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What’s the state of work comp “managed care”?

I spend a lot of time in the weeds, digging into

That’s all well and good, but I tend to lose track of the big picture – in this case – what’s really going on in medical management these days, why, does that make sense, and what does the future hold?

So here’s where things stand.

  1. Medical costs are – generally – under control.
    NCCI’s data (see slide 35) shows medical inflation remains in the single digits, where it has been for a decade plus. NASI research is even better news.  Medical costs have declined – albeit marginally – from 2012 – 2017.
  2. Payers’ approaches to managing medical haven’t evolved much – if at all – over the last decade plus.
    Large, broad PPOs paid on a percentage of discount below the Fee Schedule?U&C are the dominant “cost containment” technique. Yes, specialty networks have made big inroads, but overall the Coventry PPOs of the world are where the big “savings” below FS originate.
  3. Those approaches are generally archaic, simplistic, too often based on the wrong metrics and don’t address quality.
    Bill review in work comp is falling further and further behind provider revenue maximizers.  Most vendors are complacent, driven by add-on fees for “savings” and “reductions” that are ephemeral at best, woefully lacking in innovation and blind to their own inadequacies.
    There is so little focus on or attention paid to quality it might as well not exist.
  4. The service entity landscape continues to consolidate, leading to fewer options for buyers and ultimately less control.
    This will accelerate.
  5. The vast majority of buyers treat service providers as nothing but interchangeable vendors, buying their services as if they were commodities; talking big about quality, customer service, partnership, and metrics and then buying on price. I’ll dig into each of these in future posts.

The good times will not last. Medical costs will increase – driven by facility expenses this year and thereafter.

I’ll dig into each of these issues, and what the future holds – in future posts.

What does this mean for you?

I can hear you thinking, “hey, we’re different and special, this isn’t about us.”

No, you’re not, and yes, it is.


3 thoughts on “What’s the state of work comp “managed care”?”

  1. Agree Joe, and in many WC Cases (especially long term claims) pharmacy is the “tail that wags the dog.” Having a PharmD review medications and discuss alternatives with the primary care physician can lead to better claimant outcomes, reduce medication costs & overall medical spend.

    1. Agree Brad – thanks for the observation. Most – but not all – PBMs can provide this service.

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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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