Texas’ work comp reforms – quick takes

WCRI just released an assessment of the results of work comp reform in Texas, and – generally speaking – they are pretty positive.

Here are a few highlights; the complete report can be purchased here.

  • Costs per claim dropped 4 percent in 2010, driven by a 6 percent decrease in temporary disability duration and 2 percent decline in medical payments.
  • While WCRI’s research indicated most states’ costs declined or were stable, Texas’ dropped “more than most.”
  • Prices for non-hospital services increased after January 1, 2011 – likely driven by the elimination of so-called “voluntary networks”.
  • The growth in employment in the Lone Star State likely helped keep costs down.
  • Medical cost containment expense trend declined in 2010, however costs are still high at $3600 per claims.  Looks like the increased volume of UR post-2006 was a significant contributor to those costs.

It’s too early to tell how much of an impact will result from the changes in opioid prescribing (driven by the closed formulary), but I’d bet we’ll see lower medical costs and a significant decrease in temporary disability as well.  However, the real impact will not be felt for some time – and that will be a reduction in permanent disability.

What does this mean for you?

Macro factors – e.g. the improving economy – significantly affect workers comp.

Reforms can drive better results.  They can also increase some costs – as we’ve seen in Texas with UR.


Work comp medical, OneCall, and the future of workers’ comp

Something struck me during the bloggers speak session on Thursday – at a time when medical costs are heading up, driven by over-utilization, opioids, crappy networks, and percentage-of-savings-based networks, there are few medical experts in positions of real authority in claims organizations – much less leading those claim organizations.

Even more revealing, the medical directors at most (but not all) payers have little real authority.  Work comp payers are mostly run by men (mostly) with backgrounds in claims, underwriting/actuarial or finance. Sure, many are highly experienced and very well seasoned, but they’re fighting the last war – the one where indemnity was the enemy.

That’s no longer the case, hasn’t been for some time, and most certainly will not be in the future when medical accounts for 70% of claims costs. What we have is an industry where claims doesn’t adequately consider medical – which is understandable because the top guy is a former claims guy.

They see the world as it was back in the day, not as it is today. A piece on military leadership by Thomas Ricks is worth quoting:

“in Iraq: our military commanders focused on planning the 2003 invasion but virtually ignored the task of planning for what might happen during the long occupation that followed. Though it was clear, almost from the start, that our round-’em-up approach to the insurgency wasn’t working and that using heavy firepower in the effort was counterproductive…

Why weren’t our troops better prepared for the challenges of protecting civilians from resistance fighters, interrogating suspected insurgents and detaining enemy fighters?…The stakes of not finding out are great — for while we know we have a strong military, we truly don’t know if we have the right one for the conflicts we may face during the next two decades.

That was the discovery the British made — the hard way — in the Second World War. On the eve of the war, the Royal Navy was the biggest in the world, but Britain’s military leaders did not understand that the aircraft carrier and the submarine had drastically changed the nature of maritime conflict.” [emphasis added]

Most payers and claims organizations are built for and managed to “fight the last war”, one where indemnity was the enemy.  Yes, some few the rare “claims guy” does “get” medical – but most don’t.

Outsiders get this, and that’s why there were a plethora of private equity folks and related people circulating around the exhibit floor and attending sessions. There are a couple three (and that’s only the ones I know about) deals currently in process and lots of rumors flying around about others. Smart people see the opportunity created by this situation, and are moving quickly to position themselves to profit from others’ myopia.

As proof, some may not realize that Coventry is no longer the largest (measured by revenue) WC managed care company.  OneCall/MSC is.  Yes, OneCall does seem to be buying up everything, but it doesn’t take a genius to figure out they’ve figured out where the future opportunity is – managing medical for payers who can’t do it on their own.

Oh, and contrary to oft-repeated rumors, MedRisk is NOT being acquired – not by OneCall nor anyone else.  Lest you, dear reader, think I know not of what I speak, I promise to listen to Rush Limbaugh for an entire week if MedRisk does get bought.

PMSI isn’t on the block either.


Elections have consequences.  I don’t often quote Karl “Turd Blossom” Rove, but it certainly seems apropos now, three days after an historic election.  There are a plethora of interesting story lines surrounding the election and the hows, whys, and whos thereof.  We’ll keep our focus on those related to health policy, the impact on reform, and let the experts opine.

First out of the blocks is Bob Laszewski with his post listing some of the major health policy issues facing the President and Congress. Included among the challenges is addressing the fiscal cliff – I’m not as optimistic about our “leaders'” ability to get that fixed anytime soon.

Health Affairs’ contribution comes from Tim Jost, “Election 2012: A Win For Health Reform, But Much Work Remains” gets a bit more specific; “November 6 was a good night for health care reform, and for the millions of Americans who will benefit from it, but a great deal of work needs to be done before reform becomes a reality.  It is time for the administration to roll up its sleeves and get to work,” Tim says. He describes the areas where  important guidance and rules are promptly necessary to implement the Affordable Care Act, and he also points out continuing threats to the ACA such as challenges to the preventive services contraception mandate and premium tax credits on the federal exchanges, as well as the looming deficit reduction negotiations. We’ve less than 14 months till this thing fully kicks in, and time’s awasting.

The estimable Maggie Mahar explores the demographics of the vote in “The Nation is Divided, Not between Whites and Minorities, but between the Past and the Future. “ She sees this as a victory by the future population over the past. Maggie’s take is that “Women, minorities, and young people re-elected President Obama…This is not to say that, going forward white men will not also be in positions of power.”

Anthony Wright at Health Access blog is pretty darned excited about the result, and its implications for the nation’s largest (in population) state.  “A Great Night for California and for Health.” Anthony isn’t too giddy to remind us “this isn’t the end of the campaign, but the beginning of ACA implementation and the fiscal fight over Medicaid and Medicare.? 

Louise is one of our “battleground state” contributors and sends us via Colorado Health Insider a post responding to another’s recommendation that one can be “self-insured” if you’re careful enough.  Louise thinks not, saying “To be fair, I agree wholeheartedly with the tips he gives for “making health insurance a bad bet“.  Things like eating well, exercising, avoiding excess alcohol, not smoking, driving safely, managing stress, safe sex, not sharing needles, etc. are all great ideas.  They’re all things that our family does every day.  I’ve been told I’m a health nut, and I don’t shy away from the accusation.  I make green smoothies (kale and veggies and fruit all blended up – drink up!), exercise nearly every day and refuse to drive if I’ve had even a single glass of wine.  I fully plan on living to be a hundred.  But I would never ever go without health insurance for myself or my family.”

Fortunately, Obamacare (remember when that was a pejorative term?) includes wellness and prevention benefits; new contributor Chuck Smith at has several posts lauding the benefits of pre-illness care.

John Goodman of the National Center for Policy Analysis contributes “Socialism Kills”, on the impact of “economic freedom” on population mortality. Actually, the research isn’t about socialism per se; rather John cites the libertarian Fraser and Cato Institutes as the source for underlying research on how “economic freedom” contributes to longevity.  I haven’t read the two studies, but I’m curious if those two august organizations factored in the impact of potentially confounding factors, such as the many wars in Africa, rapid rise in starvation in several countries, an deaths from disease.  Also wondering how the headline could possibly be true in the face of data indicating longevity in most European countries exceeds that in the good ol’ US.  In fact, as the only industrialized nation without universal health insurance, we rank behind every EU country in life expectancy – including Greece, Malta, Cyprus (my birthplace) – and even lower than Chile…

I take a different approach, looking at the implications of Obamacare for workers comp – and surprise some by opining that overall, it’s good news indeed.

There are a few folks out there looking at things other than reform and the election – thank goodness!

InsureBlog’s Bob Vineyard reports that more docs are beginning to shun insurance in favor of cash, and explains why.

Dr Roy Poses continues his tireless pursuit of profiteers, this time going after the cozy relationships existing in the medical-publishing industry.

In Marketers’ Systemic Influence over Ostensibly Scholarly, Peer-Reviewed Publications: the Medtronic Infuse BMP-2 Example, Roy informs us:

A US Senate committee report detailed yet another example of how marketers working for industry (in this case, for Medtronic, a biotech/ medical device company) sought to systematically but covertly influence the ostensibly scholarly medical literature and the public discussion to sell more of their product…Those who advocate the evidence-based medicine approach, as I do, must not be naive about the extent that the evidence-base has been deliberately corrupted.  We need stronger measures to protect the integrity of clinical science.

Hospital Quality Reporting in Italy is the subject of Jason Shafrin’s post, wherein he discusses P.Re.Val.E Italy’s hospital quality initiative. Pretty comprehensive approach…

A change in Medicare policy will have a significant impact on post acute care (and home services). Brad Flansbaum digs into the details of a recent settlement between CMS and the Center for Medicare Advocacy.

The American Academy of Family Physicians is pushing back on nurse practitioners’ role in primary care. David Williams explains why they aren’t doing the same to specialists. Evidently the family practice docs are OK if specialists act as generalists, but oh no, not those nurses (disclosure, my daughter is a nurse..)

We wrap up this edition with a state-based discussion of workers comp reform; Tom Lynch of Workers’ Comp Insider offers “A Modest Proposal for New York” for fixing what’s wrong with the state’s workers’ comp system.

Finally, apologies as this, the post-election edition of Health Wonk Review is out a bit later than usual this week as I was in Las Vegas for the National Workers Comp Conference.  Fortunately, my fellow bloggers were able to keep up their writing to keep you, dear reader, fully abreast of the issues and implications thereof.


No one cares about your “value prop”…

I had two very different conversations yesterday.  One was with an entrepreneur and the other with a senior executive at a large WC services firm.  The entrepreneur heads up a relatively new entrant to a niche market, while the exec is looking to grow his company’s already substantial revenue.

The entrepreneur, who we shall call E, listens intensely, believes strongly in maintaining focus and avoiding distractions, and asks lots of questions.  The executive, who we shall call X, is enamored with his company’s approach to the market, loves to describe the wonders of their offerings, and can prattle on for quite a while, certainly longer than anyone  could care to listen.  It’s obvious X believes in what he does and is proud of it.

But no one cares about his company, their history, his product, or his “value prop.”

What E knows, perhaps intuitively, is that she doesn’t have a product or service or “value prop”, she has a potential solution to a potential customer’s problem.  But until and unless she understands that customer’s problem, she’s got nothing to offer.

In contrast, X has SOOOOOO much to offer, and the only reason people don’t buy is they don’t understand how great his offering is.  So, he’s got to tell them, in increasingly strident terms, about the wonders of his unique product offering. If they don’t get it, he’s going to spend lots of dollars “educating the market.”

To be crass, his approach is the legendary and all-too-common “show up and throw up”.

E’s is research, listen, ask, and understand deeply.

This being Vegas, I’m betting on E.


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.”