Who’s running your company.

Is it the execs or the IT department?

The workers’ comp, and, for that matter, the entire property and casualty insurance industry, is chronically systems-poor.  While other industries view IT as a strategic asset, continually investing billions in IT, WC/P&C considers IT an expense category to be mined for pennies to add to earnings per share.

We all know how much execs HATE unallocated loss adjustment expenses

Execs at payers are hamstrung by IT departments that can’t/won’t/aren’t able to implement systems changes. In fairness, IT departments are hamstrung by a lack of strategic vision in many C-suites, which in turn is motivated by financial markets or executive comp plans at mutuals.  Suffice it to say there is plenty of blame to go around – but the result is insurers’ strategy is often greatly limited by IT.

For example, underwriting and distribution. Yes, Google’s initial foray into insurance was short-lived, but that wasn’t because they weren’t selling insurance. In fact profits were good – but “good” by insurance standards, not by tech standards.  Google just couldn’t make the profit levels they are used to.

At some point another tech innovator will figure this out and/or decide a lower profit level is just fine, and then woe betide insurers.

Another example – the medical management world is changing dramatically, and work comp insurers are very hard pressed to adapt. Bundled payments, narrow networks, electronic medical records and vertically integrated delivery systems are here today, and will grow dramatically in importance tomorrow. Flexibility, adaptability, and the ability to move quickly are essential – and equally impossible.  Changing vendors requires IT to design, implement, test and monitor new data feeds to multiple systems and stakeholders.

Conversely, some payers have tied themselves to external vendors who act as consolidators or pipes, thereby greatly reducing the carrier’s IT burden.  In exchange, a LOT of power is transferred to the pipe vendor.  That’s fine if:

  1. incentives are aligned over the long term, and
  2. the vendor is able and willing to make changes to providers, processes, and feeds as necessary, and
  3. there’s transparency.

However, expediency and underinvestment comes at a cost.

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CEO T Rex: “Hey, when is that B2B platform scheduled for testing?”

CIO Triceratops: “18 months after I get the money to hire the staff you cut to reduce ULAE…”

The B2B and healthcare delivery market is evolving at a pace akin to that the dinosaurs saw after the meteor hit.  So, here’s a couple of questions you may want to ask yourself.

  1. Does your strategy drive your IT, or does your IT drive your strategy?
  2. What’s your plan to adapt to the revolutionary changes hitting distribution and medical management?
  3. Does your IT department, management, vendors, and infrastructure support that plan?
  4. What happens when – not if, but when – a carrier or new entrant builds the infrastructure and capability you can’t or won’t?

Innovation in Insurance – we are soooo far behind

ACORD’s Bill Hartnett gave a compelling, entertaining, and pointed presentation on innovation, technology, and the impact of same on insurance (my title, not his).

You will be sorely tempted to ignore this and move on to the next email or project update; Do NOT do this.

His money quote – Insurance is the DNA of Capitalism.  Buildings and homes don’t get built or repaired…”

This set the stage for a discussion of the future that fortunately began with a back-to-basics primer on what insurance is for – risk assessment and management. One lightbulb went off for me – does big data give us great predictability, which obviates the “risk” issue inherent in the concept of insurance?

We will be able to predict weather events, identify medical conditions, greatly reduce “accidents”, deliver medical care designed specifically for that individual patient.

A few factoids – every minute, there are:

  • 4 million Facebook likes,
  • a million Vine users play videos,
  • 110,000 Skype calls,
  • 700 Uber rides scheduled, and,
  • 450,000 tweets

That’s a LOT of data.

And data mining uses this incredibly rich data trove to learn a LOT about you, about health issues, drug issues, crime, you name it.  Just by accessing, analyzing, and monitoring publicly available data.

Hartnett talked about vehicular changes dealing with autonomous vehicles – Ford and Tesla will have fully autonomous cars on the road before 2023. Given vehicular accidents are the single biggest cause of occupational fatalities, this is good news indeed – computers are better drivers than humans.  Yes, even me.

Moreover, frequency and severity will drop significantly within five years – this is going to greatly impact the auto repair business and auto insurance, but perhaps no industry will be more affected than long-haul trucking.

What will today’s drivers do?  How will they be classified for workers’ comp purposes? Will we get a spate of injuries as drivers see tech taking over the wheel?

New news to meGuardhat is a hard hat with technology specifically designed to avoid falls, notify when falls occur, and monitor other movement and risk metrics. Other technologies include wearables that address posture and monitor vital signs via a tattoo on the skin.

But hard hats may not be necessary, as 3-D printed buildings are coming – a 3-D construction printing rig can build a 2500 square foot house in 20 hours and needs 3-4 technicians to move it around.

I’ll stop with this – cognitive cognition – computers that can do pretty much everything we humans can in terms of pattern recognition, intuitive capabilities, and perhaps have emotions – exponentially faster and more consistently than we ever could.

Can you imagine the impact on health care?  Doctors? Diagnostics? Medical information? The health care delivery system will be revolutionized, with the potential to dramatically reduce costs as the role of people may well be greatly reduced.

Of course, I’ll be retired by then…oh, wait, I won’t be.

That’s how fast it’s coming.

Then there’s Distributed Trust

Sales – the least “professional” business role?

BY that I do NOT mean sales people are NOT professional – rather the role is not really considered so by many.  Just think of the titles sales people go by: Marketing representative. Account executive.  Business development manager.

Ever notice how people who are supposed to be selling stuff aren’t labeled as sales people?  Yet “nothing happens until a sale is made” and no company exists without customers.

There are far more “chief marketing officers” than “chief sales officers”, and – with some notable exceptions – the prestige is in the marketing title.

It isn’t just the titles on business cards, although that’s a symptom of the larger problem. It’s the lack of training provided by many companies, the failure to adequately vet and hire due to a lack of understanding of what works and what doesn’t in “sales”. You can see the impact of this in the relatively high turnover among sales departments.

All of the really good sales people I know are true professionals.  They do their homework, are persistent, listen a lot, ask a lot of questions, prepare carefully and thoroughly, and don’t waste time on likely-futile lunches and golf games. There’s a mistaken impression among many that this is “natural”, that these women and men just “get sales.”

Not true.  In fact, these “pros” are likely the ones fortunate enough to start their careers at companies that invested in sales training; had mentors who helped them grow and mature, worked for managers that supported them and helped them learn from their mistakes. These managers understand the sales process, and how it works both internally and externally. Did they learn this in business school? Highly unlikely.

Sales’ task is to find out what customers’ pain points were and figure out if and how their company’s offerings will alleviate that pain.  It is NOT convincing a prospect to use your stuff, but rather to know prospects so well that you can identify the ones most likely to buy your stuff.  There’s a VERY big difference.

In the work comp world, we all know sales people who are constantly on the move. Many are pure relationships sales people; they sell to their friends, and when they run out of friends to sell their current stuff to, they move on.  In contrast there are a relative few who are true professionals, able to mix the relationship with the consultative, skilled at leveraging their personal reputation to gain entre to a prospect where they work very hard to determine if there’s a fit.

As I look at the work comp services industry, not much has changed over the last couple of decades.  At many companies there’s a lack of appreciation for and of sales. That’s not to say senior management doesn’t want great sales people, they just don’t understand what makes one a great sales person, and what management needs to do to help sales continue to deliver.  There’s usually a distinct lack of training as well, little effective mentoring, and lots of internal conflict between operations and sales – a clear indication that not enough has been done to ensure sales and operations work together effectively.

What does this mean for you?

With the ever-changing landscape in work comp – mergers, acquisitions, vertical consolidation and internalization of services by many TPAs, retirement of many senior execs in “buying” roles, the growing role of the Procurement departments at carriers such as the Hartford and Liberty Mutual, it is becoming increasingly clear that work comp service entities will have to invest in their sales departments and staff if they are to succeed.

 

 

Monday catch-up

Happy Monday! here’s a few items you may have missed.

King v CompPartners – the California case may have implications for UR, IMR, and the “exclusive remedy” foundation of worker’s comp.

Here’s a very brief summary (see url above for more detail).

  • The underlying issue – did CompPartners’ UR reviewer do the right thing? is not in question.  The treating doc’s request was appropriately rejected as it was inconsistent with California’s evidence-based treatment guidelines.
  • However, the patient allegedly suffered seizures due to sudden cessation of the medication, and contended that the UR physician had a “duty of care” to inform the patient of that risk and recommend a weaning process.
  • The plaintiff took the case outside the work comp judicial process to civil court, where he lost.  It then went to Appellate Court, where the ruling raised this “question”: could Utilization Review be considered medical treatment, and the reviewer a treating provider?
  • This is contrary to all work comp precedent; the case is now before the State Supreme Court, which has stayed the Appellate Court’s ruling pending a decision.

Implications – talking to those who know better than I, the Supreme Court will likely reject the Appellate Court’s validation of civil court as an appropriate venue for the case, thereby reaffirming the “exclusive remedy” inherent in workers’ comp.

One issue that strikes me about this case; as the medication in question was prescribed by a physician for a condition deemed not covered by workers’ comp, why did the patient not a) pay for the medication himself or more likely b) get his health insurer to cover the script?

This would have allowed the patient to continue taking the drug and avoid the health issues experienced by the patient allegedly due to suddenly stopping the medication.

If you are in ChicagoLand and/or looking into value-based networks, read this. Really interesting piece on how a big provider system thinks about narrow networks, contracting, and what it wants to get paid for high-end services.  And will “eat” on commodities, such as MRIs for $100.

Here’s a shocker – media is all over reports on how chocolate helps athletes – even if the underlying study is pretty much nonsense. A much more important study that determined a very common spinal procedure is fraught with danger and likely counter-productive – was all but ignored.

From HealthNewsReview:

“Provocative discography” is a diagnostic procedure that’s used up to 70,000 times a year in the United States at great cost to the health care system. It’s commonly performed on patients with so-called “degenerative disc disease” who are considering spinal fusion surgery — a $40 billion per year industry”

If you have to rely on MCM to hear about critically-important research, there’s something really wrong with the mass media.

Looking forward to NCCI next week; will be on a panel moderated by Peter Burton with Mark Walls and Bob Wilson discussing regulatory issues.

Hope to see you there.

Spring in Health Wonk Land

Thanks to Peggy Salvatore of Health System Ed for hosting this week’s Health Wonk Review – great graphics coupled with quick synopses make for a readable and entertaining edition indeed.

One don’t-miss is Dr Bradley Flansbaum’s piece on his history with the pharma industry. Pretty compelling stuff and especially enlightening for those of us without direct experience similar to Dr F’s.

Health insurance, DOS, and Apple

Between a seeming inability to design a benefits plan that fits on one sheet of paper, a refusal to actually explain those benefits in terms normal humans can grasp, network arrangements that only a provider relations expert can understand, and a “explanations of benefits” that are dense and stuffed with jargon, health plans are way out of touch with consumers.
It doesn’t have to be this way.

If there’s one service that should be simple, easy to understand, and approachable for everyone it is health care.  What do I pay, where can I go, who do I have to call.

Health plans could learn a lot from the computer industry.  We old folks remember when only pocket-protector-people used computers; remember those big rooms with rows of metal boxes fronted by blinking lights and whirring tape drives? Those blue boxes were connected to green screens in the sea of cubicles outside the “computer room”, screens with horrible resolution requiring users to know what each of the dozen(s) of Function keys did and why.

The geniuses at Microsoft made computing much more user-friendly with Windows – and the PC industry exploded.

Then Apple got serious, designing their hardware and software around the non-nerdy user.  Macs were simple enough for schoolkids to use, and eventually even their parents got comfortable with Macs and PCs.

Now it’s smartphones, Siri, and google maps.  We don’t have to know anything about programming, or APIs, or backslash v frontslash.  The technology does it for us.  And “it” is pretty much everything.  We know the weather in Philly, score of the hoops game, whereabouts of our kids, monthly sales figures, meeting schedule for next week, and anything and everything else – instantly and in a format we grasp intuitively.

Which leads us back to health care.  Insurers and health plans need to take a lesson from Apple and Google; people want good health care that’s easy to access and fits their unique needs. They do NOT want to wade thru fine print stuffed with SAT-test words and jargon that’s murky at best. Blaming the consumer for misunderstanding a benefit plan is just nuts; write the plan so it’s understandable for everyone.

Give them the tools they need to use your health plan, tools that adapt to the consumer and their situation.  Tools that are intuitive, accurate, and user-friendly.

It’s long past time to scrap the “green screen” approach to health benefits.

What does this mean for you?

Some health plan(s) will figure this out.  And they will do very, very well.

Making work comp services more “efficient”

That is the reason there’s been so much investor interest in workers’ comp – we are the epitome of the “yellow sticky” business…

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Workarounds abound, driven by individual adjuster’s requests, insurer system limitations, ever-changing state requirements, unrealistic-but-nonetheless-mandatory employer demands, and system “upgrades” that eliminate prior changes built specifically to accommodate a specific customer.

A couple examples…

Some state regulations require insurers to allow physician dispensing of drugs only within seven days of the date of injury. This requires the payer, Pharmacy Benefit Manager, bill review processor, and adjuster to have a “counter” to make sure they aren’t approving/allowing/paying for doc dispensed drugs they shouldn’t be. Data feeds have to be designed and built and tested, new fields added, new alerts coded, and staff trained and monitored and QA processes developed.

Or, more likely, put a yellow sticky with “do not pay Doc Disp Rx w/i  DoI” on that computer.

A large employer’s risk manager does NOT want Dr Awful to perform any Independent Medical Examinations (IMEs).  The employer TPA has to ensure its adjusters never use Dr Awful.  The adjuster that usually handles that employer’s claims is out on maternity leave, and somehow their replacement is supposed to KNOW this, perhaps by puzzling thru the SLAs (Service Level Agreements), reading the special handling instructions, or asking their manager.

Or, more likely, just put a yellow sticky with “DO NOT USE DR AWFUL FOR COMPANY X’S IMEs” on that computer

Pretty soon you get a cube that looks like our photo above.

Our industry is seen – rightly so – as horribly inefficient, ripe for automation, desperate for change. It is also inherently un-automatable, for several reasons.

First, it’s a state-driven system.  And when you’ve seen one state, you’ve seen one state.  Fee schedules, billing rules, employee direction to preferred providers, clinical guidelines, utilization review, state forms, dispute resolution processes, documentation requirements, all vary from state to state, and are constantly changing.  It’s just very, very hard to stay on top of these changes, figure out how to implement them, and also educate adjusters, clinical staff, bill processors, employers, lawyers and patients.

Second, payers chronically under-invest in technology, so even if the vendors have this whiz-bang terrific artificially intelligent tech platform, chances are pretty good they are trying connect with a payer just a generation away from the green screen era…if they ever left it.

Third, TPAs and service vendors have gotten very good at figuring out how to jury-rig their platforms and workflows to accommodate demanding customers.  It’s a hyper-competitive business; it’s either accommodate or lose the business.  Often it comes down to Martha or Mike in operations knowing that Fred the adjuster wants his reports on pink paper on Tuesdays and purple on Wednesdays.  And if that’s what Fred wants, that’s what you need to give him to earn – and keep – his business.

What does this mean for you?

Smart people who really understand the business can find lots of ways to do things more efficiently, increasing performance while stripping out cost and eliminating errors. However, if one doesn’t really understand the business, making things more efficient may well disrupt and break processes put in place because customers want and need them to work that way.

Highlighting the lowlifes – Real investigative journalism looks into workers comp

Finally.

Investigative journalists are catching on to the widespread, rampant abuse of work comp by unscrupulous “doctors” and scam artists who’ve figured out it’s easy to make bank by cheating employers and taxpayers out of their workers’ comp dollars; and a whole lot less risky than taking on Medicare or Medicaid.

Christina Jewett’s series in Reveal highlights the lowlifes in California who’ve made millions filing fraudulent claims for non-existent medical conditions attributed to both real and imaginary patients. Comparing work comp fraud to Medicare, Jewett cites the relative ease and low risk inherent in cheating workers comp compared to the higher risk, harsh penalties, and Federal investigative muscle confronting would-be Medicare fraudsters.

The list of scams won’t surprise anyone who’s been in workers’ comp; fake diagnoses used to justify procedures that never happened; non-existent medical providers billing for services never delivered to claimants; claimants subjected to surgeries for conditions they never had.

Nauseating indeed, if for no other reason than we’ve seen it all before so many times.

Another “area of opportunity” for profiteers looking to shake the work comp money tree is the air ambulance industry. A recent Nightline story shines a very bright light into the very cloudy world of “life flights;” families bankrupted, insurers bilked, and employers stuck with bills for “life-saving” flights for patients whose lives were not in imminent danger.  Last summer, James Laughlin reported there were over five hundred fee disputes between comp payers and air ambulance companies in just one state – Texas.

I applaud Nightline, Jewett and the Center for Investigative Reporting for their diligence.  It’s remarkable how real journalists can help focus public attention on what’s really wrong with workers’ comp.

Michael Grabell and Howard Berkes could learn a lot from Nightline and Ms Jewett.