Feb
27

Opioids in workers comp – spend is down a billion dollars.

More than 20 years ago I posted this:

Oxycontin in WC

Where are we today?

After a horrific spike in opioid prescribing for workers’ comp, the industry has done a remarkable job reducing unnecessary and inappropriate opioid usage.

Well, except for the Federal Office of Workers’ Compensation Programs, which was way too late to take action.

Leaving OWCP aside (if only we could), here’s a few statistics:

Our annual Survey of Prescription Drug Management has tracked opioid prescriptions for more than a decade.

  • The 2021 Survey showed a 12.5% drop in opioid spend over the previous year.
  • Opioids represented 13.4% of all respondents’ pharmacy spend, the lowest figure in the history of this survey.
  • A decade ago, opioids accounted for 29.4% of drug spend.
  • And, a decade ago drug spend was MUCH higher than it is today.

Net – workers’ comp has reduced opioid spend by roughly a billion dollars over the last decade.

What does this mean for you?

Thousands of lives saved, families preserved, moms and dads alive, kids not orphaned, addictions avoided.

Thanks to all who have done this – you are treasured.


Feb
23

Good news Friday!

Here’s stuff to brighten your day…

Our cities and rural areas are getting safer.

Overall crime rates have dropped – a lot...

unless you own a Kia or Hyundai.

 

Murder rates are dropping as well

Net – safer cities and towns.

Inflation???

Business owners’ consensus view is inflation will remain near 2 percent...this from the Atlanta Fed.

Healthier people!

2 Medicaid items of note

North Carolina is expanding Medicaid – terrific news for poorer folks in the Tar Heel State. Great news for the 346,000 residents who now can actually get healthcare.

In some states, Medicaid is expanding coverage to include housing and nutrition, a major step towards improving the health of Medicaid recipients.  What I love about this is research indicates housing and food stability enable people to a) get healthier, b) focus on school and work (hard to study or work when you are hungry and living on the streets).

Kudos to the Trump Administration for jump-starting CMS’ investment in social determinants.

CMS’ move is just the latest that recognizes the critical importance of stable housing and reliable nutrition. From WaPo:

social determinants of health — essentially, the conditions in which people live — have an enormous bearing on well-being. Medical care, studies have shown, accounts for only 20 percent of the difference in patients’ health, while social risk factors are responsible for half to 80 percent.

And it’s not just Medicaid…

Last year, the National Committee for Quality Assurance, which evaluates health plans and medical practitioners, updated a data tool used by 90 percent of health plans, requiring them to report whether they have assessed patients for shortages of housing, transportation and food.

See you in Boston March 5 – 6 for WCRI…it’s sold out BUT there is a waiting list… click on the link to sign up.

 


Feb
22

A.I.: The Basics

AI is all over healthcare, from assisting in diagnosis to evaluating new medicines, from allocating resources to triage. Sure, there’s enormous potential – there’s also big risks. At last fall’s National Work Comp conference AI was all over the exhibit floor….in recent surveys HSA has conducted we have seen a dramatic rise in AI-related comments.

What’s apparent from our conversations with industry execs is this: AI is…in the eye of the beholder.

While industry folks talk about AI’s potential, they readily acknowledge their understanding is superficial at best.

I asked Jay Stith, the brains behind HSA’s analytical work – he’s also worked extensively with AI applications in his work with HSA and on the national scale for disaster prediction and preparation – to give you, dear readers, a very brief overview of what AI is, how it “works” and where it might be useful.

At its core AI represents the culmination of efforts to infuse machines with human-like cognitive functions. The engine driving AI’s transformative power is machine learning – a discipline enabling algorithms to learn from data patterns. This not only facilitates automation but also empowers AI systems to continuously enhance their performance, making them dynamic and adaptable to evolving challenges.

This potential doesn’t come without cost. Once you decide to pursue AI, launching a competent AI system requires a lot of work:

• Determining what problem you want AI to address,
• acquiring the resources (money and infrastructure) ,
• earning management and staff buy-in,
• acquiring the talent to develop AI,
• assessing/cleaning up/revising the data used to “train” AI
• developing metrics to evaluate the AI’s output
• building the AI model/tool/program/etc. structure,
• adequately training the AI, and
• then…the dreaded implementation phase.

All while navigating the tricky ethical considerations associated with AI (privacy, ownership, algorithmic bias, hallucinations, and employee displacement) and the looming threat of increases/changes in regulations.



That said…safely navigating the path will lead to much improved productivity, clinical outcomes, and lower costs for all.

More specifically, stakeholders believe AI in worker’s comp can be very beneficial throughout the workflow –from the basics like increasing speed and accuracy across the board all the way to enhancing predictive analytic capabilities and most, if not everything, in-between.

What does this mean for you?

The potential is huge but be mindful of the arduous process to get there.


Feb
15

Things to not do if you sell workers’ comp services

If you’re in the workers’ comp space, there are several things you should avoid at all costs.

  1. Do not talk about your service as innovative or cutting edge. Insurance people in general and work comp people in specific avoid innovation like the plague. Innovation is scary, risky, uncertain, and potentially career-damaging. While it might help improve results somewhere, it might also cause friction, upset employees, add stress and surprise folks.
    None of this is good.
  2. Do not focus on what’s good for the entire company.
    Counter-intuitive, right? Well, not at all. Organizations don’t make decisions. People make decisions. And – intros industry – those people mostly make decisions based on what makes them look good, more important, more successful – which may – or often may not – make the organization more successful.
    Example – buying healthcare based on how much of a discount you get off over-priced and often-unneeded services.
  3. Talk about what works in other industries.
    As a hugely insular, parochial, and navel-gazing industry, workers’ comp is not interested in how other payers address healthcare costs, healthcare quality, pricing, reimbursement, or evaluation thereof. Nope, worker’s comp is different, special, unique, and in a world unto itself.
  4. Suggest you have something that is materially better than what they are doing today.
    Absolutely not – because if you do, that implies what the prospective customer is doing is inadequate, ineffective, unproductive  – or all of the above. Nope, most buyers would much rather not know that they can improve.

What does this mean for you?

So, is all this tongue in cheek? Heck no. After three decades in the business, I am quite sure these faux pas are much more likely to lose you prospects and customers than increase sales.


Feb
14

Facility costs and quality – are you operating in the dark?

Probably yes.

Facilities account for between a third and half of work comp medical spend – and that share is increasing as health systems and hospitals consolidate.

Reality is there’s major variation between hospitals  – some are stupid expensive, others quite reasonable; some have crappy quality, others excellent quality.

Example…

Here’s a good one for our colleagues in Louisiana…two hospitals less than 15 miles apart, with VERY different costs and similar quality ratings.

Note costs are for MSK conditions…pretty relevant to workers’ comp.

So, you can send your injured workers to a VERY expensive facility  – Tulane – that does a handful of complex surgeries OR…

To a MUCH less expensive facility – Ochsner – that does 14 times more surgeries (practice makes perfect…)

Let’s add a CMS quality metric...for our friends in the Sunshine State, you can send injured workers here…

solid quality, and very reasonable pricing…

or…here (just a few miles away)

to a facility with a bottom-of-the rating by CMS and costs more than double its higher-quality neighbor.

These data are available from a few states and CMS (takes some digging); HSA also has developed a national tool enabling instant facility comparison across multiple quality, patient safety, and cost metrics – drop a comment below if you want info.

What does this mean for you?

Do you want to spend $98,000 at a  facility that does few procedures, or a quarter of that at a facility that does hundreds?

 

 


Feb
7

Signs of the coming apocalypse

Medicare is slashing what it pays physicians, an annual event that – till now – was almost always rejected by Congress.

That will reduce old folks’ access to care, cut workers’ comp fee schedules, and likely lead to more provider consolidation. 

This from Becker’s:

In its 2024 Physician Fee Schedule Final Rule released Nov. 2, CMS reduced overall physician pay by 1.25% and updated the Medicare conversion factor to $32.74, a 3.4% decrease from last year.

Nope, a fix wasn’t in any of the “continuing resolutions” Congress passed last year and earlier in January (“CRs” are a stop-gap, emergency funding step more often seen in desperately poor banana republics than in the “greatest nation in the world.)

As a result, docs’ pay will be cut about 3 1/2%…and they are none too happy about it. (Read this for details on potential implications)

Okay that’s bad, right?

Not as bad as what’s coming.

Reminder – if Congress doesn’t pass a budget – in exactly one month – all Federal agenciesincluding Medicare, the VA, Defense, the FAA… face budget cuts. Weapons procurement, care for veterans, agriculture inspections, airplane safety inspections (this isn’t a problem, right??) are just a few.

Remember way back (as in two years ago) when Congress’ wait-till-the-last-minute-to-get-stuff-done made us all nuts…if we knew then how dysfunctional the House would be now we’d have been quite happy for what we did have.

Yep, Republicans in the House of Representatives’ refused to even vote on an immigration reform bill – THE hot issue in Washington and around the country – a bill that gave them everything they wanted.

House GOP – Yay, we finally got the soccer ball!  Let’s play! Wait…how do you play? I dunno…you know?  Nope – you? Nuh-uh…you? No clue…you? Uh…I thought it had pointy ends…Someone pick it up…NO way dude! Not me…

What does this mean for you?
To quote HL Mencken, you get the government you deserve, and you deserve to get it good and hard.

PS – Over the lastly 20 years I’ve written a lot about the incredibly screwed-up Medicare reimbursement  process…


Feb
5

Predictions for healthcare in 2024

Some of you know Jay Stith – he’s been working with HSA for half a decade now, heading up data analytics and research. Jay’s brilliant, has a great dry wit, and most of all very insightful.

He sees stuff – others – including me – don’t.

So, I asked Jay to make his predictions for healthcare in 2024…lest the work comp folks stop reading here, remember workers’ comp is the flea on the tail of the healthcare elephant.

Outside of employment, the biggest single factor affecting workers’ comp is healthcare – hands down.

  1. Hospital/ Health System M&A will ramp up in a big way leading to even more consolidation around the country.
    1. M&A dropped dramatically during COVID so there is an element of catch-up on top of a rapidly changing healthcare industry, financially distressed hospitals/health systems offering themselves as prime takeover candidates, and potentially dropping interest rates all point toward high levels of M&A activity.
  2. And…Facility fees will continue to be the elephant stomping around the room. Remaining high and potentially going higher all while limited efforts are made to curtail them.
    1. A next step to prediction #1 – as consolidation often means high prices. Little activity has occurred to combat facility fees so far and with sexier issues like AI monopolizing meetings I don’t see meaningful action broadly coming.
  3. Staffing shortages will keep already high labor costs high – looking at nurses in particular.
      1. The thousands of physicians and nurses entering the workforce lags the number of physicians who are retiring or simply exiting the industry. This decline coupled with the aging US population is exacerbating the already critical problem. We are, and have been, under-supplied with nurses across the healthcare landscape and between structural issues like not enough nurse education faculty and the median age of nurses >50 this issue is unlikely to change.
  4. Human-caused climate change will disrupt even more businesses with policy progress being slow and insufficient.
    1. We don’t know what we don’t know – climate-related problems are impacting a wide range of business and employee needs. In addition to the obvious employee-injury issues associated with climate change, disruptions to care access, employee-personal-life problems (e.g. damage to home), and climate migration make climate-associated changes more difficult to model and properly account for.
    2. As if we needed more proof, here’s what’s happening in California..
  5. The AI arms race will continue with companies everywhere announcing new AI tools for various business segments BUT true internal buy-in will still be far away as the tools will underwhelm managers dreams for headache-reduction.
    1. Managers are dreaming about the volume of tasks that AI will be able to effectively handle in a fraction of the time while producing higher quality work than their current teams. As companies learn how difficult properly training an AI tool is and how much time/resources are required to make even marginal gains, people will get frustrated about having over-promised and/or having to deal with poorly functioning AI tools – e.g. a bad chatbot or an internal system lacking proper training on a costly outlier situation.
    2. AI and technology improvements will dominate the headlines and capex allocations BUT customer service will remain more correlated to client satisfaction.
    3. Healthcare and insurance have changed a lot over the decades but as technology has gotten fancier and the industry more complex, high quality customer service has remained the top-rated factor when assessing a successful vendor-client relationship… and it will not change this year.

What does this mean for you?

Consolidation = higher facility costs.

Staffing shortages = higher facility costs.

Human-caused climate change = BIG problem.

AI ≠ panacea.


Jan
30

NCCI’s executive survey…what medical inflation??

A couple weeks back NCCI released information about its annual survey of work comp execs.  About 100 participated in the survey; some of the results were a bit surprising.

Execs were asked about their “concerns” re workers’ comp…frankly I found some of their concerns (financial health? rate adequacy? medical inflation?) puzzling at best.

Here’s a couple questions from my discussion with Damian England, Executive Director, Affiliate Services and Raji Chadarevian, Executive Director-Actuarial Research – and thanks tons to NCCI’s Cristine Pike for making this happen.

Where did the responses rank concerns?

Damian England, Executive Director, Affiliate Services – “While some carriers mentioned multiple concerns, roughly 40% of the responses were related to the financial health of the system and rate adequacy. About a quarter reflected the changing workforce, followed by medical inflation and the economy. Climate change and artificial intelligence were cited as emerging concerns.”

MCM – Rate adequacy concerns?

Damian England, Executive Director, Affiliate Services – Rate adequacy concerns are more of a global fear of the future and the unknown, amid a long-term trend of steady declines in loss costs/rates.  Although the industry in aggregate has seen nearly 10 consecutive years of underwriting profitability, not every carrier has same results or books of business; rather, individual carrier performance varies in many ways from the aggregate.  We also hear about changing underwriting cycles and whether we have the data necessary to recognize a turn in trends, as there is a recognition that recent trends will not last forever.

MCM – Why are they worried about medical costs – which are a non issue?

Raji Chadarevian, Executive Director-Actuarial Research (and all around good guy). – Medical cost drivers are not well understood; some are just looking at the overall medical price index, but medical cost drivers go beyond that. Changing medical practices, new medications, new ways to administer treatments and other transformations need to be considered. It is starting to resonate that some are understanding it is more complex…but there is a misconception in the industry that we look at health insurance rates and think that is representative of medical inflation – those rates [health insurance premiums] are going up but that is not medical inflation.

Also, WC is a long tail business, so a small change in the inflation rate one year can mean a lot in terms of overall cost of claims – that is where some of the concern emanates from – what does it mean for a 20-30 year claim?  Furthermore, for LT claims it isn’t general medical inflation largely driven by physician and facility prices, rather, for claims that are beyond the critical treatment period, medical costs have more to do with the price of Rx, home health care, medical equipment. Prices for HHC and DME have gone up significantly in recent years.

Ok, couple things here.  And please, this is not meant to argue with Raji or Damien, rather to point out that work comp execs need to study up on medical issues and worry about REAL issues, not NON-issues.

  1. Rate adequacy is NOT AN ISSUE. Over the last decade rates have been too high – evidenced by continuing rates drops in almost all states over that period, accompanied by huge profits AND $14 billion in “excess” reserves.
  2. Medical inflation is NOT AN ISSUE. Over the last few years there have been no reports of significant increases in medical trend. None. Zippo, Zilch.
  3. Drug costs have been dropping for years – for lost time claims as well as med onlies.
  4. Claims with ultimate costs >$1 million account for – at most – 15% of total WC costs  – and a huge chunk of that is not medical, but indemnity expense. So, while I get some execs may be concerned about future costs, this feels more like catastrophizing than rational business thinking.
  5. Climate change – hard to believe that this was not one of the top concerns, but completely consistent with the industry’s ignorance of the issue. Talk to insurers, employers, and TPAs in Louisiana and California and they’ll regale you with the horrific and extremely expensive impacts of human-caused climate change.

What does this mean for you?

Execs are working about non-issues and willfully ignoring those that will have real and sustained impact on the industry.

 


Jan
9

MedRisk acquires Medata

MedRisk and Medata just announced the former has acquired the latter.

Pretty interesting move…note I’ve worked with Medata in the past and worked with Medrisk for decades – and still do.

The official release is below – here’s my take.

Synergies

Data – Medata has a wealth of data on all types of medical services; MedRisk has data on millions of (physical medicine) episodes of care. Together, there are several potential benefits:

  • More information is good, helping identify best practices and providers with – and without – good outcomes. This will help improve patient outcomes.
  • Medata has data on post-PT costs, medical care, provider usage and other very useful information. This will help MedRisk better understand care delivered after a therapy episode and identify opportunities to improve return to work, transitional duty practices, and issues that may arise post therapy.
  • Network development – Medata has a wealth of information spanning decades on  physical therapy, occupational therapy, and chiropractic services’ prices, reimbursement, utilization and trends. These data will further help improve MedRisk’s network and enable it to provide better information re provider performance in- vs out-of-network.
  • These benefits will be felt soonest by mutual customers, but over time will improve results for each company’s unique customer base.

Efficiency

MedRisk is the largest manager of physical medicine in work comp and does a LOT of bill review in that space. Now that it owns a BR company, BR costs should decrease, improving margins albeit it on the margin.

With bill information coming into Medata, MedRisk will be better able to identify out-of-network therapy and where possible and appropriate either enroll the therapist if credentialing approves or divert the  patient to an in-network therapist. This will improve patient outcomes, increase payers’ network penetration and likely reduce cost of care.

Here’s the press release…

MedRisk acquires Medata to further improve the claims experience for customers, patients, and providers

 

King of Prussia, Pa. (January 9, 2024) — MedRisk, the leader in managed physical rehabilitation in workers’ compensation, has announced its acquisition of Medata, one of the leading providers of cost management and clinical solutions in the United States.

With this acquisition, customers of both companies will have access to expanded care management and cost containment offerings in workers’ compensation.

“We are excited to add Medata to our team,” said Sri Sridharan, MedRisk CEO. “This will further enable us to deliver superior claims outcomes and experience for our customers, for the patients we serve every day, and for our provider partners. In addition, we will now be able to leverage our inventory of data from both organizations so we can deliver unique insights and additional innovative solutions.”

Based in Irvine, California, Medata provides the most comprehensive cost containment and document management solutions in the workers’ compensation and auto liability industries.

“We are thrilled to become part of MedRisk,” said Medata President Tom Herndon. “Our companies recognize customers want greater alignment among their service partners, and this change strengthens our foundation and will drive investment into product innovation. Together, we will leverage our collective resources to continue delivering exceptional products and services to our customers.”

“For 30 years MedRisk has focused on creating a better experience for patients, our customers, and the entire industry,” said Mike Ryan, MedRisk Executive Chairman. “The addition of Medata is a natural and exciting step forward for us to further accomplish that mission.”

About MedRisk

Based in King of Prussia, Pennsylvania, MedRisk is the nation’s largest managed care organization dedicated to the physical rehabilitation of workers’ compensation patients. For more information, please visit www.medrisknet.com or call 800-225-9675.

About Medata

Based in Irvine, California, Medata provides the most comprehensive cost containment and document management software and solutions for the insurance industry. The company serves insurance carriers, self-insured companies, third-party administrators, state funds, and public entities in the workers’ compensation and auto liability industries. For more information, please visit www.medata.com or call 800-854-7591.

# # #

Media Contact:  Helen King Patterson, King Knight Communications, 813-690-4787, helen@kingknight.com


Jan
9

Prior auth – are you flying blind?

A pending CMS rule may lead to major changes in the use of Prior Authorization, changes that would reverberate across all payers – Medicare, Medicaid, group health, Exchange plans and workers’ comp.

Remember work comp is the flea on the tail of the healthcare elephant:

  • WC is 0.7% of total US medical spend and
  • a tiny portion of most providers’ patients and
  • the draft regs have no exemption for workers’ comp.

The proposed rule is now under review after public comments; there are a wealth of implications and potential issues including:

IT

  • requirements re new APIs (electronic links) in PA IT applications including payer and provider interfaces  – idea being to streamline flow of information between payers and providers
  • payer-to-payer data exchange requirements – essentially linking payers together so a specific patient’s entire health record is kept by its current payer (given patients’ high propensity to switch payers, this will be darn challenging.
    • work comp would have to integrate with many other payers...
  • build automated processes for providers to determine if a PA is required –  idea being to reduce confusion as to what procedures do and do not require a PA

PA processes

  • tight time frames for PA processes and possible reduction to 48 hours for expedited requests
  • mandatory requirement for payers to include a specific reason for denials
  • mandatory reporting for most providers

There’s a lot more to this…I’ve just scratched the surface here.

What does this mean for you?

if you aren’t paying attention to what’s happening in the larger healthcare world, you’re flying blind.

Make no mistake, what CMS does – whether its fee schedules, interoperability requirements, Medicaid eligibility, drug pricing, reimbursement policies, network adequacy or PA changes – affects you.