NCCI kicks off…

950 attendees this year – an all time high – as new President And CEO Bill Donnell kicks off the 2016 NCCI Annual Issues Symposium.  Key takeaways from Mr Donnell’s introductory talk

  • near term, solid financial results and continuing profitability
  • longer term, frequency rates continue their structural decline – consistent with other mature economies
  • Donnell highlighted programs at two very large American employers that have dramatically reduced claim frequency and severity.  That’s great – but large employers have a lot more influence on and ability to address these issues than do smaller employers.

What was encouraging – and different – about his talk was a focus on individual claimants, and what employers and insurers are doing every day to help injured workers.  He noted that industry critics don’t focus on these successes, choosing instead to highlight problems and errors.  He called for the industry to do a much better job talking about the good the industry does.

Hear hear.

Clearly Donnell is aware of – and concerned about – opt out.  Given the recent Oklahoma Supreme Court decision, I’m not sure he – or we – have much to worry about.  Nevertheless, his caution is far more appropriate than ignoring opt out.

Donnell’s “word” is the industry is Transforming – many changes in the economy, technology, the workers’ comp industry, employment are all forcing change in workers’ comp.

I agree.

The issue is, how can an industry that is not so much resistant to change as hidebound and unable to move at all – much less rapidly – catch up to the real world?

On the way to NCCI

Headed to Florida for the annual NCCI AIS confab, one of the best-organized conferences in the workers’ comp world.  Looking forward to NCCI Chief Actuary Kathy Antonello’s State of the Line presentation; will be live-blogging as she reveals the latest data on trends, costs, inflation and drivers thereof.

The powers-that-be have invited Charles Krauthammer back once again; the ever-irascible doc will certainly share his latest views on the political landscape, and for once I’m actually looking forward to it.   If I have to listen to yet another neocon/conservative ideologue, as least this time he’ll be as cranky about his candidate as I am…

A few of the topics Mark Walls, Bob Wilson and I will be covering in our talk on Thursday afternoon will be the impact of the ACA on workers’ comp (spoiler alert – too early to tell), whether the Grand Bargain is still grand and/or a bargain, what’s happening to opt-out, and medical trends.  Should be pretty lively, with ample-yet-polite-disagreement among the three of us.

Attendance is very solid this year; hope to see you there.

The ACA and employment

Several years ago the CBO (Congressional Budget Office) predicted the Affordable Care Act would negatively, if minimally, impact employment.  Since then, there’s been much parsing of employment data – and way too much credence given to anecdotal reports – by ACA lovers and haters alike. Much of this has been focused on ACA provisions that ostensibly incentivize employers to shift full time workers to part time (<29 hours per week on average).

There’s been much distortion of the CBO’s report as well, most from ACA haters (here, here, and here are just a few examples; a thorough discussion of the issue is here).

In reality, it is still too early to tell what, if any, impact on employment ACA has had.  That said, the most credible information available indicates at most a few hundred thousand workers have seen their hours reduced by employers seeking to avoid insuring those workers.

(I would note that these decisions are not eliminating the cost of health care for their workers and dependents, rather they are shifting the cost to the taxpayer and local health care delivery system (most notably hospital ERs and Community Health Centers))

Moreover, it is and will be very, very difficult to separate out the impact of ACA from that of other economic factors affecting employment such as trade patterns and policies, consumer sentiment, the strength of the dollar v other currencies, global energy markets and the like.

Here’s what we know now.

To date, there’s been little to no change in part-time employment as a result of the ACA. This from a study reported in Health Affairs earlier this year:

[there is] no evidence consistent with the thesis that the ACA caused an overall increase in part-time employment in the United States. Our evidence came from data through 2015, the first year of the employer mandate and the second year of expanded access to coverage through Medicaid expansion and the Marketplaces. As a result, both employers and employees may have still been adjusting to provisions of the ACA.

Another study came to pretty much the same conclusion.  While both used slightly different methodologies, neither of which was specifically designed to compare real-world results to the CBO’s predictions, both indicated we haven’t seen hours worked or number of jobs negatively impacted by ACA.

But, that does NOT contradict the CBO.

First, here’s what the CBO said…

CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent [and reduce total compensation by about 1 percent] during the period from 2017 to 2024, [emphasis added] almost entirely because workers will choose to supply less labor.

They went on to note that much of this will be voluntary: spouses will reduce their hours because they will gain coverage under their spouse’s plan; some lower-income folks will reduce their hours so they don’t lose out on a subsidy; some will retire early as they won’t lose health insurance coverage previously tied to an employer.

The net…

Because the longer-term reduction in work is expected to come almost entirely from a decline in the amount of labor that workers choose to supply in response to the changes in their incentives, we do not think it is accurate to say that the reduction stems from people “losing” their jobs. [emphasis added]

CBO also opined that the ACA “also will affect employers’ demand for workers, … both by increasing labor costs through the employer penalty (which will reduce labor demand) and by boosting overall demand for goods and services (which will increase labor demand).”

What does this mean for you?

I bring this to your attention, dear reader, in hopes that it helps provide you with a framework to use when evaluating claims that ACA a) is killing jobs or b) has no effect.

 

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.

 

 

Opioids, spines, and dead people

Friend and colleague David Deitz, MD, PhD, was kind enough to provide his perspective on two seemingly-unconnected items in the current issue of the New England Journal of Medicine that are highly relevant for medical providers treating occupational injuries.  Here’s his view:

Deitz – The first is an editorial by Drs. Thomas Frieden and Debra Houry from the Centers for Disease Control (CDC) reviewing the new CDC opioid prescribing guideline. It’s a concise review of what led the CDC to develop the guideline, as well as a clear statement of what CDC hopes to achieve. The money quote is this one: “We know of no other medication routinely used for a non-fatal condition that kills patients so frequently.”

Included in the same issue is one of a regular series of Images in Clinical Medicine – this one entitled Resolution of Lumbar Disc Herniation without Surgery. You don’t need a medical education of any kind to interpret this one – the pair of MRI images beautifully demonstrates a large disc herniation which resolves over a 5-month period. Nothing surprising to students of low back pain, there is abundant literature demonstrating that the best care for the majority of patients with lumbar disc herniation is conservative – maintaining physical activity as much as possible while waiting for the natural resolution demonstrated again in this case.

While I don’t think the Journal editors intended the irony, it’s sobering to think about how many opioids have been prescribed to injured workers over the last 20 years for this condition, and its (often unnecessary) surgical consequences. One of the most common conditions in WC, and a routinely-prescribed medication with potentially fatal consequences. Hopefully, we’re starting to do better.

Paduda – In a related piece, Michael Van Korff ScD andGary Franklin MD MPH summarize the iatrogenic disaster driven by opioid over-prescribing.  Over the last fifteen years, almost 200,000 prescription opioid overdose deaths have occurred in the US, with most deaths from medically-prescribed opioids.

Doctors prescribed opioids that killed well over a hundred thousand people.

Here’s one

avery

Today, about 10 million Americans are using doctor-prescribed opioids; somewhere between 10% – 40% may have prescription opioid use disorder – they may well be addicted.

Van Korff and Franklin note that 60% of overdose fatalities were prescribed dosages greater than a 50 mg morphine equivalent.

This despite evidence suggesting “neither high opioid dose nor dose escalation improves patient outcomes.”

The authors suggest three immediate steps we can take:

  1. Avoid ill-advised and unplanned initiation of COT (chronic opioid therapy). Don’t prescribe more than 10 pills initially, check the Prescription Drug Monitoring Program database, educate the patient.
  2. Regulators and legislators need to change policies and regulations to reflect what we KNOW about COT and its inherent dangers.
  3. Considerably enhance population surveillance of opioid prescribing and safety.  The FDA should expand its postmarketing surveillance program for long-acting opioids to patients using short-acting versions.

What should you do about this?

  1. Do NOT allow opioids for “herniated” disks.  (I know, easier said than done…)
  2. Require a pre-auth for ALL acting opioid scripts, and all increases in dosage above 50 mg MED.
  3. Wherever and whenever possible, ensure prescribing docs check PDMPs, educate patients, limit initial scripts, complete an opioid agreement.
  4. Educate patients – for those already on excessive dosages, have your nurses contact the patient to educate them on the potentially fatal risk inherent in long-term use of opioids.

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.

ACA’s 20 million increase in insureds – implications for workers’ comp

That’s a bit of a misstatement; ACA alone is not responsible for increasing the number of insureds by some 20 million, but there’s no question it was the primary causal factor.

Be that as it may, let’s examine who the newly-covered are, what they do, and where they reside.  The insured population’s demographics may be of interest to workers’ comp payers.

As noted yesterday, the newly-insured population is poorer, more likely to be recent immigrants, and much more likely to be Hispanic than the rest of the country. For work comp, what may be of more interest is the jobs they hold and where they live.

First, the percentage of part-time workers insured rose by 5.8 points, while the full-time population’s coverage went up 2.8 points. Those concerned with so-called Monday-morning injuries, may see this as a plus for work comp as more working people have insurance to pay for non-occ injuries.

Next, what do these workers do?

Pretty much everything; of particular interest to the work comp community, several high-severity &/or high-frequency industries saw significant jumps in the percentage of workers with health insurance. (details below)

  • agriculture +5.4%
  • construction +4.7%
  • transportation/warehousing +4.0%
  • manufacturing +3.3%
  • natural resources + 3.9%

Why is this important?  A few reasons.

Insured people are healthier than the uninsured, so they will heal faster if they do get injured on the job.

Work comp payers won’t have to foot the bill for medical conditions non-occ-related for insured workers.  This isn’t the case for claimants who do not have health insurance; actually work comp payers technically don’t need to pay for non-occ conditions, but end up paying for those conditions if by so doing the claimant gets better faster.

Monday-morning injury frequency may be reduced (if it is a real problem and not just commonly-accepted wisdom).

(chart below from NYT article)

Screen Shot 2016-04-19 at 12.33.44 PM

I bring this to your attention, dear reader, because clients, friends, and all manner of industry folk are keenly interested in the “impact of ACA on work comp.”  Fact is, we don’t know what it will be, but we can prepare if we look closely at what’s happening and make some educated, experience-based guesses.

What does this mean for you (work comp payers)?

A long term and incremental plus…perhaps.

ACA – who’s covered now and why it matters

20 million more Americans are covered today than were pre-ACA.  ACA’s insureds are poorer, more likely to be recent immigrants, and much more likely to be Hispanic than the rest of the country.

And for many, their new coverage is the first time they’ve had the “luxury” of insurance. They aren’t scared when a new pain or malady erupts, moms not terrified when a child wakes up with a fever, dads not losing sleep wondering how to pay the doctor’s bill or buy the insulin.

The disparity in coverage between and among ethnic groups, while still present, is narrowing – although black Americans would be doing much better if many didn’t live in states that have refused to expand Medicaid.

Make no mistake, this is very, very big news.

Beyond the much better life for the newly-insureds, the economic and long-term economic impacts are strongly positive.

Identifying and helping at-risk members is the top priority for health plans, community health centers (serving a large portion of the Medicaid community) and ACOs.  The more these providers are able to reduce the severity of chronic medical conditions, the lower their costs will be.  And the healthier, and more productive, their members will be.  And the more they will produce, and the more taxes they will pay.

ACA’s success will be measured over the long term.  Reducing unpaid ER visits reduces hospitals’ costs.  Preventing amputations and blindness among diabetes patients, cuts treatment costs and increases productivity. Keeping Americans healthier decreases first-year costs for Medicare recipients.

Despite the good news, there are two ongoing, knotty, closely-related and so-far unsolved issues. First, premiums in some areas are still too high to be “affordable”. Notably, that’s particularly true in non-Medicaid expansion states, but they’ll come along eventually (although far too late for many of their poorer residents, who will suffer needlessly while pols demagogue).

Second, many plans come with high deductibles, making routine care still problematic for poorer members.

Both will be addressed by health plans fighting for members – their survival, growth, and profitability demands it.

It won’t be tomorrow, and it won’t be pretty; remember we are fixing a broken industry that accounts for almost a fifth of our GDP. Networks will narrow, vertically-integrated delivery systems will get way more efficient, new models will emerge, and the health care system of 2021 will look a lot different than the one we have today.

Tomorrow, a deeper dive into who’s covered now and an examination of the potential impact on workers’ comp.

 

The impact of provider consolidation

Hospitals, health care systems, large multi-specialty groups – all are getting bigger by buying each other, merging, or snapping up smaller hospitals and physician practices. Providers smart/fortunate enough to be inside these mega-systems enjoy pricing power, strong brand recognition, and the negotiating leverage that goes with that.

Deal sizes are getting exponentially larger; a study by Deloitte indicates the average deal was $42 million in 2007.  Six years later, the average transaction was more than 4 times larger. Two were over $4 billion, and that was way back in 2013.

Last year, 940 transactions closed at a total value of $175 billion.  And it’s not just the mega-mergers that are influencing care delivery and pricing.  Small, “under-the-radar” deals are proliferating as those on the outside increasingly scramble for the crumbs.  Providers unable to join the big plans are pursuing out-of-network services, servicing smaller insurers, and trying to figure out how to remain viable.

Chicago is one such market; already quite consolidated, two of the largest systems, with over 6000 medical providers between them, are fighting to merge despite the Feds’ efforts to keep them apart. These mergers are increasingly coming under scrutiny from both federal and state regulators, as evidence suggests costs in “consolidated” regions are higher than in non-consolidated areas.

Meanwhile, DuPage Medical Group hasn’t been sitting by, closing 16 transactions that doubled it in size to 500 doctors. According to the NYTimes, “many of its acquisitions barely register — eight specialists last month, two small physician groups in February, a handful of doctors joining at a time. But it has been enough that DuPage now has ambitions of going national. Late last year, it teamed up with a private investment firm to provide it with $250 million for its goal.”

This is common everywhere; from Boise to St Louis to Boston to North Carolina providers are joining together, shifting the map or providers from one of thousands of tiny dots of ink to ever-growing Rorschach blotches.

What does this all mean for work comp?

Work comp is a tiny but very profitable line of business – so networks have limited bargaining power.

Prices are considerably higher in highly-consolidated regions; payers that don’t have contracts with the mega-systems must rely on non-contractual ways to address prices and utilization. This is particularly true in the South.

Where your patients get their care matters; a visit to a hospital-based provider costs about twice what the same visit to a privately-employed physician. Employer direction, soft-channelling, and variations thereof are key.

Tracking prices is key; make sure your internal analysts and external vendors are on top of the latest information on service prices.

Most importantly, factor outcomes into your evaluations.  Often the lower cost provider also delivers better outcomes; less use of opioids, better surgical results, faster return to functionality.

This last is key; price is easy to track and report. Outcomes are not.  Yes it’s hard; and yes it’s vital.