What will Aetna do with Coventry Workers’ Comp?

That’s a question that’s been around for years, but one that’s being asked more and more these days.

One clue could be – but probably isn’t – Aetna CEO Mark Bertolini’s evolving view of the purpose of health insurance and healthplans.

Bertolini’s personal brushes with mortality (a horrific skiing accident and his son’s cancer diagnosis) have fundamentally changed how he sees the role of health insurance. Unlike other insurance executives, he is pushing Aetna to deliver health defined as “a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity,”

That’s what we do in workers’ comp, admittedly not all that well some times, but that’s our goal – prevent accidents and illnesses, get people healthy and functional if they do get hurt, and keep them that way.

I agree with Bertolini’s perspective.

That being the case, CWCS seems like a valuable asset indeed with exactly the right people, technology, business models, and intellectual property Bertolini needs to transform Aetna.

The question is, does Bertolini understand what he has, or will Aetna continue to treat CWCS as a purely financial asset?…a tiny part of a huge healthcare company valued not for its potential impact on the company as a whole, but for the dollars it delivers to the bottom line.

Rumors persist that CWCS is on the block, rumors without solid evidence behind them. As the work comp services industry continues to consolidate, CWCS’ name will continue to come up in conversations whenever investors are contemplating the next big deal. While it is indeed possible Aetna will entertain offers for CWCS, the division’s value (as a financial asset) has likely decreased over the past few years.  CWCS’ core asset, it’s provider network, is not the dominant force it once was, the bill review business has dropped off, and under-investment throughout the division has hampered innovation.

What does this mean for you?

Sometimes exactly what you need is right in front of you.


How much does employer misclassification cost you?

“Independent contractors” who are told what to wear, when they’ll work, what they’ll do, and how they’ll do it are NOT independent contractors.

At least, not under the law.

But a lot of employers are skirting the law, and some are committing outright fraud. The good news is some states are starting make major progress.

WorkCompCentral’s Todd Foster has a great investigative piece in this morning’s edition detailing the progress made in North Carolina by the Industrial Commission.

This isn’t pennies, folks – this fraud cost North Carolina and the US $467 million just in lost tax revenue.

It also

  • reduced workers’ comp premiums,
  • hurt local hospitals and healthcare providers who had to provide care to injured workers with no insurance,
  • likely bankrupted workers who weren’t able to work due to their injuries and were billed for medical care, and
  • drove up costs for the legitimate businesses in NC who weren’t committing fraud.

According to investigative reporting by the McClatchy news organization,

if the level of misclassification found on 64 government-backed housing developments extends to the construction industry as a whole in North Carolina, the state and federal government are losing $467 million a year in taxes. That’s roughly the size of the budget shortfall legislators initially faced this year as they tried to find ways to give raises to public-school teachers.

The construction industry is rife with this practice, unscrupulous contractors underbidding responsible competitors by avoiding workers’ comp premiums, taxes, and labor regulations. The McClatchy investigation found construction misclassification happens on up to 40% of job sites.; the worst states tend to be in the South, where legislation has stalled in several legislative sessions.

There have been some efforts both nationally and in individual states to address this crime, but reports are it is still rampant – on smaller projects and even on federal worksites, municipal projects, huge construction sites including highways, sewer plants, schools and airports.

A lot more information is here.

What does this mean for you?

If you are a work comp insurer, service company, TPA, construction worker or legitimate contractor, you’re getting screwed by these crooks.


Sharing risk – a new approach to ancillary services

Priority Care Solutions just introduced a new take on ancillary services, one involving risk sharing between the payer and PCS.  

It allows the payer  – insurer or self insured employer – to set their “budget” for specific services going forward, giving the payer a stable, predictable cost.

Here’s how it works.

PCS and the payer analyze several years of claims data, assessing spend by ancillary area – say imaging and durable medical equipment. Changes in employment levels are factored in, outlier claims – typically catastrophic claims – are excluded, and a “loss pick” range (my words, not theirs) for the specific ancillary benefits are agreed upon.

The loss pick is a total cost, not a per-claim dollar amount.  If costs come in below the loss pick, everyone is happy. If costs are above the loss pick, PCS is on the hook and has to transfer funds to the payer.

There’s a bit more to it than that, but you get the idea.

To date, PCS has several payers participating in the program, most of which are self-insured employers. Not surprising, as employers and their risk managers love cost certainty.

While we’ve seen other forms of risk share in workers’ comp services, this is the first that addresses an entire spend for a type of service.  Paradigm has taken risk on a per-claim business for decades, although it has diversified in recent years to provide a broader array of claim management services.

PCS provides a pretty broad array of ancillary services, and it will be interesting to see how this goes. CEO Bob Smith is well respected and well known throughout the industry, and PCS has quietly grown by staying under the radar for some time.

Thats about to change.


Healthcare reform – the HWR report

Steve Anderson at HealthInsurance.org hosts this month’s Health Wonk Review – and what a month it is.

If you want insights from people who REALLY understand what’s happening – from across the political spectrum – this is the go-to.

Among the posts are Charles Gaba’s view of Congress’ screwups at  Trump, Ryan, McConnell & Price will owe my family $2,000 next year. Pay up, jerkweeds. Title pretty much says it all..

Louise Norris’ How Would the BCRA Impact Deductibles and Out-of-Pocket Costs? tells us why the Better Care Reconciliation Act is a double whammy..

And A Tale of Two Health Systems, Kelley Beloff, a medical office manager, offers her insights about two healthcare systems, and two very different outcomes.

Lots more – thanks to Steve!


Innovation in work comp – part 2

Yes, there is some “innovation” in workers’ comp – but none that’s “disruptive.”

Not yet.

and it’s because too many of us are like the hitter below.

After yesterday’s post, I received a slew of emails from folks detailing their innovative approaches/systems/applications, some of which are noted below. I much appreciate this.

That said, I would suggest that while to the folks involved their efforts may seem innovative, that innovation is limited to a pretty narrow segment of the work comp world. What is missing is disruptive innovation – game changing, real disruption.

Think smartphones – they’ve totally changed how we communicate, drive, get information, use telecommunications.

Here is an example of what I see as truly significant innovation.  Next week I’ll be digging into a couple more.


Make no mistake, the combination of broadband, smartphones, and new programming languages will disrupt how healthcare is delivered, managed, and reimbursed. For workers’ comp, this goes well beyond telemedicine – doctor visits enabled by the internet. Here are just a few ways “telepresence” will be used in workers’ comp,,,

  • Tele-triage, with the triage nurse interviewing the patient, observing the accident site, and using professional judgment enhanced by artificial intelligence to recommend next steps
  • Follow-up doctor visits delivered via telemedicine, enabling script re-fills, monitoring of functionality improvement, and eliminating travel and out-of-work time and expense
  • “Tele-presence” case management – think a hybrid between telephonic and field, without the windshield time but with the real nurse-to-patient-to-provider-to-employer face-to-face interaction.

And all interactions are recorded, stored, indexed, and available to all parties instantly. Adjusters get notified instantly of potential issues, don’t have to wait for email downloads, or wonder if an “office visit” happened, or try to figure out on their own if the patient is “compliant”.

Think about this – workers’ comp is a declining industry – injury rates have dropped about 60% over the last 25 years – and will continue to drop. Whether you’re a bill review company, case management firm, occupational medicine provider, or TPA, you’re going to be fighting over a slice of a smaller and smaller pie.

A provider network can get into the care delivery business, gaining top line revenue by actually providing “office visits.”

A case management firm can deliver more value and gain revenue – with higher margins, across a broader spectrum of services. Directing patients to specific (affiliated or contracted) providers, documenting same, and actually providing that initial physician’s evaluation via telemedicine. More revenue, stronger ties to customers, and better margins.

A peer review firm can do face-to-face meetings between the peer reviewer and treating physician/patient/provider, gaining a better understanding of the issue, while documenting same for the claims handler’s use.

A catastrophic case can be routed to a physician expert in the diagnosis, who can provide insight into optimal treatment plans, evaluate the medical condition, and assist the local provider to ensure the right care is provided – immediately.

What’s standing in the way of widespread use of tele- in workers’ comp is what we talked about yesterday – our culture.

Fear of innovation; obsessive focus on “proof” something works before implementing it widely; complacency; deep-rooted comfort with the status-quo, all are why work comp is adopting tele- much more slowly than group health.

What does this mean for you?

If you never take the bat off your shoulder, you may earn a walk – but you’ll never get a hit and you will strike out a lot.



Innovation in workers’ comp doesn’t exist

REAL innovation in workers’ comp is rare indeed – which is completely understandable, and unfortunate indeed.  As the rest of the world embraces automation, artificial intelligence, and disruptive technology, we rely on old approaches, systems, processes and tools that are relics of the pre-internet days.

Yes, only in work comp would our version of the Mad Men be able to fit in seamlessly if dropped into today’s workplace.

Sure there are many differences, but these are from outside work comp; after they figured out push-button phones and men got their heads smacked for harassing women, it would be business pretty much as usual, albeit with flat screens instead of typewriters and paper files.

Innovation does exist – I’ll cite a couple examples tomorrow, examples notable as much for their rarity as for their potential impact.

What’s deeply troubling for an industry struggling to adapt and evolve, we have a culture that values stability, safety, and tradition and actively avoids anything that seems even remotely risky.  I’ve spoken with many executives, risk managers, front-line staff and brokers who decry the lack of innovation in workers’ comp – yet they are often the very reason innovation doesn’t happen.

Some will argue that they do innovate – and in a couple instances they may be right. But those are rare indeed, as most in workers’ comp conflate “innovation” with incremental improvement.

Everyone wants to be the second – or even better, the third – to try something.  They want someone else to do it first, to figure out what works and what doesn’t, to take the risk. God forbid they ask permission to try something that turns out to not work as well as it was supposed to, or doesn’t work at all.

What our industry is missing is that people and companies learn far more from failures than from successes.  Just like sports teams take lessons from defeats to change what they do, to adapt and evolve, industries and companies get better faster when they screw up.

One of our daughters works for a huge tech firm; her account is a giant application provider. They just invested well over ten million dollars on a new system/technology that may or may not work. The approach seems to be – “we have to try it, if it fails, we’ll learn a  lot, and if it works, we’re way ahead of the competition…”

Can you imagine anyone in workers’ comp doing this?

Maybe once – then they’d get fired.

Because we don’t understand the difference between “failing” and “failure”.

I see this happen all over workers’ comp.  Giant insurers and TPAs force their vendors to develop systems, programs, technology, knowing that they have no risk because if it fails, the TPA/insurer is fine. What they miss is the real, and long-lasting damage they do to their “vendors” – and every other vendor.  Far too often, suppliers build systems and technology at the behest of payers, only to be told “we need you to tweak this and change that…oh and can you integrate with this other system…uh, let’s think about a pilot…jeez, just doesn’t seem to be exactly what we need…let’s put it on the backburner for now…”

Vendors have been burned so many times many are (quietly) refusing to do anything new or different, because they’re going to get screwed.

I’m not solely blaming big payers – this is industry wide, due to the pervasive culture that prizes stability and safety over innovation and insight. 

That’s great for today, but the implications are frightening indeed.

The worker-employer relationship is fundamentally changing.

Where work happens is rapidly changing.

What workers “do” is changing even faster.

And here we sit, waiting for the other guy/gal to try something so we don’t “fail”.

What does this mean for you?

  1.  This is a primary reason our industry attracts few A players.
  2.  Change will be forced on us from outside if we don’t change first – and we will NOT like it.
  3. This industry is incredibly vulnerable to disruption from outside forces.


Workers’ comp update

now that repeal and replace is dead, we can figure out what we missed while contemplating healthcare armageddon.

Workers’ comp

WCRI’s been publishing a flurry of great reports on injured worker outcomes, physician dispensing, opioids, and hospital costs. Sign up for a free webinar on outcomes here.

Coventry’s out with the second part of their work comp Drug Trends Report – download it here. This part deals with the differences between managed and unmanaged pharmacy.  Good video intro by Nikki Wilson too...

HealtheSystems is rumored to be looking to split the company in two, selling off the PBM and keeping the Ancillary Benefit Network business. With myMatrixx setting yet another high point for valuation recently, we’ll have to see if PBM prices remain stratospheric or drop a little closer to earth.

Given the myMatrixx – Express Scripts transaction had a ton of strategic benefit for the acquirer, a similar valuation for Healthe might be a tad optimistic. In addition, a very sizable chunk of the PBM business comes from one payer – the Travelers – a “customer concentration” issue that will give some pause.

BTW, I’m hearing optimism from many work comp pharma buyers about the “new” myMatrixx-ESI combination.  Guarded, but optimistic.


Are you seeing an uptick in Commercial Repayment Center (CRC) demands coming from the Coordination of Benefits & Recovery Program? (COB&R)? A couple clients have mentioned this to me..the concern seems to be CMS is revisiting MSAs and looking for additional funds (I am likely not phrasing this correctly…Rafael, please clarify/correct!)

Physicians work for others…

About 2/3rds of younger physicians are employed.   Overall, less than half of practicing physicians have an ownership stake in their practice.

Finally, here’s a really interesting snapshot of price variation in a wide variety of healthcare markets


Repeal and replace is dead. Now what?

We are getting very, very close to retiring the ACA Deathwatch meme.

With last night’s news that two more Republican Senators won’t support BCRA, the Republican Repeal-and-Replace bill, efforts to kill “Obamacare” are dead.

Yes, there will be a move to pass a repeal only bill – they will fail, for the same reasons the BCRA died;

  • deep divisions within the Republican Party,
  • a keen understanding by many Senators that BCRA would crush their core supporters and lead to a revolt; and
  • Congressional Republicans have yet to make the transition from a party of opposition to a party of leadership.

I predicted this back in December, doubled down in May, and repeated that prediction after the House passed the AHCA. This wasn’t some amazing insight, rather a careful reading of the bill, and an understanding that taking something very valuable, very personal, and very important from people is political suicide.

So, what now?

Nothing much is going to happen with healthcare in Congress for some time.  That’s too bad, as ACA needs fixing – namely:

  • enforcement of the mandate;
  • guaranteed full funding of the Cost Sharing Reductions that help lower-income Americans pay deductibles and co-pays;
  • allow us older folks to buy-in to Medicare, thus reducing insurers’ risks

This would go a loooong way to giving certainty to insurers, certainty that would lower premiums and stabilize markets.

For now, my sense is Congress doesn’t want to hear smell see or taste anything healthcare-related for a long time.  There will be lots of politicking from the right about “Obamacare’s death spiral” and the left on GOP’s complicity in same.

What does this mean for you?

The good news is this horrible bill didn’t – and won’t – pass. 

The bad news is worse – nothing is being done about the core problem with US healthcare – it costs way too much.



ACA Deathwatch – Handicapping ACA repeal legislation

With Sen John McCain’s unexpected surgery delaying a Senate vote on the BCRA (Senate Republican ACA repeal-and-replace bill), here’s where ACA repeal stands.

Briefly, my take is Congress will not pass a repeal bill. So, the ACA Deathwatch clock’s hands turn back yet again

The core problem is the damned-if-you-do-or-don’t nature of the legislation.  By a 2-to-1 margin, Americans prefer “Obamacare” to the replacement

However, Republicans like repeal and replace. So, McConnell et al are stuck with a terrible choice – pass repeal and replace legislation that most Americans don’t want, or pass legislation that their base wants.

Add to this the strong support for ACA from several key Republican governors, and the fact that those most hurt by repeal would be core Republican voters; rural, white, lower-middle income folks, and the dilemma becomes knottier still.

A vote has been delayed indefinitely, allowing opponents – who grow more numerous by the day – to rally more opposition to BCRA.

What’s the future of repeal-and-replace? 

As of now, cloudy indeed, with a strong chance of dying with a whimper and not a bang.

What does this mean for you?

We’ll explore implications for workers’ comp of a non-vote on BCRA later this week – factoring in other legislative moves to slash Medicaid plus the non-enforcement of the mandate into our analysis.


It’s not just opioids.

Yes, opioids are the biggest problem in workers’ compensation.  Not just work comp medical, but in the entire work comp industry.

Opioids kill patients, prolong and intensify disability, ruin families, run up huge costs, and lead to myriad other problems. But opioids are far from the only problematic drug class in our tiny little world

No, we have gabapentin, Soma, and anxiolytics. But today we’re going to focus on anti-psychotics – yet another mis-used medication that is causing harm to work comp patients.  

Reportedly some prescribers are writing scripts for these drugs as an alternative to opioids or other pain medications; they aren’t required to check PDMP databases or otherwise deal with opioid-related issues when prescribing anti-psychotics. This lower “hassle-factor” may drive increased use of these medications as opioid-related prescribing legislation becomes more common in more states.

As with opioids, a big issue is the side effects…in this case, tardive dyskinesia.

  From wikipedia:

TD is a disorder that results in involuntary, repetitive body movements.vThis may include grimacing, sticking out the tongue, or smacking of the lips. Additionally there may be rapid jerking movements or slow writhing movements.[1] In about 20% of people decreased functioning results.

Tardive dyskinesia occurs in some people as a result of long-term use of neuroleptic medications (antipsychotics, metoclopramide).[1][2] These medications are usually used for mental illness…older neuroleptics [drugs]…are associated with high risk for tardive dyskinesia. (emphasis added)

The photos above are the least disturbing I could quickly locate; suffice it to say that TD is pretty horrible.  One of TD’s causes is long-term usage of antipsychotics – which, believe it or not, are becoming more prevalent in workers compensation.  A close friend who runs the pharmacy program for a top ten insurer told me prescriptions for these drugs are becoming increasingly common – and he’s now seeing scripts for drugs to treat their chief side effect – TD.

The good news is there’s now treatment for TD.  The bad news is the cost – between $125 and $150 a DAY for Ingrezza – that’s $60,000 annually. Forever.

What does this mean for you?

unintended consequences can be horrific.