Sep
18

Friday catch up; lots doing in workers’ comp

A very busy week indeed – here’s what happened.

MedRisk’s management changes

Long-time CEO Mike Ryan has stepped up to Executive Chair, and President Ken Martino is moving up to CEO. Mike has led the organization as President for more than 7 years. Founder and Chair Shelley Boyce named Mike CEO several years ago. I know Shelley, Ken and Mike very well.

MedRisk’s annual growth has averaged over 20% for the last decade. The company now employs 1,200 people, all located here in the US.

There’s no question MedRisk, perhaps the most successful company in the work comp services sector is in very good hands. (MedRisk is an HSA consulting client)

Mental health in the workplace – Great take on the big increase in workplace stress from HomeCare Connect’s Teresa Williams in today’s WorkCompWire.  Teresa notes that the percentage of adults with depression or anxiety has tripled over the last year. Her piece has helpful recommendations that employers:

  • list what they are doing to protect employees
  • be honest and straightforward about the employer’s financial situation
  • refer workers to trusted sources for information on COVID – NOT YouTube videos from random cranks
  • keep in mind that younger workers seem more vulnerable to stress than we older folks.

Progress in bringing science to claims handling

Congratulations to Gallagher Bassett’s Jeffrey Austin White and colleagues – GB’s Treatment Quality Index (TQI) was named Insurtech Initiative of the Year. The Index, coupled with Clinical Guidance, identifies which claims would benefit from what type of clinical attention and when to apply it.

There’s a lot of really good thinking behind TQI; it addresses one of the toughest challenges faced by claims handlers.

Innovate or else.

Coincidentally, GB’s Gary Anderberg PhD penned a terrific piece on what we have learned and can learn from COVID.  One of his 5 takeaways:

COVID has cast a strong light on the fact that we always act on imperfect, half developed information, that all decisions are provisional, that updating your data constantly and rigorously is not a luxury.

(GB is not an HSA client)

Gary’s piece came the same day the Harvard Business Review published a though-provoking article on innovation…noting one huge retailer spent 18 months developing and implementing curb-side pickup. This went pretty much nowhere…until COVID.

Substitute “telemedicine” for “curbside pickup” and “workers’ comp insurer” for “retailer” and you will learn a lot about the cost of not innovating.

What does this mean for you?

Great companies succeed by delivering the service customers don’t even know they want.


Sep
4

Friday catch-up

Lots happened this week – here’s the big stuff.

COVID’s impact on work comp

WCRI is hosting a free webinar on the delivery of medical care and RTW during the pandemic.  Hosted by WCRI CEO John Ruser PhD and Randy Lea MD, the webinar will also include Mark Herbert MD, an infectious disease specialist.

Sign up here for the September 24 event, it kicks off at 2 pm eastern.

Drug prices

No, payers’ drug costs are not dramatically higher. In fact, net costs after rebates and other payments are flat to lower.  That’s one of the key findings from Adam Fein PhD’s analysis of the top PBM’s results. Kudos to Express Scripts, CVS, and Prime Therapeutics for publishing true cost data; one only wishes all PBMs did the same.

Ever wonder where all those new drugs come from?

Well, pat yourself on the back – because you, dear taxpayer, funded most of the initial R&D behind new drug development. Here’s the takeaway:

every new drug approved by the Food and Drug Administration (FDA) for the decade from 2010-2019 was associated with basic science funded by the NIH.

The IAIABC’s annual meeting kicks off next week; registration is still open here. Lots will be covered, including a discussion of COVID claims, presumption, fee schedule improvements, and of course EDI.

David Dubrof is PBM myMatrixx’ new Chief Sales Officer. I’ve known David for 20+ years; he is one of the very few “A” players in work comp services sales and a consummate professional. (myMatrixx is an HSA consulting client). David is all in on myMatrixx’ industry-leading push for price transparency.

How’s that budget process going?

Imagine trying to set up a curriculum for an unknown number of students with an unknown level of education. Or meal planning for an unknown group with different dietary requirements that are also unknown.

Well, that’s budgeting 2021. Never has that been so…fraught/uninformed/scary/pointless as it is today. If you need a break from trying desperately to figure out how to justify/rationalize your 2021 forecast and budget, read this.  It’s an excellent discussion of budgeting in a time of huge uncertainty.

Family is coming in this weekend to celebrate our new granddaughter’s arrival – have to say this is much-needed these days; the nastiness and bad news is getting to be a bit much.

Hope your weekend is filled with joy.


Aug
28

Another whirlwind week is just about over, and with it the summer of 2020.

Here’s important/interesting news that came across my virtual desktop this week.

COVID and Comp

More data on workers’ comp COVID19 claims is coming in; Virginia’s Workers’ Comp Commission has published data; key takeaway is to date, only 8.3% of COVID19 claims reported have resulted in benefit payments. That will certainly increase as claims develop.

More info on state COVID reporting is here – you can watch a recorded webinar on the subject here – Mark Priven and I dive into data from California and Florida and discuss the implications thereof.

Meanwhile, employment took another hit as last week more than a million Americans filed for unemployment. This continues a five-month run of claims at or above the million mark. 14 million of us are still without jobs.

COVID19’s impact on health insurance coverage

Several million people have lost their health insurance due to COVID19-related job losses.  We don’t know the specific number – and it is certainly increasing – but it is likely between 3 and 12 million. (download the report for details).

Another perspective is here.

Most of those folks are lower-income workers and many are minorities; some may be eligible for Medicaid however states that did NOT expand Medicaid such as Texas and Florida will see an increase in uninsured care costs.

Congratulations to myMatrixx and new Chief Sales Officer David Dubrof; David is one of the very few “A” players in work comp services sales; myMatrixx will benefit greatly from his sales leadership. David and his colleagues are equally fortunate; payers have consistently rated myMatrixx the top workers’ comp PBM. (myMatrixx is a client)

NCCI published a report on the impact of fee schedule changes on outpatient facility costs.  Good to see this rapidly-rising cost driver getting attention.

Implications

  1. Fewer jobs = lower payroll = lower work comp premiums
  2. Things are tough and getting tougher for lower-wage workers, which are disproportionally people of color.
  3. More uninsured = more need for facilities to get $$ from those who are insured.

Aug
26

BWC’s dividends and drug costs

Last week Ohio’s Bureau of Workers’ Compensation announced it will consider $1.5 billion in dividends to policyholders.

This comes on the heels of a similar payout in April;

$1.35 billion went to private employers and $184 million went to local government taxing districts, such as counties, cities, townships, and school districts.

Together, the two dividend payments amount to a refund of all premiums paid by employers in 2018 and 2019.

The Bureau’s very strong financial results were attributed to excellent investment performance, a continued decline in claim counts, and “prudent fiscal management.”

A significant piece of this “prudent fiscal management” was the audit of BWC’s pharmacy program, an audit that led to the State Attorney General suing BWC’s PBM OptumRx. Subsequently AG Dave Yost accused OptumRx of overcharging “the state on 57% of 2.3 million claims between January 2014 and September 2018.” [it is important to note that BWC’s prior PBM was acquired by Optum and operated under a separate business unit]

The suit was later amended to reflect Yost’s allegation that overcharges exceeded $16 million.

BWC switched PBMs two years ago.

BWC’s drug costs have dropped significantly over the last couple of years; while a decline in claim frequency undoubtedly contributed to that drop, it is safe to say that prices paid for drugs helped slash pharmacy expenses.

And that has helped fund the huge dividend checks BWC’s customers are getting.

What does this mean for you?

Do you know you are paying only what you should? 

How can you prove that to your policyholders and customers?


Aug
21

YAY! More COVID claims data!

During yesterday’s webinar on COVID19’s impact on workers’ compensation, Mark Priven and I asked the 260+ attendees to share any data they have on COVID and comp.

[As soon as we have a link to a recording of the webinar, I’ll post it.]

William Rabb of WorkCompCentral provided a summary of the presentation [subscription required] this morning, and added helpful commentary from NCCI’s Jeff Eddinger. (NCCI just updated their guide to COVID presumption laws and regulations – get it here.)

Jeff Kadison of Practical Actuarial Solutions forwarded a detailed study put out by New York’s Insurance Rating Board. Lots of detail on costs, counts, and a discussion of potential impact.  A few key takeaways:

Using the CDC’s models, NYCIRB came up with the following estimates:

  • note 97.8% of infected workers will not require hospitalization (this is an estimate)
  • for those that do need hospital care:
    • estimated COVID19 non-ICU hospitalization cost range of $20,129 to $29,948
    • depending on clinical severity, estimated COVID19 ICU costs with ventilator support range from $47,458 to $192,250
    • for claims that may have long-term health issues, the NYCIRB estimated the average incurred medical to be approximately $200,000. (note this is just an estimate)

Brandon Miller, CEO of MWCIA was kind enough to send an excellent report prepared by Minnesota’s Department of Labor and Industry’s Brian Zaidman.

Unlike California and Florida, Minnesota’s claim counts didn’t drop much over the first half of 2020, although a third of MN claims are COVID19-related. The implication is fewer non-COVID19 claims have been filed in Minnesota than one would have expected.

Similar to the Golden State, Minnesota is a “presumption state” which may well be leading to more COVID claims filed. (California’s is by regulation, Minnesota by law.)

 

COVID-specific claims

Peter Strauss, Executive Director of the Montana Self Insurers’ Association also helped out, sending a presentation delivered 10 days ago by the state’s Department of Labor & Industry.

Unlike Minnesota, Montana’s data is remarkably consistent with what we’ve seen from Florida and California. Overall claim counts’ are down sharply, while COVID claims are relatively rare. Of course, Montana is built for social distancing; the state has a very low population density.

 

What does this mean for you?

Based on the very limited research we have, it certainly appears COVID19 cases aren’t going to be that expensive.

And please forward any credible research on the claim counts, claim costs, and COVID claims in the comment field below.


Aug
18

California agriculture, COVID19, and workers comp claims

Here’s what’s puzzling me about agricultural workers, COVID infections, and workers’ comp.

  • Few agricultural workers have filed WC claims for COVID.
  • COVID infections are much more prevalent among Latinx than any other ethnic group.
  • News reports indicate workers infected with COVID have spread the virus to family and co-workers
  • Infection rates in the ag heartland in the Central Valley are much higher than in population-dense urban centers.

Here’s the data.

Latinx people are much more likely to contract COVID19 than any other ethnic group – more than twice as likely as White people.

Agriculture employs a lot of Latinx folks; average monthly employment was 422,000 in 2019 (downloadable files).

About 45% of ag workers nationally are Latinx. [if you have data specific to California please share]

So far this year, only 0.2% of California’s agricultural workers have filed a work comp claim for COVID19.

While news reports allege some employers are failing to implement adequate COVID19 safety protections, there’s another side to this, one that requires serious consideration.

This from a colleague (edited to preserve confidentiality):

I can attest to the Latino population being hit extra hard.  The reasons are fairly simple.

Number 1 reason:   The work ethic demonstrated by our workforce is hurting them and their co-workers.  The Mexican culture has long had excellent work ethic.  Their mantra is always, “I have to work.  I have to work.  I HAVE to work.”  They often do not safeguard their own health as a result.  Many when told they are positive respond with, “Well yeah.  I knew.  I haven’t felt good for a week.”  Which means that they’ve been spreading the virus daily.

Another factor for Ag workers is the common practice of transporting workers by vans or small buses.  Probably the worst thing they can do.

We found out most of them refused to comply with wearing a mask.  They’d have them on in front of the supervisor, but as soon as the vehicle left the yard, most all of them would take the masks off.

The third problem is the comorbidity factor of diabetes.  Their diets frequently lead to diabetes.  Every one of our fatalities had instant blood sugar levels of 700+.  Each of the deaths were investigated, and without exception, we found that there had been a diabetes dx years before but they had failed to comply.  Most of the diabetes dx’s were for men who refused to ignore or rethink the macho feelings of being able to drink beer and eat as many carbs as they want along with refusing to take meds.

Of course this does not apply to the entire Latinx population.  But it is sadly true of more than half and probably true of at least 75%.

What does this mean for you?

  1. Don’t be surprised if we see a significant increase in workers’ comp claims from agricultural workers.
  2. Cultural norms and biases MUST be considered, factored into, and made part of any and all prevention solutions.
  3. There are NO simple answers, and all of us are part of the problem – and can be part of the solution.

REMINDER – sign up for Pandemic, Premiums, and Profit: Is it the Sky That’s Falling…or the Floor? a free webinar on COVID19’s impact on workers’ compensation here. Mark Priven of Bickmore Actuarial and I will be weighing in this Thursday at 1 pm Eastern, 10 am Pacific.


Aug
17

COVID’s costs; 3 P&C insurers report

We are starting to see the impact of COVID on P&C insurers’ financials; so far its not all gloom and doom.

AIG’s COVID costs totaled $458 million for the first half of 2020; Chubb announced $1.16 billion in COVID related costs for Q2, while Travelers‘ “pre-tax insurance losses directly related to the pandemic amounted to $114 million.” for Q2. (note AIG’s numbers are for six months, Chubb and Travelers for 3 months)

Travelers’s results are especially notable as it is the largest writer of workers’ comp insurance. Several quotes from the Q2 conference call merit attention:

  • beyond the healthcare sector, data from some of the state workers’ comp systems suggest that the COVID related claim rate is low relative to the infection rate.
  • That’s likely partly attributable to the fact that the population most seriously affected by COVID-19 skews older and is not the workforce.
  • [there were] fewer traditional workers’ comp claims as more people work from home.

It doesn’t look like workers’ comp is the biggest contributor, as COVID’s costs arose from travel insurance, personal auto refunds, reduced premiums, and lower renewals.

One example – AIG’s travel insurance business got crushed in the second quarter as “you had not only no new sales. You had cancellations…”

According to CEO Evan Greenberg, the $1.16 billion loss “is an estimate of our ultimate loss from the pandemic.”  Chubb’s net premiums written fell by $191 million, mainly from workers’ compensation and commercial casualty payments, including refunds on auto policies.’

Reading between the lines, it doesn’t look like Chubb’s investment income was significantly affected by COVID-related interest rate cuts; the huge insurer’s $112 billion in cash and investments increased by $3.4 billion in Q2 2020. (see CFO Phil Bancroft’s discussion in the transcript)

Takeaways

  1. COVID’s costs aren’t devastating P&C insurers.
  2. While interest rates have dropped, so far this hasn’t had much of an impact on insurers’ investment income.
  3. Insurers with less exposure in the US are doing better; other countries have handled COVID far better than we have.

Aug
12

Claim counts, COVID, and (premature) conclusions

We know a LOT about how COVID and the COVID economy are affecting workers’ comp – and that’s what Mark Priven and I will dive into next week as we discuss “Pandemic, Premiums and Profits: Is It the Sky That’s Falling … or the Floor?” .

The free webinar (register here) is happening August 20 at 10 am Pacific, 1 pm Eastern. (attendance is limited, so sign up now to make sure you get a spot).

Mark is Vice President and Principal of Bickmore Actuarial, a highly regarded Actuary, and a very insightful analyst of all things workers’ comp. I’m honored to be on the virtual dais with Mark.

What triggered our decision to work together was a shared concern that there’s been way too much discussion about the potential, theoretical, possible, hypothetical costs of COVID itself – and (with one major exception) no discussion, analysis, projections, or discussion of the huge drop in workers’ comp claims – and the effects of that drop..

Frankly, prognostications about the damage COVID could do to profits just don’t stand up to scrutiny.  How an industry with a combined ratio of 85 and investment income of 11% will go from a 26% profit margin to a loss when COVID claims are not that common and all evidence indicates they aren’t that expensive is…puzzling.

One can – and some do – argue that we don’t have data on claim counts yet – and therefore it’s premature to discuss the impact.

But you can’t have it both ways – we know little about COVID, so making assumptions or statements about how the disease will affect workers’ comp is equally presumptuous.

Fact is we are fast approaching budget season for employers, insurers, TPAs, and service companies – and it is incumbent on those with data and expertise to share that information.

So, sign up, send us your questions, and Mark and I will do our best.

What does this mean for you?

Sign up here.


Aug
10

COVID’s fallout for workers comp – the picture gets clearer

70,000+ small businesses have permanently closed their doors.

The demise of big retailers has accelerated, with JCPenney, Men’s Wearhouse, and Brooks Brothers all entering bankruptcy.

Prom wear companies were also hit hard, with Occasion Brands also a victim.

The airline industry is mired in a deep slump, with passenger volumes down to a quarter of pre-COVID levels.

That’s driven by both far fewer flights, and far fewer passengers on each plane.

Air travel reductions affect other businesses…

  • taxi ridership and rideshare services
  • on-airport concessions, food, retail, and services (these account for 2/5ths of airport revenue)
  • hotel and restaurant activity is lower with far fewer business travelers and vacationers
  • airplane maintenance requirements are greatly reduced – along with the need for mechanics, spare parts, and consumables (fuel, lubricants, etc)
  • airplane orders are way down and many have been cancelled, impacting the airplane industry  – and the thousands of suppliers dependent on it.
    • In June, Boeing had a single order for one jet, while losing 183 orders due to cancellations or likely cancellations.

And energy – in a slump to begin the year, got crushed with fallout continuing.

Its not all bad news; in general larger companies are doing better – if they aren’t in retail, energy, air travel or tourism. Of course exceptions abound; WalMart is doing just fine, thank you as are big box home improvement stores.

For workers comp, the implications are significant;

  • lower premiums due to lower payroll
  • tougher to return injured employees to work due to cutbacks
  • fewer claims require fewer services
  • insurers focused on energy, Main Street businesses and retail will be hit hardest

 

 


Aug
5

COVID is crushing work comp claim counts.

Thank you, CWCI. Due to it’s diligence and foresight, we now know:

  • through June 30 there were 14,487 COVID claims reported to California’s DWC;
  • this amounts to 6.3% of all confirmed COVID cases (data from JHU);
  • the vast majority of COVID claims reported have been accepted;
  • and perhaps the most important data point…

Total claims (COVID and non-COVID) dropped 28.8% from the first half of 2019 to the first half of 2020. (note this is corrected from my original 36.4%)

Kudos to the fine folk at CWCI; they have produced the first data-based report on all things COVID. It is quite user-friendly, highly credible, and interactive, allowing users to analyze California-specific on COVID and non-COVID claims.  The tool enables comparison by industry, body part, nature and cause of injury, class code and region for claims (both filed claims and accepted claims) with dates of injury from 1/1/2020 to 6/30/2020.

The tool also allows users to compare actual claim counts for the same time period in 2019 to current and projected counts for 2020.

Claim counts, dear readers, is WAAAAAY more important than the rather minor financial impact COVID claims have had on workers’ comp. As I’ve reported previously, work comp COVID claims to date are not expensive; despite the prognostications of others, it is unlikely indeed COVID’s costs will have any material impact on work comp financials.

What WILL have an impact – and a very positive one – is the massive drop in total claim counts we’ve seen so far this year.

grey – 2019; green – 2020

Yeah, I know, this is California-specific, and only for half a year, and not fully developed, and all that stuff. I also know a 36% drop in total claim counts is the biggest thing to hit the workers’ comp industry in…forever. 

What does this mean to you?

Everything.