A week away from the blog is now past…here’s what I missed.

myMatrixx’ Chief Innovation Officer Cliff Beliveau – one of the smartest and most articulate tech people I have ever met – penned an excellent summary of AI’s potential uses in and impact on workers’ comp in yesterday’s WorkCompWire.

Cliff highlights key opportunities and challenges in claims, medical management, fraud detection and claims oversight…download his piece and save it.

Will automation disrupt construction? A better question might be “when will automation disrupt construction?”

Even better “when will what parts of the construction industry be disrupted by automation?”

All are addressed here.

Net is this – the author isn’t convinced we’ll see massive automation within the next decade...but points to a key use of technology that is already speeding up construction  – and making it more efficient to boot.

Surprise! medical bills and Junk healthplans – defined as plans with significant limits which often aren’t clearly identified up front – are facing increasing scrutiny. The White House is proposing strict disclosure standards and time limits on junk plans…

“The new proposed rules would close loopholes…that allow companies to offer misleading insurance products that can discriminate based on pre-existing conditions and trick consumers into buying products that provide little or no coverage when they need it most,”

The two – surprise! bills and junk plans, sort of complement each other…the junk plans don’t protect families from healthcare providers’ aggressive billing practices.

The proposed rule would highly limit duration of the plans, requiring clear disclosure of policy terms (as in written in English), and close coverage loopholes.

And one more note of interest for smaller employers looking at self-funded plans, and especially level-funded plans...AM Best’s April 28 2023 Market Segment Report indicates:

  • 2 out of 5 small employers (3 – 199 employees) are in level-funded plans
  • Just a year ago it was 1 out of 8 employers…
  • stop loss insurance loss ratios jumped to 85% in 2021 driven by new and very expensive specialty drugs and a lot more million dollar claims.

Just in the last year, 5 specialty drugs, each costing more than a million dollars annually per patient – have come to market.

What does this mean for you?

Smaller employers be very, very careful of self-insuring… 


Solving Texas’ healthcare problems…or not.

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 messand 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.


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

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.


Texas Mutual foray into health insurance…part 2

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…


Quick takes

Stuff you may not have seen/thought much about…

Good work from the Travelers...Analysis of a very large number of WC calms found:

  • watch those new workers – those with < a year on the job account for more than a third of all WC claims
  • workers >60 cost more…a whopping 1.4x more than the 18-24 year olds (but only 15% more than the 25-59 folks)
  • but…the 60+ folks don’t get injured as often.

The report is here.

kudos to the folks under the umbrella and WorkCompWire for getting the work done and news out.

you may have missed this – Texas Mutual is getting into the health insurance business.  I’ve reached out to TM and will be interviewing the new leader. I’ve a lot of thoughts about this…

  • the just-hired leader has a wealth of experience
  • standing up a new health insurance entity in a year is a very heavy lift
  • regulatory structure is quite different from WC
  • all research shows market share is the key factor in negotiating provider reimbursement, making it hard for new entrants to gain traction

Then there’s the question: “Why did legislators want TM to get into health insurance?” If they wanted to cover more people, expanding Medicaid would have been a lot faster, far less expensive, and much more impactful.

Finally, (somewhat) new WC bill review company accuro solutions acquired Splashlight...Splashlight is also in the WC BR business.  Good to see competition in an industry sector that sorely needs it.



Friday catch-up

Lots happened this week while I was hunting, driving, and finishing up the annual survey of pharmacy management in work comp.

A quick update on pharmacy data points…

  • across the 30 respondents we have so far (a few more to come), drug spend was down one percent...however
  • there’s a ton of variation between respondents with some seeing big jumps and others steep drops in spend.
  • 91% of all scripts are generic…that’s a big increase from a few years back
  • pharmacy is viewed as being just a bit more important than other medical categories such as facilities, surgery, E&M.
  • and opioid spend is down again (YAY!!)

From HBR comes this trenchant observationIn Supplier Negotiations, Lying Is Contagious

“Lying once can be contagious. It can pave the way for lying again in other interactions or negotiations with people at other companies.”

The brief article is intended to provide guidance to buyers, but sellers would do well to internalize the researchers’ observations.

Health spending in the US is almost twice (as a percentage of GDP) as high as other developed countries’.

The graph is here if the pic above is hard to read.

Which means far fewer dollars to spend on wages, R&D, IT investment, and stock dividends – and much higher taxes to pay for civil servants’ health benefits.

Oh, and costs zoomed up in 2020 and 2021 due to COVID…due in large part to staffing shortages and concomitant labor costs.

What does this mean for you?

Next time someone starts comparing US healthcare to those with national systems, ask them if they have any idea how much more money we spend than those “socialists” do.


How we measure “value” in healthcare is all wrong.

The most popular formula for calculating the “value” of healthcare is pretty simple…

If you want to get a bit deeper into details, there’s this…

It’s about the “quality” of the medical procedure (was it done right? was the patient re-admitted? was there a surgical error or infection), perhaps the appropriateness of that procedure, and the “patient experience” – measured…somehow.

Pretty much every formula, discussion, or description of the healthcare value equation is focused on “outcomes” defined as the result of a surgery or treatment (did the patient get better?) or avoidance of sickness or injury (did the patient stay “healthy”).

None – as in none – focus on what’s really important to you and me –

Did the healthcare we received maintain/improve our ability to function – to raise our kids, work, exercise, function in society, do things we like to/have to do.

Functionality is the only “value” metric that matters, yet pretty much no one in healthcare and no healthcare organization – except in workers’ comp – talks about functionality, measures their results based on functionality, reports member functionality, studies it or seeks to improve overall member functionality as a core goal (except for a few unique healthplans).

Further, employers, who pay hundreds of billions of dollars on healthcare insurance premiums don’t even think about the impact of that healthcare on employee functionality/productivity.


Procurement, CFOs, finance departments and management are constantly challenged to show a return on investment on any project, hire, new initiative, acquisition or investment.

But never when they are buying healthcare – which, after payroll, is the biggest single part of the budget for most service companies and a major cost for every type of employer – public, private, not-for-profit.

Nope, it’s the thickness of the provider directory, whether or not some health system is in that directory, perhaps some “quality” rating, plus the biggie – cost.

What does this mean for you?

We are buying healthcare all wrong.


The problem with primary care?

It doesn’t generate profits for the medical-industrial complex.

From a societal perspective primary care is wildly undervalued – and wildly under-appreciated – because primary care doesn’t make money for anyone, especially primary care providers.

Which makes no sense on every front but the profit one. If everyone had good primary care,

  • they’d be healthier,
  • their health risks would be identified early and a plan developed to address them,
  • they’d have a provider who treats them as a whole person, who understands that we are a bunch of tightly-interrelated organ systems that have to be considered as a whole, not as individual organs,
  • they’d understand non-physical issues can be just as impactful as physical ones,
  • there’d be a lot less need for specialists, and
  • healthcare costs would likely be a lot lower.

Healthier people don’t need as many medications, devices, treatments, injections, therapies, surgeries, rehab, inpatient beds or surgical centers as unhealthy people.

And that’s where the money is.

Kaiser Permanente has generally excellent primary care – yet it can’t/hasn’t been able to translate that excellence into a sustainable competitive advantage.

I believe that’s because KP – and pretty much everyone else – is thinking about the “value” of healthcare the wrong way.

Tomorrow – how we define value today – and why that is wrong.


Private health insurance – can it be fixed?

I’ve been thinking long and hard about why our health insurance and healthcare systems are such a clustermess. Hugely costly, lamentable outcomes, a morass of bureaucracy, red tape and stupid rules enriching a few and impoverishing many.

So, I think I have a solution – and it involves workers’ comp.

First, the problem.

Today I’m reprising a post from a couple years back – if anything it is more accurate today than it was way back then.

If you had “government” health insurance for the last decade, your costs would be 20 – 25% lower today.

That’s because private insurers have not controlled spending nearly as well as Medicare and Medicaid have.  This from KFN via Axios.

Doesn’t matter what your economic or political ideology is – that’s a fact.

You and your insurance company pay your doctors and hospital more than twice what Medicare does. Yes, the Feds can exert pricing power – but why can’t United Healthcare, or Aetna, or Blue Cross?

Those healthcare giants should be able to negotiate better deals with providers; they have massive buying power and millions of members to leverage. They should be able to use that power to give you lower insurance costs – but they can’t.

Those private insurers are (theoretically) more nimble, smarter, better run, and more efficient than the government. And they have hundreds of billions of healthcare dollars to leverage.

Yet they’ve failed to outperform a bunch of bureaucrats.

I won’t dive into the “whys” today, because that would take away from the over-arching truth – government has been much more effective than private insurers.

What does this mean for you?

Cutting your health insurance costs by a quarter = more dollars you could have spent on other stuff.

note – happy to hear other thoughts; please use citations to back up any assertions.


Amazon, Kaiser, and primary care

Two seemingly-unrelated new items hit my news feed – Kaiser Permanente lost over a billion dollars last quarter, and Amazon paid $3.9 billion to buy One Medical, a primary care company.

Amazon is betting it can make primary care “work”, yet one of the best healthcare systems hasn’t been able to translate excellent primary care into lower costs.

Reality is, in the US primary care is (mostly) a money-loser.

One Medical, Amazon’s new purchase, has consistently lost money – a lot of money. That’s because reimbursement for primary care remains pretty low – despite Medicare’s move to increase pay.

We spend twice as much on healthcare as other developed countries, yet our outcomes, well…suck. One driver is likely access to primary care:

  • High income countries spend 2 to 3 times more on primary care services than we do; United States as a proportion of their (14% of total health care expenditures vs. the US’ 5% to 8%)
  • In those other countries primary care providers (PCPs) account for a substantially higher proportion of all practicing physicians; almost half of French physicians and a quarter of docs in the UK are PCPs compared to just one out of 8 in the United States.
  • that last data point may be due to pay; family practice docs make less than half what orthopedic docs do.

Good primary care saves big bucks by reducing the need for specialty care – an economic impact that isn’t reflected in primary care reimbursement in the US. At least not in most reimbursement schemes; risk-taking, ACOs, risk share, and other variations are among the models that attempt to reward PCPs for effectively managing patient health.

Amazon’s move to buy One Medical comes on the heels of lots of other investments in primary care; what’s notable is how few have resulted in profits.

Can Amazon “fix” primary care?

Well, they’ll  have to be a lot better than Kaiser Permanente.

KP is one of – if not the best – health care systems in the world, with excellent primary care and provider compensation that better reflects the value of primary care.

Yet KP lost over a billion dollars last quarter – and over $2 billion for the first half of 2022. Yes, a big chunk of the Q2 loss was due to investments, and there are extraneous factors – COVID-related mostly; Kaiser also has to pay orthopedic surgeons and other specialists a lot (increasing KP’s overall cost of care) because those docs could make much more outside KP.

Still, when one considers that Kaiser Permanente’s operating margins are generally pretty thin and certainly KP is less profitable than other health plans (UnitedHealth Group’s Q2 profits were up 19%) it shows just how difficult it is to make primary care “pay.”

What does this mean for you?

Pay more for primary care.