I’d have to say “Yes.”
Several sources have confirmed that the rumored acquisition of Avizent by York Claims is an all-but-done deal.
York was a small, low-price NYC-based TPA a decade ago, a subsidiary of AIG (who had bought the company from the founding family) that won business on low bid awards. THe offices were modest (to say the least), staff over-burdened and under-qualified. Over the last ten years, the company has evolved been transformed into what is now a well-regarded, well-positioned TPA with offices in a dozen states, thousands of customers, and a growth record that’s pretty impressive given the economic conditions of the last few years.
Purchased by management and private equity firm Bexil in 2002, York was acquired by Odyssey (another private equity firm) in 2006, where York’s growth accelerated through acquisition and new clients. York acquired several TPA and related businesses including Southern California Risk Management Associates (SCRMA) and Bragg and Associates, expanding the company’s reach in California and the midwest.
Columbus Ohio-headquartered Avizent looks to be the next company purchased by York. Not to be confused with Advisen, Avizent is a well-regarded TPA that has also grown, albeit primarily via new business acquisition. With its roots in the old Frank Gates organization, Avizent added FA Richard (FARA) in 2010, a major deal that greatly expanded Avizent’s business in the south.
The contract is done, due diligence essentially completed, and it’s just details and timing now.
What does this mean?
There’s been a lot of consolidation in the claims administration industry. Industry leader Sedgwick has been acquiring various and sundry claims services and claims related entities for several years, Gallagher Bassett bought GAB Robins back in 2010, and regional TPAs have been consolidating – or closing – as the soft market has dramatically affected their business.
These deals have removed competitors and added strength in different geographic areas and industry sectors.
Now that the market looks to be hardening, TPAs are positioning themselves for organic growth. As insurance premiums increase and insurance becomes harder to find, more employers are going to turn to self-insurance. The TPAs that have survived the brutal conditions of the last few years are – in general – well positioned to flourish.
(Note I asked both entities for comment; if I hear back I’ll provide an update)

Here’s what Aetna provided in response to my questions about the termination of their workers comp business. The company did not directly respond to my queries about who was going to keep access for how long, and there’s a good bit of corporate-speak here.
If I hear more inside info about the decision I’ll pass it on…
“Aetna is focused on committing resources to areas where we see the greatest potential for growth and where we can deliver the greatest value to our customers. After reviewing our business portfolio, we made the decision to transition out of the AWCA [Aetna Workers Comp Access] business so that we can invest in other areas of the enterprise where we see greater opportunities for growth. We notified our customers of this decision earlier this year and have committed to honoring all existing contracts, which in some cases run through the end of 2013…
Since we are transitioning out of the business over a two year period, there will be no immediate impact to the services that we provide to our customers or to the employees that support the AWCA business. We will continue to monitor our staffing levels to ensure that they are in line with our business needs and will look for opportunities to realign staff to other business areas as appropriate.”
Readers will recall AWCA laid off a number of customer-facing staff early in 2011, so there may not be many left to go.
Initially Aetna said no other business areas were affected; in subsequent conversations I learned they will no longer underwrite the insurance risk for PetsBest pet insurance – but that’s it.

There are three types of physicians – the few really good ones, the few really bad ones, and most who either aren’t good or bad, or you just don’t have enough information to tell. The problem with most networks is you can’t de-select/kick out/avoid the bad docs without going thru lots of effort.
That’s about to change.
Most comp provider networks are pretty much interchangeable – a big directory of every provider alive – and some not – that’s agreed (usually) to give a discount to payers accessing that network’s contracts.
A great friend and colleague referred to these networks by the mildly-pejorative term “a box of contracts” many years ago – and that description, unfortunately, still fits.
Recently I’ve had yet another opportunity to evaluate a network – or more precisely, a managed care firm with an interesting network ‘capability’. The company is Anthem Workers’ Comp (subsidiary of Wellpoint), and their network offering is somewhat unique – somewhat more than that proverbial box.
First, buying power. Originally created by Blue Cross of California back in 1992 as a for-profit managed care subsidiary, Wellpoint is comprised of what we used to know as Blue Cross and Blue Shield plans. Anthem is an operating entity under giant healthplan Wellpoint, which was ‘created’ back in 2004 when the two companies merged. Health Plans in California, Colorado, Indiana, Kentucky, Missouri, Nevada, Ohio, New York, Virginia, Wisconsin and a few other states were acquired by the parent over the years, and those plans, along with new plans in other markets, form what is now the nation’s largest health plan company.
(The work comp network isn’t available in all areas, but is limited (for now) to California, Colorado, Nevada, Missouri and Southern Illinois.)
Wellpoint is best known for their dominant market share in the group health (and governmental sectors) in California and several other states. Several years ago, Wellpoint decided it was going to be a major force in work comp. Leveraging their provider contracts and relationships, they began contracting in California, which remains the core market. As Wellpoint is one of the dominant players in the state for non-comp business, the list of providers is rather extensive, as is their buying power. The result is clients get pretty good deals with most providers. (That’s not to say there are any bargains out there for comp payers – far from it. Unfortunately work comp remains one of the best payers in most states, especially for hospitals and facilities.)
So far, pretty standard stuff – big health plan uses its buying clout to get providers to sign work comp deals. Here’s the second point; Anthem (the brand they operate the WC sub under) has a unique offering – customers can use Anthem’s network ‘selection’ tool to pick whatever providers they want. Now operational in California, payers are essentially building their own, customized workers comp MPN.
According to Anthem work comp president Bob Mortensen, payers are able to pick and choose whatever providers they want from Anthem’s directory. If they want to focus on one county, one region, or need a custom MPN in a few different communities they can do that. For those payers who want a small MPN with relatively few physicians, that’s their choice. How they select providers, the criteria they use, that’s up to the payer.
I’ve spoken with a couple of their customers, and they are generally pleased with the result.
Big insurers and TPAs that work with large self-insureds need the flexibility to add or remove docs as those employers see fit. As payers increasingly push for smaller and smaller networks comprised of physicians who understand work comp and treat appropriately, the ability to manage their own network will gain more traction.
For insurers with lots of mom-and-pops, big networks with lots of providers are critical, as there’s precious little chance a claimant will think to check the posted panel before seeking care.
The big advantage to Anthem’s approach is this – they’ve got the world under contract, and you can pick and choose which docs you can exclude. Because those are the ones that do the most damage: the ones who overprescibe opioids, refuse to release to return to work, recommend spinal fusion far too often, don’t communicate with payers and employers, and generally deliver lousy care.
What does this mean for you?
Anthem is building what looks to be a reasonable alternative in multiple jurisdictions. Competition is good.
While it would be great to be able to identify the docs who are definitely the “best”, that’s hard to do for myriad reasons: not enough data, inaccurate data, low claim frequency, diverse patient population, the list goes on. But rather than focus on the good ones, there’s a lot to be gained by identifying the ones at the other end of the spectrum. And once those outliers are gone, results will improve – probably dramatically.

Aetna Work Comp Access will be exiting the provider network business. Over the next couple of years, current direct customers will be losing access, with the duration of access dependent on whether the relationship is direct or through a reseller. I’ve got my own opinions on why, but will hold them for now in hopes I hear back from Aetna soon.
This hasn’t been announced publicly, but sources indicate all AWCA’s direct clients were informed over the last couple of months, and the ‘indirect’ clients – those accessing AWCA through Coventry or another entity – are finding out thru their account managers (if not, to misquote Desi Arnaz, “you got some ‘splainin’ to do…”).
First, a bit of history. Veterans of the industry will recall Aetna made a big push into the WC provider network business back in 2006, positioning itself as a competitor to Coventry/First Health. An executive team was hired, staff came on board, and they were off and running. Some years later, senior management at Aetna decided to change course, and instead of competing with Coventry, they became Coventry’s network in what they said at the time was nineteen states.
Coventry’s been using Aetna as their underlying network in about 15 states since late in 2007.
Shortly after, senior management was terminated in a surprise move in September, 2008.
More recently (January 2011 to be precise), most of their customer-facing staff were laid off r and Aetna ended (most of) their direct relationships and pushed those customers to work thru their resellers, including Coventry.
I spoke with David Young, President of Coventry Work Comp about this, and here’s what he had to say.
Way back when the two entities first got together, they included what David called “divorce provisions” in the deal they structured. Back in January Coventry got notice to term contract at beginning of year. Over the course of 2011, both parties were in discussions, with Coventry looking to renew the relationship. That was not to be. Early this fall, Aetna confirmed their intent to exit the business.
As a result of those “divorce” provisions, Coventry’a network customers will have access to Aetna’s network thru 12/13. David believes this is longer than any other entity (I’ll ask Aetna when I hear back from them). Coventry plans to use that two year window to evaluate their current network, figure out where they need to backfill, and get as much as possible of that done before the clock stops ticking.
So far, Young’s analysis indicates Coventry’s current non-Aetna direct and leased network contracts can cover about 70%+ of the dollars flowing the network. They’re starting a targeted recruitment effort in areas most affected by Aetna’s departure, and are looking to strengthen relationships with current leased network partners as well.
Of course, David was quick to note this has no bearing on their interest and commitment to the WC business – Coventry is commited to the comp business. I believe him. They are making so much money from comp that they’d be nuts to get out – and Chairman Allen Wise is not nuts.
That said, this opens up the door for other network companies, as large and mid-sized payers, network aggregators, and bill review companies are looking hard at alternatives.
One last point. A lot of work comp dollars flow thru Coventry’s networks, and they aren’t shy about using those dollars to squeeze providers for better pricing. David indicated they’ve had success in negotiating deals with two health systems recently doing just that.
I hope to hear from Aetna tomorrow.