Sep
19

Paradigm Outcomes acquired

Paradigm will be acquired by investment firm Omers, a Toronto, Canada headquartered company. Sources indicate the price was approximately 14 times earnings; by my calculation, the total valuation was above a billion dollars.

Till now, Omers had not been visible in the work comp services investment space. And, Paradigm was not “shopped” in the usual way; an investment bank is hired, books go out, bids are accepted, etc. The price is even more remarkable as there wasn’t an auction; the valuation continues what’s become the new normal pricing for work comp assets.

If it seems like you were just reading about a Paradigm acquisition…you were. The company just completed a deal to buy pain management network company AdvaNet.

Omers does own Premise Health, a worksite clinic firm, as well as two outpatient rehab and physical therapy companies – however sources indicate there are no plans for any collaboration or combination of assets.

What does this mean for you?

If you own a work comp services business – sell now!


Aug
24

King v CompPartners – good news, but another shoe to drop?

Yesterday California’s Supreme Court fully supported the State’s workers’ comp UR/IMR process.

That is excellent news.

First, here’s the key takeaway – the Court ruled that workers’ comp remains the “exclusive remedy” for resolving disputes related to treatment approvals/UR/IMR.

Second, the California Legislature may well take up the issue and require payers to take into consideration the potential medical effects of a treatment decision, perhaps including weaning off medications that are no longer approved.

The Ruling

UR/IMR is an inherent part of the workers’ comp process, and therefore falls under the exclusive remedy provision of work comp. So, the plaintiff could not sue the IMR reviewer for an allegedly adverse treatment decision.

(Any treatment arising from the plaintiff’s medical care – which in this case was allegedly due to the suddenly stopping a medication – is part of the work comp claim.)

Here’s how CWCI General Counsel Ellen Sims Langille put it:

We have long contended that exclusive remedy was the beginning and end of the discussion in this case, inasmuch as the URO was acting in the capacity of the employer, and as a statutorily required part of the claims process, and now the Supreme Court has agreed.  The URO was acting as the “alter ego” of the employer, and the utilization review itself is a statutorily required part of the claims process.  That is the very definition of exclusive remedy.

The Court of Appeal had made an obvious error in finding that the seizures suffered by Mr. King were compensable outside of the workers’ compensation system because there were no allegations that he was working at the time he suffered the seizures.  That is a fundamental misunderstanding of how compensable consequences work.  As our Amicus brief argued, the injuries alleged by Mr. King were derivative of a compensable workplace injury, and the new compensable consequences injuries fall within the scope of the workers’ compensation bargain — and within exclusive remedy.

But there’s more, which may lead to additional legislative action to address the underlying event behind King…again from Langille:

Concurring Opinions were filed by two justices, and may prove to be the enduring legacy of the decision.  Justice Liu frankly invites the Legislature to examine whether existing safeguards provide sufficient incentive for competent and careful utilization review, pointedly noting his skepticism that “a care plan… appropriate for the medical needs of the employee” was established before the Klonopin was discontinued.  Even the Majority Opinion referenced the same language from §4610(i)(4)(C).  Unfortunately, it does not appear that any of the justices understood that this subsection applies only to cases of concurrent review, which is defined under Reg.  §9792.6(d) as “utilization review conducted during an inpatient stay” and thus inapplicable to the facts of this case.  Be that as it may, it is likely that the next legislative session will include some effort to expand the safeguards for the injured worker under utilization review.

What does this mean for you?

Consider the impact of medical treatment decisions on the patient’s future condition. 


Jul
20

The big story – work comp rates continue to drop

Spent most of this week doing a long bike ride with two great friends – riding thru a 90 minute downpour, falling into a mud puddle, and marveling at two century-old engineering feats.

Glad I missed the poison ivy and horse poop…

Work comp premium rates keep tumbling

This is one of those very big stories that isn’t getting near enough attention. This morning’s WorkCompCentral had two stories that highlight just how much the world is changing.

WCC’s Greg Jones (one of the more diligent reporters I’ve read) noted that California may lose it’s place as the state with the highest work comp rates. 

Ohio’s public employers are looking at a 12 percent drop, capping off a seven-year run of decreases that have slashed premiums by almost 42%.

Meanwhile, despite high medical costs and lots of litigation, Louisiana’s rates have also declined some 30 percent over the last decade.  (thanks to LCTA’s Troy Prevot for the head’s up). While the reduction in employers’ and taxpayers’ costs is a very good thing, too-high medical costs and too-long disability duration are problematic indeed. But the story here is rates are dropping despite these significant cost drivers.

The biggest driver appears to be claims volumes – frequency declined 6 percent last year alone. While some argue that frequency is not a number, and therefore isn’t relevant, as we get very close to full employment, the “gap” between frequency (claims per 100 FTEs) and the actual volume of claims becomes pretty meaningless. (cue disagreement, which is welcomed)

What does this mean for you?

Lower rates will force insurers to reduce administrative expenses, overhead, staff, investments in technology.

Lower rates reduce premium taxes, a funding source for regulatory entities.

Historically low injury rates are continuing to drop, reducing the number of claims – which reduces the need for case management, claims adjusting, bill review, UM, peer review, IMEs…pretty much all claims services.

Insurers seeking to cut fixed costs to reduce Unallocated Loss Adjustment Expenses are moving claims to TPAs, a trickle that may become a flood.


Jul
12

Health Wonk Review’s July edition is up!

July’s Health Wonk Review has:

  • intel on how Purdue deceptively marketed OxyContin;
  • the ACA’s role in tackling the opioid crisis via expanded coverage for mental health
  • a great review of so-called “faith-based” alternatives to health insurance

Just in time for your lunch break too.


Jun
29

Friday catch up

Happy last June Friday – going to be a blistering weekend here in upstate New York with temps likely to blast thru records.  Hope you’re cooler than we are…

Here’s a few newsworthy items that crossed my virtual desk this week.

First up – WCRI’s got the latest on perhaps the biggest cost driver in work comp medical – outpatient facility costs.

Couple quick takeaways:

  • States without fee schedules had significantly higher prices
  • States with percentage of charges fee schedules were way more costly than those with fixed fee schedules
  • Medicare’s reimbursement scheme is becoming more pervasive – my view is this is a very good thing.

Speaking of cost drivers…Health systems are buying up physician practices at a record pace. But does this make good business sense? “…some larger health systems’ physician operations are generating nine-figure operating losses, which are major contributors to the deterioration in hospital earnings. ”

Best line in a news article this week goes to the Economist; in a great article about why meetings suck.

MOST workers view the prospect of a two-hour meeting with the same enthusiasm as Prometheus awaited the daily arrival of the eagle, sent by the gods to peck at his liver.

The solution? “the best solution to tedious gatherings is to have far fewer of them.”

Excellent discussion of the Infrastructure issue – how it affects local business, why tolls should only cover operating and not capital expenses, and why Dodge City didn’t become Dallas – Forth Worth – and DFW did.

Health status is driven by many things – but perhaps the most important is food. One out of six Medicaid recipients surveyed who are working didn’t eat anything for the entire day. Details here.

In the Road-To-Hell-Is-Paved-With-Good-Intentions department, we bring you Medicaid work requirements; they make sense, right? Well, most of the recipients who would lose coverage are actually working today – but they’d be kicked out due to the administrative hassles of complying with reporting requirements.

Prescription Drug Monitoring Programs  – when effectively and intelligently implemented – are associated with reduced opioid prescribing. The best results appear to come from Kentucky…

Ok, time to get to work.

Don’t forget the sunscreen, eh?

 


Jun
25

HWR’s Midsummer Nights edition is up

Thanks to the estimable Hank Stern, we bring you the June edition of Health Wonk Review, a fast read of the latest intel on health policy and related matters.

Hank’s summary includes notes on the CVS’ donation kerfuffle; a very readable review of the Trump Administration’s Association Health Plans plans; what may happen if the Trump folks kill off ACA; and how Medicare might be expanded.

Read on!


Jun
22

After a spate of mega-deals and “tuck-in” acquisitions, things seemed to have calmed down in work comp services M&A.

In reality, there’s a lot going on – for reasons I’m not sure make sense.

There’s been consolidation throughout work comp services; every niche from pharmacy management to MSA vendors to networks to IME firms to case management to TPAs has gone thru this. There’s been both vertical (companies in the same business merging (e.g. EXAM buying IME companies) and horizontal deals (companies in dissimilar areas joining forces (e.g. Mitchell buying MCN).

While your take on this depends on where you sit, (e.g. fewer vendors bidding on a payer’s business), there’s another, arguably more important issue here.

I’m going to caution buyers to not conflate scarcity with value.

I’m seeing renewed enthusiasm among both strategic and financial buyers in companies that weren’t that exciting just a couple of years ago. Those heretofore-not-exciting companies seem to have gotten much more attractive now that there are far fewer potential acquisition targets available.

This is just human nature; we tend to value things more when there are few of them.

For example, I give you the Ford Pinto…

A horrifically crappy car rushed into production during the gas crises of the early seventies, thankfully there are few left in circulation.

Even worse, the AMC Gremlin (why a company would name a product after a manufacturing defect is one of the great mysteries of the Universe).

Yet people still spend stupid money on Pintos and Gremlins

Why? because there are few of them left. That doesn’t make these awful examples of design and engineering incompetence any better, it doesn’t make the build quality less than horrific, and it sure doesn’t make them any more visually attractive.

What does this mean for you?

Before you plunk down your (or your investors’) hard earned cash on some company you passed on or wouldn’t have given a second look at a few years ago, you may want to ask if it passes the Gremlin Test.


May
30

King v CompPartners and the Duty of Care

To what extent are utilization reviewers care providers?

That was NOT the central question argued yesterday in the King v CompPartners case before the California Supreme Court.

The case appears straightforward; the plaintiff was prescribed Kolonopin, which was denied after going through the UR and IMR process. When he stopped taking the drug, he suffered several grand mal seizures which led to additional injury. The plaintiffs are arguing the UR physician who wrote the final denial should have authorized or otherwise recommended a gradual withdrawal, as seizures are not uncommon when patients suddenly stop taking Klonopin (Mr King had been taking it for two years).  In the view of the plaintiffs, failing to do that amounted to medical malpractice .

The central legal issue in this case is the exclusive remedy nature of workers’ comp, with the defendant arguing that he cannot be charged with malpractice as the UR determination and related processes took place within the workers’ comp system. While that’s the central issue, it’s not my focus.

Rather, I’m interested in the “duty of care” issue. I’ll leave the exclusive remedy issue to the lawyers; the health of the patient – and who is responsible for that – is what’s important to me.

There’s some pertinent case law in California that speaks to the “duty of care”, a phrase that infers the physician doing the review  is responsible  – to some degree – for the medical treatment and results thereof associated with his/her UR determination. In fact, the first court ruling verified that the UR physician owed the patient a duty of care.

The question seems to be, how broad and deep was the duty owed the patient?

The case went to appeal, and the court asserted that the UR physician did have a duty of care. From my reading, it based that assertion on the court’s view that a UR physician is implicitly acting as a medical provider.

However – and this is where it gets sticky – the duty of care varies depending on the patient’s specific situation.  

There’s a legal and an ethical issue here. First, that “standard” is pretty nebulous, ripe for disagreement and litigation.

Ethically it’s more clear. The UR entity should always consider the implications of its decision, the potential negative health consequences, as well as the narrower workers’ comp medical considerations of relatedness, appropriateness, and causation.

Because at the end of the day, it’s about doing the right thing for the patient.

Here’s where the reality that is California’s work comp screws things up; payers often base their decisions on which UR vendor to use largely on price.  UR is seen as a commodity, a necessary evil, especially in California where medical management costs account for way too much of the claims dollar.

Payers are looking to get the cheapest UR they can, while some providers and their legal/lobbying supporters scream about high administrative expenses, inferring those dollars should be spent on patients.

What does this mean for you?

What patients need is careful, thorough UR by physicians with the time and training to foresee and speak to potential consequences of their determinations. And that costs money.

Both payers and their adversaries would be well served to acknowledge that fact.

Note – I haven’t read the UR/IMR determination itself, so I don’t know if or to what degree the UR physician delved into the Klonopin withdrawal issue, nor do I know if that was discussed with the treating physician.

Rather my perspective is how these things should be handled and what the primary consideration should be.

 

 


May
25

Health insurance status and workers’ comp

The headlines were comforting – not much change in the number of Americans without health insurance.

Before you breathe that sigh of relief, you’d be well-advised to dig a bit deeper, because there’s plenty of bad news just under the headline.

While the national number of uninsured stayed about the same, that’s irrelevant to you – because healthcare is local. Here’s what I’d be worried about.

  • Young adults are almost twice as likely as older adults to be uninsured – about one in six younger adults don’t have coverage.
    Takeaway – no health insurance = more incentive to file work comp claims 
  • Over a quarter of working-age Texans don’t have coverage. Georgia, Florida, and North Carolina are not far behind

    Takeaway – no health insurance = poorer health status, more comorbidities, more charity care for providers thus more incentive to cost- and claim-shift.

  • 44% of working-age adults were covered by high-deductible plans – but more than half of them don’t have health savings accounts needed to fund those high deductibles

Takeaway – “High” deductible healthplans aren’t much different than no insurance at all if the patient can’t afford the deductible – and over half can’t. So, more incentive to cost- and claim-shift.

What does this mean for you?

Workers’ comp will be affected by the Administration’s ongoing behind-the-scene effort to hollow out the ACA and cut funding for Medicare and Medicaid.

 


May
22

Swedlow on work comp networks…they are NOT equal

The best was saved for last at NCCI’s Annual Issues Symposium. After Gen (ret) Colin Powell warmed up the crowd, NCCI’s Barry Lipton and CWCI’s Alex Swedlow took to the stage to educate us on networks and outcomes.

First, California. Average medical costs have gone up 4.3x in CA since 1990; while there have been lots of regulatory and legislative efforts to add guidelines, enable managed care, and increase network usage, ultimate medical costs now are over $37k.

Network penetration in CA is now around 84% for physician services – where it looks like it has peaked.  Along with this increase has come an increase in administrative expenses.  WC Admin expense in CA now accounts for 53% of work comp costs, more than twice the average across the nation.

41% of those costs are for med management (31% for defense attorney expense). Bill review and network account for 47% of those medical management costs, UR is the remainder. (these percentages have been pretty static over the last decade).

So, what are you getting for all your millions?

Fortunately, CWCI’s done a lot of work to evaluate that very question. And they dug really deep. The slide below describes the data points CWCI used in their network evaluation.

Swedlow et al then looked at individual networks, comparing 11 different networks’ outcomes for claims (case mix adjusted, incurred between 2011-2014, developed thru 2017). Lots of takeways that will be published in a few weeks after final editing.

But here’s a spoiler –

There’s a huge amount of variation between networks, and some are delivering excellent results while others are worse than no network at all.   I direct your attention to the right side of the picture; note that average case-mix-adjusted cost per claim varied by 82 percent.

If you used the MPNs on the left side of the graph, your medical loss costs per claim would be over $11,000 lower than if you used the MPNs on the right.

And, your patients would get back to work two months earlier.

My takeaway is this – there are two types of MPNs; the State Fund and Kaiser Permanente On-The-Job type that is outcome-based, highly selective, and focused on care. This Outcome-based MPN, Or O-MPN is on the left of the screen.

And the revenue-based, that are focused on generating dollars off savings below fee schedule and other meaningless standards. On the right of the screen, the revenue-based MPN, or R-MPN, is huge, includes every provider in the book and some who haven’t been in the book for some time, is completely unmanaged, and generates beaucoup bucks for the payers that use it.

Lots of other great insights in the session which I missed – I had to run to get to the airport.

What does this mean for you?

Depends…Is your MPN an R-MPN or an O-MPN?