Category: Uncategorized

Jun
22

What’s up with M&A in work comp services…or, will it pass the Gremlin Test?

Posted by Joe Paduda on Friday, June 22nd, 2018 | Comments

After a spate of mega-deals and “tuck-in” acquisitions, things seemed to have calmed down in work comp services M&A.

In reality, there’s a lot going on – for reasons I’m not sure make sense.

There’s been consolidation throughout work comp services; every niche from pharmacy management to MSA vendors to networks to IME firms to case management to TPAs has gone thru this. There’s been both vertical (companies in the same business merging (e.g. EXAM buying IME companies) and horizontal deals (companies in dissimilar areas joining forces (e.g. Mitchell buying MCN).

While your take on this depends on where you sit, (e.g. fewer vendors bidding on a payer’s business), there’s another, arguably more important issue here.

I’m going to caution buyers to not conflate scarcity with value.

I’m seeing renewed enthusiasm among both strategic and financial buyers in companies that weren’t that exciting just a couple of years ago. Those heretofore-not-exciting companies seem to have gotten much more attractive now that there are far fewer potential acquisition targets available.

This is just human nature; we tend to value things more when there are few of them.

For example, I give you the Ford Pinto…

A horrifically crappy car rushed into production during the gas crises of the early seventies, thankfully there are few left in circulation.

Even worse, the AMC Gremlin (why a company would name a product after a manufacturing defect is one of the great mysteries of the Universe).

Yet people still spend stupid money on Pintos and Gremlins…

Why? because there are few of them left. That doesn’t make these awful examples of design and engineering incompetence any better, it doesn’t make the build quality less than horrific, and it sure doesn’t make them any more visually attractive.

What does this mean for you?

Before you plunk down your (or your investors’) hard earned cash on some company you passed on or wouldn’t have given a second look at a few years ago, you may want to ask if it passes the Gremlin Test.

May
30

King v CompPartners and the Duty of Care

Posted by Joe Paduda on Wednesday, May 30th, 2018 | Comments

To what extent are utilization reviewers care providers?

That was NOT the central question argued yesterday in the King v CompPartners case before the California Supreme Court.

The case appears straightforward; the plaintiff was prescribed Kolonopin, which was denied after going through the UR and IMR process. When he stopped taking the drug, he suffered several grand mal seizures which led to additional injury. The plaintiffs are arguing the UR physician who wrote the final denial should have authorized or otherwise recommended a gradual withdrawal, as seizures are not uncommon when patients suddenly stop taking Klonopin (Mr King had been taking it for two years).  In the view of the plaintiffs, failing to do that amounted to medical malpractice .

The central legal issue in this case is the exclusive remedy nature of workers’ comp, with the defendant arguing that he cannot be charged with malpractice as the UR determination and related processes took place within the workers’ comp system. While that’s the central issue, it’s not my focus.

Rather, I’m interested in the “duty of care” issue. I’ll leave the exclusive remedy issue to the lawyers; the health of the patient – and who is responsible for that – is what’s important to me.

There’s some pertinent case law in California that speaks to the “duty of care”, a phrase that infers the physician doing the review  is responsible  – to some degree – for the medical treatment and results thereof associated with his/her UR determination. In fact, the first court ruling verified that the UR physician owed the patient a duty of care.

The question seems to be, how broad and deep was the duty owed the patient?

The case went to appeal, and the court asserted that the UR physician did have a duty of care. From my reading, it based that assertion on the court’s view that a UR physician is implicitly acting as a medical provider.

However – and this is where it gets sticky – the duty of care varies depending on the patient’s specific situation.  

There’s a legal and an ethical issue here. First, that “standard” is pretty nebulous, ripe for disagreement and litigation.

Ethically it’s more clear. The UR entity should always consider the implications of its decision, the potential negative health consequences, as well as the narrower workers’ comp medical considerations of relatedness, appropriateness, and causation.

Because at the end of the day, it’s about doing the right thing for the patient.

Here’s where the reality that is California’s work comp screws things up; payers often base their decisions on which UR vendor to use largely on price.  UR is seen as a commodity, a necessary evil, especially in California where medical management costs account for way too much of the claims dollar.

Payers are looking to get the cheapest UR they can, while some providers and their legal/lobbying supporters scream about high administrative expenses, inferring those dollars should be spent on patients.

What does this mean for you?

What patients need is careful, thorough UR by physicians with the time and training to foresee and speak to potential consequences of their determinations. And that costs money.

Both payers and their adversaries would be well served to acknowledge that fact.

Note – I haven’t read the UR/IMR determination itself, so I don’t know if or to what degree the UR physician delved into the Klonopin withdrawal issue, nor do I know if that was discussed with the treating physician.

Rather my perspective is how these things should be handled and what the primary consideration should be.

 

 

May
25

Health insurance status and workers’ comp

Posted by Joe Paduda on Friday, May 25th, 2018 | Comments

The headlines were comforting – not much change in the number of Americans without health insurance.

Before you breathe that sigh of relief, you’d be well-advised to dig a bit deeper, because there’s plenty of bad news just under the headline.

While the national number of uninsured stayed about the same, that’s irrelevant to you – because healthcare is local. Here’s what I’d be worried about.

  • Young adults are almost twice as likely as older adults to be uninsured – about one in six younger adults don’t have coverage.
    Takeaway – no health insurance = more incentive to file work comp claims 
  • Over a quarter of working-age Texans don’t have coverage. Georgia, Florida, and North Carolina are not far behind

    Takeaway – no health insurance = poorer health status, more comorbidities, more charity care for providers thus more incentive to cost- and claim-shift.

  • 44% of working-age adults were covered by high-deductible plans – but more than half of them don’t have health savings accounts needed to fund those high deductibles

Takeaway – “High” deductible healthplans aren’t much different than no insurance at all if the patient can’t afford the deductible – and over half can’t. So, more incentive to cost- and claim-shift.

What does this mean for you?

Workers’ comp will be affected by the Administration’s ongoing behind-the-scene effort to hollow out the ACA and cut funding for Medicare and Medicaid.

 

May
22

Swedlow on work comp networks…they are NOT equal

Posted by Joe Paduda on Tuesday, May 22nd, 2018 | Comments

The best was saved for last at NCCI’s Annual Issues Symposium. After Gen (ret) Colin Powell warmed up the crowd, NCCI’s Barry Lipton and CWCI’s Alex Swedlow took to the stage to educate us on networks and outcomes.

First, California. Average medical costs have gone up 4.3x in CA since 1990; while there have been lots of regulatory and legislative efforts to add guidelines, enable managed care, and increase network usage, ultimate medical costs now are over $37k.

Network penetration in CA is now around 84% for physician services – where it looks like it has peaked.  Along with this increase has come an increase in administrative expenses.  WC Admin expense in CA now accounts for 53% of work comp costs, more than twice the average across the nation.

41% of those costs are for med management (31% for defense attorney expense). Bill review and network account for 47% of those medical management costs, UR is the remainder. (these percentages have been pretty static over the last decade).

So, what are you getting for all your millions?

Fortunately, CWCI’s done a lot of work to evaluate that very question. And they dug really deep. The slide below describes the data points CWCI used in their network evaluation.

Swedlow et al then looked at individual networks, comparing 11 different networks’ outcomes for claims (case mix adjusted, incurred between 2011-2014, developed thru 2017). Lots of takeways that will be published in a few weeks after final editing.

But here’s a spoiler –

There’s a huge amount of variation between networks, and some are delivering excellent results while others are worse than no network at all.   I direct your attention to the right side of the picture; note that average case-mix-adjusted cost per claim varied by 82 percent.

If you used the MPNs on the left side of the graph, your medical loss costs per claim would be over $11,000 lower than if you used the MPNs on the right.

And, your patients would get back to work two months earlier.

My takeaway is this – there are two types of MPNs; the State Fund and Kaiser Permanente On-The-Job type that is outcome-based, highly selective, and focused on care. This Outcome-based MPN, Or O-MPN is on the left of the screen.

And the revenue-based, that are focused on generating dollars off savings below fee schedule and other meaningless standards. On the right of the screen, the revenue-based MPN, or R-MPN, is huge, includes every provider in the book and some who haven’t been in the book for some time, is completely unmanaged, and generates beaucoup bucks for the payers that use it.

Lots of other great insights in the session which I missed – I had to run to get to the airport.

What does this mean for you?

Depends…Is your MPN an R-MPN or an O-MPN?  

 

 

Jul
18

The VA head smack

Posted by Joe Paduda on Monday, July 18th, 2016 | Comments

A few weeks back I posted on the incomprehensible decision by the Veteran’s Administration to award almost all of a $6.8 billion contract to two “different” companies that are actually very closely related.

Last week came the news that the Government Accountability Office delivered an official head slap – with a 2×4 – to the VA.

Politico reported [subscription required]

the GAO “citing “prejudicial errors” has directed the Department of Veteran Affairs to go back to the drawing board…the office “recommended that the VA reopen negotiations with the offerers, solicit, obtain, and evaluate revised proposals; and make new source selection decisions” [emphasis added]

Oh, and the VA “misled two of the protestors during the conduct of discussions or negotiations.  These errors led the VA to make source selection decisions…that were unreasonable…” [emphasis added]

Here’s my take.

First, there’s obviously some backroom dealing going on here.  When a giant defense contractor – Lockheed Martin – that has a documented record of failing to deliver a service and its “partner” are awarded most of a “competitive” $7 billion contract, while a much smaller competitor that happens to have a far better record of delivering that service on time and to specifications is awarded a tiny piece of the contract, something stinks.

Kudos to the GAO for the investigation.  HOWEVER, it’s unknown if this investigation would have happened at all if the three competitors who were screwed on the initial deal hadn’t spent hundreds of thousands of dollars preparing a protest within a really short time frame – a time frame that, to this observer, looks like it was designed to make it damn near impossible for the losers to react to the initial contract award to Lockheed Martin.

Second, and more important, this is outrageous, and demands further investigation.

There are thousands of veterans waiting on disability evaluations, a wait needlessly prolonged by what smells like corrupt contracting by someone or someones in the VA.

One just has to listen to calls from vets whose disability evaluations are delayed for months, vets in limbo because they have no idea if they will ever get any benefits, help, or the right treatment. These are men and women suffering from PTSD, missing limbs, burned, scarred, traumatized, now subjected to the mental anguish of not knowing when or if they will ever be taken care of by the country they fought for.

I would encourage you to email the GAO and ask it to continue the investigation to determine if this should be turned over to the Department of Justice.  Here’s the email address – youngc1@gao.gov 

Because the individual or individuals responsible for this unconscionable delay deserve more than a head smack.

[disclosure – I’ve consulted in the past for one of the protestors – Veterans Evaluation Services]

May
15

NCCI outtakes

Posted by Joe Paduda on Friday, May 15th, 2015 | Comments

This morning began with Ted Koppel – not a workers’ comp expert, but a terrific speaker and highly entertaining.  So, while listening to Mr Koppel, a few things worthy of note are coming to mind.

First, while my original thought was this was, while fun and interesting, pretty much a filler, I have to say that was short-sighted.

We workers comp folks spend far too much time navel-gazing, and the chance to engage, really engage, with a very thoughtful, highly experience, and deep thinker was valuable indeed. Topics addressed included India, Pakistan, the energy infrastructure, Edward Snowden, Putin, Nixon at the Great Wall and where to find good sources for information (Mr Koppel’s favorite is John Oliver’s This Week Tonight on HBO – and yes, it is for the news content, not just the terrific delivery).

While Mr Koppel was impressive, what was perhaps more impressive was the depth and interest level of his questioners.

Kudos to each and every one who posed a question – you enriched the experience for all of us.

What does this mean for you?

It’s not about the urgent; it’s about the important.  Look up, read, listen, and not just to those who think just like you.

 

 

Jan
28

NOT taking risks is what’s risky

Posted by Joe Paduda on Wednesday, January 28th, 2015 | Comments

I’m talking about marketing here folks, and not the typical work comp service marketing, which is not much more than a big party at NWCDC &/or RIMS plus some folks doing RFP responses and the (very) occasional website re-do.

Nope – real marketing – creative brand promotion that dramatically raises awareness.  Campaigns that make the market sit up and take notice. Smacking them in their eyeballs with innovative, aggressive, creative messaging.

When was the last time you saw really good marketing in this boooooring business of ours?  Stuff like the Newcastle campaign?  Campaigns like Kinaxis‘ that produce brilliantly simple and quite funny brand messages for pretty dry products?

(This video on implementation as a differentiator is hysterical)

Or Microsoft’s Camp Network? (I can already see execs cringing over the “nobody eat the berries” bit…)

Not taking risks is what’s risky.  Staid, boring, yawn-inducing plain-vanilla stuff is, well, safe – if you define “safe” as no one will ever pay attention to it, so you won’t get fired.

It also won’t get you any results.

What gets results is risky, aggressive, out-there marketing.  If it doesn’t make the denizens of the C-suite at least a little nervous, its probably not worth doing.  Because it can be holy-smokes-effective, as in millions of impressions and millions in new revenue.

Let’s be clear – we aren’t talking “risky” as in “stupid”.  Not offensive, but rather “we think this works but it may not”; “this is a big departure from stuff we’ve done in the past”; “no one else in our niche has ever done anything like this”. To break through, you have to take that risk. In a world of grey and greyblue, bright orange will stand out and grab the viewer.

Which gets you their attention, for about a nanosecond.  Great marketing grabs and holds the viewer’s attention while communicating your message clearly and completely. 

And you can’t do that if you go immediately from orange back to your usual greyblue.

What does this mean for you?

Success favors the smart risk taker.