Insight, analysis & opinion from Joe Paduda


MCM is back – and so is the damn coronavirus

After a brutal three weeks of 12 hour work days, finally came up for air late yesterday. The water is receding, so should be able to get back to my posting duties on a regular basis.

Let’s get right into it.

COVID’s mutations are likely to put off a full recovery till late summer or even fall.

While quite rare, viruses mutate during replication – genetic material gets shuffled around, mixed up, and re-ordered. In most cases the result is pretty minor, or “fatal” to the virus’ replication (as viruses are not technically “alive”, “fatal” isn’t exactly the right term, but close enough.)

Mutations are even rarer for the coronavirus.

So that’s the “good news”.

The bad news is this – with hundreds of millions of people infected, each producing hundreds of millions of individual viruses, there are lots of opportunities for the virus to mutate.

That’s why we now have at least three separate instances of a mutation that appears to make COVID more transmissible. While only one – the UK variant – appears to be slightly more deadly, the overall impact is not good.

Even more worrying, these mutations also appear to make antibodies (one of the immune system’s tools to attack viruses) and perhaps one of the vaccines less effective.

The good news is the Moderna and Pfizer vaccines appear to work almost as well against COVID mutations as they do against the “original” virus. So far.

Meanwhile, vaccinations in the US are few and far between. With only one out of 12 Americans vaccinated to date, we have lagged far behind the world leader – Israel – which has vaccinated over a third of its population.

Amazingly, there are idiots seeking to stop or prevent COVID vaccinations; these people are complicit in the deaths of the 440,000 Americans who’ve died from COVID. (photo credit halperry)

What does this mean for you?

  1.  Wear an FDA-approved N95 or KN95 mask. Not a cloth mask, not a bandanna, not a “surgical mask. (Thanks Mary!)
  2. Prepare for at least six and maybe nine more months of COVID. It stinks and no one likes it and all that – we all need to suck it up, stop whining, help each other out, and power through.
  3. If you can, help out the less-fortunate. Be kind and be generous.



COVID update – good news and bad.

The good.

David Colon and Raji Chadarevian of NCCI have produced an excellent summary of COVID’s impact on workers’ comp medical treatment.

Colleagues Brittni Moore and Vicky Mayen have authored a companion piece that provides an early projection of 2020 financials. While not COVID-centric, there’s no doubt COVID is a main driver of the 8.1% decline in private carrier premiums. Moore and Mayen also note final premium totals may well be lower due to pandemic-driven declines in payroll.

As we projected back in the summer, profits remain robust. The pandemic-driven decline in claims plus carryover from inflated pricing due to the opioid factor are likely chief contributors.

A few takeaways from the COVID study:

  • Among COVID claims that had medical expenses, one-fifth had an inpatient stay. Note that this is only for accepted claims WITH medical expenses.
  • Among those claims with an inpatient stay, one-fifth – or 4 percent of all claims with medical expenses – were in an ICU at some point.

graphic courtesy NCCI

My takeaway – medical costs are relatively low.

Meanwhile Johns Hopkins University researchers studying Accident Fund data report there’s only one industry likely to be significantly impacted by occupational claims for COVID – you guessed it, healthcare.

The highlight – “This suggests that the vast majority of workplaces will not be subject to a high frequency of COVID-19 related WC claims over the course of the pandemic.”

Now, the bad news.

Long Haulers are COVID patients with persistent and often strange symptoms that can persist for month. Possibly related to an immune response gone awry, these conditions include (quoting the NYT):

  • fatigue,
  • pain,
  • shortness of breath,
  • light sensitivity,
  • exercise intolerance,
  • insomnia,
  • hearts that race inexplicably,
  • diarrhea and cramping, and
  • memory problems.

While most patients improve over time, one researcher estimates about one in ten have issues that persist for months.

What does this mean for you?

We have a lot to learn about COVID.


COVID’s impact on workers’ comp

Premiums and injury claims are way down; profits remain really high.

Those are the key takeaways from just-released analyses of COVID’s impact on comp from NCCI and WCRI (WCRI report free to members, fee for non-members).

That’s also what Mark Priven and I predicted last summer. I highlight that not to crow but rather to point out that these findings were quite predictable. And others’ grave concerns about COVID hitting profits were completely off the mark.

First, the qualifiers.

  • NCCI’s report includes private carrier data reported by NAIC through September 2020. Things got a lot worse late in the year, so it is highly likely premiums and injury claim drops increased somewhat.
  • WCRI data covers results from 27 states during the first half of 2020

Claim decreases

WCRI’s data shows a stunning decline in non-COVID claims (MO and LT) across the 27 states from Q2 2019 to Q2 2020…a 30% + drop in the vast majority of states.

Not surprisingly, the decrease in LT claims – while still dramatic – wasn’t as large.

The net – overall, claims dropped by more than a quarter in the vast majority of states.

Also, WCRI found that the severity of the outbreak was strongly correlated (my word not their’s) with the decline in non-COVID claims.


  • TPA revenues suffered as claim counts declined
  • Medical management revenues in the second half of 2020 almost certainly dropped significantly (compared to 2019). Fewer new LT claims = fewer bills, fewer network encounters, less need for case management and UR

What does this mean for you?

  • With COVID infections exploding – and the criminally inept vaccine rollout – we will almost certainly see a reprise of Q2 2020.
  • You can expect this reprise started in December and will continue thru April.



Haven Healthcare’s demise – lessons for workers comp

Haven Healthcare – the Amazon-JPMorgan-Berkshire Hathaway joint venture intended to re-invent healthcare – is no more. The quest to improve access to primary care, simplify insurance coverage, and make prescription drugs more affordable ended after three years.

We don’t know why Haven is now in heaven; it could be that three of the most powerful and well-run organizations in the world could not figure out how to build a better healthcare system.

Or it could be that they each had different motivations, different needs, and different priorities and could not figure out how to work together. That would not be a surprise. Or that their well-known, accomplished, and brilliant CEO was not an effective CEO (that’s not a slam; I’m no operator either).

Or more likely – all of the above plus more.

Regardless, it’s dead. Workers’ comp execs can learn three lessons from Haven’s failure.

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.

Implications – Two things – knowledge and commitment.

Do you know anyone in workers’ comp with deep knowledge of healthcare? Someone who understands reimbursement, infrastructure, process, the regulatory environment? Medical drives workers comp, and very few comp execs have that knowledge and understanding. 

Many who think they do – 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, market share. With about 1.6 million employees – and perhaps 5 million insureds – the three giants had a lot of lives to cover, a lot of healthcare dollars to leverage (about $24 billion in employer costs and a total of about $30 billion). BUT, the proverbial mile-long-and-inch-deep problem meant Haven didn’t have local scale.

Healthcare is local – facilities and medical practices want insured bodies, the more the better. Outside of a very few markets where Amazon has big distribution centers, Haven didn’t have enough bodies to leverage big changes.

Implication – Total annual medical spend in workers’ comp is about the same as Haven’s – $31 billion. That is less than 1 percent of US medical spend. Haven tried to leverage all those dollars. It failed.

Unlike Haven, there are lots of workers’ comp networks all trying to negotiate deals – the largest may have $8 billion in spend nationally.

That is small potatoes indeed…A mere tablespoon of hash browns.

What does this mean for you?

The workers’ comp industry cannot “solve” healthcare. But that’s not the point.

The point is this – organizations and leaders that know more about healthcare, that are more committed to doing better, will far outperform their competitors.


I wish I could.

It is times like this that determine if people have souls.

To those who say stay out of politics, I say – I wish I could [see comments at link].  What happened last year, and last summer, and last week make that impossible.  We can’t just continue on as if nothing had happened.

Our country – lauded by self-described “patriots” as the greatest country in the world:

photo credit Daily Mail, circled object is fire extinguisher thrown by rioter that struck and killed Officer Brian Sicknick


American Carnage indeed.

I get that people are upset when their candidate loses a critical election – millions of Americans – your fellow citizens – were crushed when Trump won in 2016. I was – and still am – among them.  As much as it hurts to say it, Trump won in 2016 – and we accepted that victory. We did not riot, lie, provoke, build scaffolds on the Mall, threaten to hang the Vice President and shoot the Speaker of the House. We did not file 60 lawsuits seeking to overturn our fellow citizens’ votes.

I accept and understand that Trump supporters are distraught, angry, even terrified – as I was in 2016 (and still am of the damage Trump has done and will do). I do not accept and cannot allow the anti-American behavior of many to pass unremarked and unchallenged.

I applaud the businesses that have stopped contributing to politicians lying about election fraud. Among those organizations fed up with Trump and his enablers are AirBnB, Amazon, BestBuy, the Blue Cross Blue Shield Association, Commerce Bank, Dow, Marriott, GE, Hallmark, AT&T, MasterCard, Verizon.

I decry CVS, Berkshire Hathaway, Facebook, Goldman Sachs, JP MorganChase, Microsoft, Google, BlackRock, Charles Schwab, VISA and others who have suspended all political contributing to all politicians – this smacks of false equivalency when it is blindingly obvious that the Ted Cruzes and Josh Hawleys are guilty of fomenting insurrection – not the Sherrod Browns and Jason Crows.

My family has agreed that we must do more. So, I will contribute 10 percent of my income to organizations dedicated to righting wrongs. The Southern Poverty Law Center, BLOCbyBLOC, FairFight, and the Native American Rights Fund are the ones we’ve chosen.

This may well cost me readers, business, income, and prominence – and I am totally fine with that. What we are on the verge of losing is immeasurably more important.

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Tomorrow – back to health care and related topics.


Predictions for 2021 – Workers’ Comp Part 2

Wednesday I dropped the first five predictions; today we’ll finish up.

6.  The workers’ comp insurance market will stay soft.

Here’s a few reasons why.

  • There’s hundreds of billions of capital floating around out there, looking for a home. Workers’ comp insurance has been a) quite profitable and b) is a great place to park dollars.
  • Claim counts continue to decline – while COVID is accelerating the decline, the structural drop is embedded in the business and is here for the long term. Next year there will be fewer claims, and the following year even fewer.
  • Medical inflation remains pretty low (while there are troubling indicators that costs will bump up, overall trend remains low historically)
  • There are lots of insurers fighting for a shrinking market, and it only takes a couple cutting prices to force others to join in.

7. More layoffs and staff reductions will hit insurers and TPAs
See #6 above.  Fewer premium dollars = fewer administrative dollars; fewer claims = less need for staff. Layoffs hit several insurers last year and we can expect more to come.

8. Other than presumption and tele-services, there will be very few significant moves in WC regulation or legislation.

Between drastic reductions in state revenues due to sales and other tax receipts affecting staffing and state legislatures and governors all-consumed by COVID responses and budgetary issues there’s little oxygen left to fuel any material changes to work comp regs. While it would be great to see Florida’s legislature stop facilities raiding workers comp to make up revenue shortfalls, that’s highly unlikely.

9. OneCall will be sold and/or broken up

While the current debt load is a LOT less than it was under the previous owners and the current CEO is an improvement, the decline in claims hit One Call hard in 2020.   The first half of 2021 won’t be any better with employment numbers and claims counts likely reduced due to the pandemic.  On the plus side, there’s still lots of investor money looking for deals.

Net – I expect the company to change hands this year. Whether it is sold as one entity or broken up is TBD.

10. Opioids and other dangerous drugs will get a lot more attention.

With COVID dominating everyone’s calendar, workload, thinking and energy, we all dropped the ball on managing opioids. That will change.

chart below is from The Economist.

With prescription volumes, MEDs, and duration likely up during 2020, expect payers to re-engage with prescribers, PBMs, and employers to get things moving in the right direction.

What does this mean for you?

This is going to be a very busy year, with more change than any we’ve seen in a long while.


Predictions for 2021 – Workers’ comp

Never has the crystal ball been cloudier.

A lack of visibility does not mean one shouldn’t think through what might be hidden within the clouds. To quote Dwight Eisenhower, “plans are useless, but planning is indispensable.” While what we think may happen may not, the process of working thru the implications is hugely valuable.

So, here we go.

  1.  Total premiums will stay low.
    As employment, payroll, and injury rates all remain under pressure, total premiums will remain significantly lower than we’d expect in a non-COVID, non-recession environment. We are also on the tail end of the opioid cost bubble, with actuarial projections still over-compensating for what was rampant overuse of opioids.
    Unemployment will persist at least thru the first half of 2021 – and likely the first three-quarters – helping to keep premiums lower. There are some predictions that employment will ramp up towards the end of the year; let’s hope so.
    Implications abound.
  2. Facility costs will spike.

    Hospitals are in dire financial straits, with 2021 bringing no respite from the cash crunch experienced by the entire industry when people avoided facilities, put off elective procedures, or weren’t able to get care due to facility restrictions.
    As desperate financial managers look high and low for any and all revenue sources, you can bet your house they’ll be focused on workers’ comp. Payers have:

    • few effective price or utilization controls;
    • an often-lackadaisical approach to cost management;
    • bill review programs and processes hopelessly outclassed by sophisticated revenue maximization technology; and
    • management that doesn’t know that it doesn’t know;

thus payers are going to see facility costs – already the largest part of medical spend – jump.

3. Consolidation
Seems I’ve been forecasting increased industry consolidation for years…it’s not a prediction but more acknowledgment of reality. Workers’ comp is a declining industry with shrinking claim counts and flat expenses – and that isn’t going to change.

COVID has accelerated the process dramatically; with claim counts down 15-20%, there are fewer claims to adjust, fewer services to medically manage, fewer bills to pay, fewer dollars to compete for.
Because there will be fewer revenue and premium dollars next year than this, more consolidation is inevitable.
I expect this to be most pronounced among medical management firms and TPAs, and the big to get bigger. Genex/Mitchell/Coventry, Sedgwick, Concentra are all likely consolidators. Not sure about Paradigm.

4.  Drugs will re-emerge as a significant problem
After several years of declines in opioid prescription volumes, it looks like things headed in the wrong direction last year.
Prior Auth requirements were relaxed, refills extended, and states loosened restrictions on prescribing. Add to that patients weren’t able to get to their PT visits and surgeries were postponed. The result – I expect we’ll see drug costs in 2020 flattened out, and opioid usage actually increased (We will know a lot more in mid-late March when I complete my Survey of Drug Management in WC).
That was last year; as COVID is returning with a vengeance, expect to see continued increases in 2021.

5. COVID claims aren’t going to be costly.

Despite all the caterwauling we heard back in 2020, COVID costs have been minimal. That will not change. Yes there will be long-haulers, but those will be very few indeed. Yes there will be more claims, but most will cost just a few thousand dollars.

Tomorrow – the next 5.



Last year’s predictions…how’d I do?

As tempting as it is to just ignore my predictions for workers’ comp in 2020 and blame mis-calls on COVID, that wouldn’t be right.

So, here’s how I did.

 1. The work comp insurance market will stay soft.

Yep. And it would’ve stayed marshmallow-y soft even if the damn virus hadn’t spawned.

2. Work comp medical trend will remain flat.

As the kids say, that’s a hard large part because lots of injured workers didn’t get all the care they should/could have. However, I’m basing this on spotty information…we will know a lot more later this spring. But, so far, medical costs are looking flat to lower.

3.  Facility costs will gain a lot more attention.

Well, not enough. While there was a kerfuffle about Florida’s abject failure to correct it’s blatant giveaway to facilities, this got lost in the shuffle.

4.  Consolidation in the work comp services industry will continue, with more of the big players merging/acquiring each other.

Yup. Concentra went on an acquisition tear, and Mitchell bought Coventry.  Expect more to come in 2021.

5. OneCall will be sold.

Nope. While discussions were held at various times with various parties, the gap between what potential buyers would pay and what owners KKR and GSO would accept was too broad.

6. California’s crooked docs will be outed.

No dammit.

With SB 537 signed into law, I thought we would know which docs were the bad actors  in 2020 – like the  PM&R doc in northern California who filed IMR requests resulting in 2,800 IMR letters and 4,441 Medical Decisions.

(while the law doesn’t require this outing to happen before 2024, I’d expected we’d know the names of the worst offenders in 2020.)

7.  More effective approaches to chronic pain and opioid abuse disorder are here – and will gain a lot of traction in 2020.

That’s a yes – despite COVID sucking all the air out of every room, more and more payers launched smarter/better/more patient centric approaches to OAD and chronic pain.  Carisk’s Pathways 2 Recovery gained significant traction… (Carisk is an HSA consulting client).

8.  Don’t expect any meaningful state legislation/regulatory changes.

Well, outside of doing everything possible to expand access to and use of tele-everything, and all that stuff about presumption, nothing happened. Now that I read that…it’s clear that a lot happened. So, that’s a no.

9. Benefit adequacy will gain some traction.

I admitted this was much more of a hope than an actual prediction…and it didn’t happen. I’ll blame this in part on COVID…but Double Dammit.

10. Conferences will continue to struggle.

Uh, a  huge yes. I know, the demise of the conference was largely driven by COVID, but hey – I took the hit on leg/reg changes and adequacy, so will take a yes where I can get it.

Oh, and one more.

Back in 2019 I wrote this…

A very big external event/issue/mess will affect the economy – and thus workers’ comp

So, I hereby invoke the “better late than never” scoring rule and take a half-a-yes for this prescient – but 60 days too late – prediction.

The net – I got 5 1/2 points.

Tomorrow – predictions for 2021.



COVID update pre-holidays

First – stay careful and smart – this is NOT the time to take risks; hospitals in many states don’t have room in their ICUs or ERs. Drive carefully, mask up (see below for info on the most protective mask), and DO NOT hang out indoors with people outside your “pod”.

To that point..

“Excess” death counts are used to better understand the real impact of COVID. In California, the pandemic is not only leading to tight capacity in hospitals, it is correlated with a significantly higher death rate, especially among Blacks and Latinx people.

This isn’t surprising; people of color are:

  • less likely to have health insurance and
  • thus are in generally poorer health;
  • more likely to live in urban areas with denser populations;
  • have less access to testing; and
  • more likely to work in “essential” industries and in “essential” jobs that place them at higher risk.

This from an NYC physician:

As a physician in an urban pediatric ED, I have worked with families who fear losing their jobs and medical coverage or exposing their children because they cannot work from home; families who feel abandoned by their primary care clinicians after their offices closed down; and families with language barriers or limited internet access precluding their use of telemedicine services, which are not always covered by insurance.

Also notable – the group that had the highest increase in excess deaths was people under 24 years old.

It’s not just California. A national study of excess deaths among 25-44 year-olds showed just over a third were from COVID.

Workers’ comp claims

COVID-related claims in California hit an all-time high last month.

A quarter of all claims in November were COVID-related.

BUT…claims are down by almost 17% for the year.  One out of every six claims disappeared…

double But – only (!) one of every 10 projected claims didn’t happen. (claims counts are on a decades-long structural decline)

Other key metrics:

  • about 1/3rd of all COVID claims are denied
  • over half of all WC COVID claims are for people under 40
  • to date, one of every eight claims is COVID-related

CWCI has led the way in reporting, documentation, and accuracy in all things COVID claim related.

Insurance execs are concerned.

As well they should be. The fine folks at NCCI report that COVID is the top concern amongst the insurance execs they polled.

I still don’t get fears about  presumption (the number 2 concern). COVID claims are cheap, resolve relatively quickly, and rarely become cat claims. Yes a very small percentage of patients may become Long Haulers, but even then they don’t/won’t represent a lot of dollars.

Concern about rate adequacy is even more puzzling.  Rates have been too high for years, driven largely by declines in opioid-related costs and disability. While that may change w the uptick in opioids, to date we’ve seen nothing that indicates the long-running gravy train that is workers’ comp is headed off the tracks.

What does this mean for you?

Prevention is the best cure – the most protective cloth mask is a two-layer woven nylon version.

If you don’t have one, use your regular mask this way:

See you next year.



Florida’s hospitals win big. Employers and taxpayers lose big.

Defying statutory requirements, logic, common sense, good government, fairness, basic math and the facts, Florida’s workers comp regulators just hammered the state’s employers, taxpayers, and physicians.

This is NOT yesterday’s Three Member Panel meeting, altho it bears a striking resemblance…foregone conclusion after a lot of theatrics

In a regulatory process resembling a Soviet show trial, the Three Member Panel slammed through a reimbursement scheme that will raise costs for employers and taxpayers while making sure Florida’s docs are among the lowest paid in the nation.

Allow me to list a few of the TMP’s many errors.

  1. The TMP failed to comply with the law that established the TMP, which reads in part:
    Paragraph 440.13(12)(d), F.S. further 4 states: In establishing the uniform schedule of maximum reimbursement allowances, the panel must consider: 1. The levels of reimbursement for similar treatment, care, and attendance made by other health care programs or third-party providers; [note that several organizations gave the TMP data comparing WC reimbursement to Medicare and others; the TMP ignored it] 2. The impact upon cost to employers for providing a level of reimbursement for treatment, care, and attendance which will ensure the availability of treatment, care, and attendance required by injured workers…”
    The TMP said the scheme would reduce facility costs by 23%, citing an NCCI analysis that indicated the revised hospital fees. HOWEVER, the comparison data used in the analysis was from 2019, when hospitals were able to game the system by over-charging work comp patients. After a court ruling some months ago, many payers started denying outlier payments – and that continues to this day. [edit after hearing more from NCCI]
    Thus, the comparison does NOT reflect the actual difference between current and future costs due to the TMP’s new reimbursement scheme.
  2. The TMP refused to even consider the impact of rampant price-gouging by facilities with high charges on employers and taxpayers. This is very well documented, yet somehow escaped the TMP’s consideration.
  3. An incredibly naive comment by one TMP member illustrated his total ignorance about medical costs in work comp. According to a piece authored by William Rabb in WorkCompCentral, “worker representative” Jason Robbins said that in his experience, since few workers end up in the hospital, it’s not a big deal. [Why read WCRI studies when you can just rely on your own “experience”?)
  4. The estimable Mr. Robbins also noted excess insurance protects the insurers from high costs. Of course, employers and taxpayers have to pay premiums to excess insurers, which are driven by facility costs, a reality that appears to have escaped Mr. Robbins.
  5. Then there’s the hospital lobbyist noting that the law doesn’t require reimbursement to be “reasonable”…looks like the TMP bought into HCA attorney Jennifer Hinson’s opinion on what the law says.  Attorney Hinson’s opinion is – to be kind – not supported by the actual law, which states:
    “The uniform schedule of maximum reimbursement allowances must be reasonable, must promote health care cost containment and efficiency with respect to the workers’ compensation health care delivery system…”[italics added]
  6. Even the employer “representative” on the TMP, one Tamela Perdue, also voted in favor of hospitals. Perdue is an attorney employed by Sunshine Health, a Florida health insurer owned by Centene.
    I’m a bit surprised Perdue is a) on the TMP and b) voted; there’s a potential conflict of interest here as her vote favoring hospitals could be seen as a favor to hospitals in Sunshine Health’s network.

Finally, there’s a wealth of research indicating Florida’s reimbursement of physicians is way too low.  Rather than take a stand on this, the TMP just said it wasn’t anything they could do anything about.

Leadership at its finest, no?

What does this mean for you?

This is a not-very-well-hidden tax on Florida employers and taxpayers.

[note – I asked the Dept of Workers’ Comp for comment; as of this time they did not respond]

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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