Author: Joe Paduda

Jan
5

2021 Predictions – How’d I do, part 2

Posted by Joe Paduda on Wednesday, January 5th, 2022 | Comments

Yesterday we went through the first 5 of my predictions for 2021, today we’ll wrap up the second batch before I attempt to predict what 2022 brings.

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.Verdict – True. Although this is really directly related to another prediction about rates, so if one was true, the other almost certainly had to be. Then again, if one was false, I’d be 0 for 2…

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.

Verdict – False. There are anecdotal stories about a few reductions here and there, but nothing big except…Reports indicated AIG “transferred” employees  – apparently primarily claims staff – to Gallagher Bassett as part of its move to offload fixed costs.

Where I really went wrong was predicting TPAs would have layoffs…Since TPAs’ biggest growth is coming from carriers offloading work to them, and if carriers are laying off staff, then the work has to go somewhere – and that “somewhere” is to TPAs. So, that was an unforced error.

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.

Verdict – True. And there wasn’t much in the way of presumption or tele-services changes…no, a few states addressing medical marijuana is NOT significant.

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.

Verdict – False. That said, it’s just a matter of time…the bleeding has mostly stopped, but growth is anemic at best, service levels remain suspect, and financials have gotten better in large part due to lots of expensive staff exiting the company

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.

Verdict – False.  NIOSH published a timely report on opioid issues among construction workers but other than that – very little material action.

This is REALLY disappointing. I get that COVID was a lot to handle, but the opioid crisis got even worse last year with a record number of opioid-associated deaths. That, and the fact that long-term usage of opioids is likely the most significant contributor to claim duration and long-term claim cost should have insurers, employers, and TPAs focused on addressing chronic opioid usage.

The net – overall 5 True, 4 False, and 1 pending.

Gotta do better than that.

Jan
4

2021 predictions – How’d I do?

Posted by Joe Paduda on Tuesday, January 4th, 2022 | Comments

It’s time once again to see how I did on my 2021 predictions for workers’ comp.

Today we’ll dive into the first 5 and finish up with the last 5 tomorrow.

  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.

    Verdict – True. Wages did increase significantly (Good news indeed for hospitality, leisure, construction, logistics, healthcare and retail workers!) but premiums and rates mostly dropped. Florida, California, and other states saw decreases, continuing a decade (or so) long decline in rates and premiums.
    Note – Actuary Mark Priven – and I – both believe rates are still too high.

  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.

Verdict – too early to tell. We won’t know until we get 2021 data, which will be sometime in mid-Q2 for most states. I’ll go out on a limb and double-down on my prediction; facility costs – as a percentage of total spend – have increased significantly in 2021

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.

Verdict – True. Paradigm has bought HomeCareConnect; Enlyte (Mitchell/Genex/Coventry) acquired QualCare (and reports indicate Enlyte is for sale); and Sedgwick is buying up tangential businesses (JND Legal Administration, Temporary Accommodations, Managed Care Advisors, and several other firms).

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.

Verdict – False. Drug costs continued to drop in 2020 and reports from multiple industry contacts indicate that continued into 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.

Verdict – True. All credible research and reporting indicates COVID claim costs have been pretty low. Not surprising to those who actually have a grasp of healthcare cost drivers and treatment expenses.
More on costs here, here, and here.

The Net – 3 True, 1 False, and 1 pending.

What does this mean for me?
I’ve got to relook at my thinking re drugs and drug costs. I know as much about drugs in workers comp as anyone, and I clearly got this one wrong.  

Dec
23

Good news on the COVID front

Posted by Joe Paduda on Thursday, December 23rd, 2021 | Comments

Some good news on the COVID front – well, good compared to the $%*#%Storm we’ve had for two years.

First, the good news is tempered by reality – Omicron is incredibly transmissible. It feels like you could catch the damn thing if you drive by a patient on the highway.

Three studies published yesterday or just before agree – Omicron-infected patients generally aren’t as sick as those infected with other variants. A UK study and one in Scotland had similar results – Omicron patients had less severe and shorter hospital stays – and fewer of them. Another from South Africa indicated Omicron patients were hospitalized a quarter as often as non-Omicron patients.

Warning – these are PRELIMINARY reports and have not been peer-reviewed; it is possible results will change after the review process is completed.

And, Pfizer’s COVID treatment bill got the nod from the FDA. From FiercePharma:

Pfizer has agreed to supply the U.S. with 10 million courses of Paxlovid for $5.29 billion ($529 per course). On Wednesday, the company also revealed it will supply 2.5 million courses to the U.K. on top of a previous agreement for 250,000 courses.

Paxlovid will only be available – for now – via the FDA’s Emergency Use Authorization (EUA). If you aren’t vaccinated because you think the vaccines didn’t go through enough testing, you need to understand that Paxlovid has had far less testing – and there’s been zero real world experience with it.

So here’s the bad news.

Because far too many of us are NOT vaccinated, hospitals are swamped with COVID patients – the vast majority of whom are unvaccinated. So, while Omicron isn’t as deadly as other variants, the fact that it is far more transmissible means there are going to be many more patients who WILL be hospitalized, need ICU/CCU care, and many of whom will die.

What does this mean for you?

Get vaccinated and wear a mask. 

Or don’t ask for Paxlovid if you get COVID.

Dec
22

Our healthcare system is breaking – part 3

Posted by Joe Paduda on Wednesday, December 22nd, 2021 | Comments

Here in northern New England emergency departments are being staffed by National Guard troops. Hospitals’ ER staff – trained to handle critical care patients – are being shifted to critical and intensive care units already short-staffed due to burnout and overwork.

Hospitals are once again halting all non-emergent care as beds are full, staff are exhausted, and supplies constrained.

Omicron’s incredible transmissibility coupled with a core group of unvaccinated people is driving the disaster – and make no mistake, disaster it is.

In the UK, Omicron infections are doubling every three days.

Here in the US, Omicron accounts for three out of every four new COVID infections.

To date the evidence seems to suggest Omicron infections may be a bit milder than previous variants, although other data appears to contradict that statement. Net – it’s still early.

Two key points (source here)

  1.  Vaccinated people are much less likely to get Omicron than the unvaxxed.
  2. Omicron may still infect those of us who are vaccinated, BUT the infections are relatively mild and, unlike the unvaxxed, we are MUCH less likely to be hospitalized or see the inside of an ICU.

Omicron is likely to burn very hot and very fast through our healthcare system; I’d expect that 6 – 8 weeks from now most will be behind us.

BUT – the damage COVID and the unvaxxed have done to our healthcare workers and the healthcare system will be felt for years.

  • About one in five healthcare workers left their job since COVID started.
  • There are far fewer healthcare workers in nursing care facilities and community care facilities for the aged today than there were pre-COVID.
  • Wages for workers in those sectors are up more than 12% – which will drive costs up too.
  • U.S. Bureau of Labor Statistics projects that 500,000 seasoned nurses are expected to retire between now and the end of 2022, creating a shortage of 1.1 million nurses.

Numbers are soulless. Here’s what COVID feels like to those trying to save COVID patients…

Last December, at the height of the winter surge, (a 14-year ICU nurse)  cared for a patient who had caught the coronavirus after being pressured into a Thanksgiving dinner. Their lungs were so ruined that only a hand-pumped ventilation bag could supply enough oxygen. Alexander squeezed the bag every two seconds for 40 minutes straight to give the family time to say goodbye. Her hands cramped and blistered as the family screamed and prayed.

…when the same family called to ask if the staff had really done everything they could, “it was like being punched in the gut,” she told me. She had given everything—to that patient, and to the stream of others who had died in the same room. She felt like a stranger to herself, a commodity to her hospital, and an outsider to her own relatives, who downplayed the pandemic despite everything she told them. In April, she texted her friends: “Nothing like feeling strongly suicidal at a job where you’re supposed to be keeping people alive.”

Shortly after, she was diagnosed with post-traumatic stress disorder, and she left her job.

If that’s not enough, watch these videos of nurses…

Full disclosure – a family member works at Dartmouth-Hitchcock in the emergency department – this is what they deal with every day.

What this means for you.

  • Do NOT have an accident, stroke, appendicitis, or slip on ice
  • If hospitals in your area are still open for elective procedures, they won’t be in the very near future. 
  • Health insurance costs are going to spike
  • More of your unvaxxed family and friends are going to die a miserable death.
  • Healthcare is going to be harder to get and more expensive, waiting times will be much longer, and the healthcare experience will be more mechanical and less caring.

Get vaccinated and wear a mask. If you don’t, then take responsibility for your decision.

Dec
20

COVID update

Posted by Joe Paduda on Monday, December 20th, 2021 | Comments

Oh ^&%$*&^%^.  Here it comes again.

“IT” is the umpteenth wave/surge of COVID, a marvel of evolutionary adaptation.

IT has also killed 800,000 of our sisters, brothers, daughters, sons, parents and grandparents, friends and neighbors, co-workers and colleagues.

IT is also blowing up our healthcare system; 4 states are turning to their National Guard to staff critical services.

IT has driven healthcare costs over the $4 trillion mark as costs spiraled up almost 10 percent in 2020 – more than double the 2019 inflation rate. Taxpayers’ costs rose almost 4 times faster than the overall healthcare world – mostly driven by COVID.

Commenting on this, HealthAffairs noted;

OK, the good news.  Omicron seems to mostly infect the airways leading to and from the lungs, which helps make it more transmissible. It doesn’t get too deep in the lungs (in most instances); this may be one of the reasons it isn’t as deadly as other COVID variants.

Myocarditis occurring after vaccination is quite rare, according to research published in a UK Journal “However, natural infection from SARS-CoV-2 is linked to a substantial increase in the risk of serious outcomes from developing myocarditis, pericarditis, and cardiac arrhythmia, researchers say.”

What does this mean for you?

Get vaccinated AND mask up.

Dec
17

Friday update

Posted by Joe Paduda on Friday, December 17th, 2021 | Comments

Apologies for lack of posts this week; this was the annual father-son hunting trip, and work is strictly banned.

Here’s what happened this week…

News hit the wire that Enlyte (aka Mitchell Genex Coventry) is for sale. Owner Stone Point Capital (deep experience in workers’ comp) is reportedly “exploring a sale” of the company which is generating about $450 million in earnings (I’d be a bit careful about that figure as sellers almost always include stuff in “earnings” that doesn’t usually “count” as such.)

There aren’t too many potential buyers for a deal this big as we’re talking a “multi-billion dollar” deal.

HomeCareConnect was bought by Paradigm – more on this later, but my initial take is this is a smart move by the big cat case management company as it brings a well-regarded DME and home health provider into the fold, allowing Paradigm to capture all that revenue and margin on their financials.

Research –

The fine folk at WCRI have just released a very helpful report on the use and reimbursement of telemedicine in work comp.  The report is free to members; non-members get their copy for a nominal fee.

From WCRI; the report addresses:

evaluation and management and physical medicine services. It investigates the patterns of telemedicine utilization among these services in workers’ compensation during the early months of the pandemic (primarily March–June 2020) across 28 states. It also examines the actual prices paid for the most frequent services delivered via telemedicine versus in person across the study states.

NCCI researchers collaborating with various other agencies published a summary report on the impact of COVID on workers comp. Download a copy at the link…

Key takeaways include:

  • Covid claims are cheap – as in a LOT less costly than non-COVID claims
  • There’s a “new” claim category – “Indemnity only” that accounted for a plurality of claims.

Interestingly,  more and more insurers have stopped waiving member payments for COVID treatment.

Oh, and costs varied a LOT across states – $49k for non-complex hospitalizations in Maryland vs $129k in New Jersey. That’s likely largely due to Maryland’s very smart hospital charge regulation policies.

from FairHealth

The median length of complex hospitalization declined from a peak of 13 days in April 2020 to 7 days in July of this year…which is likely a big contributor to lower treatment costs.

What does this mean for you?

The investment community’s fascination with workers’ comp will be put to the test.

If you get COVID, you’re gonna pay a lot for your care – if you go into the hospital. 

Dec
10

Our healthcare system is breaking – part 2

Posted by Joe Paduda on Friday, December 10th, 2021 | Comments

Earlier this week I wrote the first in what is likely to be a wholly dispiriting series of posts documenting the decline of our healthcare system.

Make no mistake, in many areas it is coming apart at the seams. While the causes are many, there’s no question COVID has both sped up and steepened the fall.

Healthcare job vacancies are twice the historical high, with one out of every ten jobs unfilled. We are missing about 1.9 million nurses, doctors, technicians, administrators, lab techs, therapists, nutritionists, counselors, case managers, social service workers, aides, and support staff.

From the Bureau of Labor Statistics… note the graph includes both social workers (about 200k openings) and healthcare about 1.7 million.)

At the end October,

  • more than half of the healthcare job openings were for RNs
  • 15% were for LPNs
  • 7^ for nursing assistants
  • 17% for therapists.

Many of the healthcare workers that have been able to hang in there are exhausted, scared, emotionally scarred and beyond frustration.

Statistics don’t mean anything? OK, here’s what this feels like…

What does this mean for you?

You don’t know what you’ve got till it’s gone. 

Reminder to Trolls and Cowards

I highly value disagreement but only if it is courteous, fact-based and the other side isn’t hiding behind anonymity.

A reminder to all commenters; with rare exceptions – as in when I know who you are – anonymous comments are banned. You know who I am, it is only fair that I, and your fellow readers, know who you are. Indeed there are sometimes good reasons for anonymous comments, but never when you attack, insult, denigrate, and rant. So, Cowards are not welcome here.

Similarly, I’m done debating Trolls who engage in fact-free rants and/or cite completely not-credible “sources” (no, InfoWars is NOT a credible source). If you want to debate, avoid these common pitfalls.

Dec
9

A promising new tool for physical therapy

Posted by Joe Paduda on Thursday, December 9th, 2021 | Comments

I’m approached by lots of companies looking for advice on how to get their products/services into the workers’ comp and/or group health space…most are:

  • not exactly ready for prime time &/or
  • don’t have enough solid research behind them &/or
  • have glaring deficiencies &/or
  • just don’t feel right.

But when Bill Zachry called me about Plethy, I paid attention (disclosure – Bill is a long-time friend and colleague, has huge experience in workers’ comp, and is one of the finest people I know).

While Plethy’s Recupe is technically in the digital musculoskeletal space, Recupe is unlike other approaches in that the technology is not the focus, rather a key component of a comprehensive approach that supports physical therapists’ work with patients. Yes there’s a smartphone-based app, yes there’s a sensor that is used to help the therapist monitor exercises and recovery, yes the data can be seamlessly shared with other members of the patient care team.

In my experience devices of this kind are either driven by technologists or clinicians – both have challenges. Technologist-driven approaches often have significant clinical gaps, while clinicians’ efforts are usually clunky and hard to use.

Plethy has involved orthos, DPTs, and other clinicians in the entire development process, which has been managed/done by highly experienced tech experts with deep background in tech product development.

Tech should NEVER displace the involvement of clinical experts. Rather tech should support those experts, provide actionable information and do so with minimal hassle factor.

So far, Recupe checks those boxes.

What does this mean for you?

We are getting there…

note – I am an advisor to Plethy.

Dec
8

Our healthcare system is breaking.

Posted by Joe Paduda on Wednesday, December 8th, 2021 | Comments

The healthcare system is in perilous shape.

The fourth wave of COVID is pushing many workers past exhaustion, anger and frustration to despair.  If you are one of the anti-vaxxer, anti-mask, “personal freedom” people, this is on you.

Healthcare workers say:

  • “You feel expendable. You can’t help thinking about how this country sent us to the front lines with none of the equipment needed for the battle,”
  • “You look at staffing, preparedness, what the priorities were for many hospitals during the crisis, and it’s clear the industry is driven by profits rather than well-being of patients or health workers,”
  • “As psychiatrists, I think we were all seeing the warning signs. You had doctors suddenly writing their wills, talking about how they felt abandoned to die, how the only choice they faced was being called a hero or coward,”
  • “It’s hard to let go of the anti-mask thing…The worst thing is the panic you see on dying people’s faces when they realize this could be it…”
  • “There have been many healthcare workers who have not only thrown in the towel, but have said they are never coming back,”

Over half a million healthcare workers quit their jobs in August, and more have left since then. Three of every ten healthcare workers are considering quitting.

Traveling nurses in many areas are getting north of $100 an hour, while their full-time colleagues are making less than half of that. Yet traveling nurse staffing agencies have more than 40,000 unfilled vacancies.

Oh, and the average nurse is over 50 years old, and that has not been an easy 25 years with often-brutal shift hours, lots of standing, lifting and emotional stress. Combine wage disparities with the risk of bringing COVID home to family and children with the pandemic of the unvaccinated and we get…

a disaster in the making.  The toll is not only personal, it is national.

Hospitals in several states are again postponing all but emergency surgeries.

Some areas are so overwhelmed patients requiring higher-level care are being shipped out of state.

What’s truly awful about this is so much of it was preventable.

What’s even worse is the continued refusal by many to get vaccinated and wear masks. These people are destroying our healthcare system and the people who take care of us.

This is personal for me; family members are front-line healthcare workers and I see the toll this is taking on them every day.

What does this mean for you?

Get vaccinated. Wear a mask. Take responsibility. 

 

 

Dec
3

Don’t miss out

Posted by Joe Paduda on Friday, December 3rd, 2021 | Comments

on WCRI’s 38th Annual Issues & Research Conference, March 16-17, 2022. Mid-March is a great time to be in Boston!  Then again, pretty much anytime is.

Register here.

on NCCI’s latest update on claim frequency and severity – spoiler alert, frequency is still declining, although it’s hard to unpack the influence of COVID from structural drivers. Hat tip to Carolyn Wise and Kevin Fernes for their helpful research and cogent explanation of the data.

More surprisingly, severity – which is workcomp-ese for costliness – declined last year – for non-COVID claims.

Also notable – and consistent with what I predicted last year – COVID claims are way less costly – as in two-thirds less costly – than non-COVID claims (this isn’t about chest-pounding, rather pointing out that this was predictable – but few in the WC world have the health care/medical system insights to do so)

Also worthy of your attention, Chris Brigham MD is hosting a discussion of Post-Acute COVID via Webinar – registration is here and is complimentary.

Finally, in yet another example of the consequences of stupid, a physician who testified before Congress that Ivermectin would prevent COVID…wait for it…got COVID. As concerning, there have been 2021 1,810 cases of ivermectin poisoning in the U.S. in the first 10 months of this year, compared with 499 for the same period in 2019.

What does this mean for you?
Understanding healthcare would be really helpful for workers’ comp execs.