Insight, analysis & opinion from Joe Paduda


Prepping for the National Comp Conference

Looking forward to next week’s National Comp Conference, sort of old home week for the WC industry.

A few sessions caught my eye…

Ceil Jung and Sylvia Sacalis will be discussing infectious diseases in the workplace Wednesday at 11 am local time.

Erica Fichter, Teresa Williams, and Dawn Soleta will dive into protecting employee mental health and well-being. This is one of those sessions we all wish we’d had before things got so…weird.  2:30 Wednesday is the time slot,

which unfortunately is the same time John Hanna, former Pharmacy Director at Ohio’s Bureau of Workers’ Compensation and I will be digging into the details of PBM program leakage. Join us Wednesday at 2:30.

Legendary pharmacy expert Phil Walls RPh and the very knowledgeable Adam Seidner MD are going to unpack issues related to the use of antidepressants Thursday at 10:45. Kudos to the duo for encouraging non-medication approaches to helping workers recover their mental health.

A note of appreciation to the conference planners – this year there is a lot of focus on mental health and related matters, a topic that has long been neglected.

One session that grabbed my attention is focusing on the cost and impact of mental health issues for both disability and workers’ comp. Michael Lacroix, the Hartford’s Medical Director and Pamela Bloom-Pugliese are the speakers – alas this is also scheduled for 10:45 on Thursday…

Cliff Belliveau is brilliant – his Thursday afternoon session will offer a brief guide to interpreting data to help you understand the importance of clinical interventions, drivers and solutions to specific pharmacy issues.

Make sure to stick around for Stuart Colburn and Mark Pew’s session focusing on defusing distrust Thursday at 4:45. With trust comes rapid progress…Stuart is also leading a 60 tips in 60 minutes session Friday am – also focused on mental health related issues.

Travel smart and safe, don’t shake hands, and let’s all learn a lot and care for each other.



Sticks, carrots, and vaccinations

Delta (my favorite airline) isn’t forcing employees to get vaccinated.  It is charging the unvaxxed more for health insurance.

Ochsner Health system in Louisiana is following suit, adding the same surcharge for spouses or partners that are not vaxxed in an effort to help cover the $9 million in costs the system spent on caring for workers infected with COVID – and pay for future expenses. The unvaxxed will have to pay $200 more per month and comply with strict testing requirements.

Financial giant JPMorgan will charge unvaxxed employees more for health insurance as of January 1 2022.

Those who come down with COVID are also going to see higher out-of-pocket costs as more insurers pull back on the first-dollar coverage they were providing for COVID care. Average out-of-pocket costs around $3,800 are expected for unvaxxed patients hospitalized for COVID treatment.

While a lawsuit has been filed by some Ochsner employees seeking to overturn the surcharge, legal experts dismiss any chance of success. CMS has told self-insured employers they cannot refuse to provide coverage for unvaxxed patients’ COVID care, but they can charge those members more. This is consistent with regulations regarding tobacco use, which can result in insurance surcharges.

Meanwhile, many of Delta’s competitors are mandating vaccines, perhaps in part because unvaxxed workers mostly comply with mandates. And all the data to date indicates the vast majority of workers are getting the shot rather than the heave-ho.

One expert noted the surcharges are a powerful emotional tool, stating:

“There is this idea of loss aversion, that losses are weighed more heavily than gains, so a $200 incentive will not have as much influence as a $200 fine.”

What does this mean for you?

Unfortunately, sticks seem to be more effective than carrots, at least for the most committed of the vaccine holdouts.


COVID, care rationing, and consequences thereof

Hospitals in Idaho, Alaska, Alabama, Montana and other states are rationing care – a painful decision necessitated by unvaccinated patients suffering from severe COVID infections overwhelming available facilities.

In Idaho, the State Department of Health and Welfare now “allows hospitals to allot scarce resources like intensive care unit rooms to patients most likely to survive and make other dramatic changes to the way they treat patients.

  • In Kootenai Health’s ICU, one critical care nurse might be supervising up to six patients with the help of two other non-critical care nurses. The usual ratio is one ICU nurse for one ICU patient.
  • “nearly 92% of all of the COVID-19 patients in St. Luke’s hospitals were unvaccinated. Sixty-one of the hospital’s 78 ICU patients had COVID-19.”

A Montana hospital “was also forced to implement crisis standards of care amid a surge in COVID-19 patients” when all critical care beds were already occupied.

In Houston Texas, a military veteran died when no hospitals near him had space or staff to treat a sudden case of gallstone pancreatitis.

A 73 year old Alabama man died of a cardiac condition when the hospital in his hometown of Cullman, Ala., contacted 43 others in three states — and all were unable to give him the care he needed. Three weeks ago there were 60 more ICU patients than beds in ICUs.

There are many. many more examples.

This. Should. Never. Have. Happened.

And wouldn’t have if not for COVID deniers, anti-vaxxers, and the media channels that gave them a megaphone to spread their nonsense.

Getting anti-vaxxers to change their views is incredibly difficult; the media is replete with stories of COVID patients telling their doctors they don’t believe they have the virus (look them up).

Medical providers’s option is stark indeed – treat the patients with a self-inflicted disease, or send them home…and treat the heart attack, car crash, pancreatitis, stroke, burn, asthma attack and other patients.

It has come to this.

What does this mean for you?

With personal choice comes personal responsibility. 


Friday catch up

Let’s spend a minute on all things workers’ comp – and one COVID note.

First up, the fine folk at WCRI – in particular the eminent Bogdan Savych PhD – are putting on a free webinar on the

Effects of Opioid-Related Policies on Work-Related Injuries

– register here. This is particularly helpful for me; I’m helping out on a Federal research project comparing outcomes, impacts, and patient experiences from opioid programs and regulations in Washington and Ohio. Thanks to all taxpayers for helping fund this project – this is some really interesting work that I am quite sure will increase our understanding of opioid management.

NCCI just released their annual analysis of work comp industry reserves… And boy oh boy are there are a LOT of extra reserves sitting in payers’ coffers.

Key takeaway – NCCI-projected industry loss and LAE ratios continue to be below those reported by carriers.

Said another way, carriers are NOT releasing these excess reserves in the form of dividends or credits or whatever. My take – carriers are salting away dollars to protect their future profits from the inevitable – but much delayed – market turn.

While one may think this is a one-time difference between carriers and NCCI, the data clearly shows otherwise.  Over the last decade insurers have consistently over-estimated claims and admin costs  – especially from 2014 to 2017. (graph courtesy NCCI)

So here’s my take – carriers are over-reserving because their actuaries haven’t yet figured out the rapid decrease in opioid utilization is having a major impact on claim duration, indemnity expense and medical costs. Carriers were well behind the curve when opioid use exploded in the middle of the last decade, and they are repeating that error now on the downside.

As a long-time – as in 27 years – consultant, I’m always on the lookout for advice for clients about working with consultants. Great piece in Harvard Business Review on that topic…key takeaways are consistent with my experience:

  • first and most important, spend the time to define the problem(s) you are looking to solve for. That will save untold weeks – and thousands of dollars billed
  • all parties should be humble and very open-minded – including the consultant
  • don’t assume you know the solution; going to RFP should be an option, but not the first one to address a market need, performance issue or vendor problem

File this away and pull it out next time you look to engage a consultant – me or anyone else!

One COVID fact check…I’ve heard from a couple folks that migrants on the southern border are a major source of COVID infections – partially because they aren’t being tested. Well, all are being tested, and the test positivity rate is actually much lower than among residents of border counties.

(note that a recent report indicating 18-20% of migrants leaving Border Patrol custody tested positive specifically includes ONLY those migrants targeted for “expedited removal” and thus is not a complete sample of all migrants)

While those two data points don’t completely address the assertion that migrants are the cause of infections (and there’s no way to prove or disprove that assertion) – it is clear that COVID infections in those border counties would be a lot lower if more residents wore masks and were vaccinated.

What does this mean for you?

Always check your sources, be humble, and do your research.


Yesterday’s post

Did exactly what it was intended to do – engaged with a lot of people, bluntly stating what many are thinking.

Some of the willingly unvaccinated are very good friends, people I admire, respect, and care about. It grieves me to no end that we are so far apart on this issue, and that it has come to this.

The title and some of the language offended a few (out of 2567 subscribers, 21 unsubscribed). While I absolutely do not apologize for my language I do understand why you may have been offended. Long time readers know that I almost never curse on MCM (although I am more profane in person); I think I’ve used profanity fewer than 5 times in over 3500 posts.

On the other side, 8 new subscribers signed up and comments and private emails were overwhelmingly supportive.

What is apparent is this.  Anger with the willfully unvaccinated is growing, and for very good reason. Unless you are a Native or Black American or have a legitimate medical issue, you have no valid reason to put your family and friends and the rest of us at risk because you don’t want to get the vaccine.

(Native and Black Americans should absolutely get vaccinated; however knowing how we killed millions of Native Americans and infected Blacks in the name of science one can certainly understand vaccine fears, fears we must overcome.)

You have already been vaccinated to protect you from polio, mumps, measles, rubella, and many other childhood ailments. Many of us have vaccinations protecting us from the flu, tetanus, rabies, shingles and myriad other diseases.

You didn’t rebel, protest, or demonstrate when your kids had to get those vaccinations to attend school.

You didn’t scream and shout when you asked for a shingles vaccine to protect you from this painful and debilitating infection.

No one was outraged when we effectively ended small pox and polio infections through mass vaccinations.

So ask yourself – why are you so angry about COVID vaccines?  And be honest. Do not spout meaningless nonsense you read somewhere on Facebook about VAERS or breakthrough infection issues or other blather. We are done refuting arguments that don’t stand up to the most cursory examination.

And I will publicly call out commenters who spout such idiocy.

The reason is tribalism. You and your friends and family have been duped into making COVID a divisive issue, to separate us and push us apart. After 20 months of attempting to educate, inform, discuss and debate, the majority of Americans are fed up with your intransigence, your willful ignorance, your refusal to accept the science.

I have tried and tried and tried again, writing over 120 posts about COVID only to be met with the same tissue-thin arguments based on nothing but a Facebook post.

So, we are done with you.

If you refuse to get vaccinated, then you get to own the consequences of your decision. You tout personal responsibility, you teach your kids to be responsible, you demand it of your elected officials, then fine – you get to:

  • lose your job,
  • pay for all your COVID-related medical care, and
  • be sued for the care of others you infect.

What does this mean for you?

Your decisions have consequences. Own them.


Get a goddamn vaccination and wear a goddamn mask.

Warning – I am really pissed off.

We are very close to several clinicians that work in medical facilities. They are overwhelmed with COVID patients – almost all of whom are unvaccinated. It is devastating to talk with these medical professionals, to hear their pain and immense frustration and anger and fear.

There are no more beds in the Pediatric ICU, no more ecmo machines available for anyone – covid patients or not. Many procedures are being postponed indefinitely because unvaccinated COVID patients are occupying all the beds, Unvaccinated COVID patients are sucking up all the care, all the energy, all the will and desire and expertise and passion and patience and resilience.

All because many Americans allow themselves to be duped into believing somehow COVID isn’t a problem, that kids won’t be affected, that vaccinations are dangerous, that bullshit from right wing pundits is more believable than facts from scientists or pleas from physicians.

And this is just one hospital, albeit a very big one that serves a very large area. Hospital beds in eastern Washington are full to beyond capacity because idiots in Idaho aren’t vaccinated. Hospitals in Florida, Mississippi, Missouri, and many other states are also overwhelmed, all because total assholes who know better are lying to people.

Hospitals in several states are doing battle triage – meaning if you are in a horrendous car accident, have a stroke or an embolism or fall off a ladder, if your baby falls in a pool or your mother falls down the stairs you/them are gonna die because the facilities and doctors you need are too busy caring for fucking idiots who refused to get vaccinated and are now dying of COVID.

This isn’t a short term problem.

Nurses doctors and other staff are running away from patient care because they cannot stomach treating yet another idiot for a dangerous disease because they were too lazy, too willfully ignorant, too willing to listen to some asshole on Facebook and not believe science, facts, nurses, doctors.

This is deeply personal for many. If your baby has a respiratory problem, good luck finding a facility with room and time and facilities needed to care for your baby – they are full with kids who got infected because assholes refused to get vaccinated.  Same thing with ICUs and CCUs, cath labs and operating rooms.

Republicans in many states are trying to pass laws allowing people to not get vaccinated, to not wear masks, in the name of “freedom.” I am done being politically correct when describing these pandering assholes.

They are the real baby-killers.

Through their willful ignorance, their calculating refusal to serve the people that elected them because they want more votes, their shameless pandering, more babies will die. more kids will be infected, more grandparents will be lost, more hospitals will close, more doctors and nurses will abandon their work.

The rightwing conspiracy-fomenting media decries the lack of “science” behind vaccinations, while touting a goddamn horse pill. These assholes recommend breathing in bleach – an incredibly stupid and dangerous idea with NO basis in science.

Personal freedom my ass.

We conquered polio, measles, chicken pox, small pox, mumps, diphtheria and countless other diseases by vaccinating people. You have had many vaccinations, and you are doing just fine.

If you don’t want a vaccine, fine.

You don’t get healthcare when you get COVID.

So goddamn confident in your beliefs and so committed to your “personal choice”? Fine.

You won’t need healthcare, and neither will your kids, mom, or grandparents, so the rest of us can get our heart bypasses, kidney transplants, cancer treatment, hip replacements, and emergency surgery.

Don’t be a goddamn hypocrite. Either get vaccinated and wear a mask, or stay the hell away from the rest of us, take your ivermectin, breathe in bleach, and bury your relatives by yourself.

Oh, and tell the mom with the sick baby who can’t find a Pediatric ICU bed that your personal freedom to be a complete idiot is more important than her baby’s life.

And I don’t want to hear any bullshit from COVID deniers and vaccine opponents. I am done trying to be polite, to explain, to use reason and facts and logic.






Consolidation in work comp services – comments on Conduent

As we march thru the list of big bigger and likely gonna-be-biggest WC services entities, we are now at the single service providers.

This won’t take much time.  Conduent is the leader in market share in workers’ comp bill review applications followed by Mitchell and Medata; the company claims 50% market share which sounds about right although the claimed “savings” of $16 billion is just nonsense (as it likely reflects reductions below billed charges, which we all know are not “savings”).

Back in the day there were lots more bill review applications and providers; PowerTrak, CompIQ, Smartadviser, Corporate Systems and CS Stars, (can’t remember their applications’ names). Strataware is Conduent’s application;  Stratacare – owners of Strataware – was acquired 7 years ago when Xerox bought ISG Holdings (ISG had previously acquired Stratacare)

Back in late 2018 we did a survey of bill review in workers’ compensation; (Conduent’s predecessor came out pretty well, Conduent not so much). I also conducted BR Surveys in 2009 and 2012).

There have been rumors aplenty about Conduent potentially selling its BR application. The company has suffered through staff departures, ditched the CompIQ platform, and gone thru too many senior staff of late. While still the largest player in the workers’ comp bill review application space, it is apparent Conduent has yet to figure out how to right the ship and set it on a steady and improving course. 

The problems extend beyond work comp bill review.

Overall, Conduent’s revenue declined rather precipitously from $5.4 billion in 2018 to $4.2 billion in 2020; work comp bill review is included in the “commercial healthcare solutions” category, which saw a smaller drop from $445 million to $431 million over that period (see p 73).

The CEO’s discussion of Conduent’s pretty poor results is a classic example of corporate speak…

Going forward, we will assess our diverse portfolio and apply a differentiated investment strategy to optimize, enhance and expand our solutions as necessary based on the needs of our clients. We are focused on positioning Conduent for long-term success and driving value for clients and shareholders.

Net is I don’t see Conduent adding to its workers’ comp portfolio; if anything Stratacare may be sold if/when Conduent’s Board decides it has had enough of poor results and restructures the company/changes leadership.

What does this mean for you?

Strataware’s future will be driven by larger issues – and hopefully resolution of those issues – at Conduent. 

If/when Stratacare is sold off, expect the other big players in workers’ comp services to be the likely buyers.



Consolidation in work comp services – Opining on Optum’s future

Last week we pondered Paradigm’s future, before that we mused about Mitchell’s. Today we opine about Optum.

First, a little history. Back in the Pleistocene, I worked for what was then UHC.  United Healthcare was considered the best managed care company in the country, had a massive $6 billion in revenues and was expanding everywhere.  After spending about 9 months carrying a UHC card, I departed, a lot less starry-eyed.

UHC has been in and out of workers’ comp about as often as Brad Pitt enters and exits relationships…

For those interested in digging deep into UHC’s workers’ comp history, at various times, the company owned:

  • a technology business focused on bill review (Power-Trak…later sold to Mitchell);
  • MetraComp, A WC PPO and managed care firm (and a former employer) and
  • Focus (this last of some interest to one reader in particular :)…also,
  • here is a brief note on UHC’s ill-fated entry into workers’ comp insurance back in the nineties. (spoiler alert – that damn tail will always get you.)
  • much more recently UHC’s Optum got into the work comp PBM business in a very big way, buying Catamaran.

Writing about UHC’s foray into WC 6 years ago I opined that while really small potatoes compared to group health/MM, WC is attractive for a number of reasons:

In contrast (to UHC’s group health, Medicare and Medicaid (MM) business, work comp regulatory risk, while significant, is limited to what individual states do.  If one state makes a change, it has zero impact on the others, thereby minimizing regulatory risk.

There are a number of other nice things about UHCs work comp business:

          • it’s a fee business, without insurance risk
          • margins are pretty healthy; a lot higher than group/governmental programs
          • it has scale; when all the dollars are combined it’s a substantial player
          • minimal investment is required as the businesses are mature and operating pretty successfully with experienced management and solid brands

Of late, UHC has stepped up its hiring in an effort to build a viable PPO competitor to Coventry.  They’ve got some smart people (and other payers have lost same) – but the challenge will be getting Optum/UHC’s other provider negotiations people to leverage their relationships and nail down great WC contracts with deep discounts.

That’s gonna be a very tough row to hoe…

Optum WC CEO David Young – we’ve crossed swords a time or two, but he does know the PPO business inside out and sideways, and is making the right moves – but WC is perhaps $1.2 billion in revenue.

that’s a LOT…right???

Well, no.

Parent company UnitedHealthGroup [I can never remember which letters are capitalized] will rake in $286 BILLION in total revenues this year.

So, workers’ comp is…what…one-half of one percent of UHG’s total revenue…

What does this mean?

UHG will keep workers comp – partially because the Board probably doesn’t even know it is in the WC business, and partially because it will continue to throw off cash.

The problem facing Young et al is UHG is a quarterly earnings-driven company – and workers’ comp is NOT a growth business. Young will have to invest in PPO, try to get support from people who don’t know how to spell – much less care about – WC – AND meet quarterly earnings growth targets.

That’s why he gets the big bucks.



The state of the industry – pharmacy management in workers’ comp.

29 payers responded to this year’s Survey, ranging from very large TPAs to small state funds, from small guarantee associations to large insured employers and insurers. As always, no individually-identifiable information is disclosed or contained in the Survey report.

Here’s the key takeaways from our 17th Annual Survey of Prescription Drug Management in Workers’ Comp.

  • Total work comp drug spend for 2020 was about $3 billion, or about 10% of total medical spend.
  • That’s down from $4.8 billion a decade ago.
  • Opioid spend decreased 19.3% from 2019 to 2020
  • Pharmacy management remains important despite these decreases, primarily due to respondents’ view that drugs have a disproportionate influence on claim outcomes and disability duration.

You can download your copy of this year’s Survey here – just click on “resources” at the top. Previous Surveys are also listed and all are free to download.

Note that the public version at the link is not as extensive or detailed as the respondent version. As respondents invest time, energy, and brain power helping with the Survey, they get the detailed version.



Consolidation in work comp services – speculating on Paradigm’s future

Last week we pondered Mitchell’s future; as (perhaps) the largest WC entity outside the TPA space Mitchell/Genex/Coventry has an enviable position – albeit one that is by no means dominant.

Today our attention turns to Paradigm, a company I’ve written about…a lot.

I wrote this four years ago...

I’ll admit to wavering between being impressed with Paradigm and thinking it won’t ever become a significant force in the industry. As noted previously, the company has been around for the better part of three decades, and throughout that time has seemed to be just a year or so away from really breaking out.

Today’s no different.

While a lot has happened since then, it hasn’t changed my mind.

Paradigm was acquired by Omers, a Canadian investment firm three years ago; since then it has:

  • bought up several case management companies,
  • acquired some assets from Best Doctors,
  • bought some network and specialty companies, but
  • by no means has it become a “big player in the musculoskeletal [MSK] space.”

Becoming a big player was the plan back in 2018 according to CEO John Watts (a good guy with an impressive background), and I thought it was a good one – focus on using analytics and care management expertise to drive business to the case management and specialty assets, relieving adjusters of the hassles of managing, coordinating, and monitoring medical care for potentially expensive conditions, improving outcomes and reducing total cost.

One of their better deals was Adva-Net, a “pain management network” that reportedly has been a pretty solid earnings driver. Sources indicate Foresight – which reputedly went for 40x earnings (!!!) – has not been as profitable.

Problem is, Paradigm has not become a “big player” in MSK; rather the company is still seen as a catastrophic claim management firm, albeit one with other service offerings. MedRisk (HSA client) and OneCall dominate physical medicine. Relatively few surgeries happen outside traditional PPO networks (looking at you, Coventry).

Paradigm’s landing page focuses on cat cases, touting the company’s internal results. I’d also note it describes itself as

“an accountable care management organization focused on improving the lives of people with complex and catastrophic injuries and diagnoses.”

That description makes me think Watts et al are attempting to move Paradigm into the group health/medicare/medicaid business. Recent hires in top positions have extensive experience in those sectors, and Watts himself has deep experience in health insurance.

Work comp is tiny – less than 1% of US medical spend – so moving into the broader payer world makes sense. Problem is, I can’t recall any work comp services company that has pulled that off. Many have talked about it, done the work, hired the execs, and…crickets.

Meanwhile, Paradigm is facing serious competition in its core catastrophic risk transfer business from Carisk (HSA consulting client).

Methinks there’s a few intertwined reasons the company has not become that “big player.”

  1. The core message – we can do claims better than you – is still kind of a problem.
  2. Few employers care about workers’ comp, so there’s no push from big influential buyers to buy smarter.
  3. Few buyers have any idea how to intelligently “buy” work comp services.
  4. Few buyers want that kind of “innovation” – even if they say they do, they’re just mouthing words they haven’t thought through.
  5. TPAs don’t make enough margin on Paradigm’s services – and as we all know, fee-splitting is pretty damn important.
  6. Paradigm hasn’t made a compelling case.

But the real reason is #1.

Employers. do. not. care.

I just don’t see Paradigm “breaking out” and becoming a major player in worker’s comp claims management – or MSK management. Is it going to acquire more stuff?  I don’t see it – prices are too high, and Paradigm’s M&A record is mixed at best.

Meanwhile, claim counts continue to drop, making future growth in case management dependent on taking share from Genex, Corvel, and smaller CM firms. (note there are aberrations from time to time and place to place)

My guess is owner Omers  – a very patient owner indeed (it is the private equity arm of the municipal employees’ pension plan in Ontario, Canada) will stay invested until they think they can sell it for twice what they paid…or perhaps be happy with the $125 million+ of cash flow Paradigm throws off every years.

On the positive side, Paradigm was smart enough to hire Kaye Lewis to handle customer implementations. Kaye is one of – if not THE – best client management pros in the business. Her departure was a big loss for CadenceRx, her arrival is a big plus for Paradigm.

What does this mean for you?

A solution in search of a problem only works when those with the “problem” KNOW they have a problem.

Oh, and branding is super important.

And workers’ comp is NOT a growth industry.


Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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