asbestos and workers’ comp

After reading last week’s post on asbestos and work comp, a good friend and colleague sent me the following.  As he is far more knowledgeable about this than I, his view is well worth consideration.

Interesting points you bring regarding the overlap in the asbestosis/mesothelioma latent injury litigation.
The individual states have always relied on the WC statutory time bars for reporting latent disease injuries.  The true reason why the plaintiff’s attorneys have historically chosen the general liability path to litigation is because the claim for conscious pain and suffering is excluded from workers’ compensation.  Also—the trigger theories for liability in GL permit the plaintiff to assert that he could not have known that he was injured until the long-gestating disease was “discovered.”  Hence, the trigger for coverage was extended until that point when the disease manifested, often some 30 to 40 years after actual exposure began.  Those characteristics and the chance to assert punitive damages were the catalysts for asbestos litigation in Federal courts; bigger damages and bigger awards.
That is also why some of the earliest asbestos-related work injury cases were filed in industries like rail, ship-building, steel and glass/insulation fiber industries.  Specifically with the rail employees—WC never applied.  Interstate commerce required FELA to be applied (the Jones Act and US Longshoremen & Harbor workers Act are built off the FELA model).  As a federal statute FELA permits conscious pain and suffering to be considered compensable.   Those claims are litigated under common law, hence a judge and—more specifically–a jury determine the facts of the case and render verdicts.  Juries determine if conscious pain and suffering were applicable in their jury verdict awards.  They also determine if punitive damages apply.  The verdicts can be gigantic.
The exhaustive litigation discovery over the course of the past 30 years of asbestos litigation demonstrated that manufacturers, distributors and users of the product (employers) in the “stream of commerce” knew of the dangerous characteristics of asbestos products—which always created a risk to them that punitive damage awards could be tacked on by jury trials.  That is principally why asbestos litigation defendants negotiate settlements rather than risk adverse jury verdicts.
One other note—of the two claims you cite—the defendant in the PA case is AK Steel—-which is a relatively “young” company.  Without doing any research, my guess that AK Steel is the successor to one of the old line Pittsburgh-based steelmakers.  In that case, the worker would have to demonstrate that his exposure while working for the steelmaker was latent and long-gestating.
Asbestos litigation has been troublesome for the insurance industry for more than 30 years now so the new rulings regarding WC create interesting discussions.


Monday catch-up

Here’s what happened last week.

First, the election.  A thorough butt-kicking to be sure.

Now, we will see if the two very distinct wings of the Republican party can work together.  With almost all of the moderate Dems losing their elections, projected majority leader McConnell will have to figure out how to keep his fractious caucus together while adding a few liberal Democrats if he is to have any hope of getting the 66 votes needed to overrule any Presidential vetoes.

This will be entertaining.

Reform implementation

Rates for most 2015 plans on the Exchanges are not going up much, and in some areas are dropping.  Average premiums are going down in 6 states, rising by 5% or less in 10, and increasing by >5% in only 2.

Obviously this somewhat discredits the warnings of rate shock, but we’ll have to wait for the expiration of the “3Rs” (which reduce insurers’ risks) before we’ll see fully market-based rates. has released a web app for shoppers to quickly compare plans and benefits – without the registration requirement.  Should have been out earlier, but better late than never.

BTW, an excellent piece in The Economist provides objective insight into the goods, bads, and uglies of PPACA – along with solid recommendations on how it can be improved.

Hospitals are going to be screaming.  Even louder.  A research piece in HealthAffairs details the impact of Medicaid non-expansion on hospitals in poor financial shape. Briefly, PPACA ended subsidies for those hospitals, anticipating they’d benefit from higher Medicaid enrollment.  As an example, DSH payments to struggling hospitals in Texas will decline about 52% in 2018.

State officials determine what hospitals get how much money, so the lobbying will be intense.  Facilities without strong relationships with state governments may well not survive.

Methinks more cost-shifting may be in the offing.

Workers’ comp

In WorkCompCentral last week Greg Jones’ article on the California State Fund provides a brief summary of the huge changes at the State Compensation Insurance Fund over the last few years; premiums and employment have both dropped by about half, operations have been dramatically streamlined, and a new rating program developed that makes the State Fund a viable competitor in good times as well as bad.  There’s much work to be done, but credit should go to former CEO Tom Rowe and his colleagues for these notable accomplishments.

A great piece in Insurance Journal by Safety National’s Mark Walls on that bane of our existence – physician dispensing in work comp. The conclusion:

There is overwhelming evidence to support that physician dispensing increases costs, lengthens disability, and produces poor outcomes for injured workers. It’s time to end physician dispensing in workers’ compensation.

In yet another deal, Apax/Genex bought case management firm MHayes. Congratulations to owners Melinda Hayes and Helen Froehlich; they built a pretty solid company with an interesting affiliate approach.  With revenues in the $15 million range and an EBITDA likely a bit more than 10%, this isn’t one of the bigger deals done by Apax on their way to building an ever-larger behemoth.  However, it does remove a competitor that was successfully competing with Genex and had service niches (that may prove valuable.

Perhaps MHayes will help Genex resolve their long-standing billing issues.

It’s the last week before many lucky souls head to Las Vegas for the gathering of the work comp tribe.  Shameless plug – I’m moderating a session on Private Equity and Workers’ Comp; Thursday at 10:45, principals from three of the leading private equity firms will be giving their insights into:

  • the impact of outside investors on comp,
  • the reasons this is such a hot investment opportunity,
  • what investors look for, and
  • what we can expect in the future.

We’ll have a lot of time for Q&A too.