Work comp claim reporting – why no data?

There’s very little publicly-accessible data about who reports work comp claims, via what channel.  We just finished up a brief project for a client interested in comparing their data to national benchmarks, and we found precious little data on the topic. It may be out there, but it sure is hard to find…

We know the sooner claims are reported the better; there’s some good research out there altho arguably the best – the Hartford study – is dated.  There is more info about the impact of delays in reporting on ultimate claim costs, which is certainly critical, but that’s “outcome” information.  What we don’t know is the “process” information – which helps payers understand where they stand and what they can and need to do to improve.

Payers need to know when and who and via what channel claims are reported, by type of payers, states, industries, employer sizes, class codes – if they want to set goals, figure out where to put their efforts, who to target.

In general, we learned that the vast majority of claims are reported by employers via phone.  Whilst many payers have web- or email-based reporting capabilities, these are rarely used.  Some have developed smartphone-based reporting, but with a couple exceptions (very large self-insured employers) very few claims come in via this channel.

What does this mean for you?

Should we do a Survey of Work Comp Claim Reporting?  I’m thinking this may be worthy of study; perhaps HSA should develop and conduct a quick study to gather some baseline intel on the current state of the industry.

If this makes sense to you, please say so in the comment section.

Thanks!

 

 

 

 

Workers’ comp – the near-term outlook

NCCI’s just-published assessment of work comp trends has a wealth of information, much of it well worth contemplation by anyone in the industry.

Here are a few takeaways that jumped out at me.

  • Overall the current state of the market is steady – the market and rates are firm, premiums are trending up modestly, frequency is continuing its structural slow decrease, and claims cost inflation appears to be well within acceptable ranges.
  • Employment has returned to its pre-recession level, yet the percentage unemployed remains above 6 percent.  Employment drives premium so that’s good news, however there’s plenty of room for that percentage figure to drop even more.
  • More specifically, employment in manufacturing and construction, traditionally high-premium industries, remains lower than it was before the recession.  If this picks up significantly, so will work comp premiums and rates.
  • If investment yields remain low, we may well see premiums increase as insurers seek to offset the decline in ultimate cash flow.
  • Medical trend is pretty low as well as the work comp world’s experience parallels group and governmental program results.

Which leads to the key questions – what could change the outlook from “steady”?

  • A surge in employment especially in construction will increase injury risk and premium volume.
  • Continued low investment returns may force insurers to raise rates.
  • An uptick in medical inflation – perhaps due at least in part to cost-shifting – could lead underwriters to push rates up quickly.

What does this mean for you?

Lots of ifs and maybes; fortune favors the alert.

 

 

Survey of Drug management in work comp – quick take

This is the eleventh (!) year I’ve been involved in surveying workers’ comp payers to get their take on pharmacy management.  Now that Yvonne Guibert (thank you Yvonne) has finished collecting the data, I’m working on the report.  It’s going to take a week or so, but I’ve pulled a couple highlights to whet your appetite.

  • Overall, drug spend declined for most of the 25 respondents, with some seeing percentage decreases in the double-digits.
  • In addition, total spending (across all respondents) declined as well – by about the same margin.
  • Top problem? close between opioids and physician dispensing, same as last year.
  • Biggest emerging problem? Compounds, without a doubt.
  • 21 of 25 respondents said prescription drug costs were more or much more important than other medical cost issues at their organization.
  • 88% of the 25 respondents (large, mid-sized, and small WC TPAs, state funds, and carriers) have a urine drug monitoring program in place today or will by the end of the year.

Much more to come – the data geek in me is getting all fired up about what we’re going to learn.

Thanks to the 25 organizations who spent time collecting their data, then sharing it with Yvonne.  This is not an easy task, but one that really helps all of us understand what is going on with pharmacy programs, utilization, solutions and cost drivers and how payers are addressing the issue.

Stay tuned…

Frequency, high finance, and the future of work comp managed care

NCCI’s recently-released report that indemnity claim frequency dropped another two points last year is just the latest indication that the market for traditional managed care services is shrinking.  

Fewer claims = fewer services needed = fewer bills; less need for UR, case management, and related services.

Sure, severity is increasing, so there may be more utilization for a subset of claims, but this is not likely to offset the structural decline in frequency that looks to be baked in to workers’ comp – frequency is down over 50% over the last two-and-a-half decades.  And yes, cost-shifting from providers scrambling to deal with tighter controls from private payers and reduced reimbursement from governmental payers will increase providers’ efforts to get more revenue from work comp payers.

Meanwhile the supplier market is consolidating, and managed care vendors are scrambling to capture enough of the shrinking market to survive the coming shakeout. If APAX/Genex/OCCM buys Coventry – which looks increasingly likely - they will control the largest network, case management company, PT vendor, DME/HHC vendor, and imaging network; one of the largest (albeit fading) bill review entities, a big PBM, and a ton of other services  - MSA, UR, peer review, IME.

Some may think the FTC may find this dominant position a bit too much and not allow the transaction.  I disagree; no one in DC cares about workers’ comp, there are many other networks out there, many other bill review entities and specialty managed care providers, and this is an election year and the focus certainly isn’t on a relatively small industry.

The implications are rather significant.  Leverage is all-important – and I don’t mean the financial leverage but the customer leverage.  With all these services, it would be surprising indeed if AGOC (APAX Genex OCCM Coventry) didn’t encourage payers to buy everything from them in return for discounts on some/most/all services, enhanced reporting, integration services and technology and/or some other incentives.  Some buyers, already hard-pressed by reductions in staff, low IT budgets, and increasing demands for more “savings” and higher network penetration might find it hard to resist such a pitch.

The pitch would be compelling – more cost reductions and less hassle at discounted fees.

The trade-off would be ceding effective control over medical costs to a third party, one with arguably different incentives and motivations.

That alone will give many pause, as well it should.

For those who say I have a dog in this fight, you are correct.  I work with several entities that directly or indirectly compete with these entities, and that is by choice.

More to the point, I also work with several very large payers on various aspects of medical management, and my opinion is control over medical management MUST reside with the payer. 

What does this mean for you?

Workers’ comp is a medical business.  Three-fifths of claims costs are medical, and that’s going to be two-thirds very soon.  It makes no sense to outsource two-thirds of your costs to a third party.

Great news for taxpayers may be bad news for workers’ comp

The just-released report of the Medicare Actuary finds that hospital costs have been increasing at a historically low rate – below 1 percent – for the last four years.

And that’s not likely to change.

Medicare is pushing facilities to reduce costs, driving down readmission rates, using a variety of tools including Value-Based Purchasing, MS-DRGs, and increasing the emphasis on other types of pay-for-performance (basing a small part of compensation on quality measures).  While these can be somewhat blunt instruments and may lead to some unwanted consequences, overall the strategy is working – costs are coming down.

In the 24 states that have not (yet) expanded Medicaid, the effects of Medicare’s changes are even more stark. Payments to safety-net hospitals under the Disproportionate  Share Program have been drastically reduced, while the additional revenue anticipated from Medicaid expansion did not.  The result is a budget shortfall that many are scrambling to address.  The issue is particularly acute in Texas, Florida, and Georgia, which account for about half of the 5 million people in the “coverage gap”.

Non-DSH facilities (which accounts for most of the hospitals) in non-expansion states have a similar, if somewhat smaller problem; their indigent patient loads are (very likely to be) significantly higher than they would be with Medicaid expansion.

Impact on workers’ comp

In a phrase, cost-shifting.  Sure, hospitals are doing better post-PPACA than they were before, however they are also much more focused on financials, developing ever-more sophisticated coding, reimbursement maximization, and revenue-enhancement tools. (Google “hospital revenue maximization” if you are curious…).  They don’t apply these just to Medicare or Medicaid patients; in fact they look for other payers where they can increase revenue to make up for projected shortfalls.

And folks, workers’ comp is a very soft target.

  • Work comp networks’ ability to get deep discounts from hospitals and health systems is diminishing.
  • More and more physician practices are being acquired by health systems.
  • Facility fee schedules have not kept pace with technological or billing practice changes, and any effort to address these via regulation or legislation results in a battle with the (very powerful) hospital lobby.
  • Some bill review entities are playing games with network facilities, trying to negotiate
    prompt pay discounts instead of using the network rate.

What does this mean for you?

Watch those facility costs.

Friday catch-up

Here’s the quick summary on a couple happenings in work comp this week.

The big news comes from Liberty Mutual, where long time Medical Director David Deitz will be retiring, and Frank Radack has been named VP of managed care.

David is one of the true stars in this business, and this will be a big change for Liberty.  Word is one of his regional medical directors will assume the leadership role on an acting basis; more to come on that to be sure.  Dr Deitz has a wealth of experience; he has developed and implemented evidence-based guidelines, is an extremely knowledgeable analyst, a very effective communicator to clients, prospects, and regulators alike, understands the US health care delivery system like few others, and knows work comp.  I am fortunate indeed to count him as a friend, and hope we get to work together again.

Frank is a very experienced business guy with a strong history at Liberty; he ran Liberty’s bill review operation years ago before taking over their reporting/RMIS function some years back.  His depth of knowledge about what customers want to know and what is important to them will undoubtedly help Liberty focus their managed care efforts.

Friend and colleague Todd Brown informed me (and others) that Maryland is looking for input from self-insured employers and groups on prescription drug costs.  Their survey is here.  Given the physician dispensers’s BS claims about lower costs and better outcomes associated with their nefarious practices, it would behoove any and all self-insured employers to respond to the Survey.  Like, NOW.

Delivery systems and workers’ comp

There’s been quite a bit of focus on alternate health care delivery methods of late, with medical homes and Accountable Care Organizations prominently noted as ways care will be improved and costs reduced.  One source indicates there are 270 ACOs currently operating with an estimated 20 million members.

While the early evidence is somewhat mixed, in general the news is positive; a Pennsylvania ACO raised quality, and decreased infections and readmission rates, leading to a year over year decrease in medical costs.  Generally, ACOs involve facilities and providers agreeing to focus on specific quality measures and reward performance instead of paying on a fee for service basis.  In PA:

Half of hospitals and physicians’ potential earnings are based on their performance improvement in hospital-acquired infections, patient experience, readmissions, surgical care, and treatment for heart attacks, heart failure and pneumonia. The other half of the earnings are based on the providers’ ability to manage costs across inpatient care, outpatient care, ancillary care, home health services and prescription drugs.

There are problems inherent in the model; patient satisfaction is a tough metric to achieve when ER patients only want narcotics for their pain, while readmission rates are going to be higher when patients refuse to be responsible for post-discharge care. Our daughter works in an inner-city ER and this is all too common; patients KNOW these are key criteria and tell care givers they will downscore them if they don’t get their meds.

Nonetheless, it’s a far better financial model than fee for service as it doesn’t incent more care and higher intensity care.

Notably, it’s hard to find any evidence of ACOs in work comp.  I’d be most grateful if readers could point me to any reports or information related to alternative delivery systems in WC; while there are some bundled payment models, and a couple episode-of-care pilots I’m aware of, there’s just not much going on as far as I can see.

Just leave a comment here – and thanks!

Adjusters are happier than we thought…

Jack’s been getting ever deeper into the world of the adjuster of late – here’s his latest post.

Over the past couple weeks Joe and I developed and sent out an Adjuster Survey to get more insight into adjusters’ (and other front-line staff’s) work life. We are looking for first hand information as website reviews and other second-hand sources can be easily misinterpreted.

Surprisingly, the response rate to date is an astronomical 24.4%.  We are delighted with our results, but we’re looking for more.

Perhaps even more surprising adjusters’ views of their work life are very positive; contradicting what I had read online prior to developing the survey.

Just over 90% of our participants claimed that their daily workload was either “manageable” or “a bit too much, but still manageable.”  We were very pleased to see that these participants were not getting overworked and that they were at least tolerating their work environment.  About 66% of the survey participants said that their work environment was “great” or even “unbelievably fun and enjoyable,” while another 30% said that the work environment was “tolerable.”

A tiny percentage – 3% of participants – claimed that their work environment was “not fun at all.”

We are data hounds here at Health Strategy Associates, and need you to help develop an even better understanding of adjuster likes, dislikes, and attitudes.

Please take roughly 2 minutes out of your day (that’s all it takes!) and fill out our survey.  In appreciation of your participation, you will receive a $5 Starbucks eGift card via email if you fill out our survey by Friday.

We’ve been getting great feedback thus far and would like to continue this run.  Once again, here is the survey link if you missed it.  Enjoy the (generally pretty good) work week!

The contentious and misunderstood world of drug testing

Any time you have to mention urine in a blog post you know it’s going to be a tough one.

There’s a kerfuffle in the world of urine drug testing, one of the more litigious and contentious industries I’ve ever encountered.  The parties involved, Ameritox and Millennium Labs, have been involved in litigation for some time now.  [full disclosure, Millennium has been a consulting client for a couple of years; I work closely with them, and have found them to be great people who do the right thing consistently.]

A while back, Ameritox lost a suit brought by Millennium over alleged deceptive advertising; more recently a jury ruled Millennium had improperly given cups to docs in four states, a practice the jury deemed an unfair trade practice. Ameritox trumpeted their “win”, however the jury’s finding was inconsistent with the opinion of several experts in the area, all other charges were dropped, and the case is on appeal.  And there was a serious legal question raised when one of the key witnesses allegedly provided information that perhaps they had no right to.

Be that as it may, the case was noted by friend and colleague David DePaolo, who opined: 

While medical guidelines recommend drug testing for compliance purposes and to help ensure that drugs aren’t being diverted to the black market, we know those are specific case recommendations particular to a certain set of medical facts, not to be applied universally.

But the way medical suppliers stimulate sales with physician gifting and revenue enhancement programs tests the ethical and moral qualities of the individuals on the front lines, and physicians should not be placed in those positions, and we should not be placed into positions of having to pay for it.

Sometimes drug testing is warranted. Most of the time it is not.

A couple comments.

First, research from various organizations including WCRI clearly indicates there’s far too much testing going on of a small population, and far too little of most.  About a quarter of folks who should be tested are, while some unscrupulous docs test every patient every time, making bank.  I respectfully disagree with David’s statement that “most of the time” drug testing isn’t warranted.

Second,

What is correct is to say many more patients taking opioids should be tested, and that testing should comply with accepted evidence-based clinical guidelines; Washington State, Colorado, ACOEM, and others are all excellent sources.

Opioid abuse, misuse, diversion, and related problems have long surpassed crisis status – we’re now in a national disaster with more people dying from this than motor vehicle accidents.  Drug testing is a critical part of the answer.  Yes, there are vehement disagreements among stakeholders, and yes, they can get very contentious, and yes, I have a dog in this fight.  That said, I – and many others – have been working long and hard to bring attention to the opioid disaster, and we need to keep the focus on addressing the problem and not get distracted by tangential issues.

On that all parties should agree.

What doe this mean for you?

There’s a real danger that we over-react, over-simplify this issue, and in so doing make blanket statements that do more harm than good.

 

 

 

Latest changes in the work comp PBM world

Helios is the new name for PMSI/Progressive.  The idea is to have a single name for the two different firms, both of which had positive brand images in the work comp world.  In talking to the marketing folk, their take was that while both brands had strong equity neither legacy name would work for the combined entity.

It seems a shame to end PMSI’s decades-long run, especially after Eileen Auen, Jay Krueger, and their excellent colleagues rescued the PBM from what seemed like a sure path to oblivion.  Instead of watching over the demise, they turned it into one of the top players in the business.  That said, Progressive had a well-earned and well-deserved reputation as a VERY customer-focused PBM; beginning under founder Dave Bianconi (one of the best people in the business…ever). If anything that focus has grown under the current Auen-Young-Sisson triumvirate; customers are (with rare exceptions) universally pleased.

So, Helios it is.

That will be a d/b/a; due to legal, regulatory, compliance matters I would not expect to see the Helios name show up on provider contracts and other legal stuff as that may well trigger all kinds of re-filing and jumping-through-legal-hoops.  But what we’ll very likely see is a big re-branding push, with lots of PR, a new logo, and a splash in Florida next month and Vegas in the fall.

Meanwhile, Aetna’s much-discussed sale of its workers’ comp sub (I know, I owe a bunch of folks on my mis-call on this one) hasn’t been finalized – as far as I know.  In conversations with several potential financial buyers, Coventry WorkComp’s declining revenues and earnings, coupled with the problems inherent in re-contracting a provider network without mother Aetna’s market clout and concern over PBM First Script’s strong ties to network Express Scripts makes for a “sub-optimal-go-forward-scenario.

Yup, that’s a direct quote. I think it means the potential investor doesn’t think they can pay what Aetna wants and get a decent return on that investment.

Undoubtedly, someone else will come up with a different scenario; whether it’s enough is to-be-seen.

Side note - long time First Script exec Brain Carpenter has joined Healthcare Solutions as their top clinical pharmacist.  HCS has been dramatically increasing the number and expertise of their pharmacist corps and the addition of Brian is a big plus. Brian will report toy EVP Jim Andrews; kudos to Jim (who I am fortunate to consider a good friend) for successfully building HCS’ clinical programs.

What does this mean for you?

Stability at one PBM…