After weeks of speculation – most of it pretty accurate – it’s official.

In one of the more impactful transactions we’re likely to see this year, CVS/Aetna has agreed to sell Coventry Workers’ Comp Services to Mitchell/Genex. Terms haven’t been disclosed. Press release is here

The deal isn’t official until it’s passed thru any and all regulatory hoops. I doubt very much there will be any problems as the current Administration isn’t interested in doing much of anything to interfere with business.  Sources indicate current Coventry leader Art Lynch will report up to Peter Madeja; as noted here before I’m a big fan of Peter’s.

Oldsters will recall that Aetna tried to sell Coventry at least twice.  Both times the deal didn’t happen because the owners didn’t understand the critically important issue – who owned the network contracts.

After the last debacle, Aetna went back and converted (almost) all the Coventry provider contracts to Coventry paper, so the network contracts convey with the sale of Coventry. Since it’s the network that drives the majority of profits, this was a have-to.

In addition to the network itself, Coventry has a bunch of other assets – PBM FirstScript, a bill review business, case management and UR, and other stuff.

Takeaways.

Data is a huge asset, and one that should create a lot of value for Coventry and its customers. As the largest network, one of the largest bill review entities, and with decades of transaction history, the company has the information it needs to build a much more effective network…effective defined as “one that delivers lower net cost for its customers.”

In an HSA survey of 15 big payers’ views of provider networks, Coventry garnered the top spot in terms of market acceptance and respondent ranking. It is certainly the largest in terms of share despite chronic under-investment by owner Aetna.  Now that Coventry will be owned by a workers’ comp entity run by people who know workers’ comp, I’d expect a pretty significant investment into the core asset – the PPO.

That will undoubtedly include building and staffing a network contracting and management capability – from scratch. Certainly M/G will be able to use Aetna’s technology and perhaps contracting/credentialing resources for some time, and equally sure M/G will do everything possible to build that network management capability quickly and well.

If they do it right, customers should see improved results in the form of lower facility costs.

The First Script PBM is the next biggest asset.  It has also suffered from underinvestment for years. Given the continued decline in work comp drug spending and the need for millions to invest in PPO network infrastructure, it wouldn’t be surprising if the new owners focused their interest elsewhere.

Genex’ bill review operation is a big player, and the addition of Coventry’s BR operation will add even more scale. One question – what to do about the BR platform?  Coventry is a big Stratacare user which presents a bit of a dilemma as the new owner is a direct competitor.

Then there’s case management, UR, and other related services.  These can be readily integrated into Genex’ current service portfolio and will strengthen the company’s breadth and scale. Expect Genex to leverage this to expand relationships with national payers.

Implications

The transaction marks the latest in a long list of mergers and acquisitions in the workers’ comp services business. We are nearing the end of a decade-long consolidation – there are just not that many large assets left, the industry is not that interesting due to structural issues, and fewer assets = higher prices.

Payers should see better results from a Coventry network run by people who understand work comp and are willing to invest big dollars into building a much more effective network.

Conduent’s leadership may be thinking thru implications as well as there’s a bit of channel conflict.  As the largest (by market share) WC BR application vendor is rumored to be in this for the long haul, I strongly doubt Conduent will be having second thoughts about partnering with the largest WC PPO.

 

Three pictures tell the story of the biggest problem in workers’ comp medical cost management.

A reminder that facility costs are the biggest chunk of medical spend from Kaiser Family Foundation.

A seemingly-unrelated graphic illustrating the status of Medicaid expansion; blue states expanded Medicaid under ACA, gold-ish states did not.

States where work comp facility costs have risen the most – courtesy WCRI.

This from Captain Obvious – Hospitals in states that failed to expand Medicaid are using workers’ comp as a financial lifeline.

What does this mean for you?

What’s your solution?

Two Republican-appointed judges on a Federal appeals court struck down a key provision of the ACA.  So what?

Well, if you or a family member are a bit heavy, have high blood pressure, are pre-diabetic, had a bout of cancer, may need long-term care, make less than $103,000, are pregnant, pay attention.

Another judge will decide if the entire ACA or parts of the very broad law are struck down. Among the provisions at risk are:

• guaranteed coverage for pre-existing medical conditions
• guaranteed healthcare for your kids up to age 26
• long-term care benefits for you and your parents.
• no lifetime caps on medical benefits
• reduced premiums for families that make less than $103,000
• financial support for small business’ healthcare premiums
• coverage for prescription drugs and behavioral health
• limits on what insurers can charge older folks
• Medicaid expansion in two-thirds of the states

SOME of the pre-existing health conditions that would not be covered if the ACA goes away…

This would have different effects in different areas… click here to get an interactive map.

What’s puzzling is the Republicans who want to blow up those protections have no plan to deal with the consequences. The end of all or some of the ACA will have huge effects on families, and there’s NO plan to help families when this happens.

What does this mean for you?

Check the list up top.

More on potential implications here.

A detailed discussion of the lawsuit and where things stand is here.

In which I publicly fess up to miscalls and things I actually got right.

Each year I make predictions about what the work comp world will do in the coming dozen months. Here’s how that went in 2019… (spoiler alert..the ball was a bit cloudy last January…)

1. The work comp insurance market will harden – a little.

Nope. The seemingly endless soft market continues – and there’s nothing on the horizon to indicate it’s going to end.

2.  A very big external event/issue/mess will affect the economy – and thus workers’ comp

Nope. Despite more launches by “Rocket Man”, a bunch of trade wars, tariffs that continue to crush agriculture, increasing catastrophes due to global warming, softening economies in Asia and Europe, and an impeachment, the economy continues on autopilot.  Sure, one could argue that these and other crises would be a huge story in any other year, but the sheer size and number of daily crises has killed our ability to consider anything short of a collision with the moon as newsworthy.

3. There will be significantly fewer M&A deals in work comp services – and those deals will be either pretty small or really big

Yes.

The Sedgwick/York deal and the OneCall creditor takeover were the big ones. Not much else of size or significance happened…

4. Facility costs will be the new focus for payers and service companies

This is a push; it’s starting to happen – but not fast enough. Every other payer is fighting back, but far too many work comp insurers and TPAs aren’t paying attention.

5.  New business models for Pharmacy Benefit Management will gain traction

Yes – transparent pricing is gaining traction, driven in part by the Ohio BWC/Optum litigation and what we’ve learned from it.

6.  The “advocacy” claims model will gain a lot more traction,

Among the self-insured employers I’ve been talking with, the answer is yes. While different names are used, there’s definitely a push to get away from the “you’re a claimant” approach and move to a “how can we help”? ethos.

7.  “Opt-Out” will not gain traction.

True that.

8.   Service companies that deliver best-in-class customer service – and build that into their branding messaging – will win. 

Yes. MedRisk has won the PT wars by delivering stellar service (btw the people in the office pictures on their site are real actual humans who work at MedRisk), PBM service leader myMatrixx is landing new customers (EMC, Koch, Qual-Lynx), HomeCare Connect is as well (Zenith Insurance, Great American, Broadspire, Chubb, State of North Carolina). (MedRisk and myMatrixx are HSA consulting clients)

9. More success in reducing long-term opioid usage by more payers.

Yes – but lots more progress is needed.

10. Payers will implement business models and processes using Artificial Intelligence  

Yes – Ohio BWC’s work on using AI to code incoming work comp claims looks to be an impressive success. The Hartford is using AI to identify claims for intervention, and legal departments are using AI to scan documents for key words to support discovery and legal issues.

So, 7 right, 2 wrong, 1 a push.  To be fair, the two I got wrong are big ones.

Coming up, predictions for 2020.

The House of Representatives just passed landmark legislation intended to reduce the cost of drugs for seniors.

The bill won’t go anywhere, because the Senate won’t consider it – and if it does, President Trump has said he will veto it (despite campaign promises to reduce drug costs).

Unfortunately, a bill advanced by Republican Senator Chuck Grassley that would cap Medicare drug price increases will be opposed by Senate Majority Leader McConnell (R).

Given the public’s focus on healthcare, and seniors’ voting power and high level of interest in drug prices, the lack of GOP support is puzzling.  It appears the main objection is reducing what you pay for drugs may result in the development of 8-15 fewer drugs. Over the next decade.

If the House bill became law, Medicare would save $345 billion over six years.

So, seniors would pay less for drugs, taxpayers would save hundreds of billions of dollars, and we may not get one new drug per year.

Only in a government ruled by pharma lobbying would this make sense.

What does this mean for you?

Once again, big business wins, and you lose.

 

 

 

Every year a quarter-million of us are killed by medical error.

That makes medical errors the third leading cause of death in the US.

Medical errors kill more of us than motor vehicle accidents, firearms, AND opioid overdoses – added together.

Efforts to fix this problem are woefully under-funded, poorly co-ordinated, and often ignored by stakeholders. That’s likely due to poor reporting and tabulation of medical errors and the repercussions thereof.

It is stunning indeed that a $3.4 billion industry whose sole focus is to preserve and protect our health kills a quarter million people a year – and we didn’t know this until a few weeks ago.

What’s even more disturbing is this story has been all but ignored by mainstream media.

What does this mean for you?

Ask questions, demand answers, be forceful, and don’t accept platitudes. And hold doctors, hospitals, and caregivers accountable.

That’s the question many have asked when told a handful of California physicians file most of the UR and IMR requests. Who are the 122 docs who file 44% of IMR disputes?  The ten physicians responsible for 9.5%? And what are the results of those filings?

Normally when regulators institute UR and associated appeals processes, there are a lot of UR appeal requests in the first few months, after which the volume drops off dramatically.  As providers learn the guidelines and understand the process, they change their practice patterns to comply with those guidelines.

This has been the pattern for decades, ever since UR started with hospital pre-auths in California in the early 1980’s.

Workers’ comp is no different, as the same trend occurred when Texas implemented guidelines and UR, and other states as well. For those wondering how this could be, a few reasons are provided below, courtesy CWCI…

Things are certainly different in California, where the volume of UR filings and IMR appeals actually increased by about 30% in the years since adoption. This makes no sense, as 9 out of 10 times a doc files an IMR appeal, that appeal is rejected. This adds millions of dollars to employers’ and taxpayers’ costs, extends disability, and slows down the patients’ recovery process. [of course, most of these UR/IMR requests are filed by applicant attorneys, based on the treatments are prescribed by physicians)

(chart courtesy CWCI)

 

Till now, the top offenders, the docs who don’t want to comply with evidence-based treatment guidelines, the ones who slow down the recovery process by continually requesting inappropriate drugs, unnecessary surgeries, unneeded injections and unproven therapies have been able to hide behind a wall of anonymity.

That’s over; SB 537 is why you’re about to find out who these bad actors are.

Specifically, Section 3, 138.8 requires DWC report individual providers’ UR and IMR filings and the results thereof.

From the Senate Analysis of the bill:

Recent research from the California Workers’ Compensation Institute suggests that medical disputes in the workers’ compensation system are not widespread: rather, they are uniquely concentrated among a few providers. For example, in 2015-16, the top 1% of providers who filed IMR requests (97 providers) filed twice as many requests as the bottom 90% of providers (approximately 40,000 providers). [emphasis added]

the strict protections on the use of individually identifiable information means that it is likely illegal for the DWC to reach out to these providers and find out why there is such a concentration of medical disputes among such a small provider group. SB 537 will address this concern by implementing the same data reporting requirements as are in the federal Medicare system.

DWC is tasked to do this on or before January 1, 2024; sources indicate DWC will likely publish data well before that date.

And when it does, we’ll know the name of the PM&R doc in northern California who filed IMR requests resulting in 2,800 IMR letters and 4,441 Medical Decisions. Oh, and 85% of those appeals were rejected. For those keeping score at home, that’s 11 letters per working day.

What does this mean for you?

Employers and insurers, make darn sure your MPN is on top of this.

 

 

 

Yesterday we dove into Haven, the healthcare company formed by Amazon/JPMorgan/Berkshire Hathaway.  Today, we discuss the potential implications for workers’ comp.

Based on what we know so far, there are two ways Haven might impact workers’ comp.

Before Haven can affect WC, it has to become a viable entity of some significant size. Some skeptics don’t see that happening, citing the Byzantine complexity of the US healthcare (non)system, the size and scale of the medical-industrial-financial complex, and the bewildering maze of laws and regulations.

Those are excellent points; I’d suggest critics may be making assumptions that aren’t necessarily appropriate. Haven may well create a “de novo” healthcare delivery and financing system, leveraging the employee population, intellectual capital, technology, financial capabilities, and buying power of its owners.

If Haven becomes the healthcare delivery platform for the hundreds of thousands employed by its three owners, those employers would likely use that platform for occupational injuries and illnesses. That would enable seamless integration of care, reduce the risks inherent in the siloing of care between comp and group health, and likely upgrade non-occ disability management as well.

Efforts to deliver 24 hour care have fizzled as the opportunities inherent in integration couldn’t outweigh the legal, regulatory, cultural and political realities. It’s possible that Haven could eliminate much of these obstacles by starting fresh.

So that’s the big change.

More likely – and much sooner, is the potential for Haven/Amazon to provide drugs, supplies, and DME to work comp patients.  The companies’ push into pharmaceutical manufacturing and distribution, and distribution of medical devices and supplies means it has the supply piece in place; next step is building the distribution channels/pipes into work comp payers.

The total work comp drug/supply business is likely less than $6 billion, a relative pittance compared to the half-trillion plus dollars in revenue the three partners will enjoy this year. And, once those pipes are built, Haven will figure out how to generate more revenue.

If anyone can do this it’s Haven/Amazon.

What does this mean for you?

Service providers need to double down on service and be that indispensable partner.