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Jan
2

What’s up for 2011 – predictions for work comp in the Next Year

This always seems like a good idea in January, looks like a not-well-thought-thru idea in July, and by December morphs into a well-it-coulda-been-worse idea.
But I’ve got a short memory, so here goes – in no particular order, predictions for the comp world in 2011.
1. Business will pick up – a lot. Hiring numbers are up, there’s considerable growth in high-frequency areas like logistics, construction, and health care, and frequency itself is trending higher. What’s been a looooong, cold winter in the work comp world is getting much brighter.
2. We’ll see several new comp writers enter the market – as things pick up, the capital that has been parked, waiting for a better, more promising opportunity, will start coming into comp, providing increased underwriting capacity in selected markets. I don’t see this as a flood, but more as selective entrance into specific markets.
3. Sedgwick will continue to snap up TPA operations, supply-chain pieces, and managed care vendors as it expands its leadership position. And there will be plenty from which to select, as a few TPAs are just barely holding on.
4. The exploding growth of opioid usage in narcotics in comp will become even more prominent, with several states seeking ways to attack the issue via regulation – or even legislation. NCCI and CWCI have done excellent work identifying the problem, now it’s time for regulators to give payers the tools they need to really impact overuse of opioids.
5. Obesity’s impact on work comp costs will gain more attention, as additional research will show significantly higher costs, longer disability durations, and lower RTW rates for the obese and morbidly obese. Employers will get tougher on new hires and existing employees alike, requiring both to meet and maintain body mass standards to get – and stay – hired.
6. Congress will not solve the Medicare physician reimbursement conundrum, choosing instead to kick the ever-growing deficit into 2012. As all comp provider fee schedules save one (California, for now) are based on Medicare’s RBRVS, there will be no change forced on states due to political possibilities in Washington.
7. Hospital and facility costs, both inpatient and out, are going to get a lot more attention in payers’ C suites. Look for a lot more action on the part of big payers and self-insured employers as they seek to hold the line on cost increases driven by declining discounts and exploding utilization; action that will take the form of network shopping, intensive specialty bill review, and, for the smarter and more data-driven payers, more assertive direction to lower cost facilities.
8. We’ll see more litigation around ‘silent PPOs’ in more states. As providers learn more about the layering/stacking/combining of multiple PPOs, more will decide to litigate, driven in part by the success of other efforts in states such as Illinois and Louisiana. This will be driven – in large part – by the legislative/judicial environment in specific jurisdictions, and in equal measure by outraged providers angry that they are giving discounts to patients who just happened to stumble into their practices.
I’ve saved the two biggest for last.
9. Social media is going to make its presence felt broadly and deeply in comp, in ways obvious and not, good and bad – The time-to-implementation for new and better ways of doing things, quick vetting of new ideas, and dissemination of best practices and alerts about new dangers/problems in the work comp world are all accelerating/improving as more and more of us use the myriad social networking tools. From the start of ‘social media’ in comp – which was probably marked by the publication of Workers Comp Insider more than seven years ago (!!) , through the explosive growth of Mark Walls’ Work Comp Analysis Group on LinkedIn, to Facebook, Twitter, photosharing sites and user groups, there are now dozens of ways to share, send, find, and uncover information that – back a mere eight years ago – was either never going to be found, or would have taken days if not weeks of digging, or was outright impossible to get without convening a few thousand WC pros in a room and asking them to respond to a question.
This is a powerful force for efficiency, a terrific tool for claims and underwriting and medical management and planning. It is also one fraught with danger – the danger of believing everything you read on the Internet just because it agrees with your mindset; the risk of taking action based on unsubstantiated rumors, the potential for privacy violation, and perhaps most common, the risk of embarrassment that comes from passing on ‘information’ to others before vetting it yourself (especially MCM’s annual April Fool’s posts…)
10. The impact of health reform on workers comp will happen in ways mostly subtle. The industry was served notice late last year of just how much reform is going to affect comp when Humana announced it was buying Concentra, the largest provider of primary occ injury care in the nation – for reasons completely unrelated to work comp. We can expect to see:
– consolidation in the health plan industry as size becomes even more important
– more vigorous enforcement of anti-trust regulations that may well block some of these deals
– providers getting increasingly hard-nosed in negotiations with comp networks
– changes to fee schedules as RBRVS changes flow thru the system
– changes in provider practice patterns and utilization as physicians adapt to reform initiatives
And, equally likely, not see other effects early on because they are very subtle and we aren’t even able to track them until they become blindingly obvious.
There you have it. What to watch for, where I think things are heading and what the impact will be. As sure as I am that I’m correct on a few/some of these, I’m just as sure there are some big ones I missed completely, and others I predicted that won’t happen at all.
But January always brings out the optimist in me!
Here’s to your New Year – may your positive predictions come true, and your negative ones not.


2 thoughts on “What’s up for 2011 – predictions for work comp in the Next Year”

  1. Great list. Full of insight and fun to consider ramifications.
    I would quibble with two items on the list:
    #6 Slightly under half of the states do not use fee schedules tied to Medicare. Many of those that use RBRVS in fee schedules do not tie the annual increase to Medicare income conversion factor or any other Medicare increase.
    # Monopsonizing of medical delivery in many cities is a very big issue. I disagree that the US DOJ is doing much to blunt the trend toward consolidation of hospitals, clinics, laboratories, etc. Suppliers will have much more bargaining power.

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Joe Paduda is the principal of Health Strategy Associates

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