Month: December 2016

Dec
7

Workers comp and Medicaid – Implications aplenty!

Posted by Joe Paduda on Wednesday, December 7th, 2016 | Comments

Workers comp and Medicaid are intertwined.

First, a few factoids about Medicaid.

  • Medicaid accounts for about 17% of US medical spend (work comp is about 1%)
  • It is very state-specific; states have a lot of control over who and what’s covered.
  • both federal and state funds pay for Medicaid, with the Feds covering about 62% of total costs
  • Most Medicaid recipients don’t pay deductibles, copays, or co-insurance. (Indiana is one exception)
  • Medicaid covers millions of people in working families.

Let’s dig into this last datapoint, as it has implications for workers’ comp.

63% of Medicaid recipients have at least one family member working full time. This varies among states, from 77% in Colorado to 51% in Rhode Island. 15% have a part time worker. Only 19% of recipients’ familes have no one working.

Many employers that don’t provide health insurance &/or aren’t required to provide health insurance under ACA recommend workers who qualify sign up for Medicaid.

Implications…

  • More workers are covered by Medicaid now than were pre-ACA
  • Medicaid’s health “benefits” are similar to work comp
  • Claiming behavior may well be influenced by coverage status

Next, employment.

Most credible studies indicate Medicaid expansion increased employment in states that expanded Medicaid.

Implications

More employment = more payroll = more workers’ comp premium and more claims (NOT higher frequency, which is a percentage and not a raw number)

There are a number of other benefits for states that expanded Medicaid – an excellent summary of all available research is here.

What does this mean for you?

Watch what happens with the GOP’s efforts to “repeal and replace” ACA.  Workers’ comp has done quite well since ACA’s full implementation; reductions in Medicaid will almost certainly have the opposite effect.

Note – if you want to argue or discuss, fine – cite sources and data to support your assertions.

Dec
6

Tuesday catch up

Posted by Joe Paduda on Tuesday, December 6th, 2016 | Comments

Or, what happened while I was/we were in New Orleans at NWCDC

First up, a most excellent report by WCRI’s Olesya Fomenko and Te-Chun Liu on provider fee schedules in workers’ compensation.  Must-reading for investors, bill review entities, networks, and users thereof, the report details:

  • which states use what methodologies,
  • what changes have occurred over the last few years, and
  • trends and developments.

As there is a lot going on with Medicare’s fee schedules, this report provides a sound basis of understanding.

For all those investors, private equity people, and researchers – you can now get – for FREE – what you often pay me for.  Information on fee schedules in workers’ comp and the effects thereof is available here. From WCRI, of course!

Wait…did I just post that? Sometimes I’m such a dumbass.

Fraud

The REAL fraud in work comp is not the odd worker cheating the system – it’s employers misclassifying workers, using labor brokers, under-reporting payroll – you name it.  Bruce Woods, formerly of AIA, brought this to the attention of AIA’s members about a year ago, and I thought of Bruce when I got this from Matt Capece about the millions in damages due to fraud in one state – New Jersey.

Health spending

US spending on health care is approaching 18% of GDP.  CMMS estimated 2015 spending hit $3.2 trillion, or $9,990 per person. The primary driver was “residual use and intensity”, geek-speak for what’s left after age, sex, population changes and inflation are accounted for. In other words, people are getting more services which, given over 40 million didn’t have health insurance until 1.1.2014, and just over half of those poor unfortunates now do, isn’t exactly shocking.

You can expect the folks most likely to lose their health insurance under Trump/Price will get every test, procedure, therapy, script, surgery, and treatment they can now, before the ACA is repealed.

Deflation in work comp medical spend

Workers comp medical expense is now just over 1 percent of total US medical spend. While non-work comp costs were up 5.8 percent last year, NCCI reported work comp medical DECREASED 1 percent last year.

Holy flipping unicorn, Batman. Until someone offers a better explanation, I’ll credit ACA’s reduction in the number of uninsured as the major driver.

Good people sometimes win

Congratulations to friend and colleague Danielle Lisenbey, CEO of Broadspire. Danielle was just named Claim Exec of the Year by the New York Claims Association.

Bravo!

 

Dec
5

NWCDC 2016 – final takes

Posted by Joe Paduda on Monday, December 5th, 2016 | Comments

After the blur that was the NWCDC in New Orleans last week, here are a few impressions.

Tough week

There were fewer insurance types this year, and a couple TPA execs noted they brought fewer people and most of their people only got Expo passes. The timing – after Thanksgiving – seemed to be a bit of an issue.  End-of-year stuff including closing whatever deals they could to make this year’s revenue budget and finalization of budgets and 2017 plans kept some at their offices, while the all-too-common “let’s stop traveling to control expenses” played a part as well.

Next year the show returns to Las Vegas, and it’s another week later.  We’ll see if that helps or hurts attendance.

Notably, overall attendance was reported as flat – after a couple years of record high numbers, that’s good news for conference owner LRP.

Presenters

Folks, please please please don’t be so damn dull. Workers comp is boring enough without we presenters making it even worse.  If you aren’t used to presenting, get coaching. If your slides just include a bunch of bullet points, get your design folks to translate words into pictures. DO NOT READ YOUR PRESENTATION. Do not read your slides. Engage, entertain, focus. Make damn sure you tell them why what you’re talking about is important TO THEM. 

No matter how important your points are, if your audience is asleep or playing words with friends you might as well be singing in the shower.

There are many, many people with different approaches and styles who are really effective. Friend and colleague Alex Swedlow, President of CWCI, uses a lot of charts and graphs – and a sardonic style and dry wit – to make complex issues understandable.

Bob Hartwig PhD has way too many slides, talks way too fast, presents way too much information – and is a terrific presenter.  Why? Because he’s found a style that works for him.

Some need a lot of practice, others shouldn’t as it makes their talk seem wooden and stilted. Some can ad lib, others can’t.  Find what WORKS well for you, and stick with it.

And always ask what you can do better.  People will always blow smoke up your shirt about how great you were – ignore that.  Sure, take away the things you did well, but seek out what you can do better. We can always improve.

Execution

There are few new ideas in the industry, few real innovations – but lots of talk about innovation. What there is – is a very real and very strong focus on execution by some vendors, TPAs, brokers, and service providers.  The people and companies that impressed me were mostly the ones that were “innovating around execution”. What can they do to make their customers’ jobs, lives, operations, functions easier/smoother/less stressful? How can that be measured? And who are their customers – what do they do every day? How are those individuals measured and rewarded? What do they need, want, and have to have? What makes their job harder? Where’s the nuance, the small difference, the unseen need that can be exploited to differentiate?

Figuring out the “execution opportunity” is a big part of success, but it’s a total waste of time if it isn’t translated into different workflows, services, business practices.  This can be tedious and frustrating and appear to be marginally rewarding at best.

But the whole is greater than the sum of the parts. Customers – buyers, front-line staff, employer supervisors, work comp patients – notice and appreciate the effort. More business comes your way. And competitors find it hard to get a foot in the door.

In several deep dive conversations with a wide variety of folks, I kept noting the ones that are doing well are relentlessly probing, asking questions, wondering why?. This isn’t flashy or in many cases really obvious – but it sure is working.

Industry Isolationism

The conference is useful in many ways; one can get lots of meetings done in a brief period; new, intriguing approaches/vendors/programs are on display; and reconnecting with colleagues is always rewarding.

What stuck out for me this year was something that is both troubling and encouraging: the insularity of the work comp industry is receding.  Perhaps it’s the election, a vastly improved economy, or just more awareness; for whatever reasons, many of the people I spoke with are more attuned to and aware of external factors that may well impact work comp.  A few examples:

  • Inflation rates will affect investment income, which in turn moves reserve adequacy
  • Automation decreases risk for industrial workers, while reducing re-employment opportunities
  • Changes to health insurance status may increase or decrease claiming patterns, cost shifting, case shifting

This is good news indeed.  However, there’s a lot of misinterpretation due to misunderstanding or just plain ignorance (not saying that pejoratively, but rather noting the fact that a lot of folks just aren’t very aware) about some of these issues.  I’d suggest it’s always best to try to understand what’s really going on before jumping to conclusions about what “that” means.

A lesson I try to keep in mind myself…

 

Dec
2

NWCDC Quick recap

Posted by Joe Paduda on Friday, December 2nd, 2016 | Comments

It’s been a blur – here are the quick takeaways from the last 3+ days in New Orleans

The new new thing is…

Telehealth.  Several entities are either specializing in telehealth, telemedicine, or some aspect thereof.  Provider organizations have proprietary applications, independent third parties have theirs (CHC is one I met with), and others are talking about what they’re going to do.  Seemed like there was a lot of product development happening on the fly – which is fine – and a good thing.  Hearing from lots of stakeholders is always productive.

Blockchain.  When asked to name one thing that people aren’t talking about that they should be, I named Blockchain.  Here’s what this is – and why you need to know about it. That was actually one of two things I discussed – the other is admin expense – which we’ll dig into next week.

What wasn’t there?

More accurately, who wasn’t there.  Young executives in positions of significant responsibility were noticeably rare.  BTW “young” is a very relative term in workers’ comp; people who I think of as “young” are 51-52.

In other industries, I’d guess young is rather…younger than that.

As many have been noting, we’ve got a real dearth of young talented professionals in positions of responsibility.  That’s pretty damn scary, as the work comp world is in for massive changes over the next decade, and old guys like me aren’t nearly as prepared to anticipate and address these changes as younger people are.

There was also a noticeable lack of insurance folks at the gathering. Im hearing this is due to end-of-the-year cutbacks on travel to make those 2016 financials just a little rosier.  TPAs were also a little light on staff this time around.

Deals

While the pace of acquisitions has tapered off significantly, I spoke with several owners who are in the process of working on transactions.  Not big ones, but what we’re going to see is more small transactions beefing up a company’s core capabilities or expanding its product lines.  Prices are also down, as at least two investors told me the OneCall situation has significantly affected valuations.