Here’s what Aetna provided in response to my questions about the termination of their workers comp business. The company did not directly respond to my queries about who was going to keep access for how long, and there’s a good bit of corporate-speak here.
If I hear more inside info about the decision I’ll pass it on…
“Aetna is focused on committing resources to areas where we see the greatest potential for growth and where we can deliver the greatest value to our customers. After reviewing our business portfolio, we made the decision to transition out of the AWCA [Aetna Workers Comp Access] business so that we can invest in other areas of the enterprise where we see greater opportunities for growth. We notified our customers of this decision earlier this year and have committed to honoring all existing contracts, which in some cases run through the end of 2013…
Since we are transitioning out of the business over a two year period, there will be no immediate impact to the services that we provide to our customers or to the employees that support the AWCA business. We will continue to monitor our staffing levels to ensure that they are in line with our business needs and will look for opportunities to realign staff to other business areas as appropriate.”
Readers will recall AWCA laid off a number of customer-facing staff early in 2011, so there may not be many left to go.
Initially Aetna said no other business areas were affected; in subsequent conversations I learned they will no longer underwrite the insurance risk for PetsBest pet insurance – but that’s it.

There are three types of physicians – the few really good ones, the few really bad ones, and most who either aren’t good or bad, or you just don’t have enough information to tell. The problem with most networks is you can’t de-select/kick out/avoid the bad docs without going thru lots of effort.
That’s about to change.
Most comp provider networks are pretty much interchangeable – a big directory of every provider alive – and some not – that’s agreed (usually) to give a discount to payers accessing that network’s contracts.
A great friend and colleague referred to these networks by the mildly-pejorative term “a box of contracts” many years ago – and that description, unfortunately, still fits.
Recently I’ve had yet another opportunity to evaluate a network – or more precisely, a managed care firm with an interesting network ‘capability’. The company is Anthem Workers’ Comp (subsidiary of Wellpoint), and their network offering is somewhat unique – somewhat more than that proverbial box.
First, buying power. Originally created by Blue Cross of California back in 1992 as a for-profit managed care subsidiary, Wellpoint is comprised of what we used to know as Blue Cross and Blue Shield plans. Anthem is an operating entity under giant healthplan Wellpoint, which was ‘created’ back in 2004 when the two companies merged. Health Plans in California, Colorado, Indiana, Kentucky, Missouri, Nevada, Ohio, New York, Virginia, Wisconsin and a few other states were acquired by the parent over the years, and those plans, along with new plans in other markets, form what is now the nation’s largest health plan company.
(The work comp network isn’t available in all areas, but is limited (for now) to California, Colorado, Nevada, Missouri and Southern Illinois.)
Wellpoint is best known for their dominant market share in the group health (and governmental sectors) in California and several other states. Several years ago, Wellpoint decided it was going to be a major force in work comp. Leveraging their provider contracts and relationships, they began contracting in California, which remains the core market. As Wellpoint is one of the dominant players in the state for non-comp business, the list of providers is rather extensive, as is their buying power. The result is clients get pretty good deals with most providers. (That’s not to say there are any bargains out there for comp payers – far from it. Unfortunately work comp remains one of the best payers in most states, especially for hospitals and facilities.)
So far, pretty standard stuff – big health plan uses its buying clout to get providers to sign work comp deals. Here’s the second point; Anthem (the brand they operate the WC sub under) has a unique offering – customers can use Anthem’s network ‘selection’ tool to pick whatever providers they want. Now operational in California, payers are essentially building their own, customized workers comp MPN.
According to Anthem work comp president Bob Mortensen, payers are able to pick and choose whatever providers they want from Anthem’s directory. If they want to focus on one county, one region, or need a custom MPN in a few different communities they can do that. For those payers who want a small MPN with relatively few physicians, that’s their choice. How they select providers, the criteria they use, that’s up to the payer.
I’ve spoken with a couple of their customers, and they are generally pleased with the result.
Big insurers and TPAs that work with large self-insureds need the flexibility to add or remove docs as those employers see fit. As payers increasingly push for smaller and smaller networks comprised of physicians who understand work comp and treat appropriately, the ability to manage their own network will gain more traction.
For insurers with lots of mom-and-pops, big networks with lots of providers are critical, as there’s precious little chance a claimant will think to check the posted panel before seeking care.
The big advantage to Anthem’s approach is this – they’ve got the world under contract, and you can pick and choose which docs you can exclude. Because those are the ones that do the most damage: the ones who overprescibe opioids, refuse to release to return to work, recommend spinal fusion far too often, don’t communicate with payers and employers, and generally deliver lousy care.
What does this mean for you?
Anthem is building what looks to be a reasonable alternative in multiple jurisdictions. Competition is good.
While it would be great to be able to identify the docs who are definitely the “best”, that’s hard to do for myriad reasons: not enough data, inaccurate data, low claim frequency, diverse patient population, the list goes on. But rather than focus on the good ones, there’s a lot to be gained by identifying the ones at the other end of the spectrum. And once those outliers are gone, results will improve – probably dramatically.

Aetna Work Comp Access will be exiting the provider network business. Over the next couple of years, current direct customers will be losing access, with the duration of access dependent on whether the relationship is direct or through a reseller. I’ve got my own opinions on why, but will hold them for now in hopes I hear back from Aetna soon.
This hasn’t been announced publicly, but sources indicate all AWCA’s direct clients were informed over the last couple of months, and the ‘indirect’ clients – those accessing AWCA through Coventry or another entity – are finding out thru their account managers (if not, to misquote Desi Arnaz, “you got some ‘splainin’ to do…”).
First, a bit of history. Veterans of the industry will recall Aetna made a big push into the WC provider network business back in 2006, positioning itself as a competitor to Coventry/First Health. An executive team was hired, staff came on board, and they were off and running. Some years later, senior management at Aetna decided to change course, and instead of competing with Coventry, they became Coventry’s network in what they said at the time was nineteen states.
Coventry’s been using Aetna as their underlying network in about 15 states since late in 2007.
Shortly after, senior management was terminated in a surprise move in September, 2008.
More recently (January 2011 to be precise), most of their customer-facing staff were laid off r and Aetna ended (most of) their direct relationships and pushed those customers to work thru their resellers, including Coventry.
I spoke with David Young, President of Coventry Work Comp about this, and here’s what he had to say.
Way back when the two entities first got together, they included what David called “divorce provisions” in the deal they structured. Back in January Coventry got notice to term contract at beginning of year. Over the course of 2011, both parties were in discussions, with Coventry looking to renew the relationship. That was not to be. Early this fall, Aetna confirmed their intent to exit the business.
As a result of those “divorce” provisions, Coventry’a network customers will have access to Aetna’s network thru 12/13. David believes this is longer than any other entity (I’ll ask Aetna when I hear back from them). Coventry plans to use that two year window to evaluate their current network, figure out where they need to backfill, and get as much as possible of that done before the clock stops ticking.
So far, Young’s analysis indicates Coventry’s current non-Aetna direct and leased network contracts can cover about 70%+ of the dollars flowing the network. They’re starting a targeted recruitment effort in areas most affected by Aetna’s departure, and are looking to strengthen relationships with current leased network partners as well.
Of course, David was quick to note this has no bearing on their interest and commitment to the WC business – Coventry is commited to the comp business. I believe him. They are making so much money from comp that they’d be nuts to get out – and Chairman Allen Wise is not nuts.
That said, this opens up the door for other network companies, as large and mid-sized payers, network aggregators, and bill review companies are looking hard at alternatives.
One last point. A lot of work comp dollars flow thru Coventry’s networks, and they aren’t shy about using those dollars to squeeze providers for better pricing. David indicated they’ve had success in negotiating deals with two health systems recently doing just that.
I hope to hear from Aetna tomorrow.

Closing out MCM’s coverage of WCRI’s annual meeting, here’s a few final observations.
In general, this was one of the better WCRI meetings I’ve attended over the past fifteen years. The material was more current, the focus was on issues near and dear to my heart (lots of research on drugs, pricing, and utilization of medical services), and attendance was robust. WCRI’s also recognized the influence of press and social media, and worked diligently to accommodate both.
One of the sessions addressed the oft-asked question “Do work comp fee schedules affect the actual prices paid for medical services?”
The answer? Yes.
But not consistently.
According to data provided by WCRI, states with the highest prices for medical services are generally those that do not have few schedules. The non-FS states also exhibited higher growth in costs than those jurisdictions with fee schedules.
However, my home state of Conn. was one of the states in the ‘high price’ group but it has a fee schedule, albeit a particularly high one. Illinois was even pricier but there’s a lot more to that, namely the IL FS was a pretty loose one (and was one of the reasons reform was passed earlier this year).
Interestingly, there was a BIG variation in medical prices paid with the highest prices 2.5 times greater than the lowest. There’s been much discussion and research into this in the past, and the correlation isn’t very strong.
Note that this research addressed price – and not cost. While price is one component of cost, its influence is often overshadowed by utilization. Moreover, price is not directly linked with cost. For example let’s look once again at Connecticut. While we have high prices, we don’t have high costs. In fact, CT’s costs are consistently about average among WCRI’s study states.
Finally, I’d vote for WCRI to move their conference to the first quarter instead of the same month as National WC. The two conferences compete for a similar target market, and moving to a different date may increase attendance as heading to Las Vegas one week only to pack up and travel to Boston the next is tough. (National WC can’t move as they have a 5 year facility contract.)

Employment.
After much discussion and debate, WCRI Executive Director Rick Victor informed WCRI meeting attendees that one of the more significant issues facing work comp is the gap between jobs needed to return to pre-recession levels of employment and current employment.
Specifically, Rick noted there are now 25 million potential workers and 3.5 million current job openings. This will – and undoubtedly is – dramatically affecting claimants looking to return to work in a new position.
If those jobs aren’t there;
– disability durations will increase
– medical costs may well escalate
– overall claim costs will rise
– older workers may find it particularly hard to get hired
– states with older populations and declining industries may be particularly hard hit
Combine Rick’s elephant with rapidly rising hospital and pharmacy expenses (the ‘elephant’ CWCI research guru Alex Swedlow and I discussed at length over dinner last week) and things aren’t looking so bright.
Quite the opposite.

The fall conference schedule comes to a close with this week’s annual WCRI meeting in Boston. I’ll be posting from my iPhone as the wifi access fee is $100(!) so watch out for typos…
Peter Barth began with a history of work comp, with particular emphasis on the societal issues that helped give rise to Wisconsin’s first in the nation state comp laws. (more accurately the first WC law that survived legal challenges) Barth noted that one county in PA had more than five hundred workplace fatalities one year in the early nineteen-hundreds.
The National Commission on WC and the impact thereof was discussed in some detail. For the non-work comp folks out there, the Commission led to rather remarkable changes in many state work comp systems by shining a very bright light on the differences among and between the various states. By developing and promulgating universal objectives, the Commission helped accelerate the pace of change and modernization in those states that had long lagged more progressive jurisdictions.
This being the anniversary of the passage of Wisconsin’s comp law, there have been many reviews of the history of comp; Barth’s presentation was one of the better ones. Perhaps the most revealing takeaway was the drastic change in medical benefits from the early days.
Barth reported that several states allowed claimants a maximum of fourteen days to obtain medical care, two states had rather brief medical benefits periods (Massachusetts with 14 days) as late as1940.
Next up for public consumption is a discussion of pharmacy costs – which is a subject near and dear indeed.
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