Insight, analysis & opinion from Joe Paduda


Hypocrisy and Hippocrates

A physician posting on MedPage blamed many of the problems in healthcare on private equity…and for-profit insurers.

That takes some…[insert anatomical reference here]. While his assault on Private Equity does have some merit, I can’t let his assertion that the profiteers are insurance companies stand.  What makes me nuts is Liu’s mindless and demonstrably false assertion, coupled with his complete inability to see that he is part of US healthcare’s cost problem.

Dr Mitchel Liu stated “For-profit insurance companies have long been regarded as the ultimate offenders in medical profiteering.”
Wow. Coming from a physician, who make more than docs in any other country, that is ballsy indeed.
Reality is physician compensation is a key driver of healthcare costs, and one of the reasons our healthcare costs are so much more expensive than other countries’. For-profit healthplans do make billions…but their margins are tiny compared to healthcare providers.
Liu also says:
“It’s time for medicine, including individuals and professional societies, to restore the integrity of the physician-patient relationship by taking a strong stand against all forms of corporate greed.”
Well, docs are often partners in Ambulatory Surgical Centers and hospital outpatient surgery centers.  Many docs belong to big multi-specialty groups that are quite profitable.  And, docs make a lot of money.
What does this mean for you, Dr Liu?
How about taking a stand against physician greed, Dr Liu?


Opioids, tapering, and risks – what you need to know

WorkCompCentral’s Mark Powell penned an excellent piece on just-released research on tapering long-term opioid patients.

One finding demands our attention; researchers found a statistically significant increase in overdoses and mental health crises in the 12 months after tapering was concluded. On average, these adverse events (science talk for bad stuff) happened 6 months after tapering concluded.

From the JAMA article:

In the current study, tapering was associated with absolute differences in rates of overdose or mental health crisis events of approximately 3 to 4 events per 100 person-years compared with nontapering. These findings suggest that adverse events associated with tapering may be relatively common and support HHS recommendations for more gradual dose reductions when feasible and careful monitoring for withdrawal, substance use, and psychological distress. (emphasis added)

The study included 114,000 patients who had been on stable, higher doses (50+ morphine equivalents) of opioids over an 11-year period. It came on the heels of two chronic pain studies published earlier this year; one addressed opioid treatment for chronic pain and the other was a meta-analysis of 190 studies focused on non-opioid treatment. I wrote about both here.

Tapering is an opioid management approach involving a steady decrease in opioid dosage over a prescribed time. The decreases in dosage and how fast patients were tapered varied significantly among the patient population; patients who were on higher doses before tapering were at increased risk for adverse events.

There were some limitations in the study including; the population was Medicare Advantage and commercially insured; individual patient tapering may have varied after the initial decrease; and the data didn’t indicate if the prescriber or patient initiated the tapering.

A thoughtful and detailed discussion of tapering is here…in part the paper states:

The authors emphasize that any medical action taken should involve as much patient buy-in as possible and should not be driven by rigid opioid dose cutoff s and misinterpreted guidelines. The authors of this paper also support sustaining patients on their existing medication at its existing level if patients are continuing to benefit from use, are not experiencing significant side effects, and express the desire to remain on their current medication as opposed to pursuing a taper. In such cases, the risks of a taper would outweigh the potential benefits.

Regardless, this is a wake-up call to the industry. Yes, workers’ comp – once the addiction creation industry – has made great progress in reducing inappropriate opioid usage and some progress in helping long-term opioid patients reduce or eliminate opioids.

That said, there are a variety of opioid management approaches, and we should be considering – and open to – any and all.  Medication-assisted therapy involving methadone or buprenorphine, physical therapy, acupuncture, yoga, and talk therapy are among the approaches that have shown promise.

I’ll end quoting myself from a post back in 2019;

we need to make very sure we are doing the right thing for patients. In some instances this will involve telling patients what they don’t want to hear; we need to be prepared to do that and help them thru the process, while understanding that process is very difficult.


It doesn’t matter

if you think COVID is overblown, just the flu, not going to hurt you, came from a Chinese lab, or part of some bizarre plot by the New World Order.

it doesn’t matter if you haven’t been vaccinated because you haven’t had the time, don’t believe it works, think it contains a tracking chip, don’t trust science, think it needs more study, or are just lazy.

What matters is the unvaccinated are dangerous as hell. The more of us who get infected, the greater the chance COVID morphs again into something far deadlier and far more infectious.

Let’s talk freedom for a second. The old argument about where our freedom of speech stops is “you can’t yell “fire!” in a crowded theater.

Well, you don’t have the “right” to set a fire in a crowded theater. That is exactly what the unvaccinated are doing.

Even if COVID doesn’t get more dangerous, it is crystal clear the unvaccinated are why we may be headed back to lockdowns, mandatory masking and physical distancing, remote “learning” and all the awfulness that we are just now starting to leave behind us.

Not getting vaccinated is a “personal choice” to:

  • expose yourself and your loved ones to COVID,
  • tell your employer you don’t want to work,
  • tell first responders and healthcare workers you don’t care about them, and
  • make the rest of us pay for your healthcare if/when you get sick.

Those of us who are vaccinated can also make a “personal choice”;

  • you don’t get to work around us,
  • we won’t pay for your healthcare, and
  • you will be held liable for infecting others.

What does this mean for you?

Get vaccinated.



Rating workers’ comp payers

Okay, a LOT of interest among work comp service providers in rating/reviewing workers’ comp payers…so let’s find out what service providers want to know/share.

I’ve got a few thoughts about key considerations…perhaps assessing payers based on:

  • does the buyer really know what they want?
  • rating payers on how they work with service providers on a continuum from pure vendor (commodity provider) to true partner (collaborator).
  • rating payers on the fairness of the process (with sub categories)
  • rating payers on the depth of their understanding of what they need to accomplish their goals
  • rating payers on the usefulness of their RFPs – are they asking the right questions, looking for creativity, and not just doing the basics so they can say they “went to market?”
  • decision making
    • involvement of procurement/purchasing (which can be helpful, but most often is not)
    • clarity of criteria and ranking priorities, and consistency throughout the process (start in one place and evolve to something(s) else). (again not necessarily a bad thing if they move towards smarter decision criteria)
    • do they stick to the schedule, and if not, are they clear on changes and do the changes make sense?
  • their interest in learning how you are different from your competitors
  • what they say about price vs how important price is in the actual decision process
  • are they frequently market-checkers or are they serious about their interest in getting better?
  • does Payer X keep your response confidential?
  • if you don’t win the business, does Payer X provide you with information as to why and what you could have done better?

  • do they actually know what they want/need?
  • do they respond to questions in a helpful way?
  • will the requested “solution” actually solve the problem they are trying to fix?
  • are they transparent about the process?
  • are the SLAs (service level agreements) reasonable, onerous, sensible (feel free to add other adjectives)?

Other thoughts

  • are there RFPs you won’t respond to because you don’t trust the payers?
  • what are the five things any RFP should contain?
  • what are the five things RFPs should NOT contain?

Any ideas are welcome and confidential – just drop me a note in the comment section – it will NOT be published but used to build the questionnaire.

Oh, and realize this can’t take an hour – so prioritize what you think is most important.

And thanks.




Vendors rating buyers…

Customers and prospects rate vendors all the time – yet vendors never rate/review customers or prospects.

I’m as guilty as anyone else for not seeing the obvious; sellers’ views of buyers are just as important as buyers’ views of sellers.  Sure, I wrote about problematic purchasers and their arrogant behavior – but that was 14 (!) whole years ago.

This came to light recently when I was thinking about conversations I had with a couple of buyers over the last few months. Buyers’ perceptions of how they dealt with vendors was quite different from vendors’ views. As in pretty much opposite; the buyers saw themselves as collaborative, collegial, and open to new ideas and perspectives. They opined that their buying criteria prioritizes forward thinking, innovation, and aligned incentives.

That was NOT how they were perceived by vendors. Far from it.

The buyers in question were perceived as dictatorial, dogmatic, and difficult to work with. The buyers always squeezed vendors on price and forced concessions while requiring detailed Service Level Agreements with financial penalties.

The Golden Rule applied – She Who Has the Gold Rules.

Of course all buyers are not like thatsome are collaborative and thoughtful and really looking for partnerships that benefit all parties. (Thank you HSA clients!)

It goes beyond the purchasing process; some buyers don’t get the “partner” thing. They don’t realize their success is driven by collaboration and teamwork, that this requires the customer’s cooperation and an investment of time, energy, and often IT resources. Instead they require/demand/mandate the vendor deliver on SLAs while making it darn near impossible for them to do so.

So…I’m thinking of surveying workers’ comp vendors about their views, opinions, and experience with WC payers.  Of course as with all our surveys, responses would be completely confidential. If we do this, we’ll require respondents to identify themselves so we can verify they are who they say they are. Once that’s done, identifying information will be erased.

If you’re interested in participating, shoot me a comment in the box below. All comments are held for approval, so I won’t publish yours if you ask me not to.

What does this mean for you?

This will be fun.


Infrastructure’s implications for workers’ comp

Hundreds of billions of dollars will be spent on heavy construction and everything that goes into that – steel, aluminum and concrete; wire and cable; glass and pipes; rail cars, track, and signaling equipment;  heavy equipment; electric vehicle charging stations; and of course labor.

It will fix huge infrastructure problems – including the Brent Spence Bridge which spans the Ohio River between Cincinnati and Kentucky and desperately needs an overhaul. (the Bridge carries 3 percent of our GDP every year, has no shoulders, is used by tens of thousands of commuters each day, and has frequent accidents that snarl traffic and screw everything up.)

Texas’ electrical grid is also targeted for a major – and critically needed – upgrade. Rail, highways, tunnels and port facilities around New York City are in desperate need of major repairs. Rural America’s access to broadband – essential for agriculture and education – is pathetically sparse. (think DSL…remember that?)

Here in upstate New York, the City of Syracuse still relies on water pipes that can be 180 years old and, wait for it, some are wood. Albany just discovered some of their pipes are even older – and yes, made of wood.

The infrastructure bill will likely pass and be signed into law, but that’s just part of President Biden’s economic plan, the rest of which will be addressed in a massive bill that won’t have to garner any Republican Senators’ votes due to reconciliation. [explanation at the link]

The budget proposal will include additional investments in human capital that will expand child care, increase protections for workers, ramp up spending on community colleges and education and add funding for clean energy projects. This last will likely have the biggest impact on work comp, but the rest will add tens of thousands of workers to the child care and education sectors.

So what does all this mean for workers’ comp?

Two things – the improvements/upgrades/fixes will generate more premium dollars, more injuries, and more claims; expect this to start ramping up in a year or so, and continue for a decade plus.

As our amazingly crappy infrastructure gets better, those improvements should make us more competitive, remove bottlenecks (here’s looking at you, Brent Spence Bridge) and spur growth – which will add jobs and increase work comp premiums.

What does this mean for you?

More and better infrastructure = more dollars flowing into the work comp industry.




that giant sucking sound…

Is coming from hospital trauma centers vacuuming thousands out of your wallet.

Trauma centers are supposed to handle the worst trauma cases – those from major car accidents, gunshots, airplane crashes, building collapses – you get the picture. Smelling gold, some hospital systems – including HCA – figured out that “activating” trauma centers lets them charge fees up to$50,000 per patient – even if that “trauma center” never actually treats the patient.

The fact that HCA has opened trauma centers in 90 of its 179 hospitals – many in close proximity to other trauma centers – indicates it is not a pubic health need as that “need” is already being met.

Shockingly, Florida is once again the poster child for what look to be abusive billing practices.  From Kaiser Health News:

In Florida alone, where the number of trauma centers has exploded, hospitals charged such fees more than 13,000 times in 2019 even though the patient went home the same day,

Florida trauma activation cases without an admission rose from 22% in 2012 to 27% last year, according to the data. At one Florida facility, Broward Health Medical Center, there were 1,285 trauma activation cases in 2019 with no admission — almost equal to the number that led to admissions. [emphasis added]

Work comp and auto alert…

Peter Johnson penned a deep dive into the explosive growth of trauma centers in the latest edition of Health Plan Weekly [subscription required]. In his article, Peter reported the number of Level I and II trauma centers almost doubled from 2008 to 2020, going from 305 to 567.

From his piece (Peter was quoting me):

It is abundantly clear this [the growth in the number of trauma centers] is not due to a years- or even months-long dramatic increase in apartment building fires, accidents, gun fights, or multi-car crashes.

Trauma used to be defined as high-acuity, emergent cases involving severe injury. Not any more at some of these facilities. Reports abound of patients with minor injuries requiring stitches, cold compresses, and even just a baby bottle and a nap billed for trauma activation.

What does this mean for you?

Any facility bill with a trauma center charge must be subjected to very careful and thorough review. Especially in states that allow higher payments for so-called “outliers”.

Auto insurers – pay attention!!


Canaries and coal mines.

Prior authorizations – aka 1-800 NURSE MAY I – are either an absolute necessity if you are a healthplan or a complete waste of time and money and affront to the medical profession if you’re a provider.

Of course, reality is somewhere in the middle.  Regardless, in what I will argue is due mostly to payers being dumb, a new law will strip most Texas payers of the ability to unilaterally set and enforce prior auth requirements.

As of September 1, Texas healthplans won’t be able to require prior authorization for certain treatments if 90 percent of the treating doc’s medical orders for those services over the last 6 months were deemed medically necessary by the insurer. The details are yet to be released; how this gets implemented, how insurers are supposed to track compliance, how the inevitable disagreements will be dealt with and all the other devilish details are TBD.

We do know that the “gold carding” of docs (the term used to describe docs who meet the 90% threshold for a healthplan or insurer) “only applies to payers that fall under the state’s jurisdiction and are not state funded.” It appears the law – HB 3549 – applies only to:

  • HMOs,
  • Medicaid plans, and
  • PPOs and EPOs offered by health insurers.

Self-insured employers are exempt as they are regulaterd under ERISA and thus outside state jurisdiction.

I’ve long argued – and strongly suggested to consulting clients – that they stop requiring good docs to submit to prior auth requirements, instead monitoring them on the back end via smart data analysis.  The vast majority of procedures that do go thru the PA process are approved – and the process can delay treatment, costs treaters and healthplans money, and add to the general frustration with healthcare and insurers.

Docs argue that PAs are unnecessarily burdensome…but I give little credence to their arguments; if they weren’t prescribing too many opioids, doing unnecessary surgeries, requesting unneeded tests and MRIs, PAs would not be necessary.

Similarly, healthplans’ argument that “The use of prior authorization is relatively small — typically, less than 15%”[of medical care] is ludicrous – the cast majority of healthcare is routine, and 15% of all “healthcare” is a gigantic number of services/drugs/procedures/treatments.

Canaries were an early warning sign of bad air in coal mines; when they stopped singing and died, miners knew to get the heck out fast.

What does this mean for you?

This is the first of what we will see in many states, and should be a wake-up call to all payers – health, auto, workers’s comp alike.





Well, I got that one wrong…COVID-related treatment delays

Didn’t happen.

That’s the result of a just-published study conducted by Olesya Fomenko PhD, one of WCRI’s talented researchers.

Not only were there no delays during the first half of 2020, when the pandemic was raging – but there was a slight improvement in waiting times for some services.  This may have been due to non-COVID patients actively avoiding medical treatment facilities (that’s my speculation, not Dr Fomenko’s).

This was true even in states hit hard in the early months of the pandemic; of note the waiting time for surgeries decreased by 1/3.

The same held for pretty much all injury types; soft tissue injuries, fractures, lacerations, you name it, none had delays in treatment. 

The report documents decreases in emergency room visits in Q2 2020 for lost time claims – again this may well be due to patient reluctance to go where COVID may be present. It’s also a reminder that all employers should do everything they can to ensure workers with non-emergent injuries DO NOT SEEK TREATMENT AT ERs.

ERs are way more expensive than occ med clinics, often exhibit abusive billing practices, don’t understand workers’ comp, and are where sick people go.

Other findings…

Non-COVID claims plummeted in the 27 study states during Q2 2020…

There was little difference in the type of injuries incurred during COVID’s worst times…

There’s a lot more in the 63 page report, but my main takeaway is this – I was pretty sure there would be treatment delays – and that was wrong.

Sure, logically my assumption made sense; people would avoid care because they were scared of being near COVID patients. And that was certainly true for most medical care; visits to doctors’ offices dropped 70-80%.

But that “logical” assumption didn’t take into account that when you get a nasty cut, or fall off a ladder, or break your leg, you need medical care.

What does this mean for you?

Question your assumptions.


The hospital war is ramping up.

The Biden administration is clamping down on hospital mergers and ramping up enforcement of surprise billing laws. 

Meanwhile, most hospitals are pretty much ignoring the requirement that they post prices. and are going to the mattresses to fight over mergers. (going to the mattresses is what Mafioso did back in the day during major turf battles)

I’ve written extensively about the impact of mergers on cost – it goes up, a lot – and quality – no evidence that it improves. But this isn’t just about hospitals, it is about the entire healthcare system and where it is headed.

Hospitals accounted for $1.2 TRILLION in spending back in 2018

Price is the reason healthcare is so damn expensive here compared to other developed countries; and price is driven more and more by hospitals. Pricing power is how hospitals and health systems generate ever margins, pricing power is what they get when hospitals merge and reduce competition in markets.

This from Cooper and Gaynor:

A number of studies have examined individual hospital mergers and found price increases of greater than 20% (e.g., Town and Vistnes 2001, Krishnan 2001, Vita and Sacher 2001, Gaynor and Vogt 2003, Capps et al. 2003, Capps and Dranove 2004, Dafny 2009, Thompson 2011, Tenn 2011, Gowrisankaran et al. 2015).

The FTC has conducted a series of merger retrospectives. These analyses have found price increases of 20% to 50% (Haas-Wilson and Garmon 2011, Tenn 2011, Thompson 2011).

There has also been work analyzing “cross-market mergers” of hospitals that are not geographically proximate competitors (Dafny, Ho, and Lee 2019, Lewis and Pflum 2017). These studies have observed cross-market merger effects that raised prices between 10% and 17%.

That’s how Tenet reported record profits last quarter, it’s why Michigan’s two largest systems are merging.

The merger thing has gone on so long that 4 out of 5 hospital market areas are “highly consolidated” – meaning the locally-dominant health systems have pricing power, and can use that to dictate prices to payers of all kinds. Mergers peaked several years ago – not because they are losing popularity, but rather because there just aren’t that many merger targets any more.

Because hospitals thrive on profitable services, we’re seeing cutbacks in less-profitable lines, cutbacks that are limiting the availability of services especially in rural and under-served areas. 

What does this mean for you?

We have got to get control of the hospital beast before it eats us alive.

Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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