Author: Joe Paduda

Sep
22

Opioids responsible for a fifth of the decline in male workforce

Posted by Joe Paduda on Friday, September 22nd, 2017 | Comments

That’s a conclusion, albeit one with caveats, of a just-released study by Princeton University’s Alan Krueger PhD.

Here’s Dr Krueger’s key takeaway, with emphasis added:

about half of prime age men who are not in the labor force (NLF) may have a serious health condition that is a barrier to work. Nearly half of prime age NLF men take pain medication on a daily basis, and in nearly two-thirds of these cases they take prescription pain medication.

Labor force participation has fallen more in areas where relatively more opioid pain medication is prescribed, causing the problem of depressed labor force participation and the opioid crisis to become intertwined.

Implications abound.

For workers comp – despite unprecedented drops in opioid prescriptions for work comp patients, there remains a large population of patients addicted to/dependent on opioids. Moving this population away from opioids will require diverse, creative, and likely expensive services, patience, and persistence.

For the economy – a double whammy of non-productive people means they aren’t generating tax and revenues while consuming lots of resources in the form of aid, government funds, healthcare services, and family income.

For health plans, especially those serving the indigent, a very expensive, and very tough to manage population will increase Medicaid costs significantly.

For opioid manufacturers, shiploads of cash.

Sep
21

One last shot at repealing ACA – quick takes on Cassidy Graham

Posted by Joe Paduda on Thursday, September 21st, 2017 | Comments

The GOP has just eight days to pass legislation to repeal ACA, and the Cassidy-Graham bill is perhaps the most drastic effort we’ve seen to date.

Cassidy Graham would upend the health insurance and healthcare industries almost overnight.

Here’s the quick summary…

The ACA would end on January 1, 2020.

Over ten years, states would lose a total of $215 billion in funding for healthcare.

The federal subsidies that now go to the 31 states that expanded Medicaid would be spread across all 51, making Texas, Florida, Alabama and other non-expansion states big winners. New York, California, Pennsylvania and other expansion states would lose billions.

from CNN…

States that wanted to replace ACA would apply for federal block grants; each would come up with their own programs and approach.

Insurers would still be required to cover any and all applicants. 

It’s likely at least 15 million, and probably more than 20 million, would lose coverage.

Implications

The individual insurance markets would be in turmoil starting October 1. Insurers would exit the individual markets as none would want to be the last option for folks desperate for insurance.

Many states would be unable to come up with their own solutions in that timeframe. Smaller states such as Delaware, Montana, Rhode Island and the Dakotas would be hard-pressed to develop and implement a program in 27 months.

The Medicaid programs in big states would be severely disrupted, with potentially devastating consequences for hospitals especially those in low-income areas.

What does this mean for you?

If Republicans marshal the votes necessary to pass Cassidy-Graham, they will blow up the health care industry, with devastating and far-reaching consequences.

Sep
15

Friday catch-up

Posted by Joe Paduda on Friday, September 15th, 2017 | Comments

Hurricane recovery

Thanks to NCCI for a very timely article by Chief Actuary Kathy Antonello on evaluating construction contractors based on information on experience modification rates.

Key takeaway – “It’s not appropriate to use E-mods to compare the relative safety of employers.”

Very interesting take on efficiency in construction; the Economist notes that the construction industry has become LESS efficient over the last few decades. While this may well be about to change, for those rebuilding in hurricane-ravaged areas, costs will be much higher, reconstruction take longer, and preparation to deal with the obvious impacts of climate change may not keep up with the speed of that change.

Blockchain continues to work its way into the insurance industry. An excellent piece in the Harvard Business Review notes that insurance is especially suited for blockchain. Both are predicated on spreading information, and in the case of insurance, that information deals with risk. Blockchain is uniquely suited to spreading risk as at its core it is a “trust and efficiency engine.”

Key takeaway…

it will require uncomfortable transparency [from established insurers] and price corrections in their business models. This will be toughest on the portions of the industry that are the least differentiated, where consumers often decide based on price: auto, life, and homeowner’s insurance. [emphasis added]

And there’s this telling point, which identifies a key reason insurers should be worried…

trust in business institutions, and the financial services sector in particular, is at an all-time low. While the large banks are at the center of this trust vacuum — with a seemingly steady stream of scandals, such as the recent Wells Fargo account rigging debacle — the erosion of trust is bad for everyone

Ignore at your peril.

Sep
14

Louise is the best.

Posted by Joe Paduda on Thursday, September 14th, 2017 | Comments

Kudos to Louise Norris for her ongoing commitment to educate the rest of us about all things healthcare and reform related.

Today brings us her edition of Health Wonk Review – capping off a summer of never-ending health care legislative maneuvering with not one but TWO Senate bills that purport to fix everything.

One entry ruined my day – hookworm has returned to Alabama as many people can’t afford adequate sanitation – and the government there doesn’t give a rat’s ass.

Read it here!

Sep
14

Costs and benefits of disasters

Posted by Joe Paduda on Thursday, September 14th, 2017 | Comments

Disasters are good for the economy – sort of. They are also very likely to be really bad for people.

Combined, Harvey and Irma will cost about $200 billion – or 1.5% of US GDP.  That’s a huge infusion of capital and cash into the economies of Florida and Texas – and the other affected southeastern states.

Those dollars will go to pay workers, buy new equipment, replace ruined houses, buildings, furniture, technology, and infrastructure.

What’s not accounted for in the $200 billion figure is the cost – both personal and financial – that these disasters will levy on people involved in rescue, clean-up, and re-building.

One example – the bacterial and chemical stew pervading many areas in Houston will lead to immediate and long-term health problems for residents and clean-up workers alike. Living rooms, offices, factory floors, nursing home rooms, healthcare facilities, schoolrooms and firehouses – many will be polluted, requiring thorough cleaning and decontamination.

The real concern here is will the workers tasked with this job have the training, equipment, and clothing required to do this safely.

caption from photo reads: The #HurricaneHarvey clean up crews at our homes that were hired by management number about 200 and notice that none of them were given #Hazmat suits

Several factors are greatly concerning.

  • Texas doesn’t require workers’ comp
  • Companies are desperate to find workers, any workers, who will go into dangerous places and do very hard work in brutally hot and humid conditions
  • Labor brokers are notorious for subcontracting work like this, shaving every possible corner, and in the process hurting workers and dumping the cost of their medical treatment on the public sector
  • There are far too few documented workers available in either state to get the necessary work done quickly, so labor brokers are going to be recruiting undocumented workers.
  • Given today’s political climate and past history, those undocumented workers are far less likely to report and injury or illness
  • Lastly, an illness brought on by exposure to chemicals or bacteria takes days, weeks, months or even years to present, making it a lot harder for any injured worker to prove it was work-related.

What does this mean for you?

While responsible non-subscribers in Texas will do the right thing, many other non-subscribers will not.

Florida’s a different story, but both states must be vigilant to catch unscrupulous labor brokers.

Sep
13

Motivating sales people

Posted by Joe Paduda on Wednesday, September 13th, 2017 | Comments

Is a question asked over and over by pretty much everyone in this and other businesses, but it is especially important in workers’ comp services, where companies and sales people are fighting over what’s been a shrinking pie for years.

And, except in Florida and Texas, that pie will continue to shrink.

New research provides pretty compelling insights into what works, what doesn’t, and why.

Caution – this is ONE study, in a very different culture, of a in a company selling tangible products.

The high-level takeaway…Sales force compensation is a tricky issue, requiring decisions based less on intuition and conventional “wisdom,” and more on hard, quantitative data.

Details (paraphrasing here…)

Salespeople were assigned to groups each with different compensation arrangements. Some people received unconditional bonuses, which were given irrespective of their sales performance. Some received “conditional” bonuses, where compensation was tied to sales quotas under three different treatments: standard, punitive, and real-punitive. In the standard treatment, a salesperson was paid a bonus after achieving a weekly sales quota that was set 20% higher than what that individual had previously sold. The punitive treatment was identical except for the framing: We told salespeople that failing to receive a bonus was a penalty for failing to achieve their quotas. And in the real-punitive treatment, a draw system was used, where payments were made at the start of the week but then withdrawn for those who didn’t meet their quotas.

For the unconditional bonuses, the thinking was these would encourage reciprocity; Salespeople would work harder in appreciation for the firm rewarding them with higher pay. These bonuses were awarded under two different treatments: delayed and immediate. In the delayed treatment the bonuses were communicated to the salespeople at the beginning of the week, and payment made at the end of the week. In the immediate treatment salespeople were simultaneously informed of and awarded the bonus at the start of the week.

Perhaps not surprisingly, the conditional bonuses were, on average, more than twice as effective as the unconditional bonuses… they increased sales by an average of 24%.

But it’s not that simple.

The researchers found that a conditional bonus could potentially demotivate salespeople over time: Salespeople’s performance was higher during weeks of a bonus treatment but lower in weeks after a bonus treatment. This result is consistent with past behavioral research that has found that too much extrinsic motivation may actually lead to a decrease in intrinsic motivation.

Unconditional bonuses tended to be more effective for salespeople with a higher base performance, which supports the idea that high performers generally have more goodwill toward the company and thus are more likely to reciprocate by increasing their selling effort.

Conditional bonuses were equally effective across all types of performers.

What does this mean for you?

Experiment with different approaches.  Avoid basing decisions on your gut; rely instead on data.

Sep
12

MedRisk is back on top.

Posted by Joe Paduda on Tuesday, September 12th, 2017 | Comments

Big doings at work comp physical medicine management firm MedRisk.

(MedRisk has been a client for over a decade)

Most significant, MedRisk is likely now the largest firm in the sector, passing OneCall’s Align Networks in total revenue. Two factors driving this result; Align dropped the ball on customer service, and MedRisk upped its game considerably.

As I wrote last year,

For years, [MedRisk] had the niche almost to itself, focusing its sales and service attention on corporate buyers. Along came Align Networks, a start-up that concentrated on the desk-level user, delivering stellar service to each and every adjuster and case manager.  Align was quite successful, eventually becoming the largest vendor in the PM management space.

A misstep by MedRisk helped Align.  Some years ago, MedRisk chose to outsource key functions, including some aspects of IT, billing, and outbound call center functions including patient scheduling. This did not go well, and the resulting dissatisfaction among desk-level users led some customers to switch from MedRisk to Align.

Confronted with the loss of business, MedRisk got back to basics.  The lesson was apparent; a dramatic change in customer service was critical. That involved a major shift in understanding about the central importance of the desk-level customer, the provider and the patient, and a recognition that those customers required, above all, personalized service.

MedRisk’s results prove the back-to-basics approach worked; the company has taken major market share from Align, and continues to add new business. Operations expanded, and the company had to lease new space to accommodate the hundreds of new workers.

Now, One Call is all-in on a technology solution, investing millions in a customized application intended to deliver on the “One Call” promise (currently the seven different services offered by OCCM have separate systems and processes). “Polaris” is slated to be “fully implemented” in Q1 2018, although it’s not clear what “fully implemented” means.

I don’t believe “automating” and off-shoring key customer-facing functions is the right answer, not in a high-touch business where adjusters, therapists, physicians, and patients all are key parts of the rehabilitation process.

While many MedRisk people made this happen – including COO (and fellow Syracuse grad) Michelle Buckman, CIO Vic Pytleski, and EVP Marketing Rommy Blum, the effort was led by President Mike Ryan.

Mike is one of the best-liked people in our industry, and most respected as well. Today, MedRisk will announce he is taking over as CEO from founder and Board Chair Shelley Boyce.

I’ve known Mike for years, worked with Shelley and her team for almost two decades, and am delighted for all. They traveled a long road and it is truly gratifying to see MedRisk back on top.

What does this mean for you?

It’s all about customer service.

Sep
7

Thursday catch-up

Posted by Joe Paduda on Thursday, September 7th, 2017 | Comments

Genex acquires Prium…

Good move by Genex, as Prium’s portfolio of services including physician review and pharmacy management ties in well to Genex’ current offerings. I’m a big fan of Prium CEO Michael Gavin – he’s one of the most thoughtful, intelligent, and measured people in our business…good news is he’s sticking around.

Kentucky’s making big progress on opioids

Thanks to WCRI’s Vennela Thumula PharmD for her study on how new legislation (HB-1) helped to reduce the number of new work comp patients receiving opioids.

The legislation required prescribers to check the Prescription Drug Monitoring database prior to prescribing opioids, limited opioid prescriptions, and implemented mandatory educational and patient treatment practices.

Key Takeaways

HB-1 immediately reduced opioids prescribed to patients in the first 12 months after the date of injury.

Both the percentage of patients receiving opioids and the amount of opioids decreased by more than 15 percentage points.

Major surgical patients weren’t significantly affected by HB-1; not much change in prescribing to these folks.

Patients with back sprains and similar diagnoses had far fewer opioid scripts.

Thanks to Andrew Kenneally, Communications Director of WCRI, for the head’s up…

Opioid marketing practices

Kudos to Sen Claire McCaskill, D MO, for publicizing opioid manufacturer Insys’ alleged efforts to get approval for fentanyl product Subsys through misrepresentation. McCaskill’s report included an:

audio recording of conversations between an Insys employee and pharmacy benefit manager representatives related to a Subsys prescription for Sarah Fuller, who later died from an alleged fentanyl overdose. This recording suggests the Insys employee in question repeatedly misled Envision Pharmaceutical Services to obtain approval for Ms. Fuller’s Subsys treatment—heavily implying she was employed by the prescribing physician and misrepresenting the type of pain the patient was experiencing.

Sarah Fuller

This follows other reports of Subsys’ unethical and potentially illegal marketing practices, where other Subsys reps said they called payers, saying they were from doctors’ offices and were seeking approval for the drug.

Hell is too cold for these people. 

Finally, a very revealing piece in HealthAffairs provides more insight into just how powerful big healthplans are:

insurers with market shares of 15 percent or more (average: 24.5 percent)…negotiated prices for office visits that were 21 percent lower than prices negotiated by insurers with shares of less than 5 percent.

Differences in providers’ and insurers’ bargaining power are a major contributor to variation in commercial health care prices

Workers’ comp folks – you’re lucky if a generalist work comp PPO’s market share at a practice is 3 percent…

Back out onto the campaign trail!

Sep
5

Big changes a-coming in workers’ comp.

Posted by Joe Paduda on Tuesday, September 5th, 2017 | Comments

Here’s what I see coming.

Quick take – what happens this fall and winter will bump up premiums, injury rates and claims costs.  

Insurers will see rising premiums, claims service entities more work, and some insurers and re-insurers’ bottom lines will be hit hard.

Companies focused on servicing work comp patients in Texas and Florida are going to be very busy.

Hurricanes are the “why”

Harvey, Irma, and as-yet-unnamed storms are likely to make this the worst of all hurricane seasons – and we’re nowhere close to the end of the season.

Harvey alone may cost close to $200 billion. With Irma – now a Category 5 hurricane with winds over 175 miles per hour – storm tracks favoring a Florida landfall, we could be looking at a second blockbuster bill. (note cost projections are all over the map

There are huge implications for the workforce – starting with public safety workers, moving to clean-up crews and workers making emergency repairs. Then comes re-building: residential, public, commercial, and industrial construction, plus repairs to infrastructure.

Remediation will follow and take years. The huge petro-chemical operations around Houston mean waterways and land will be seriously polluted.

And, hopefully, big changes to storm and climate change mitigation planning, which will require major investments as well will mean billions in spending and lots of work for construction workers

Roads, water and sewage systems, rail, power generation and transmission, pipelines, ports and terminals, communications infrastructure all were hammered by Harvey and Irma may be just as brutal.

Implications.

Higher payrolls – Hundreds of thousands of workers will be needed today, next month, and for years to come. They will be working in high-frequency, high-severity jobs, and many may be poorly trained and supervised. And good, experienced workers will be costly due to supply-and-demand.

It’s highly likely tens of thousands will be undocumented; our governmental leaders will have to decide whether they are going to strictly enforce immigration laws or turn a blind eye. 

Labor fraud – I’m betting a large percentage of clean-up and construction workers will be undocumented, which means a likely explosion in labor fraud. Unscrupulous employers will bid on clean-up work, knowing they can screw immigrants out of pay and those workers have no recourse.

Higher injury rates – inexperienced workers putting in massive hours in dangerous places doing dangerous work = lots of bad injuries, plus exposure to nasty chemicals and pollutants.

What does this mean for you?

We’re about to see the most significant change in workers’ comp in decades.

Sep
1

Labor Day Special Edition

Posted by Joe Paduda on Friday, September 1st, 2017 | Comments

Happy Labor Day Weekend readers!

Make sure to thank the folks who work hard every day to make our lives better – teachers and support staff, building trades, healthcare workers, factory folks, agriculture and food workers, public safety, transportation, public works, and everyone else we often take for granted.

Here are a few articles of interest…worth thinking about as you watch parades, cook up your masterpiece on the grill, and enjoy the opening of the College Football season.

What’s been top-of-mind for me is how we’ve commoditized our workers, thinking of them as “expense” instead of an “asset”.  One of the most reprehensible anti-Semitic, racist, nasty people in business – Henry Ford – recognized employers need to pay their workers enough to buy the goods they make. Somehow we’ve forgotten this, along with the truth that workers are people, have intrinsic value, and deserve to be treated as such.

The best employers I know think of their workers as assets, not expenses. They know that when people feel valued and respected, those people do amazing work.

Here in upstate New York, one of the best employers I’ve ever come across is Tessy Plastics, a privately held company with about 900 workers that makes everything from those tiny plastic thingies that close ziplock baggies to surgical stapling devices used in gall bladder surgery.

Facing the loss of their largest customer fifteen years ago, Tessy relied on its workers to bounce back and become an amazingly successful company. I know a lot of Tessy employees, and they love what they do, work incredibly hard and smart, and as a result Tessy is doing very, very well.

We all can learn a lot from Tessy.

On the other hand, there’s a lot of worker risk and abuse out there.  First up, a reminder of how some workers are mistreated, abused, and oppressed by scummy bosses.  Thanks to workerscompensation.com for the heads’ up.

Law enforcement officials in New Jersey busted a company that was allegedly taking advantage of undocumented workers, cheating them and their clients in multiple ways, including money-laundering.

The explosion in the Arkema chemical plant outside Houston is another reminder of the risks faced by workers, risks that almost always are ignored by all of us until something catastrophic happens. Fortunately none of the 60 workers were at the plant when the storage trailers started exploding, but public safety workers were.

For those looking to help out with donations, the Greater Houston Community Foundation is one site that’s been thoroughly vetted.

Have a great weekend!