A week on the road ends today – if flights are on time and the weather gods are merciful.  Here’s what I missed while sitting on planes and in airports…

This week marked the 103rd anniversary of the Triangle Shirtwaist Fire, the tragedy that led to major changes in employment law, drove adoption of workers’ compensation coverage, and focused the nation’s attention on abusive employers – here in the US.  The rest of the world has a long way to go, as we’ve seen.  There’s a very good, and very graphic, video here that shows the rest of the world needs their own drastic changes in employment law and policy. What happened 103 years ago in New York happens far too frequently today – just not here. 

With the witching hour fast approaching, it looks like the PPACA rollout will end up with somewhat more than 6 million enrolled, most taking advantage of a subsidy or covered thru Medicaid.  Before we all start declaring victory or pronouncing defeat, let’s just sit back and realize we won’t know if PPACA’s goals of reducing cost, improving outcomes, and covering many more Americans will be realized for at least a few years…

Saw an item in Insurance Thought Leadership by one Al Lewis claiming that wellness is a fraud, an” industry conceived in lies, retractions, and hypocrisy.” Lewis doesn’t suffer from a lack of ego; he claims, among other things, to be “widely credited as” the inventor of disease management (now that’s a ballsy assertion). Lewis’ assertions about wellness are similar; simplistic to the point of being misleading.  

Fact is, the wellness story is much more nuanced, more complex, and while there are certainly misstatements and over-the-top claims (akin to naming oneself the “inventor of disease management), there is ample evidence that properly conceived and implemented programs can and do have measurable, positive effects on individuals’ health status and health costs. A RAND study reported:

• We found statistically significant and clinically meaningful improvements among program participants in exercise frequency, smoking behavior, and weight control, but not cholesterol control.
• Participation in a wellness program over five years is associated with lower health care costs and decreasing health care use. The average annual difference is an estimated $157, but the change is not statistically significant.

I’d note that almost all business decisions are made based on evidence that is not “statistically significant“, so don’t get caught up on that metric.  More evidence of wellness programs’ effectiveness is here and here.

Back in the real world, a 12 month fix for the Medicare physician reimbursement mess known as SGR will happen before the end of the month. The House passed legislation yesterday, and word is the Senate will follow shortly.  There’s a few other provisions in the bill that, among other things, reduce long term care reimbursement, delay ICD-10 rollout for another year, and cut Medicare payments to rural hospitals.  These may or may not, end up in the final bill that gets signed into law.  I’ll keep you posted.

This matters to workers comp as all states with doc fee schedules use Medicare as the basis (except IL).  In only a couple states is there a “direct” linkage, but what Medicare does tends to eventually work its way into WC fee schedules, and, perhaps more importantly, affects physician behavior.  A cut would motivate docs to shift costs to work comp…

Sticking with work comp, the rumors that Aetna will sell off its work comp subsidiary continue.  As I’ve noted ad nauseum, that’s just not possible.  Can they sell PBM First Script?  Sure, and well they might.  How about their case management and UR and IME and other “ancillary” business? Well, if anyone wants to buy it, perhaps.  Bill review?  no way – unless they do a renewal rights deal, as the current application is just not viable. That, and the fact that Aetna laid off most of the tech support staff indicates they may just let it fade away.

Which leaves the work comp PPO – the Coventry network. Word is Aetna execs have been trying to figure out how to sell it – except it isn’t “sell-able”, at least not for a price that would be anywhere close to the money they are making off the network today.  As I said a couple years back; 

if Aetna wanted to sell the WC business it is hard to see how it could transfer the network’s provider contracts to the new owner as most are a combined WC/group/governmental contract. Sure, Aetna could guarantee access to their contracts going forward for some period certain, but given Aetna’s history with workers comp, any buyer would be very reluctant to bet the future of their investment on that guarantee.

I do have first-hand knowledge of this; about 15 years ago UnitedHealthcare sold MetraComp’s WC network to NHR, which was then sold to Concentra. (I worked for then consulted for MetraComp) There was a deal in place wherein UHC was supposed to maintain the network contracts; didn’t happen.  Discounts declined, the network shrunk, and the asset value diminished rather quickly.

I’d be remiss if I didn’t make sure you are going to Operation UNITE’s Prescription Rx Summit in Atlanta April 22 – 24.  The Summit is focused on all aspects of the prescription drug abuse problem – the top problem in worker’s comp today.

Enjoy the weekend – hope your flowers are blooming!

Yikes – where did the week go?

Apologies for not keeping up with the daily blogging – too darn much paying work these days.  Alas…

So here are a few quick takes.

Prime Health got $8 million in debt financing from LongueVue Capital; this likely means the PPO won’t be on the block any time soon.  No word on what they’re going to use the funds for…

Drug compounding hit the big time this week, with the news that both the FDA and HHS’ Office of the Inspector General are looking into compounding.  This from AIS’ Health Business Daily: (free sub req)

“…state-regulated compounding in hospitals and federal oversight of manufacturers — are colliding, as the FDA in January urged hospitals to buy drugs only from compounders that voluntarily register with the agency and abide by “good manufacturing practices.”

Compounding — which is the mixing of two or more ingredients to tailor a drug to a specific patient’s needs — also is a new target on the 2014 Work Plan for HHS’s Office of Inspector General, with the OIG eyeing practices inside hospitals and oversight by Medicare accreditors.

PPACA/Obamacare

About 80% of survey respondents want their elected officials to fix O-care – not make it fail.  Fully three-quarters of non-Tea Party Republicans want their representatives to fix – not kill – Obamacare…and the less-educated one is, the more likely they are to oppose Obamacare.

Of course, among those who disapprove are some who want a single payer system.

Re Obamacare implementation, there were mis-leading headlines and ledes out there saying that insurance markets are less competitive than they were pre-reform.

Once again, these media got it wrong.

Here’s what the study  – which only looked at 7 states – really said:

“early indications suggest that some exchange markets are more competitive than their states’ individual markets before the ACA (emphasis added)…Two states (Connecticut and Washington) that have also been successful at enrolling consumers seem to have less competition than in their 2012 individual markets.  Results from the remaining states generally show either similar levels of competition as their pre-ACA markets or mixed signs.“(emphasis added)

There’s a great infographic up at JAMA’s site showing what people are paying under Obamacare – check your state here.

Finally, myMatrixx has a webinar on specialty pharma in work comp next Tuesday at 2 PM eastern.  Highly recommend it – this is a rapidly growing and very complex issue and Phil Walls is a great “explainer”.

Enjoy the weekend, best of luck in your brackets, and here’s hoping my beloved Orangemen make it thru!

NCCI’s Dr Harry Shuford gave a great brief talk on the economy’s impact on the financial performance of WC.

A few key takeaways.

1. WC is a relatively small part of the overall property and casualty insurance industry (around 11% or so)
2. Average operating gain of WC has been about 5% over the last 20 years. That factors in an average return on investment of 14% and the underwriting results.
3. WC premium dropped 23% from 2007 – 2009, then grew 18% from 2010 to 2012.
4. Markets for all P&C lines seem to go thru cycles in synch.  That is, when the personal auto market is soft, so is WC, etc. Harry’s inference – poor investment returns are key to understanding when cycles occur, and, perhaps more significantly, help us understand overall business cycles as high investment returns APPEAR to predict recessions.
5. Cost drivers include:

• Long term structural decline in frequency  – this is global and not limited to the US.
• The ebb and flow of inexperienced workers drives frequency as part of the business cycle – temps get added, frequency goes up.
• Medical severity is a huge driver – utilization, price, and intensity of services.

 

And Health Wonk Review isn’t escaping the mess.  Wright on Health celebrates (!) the season, even though it may be delayed due to winter’s refusal to leave just yet.

Apologies all – too much work last week and not enough time to get this out.

Here’s what I missed reporting last week.

WCRI’s annual meeting is starting Wednesday – there’s a ton on the agenda, attendance looks high, and I’ll be “live blogging” throughout.

There’s increasing evidence that health care cost trends have continued to moderate.  However, people – employees, individuals, moms and dads – are seeing higher cost-sharing and contributing more to their premiums.  Thus the “good news” is mainly “good” for policy wonks and not for real people.

On the Obamacare issue, a poll released Friday indicated 55 percent of the currently-uninsured respondents will get coverage rather than pay a fine. The same poll indicated the uninsuranace rate has decreased 1.2 points since the end of 2013.

Meanwhile, those zany, madcap House Republicans are at it again! Yes, they are trying to hold up O-care, this time by tying a fix to the Medicare physician reimbursement rate to delaying the mandate for a couple-or-ten years.  What will they think of next?

In the wild world of work comp, the big news last week was – there was only one private equity deal! Fairpay Solutions was sold by Riverside to Mitchell International in a transaction that sources indicated made the Riverside folks happy but not ecstatic.

That’s it for last week.  Gotta save up my pixels for the forthcoming blog-o-thon aka WCRI.

 

 

Today we begin with a plea for…research.

Can someone please provide evidence – that’s solid, well-documented, and not just opinion based on…common knowledge that employees file lots of claims under work comp that SHOULD be considered non-occ?

Or that Obamacare will lead to MORE claim-shifting to work comp?

because that’s what two recent analyses of Obamacare’s impact on P&C/work comp say.  One, from Marsh, says “Employers have long been concerned that injuries from non-work-related causes will be shifted to workers’ compensation.”  Why? Is there any basis for this “concern”? Any research? Science? Data?  Not disagreeing with Marsh’s conclusions, rather challenging what passes for “accepted wisdom” in our industry.

Another “analysis” of Obamacare and P&C, by the Insurance Research Council, reads “In some cases, the [workers’ comp] claim may be legitimate, but would have been previously filed as a health-insurance claim…While increased cost-sharing may decrease health insurer outlays, it also may encourage individuals with health insurance to assert coverage for injuries under property-casualty insurance where the opportunity is present to do so.”

Again, since when is idle speculation “research”? And the assertion that there is “increased cost-sharing” is just ludicrous. In fact, there is LESS cost-sharing in many plans due to lower deductibles and co-pays under PPACA plans than employees’ previous health insurance coverage. Research indicates that if the annual out-of-pocket caps had been in place in 2011, the 15 million people who exceeded the cap would have saved $25 billion.

Truth be told, I too “knew” employees abused work comp, until it turned out the research indicated it wasn’t.

Then again, I’m not a “research council”…I am, however, a big believer in credible research and analytics and science.

Narrow networks

A guest post on Monday will dig in to this deeply, so here’s the teaser.  A Kaiser Health Tracking poll just released finds “those who are most likely to be customers in the Affordable Care Act (ACA)’s new insurance exchanges (the uninsured and those who purchase their own coverage) are more likely [54% to 34%] to prefer less costly plans with narrow networks over more expensive plans with broader networks.” (emphasis added).

Not surprising; those who have to pay the entire cost are more price-sensitive than those whose employers’ subsidize their premiums.

Hospital inpatient volume is declining

And has been for five years, due to fewer elective admissions, tighter controls by health plans, more use of outpatient rather than inpatient facilities, and the structural shift towards “fee-for-value away from fee-for-service” due to more emphasis on prevention and practice care.

Sounds good right? Sure, unless you are a P&C payer – as patient census counts from governmental and private insurers declines, those smart hospital execs are going to look for ways to make up that shortfall.

Federal deficit

Then again, it’s not bad news for we taxpayers, as the decline has reduced Medicare spend below projections, which has helped give us the smallest deficit since 2008.

Always good to end on a high note!

 

 

 

Hopefully it isn’t “wither”…

There’s been a good deal of reporting on trends in work comp premiums and coverage of late, with a good piece in WorkCompWire on Marsh’s market survey describing a softening market for many employers.  The WCW article comes on the heels of one in Insurance Journal announcing the “good news” that the P&C industry returned an underwriting profit for the first time in four years.

It’s a bit disturbing that the industry had to rely on investment income to make a profit for three of the last four years, nonetheless the news from AM Best that net income increased 60 percent to $63 billion in 2013 is encouraging news indeed.

WC is a relatively small part of the P&C industry, typically about 11 percent of total premium.  Here are a few quick takeaways.

• WC premiums increased 9.7 percent in 2013.
• Despite those higher premiums, AM Best estimated the industry was under-reserved by about $28 billion in 2012.  
• The 2012 combined ratio was 110.3, a seven-point decrease from 2011.
• Frequency declined faster than claims severity increased.
• Rates are up in several states, including California and Washington.
• There’s much concern about the potential non-renewal of the federal terrorism risk insurance program; if it doesn’t happen rates will likely increase but by how much is unclear.

So, what does this mean?

When profits climb, the market typically starts to soften as capital comes in to work comp, seeking to take advantage of the financial returns. Carriers get more competitive, seeking to add share, and there are more carriers bidding on employer business.

I’d expect this will happen this time, and we’ll see prices level out this year in most states.  This may not be readily apparent as the rates insurance companies file with regulators may not change much, but discount arrangements may well increase.