Inflation. Employment. Manufacturing jobs. Wages.

All are in waaaaay better shape than they were a couple years ago.

What’s downright weird is how gloomy many are…in the face of pretty good news on many fronts. So let’s start the weekend off with what’s REALLY going on…

Inflation dropped to 3% – a third of what it was in June of 2022…when it was 9% –  “we’ve made a lot of progress [reducing inflation] without much pain. And I think that’s what’s critical so far.” says Stephen Juneau, an economist at Bank of America Merrill Lynch.

Employment  – there are one and a half jobs open for each unemployed worker which a) means there is NO recession and b) employers are in better shape than they were 18 months ago when there were more than 2 jobs per unemployed worker.

US manufacturing is roaring back...construction of new factories is at an all-time high and companies are adding over 400,000 new manufacturing jobs this year.

Wages are also going up – adjusted for inflation annual median household income was up over $3,000 over the last three years.

What does this mean for you?

Things are going pretty darn well.

As for the implications for work comp…this from a post in August.

Hundreds of billions of dollars is flowing into infrastructure, investment that has already created ninety thousand jobs in:

• construction,
• transportation improvements,
• highway, bridge and road maintenance and replacement, and
• heavy industry.

And many more jobs are on the way. (check out where this is happening here).

These are very well-paid, high-frequency and high-severity jobs.

This means premiums will increase as will claims and claims costs. And this will continue for years.

Our fourth (!!) Survey of Workers’ Comp Bill Review is nearing completion…one of the good things about doing this every few  years is we can identify trends and the industry’s evolution.

This year we surveyed both executives and front-line staff. Shockingly, they didn’t always agree…

a few initial takeaways…(ratings are 1 – 5, with 5 being the best)

• The Bill Review industry generally held its level of support from 2018. Overall average (all vendors grades from all respondents) was 3.2, just above, equal to 2018.
• Despite respondents’ overall view not changing, there’s less differentiation among the major players; scores have compressed.
• New entrants are making inroads
• Customer service remains absolutely critical to a successful bill review relationship: considered the top reason a company would change bill review vendors and consistently ranked near the top for “most important bill review attribute”.
  • this is consistent across the dozens of surveys of all types HSA has done over the last 2+ decades…
• There is a noticeable difference between executives and front line employees when evaluating customer service – front line average score 3.6 vs. 4.2 for executives.
• Front line employees have different criteria for quality customer service than executives’…: front liners do not seem to care much about soft skill aspects of customer service but rather customization and timely updates while executives have a more traditional sense of customer service.
• Automation is on most people’s minds – but it isn’t all positive. While nearly all talking about it want more automation (for TAT/auto-adjudication/quality reasons) some still need it to handle the basics better than it currently does.
• E-billing, for largely the same reasons as automation, is getting more popular – especially among larger respondents and internally run bill review respondents.
• Bill review vendors are seen as quite transparent – especially compared to 2018. 90% of respondents believed their bill review vendor to be transparent vs. just 52% in 2018. This is despite several complaints about how convoluted % of savings can be.
• Flat rate pricing is rising in popularity while % of savings is not viewed favorably in most cases.

Cautionary note – these highlights are just that – highlights – and there’s often a lot of nuance underlying respondents’ views and perspectives. That will be described in the final report …a public version of the report will be available in a few weeks. (Respondents get a much more detailed version).

What does this mean for you?

Customer service.

RAND’s long-awaited research paper on Alternative Payment Models for California Workers’ Comp is out.

It is…underwhelming, incomplete, doesn’t focus on key metrics, did not include actual examples of APMs in WC (of which there are many), makes inappropriate comparisons, and…I could go on.

Yeah, I know it’s an initial study, but C’mon…

First, a couple intro notes…

• • in laypersons’ terms, Alternative Payment Models (APMs) are different payment schemes/methodologies used in an attempt to improve care/patient experience/save money.
  • APMs include pay for performance, bundled payments (e.g. flat fee for a surgical episode), per member per month flat fees, global payments and other models.
  • APMs are quite commonplace in Medicare/Medicaid, group health, and exchange healthplans and have been for years.
  • Broadly speaking, despite LOTS of different approaches, studies, methods and work, to date APMs’ impact on those metrics has been marginal.

OK…initial takes on RAND’s report. (note I haven’t thoroughly reviewed and analyzed all 95 pages, but wanted to get this out ASAP)

APM in WC

Most importantly, there have been numerous experiments AND long-standing programs with “alternative payment models” in California and other states…somehow RAND missed these. Yes RAND noted Ohio and Washington have done work on APMs, but RAND missed:

• Carisk’s Pathways2Recovery Program (Carisk is an HSA client)
• Paradigm’s HERO programs. – models include full risk transfer and episode of care payment for shoulder, back, knee and other diagnoses.
• Medrisk has had an episode-based managed physical medicine reimbursement model in place for decades. (Medrisk is an HSA client)
  • other specialty network/service companies have had similar programs
• and others I don’t have time to get into.

I note that these are very patient- and condition-specific and narrowly focused – similar to many group health/Medicare/Medicaid APMs…yet should have been included.

Inpatient vs outpatient

Across all payer types, care has been shifting from inpatient to outpatient settings. Unfortunately RAND spends a lot of time on inpatient APMs and nowhere near enough on the outpatient side. 

Outcomes

What is critically important in workers’ comp (and I argue SHOULD be across all payer types) is sustained and rapid return to functionality. There is precious little discussion of the central importance of this primary goal – and how it might/might not be affected by myriad different APM models/studies discussed in RAND’s report.

Comparisons

RAND relies extensively on comparing hospitals in the Hospital Value-Based Purchasing Program (HVBP) to critical access hospitals that are not in that program…without much discussion of the key differences between these facilities, differences that – I would argue – make comparisons sketchy at best.

One issue – poorer patients are more likely to get care at and represent larger percentage of the patient population at critical access facilities…that demographic also consistently rates patient experience lower than wealthier patients. Thus, comparing HVBP program patient experience data to critical access hospital data is difficult – at best.

Access to care

RAND makes a major point about “stakeholders” concerns about access to care. Actual real scientific research paints a different picture.

Let’s get real.

There’s a whole shipload of factors that RAND mentions (very briefly) that deserve a LOT more discussion.

One example – less than a penny of the US healthcare dollar is spent on workers comp medical. That, dear reader, makes it really hard to get the vast majority of health care providers to do ANYTHING.

What does this mean for you?

There are APM in WC…and a lot of history and knowledge and research and expertise around them. Much could have been learned if they were fully considered. 

For a lot less money.