May
23

Heat = More injuries.

With temps here in the northeast nearing 90 degrees F yesterday  – and much hotter in many southern and western states, attention is turning to the implications for workers – and workers’ comp.

Two studies released by NCCI and WCRI show just how damaging excessive heat will be for workers and employers.

WCRI’s study – authored by the estimable Olesya Fomenko, Vennela Thumulaand Sebastian Negrusa, contains a wealth of information which anyone in construction should be aware of…

 

WCRI will be discussing this in a webinar June 6. Register here.

At NCCI’s recent AIS, researchers noted:

  • Days with extreme temperatures, both hot and cold, exhibit 2%-10% more injuries in NCCI states compared to “mild” days.
  • The largest effects of hot days are seen in outdoor sectors, particularly construction.

What does this mean for you?

Underwriters, actuaries, and risk management folks – pay attention. 


May
20

What’s really going on with workers’ comp medical…

Medical inflation in workers’ comp is pretty much flat – as it has been for several years.  Why?

Four reasons.

  1. Claim counts continue to remain pretty flat with lost time claim frequency down yet again.
  2. Drug costs have plummeted over the last decade, and now account for about $2.2 to $2.5 billion or 7% – 8% of total medical spend…down from around $5 billion.
  3. Costs for professional services – docs, PTs/Ots/chiro – remain pretty low. WCRI’s latest publication (available for now cost at the link) shows very little inflation across 36 states. Kudos to WCRI for tracking this up through 2023 – that’s really fresh data.
  4. Facility costs are increasing, but have yet to reach the point where payers actually do anything material about cost control.
    A better way to say this is payers are lazy and complacent, waiting for the crisis to hit before actually doing anything.

What does this mean for you?

Focus on facilities. 


May
15

A Workers’ Comp Quiz

Workers comp is:

a) hugely profitable,

b) way over-priced,

c) even more profitable than it looks,

d) by far the most profitable P&C insurance line,

e) NOT suffering from medical cost increases,

f) a highly mature industry with all the attributes thereof,

g) shrinking as claim frequency continues the 20-year trend averaging -3.4%

h) the financial savior of multi-line carriers, and/or

i) all of the above.

The answer is…i.

NCCI’s Annual Issues Symposium provided a deep dive into the industry’s financials…and the industry is swimming in a lake of profits.

With a net combined ratio of 86%, WC is HUGELY profitable…especially when one considers the industry is over-reserved to the tune of…$18 BILLION.ut wait…when you add investment income, private carriers pre-tax operating profits are a whopping 23%.

Which means premiums are still far too high, employers are still paying far too much for WC insurance, and insurers are sitting on $18 billion that should be returned to policyholders.

This despite ongoing premium rate reductions…in every state.

Oh, and medical inflation is LESS than overall inflation – at a paltry 2%.

Amidst all this sunshine and rainbows, there’s one troubling trend…facility costs.

Specifically ASCs and outpatient, which is the only category showing an increase in share of medical spend. 

As CompPharma has reported drug spend has been trending down for years – and now accounts for just 7% of total WC medical spend – down from 12% in 2012.

The full AIS report is here …

What does this mean for you?

Employers – lower rates – MUCH lower rates.

And BIG dividends if your carrier is a mutual.

Insurers – invest those profits in technology NOW. Workers’ comp – and the P&C industry as a whole – is waaaay behind in tech. NOW is the time to invest – because…

this will not last.

 


May
7

Cost Doesn’t Equal Quality Part 2:

All over the country there are areas where the more expensive facility has poor scores for patient safety and outcomes. And with facility costs accounting for about 40% of workers’ comp medical expenditures, you can hardly afford to ignore this reality.

Today we look at Sarasota, Florida. More specifically, we are comparing Sarasota Memorial Hospital against Sarasota Doctors’ Hospital.

According to Health Strategy Associate’s Facility Assessment Tool (c) – Sarasota Memorial Hospital scores:

60+% higher on Clinical Outcomes

50+% higher on Person and Community Engagement

75+% higher on Patient Safety

than Sarasota Doctors’.

And Memorial is a whopping 7 points better on Relative Price – which means you are paying much less for a much higher-scoring facility.

When combining all 5 metrics the Facility Assessment Tool considers, Sarasota Memorial Hospital scores 2.94 against just .16 for Sarasota Doctors Hospital.

Oh, and these two facilities are just 6.4 miles away from each other with Sarasota Memorial Hospital closer to the beach!

Take a look at your network and see just what facilities you are utilizing – and what they are costing you.


May
3

Physical medicine management firm MedRisk will acquire Conduent’s Casualty Claims Solutions business.

So…what and why and how?

What will MedRisk do now?

Improve Conduent’s performance is Job One.  
Conduent has – to be kind – struggled to deliver customer service, to respond to client needs, to keep systems, regulations, and fee schedules updated, to keep its customers much less win new ones, to actually perform. MedRisk has a wealth of experience and expertise in turning around an entity with those problems, has the staff and internal knowledge to help fix Conduent’s major issues, and has the leadership to actually get it done.

Stabilizing the current business is the first, and by any measure the most important task.

I’d note that MedRisk is the most successful physical management company in the space because it listens to its customers; partners – in the truest sense of the word – with them and works very hard to make payers’ front-line staff’s jobs easier, less stressful and less complicated. (I know, MedRisk is not perfect, no organization is…)

That corporate culture will be hugely helpful for Conduent’s bill review clients.

Why did MedRisk do this deal?

Data.

It’s all about the data.  I CANNOT emphasize this enough.

MedRisk’s analytics folks are quite adept at assessing provider performance  – “performance” being based on what its customers value. Payers want more control over physical medicine (which is one of the fastest growing costs in workers’ comp). Now, with access to terabytes of data on provider billing, treatment practices, related services e.g. surgeries, medications, facility visits, treatment documentation, claim demographics, duration of care and lots of other hugely valuable data points, MedRisk will be able to help customers better:

  • assess and identify high- and low- performing providers
  • get instant notice of changes in billing patterns (e.g. new Revenue Cycle Management tricks designed to hoover dollars out of payers’ pocketbooks)
  • reduce leakage from provider networks
  • evaluate treatment plans to identify effective and less effective approaches to specific types of claims, diagnoses, and cases
  • and a host of other things we haven’t yet thought of.

How?

Is MedRisk – a rehab management company (!!!) – becoming the major provider of bill review services which are generally recognized as the most important and impactful of workers’ comp services?

Simply put, because it is very well run, has a really impressive growth record of late, and is worth a ton of money. That corporate equity gives it a relatively low cost of capital and access to even more investment.

Finally…

I’ve worked with MedRisk for more than 2 decades. In no way am I responsible for or attempting to take credit for what Shelley Boyce, Mike Ryan, Sri Sridharan, Michelle Buckman, Ed McBurnie, Vic Pytleski, Rommy Blum, Jamie Davis, Tom Weir, Mary O’Donoghue and many others from the most senior to the least senior workers have accomplished.

The company’s leaders – starting with Shelley and continuing to today – have focused on doing right by customers and pushed that ethos throughout the organization. Yes, MedRisk had its stumbles along the way…but it recovered and became more successful by learning from those mistakes and returning to its core principles.

What does this mean for you?

Success is all about delivering your customers what they want how they want it.


Apr
30

Walmart is shutting down its healthcare centers…which means…what?

Three things.

First, healthcare is a very complicated and complex business, nothing like Walmart’s core business 

Walmart’s culture, ethos, business practices, priorities, and people built a multi-gazillion dollar consumer business by TBH, beating the crap out of vendors to deliver really low prices.

That is diabolically different from building a service-oriented, one-at-a-time, people-based interaction around a very complex need – healthcare.

So, yeah, healthcare is about as different from Walmart’s core culture as you cold possible get. 

Walmart’s failure comes after Haven Healthcare, the joint venture of giants Amazon, Berkshire Hathaway and JP Morgan went belly-up early in 2021.

Haven CEO Atul Gawande MD lacked the intimate, deep knowledge of healthcare infrastructure, reimbursement, regulations and management required to be successful. A brilliant writer, insightful analyst, and highly visible public figure, Gawande didn’t have the management chops. He also didn’t give up his other jobs and had no experience as CEO of a start-up.

Many who think they know healthcare – don’t.

Then there’s commitment. Gawande was committed to Haven – and frankly the three founding companies were as well – like the chicken is committed to breakfast.

If you want to take on something as daunting as reforming healthcare, you’d best be committed to the task like the the pig is committed to breakfast.

Second, reimbursement.

Despite a partnership with giant UnitedHealthcare, Walmart Health was unable to attract enough customers paying enough for care at its 51 centers. This MAY have been due – at least in part – to the venture’s focus on Medicare Advantage members…

This from UHG’s announcement back in 2021:

(the partnership will launch in) 2023 with 15 Walmart Health locations in Florida and Georgia and expand into new geographies over time, ultimately serving hundreds of thousands of Medicare beneficiaries in value-based arrangements through multiple Medicare Advantage [MA] plans. [italics added]

MA has been having a rough time of late which may have factored into a non-produdctive partnership…As the payor, UHG would want WH to agree to low reimbursement rates…as the provider, WH wanted high reimbursement…

Third, providers.

Primary care providers are expensive, rare, and thus have a lot of bargaining power. Oh, and you can’t have a business without them.

Which – to return to the lede, runs directly counter to Walmart’s…everything.

What does this mean for you?

Fixing healthcare requires understanding healthcare.

 

 


Apr
26

There’s a LOT of good news today

The House finally approved a massive aid bill for Ukraine – and the aid is already flowing – hallelujah.

Several encouraging takeaways…

  • It was bipartisan, with strong support from both parties (who’da thought??)
  • It passed despite strong opposition from the Republican Presidential candidate
  • It includes long-range missiles that Ukraine can use to demolish Russian air defenses, oil infrastructure, shipping, bridges and railroads

Long range ATACMS

Here’s why this is so incredibly important…

Health insurance coverage

is benefiting more Americans than ever, thanks to expansion of the Affordable Care Act. Another major driver is the increase in insurance subsidies for lower-income folks.

This means more moms and dads, kids, and families have access to health care.

The addition of dental care is the cherry on top; new regs allow states to add that coverage.

Work comp

WCRI’s just released in-depth analyses in its CompScope series…this year they’ve added details on COVID’s impact in 17 states.

Work comp rates for employers continue to dropIVANS reported a drop of 0.9% for the first quarter of this year. (Hat tip to R&I for the news)

California is slamming work comp fraudsters, (sub req) with the latest conviction resulting in a 54+ year prison sentence for a scheming fraudster. The Golden State’s been ramping up its prosecution of these dirtbags...here’s hoping these massive penalties discourage others from stealing from employers and taxpayers. Kudos to WorkCompCentral for a comprehensive update on recent convictions.

What does this mean for you?

A safer America comes from a diminished Russia.

More insured Americans = healthier families.

More crooks in jail = hopefully less future fraud.


Apr
23

Dumbest law/regulation of the month – A tie!

Congratulations to Florida and Texas for passing new laws barring local governments from protecting workers from heat-related injuries!

This at a time when global warming is leading to record heat waves with temperatures hitting – and staying at – record highs for days on end.

Last week WorkCompCentral informed us that Florida is about to join Texas in prohibiting local governments from instituting heat protections from workers. This from a state with record high temperatures last summer…

Florida’s move is especially egregious; Florida does not have its own occupational health regulations but relies on OSHA and Federal regulations. But, the Feds continue to drag their feet on national protections for workers exposed to excessive heat…so the new law effectively prohibits ANY protections from heat-related injuries. 

Politicians in Florida and Texas are doing their best to kill more workers. That is NOT hyperbole…and is especially hypocritical because Florida passed legislation protecting student athletes from heat.

credit WaPo

But hey, in the air-conditioned offices in Tallahassee, with the brocade curtains drawn, one doesn’t see the workers outside the windows mowing lawns and doing landscaping.

Colorado, Oregon, and Washington have rules for outdoor workers.

Minnesota and Oregon also have indoor heat standards.

A committee in California’s State Senate passed a bill doing just that two weeks ago; hopefully that bill will be signed into law.

What does this mean for you?

More deaths, more heat injuries, higher premiums, and more devastated families.

Here’s hoping the industry’s “thought leaders” weigh in on this travesty. 


Apr
12

Good news Friday – protecting workers and an improving economy

Lots of good stuff to start your weekend…

First a California Senate Committee passed a bill to protect workers from heat-related injuries. SB1299 establishes a presumption that:

a heat-related injury that develops within a specified timeframe after working outdoors for an employer in the agriculture industry that fails to comply with heat illness prevention standards, as defined, arose out of and came in the course of employment.

Kudos to the Committee – this type of legislation is sorely needed – and should be promoted enthusiastically by anyone and everyone concerned about protecting workers.

And shame on the California Chamber of Commerce and APCA for their objections. The bill is clearly intended to encourage employers to comply with existing heat-related standards…yet these opponents are quibbling over minor definitional issues when they should be pushing their members hard to do the right thing.

More details on heat injuries here.

Hat tip to Workcompcentral.

Inflation – or not.

Wholesale prices edged up 2/10ths of a percent last month, significantly less than expected.

Reminder – retail price increases are closely related to increasing corporate profits. It is very clear indeed that big food is a major driver of consumer inflation.

Employment

Filings for unemployment benefits were also lower than expected, yet more evidence of a very solid jobs market.

 

 


Apr
1

“AI-djusters” are becoming a reality.

It’s happening sooner than expected…a new entrant into the workers’ comp insurance business (following other P&C lines by companies including Omnius) is pursuing regulatory approval for and licensure of an “AIdjuster”.

Notably this goes far beyond current thinking, described in a recent Risk and Insurance piece as:

By reducing administrative workloads, AI can give claims adjusters more time to spend with injured workers.

This is replacing adjusters with technology, technology that will:

  • interact (both verbally and electronically) with providers, injured workers, and employers;
  • constantly evaluate those interactions to identify red flags or barriers to progress;
  • better estimate future costs, duration, reserves, and return to functionality;
  • leverage provider data to identify potential abuse or overuse;
  • constantly update the worker’s profile and compare it to job requirements (from past job to transitional jobs to potential new employment)

There’s a raft of complications with one of the most obvious being state requirements for human licensure. I spoke with the company’s Chief Claims Officer, Aprille Pfuehle PhD. Dr Pfuehle noted:

There’s a raft of complications with one of the most obvious being state requirements for human licensure. This can easily be addressed by having a human adjuster “oversee” the AIdjuster’s work…We are also working on logic to insert a human adjuster into claims issues based on our algorithm’s determination that a human intervention is optimal…

While it seems pretty sudden, reality is many industry stakeholders have been working towards this for some time.

But…Color me skeptical...there is so much nuance to the job, experience is critical, human interaction essential, and empathy critical…that and AI is still awfully new, risky, and more than a bit weird.

Yet…the factors driving the “AIdjuster” may outweigh those needs. When I asked how they were expecting widespread adoption, Dr. Pfuehle seemed quite confident, alluding to the staffing challenges facing insurers and TPAs;

  • an aging workforce;
  • lack of training;
  • a talent war accelerating turnover;
  • lots of other opportunities for potential new hires;
  • a difficult, trying, and sometimes quite frustrating work environment; and
  • increasing labor costs while premiums are shrinking.

Pfuehle also opined that the P&C industry’s chronic under-investment in IT all-but ensured their venture would succeed, stating:

They just don’t have the financial or talent resources to do what has to be done (building AI capabilities)…our solution eliminates the need for massive investment with an uncertain result, while allowing insurers to greatly improve their financials by eliminating much of their administrative costs...

The implications are broad indeed; In conversations with claim execs,  the adjuster shortage is one of the factors driving insurers to outsource claims to TPAs…lack of training is another major obstacle, rising labor costs yet another and both contribute to a lack of consistency in claims handling.

That and WC profits are desperately needed to fund losses in most other lines...and thus can’t be invested in tech.

What does this mean for you?

What’s fantasy today is reality tomorrow.