The geekiest part of NCCI is the research workshop that takes place after lunch on the second day – you know the people attending are committed if they are in Orlando on a Friday afternoon listening to economists…

Harry Shuford discussed the “mystery of declining claim frequency”, an oft-described trend that some believe will end at some point while others think it may continue ad infinitum.

While there has been a cynical pattern over the last 90 years, the overall decline has persisted since 1926 (using manufacturing claim rates, the only ones that go back that far).  That said, the decline steepened after 1990 and has continued to this day, and it is consisted across all states, industries, occupations, demographics, affected body parts…

Why?

Harry and his colleagues looked at a lot of factors to determine their correlation with injury rates and similar data points.  The correlation isn’t due to the decline in manufacturing in the US; the decline has happened globally and across all sectors of the economy, not just manufacturing.  

Harry then showed a graph of international work-related fatalities (across 120+ countries) which showed a similar decline trend, with a bit of leveling in the late eighties followed by a steeper decline till 2006  and an even more rapid drop after that.  On average, there’s been a 4.3% annual decline over the last 30 years.

The death rate decline also mirrored the increase in per-capita income, albeit at a lower rate (3.6%).

And it was, if not entirely consistent, at least similar across geographic regions.

Net – two drivers: time, perhaps driven by pressures to improve productivity; and as a country gets wealthier, there’s a decline in the injury rate.

The takeaway – the trend has been in place for 80 years (at least) and will very likely continue into the future.

What does this mean for you?

Frequency will continue to decline.

 

Held again in Boston, WCRI’s annual meeting is one of the better research-focused events on the annual calendar.

It always includes a timely topic as well as a deep dive into key issues explored by the geniuses at WCRI; we can also expect insights into the impact of the economy on comp, updates on WCRI’s Benchmarks analyses, and the always-terrific Alex Swedlow will educate on medical dispute resolution.

This year the focus is on the impact of Affordable Care on work comp, a subject near and dear.  I’m a bit surprised about the timing as PPACA has been the law of the land since 2010; payers who haven’t done their homework and prepared for tighter access, potentially more cost-shifting, revised hospital coding, and strengthened subro efforts by group payers are going to be far behind.

There was much that work comp payers could – and should – have been doing to prepare for PPACA over the last four years; those who have not are way behind. Fortunately, they can gain some insights from the several presentations on the subject at WCRI.

(Here’s a link to a nine-part series on Obamacare and WC; dozens of other posts are here.)

As always, I’ll be reporting from Boston, but won’t be nearly as prolific this time around…if you want to hear the good stuff, see you there.

The California Applicant Attorney’s Association says there’s a BIG problem with UR in California, and a recent analysis by CWCI is flawed and inaccurate.

I don’t see it.

Greg Jones’ piece in yesterday’s edition of WorkCompCentral digs deep into the issue; here’s the brevitzed version of the disagreement.

CWCI analysis indicates about 75% of ALL treatment requests are approved by the adjuster or surrogate referring 25% on to an elevated physician-based UR process.

Elevated UR denies or modifies 23% of the treatment requests for an overall denial/modification rate of about 6% (.25 x .23 = 6%). The denial rate falls even further to less than 5% for claims that go through the state’s new medical dispute resolution process, independent medical review (IMR).    CAAA’s consultant argues that the denial rate is higher, by:

• citing different studies from different years with different samples, thereby comparing apples to oranges;
• asserting that there’s a lot of variation in denial rates among payers, as if this was a bad thing or even meaningful (different employer types, different locations, different medical management strategies);
• claiming that CWCI’s analysis was in error because their study included medical-only and not just indemnity claims, as if a standard of care or UR should or could somehow be different for claims with lost time. Guidelines are guidelines; they apply to all injured workers and don’t vary by type of claim.

Moreover, the premise of CAAA’s argument – to the extent there is one – is fatally flawed.  

A denial rate of 5% is hardly a catastrophe – especially when one considers where California was before the 2004 reforms – known as the physician’s presumption of correctness. Treating docs decided what treatment was appropriate, based almost exclusively on their personal opinion, or for a relative few, how they could generate the most revenue.  Payers had few opportunities to challenge a treatment plan. Treatment costs exploded to over $12 billion a year.

Would anyone allow a vendor to completely determine what services they were going to provide at what cost to whom? 

Of course not. This is completely at odds with every other payer system’s medical management methodology/process, because it is wildly illogical.   Yet that appears to be the motivation behind CAAA’s “analysis”.

Today, about 5% of treatment requests are denied or modified, medical costs are half what they were and employer premiums are way down as well.

Let’s look a little deeper at the results.

CWCI found that 43% of elevated UR and a third of the IMR reviews were for drugs. About half of those RX reviews are for opioids and compound drugs. Most likely a relatively few docs have a disproportionate percentage of challenged treatments.

The key is what are they doing and why – if they are prescribing Oxys to patients not supported by medical evidence, that’s wrong.  And, the current IMR process has begun to fix that problem.

Yes there are workflow problems, problems that will be resolved. Yes the process needs to get a LOT more efficient and less expensive. Yes guidelines need to be constantly updated.

And No, we don’t need to go back to the days of never ending treatment at the whim of the treating doc and bankrupt insurers.

 

Yes – at least medical prices did, but the drop wasn’t as much as the reduction in the fee schedule, and it was a LOT less for expensive procedures.  Those are the quick takeaways from WCRI’s report (published yesterday).

The reforms brought a 30 percent reduction in the medical fee schedule as of September 2011, yet:

• Professional service prices dropped 24 percent, with the 6 percent difference driven by lower provider participation in networks (thus fewer providers delivering care at a discount) and higher prices from in-network providers.
• Radiology prices dropped 13 percent for MRIs and 22 percent for X-Rays, and ER services also only dropped by 18 percent; other than that, most service groups saw prices decrease somewhere in the mid-twenty-percent range.
• Utilization appears to be on the increase, as WCRI’s research found “more complex office visits with higher prices were billed more frequently in Illinois.”
• Surgeries are still waaaay more expensive in IL than in the median study state 2 1/2 times to be precise.  That’s 242 percent more than employers pay in Michigan...

What does this mean for you?

1.  Reducing prices does not lead to a corresponding decrease in costs as providers figure out how to make up for lost revenue by doing more, and more expensive, services.

2.  Kudos to WCRI for getting this info out so quickly; in the past it has taken much longer, so they’ve upped their game considerably. This makes the information much more actionable for payers and regulators alike who can figure out where potential issues lie and take steps to mitigate problems.

 

One study published in the Spine Journal says no.

In fact, the opposite may well be the case; compared to Washington State, workers’ comp back patients in California get way too much unnecessary surgery, leading to higher costs and worse outcomes – including more wound infections, life-threatening complications, and device complications.  

The study used a case-mix adjusted of patients undergoing an inpatient lumbar fusion for degenerative disease in 2008 – 09, and produced the following results:

• the rate of lumbar fusions in CA was 47% higher than in WA.
• the complexity of procedures was much higher in CA.
• CA costs were more than 20% higher in CA than WA.
• CA costs were influenced by the (since fixed) double payment for surgical devices and coverage for bone growth enhancers (which have decidedly mixed reviews)

So, we have too many and too complex procedures performed on too many patients at too high a cost, with worse outcomes.

Why?

Well, the limits on lumbar fusion in WA are pretty tight, for very good reason.  In contrast, CA only required a second opinion to approve the procedure.

The financial incentive inherent in CA’s high payments for the procedure may (!) have had something to do with it.

What does this mean for you?

More surgery is often not better care, and in many instances means worse care – and a pretty crappy life for the patient.