Predictions for work comp in 2015

Once again I’ll head out on a limb with saw firmly in hand…

1.  Aetna will NOT be able to sell the Coventry work comp services division.  I’ll double down on last year’s prediction: even if the giant health plan wants to dump work comp, the network – which is where all the profit is – isn’t sellable.  The rest of the operation isn’t worth much; the bill review business continues to deteriorate (and CWCS is looking for a replacement BR application) , competitors are picking off key staff, and customers continue to switch out services and network states.

2.  Work comp premiums will grow nicely, driven by continued improvement in employment and gradually increasing wages coupled with increases in premium rates in key states (we’re talking about you, California).

3.  Additional research will be published showing just how costly, ill-advised, and expensive physician dispensing of drugs to workers’ comp patients is. Following on the excellent work done by CWCI and Accident Fund/Johns Hopkins, we can expect to learn more about the damage done to patients, employers, insurers, and taxpayers by docs looking to Hoover dollars out of employers’ pocketbooks.

4.  Expect more mergers and acquisitions; there will be several $250 million+ transactions in the work comp services space, with more deals won by private equity firms.  Of late, most transactions have been “strategics” where one company buys another; the financials of these have been such that private equity firms couldn’t match the prices paid.

I’d expect that will change somewhat in 2015 as  “platform” companies come on the market.

5.  A bill renewing TRIA will be passed; the new GOP majorities want to show they can “govern” and this has bipartisan support.

6.  Liberty Mutual will continue to de-emphasize workers’ comp. The company’s continued focus on personal lines and property and liability coverage stands in stark contrast to the changes in work comp.  The sale of Summit, management shifts, and the financial structuring of legacy work comp claims portend more change to come. Recent financial results show the wisdom of this strategy…

7.  After a pretty busy 2014, regulators will be even more active on the medical management front.  Work comp regulators in several more states will adopt drug formularies and/or allow payers/PBMs to more tightly restrict the use of Scheduled drugs via evidence-based medical guidelines and utilization review.  While the former is easy, the latter is better, as it enables payers and PBMs to more precisely focus their clinical management on the individual patient.

Expect more restrictions on physician dispensing and compounding, increased adoption of medical guidelines and UR, along with incremental changes in several key states (California we hope) to “fix” past reform efforts.

8. There will be at least two new work comp medical management companies with significant mindshare by the end of 2015. These firms, pretty much unknown today, are going to be broadly known amongst decision-makers within the year.  While they will not generate much revenue this year, they will be attracting a lot of attention.

9. Outcomes-based networks will continue to produce much heat and little real activity.  After predicting for years that small, expert-physician networks will gain significant share, I’m throwing in the virtual towel. There’s just too much money being made by managed care firms, insurers, and TPAs on today’s percentage-of-savings, huge generalist network/bill review business model.  Yes, there will be press releases and articles and speeches; No, there won’t be more than a very few real implementations.

10.  Medical marijuana will be a non-event.  Amidst all the discussion of medical marijuana among workers’ comp professionals, there’s very few (as in no) documented instances of prescribing/dispensing of marijuana for comp claimants. Yes, there will likely be a few breathless reports about specific claims, but just a few.  And yes, there may also be a few instances of individuals under the influence of medical marijuana incurring work comp claims, but these will be few indeed.

There you have it – here’s hoping I’m more prescient this year than I was last.