As the biennial Texas legislative session nears its end, it looks like the legislature may pass a bill that would have a dramatic effect on workers comp PPO networks.
According to WorkCompCentral (subscription required):
“HB 223 would regulate “discount brokers” that are engaged in (for money or other consideration) “disclosing or transferring a contracted discounted fee of physician or health care provider.”
A broker could not transfer a physician’s or health care provider’s contracted discounted fee or any other contractual
obligation unless the transfer is authorized by a contractual agreement that complies with the provisions of the bill.
Those provisions include notifying each physician and provider of “the identity of the payers and discount brokers authorized to access a contracted discounted fee of the physician or provider.”
The notice must be provided at least every 45 days through “electronic mail, after provision by the affected physician or health care provider of a current electronic mail address” and posting of a list on a secure Internet website.”
Now that’s a huge change, one that would effectively stop much of the rental network business cold. The dirty secret of the work comp PPO business (well, one of the dirty secrets) is that networks don’t have direct contracts with providers in all states – every ‘national’ PPO uses another network’s contracts in at least a few jurisdictions.
Docs sign contracts in return for direction – they are trading a discount for the promise of more volume. Yet few networks actually drive any significant volume to the vast majority of their contracted physicians.
We’ve been seeing a rapid rise in the volume of litigation from providers contesting reduced reimbursement due to PPO contracts, with three payer clients reporting a significant upsurge in the last twelve months.
What does this mean for yuo?
Find a better, and more sustainable, way to reduce medical expense. The days of cutting costs by slashing provider reimbursement on the basis of some flimsy network contract are rapidly ending.

In my post earlier this week that mentioned developments with Coventry’s bill review services, I incorrectly stated:
Reports are that Coventry will ‘own’ the bill review application source code and related assets as of October 1 2009; what they will do then appears to be up in the air.
Well, that’s not exactly incorrect, as Coventry will own the application after that date, but sources indicate they already own it.
The significance of the 10/1/2009 date is that It marks the day that EDS will no longer support the application. EDS has provided IT support for BR 4.0 and the previous iterations of the program for years; as of October 1 they no longer will.
Which leads rather quickly to the next question – who will?
My assumption is Coventry. However, as I’m all too familiar with what happens when you make assumptions, I’ve reached out to Coventry and asked them what their plans are.
I’m not sanguine about the chances of a response.

RIMS is in Orlando this year, a rather ironic location. The P&C insurance industry is in a bit of a fantasy world these days, with increasing reports of reserve inadequacy (anecdotal to be sure) while the soft market continues with few signs of firming pricing.
Monday was a bit of a blur; back to back meetings in the exhibit hall, interspersed with the inevitable encounters with old friends and colleagues passing on the latest news about who’s moved where and what deals are in the works.
The private equity folks are here as well, scouting for promising companies they can buy and use as a ‘platform’ to build a bigger company. There’s talk of several potential deals in the works – more on those as they develop.
The conference itself looks to be rather sparsely attended. Exhibit hall traffic is noticeably light, and few sessions are filled. This is likely due to a combination of the ‘AIG hangover’; big insurance companies are reluctant to send lots of folks to nice destinations (yes, some do think of Orlando as a ‘nice’ destination); the continuing soft market and financial impact thereof (more than a few insurers and vendors have recently laid off staff); and the lack of solid, new information delivered at the conference itself.
I’m using twitter to post brief comments/observations throughout the day – for updates sign up for my feed (Paduda). Here are a few quick takes from Monday.
The PBM world is consolidating at the top, and growing at the lower end. Some of the newer entrants are seeking to carve out niches based on clinical expertise in pain management (MyMatrixx), innovative pricing (PMOA), a focus on smaller payers (don’t use our name) or a push into the mid-tier (don’t use our name either).
There’s a lot of turmoil around Coventry Work Comp, with recent layoffs in their MSA division and in the IT support area (bill review specifically). Reports are that Coventry will ‘own’ the bill review application source code and related assets as of October 1 2009; what they will do then appears to be up in the air. While they would undoubtedly like to move all their payer clients over to BR 4.0 (their platform) from Ingenix’ PowerTrak (the system used by former Concentra clients) there is significant resistance to that move from PowerTrak users. That resistance, coupled with the expense of maintaining BR 4.0 and the recent layoff of BR support staff are clouding the crystal ball.
I’ll try once again to get a read from Coventry staff as to their strategy and direction; I don’t expect much as my repeated requests for information and dialogue have been met with silence. That’s too bad, as they have been and continue to be the dominant player in the comp managed care business, and their directional changes will dramatically impact their current – and potential – customers…

I’m about half-way through the first annual Survey of Workers Compensation Bill Review, and already there are a few somewhat surprising findings. These are very preliminary, but nonetheless intriguing.
1. The range of pricing for payers using external bill review vendors is broader than I expected, even after accounting for differences in services provided and volume. The range is over four dollars per bill.
2. Payers’ views of bill review vendors are diverse, with some payers enthusiastic about a particular vendor and others disdainful.
3. A majority of respondents voiced concern about their vendor’s inability to keep up with fee schedule and regulatory changes, and the negative impact this has had on the payer.
4. Regarding the use of UCR databases, some respondents are quite concerned, while others (primarily ones who are not using the Ingenix MDR/PHCS databases) are much less concerned. All respondents are well aware of the issue.
5. Most respondents view bill review as unnecessarily complex, difficult, time-consuming and expensive. The perception is much more of the bill intake, triage, review, repricing, and transmittal processes should be automated, with far fewer bills requiring human intervention.
The survey final report will be completed in mid-May; non-respondents can request a public version of the report by sending an email to infoAThealthstrategyassocDOTcom (substitute symbols for CAPS).

Word in the industry is a majority interest in bill review company Stratacare has been sold to a California private equity firm. Stratacare had been in and out of the financing market for over a year, and reports are that the investment firm purchased a majority stake. Several sources report industry veteran Paul Glover is also involved in the deal.
Glover has a long history in the workers comp business, most recently concluding a stint as CEO of Interplan (which merged with the Parker Group in October of 2007). Glover then served on the board of the successor company, HealthSmart.
That’s all for now; details when they become available…