Vegas – day two

With the national work comp conference well underway, here’s what we saw/heard/learned yesterday.

The session on improving medical networks led by Mark Walls  included a rather blunt and direct Indictment of the work comp network business.  I wasn’t there, but heard from several who were that the panel criticized PPO network developers for failing to consider quality in network recruiting or management – despite their protestations to the contrary.  The reason, as we’ve been discussing here for oh-these-many-years is simple – good providers treating efficiently and effectively make for fewer bills at lower charges.  And that makes for lower revenues for networks charging on a percentage-of-savings basis. And some undoubtedly uncomfortable moments for network folks in the audience…

Kudos to Mark, Pat Venditti of BJC Health, Monica Lichtenstein of Aramark, and Anita Weir or Safeway for speaking the truth.

Deals are getting done.  Vendors are payers are using the conference to finalize agreements and nail down details on negotiations in progress. I”m aware of at least three business relationships that were consummated yesterday, and I’ve no doubt there were dozens more.  This is somewhat unusual, the conference is typically more for starting and continuing relationships than doing deals.

That said, there’s an ongoing demand for really good sales talent and sales leadership.  There just isn’t near enough supply.  The lack of professional, smart, polished sales talent has never been more evident.  Everyone is looking for A players, and finding they’re lucky to find Bs. I’ve been asked by three companies to send talent their way, but there’s not a lot of talent to be found.

Dr Gary Franklin, Medical Director of the Washington state fund, and Dr Sanford Silverman, pain management physician in south Florida, gave a great overview of the problems inherent in using opioids to treat musculoskeletal injuries/chronic pain.  Gary  – who is as passionate and blunt as he is knowledgeable and Sandy – who is terrific at describing the causes of and challenges with addiction treatment – didn’t always agree on specifics, but the 200+ attendees saw two experts talking about solutions.  It was a refreshing, and much-needed change from the usual report on “here’s-how-bad-it-is”.

There seem to be more and bigger booths here than before.  In what’s got to go down as one of the stranger sightings, there are no fewer than three separate booths for EXAMWorks.  There’s the big one at the front, the MES booth, and at least one more for another EXAM subsidiary.  For a “growth” company that has seen revenue from it’s US business increase by a whopping two percent this year one would think they’d be a bit more careful about spending marketing dollars.  Then again, if they are able to convince payers that MES is in fact a different company, EXAM will be able to meet some payers’ requirement/policy to always have at least two different IME vendors.

Which, of course, they’re not.

Finally, I must’ve had a dozen conversations that began with “this isn’t going to be in the blog, is it?”.  No, it isn’t.  If something is told to me in confidence, it doesn’t show up in MCM.  That said, if I subsequently hear the same rumor/report/tidbit from another non-confidential source, I may choose to write about it, but only while ensuing the original source can’t be identified.

So, the sun is coming up, and it’s time to get a workout in before wading once more into the fray.  See you at the Bloggers Speak roundtable this afternoon.


Work comp conference – day one

The annual gathering of the tribes has begun, with vendors and prospects flooding into Vegas. This year Nancy Grover reports attendance is up with only two cancelations due to Sandy.  Having lived thru that storm I understand why folks want to move on to some semblance of normal.

Here are a few random thoughts from yesterday.

Odyssey continues to build what has become the largest – and most interesting – collection of “assets” in the comp services business. The acquisition of Harbor Health gives them a very valuable view into provider performance, one that will certainly support their other service lines.

if there’s one predominant theme I’ve seen so far it is OPIOIDS. There’s a track devoted to the topic (I’m on a lead off session this am); Modern Medical announced a comprehensive, integrated approach last night; there are several booths with the word prominently featured, and Emil Bravo’s WorkCompWire piece this week addresses the issue as well.

There are a plethora of private equity industry folks here; investors, research firms, and attorneys and investment banks. With several companies currently “going thru the process”, one would be well-advised to be circumspect in comments and conversations about certain firms, as some folks are almost certainly here just to learn what they can about the companies in play.

There’s an upbeat feeling here. Whether its the improving work comp premium and loss picture, the sense that the economy is finally recovering for good, or something less obvious, people are more upbeat and positive Than last year and way happier than they were a couple years back.

There’s a LOT of this evident among the TPAs. I met with the CEO of one of the largest yesterday; there’s good activity and a good bit more likely coming as insurance rates continue to creep up.

Id be remiss if I didn’t acknowledge the continued strength of Sedgwick. As the first among equals, the giant TPA took a bold step at the Conference last year in committing to full transparency, offering to show their clients their contracts with vendors and details of financial flows. CEO Dave North is to be commended for that commitment.

Posts will be several and hurried over the next few days; lots to do and little time to proof so apologies for typos in advance.


Providers’ unmitigated gall

This morning’s workcompcentral arrived with the news that hospitals and device manufacturers somehow are arguing the huge overpayment for surgical devices in California is justified because of the “additional costs” of putting these devices in comp claimants.

Seems the California Hospital Association hired a consulting outfit to see just how much more costly it is to do surgery involving screws and cages and other hardware for people with occupational injuries than non-occupational ones.  And, stunningly, it’s waaaaaaay more expensive!

Yep, wrenching that back lifting a stack of drywall at work requires surgery that is, well, different/more complex/more involved/more time-consuming/more lucrative than lifting drywall at home when you’re re-doing the family room. The doctors, facilities, devices, tools, patients, support staff, all are identical – the only difference is who’s paying for the device – workers comp or Medicare.

The “disagreement” arises over a regulation proposed by DWC California that would set device reimbursement at 120% of Medicare.  That’s ALREADY higher than Medicare, but not enough for the profiteers.

Writing in this morning’s WCC, Greg Jones reported that hospitals and their allies said “additional allowances for devices used in certain spinal surgeries are not enough to make up for lost revenue from eliminating the spinal pass-through”.

No $%&*(.  It’s not supposed to.  

The “pass through” provision allowed these providers to “pass through” grossly inflated charges to workers comp payers.  There’s more to it than this – of course – but the net is this.

Once again workers comp is the trough.  As friend and colleague John Swan often reminds me, pigs get fat, and hogs get slaughtered.


What people in Vegas will REALLY be talking about…

It’s not the latest Odyssey/MSC/OneCall deal…

Nor is it the increasing profitability (if one can call what’s really just the absence of continuing losses “increasing profitability”) of the comp industry.

Sure there’s going to be talk about Sandy and her impact on insurance rates, but that’s not it either.

Nope, it’s the election, and more specifically what is looking increasingly like the re-election. Please spare me the nonsense about lousy Dem turnout and left-leaning pollsters and faulty methodologies and other memes that are rooted not in reality but desperation.

If I’m wrong (and Bob and Cy and T Don and Sandy and other dear friends and treasured colleagues are hoping and praying I am) I’m going to have a really miserable conference…

But back to the key issue – we’re going to have a continuation of a split government – President Obama in the White House, the GOP with a smaller but nonetheless significant majority in the House, and Democrats nominally in control of the Senate (altho the Dems proved they can’t even control the Senate when they have 60 Senators, so 52-54 isn’t nearly enough).

PPACA aka Obamacare is going to be (almost fully) implemented in 15 months.  There will be about 30 million more people with insurance.

The most important single impact is this – When injured workers have coverage, there is no need for WC to pay for non-occ conditions for injured claimants (whether the WC payer follows thru on this is a separate issue).

This is also the most significant short term impact, especially in states such as Texas and Florida where almost one in four working age people doesn’t have health insurance. Think of it this way – a claimant needs surgery for a rotator cuff tear, has diabetes and hypertension. If they don’t have coverage, the work comp payer will pay to treat the diabetes and hypertension – those conditions have to be addressed if the claimant is going to recover and get back to work. Now the comp carrier can send those bills over to the health insurer. 

And, the adjuster, case manager and UR function won’t have to engage in the back-and-forth with the provider over treatment, delaying treatment and extending disability duration.

Finally, with about 30 million more Americans with health insurance there will be a lot less need for hospitals and other providers to cost shift to work comp to make up for revenues lost due to treating the uninsured. Sure, Medicaid reimbursement is lousy and Medicare only a bit better but something’s a lot better than nothing.

Of course, there’s going to be a lot of people trying to get care from providers who just won’t have capacity; this will – inevitably – lead to delays in accessing care for work comp claimants, which is a bad thing indeed.

It’s going to be an interesting conversation.


Surviving Vegas.

The big workers’ comp conference is just a few days away, and now’s the time to finish your final preparations and make sure your schedule is set.  Once you’re there, it’s all about making the most of the three days.

Easier said than done.

First, make sure you’ve read – and followed – Sandy Blunt’s list of must-dos and don’t-evers.  I’ll add a couple other suggestions.

1.  Realize you can’t be everywhere and do everything. Prioritize.

2.  Leave time for last-minute meetings and the inevitable chance meetings with old friends and colleagues.

3.  Unless you have a photographic memory, use your smartphone to take voice notes from each meeting – right after you’re done.  Otherwise they’ll all run together and you’ll never remember what you committed to.

4.  Get the NWCDC app for your Droid or iPhone – there’s a web-based version too for tablets.  It has the schedule, exhibit hall layout, local map, and a bunch of other handy information and tools.

5.  Introduce yourself to a dozen people you’ve never met.  This business is all about relationships and networking, and no better place to do that than this conference.

6.  Wear comfortable shoes, get your exercise in, and be professional and polished.  It’s a long three days, and you’re always ‘on’.

Finally, I’ll echo one of Sandy’s points – in these day of YouTube, phone cameras, Twitter and Google+, what you do is public knowledge.  That slick dance move or intense conversation with a private equity exec just might re-appear – to your dismay.

Beware the dreaded White Man’s Overbite…



Illinois’ workers comp costs – drivers and solutions

My post on Accident Fund’s ground-breaking analytical work generated a good bit of discussion, some public and much not, some appropriate and some a bit confused.

To clarify, allow me to address a few issues.

1.  As I said yesterday, Illinois has the highest medical costs in workers comp, driven in large part by the second highest fee schedule. WCRI’s CompScope report (12th Ed., ppg 10-11) provides an excellent comparison of medical costs among the study states; IL’s medical costs are – by far – the highest for both lost time and medical only claims (as defined by WCRI).

2.  I did NOT say IL’s workers comp costs were the highest – the state is fourth in that category.  Some readers evidently conflated “medical” with “workers’ comp”; medical is a component of workers comp costs, along with indemnity and administrative expense (ULAE and ALAE).

3.  There are several contributors to IL’s medical cost problem.  The highest outpatient facility costs, an easily-gamed fee schedule, no real employer direction, and high – I would suggest far too high – utilization of physical medicine at prices much higher than those in surrounding states are among the major drivers.  Internal HSA data from several large payers indicates the average number of PT visits for work comp claims in IL was above 15 in 2010; if anyone has more current data I’d love to see it.  This was substantially higher than states surrounding Illinois.

So, what’s to be done?

Well, start with identifying the best providers – defined as those who adhere to evidence-based medical guidelines and deliver the best outcomes: shortest disability duration, lowest medical and indemnity expense, sustained return to work.  Note that patient satisfaction is not automatically included.  Unfortunately some WC claimants don’t want to return to work when they’re physically ready to do so, and therefore don’t like providers who try to get them back quickly.  That’s not to say patient satisfaction should not be factored in, just that one has to be careful when doing so.  Much of what I’ve seen re patient satisfaction doesn’t adequately address this potentially-confounding issue.

Next, develop strong relationships with those selected providers – pay them fairly and quickly, don’t bother them with needless UR requirements, help them schedule ancillary services when and where necessary, and let them know you’ll be monitoring their performance on an on-going basis.

Direct injured workers to those good providers – this can be done in every state except New York. There’s an industry-wide misunderstanding of “direction”; it is legal in every state (but NY), however in some states the claimant can decide where they want to go, while in others the employer can require an injured worker go to a specific provider (or choose from among selected providers in states such as GA and PA).

Finally, monitor and measure outcomes, provide that data to providers, and continuously tweak your network.

Which leads us back to the Accident Fund’s CareAnalytics(tm) approach.  Notably, the analysis of providers did not factor in network participation or discount arrangements, rather it focused on outcomes.  As Jeff White reported in his public presentation at WCI in Orlando, desired outcomes include:

  • adherence to evidence-based medical guidelines
  • total claims cost
  • claim duration
  • medical cost
  • addiction and dependency prevention

Finally, I’d echo what George Anstadt MD, former president of ACOEM, said yesterday in a comment on MCM: “glad to see insurers looking at good outcomes and recognizing that Occupational Medicine specialists are a great value, as a group, and that within that group are an experienced and ethical sub-group who save insurers even more money and get even better health outcomes for workers and their employers.”


Claims, analytics, good docs, and process improvement

For several years, the Accident Fund (HSA consulting client) has been making major investments in data analytics and working on ways to use their new-found knowledge to reduce costs and improve outcomes.  Now, the results of those efforts are becoming apparent.

Claims costs are coming down, driven by rapid referral of selected claims to top occ med physicians.

AF’s program identifies higher risk claims and claimants, alerts adjusters and case managers, and, when necessary seeks to move the claimant to one of the top docs.

The program, which recently won an award for innovation, is under the direction of Jeffrey Austin Whitedirector of Medical Management Practices and Strategy for Accident Fund Holdings.  In a press release Jeff said “It’s a huge honor to receive this award and it is truly reflective of the hard work of our claims representatives, risk case managers and operating companies…This is a major accomplishment of custom software development to meet our business needs and improve efficiency while also giving us a competitive edge.”

So far, the program has helped identify high-risk claims faster, improved policyholder satisfaction, and reduced claim costs for targeted claims in excess of 20 percent.

Jeff reported on these results at several recent conferences including August’s Workers Comp Institute in Orlando.  Here are a few highlights:

  • the more work comp experience a physician has, the better their outcomes are.
  • the most experienced docs’ claims costs were 20% below the least experienced
  • a lot of claims are handled by docs with zero experience in comp
  • claims handled by occ med docs were 20% less costly than average

The net -“change of provider based on experience is an effective cost containment strategy.”

While others are talking, planning, and getting ready to get ready, Accident Fund is doing.  Kudos to Chief Claims Officer Pat Walsh, VP Claims Lisa Riddle, and Jeff White.



Update – The wages of sin in Maryland – a mild slap on the wrist

In response to several requests, click on the link for details on charges pending against Maryland Orthopedics physicians.

When a doc knowingly overtreats, increasing the risk of adverse outcomes, potentially harming patients, and drives up costs with little apparent regard for patient safety or approopriate treatment, one would hope they’d be sanctioned pretty harshly.

Not in Maryland. 

Jen Jordan reports “This group of physicians [Franchetti et al] routinely performed injective therapies regardless of efficacy, up-coded (say for instance a sciatic nerve block when only trigger point injections were performed or claimed multiple level or bilateral procedures when the facts didn’t line up), dispensed excessive quantities of drugs at extremely inflated prices from within their own offices (despite the many retail pharmacies within a mile of their various locations) on top of the ineffective injective therapies with little to no detail in the medical record other than prescriptions were renewed so as not to draw attention to the quantity and dose, and essentially bilked insurers in Maryland out of millions of dollars over at least the last decade if not longer. They put patients’ lives in danger.”

Did the doc in question, one Michael Franchetti of Maryland Orthopedics, lose his license?  Was his license suspended?  Go to jail?


He’s on probation, has to have a few of his cases peer-reviewed, pays a nominal fine to the state board of physicians, and complete a few tutorials on ethics and billing.

Oh, and he’s still a “HealthGrades recognized doctor” too; so much for those doc rating sites…

Yep, he’s still “treating” patients, sticking needles into people and prescribing opioids, continuing on as if nothing had happened.

This is a travesty, a sick joke, a blatant disregard for patient safety, a complete abdication of responsibility on the part of the Maryland State Board of Physicians.

The conduct of this…”physician”, his overtreatment and overbilling and wanton disregard for patient safety is stunning, as is the pathetic penalty he’s paying.

One patient received 50 steroid injections over a four year period, and 34 scripts for controlled substances – which were dispensed by this doc’s practice – at prices up to 17 times the retail price for the drugs.

Another patient allegedly received 140 nerve blocks over 14 years along with 150 scripts for controlled substances.

If you aren’t outraged/disgusted/shocked, you can read the consent order agreed to by this poor excuse for a physician here.

So, what does it take to get your medical license suspended or revoked in Maryland?  Turns out, the Maryland Board of Physicians has a long history of lax enforcement, handing out relatively mild sanctions if and when it finally got around to doing anything. 

Jen’s outraged.  And you should be too.



Coventry work comp’s Q3 numbers are out

And they’re rather middling...

Q3 workers comp revenues were $188 million, down 3.6 percent from Q2’s $195 million and about the same from Q3 2011.  While the loss of ESIS’ pharmacy and other business in January was significant, Coventry has mitigated much of the loss with “client expansion and new sales.”

With the acquisition of Coventry (the entire company, not just the work comp division) by Aetna in the offing, we can expect more noise about the coming sale of the work comp division – but it’s just noise.

It isn’t going to happen.

Recall Aetna’s CFO Joe Zubretsky’s positive statements about work comp, and there’s this from a colleague with direct contact with Aetna and Coventry

“this [the CFO’s statement] is very consistent with Aetna’s outreach to us and a few other WC TPAs early this year to find partners for integrated plans. They don’t want to get into the WC TPA business (good for them) but they want to have good integration and smooth operating links with a few TPAs with whom they can put together WC/FMLA/AM/STD/LTD plans– and maybe loop in the healthcare as well.”