Insight, analysis & opinion from Joe Paduda

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How’d those 2010 predictions turn out?

So, how’d my predictions for 2010 turn out?
Well, I won’t e jumping for joy – or out any windows either.
Here’s what I predicted back in January for 2010, and a (mostly) objective assessment of the accuracy thereof.
1. Acquisitions will accelerate.
IntraCorp, SRS, Sedgwick, Bunch, York Claims, CS Stars, and Concentra were among the WC entities bought or ‘recapitalized’ in 2010 – a significant increase in both the number and size of deals over 2009.
Have to score this one as ‘correct’
2. Coventry (the big Coventry, not the WC entity) will be acquired.
OK, I predicted this last year (and the year before) and was wrong (or more generously premature) – again.
This one – wrong.
3. The basis for WC Drug fee schedules will start to move away from AWP.
This was a ‘gimme’; AWP was supposed to disappear in early 2011, leaving regulators and legislators little choice but to move to another metric. The announcement of AWP’s demise was premature as Medispan announced its intention to keep publishing AWP for the foreseeable future.
Wrong again.
4. (Some/Many) WC physician fee schedules will change significantly
Some fee schedules did change when Medicare’s RBRVS was altered, but the failure of Congress to act on a more permanent fix meant the changes were not significant.
Have to score this as another wrong. This is getting painful.
5. The WC insurance market will harden, bringing more business to case management, UR, bill review, and network vendors.
Twelve months ago I said “As the economy recovers and the jobs picture brightens, hiring will pick up and so will the raw number of injuries as well as frequency. That, along with rising medical expense, is the ‘cost-side’ driver. The ‘supply side’ of insurance is somewhat cloudier, as there still appears to be excess capacity…”
There’s some evidence the comp market is hardening (as opposed to softening) but is by no means ‘hard’. There is certainly evidence that hiring has picked up and anecdotal reports that so have first reports and claimants seen at occ med centers. But – bill volume remains down and – likely due to internalization of CM and UR at many payers, external CM and UR volumes are not increasing.
Looks like a push.
6. The rise of the Medical Director
Last year I said “I’d expect to see the ‘market’ for assertive, data-driven Medical Directors heat up considerably in 2010.”
Definitely a ‘correct” (and about time!). Broadspire’s Jake Lazarovic has played a major role in the company’s new network strategy as well as their DME ‘formulary’. David Deitz at Liberty continues to be one of the most influential medical leaders in comp. And at least three other payers have hired or are looking for MDs that fit the definition.
This isn’t to say there is a market-wide trend, but rather a growing recognition of the need for smart, data-driven clinical leadership in comp.
7. Drug costs will return to the fore.
A yes. Drug costs are once again rising at near double rates, execs are concerned, and the focus on opioids is both very welcome and long overdue.
8. Florida’s attempt to redo facility fee schedules will continue to plod along
Yes – without much progress. The three member panel just published their latest thoughts on facility fee schedules, and payers still seem unconcerned.
9. TPAs will continue to try to make up lost margin by internalizing managed care services.
A definite yes. Led by Sedgwick, most TPAs have pushed hard to grow their internal bill review, case management, and UR functions, taking business away from their vendors while increasing the TPA’s top – and bottom – lines.
Here’s the final score:
Correct – 5
Wrong – 3
Push – 1

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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