Insight, analysis & opinion from Joe Paduda
Brad Wright is a master blogger, and a terrific writer as well. He’s put together a synopsis of all you need to know about health care heading into next week’s election; complete with graphs, charts, and data, while somehow tying it all to the Cubs’ historical World Series victory.
As a White Sox fan, I’m happy if for no other reason then those Cub fans will finally feel the joy we did in 2005!
Injury rates are plummeting, insurance premium rates are flat or dropping, medical costs are down as well.
This morning Todd Foster of WorkCompCentral reports big rate decreases in Louisiana and Texas and a slight decrease in Georgia. This comes on the heels of drops in most other southern states, some well into the double digits.
Out of 36 states reviewed by NCCI, all but four will get rate decreases.
In Texas, a drop in energy service employment is one factor; this is a high-severity, high-frequency industry (injuries are worse and occur more often than in other industries).
Another article in WCC reported that American Financial’s work comp results improved due to “prior year loss development” improvements. In English – claims costs for last year came in lower than they predicted.
Injury rates are continuing to decrease every year. Medical costs are flat or down slightly. And, while wages are slightly higher, employers’ and taxpayers’ workers’ comp premiums are lower.
Make no mistake, this is good news for the three constituencies that matter – workers, employers, and taxpayers. Fewer workers are suffering the trauma and uncertainty of injuries. System costs are dropping for everyone.
There are a couple of things that could will change this.
If Congress and the next President (whoever that is) can work together (yes, I believe in the Easter Bunny too), there will be a massive investment in infrastructure in the near future. We’re talking hundreds of billions of much-needed spending on bridges, roads, rail, the energy grid, clean energy, broadband. With interest rates still right around zero, now is the time to finally fix stuff our legislators have avoided for decades over fear of political repercussion.
This work will take years, and as it is high-risk for workers, undoubtedly lead to more injuries.
Longer term, we can look to what’s happened in manufacturing to forecast employment trends in other sectors.
The US is the second largest manufacturer in the world – despite the decline in jobs in that sector, output is just slightly lower than China’s. Despite what any politician says, those “lost” jobs are NOT coming back. What’s happened in manufacturing will be felt in every other business and industry, from hospitality to transportation to health care.
What does this mean for you?
Workers’ comp is driven by macro factors.
Off to New Orleans for client meetings; should be interesting spending Halloween evening downtown.
A couple tems of note that deserve mention.
Over the weekend 178 GOP and 1 Dem representative called on CMS to stop with all the value-based stuff. Claiming the agency is overstepping its bounds, a letter signed by these worthies evidently wants Medicare to return to fee for service.
In a word, this is dumb. FFS is a big reason health care costs are out of control while quality is spotty at best. Fiscal prudence would seem to demand rapid adoption of value-based care. I know taxpayers will be far better served when more care is based on what actually works, not on what providers can bill for.
CompPharma’s annual Survey of Prescription Drug Management in Workers Comp will be out tomorrow at CompPharma.com. Big news is respondents’ drug costs dropped 8.7% in 2015. Opioids are still the biggest concern and compounds the top emerging issue.
Finally it looks like occupational injuries declined yet again; the Department of Labor reported the injury rate dropped from 3.2/100 to 3.0.
That is good news indeed – especially for those workers who didn’t get hurt.
Hope your week is most excellent.
Note- sorry about no URL links; posting from my phone which makes that really complicated.
PBM (and CompPharma member) myMatrixx is exiting the ancillary benefits market, turning their DME and home healthcare business over to long-time partner VGM HOMELINK.
According to the press release, myMatrixx will: “move the myMatrixx ancillary business to HOMELINK in an effort to allow both companies to focus on their core business. As a result, HOMELINK will begin servicing all myMatrixx ancillary business…”
This is in process now. HOMELINK’s Jim Nygren told me his company’s new direct clients:
“will have the option to use our electronic portal or contact us using phone, email and fax. Our systems has been in place and used by our clients for many years. As an example of our focus on service, HOMELINK has a live individual answer every call.”
Expect the company to move to firm up its presence in the workers’ comp space. HOMELINK has had a long standing relationship with Healthesystems that enables a few very large payers to access their services via Healthe’s Ancillary Benefit Management service; it will be selling direct as well in the future. To do that, Nygren said they will be
“doubling sales staff and investing in multiple national marketing campaigns…[this is our] First venture into anything other than organic growth. We will be more aggressive in sales and marketing, building on our relationship with existing clients and growing business through new ones.”
A myMatrixx transaction had been rumored for some months, but only recently had it become known that the Tampa-based PBM was just looking to spin off the ancillary business. Sources indicate the ancillary business’ annual revenues are somewhat less than $10 million; earnings are said to have been marginal.
A couple general observations.
What does this mean for you?
Focus is a very, very good thing.
OK folks, deep breath here. Let’s take a minute and discuss what’s really going on with the ACA.
ACA – or the more-commonly-used-but-nonetheless-inaccurate-title Obamacare ≠ the Exchanges. I don’t know why pundits, pols, and regular people don’t understand this.
Let’s remember that enrollment in the exchanges and individual plans amounts to about 6% of all insureds in the United States.
Six percent.
Second, remember that the ACA includes a lot more than just the exchanges.
Elimination of pre-existing condition clause, guaranteed issue, coverage of dependents to age 26, Medicaid expansion, changes in Medicare reimbursement all have much more impact on the overall industry and population than the exchanges.
It’s clear that rates in the exchanges are going up a lot. This is because there are not enough young people and healthy people buying coverage on the individual market to offset the expense of us older folks. And, it’s because the big commercial plans aren’t very good at individual coverage.
As the penalties for failure to obtain coverage increase, we can expect more people to enroll in health insurance. But for now, rates are going up significantly.
That said, I can say from personal experience that our rates are going up less than one dollar for a platinum plan in upstate New York. We are enrolled in a very narrow network with no out of network coverage.
The big commercial plans, United healthcare, Aetna, Wellpoint are all experiencing significant losses in the exchanges. However the plans that are more locally focused and have more expertise in Medicaid and other individual markets are doing well.
Therein lies a lesson. The big commercial plans are very skilled and very experienced in dealing with employer plans. However their expertise is not in the individual market which is why they are getting crushed.
Let’s not forget the ACA is based on private insurers competing. The competitive market is working. As the plans that can’t compete are exiting Exchange markets others are earning more business. This will, over the long term, help control cost and deliver better care to individuals on the exchanges. And, it will make these individual market winners better able to compete for employer business as their cost of care is going to be lower.
Finally, unlike most major federal legislation, there has been no effort on the part of the opposing party to fix the problems with the original legislation.
Hopefully this will be remedied under a new administration.
What does this mean for you?
Progress is painful. But reforming our health care system is absolutely necessary.
Last week One Call Care Management conducted another round of layoffs, with most coming from field sales. I’ve heard a few operations folks were also let go.
Word is the field force reduction is driven by two factors. First, former CEO Joe Delaney hired approximately 20 reps with NO workers’ comp experience earlier this year in what has been characterized as an “experiment”. Evidently, the experimental stage is over – these reps are gone.
Second, after keeping the sales staff aligned with products and services (one for DME, another for imaging, a third for PT…), OCCM decided this wasn’t working. Going forward, reps will be assigned to specific customers/prospects, and will have to be up to speed on all OCCM products.
Sources indicate that out of 118 reps, 38 will be terminated. It appears some will get with severance and non-competes will be enforced, however I’ve been told OCCM will consider letting terminated reps out of their non-competes on a case-by-case basis.
That would be the right thing to do.
Interestingly, OCCM made the layoff and change in focus while the head of field sales position is open – as it has been for some time. I’m not sure how this transition from seller-of-one-service to seller-of-all-services is going to progress without someone in charge over the long term. This kind of change isn’t simple, requires ongoing training and evaluation, as well as coordination with the service delivery folks to ensure the inevitable glitches and misunderstandings are handled quickly.
For a company with more than 3000 employees, a reduction of slightly more than one percent isn’t a big deal, and may actually make sense, IF those reps are really capable of “repping” all OCCM products and services. And if they are treated equitably and given the opportunity to work in the industry.
Going forward, I’d expect we’ll see additional consolidation at OCCM. The company has multiple domestic call centers, and as OCCM off-shores various functions (clinical, scheduling, A/R) the need for US-based staff will likely decrease.
What does this mean for you?
Hopefully new opportunities for the newly-unemployed.
Medical costs were up a mere 3% in 2014, and actually dropped by a point in 2015 (in NCCI states).
I’ve been in comp a long time, and nothing like this has ever happened. What’s going on?
One likely contributor – 20 million more Americans have health insurance, and work comp doesn’t have to pay for medical care for non-injury-related conditions. (Surprisingly, not many of us know that coverage has increased so much…)
If someone gets hurt at work, has comorbidities, and needs surgery, those comorbidities have to be addressed as part of the treatment plan. If the patient has health insurance, that’s what pays for the non-injury conditions. If not, work comp’s on the hook.
Clearly, the more workers with insurance, the less added expense for work comp payers. So, here are my back-of-the-virtual-envelope calculations of the impact of ACA on work comp (a more-qualified researcher needs to do a much more thorough job):
In 2009 – 2010, 81.8 percent of the employed population aged 18-64 had health insurance. By March of this year, 90.3 percent had coverage, a 10.4 percent/8.5 point increase.
Around 150 million people were employed this March; running the numbers, that means about 13 million more workers had health insurance early this year than did six years ago.
At 3.2 injuries or illnesses per 100 FTEs, that’s 416,000 patients. About 84,000 of those patients have more severe injuries, the type that may require surgery, physical therapy, and/or more expensive and extensive medication.
We do not know how much of the moderation in medical inflation can be accounted for by expanded health insurance coverage, but we do know there are around 84,000 folks with pretty significant injuries or illnesses that don’t need work comp to pay for non-occupational conditions.
Another factor – employed people with health insurance are healthier than employed people who don’t have insurance. Sure, there are confounding factors here – how long do they have to be insured to become “as healthy” as folks who’ve had insurance for years, and how much healthier do they get for each year they’ve had coverage. I get all that. And some really smart researcher at NCCI or WCRI or NASI will figure that out (c’mon, people, the race is on!)
What does this mean for you?
We don’t KNOW ACA how much reducing work comp medical costs, but it is very likely a major contributor.
Health Wonk Review’s new edition is hosted by Peggy Salvatore – you get a quick tour of the latest and greatest info on radiology (is it doomed), the problems with the “wonder drugs” for Hep C, and a terrific run-down of new tech and workers’ comp from the wonderful Julie Ferguson!
Peggy – you nailed it!
Sorry folks – it’s been a very busy few days with client meetings and project deliverables. When you’re a one-person operation, it’s just not possible to keep up with posting when client stuff needs doing!
So, here’s a quick review of things you may have missed.
Debates are over…(sounds of cheering, clapping, and general relief)
And thank goodness for that. By any objective measure, Clinton will be our next president, and the Senate may well flip to Democratic control albeit without the 60 votes necessary to avoid filibusters.
That being the case, it looks like we finally may see some much-needed fixes to ACA. I’ll dig into these in detail next week, but for now, expect:
More to come…
Customer service and taking care of employees
My two-part series on customer service got a lot of attention; a very recent story on WalMart’s decision to increase labor costs (!) speaks to much of the same. The ginormous retailer was having problems with poor store results, unkempt aisles, shoddy appearance of displays and the like. The solution (or at least a big part of it); pay workers more, and they’ll do a better job. While it is too early to measure results, initial reports are encouraging…
For a company that long relied on low labor costs to deliver low prices, this is a tectonic shift.
The state of the work comp industry
Oregon does a great job reporting on premium rates nationally – thanks to Mike Manley for sharing with me. Mike wants to “call attention to…states’ index rates expressed as a percent of median.”, not to changes from previous studies. Listen to Mike!
Good info from NCCI on macro-factors that will affect the workers comp world: highlights from new Communications Director Dean Dimke are:
For those looking for a lot more detail, WCRI just released its CompScope(TM) reports on work comp medical benchmarks for 17 states. Great weekend reading!
Break’s over – I got to get back to work!
The opioid industry’s insidious tentacles are choking the life out of individuals, families, and communities. Now we learn that nearly 44 percent of men aged 24-54 who aren’t in the workforce are on pain meds.
2/3rds of those men are taking prescription pain killers. Yet many are still in pain – a finding that surprises no one remotely familiar with opioids’ poor record with chronic pain.
Only about 2 percent of these men received work comp benefits in the prior year; it is certainly possible that many more were injured at work, settled their claim, reached maximum medical improvement, or otherwise are no longer receiving WC benefits. Fully a quarter are receiving Social Security disability income.
This is a critically important issue for all of us. Research by Alan Krueger PhD of Princeton University gives us much-needed clarity on why labor force participation is near a 40-year low; it’s about
Of course, Dr Krueger’s research is not just about opioids, but it’s abundantly clear that opioids aren’t helping these men deal with their pain, and pain is keeping many out of the workforce.
This comes on the heels of reports that the death rate for middle-aged whites has been increasing of late – and at least part of the problem is, once again, opioids
What does this mean to you?
STOP approving opioids for chronic pain unless nothing else works.