Author: Joe Paduda

Jun
26

Wildly off-topic…what just happened?

Posted by Joe Paduda on Monday, June 26th, 2023 | Comments

If you’re wondering what the heck happened in Russia, join the crowd.

Here’s what I’ve been able to “learn”…

first – the actors

The Wagner Group – a private company that is a combination of a mercenary, terrorist organization, and exploiter of poor countries that supplies Russia with tens of thousands of fighters. Wagner is the most effective fighting force in Ukraine. Wagner is really, really awful.

Yevgeny Prighozin is Wagner’s leader – he’s the former hot-dog stand operator now old bald guy commanding a huge criminal enterprise while always wearing full tactical gear even though he’s never been anywhere near actual fighting.

nice look, eh?

Friday:

  • Prighozin called for the firing of Russia’s top two military leaders,
  • Wagner Group troops took over critically important supply bases near Ukraine,
  • advanced on Moscow with convoys of his troops,  artillery and armored fighting vehicles;
  • was met with cheers, flowers, food and drink by Russian citizens;
  • shot down a super-sophisticated Russian surveillance plane and several Russian helicopters;
  • then Prighozin abruptly turned those convoys around and ostensibly went into exile in Belarus (a neighboring country that is essentially a Russian protectorate) after
  • Belarus’ president – a Putin lackey – negotiated some kind of deal between Putin and Prighozin.

Yeah, the entire US and NATO intelligence world is as confused as we are.

As I am far from “expert” in eastern European politics and “strategery”, I’ll just share what credible experts are saying:

  1. Putin is much weakened…he relied on a lackey/puppet – Belarus’ president – to end the crisis.
  2. Russia is also weaker than many including me thought – and likely getting weaker…
  3. Hard to see how merging Wagner’s troops into Russia’s Army will make the Army stronger – there’s too much mutual suspicion and distrust…
  4. Our efforts to recruit Russian intel sources seem to be ramping up…

Lastly, there’s this.

“Mr Putin was counting on a long war in which the West would grow tired of arming and funding Ukraine. There is now strong evidence that the war’s prolongation is also accelerating the fragmentation and decay of his regime.”

 

Jun
22

How much is too much?

Posted by Joe Paduda on Thursday, June 22nd, 2023 | Comments

The average family of four’s healthcare insurance and related costs are more than $31,000.

Which begs the question – how much is too much?

At what point do workers, employers, taxpayers make that call?

Because it is going to happen.

Look at your budget, your income, your future expenses…when does healthcare become unaffordable? a quarter of your income? a third?

Sure, you aren’t paying the entire $31k…

  • your employer pays a big chunk,
  • taxpayers subsidize employee benefits so
  • taxes are higher due to that subsidy,
  • but your deductible/coinsurance costs are likely several thousand dollars.

What does this mean for you?

I’d ask you to think hard about this – because we will all have to make this choice.

Sooner than we’d like.

Jun
21

Quick hits….

Posted by Joe Paduda on Wednesday, June 21st, 2023 | Comments

Healthcare costs for the average family of four topped $31,000 in 2023.

That’s the latest from Milliman.

Think about that – what percentage of your annual income is $31,000?

a third?

a quarter?

a fifth?

to calculate your total costs, click here.

Climate change’s impact on worker health and workers’ comp is getting more attention every day.

It is now hitting the C-Suite…

This morning, Harvard Business Review called out increasing focus by business execs around wildfires:

we are seeing a rapid rise in employer inquiries related to employee health and the best practices around air quality concerns.

The piece has excellent recommendations.

Word to the wise – whether you are an insurer, TPA, risk manager or captive manager, regardless of your view on human-caused global warming, when the C-Suite comes calling you’d best have a plan. 

Even better, you’d best have implemented it.

good news…

339,000  – that’s May’s increase in employment. That is spot on the average monthly increase for the last 12 months…

over the last year over 4 million jobs have been created. 

That, dear reader, is just terrific.

More than 1.35 million Americans have been kicked off Medicaid to date…and that’s without totals from Texas and several other states yet to report.

This will:

Argh.

 

Jun
16

Solving Texas’ healthcare problems…or not.

Posted by Joe Paduda on Friday, June 16th, 2023 | Comments

Yesterday we dug into the difficult position Texas Mutual is in thanks to Texas’ Legislature and Governor.

Today – as promised, why forcing Texas Mutual into a business it has zero experience in will NOT solve Texas’ healthcare mess – and may actually make it worse. (note this is NOT TM’s fault…it is stuck in a very difficult situation through no fault of its own)

First, TM is planning to sell stop-loss and Level Funded plans…let’s be clear – Level Funded plans have been sold in Texas for years; there are a lot of brokers offering these plans throughout the state.

In a phrase, Adverse Selection.

I’ve written about this a LOT – mostly back in the 2000s before the Affordable Care Act came into being and effectively ended adverse selection and the insurance death spiral it creates.

Here’s the Cliff Notes version…

  1. Thanks to the ACA, health insurance companies cannot:
    1. charge people or their employers more if employee(s) have pre-existing medical conditions
    2. refuse to pay for care for those pre-existing conditions
    3. refuse to insure the employer if its workers or their family members have pre-existing conditions.
  2. Back in the pre-ACA days, health insurers got really good at “medical underwriting”  aka identifying and refusing to insure or upcharging anyone who might have the temerity to file a claim. Why?? well, capitalism baby!.
  3. What happens when employers with young, healthy workers drop health insurance or don’t buy it, self-insuring instead of joining other employers in a health insurance “pool”?
    1. the “mix” gets worse; without that employers’ premiums helping cover other employers’ costs, health insurance premiums rise for all the employers left in the pool.
    2. over time,
      1. the number of employers in the pool drops,
      2. healthcare costs zoom (as only sick people who really need insurance stay in the pool)
      3. eventually the insurer goes bankrupt as it can’t charge enough.

Let’s suppose Texas Mutual’s program to sell self-insured health benefit plans (NOT HEALTH INSURANCE) to smaller employers is a rousing success, and hundreds/thousands of employers ditch health insurance and sign up. (TM is proposing to sell “level-funded” health benefits plans, a type of self-insurance)

Remember, TM will be medically underwriting employers that apply for health benefits plan. As the incredibly knowledgeable (and friend) Louise Norris writes;

Medical underwriting refers to the process by which a life or health insurer uses an applicant’s medical history to decide whether they can offer them a policy, and whether the policy will include pre-existing condition exclusions and/or a premium that’s higher than the standard rate.

Costs will be lower for TM’s health benefits customers because their employees’/families’ heath risks are lower than the average Texas employer’s.

Good for those healthy employers! – they get health benefits for their workers and their families at a lower price.

But…costs for employers left in the health insurance pool go up. And Up. And Up.

So, those employers apply for a Level-Funded plan…but

…some of their workers/workers’ families have pre-existing conditions, so at best they will pay more, at worst those conditions won’t be covered OR they won’t be offered a plan.

What does this mean for you?

this, dear reader, is why forcing Texas Mutual to offer smaller employers health benefit plans will NOT solve Texas’ health care problems.

For a much more detailed discussion of adverse selection, see here.

Jun
15

Texas Mutual, $?%@&#) Legislators, and Unintended Consequences

Posted by Joe Paduda on Thursday, June 15th, 2023 | Comments

Exclusive!!! photo of Texas’ elected representatives’ legislation development process

(earlier reporting on TM’s health benefits thing is here.)

The Net – If employers and their employees aren’t happy with Texas Mutual’s health benefits program, TM’s brand will suffer.

TM will NOT be selling health insurance, rather it will be selling “level funded plans” – a form of self-insurance. TM will be acting as a TPA and stop-loss carrier for health benefits plans.

This is a BIG deal, because unlike health insurance plans, Self-insured plans are regulated by the Feds under ERISA – NOT by the State of Texas.

ERISA is hugely complicated; very few small business brokers understand ERISA.

And you can rest assured NONE of their employer customers will have a clue…that is, until something hits the fan. Oh, and under ERISA, the employer is legally responsible and liable for compliance – NOT TM, the broker, stop-loss carrier, TPA, or any other party.

Here’s just a few of the issues…

  1. Unlike the employer’s single contract for health insurance, ERISA plans have multiple contracts (listed below) — all contracts must be completely consistent on coverage, financial liability, and which benefits are covered at what level.
    • Stop loss – stop loss carriers determine what they’ll pay for; unless the contract explicitly states it will pay for EVERYTHING that’s approved by the employer, the carrier alone determines what it will – and won’t – pay.
      • Oh, and stop-loss contracts do NOT pay for medical management fees, like those incurred in reducing huge hospital bills – the employer does.
    • TPA
    • Employer
    • Possibly others e.g. network, medical management
  2. Brokers will have to explain to employers how TM’s plan is different from “health insurance” – but very few – if any – brokers will know or be able to clearly explain those differences.
    • Example – ERISA plans don’t have to cover Essential Benefits (maternity, mental health, substance abuse treatment, prescription drugs etc.)…In fact ERISA plans can cover – or not cover – anything the plan sponsor (employer) wants.  TM’s health benefits plans will likely be different from health insurance plans…thus comparing TM plans with alternatives will be complicated and hard to explain.
      • Employee’s spouse…“wait, you’re telling me my pregnancy isn’t covered??!!”
  3. TM will medically underwrite employers…that is, review all past claims and medical records to identify employees’ and their families’ health problems, then adjust the rates and/or refuse to cover treatment for those pre-existing conditions. 
    • This directly conflicts with several sub-sections of Sec. 2054-603 of Texas’ Insurance Code which reads:
      TM must “fully explore all health coverage options that may be offered under this subchapter and place emphasis on:

      • ensuring adequacy of benefits and access to care for individuals in this state with preexisting conditions;
      • issuing coverage in a manner that does not discriminate against individuals with preexisting conditions
      • ensuring equitable costs regardless of gender or prospects of pregnancy or childbirth.”
        (note the language says “place emphasis on”, which allows major wiggle room)
        Employee’s spouse…“wait, you’re telling me my diabetes/hypertension/ depression isn’t covered?”

What does this mean for you?

Do NOT blame Texas Mutual for this…blame Texas’ Legislature and Governor. 

Next – why this won’t do a damn thing to solve Texas’ health care mess, but Legislators and the Governor score political points.

Jun
14

It is getting very real

Posted by Joe Paduda on Wednesday, June 14th, 2023 | Comments

The failure to see change and anticipate its impact is often fatal.

Myopia is now infecting workers’ comp – and the consequences will be dramatic. I’m speaking about human-caused global warming.

Wildfires in California and the west are now commonplace, conveniently far away from those of us in the northeast…Until we woke up last week to this…

Brought on by unprecedented wildfires in Quebec, a thousand miles north of New York’s Finger Lakes, the smoke shut down sporting events; cancelled construction, outdoor maintenance, farming, road repairs, even meter reading.

This should, but likely will not force us to finally grasp how bad things will get. Yet OSHA is woefully behind in promulgating heat standards as is pretty much every state save California, conference attendees ignore sessions on the impact of climate change on workers’ comp, and articles, research, and discussion of the topic is all but non-existent.

For an industry that prides itself on “risk management”, the willful refusal on the part of many to acknowledge that human-caused global warming is:

  • real,
  • happening faster than many predicted, and
  • will increase the number of workers who get hurt and sickened

is nothing less than an abdication of responsibility.

We talk a good game, congratulate ourselves for “injured worker advocacy”, sponsor Kid’s Chance, laud “industry leaders” who ignore the clear and all-too-present dangers, and award trophies for all manner of “accomplishments”, all the while belittling, laughing off, and ignoring the greatest threat to worker health we’ve seen in generations.

What does this mean?

Shame.

Jun
12

Texas Mutual foray into health insurance…part 2

Posted by Joe Paduda on Monday, June 12th, 2023 | Comments

Last week we talked about Texas’ healthcare problems and the Texas legislature’s decision to force Texas Mutual to jump into the health insurance business.

Like you, I wondered mostly “why”…

  • why force a very successful workers’ comp insurer to get into a business it knew nothing about
  • why not look to other health insurers, or
  • why not just expand Medicaid (like most states have)

So, I reached out to all the original sponsors of the legislation with several questions about the whys…even with four days to respond, none bothered to address my queries (one  – an office worker for James Frank (R) – responded to my email, saying he wasn’t “available to respond”).

To be clear, Texas’ healthcare problems include: 

  • bad-and-getting-worse access to care…especially in rural areas;
  • a quarter of working-age people don’t have health insurance; and
  • healthcare affordability is among the worst in the nation.

Fortunately, the CEO of TM’s new venture was very responsive to my request for an interview.  Meredith Duncan is a highly experienced, very knowledgeable and quite forthcoming executive with decades of experience in health plan operations.

Here’s our interview.

  1. MCM – Why is TXM getting into health insurance?
    The legislature created TM to help stabilize WC 30 decades ago. The passage of Texas House Bill 3752 in 2021 allowed Texas Mutual to create a subsidiary to provide health benefits coverage.  Through the creation of the subsidiary, we aim to create  additional health coverage options  for small business in TX.    Texas Mutual is a mission-driven organization, and I am excited to bring that same orientation to support small businesses in Texas.
  2. What made you decide to accept this position?
    [For a] couple reasons – I’m a native Texan, and my family is as well, I got into healthcare because [some] family [members] had health issues.  I chose this role becauseI am passionate about reducing the number of uninsured in Texas… [I’m] looking to solve that so business can get coverage for employees and families…I enjoy work that requires me to build and design, so this role seemed like a great fit.
  3. When do you expect to launch?
    Looking to quote new business in the first quarter of 2024 and issue policies in Q2, depending on regulatory approval.Our immediate plans are applying to the state to be a licensed stop loss carrier. Assuming we receive TDI approval, we’ll launch stop loss and self-funded plans in the first half of 2024 – using level funding mechanisms, medically underwritten…a level funded product looks like insurance but financials are trued up at end of the year… Over time, we will evaluate opportunities to enter other lines of business
  4. There are several key components of any health insurance program – claims, underwriting, medical management, provider networks, compliance, policyholder service – will you be looking to handle these internally or outsource specific functions?
    For most part outsource to start – more efficient to outsource for TPA services, PBM, and technology to interface with agents, customers, providers, members…also outsourcing actuarial services for short term, underwriting we are evaluating…[it] may be either inhouse or outsourced”
  5. Are there synergies [with Texas Mutual] that will be beneficial?
    Immediately [we] will keep our businesses very separate, evaluate opportunities down the road where we could support businesses together in markets outside major metro areas that are underserved.
  6. You’ve been on the job for several months, what’s been the biggest surprise?
    I am impressed with the TM leadership team and having a new set of colleagues to collaborate with has been a great surprise. Second, market feedback has been very positive, in general brokers are pretty tough on payers but they have been supportive and excited about what we are designing; there’s incredible loyalty to TM on broker side.
  7. What will TM will learn from group health…
    What they may find over time is keeping employees healthy and insured and making sure they have ability to get primary care, manage diabetes and MSK health will help outcomes on comp side as well…

What does this mean for you?

Spoiler alert – beware of seemingly well-intentioned legislators…

Jun
8

Can Texas Mutual help Texas’ health insurance/healthcare needs?

Posted by Joe Paduda on Thursday, June 8th, 2023 | Comments

Texas has some rather troubling healthcare problems…and Texas’ legislators are asking the state’s largest workers’ comp insurer to help solve those problems.

First, a few Texas healthcare data points…

Of course, one of the big issues is Texas refuses to expand Medicaid for reasons I must admit are confusing at best.

And the Feds are looking to cut almost $9 billion in funding; Texas has a convoluted tax-and-transfer thing in place which CMS believes is illegal…

I’ve been digging into this of late…collecting background information, interviewing the leader of TM’s new venture and reaching out to legislators behind a bill that asked required Texas Mutual to help (details below); TM is in the process of standing up a health insurance entity that will begin operations early next year.

From the State’s website:

HB 3752 allows a subsidiary of the Texas Mutual Insurance Company to provide a health insurance product to Texans. The goal is to increase access to affordable health insurance for individuals, especially those in rural communities, and employees of small businesses.

Effective Date: September 1, 2021.

The bill would also require the company to fully explore methods to increase health insurance competition, use innovation to increase quality of care for lower costs, avoid discriminating against patients with pre-existing conditions and provide transparency when developing health benefit plans.

(3)  ensuring adequacy of benefits and access to care for individuals in this state with preexisting conditions;

(4)  issuing coverage in a manner that does not discriminate against individuals with preexisting conditions;

Not later than September 1, 2022, the company shall submit to the legislature a report explaining how any anticipated health benefit coverage offerings would comply with all considerations and guiding principles for developing health benefit coverage offerings under Subsection (a).  This subsection expires January 1, 2023.

Gotta admit, this is a head-scratcher.

 

Jun
7

Work comp provider networks and access to care

Posted by Joe Paduda on Wednesday, June 7th, 2023 | Comments

Of late there’s been “confusion” in several quarters about the impact of provider networks/PPOs/specialty networks on access to care and outcomes.

These uninformed or willfully ignorant folks claim all manner of bad stuff is due to workers’ comp provider networks – without an iota of evidence to support those assertions.

Let’s pick on the Golden State…

Let’s be clear…actual research shows:

there is NO significant difference in access to care for patients treated within or outside a Medical Provider Network.

This from CWCI’s report…

Similarly, there was no significant difference in distance from the patient to provider between MPN and non-MPN patients.

Quoting CWCI…

The latest proximity to care findings also track with results of CWCI’s April 2021 research which found that 99 percent of claims in which treatment was rendered by an MPN provider, and 98 percent of non-MPN claims met the state’s access standards.

What does this mean for you?

Do NOT give any credence to statements similar to: “of course, paying providers less than fee schedule affects access to care” UNLESS they are backed up by real research and not built on a pile of unfounded and unsupported assumptions.

Jun
6

the basics of price and spend in work comp medical…

Posted by Joe Paduda on Tuesday, June 6th, 2023 | Comments

Basics here folks…

Facility costs soak up 2 out of every 5 dollars of work comp medical spend.

“Physician” costs take up another 2 bucks…however that is misleading.

In NCCI-speak, “physician” is a catch-all for most practitioners…MDs, DOs, PTs, chiropractors, PAs…and, the “physician” fee schedule in most states doesn’t apply to things like physical medicine (PM).

Historically PM accounts for right around one of every 6 work comp medical dollars (yes that is a very solid number based on a ton of work I’ve done), although like everything in work comp it varies somewhat by state.

Then there’s drugs, dx imaging, DME, etc.

Drugs account for less than 10% of spend, a figure that has been declining for years thanks to much better clinical management of pharmacy  – mostly by PBMs – more generic usage, a massive decrease in overuse of opioids, fewer new brand drugs used for MSK injuries, and declining fee schedules.

Risk and Insurance’s Annemarie Mannion penned an excellent explanation of how Medicare reimbursement affects work comp fee schedules.  Read her piece and save it in your reference files…you will need it in the future.

Finally, network penetration does have some effect on prices paid…although that impact has declined over the last few years as providers have figured out that when it comes to negotiating with health systems, workers’ comp is pretty much clueless.  Here’s a synopsis of network impact from a post a couple years back.