Monday morning catch-up

After eight days away, time to catch up on the goings on.  Lots happened, beginning with the non-renewal of the Terrorism Risk Insurance Act, aka TRIA.  Mark Walls’ solid summary of the non-event that is a big event is here; Peter Rousmaniere penned a piece in WorkCompWire on the issue as well.

Peter sees this as a non-event for all but the top layer of insurance execs, noting the researchers haven’t figured out what terrorism-related risks the work comp industry faces, what they’d potentially cost, and what the implications might be.

Here’s my quick take.

First, TRIA may not pass any time soon. The new Congress is more conservative than this one, and the strong anti-government involvement lobby in the current Congress had already significantly diluted TRIA before one of their members killed renewal hopes with a “hold” on the bill. Many members want to keep the gubmint out of private industry, however a RAND study indicates that in the event of an incident, non-renewal would cost taxpayers far more than renewal.

Second, this is a much bigger issue for other Property and Casualty lines than it is for workers’ comp. As Mark notes; “workers’ compensation is statutory, and carriers cannot exclude for cause, there cannot be terrorism risk exclusions on a workers’ compensation policy.”   Highly concentrated employee populations in highly visible locations (think Manhattan) are the most obvious risk; While carriers may not choose to write work comp in these areas, there’s always going to be a “carrier of last resort” that is obligated to provide coverage. 

That said, it isn’t quite that simple.  Big self-insured employers with excess loss policies may well find themselves without coverage for terrorism-related claims – however, they’ve known for almost a year that non-renewal was a possibility, so this shouldn’t come as a surprise.

This is one of those “you don’t know what will happen until it does” things.  While TRIA was in place, it had never been used so no one knows what conditions would have been covered (think PTSD). Relatedness and causation issues would have been rather complex, and coverage questions would have made the wind v water issues seen in flood insurance seem simple and straightforward.

What does the TRIA non-renewal mean for you?

Likely not much, unless you work for a large self-insured employer with big concentrations in NYC, LA, SF, Chicago, Atlanta and a very few other locations.

Health reform roll out

2015 enrollment projections from Avalere Health are around 10.5 million; initial enrollment for January 1 was running somewhat ahead of projections.  Notably, the federal health exchange website appears to be working well with minimal disruptions this time around. No news = definitely good news for the Administration.

There’s a useful graphic courtesy of the Kaiser Family Foundation detailing changes in coverage, cost, and cost-sharing over the last decade. It appears that – at least for now – the concerns over employers dropping coverage have not been borne out as less than 1% of employers are likely to drop coverage next year.  This is somewhat less than we saw in the “pre-PPACA” days.

CWCI released an excellent study of changes in inpatient hospital utilization between 2008 and last year; overall work comp usage was down by double digits, paralleling group health experience. Another data point – spinal implant usage was down significantly after SB 863, indicating the reform legislation may have had an effect on physician behavior. Hat tip to WorkCompWire for the news…

And speaking of over usage of spinal implants, news this am from WorkCompCentral that the good folk at the California State Fund are considering going after several dozen docs for possible involvement in the alleged Drobot kickback scheme. The WCC piece, authored by Greg Jones, provides an exhaustive view into various alleged schemes covering physician dispensing of drugs, kickbacks for patient referral, and other profit-generating business relationships.  It’s rather chilling reading.


Pre-Vacation catch up

Leaving tomorrow for eight days away, so today’s a quick catch-up.

First up, the news that there’s been a dramatic increase in investor interest in addiction rehab. The market for services will increase to $35 billion this year, up more than 50% over the last decade.

In a deal emblematic of the industry transition, Acadia will buy Bain Capital’s CRC Health for $1.2 billion; Bain purchased Acadia for $723 million eight years ago.

For those of us tracking the issue of addiction, the explosion in heroin use driven in large part by prescription drugs, and the damage caused to individuals, family, employers, and society, the hope is these entrepreneurs figure out a better/faster/more effective way to attack opioid addiction.  But, to paraphrase friend and colleague David Deitz, MD, those who expect to make huge profits from taking on this very difficult problem may be sorely disappointed.

Kudos to IAIABC for their effort to educate workers’ comp regulators; they will be launching a series of ten programs taught by subject matter experts to help regulators get up to speed on key issues related to work comp.

Data, research, and information

The latest research from California indicates the variation in surgery rates around the Golden State is rather dramatic.  For example, Orange County had twice as many lumbar fusions as San Mateo…and in hospital service regions, Coalinga’s rate among the <65 population was 3.5 times higher than Delano’s…

WCRI’s recently-released report examining Ambulatory Surgery Center costs and comparing same to hospitals should be required reading for managed care execs and regulators alike. Spoiler alert – ASC costs in many states are lower, due in large part to lower fee schedules

My vacation reading will include the just-released Dartmouth Atlas report on variations in treatment of prostate cancer.  (link opens pdf)  Why, you ask? Simple – there’s huge variation in treatment for prostate conditions, much of which is driven not by science or an active, involved patient – but rather by local practice patterns.  I began tracking this issue twenty years ago and hope the Atlas indicates things are getting better…

Now, back to finishing up work so I can relax unencumbered by the quest for filthy lucre!

Work comp in 2015 – predictions from around the web

Before I make my annual predictions for the coming year, I decided to find out what other experts are saying and what external factors may drive the industry.  Here’s a quick summary.

Overall, combined ratios are looking good, premiums will increase due to relatively stable pricing, rising wages, and rising employment.

Next up, my take on what else will happen next year.

PPACA – another perspective

Let’s stipulate that the US health care “system” was and is a mess.  Our costs are about twice as high as other industrialized countries’, outcomes are not as good, and for consumers and purchasers, it is confusing as hell.

The question is, is PPACA making it better?

There’s no question the PPACA has a lot of flaws, several of which are being used for a series of legal challenges.  There’s a reason for that; PPACA wasn’t supposed to be the be-all and end-all bill.

The legislation that was eventually passed originated in the House, and it was only passed “as is” because Scott Brown won the Massachusetts Senate election and his seating forced passage of the House bill by the Senate.  (Brown’s election gave the GOP 41 seats, allowing for a filibuster)

I won’t get deeper into the political history of PPACA passage; wikipedia has a very good synopsis for those interested in more history. The net is, PPACA is here.  It is not going away.  And there are no alternatives out there that make any sense and/or have any chance of passage and adoption.

So PPACA has a lot of warts – so does pretty much every Congressional legislation.  We may not like it, it may drive us nuts, but it’s reality. Our legislative process is sausage-making at its finest. Or worst, depending on your perspective.

Pre-PPACA, our health care “system” was hurting our international competitiveness, driving up the Federal deficit and state and local expenditures, covering fewer and fewer people, and delivering lousy care to a large part of the US population.  Now, several years into passage, we’re starting to see indicators PPACA is having the desired effect.

Medical inflation remains relatively low.  I, and others, would argue that is in large part because of the systemic changes driven by PPACA.

Some factoids:

  • last year health care spending grew 3.6% – the lowest rate since 1960.
  • over the last four years, health care inflation has tracked GDP growth – compared to prior years when it was consistently higher than the GDP growth rate.
  • the system is getting better – serious medical errors declined by 17% between 2010 and 2013 – saving about $12 billion.
  • Medicare inflation is flat.  In fact, CBO projections for Medicare expenditures in 2019 have dropped by $95 billion over the last four years. As Medicare utilization isn’t really affected by the economy, that’s a pretty solid indicator that the program is more sustainable than we thought just a few years ago.
  • Medicaid costs are up – as we’d expect them to be.

Overall, things are improving, rather dramatically - but not without pain.  Narrow networks, lower earnings for some doctors, higher insurance costs for some employers and consumers, a financial squeeze for many hospitals, all are real and painful.

What does this mean for you?

Fixing very big problems is ugly, thankless, and rife with collateral damage.  It’s also absolutely necessary.


York’s acquisition of MCMC is done

There won’t be an official announcement, but word will go out to employees tomorrow – the long-pending York-MCMC deal is done.

I spoke at length with a (very) senior York executive earlier today; this person did not want his/her name used, not to maintain confidentiality, but to keep the focus where the company wants it to be – on MCMC and Wellcomp and management of those organizations.

MCMC will remain intact, as will Wellcomp, York’s medical management subsidiary.  Mike Lindberg will continue to run MCMC and Doug Markham stays in the top spot at Wellcomp with no changes to management or operations at either organization.  Unlike other “business as usual” pronouncements we’ve read of late (TechHealth, Genex among them), I take this at face value.  The parent company is looking to enhance MCMC’s offerings with services provided by Wellcomp and vice versa, the idea being prospects and customers can get a broader array of services from the overall entity.

From an organizational standpoint, both MCMC and Wellcomp will report up to the overall holding company.

One concern I’ve heard is that York will pull MCMC back from some of their carrier/TPA relationships, this will NOT happen.  First, it makes no sense financially; a lot of MCMC’s revenue comes from other payers.  Second, York currently provides claims and other services to lots of insurance carriers and other payers; MCMC’s diverse client portfolio sort of mimics York’s.

What does this mean for you?

Back to the lede – no official announcement is coming because York and MCMC don’t want to raise concerns about potential changes.  That’s also one of the main reasons they didn’t hurry to get it done so it could be announced in Las Vegas; it isn’t about creating a PR buzz, it’s about stability.

From what I hear from people I trust, there shouldn’t be concerns.

Mitchell’s latest move

Is to acquire the leading auto PBM/pharmacy biller – Cogent Works and subsidiary AutoRx.

The announcement, out this morning, contains the usual corporate-speak, but in this case most of it makes sense.  Cogent has both work comp and auto PBM operations, as well as a billing unit that handles WC bills for Walgreens and auto scripts for most of the retail chains and food/drugs.

This puts Mitchell into the work comp and auto PBM business.

While (surprisingly) the auto claims billing aspect of the deal isn’t discussed at all, this may well be the most valuable piece.  By connecting retail pharmacies with the largest auto claims IT entity, Auto Rx adds a lot of value to those retail pharmacy relationships, while reducing administrative hassles for Mitchell customers and likely increasing Mitchell revenues as well.

On the work comp side, there may be some channel conflict.  Mitchell handles work comp medical bills for many payers, has connections with several work comp PBMs.  Now that Mitchell is a competitor (Cogent handles WC scripts for the Hawaii and Utah state funds as well as a number of self-insured entities in the west), it will be interesting to watch how things develop.

What does this mean for you?

KKR – owner of Mitchell – has made a smart buy.  Expect them to make others in the near future.

What I learned in Vegas – great marketing wins

Great marketing wins.

myMatrixx’ limo service has done wonders for the company’s brand recognition; their ubiquitous limos were all over the place.  Very well organized, efficiently run, and impossible to miss at the airport or hotels.

MedRisk’s booth has featured magician David Harris for several years; he knows their products and services well, is incredibly skilled at capturing a crowd, and for many is a must-see; “I’ve got to see what he’s come up with this year!” (MedRisk is a client)

If you’re going to announce something “big”, make sure it really is – otherwise you’ll be the proverbial boy-crying-wolf.  To be meaningful, announcements should be either a) really big news (and not just what YOU think is big news) and/or b) really meaningful to prospects and customers.  A new product, venture, website, white paper, hire is NOT news – and no one important really cares.

Except – if it is really well done, notable, and timely.  Rising Medical’s Workers’ Comp Benchmarking Study is one of those all-too-rare reports that is truly newsworthy.  That’s because it covers key issues, is authored by a highly-regarded expert (Denise Zoe Algire), is not overtly self-serving, and the launch was very well done.

A few takeaways:

  • there’s always another opportunity for branding; yet another cocktail party or dinner or booth giveaway isn’t getting it done.  be creative.
  • find something great and stick with it.  You don’t need something new every year – unless what you’re doing isn’t working.
  • take a risk.  I know, I know, risk is anathema to work comp folks, but no risk, no reward.
  • it’s about execution.  The best idea will flop unless the details are done right. Those companies that spend the money (yes, effective marketing is expensive, that’s because it is worth it)

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.