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What’s up with CorVel?

It’s been a while since we last looked in to see what’s going on at the managed care company/TPA.  Back in May, CEO Dan Starck left to go back to his previous employer, leaving a hole at the top.

Senior staff welcomed former CEO Gordon Clemons senior back, but Gordon junior was rumored to be in the running for the top slot.  Word is senior management wasn’t all that excited. More to come…

Financials for the most recent quarter are not great: revenues are essentially flat and earnings down 10 cents per share from 68 cents the prior quarter.

CorVel has been operating as a TPA and managed care firm for several years now.  While I don’t have access to any data on their TPA performance, there is data available on their managed care results.

Fortunately, the good folk at Texas Division of Workers’ Comp provide an evaluation of the networks operating in the Lone Star State; CorVel’s is included. The news is not so good.  CorVel’s network performance in Texas is, well, poor relative to the competition.  With average medical cost per claim almost 10 percent higher than the next most costly HCN, CorVel’s customers have the highest medical cost per claim of any HCN in the study. Other data points of note:

  • 37 percent of injured employees reported problems accessing care, second lowest among all HCNs in the study.
  • 12 percent of injured employees reported they had not returned to work, second worst in the study.

It is possible CorVel’s client base has greater risks and more severe injuries.  The 2011 report indicated CorVel had the highest rate of lost time claims of all networks – a whopping 42% of all claims were lost time

I was talking to an insurance company claims exec about CorVel; this was her/his take: “We have always been concerned about them from an ALAE [allocated loss adjustment expense] standpoint.  They only started the TPA business because the other TPAs were taking all their other bill review and case management business away.

Unfortunately, they are not alone when it comes to TPAs who put greater emphasis on ALAE billing than claims handling.  It’s a plague of the industry right now.”

As I’ve noted in the past, this is partially the responsibility of employers.  They’ve been able to beat up TPAs for ever-lower administrative fees to the point that some TPAs were losing money on claims handling.  As TPAs seem to remain solvent, many have looked to increase charges for managed care services, and perhaps CorVel is one that has followed this route.


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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