WIth the announcement that indicted Bureau of Workers Compensation investment manager Tom Noe is seeking to change his plea from not guilty, it appears that once again the scandal that won’t stop looks to be entering a new and evern more entertaining phase.
Noe, Republican fund raiser and rare coin industry advocate, “asked to change his not guilty pleas to federal charges of funneling money to President Bush’s re-election campaign.” (Akron Beacon-Journal, May 11, 2006) Now, don’t confuse this legal problem with one or more of Noe’s myriad other…difficulties (including the mystery of the disappearing coins; the where-did-Tom-Noe-get-the-money-to-buy-all-that-art-and-other-stuff question; the new allegations that Noe’s activities extended across the Atlantic to Spain where he was involved in stock price manipulations and company takoever shenanigans (?!); and his other potentially-illegal campaign contributions).
I’m surmising that Noe’s decision to change pleas involves some kind of deal wherein Noe will name names and cause yet more heartburn for dirty politicians in Ohio.
Who knew workers comp could be so entertaining?
Hat tip to Workers Comp Executive for the new news on Noe.

Coventry’s Q1 2006 earnings call did not provide any insights into the progress, results, or future of the workers comp sector. While WC accounts for over $200 million in revenue for the managed care company, it drives a disporportionate amount of profit (network business is really profitable, and a big chunk of their business is PPO for WC)
Here’s the historical perspective. Coventry Chairman Dale Wolf had previously suggested FH’s workers comp business would produce a $240 million top line in 2006. Given results to date, increasing price pressure on workers comp networks and bill review entities, and the growing likelihood that First Health will lose workers comp network business, I’d be surprised if FH produces anywhere close to $240 million in revenue. And, Q1 numbers don’t do anything to convince me otherwise.
Here’s the detail. Revenue for First Health’s workers comp in 2005 was $53.7 mm in Q1 (corrected for acquisition timing), $53.65 in Q2, $50.7 in Q3, $52.94 in Q4 and $51.43 in Q1 2006. Comparing this last quarter with the same quarter in the previous year, WC revenue dropped 4.3%. To hit $240 million for the year, FH will have to average $62.9 million per quarter for the remainder of the year. That’s a 21% increase per quarter over the prior year.
There are a couple other factors that aren’t helping. First, the ongoing search for a leader for the WC sector is well into its second year.
Second, there is considerable capital flowing into the WC managed care space from private equity firms and product development from mainstream health plan companies. The combination of innovative approaches to managing WC medical expense and the purchasing power of the Aetnas and UnitedHealthGroups will make this sector even tougher in coming quarters.
Meanwhile, specialty managed care companies are hollowing out network revenue from underneath as First Health customers increasingly turn to experts to manage PT, drugs, and radiology, as well as networks in individual states.

Work Comp insurer Texas Mutual has launched their network initiative, partnering with Concentra on their private-labeled “Texas Star Network Option”. For now, the network will only be available to employers in the Austin, San Antonio, DFW and Houston metro areas, but expectations are the coverage area will expand significantly in the near future.
Texas Mutual has prepared excellent powerpoint presentations for employers employees and agents; anyone interested in an overview of the impact of the new legislation and regulatory changes would be well-served to review the presentations.
While Concentra’s network includes thousands of providers in Texas, Texas Mutual claims to have selected only certain providers for the Texas Star Network. One hopes this is the case, as the best feature of many workers comp networks is their ability to exclude docs who don’t get workers comp.

An article in today’s Baltimore Business Journal highlights a study by the American College of Occupational and Environmental Medicine on the impact of disability on employers’ bottom lines.
It will come as no surprise to industry experts that disability costs a ton of money, both hard dollars and soft, for insurance premiums, wage replacement, medical expenses, replacement workers and lost productivity. And, while it is good to see ACOEM publicizing the real costs of disability, this is not something that has not been addressed by many employers and experts in the past.
Jennifer Christian, MD, is the most articulate and insightful expert on the role of the physician in disability management. Tom Lynch of Lynch Ryan is the industry’s leading expert on safety and return to work planning. There are any number of physicians in private practice who focus deeply on return to work – Jorge Trujillo and Yemi Owi are two occupational medicine physicians who focus on what the patient can do, rather than what they can’t, and as a result have a stellar record in this area. Choice Medical Management has proven that sending injured workers to the right docs can dramatically improve return to work results.
And I’ve argued till blue in the face that any group health payer that wants to really differentiate in the market can do so by demonstrating their impact on absenteeism and productivity. Here’s hoping that a nascent initiative to do just that (evaluating a large HMO’s impact on a large University) gets things rolling (I’m involved as the chief nag to keep things moving along).

WorkingRx’s suit against the Workers Comp Fund of Utah will likely shed some light on Working’s billing practices, methodology, and legal strategy. Working is a third party biller; a company that buys WC scripts from retail pharmacies and tries to get insurers to pay for them.
While that’s fine, and is a time-honored business practice in many retail and other industries with large receiveables, Working’s approach tends to be a bit more combative.
Working submits bills for reimbursement after applying their version of usual and customary, and then demands payment. Sources indicate that the WCF’s position is they have paid for the scripts already, and that Working’s demands are unreasonable. If Working’s other legal and collection actions are any indication, WCF may have a good point.
The issue is this; Working gets the bill from the retail pharmacy, and then reprices it using their own “usual and customary” methodology and/or adds an administrative fee. This last was shot down pretty abruptly in the WorkingRx-ScripNet legal battle, and WorkingRx’s U&C methodology is, well, unique.
One of the factors driving WorkingRx’s aggressive posturing and actions may well be the incentives of their legal team. Sources indicate that Working’s legal folk are, at least in part, financially rewarded for success in getting payers to cough up additional payments.

Industry sources indicate that managed care company IntraCorp is having its problems of late. It’s bill review business has declined rather drastically, with Sedgwick and ESIS both moving their work to other vendors. These two payers likely represent over 2 million bills annually, which may amount to 40% of IntraCorp’s business.
Organizationally, IntraCorp has been required to move into shared space, and is also using CIGNA corporate counsel and other G&A resources. This is a departure from the previously jealously-guarded independence enjoyed by IntraCorp.
IntraCorp’s new disability management chief, Archie Anderson, is a well-respected sales executive with a long history in the industry. It is most likely that these losses were well in the works before his arrival from Genex. It is likely that one of Archie’s challenges will be to generate enough case volume for Intracorp’s 2400 nurses. While the company continues to lead the industry in terms of sheer volume of cases managed, given the recent trend to reduce the role of field case management Intracorp may find itself with more nurses than it needs.
Unlike Concentra and First Health, Intracorp does not have a large cash-generating PPO network to drive profits. However, with the recent decline in popularity of these big discount-driven networks, this may not be too problematic. If Intracorp can develop or acquire technology that enables it to truly integrate and manage specialty managed care services on a custom basis, it may be able to leapfrog the competition.
That’s a big “if”.