Post vacation update

Back from a much-needed family trip to Sedona AZ where the mountain biking was phenomenal.

(son Cal and son-in-law Keith plus the old guy)

Here’s what happened while I was in the land of the vortices…

WCRI’s annual conference in March 2018 will be kicked off by the former head of the Bureau of Labor Statistics, Dr Erica Groshen.  Always a must-do; sign up soon or risk being wait-listed for the March 22/23 event in Boston.

The latest from the brainiacs from Boston is a report on California’s work comp medical benchmarks.

Colleague and good friend Frank Pennachio of Oceanus Partners will be opining on misaligned incentives in work comp at NWCDC in Vegas next month.  Frank’s terrific delivery, vast experience and deep knowledge of how things really work in work comp will make this one of the most valuable sessions for employers.

Climate change’s effects are being felt everywhere – and the insurance industry may be the industry most affected. An excellent Harvard Business Review article illustrates the major, if not central role P&C Insurance is playing in forcing us to acknowledge the reality of human-caused climate change.

Differential pricing for high-risk areas (we’re talking about you, south Florida, and you, coastal areas) and Catastrophe bonds are just two of the ways the insurance industry is forcing businesses, governments, and individuals to deal with climate change.

Finally, NCCI’s out with it’s assessment of the 2015 decline in work comp medical costs; key takeaways (note California and New York were not included):

  • a drop in utilization of physician services was the key driver
  • inpatient facility costs increased 6 points, driven by a huge increase in very expensive inpatient stays 
  • there was LOTS of intrastate variation…

Good to be back at work – enjoy the short holiday week.

Friday catch-up

Here’s a few things I missed this week – and a big thank you to you, loyal reader.

First, thank you to all the folks who reached out publicly and privately to offer condolences on my political campaign and thank me for running. I deeply appreciate each and every one of you, and cannot thank you enough.

It’s Veteran’s Day (observed) today – thanks to all of you who have served.

Okay, here’s the big news of the week…

The death of “Obamacare” was announced prematurelyACA signups are breaking records.

Enrollment is well ahead of any previous year, as in more than 50% higher in the first few days of the month. There are likely several factors driving enrollment:

  • grassroots organizations like Get America Covered, the Indivisible ACA Signup Project are doing a great job despite the Administration’s efforts to kneecap enrollment efforts (thanks Charles Gaba)
  • Costs for bronze plans for millions of Americans are actually very affordable; while the coverage is thin the cost is almost nil, making it an obvious “no brainer”
  • Loss aversion – as I’ve noted here before, people hate losing something more than they like getting something, so Trump’s continual blathering about the death of “Obamacare” is likely reminding many that they better sign up now.

I hate Purdue Pharma

And I don’t use that word lightly.

A very well-researched and written piece in the New Yorker about Purdue Pharma and the family that gave us the opioid crisis is required reading. If you want to know why 60,000 friends, family members, and neighbors died of drug overdoses last year, here is the answer.

China is a major drug supplier

And it’s unbelievably easy to get illicit drugs sent here from China.

Why large employers are buying healthcare directly

Because the outcomes are much more consistent and much better, costs are lower, and there’s a LOT of crappy medical care out there. There’s a movement among smart buyers to STRONGLY encourage their insureds to use specific providers for specific conditions, and that movement is going to explode.

Here’s a key takeaway:

While nearly all of the 450 spine patients who presented to one of the participating centers had been recommended for surgery by providers in their home markets, only 62% of the patients were found to be suitable candidates for surgery by the COE [center of excellence] sites. Instead of unnecessary surgery, activity-based therapies, pain injections, physical therapy, or weight loss were recommended by our providers.

Vacation is next week – I won’t be posting.

Enjoy the weekend!

Back to my day job

As many readers know, I have been running for County Legislator here in Onondaga County New York – yesterday was election day, and I lost.

Results are here.

In the immortal words of Yoda, “there is no try, there is only do.”

Despite a lot of support from friends and colleagues, a massive amount of work, a very, very good campaign manager and staff, and a good message, I lost.

The regret I have is not for the hundreds of hours I put in, or the fun forgone when I knocked on doors instead of visiting with family and friends, rowing or riding my bike. The regret is many of you supported our campaign in many ways, and I did not deliver the win. This campaign was never about me, it was about making a difference for the people here, and many of you bought into that and pitched in.

I deeply appreciate your support and encouragement, kind words expertise and advice. I cannot tell you how much that meant and means to me, and I am profoundly grateful.

For now, the Paduda family is headed to Sedona Arizona for a week of family time, mountain biking, hiking, too much good wine and lots of reading the stuff that’s been piling up on the nightstand for the last nine months.

Looking forward to seeing you in Las Vegas – and thanks.

Opioids now the top killer for those under 50

The death rate for drug overdoses climbed 17 percent last year, killing more than 64,000 people in 2016

‘We have roughly two groups of Americans that are getting addicted,” Dr. [Andrew] Kolodny said. “We have an older group that is overdosing on pain medicine, and we have a younger group that is overdosing on black market opioids.”

For those interested in why this is happening, I urge you to read a “biography’ of the Sackler family, owners of Purdue Pharma of Oxycontin fame.

Here is one chilling excerpt:

[Sam Quinones, author of a book on the crisis talking about the] similarities he finds between the tactics of the unassuming, business-minded Mexican heroin peddlers, the so-called Xalisco boys, and the slick corporate sales force of Purdue. When the Xalisco boys arrived in a new town, they identified their market by seeking out the local methadone clinic. Purdue, using I.M.S. data, similarly targeted populations that were susceptible to its product.

My take is this just one of the many similarities between Purdue and the drug cartels – the one chief difference is Purdue et al dosen’t have to worry about law enforcement.

At least not so far.

GOP budget’s impact on healthcare

The budget resolution that Republicans are basing their budget on would cut $1.8 trillion from healthcare, mostly from Medicaid over the next decade.

The impact of this on healthcare would be akin to Harvey hitting Houston. 

We will leave aside Republicans’ wildly optimistic economic growth projections and Congress’ elimination of scoring by the CBO – but you shouldn’t. (from former Reagan and Bush economic adviser Bruce Bartlett, discussing GOP growth projections... “[it’s] wishful thinking.  So is most Republican rhetoric around tax cutting.  In reality, there’s no evidence that a tax cut now would spur growth.”

Instead, the plan would cut Medicaid funding by 30 percent over the next ten years and slash Medicare by another half-trillion dollars.

This is a massive cut, one substantially larger than those proposed in either of the GOP’s failed ACA repeal bills.

There are NO details on how these cuts would be made or which providers and beneficiaries would lose what. This is classic Washington; they don’t want to highlight any specifics because the lobbyists will flood their offices.

Without those details, it is clear that doctors, hospitals, clinics and therapists would all face massive cuts in Medicaid reimbursement, and millions of families and kids would lose coverage. 

If something like this becomes law;

  • doctors and hospitals are going to jack up prices and increase utilization for privately-insured patients,
  • insurance markets will be thrown into disarray as the budget blueprint slashes ACA subsidies, and
  • the health status of millions of kids will decline.

What does this mean for you?

IF something like this passes – which I believe is highly doubtful – the US healthcare “system” will be hugely disrupted, with major implications for employment, private insurance costs, and workers’ comp.

Opioids, MSAs, and the Feds

The average California MSA includes almost $49,000 for drugs – about half of all future medical expenses.

69% of MSAs included funding for opioids.

But when researchers compared the MSAs to a

“case-matched control group of closed workers’ comp permanent disability claims for similar injuries, the authors found that the WCMSAs called for much stronger opioids, as average cumulative morphine milligram equivalents (MMEs) allocated to WCMSAs with opioids were 45 times the level used in the control group during the life of the claim.” [emphasis added]

Why?

Especially when the report goes on to say:

Federally mandated formulae to financially account for decades of sustained individual opioid use are at direct odds with a growing body of clinical evidence — and a widespread recognition — that opioids are often over-prescribed for the management of chronic, non-cancer pain.

The Feds want/require employers and insurers to pay for another 20 years of opioids, at relatively high doses, for claims that should not be getting opioids.

This is what makes all of us nuts; one hand of the government is pushing us to assertively reduce opioid use, while the other hand demands we pay for opioids for another two decades.

Worse still, many of the MSA patients are also taking hypnotics and/or muscle relaxants. 

[chart courtesy CWCI]

A couple thoughts…

The claims with MSAs may well be those that payers can’t resolve, where the patient, their attorney, or their provider just won’t cooperate in efforts to reduce opioid use. Thus, the MSA projections make sense.

Why are these patients being prescribed – and ostensibly consuming – a high volume of opioids for an extended time when clinical guidelines and best practice clearly contradict this practice, and other patients with similar conditions aren’t getting these drugs?

What does this mean for you?

We are making progress, but we have a very long way to go – and CMS isn’t helping.

 

Coventry work comp services will NOT be sold anytime soon

It’s been apparent for some time that the senior suite at parent Aetna has way too much on it’s plate to even begin to think about selling off Coventry’s work comp unit.

That plate just got heaped with a whole lot more; CVS Caremark is looking to buy Aetna for $66 billion. (thanks to Richard Krasner for the head’s up!)

Reportedly the two companies’ CEOs have been discussing the potential deal for several months, which implies they are in favor of the transaction.

There’s a lot more to this – but I gotta hit the campaign trail.

For now, Coventry work comp isn’t going anywhere.

Concentra – USHealthworks – implications for workers’ comp

Yesterday’s announcement that Concentra owner Select Medical is purchasing US Healthworks sent waves through the workers’ compensation world.  The “new” Concentra will:

  • have 565 occ health clinics and on-site centers in about 40 states,
  • handle around one out of every seven occupational injuries, and
  • further cement Concentra’s position as the largest initial treatment provider in work comp.

The transaction valued USHW at $753 million, or about $3 million per location. Concentra is currently jointly owned by Select Medical and investment firms Welsh Carson, Cressey & Company (and several other firms). It looks like one goal of the deal was to buy out minority investors, a not-uncommon objective for this type of transaction.

So, what does this mean for workers’ comp?

  1. Workers comp services is a very mature industry, where scale and buying power are critical. This is yet another indication that players in the industry recognize scale is critical.
  2. This looks to be continued move on the part of Concentra to focus on occupational care and de-emphasize urgent care – which is focused on non-occupational conditions.
  3. Concentra will have more bargaining power with work comp PPOs and payers. The giant provider can’t quite dictate terms today, but is certainly in a very strong position.
  4. USHW has a reputation for over-prescribing physical therapy, a concern some have with Concentra as well.  Payers would be well-served to monitor this closely going forward.

What does this mean for you?

Consolidation can be beneficial for all parties.

It can also be a cause for concern for customers.

 

Two big transactions; implications for work comp part 1

Yesterday we learned Concentra and USHealthwork are combining, and Aetna is selling it’s life and disability business.

Both deals have implications for workers’ comp.

Aetna

The Hartford is buying the life and disability unit for just under $1.5 billion. While this may seem like a lot to you and me, it isn’t to Aetna…the giant healthcare company’s pretax earnings for a three-month period were $1.8 billion this year.

Folks have been talking about a potential sale of the Coventry work comp business for what seems like years now, with more rumors coming over the last couple of months. I don’t see it. 

If a $1.5 billion transaction is “immaterial to 2017 earnings…[and] slightly dilutive for next year” then the work comp business may be even less significant to Mother Aetna. Sure, work comp is likely a more profitable business than the group benefits unit, but it would have to be an order of magnitude bigger to make it worth the time and attention of Aetna’s senior management.

Think of it from management’s perspective; their healthcare business is being whipsawed by the clustermess in DC, they don’t know from day to day what their Medicaid strategy should be, and the President’s talk about “giveaways” to insurance companies is anxiety-inducing indeed.

In light of all this, there’s just no bandwidth to think about selling a relatively tiny business that’s generating some reasonable cash flow.

Tomorrow, Concentra-US Healthworks.

What does this mean for you?

Remember, work comp is a very small business compared to the P&C world and healthcare.

Those businesses affect work comp far more than work comp affects them.