May
18

WCRI’s new leader speaks

One of my favorite people in workers’ comp is now heading up WCRI…I connected with Ramona Tanabe who was named President and CEO. making her the third leader of this august institution.

here’s our conversation…

 

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  1. Talk about how you got into research?
    I moved to Massachusetts from Illinois and was looking for something a little different. In Illinois, I was working for a law firm that represented cities and not-for-profit organizations. We were paid with tax dollars, so I was sort of tangentially a civil servant, and I wanted to be in line with that. WCRI gave me my first opportunity to look at data. I’ve always had a love of numbers and this was an opportunity to do research that is required in workers’ compensation and different from legal work. An early project was to build a database that is still in use today at WCRI. Through this experience I gained a new understanding of how to bring diverse systems together and sing as one voice.
  2. What were some of the most rewarding research projects you led?
    Two come to mind. The first is the creation of WCRI’s claims database, which underlies everything we do. The second is CompScope™, our multistate benchmarking product, which is used to monitor state workers’ compensation systems and track the impact of reforms. It was one of the first projects I worked on at WCRI.
  3. How do you see WCRI evolving over the next few years?
    There’s an opportunity for some of the benchmarking work to grow in response to recent changes. Since the pandemic, what other things need to be measured? The behavioral health report last year was our first example of this, and it examined how much behavioral health is supported through workers’ compensation and how should it be supported through workers’ compensation, social determinants of health, globalization, and how that all fits together.
  4. What are some of the challenges doing research into topics related to workers’ comp (e.g., worker satisfaction, provider access, price comparisons)?

Worker outcomes are still on the agenda and a topic we want to revisit. In the past, we talked to injured workers via telephone interviews, but it’s hard to gather that information nowadays as people don’t answer their phones. Electronic surveys are really hard to do as well. We are being very creative and thoughtful about how we gather those data for use in outcomes studies.

Who are a couple of the individuals outside WCRI that have influenced/mentored you during your career?

It’s a diverse group that spans the industry: Art Wilcox, Maddy Bowling, Alan Pierce, Paul Matera, Shelley Boyce, Vinny Armentano. They have all helped shape the Institute. And I cannot forget my mom, Dorothy, who gives great practical advice. She never said I couldn’t do something. One of my favorite sayings of hers is, “See how high you can fly; if you aren’t scared to death it isn’t big enough.”

What do you see as your role at WCRI?

It’s about managing the context of the Institute, how it fits into the workers’ compensation world, bringing the inside and outside together within WCRI, and really putting that together so members are heard and colleagues have the tools they need to coordinate across all those areas so they can do the relevant work they are great at doing.

Final thoughts?

This is all about the injured worker. Coming to work, I sit on the train and look at all the people going to work, and they are all covered by workers’ compensation and don’t even know it.

What can the world learn from WC?
In workers’ compensation situations it is all about getting all parties to cooperate in getting things done—so many different things need to get done. Patience is important. People want instant things now, but there’s still an element of patience that is needed across the whole community.


May
15

This won’t last.

Back from the boys’ annual mountain biking trip…this one to Hurricane Utah. Great riding in a beautiful area…

Okay, at last week’s NCCI conference we learned workers’ comp insurance is earning insurers record profits…despite continued drops in claims frequency, rater reductions and pretty much flat medical spend.

Oh, and they’ve got billions more in the form of excess reserves socked away for…reasons that escape me.

For an industry that loves to catastrophize (medical marijuana!!! presumption!!! interest rates!!!  COVID!!!  WFH!!!) there’s precious little to be concerned about over the near term.

Comp insurance rates and profits are cyclical…have always been and always will be. That does NOT justify the too-high premiums employers and taxpayers are paying today…but smart industry execs should be using this flood of cash to prepare for the inevitable downturn.

That will happen when:

  • the opioid hangover ends,
  • facility costs climb,
  • and unprepared payers start calling for rate increases, increases that would be necessary only because payers failed to prepare.

This is absolutely going to happen.

Very few payers are using this time and their billions to invest, innovate, build systems, train their people and build a resilient culture.

Why take “risks” or actually work smart and hard when the balance sheet is glorious?

Nope, payers are (mostly) lazing through these halcyon days taking meetings, playing golf with erstwhile vendors, celebrating their good fortune, and leaving the future to…the future.

Here’s a few things payers should be doing…

  • building much better approaches to facility costs
  • asking their vendors what they can do better
  • building useful tech that makes front-line staff’s work easier, simpler, and most of all more rewarding
  • building a culture based on valuing (really valuing) workers
  • innovating and taking risks by trying new technology and new approaches

What does this mean for you?


May
10

Work comp is rocking.

That’s the only conclusion one could draw from this year’s NCCI State of the Line report. 

Very profitable despite declining premium rates, eye-watering pre-tax operating gains, and eight straight years of very solid profits…the corks must have been popping down in Orlando.

(wasn’t able to make the event this year…boys’ annual mountain biking trip kinda took precedence…thanks to NCCI’s Cristine Pike for keeping me in the loop!)

Details..

  • private carriers’ pretax operating gain of 25% – within an eyelash of the record year of 2018
  • loss ratio of 43%…43%!!! – the lowest in two decades.
  • combined ratio was 84%
  • lost time claim frequency dropped 4 points
  • $17 billion in excess reserves

This last is most striking as it is incontrovertible proof that premium rates are still far too high.

There are a bunch of implications that we’ll dive into in the next few days, but let’s start with the biggest one:

Why are employers and taxpayers still paying way too much for worker’s comp?

I predicted this back in 2019 – in a word, opioids.

 


May
8

Quick takes

Stuff you may not have seen/thought much about…

Good work from the Travelers...Analysis of a very large number of WC calms found:

  • watch those new workers – those with < a year on the job account for more than a third of all WC claims
  • workers >60 cost more…a whopping 1.4x more than the 18-24 year olds (but only 15% more than the 25-59 folks)
  • but…the 60+ folks don’t get injured as often.

The report is here.

kudos to the folks under the umbrella and WorkCompWire for getting the work done and news out.

you may have missed this – Texas Mutual is getting into the health insurance business.  I’ve reached out to TM and will be interviewing the new leader. I’ve a lot of thoughts about this…

  • the just-hired leader has a wealth of experience
  • standing up a new health insurance entity in a year is a very heavy lift
  • regulatory structure is quite different from WC
  • all research shows market share is the key factor in negotiating provider reimbursement, making it hard for new entrants to gain traction

Then there’s the question: “Why did legislators want TM to get into health insurance?” If they wanted to cover more people, expanding Medicaid would have been a lot faster, far less expensive, and much more impactful.

Finally, (somewhat) new WC bill review company accuro solutions acquired Splashlight...Splashlight is also in the WC BR business.  Good to see competition in an industry sector that sorely needs it.

 


May
3

It is not the price Dammit!

In work comp services, far too many buyers focus solely on the price of the service.

That’s the wrong metric..it isn’t the Price, it’s the Cost (we’ll leave aside the RoI/Value/…for more on that see this.)

Price is what you pay per unit.

Cost is the total expense that you pay.

Example…

Some PBMs are trying to buy business by offering amazing prices – as in AWP-80% for generic drugs.  Sounds great…right?

Sure, until you have to explain to your boss why drug spend went up even though your discounted price went down…

While workers comp payers have (mostly) figured out that the price of the pill is a lousy way to decide on a PBM, every now and then I get a call from a payer who’s just been offered a GREAT price from a PBM, and is either a) gleeful that they have been so smart and such a cunning negotiator; or b) panicked because their boss wants to change PBMs and the vendor manager knows it’s going to blow up.

Okay, let’s walk thru this.

The price of the pill is important, but it is only ONE part of the equation. Which is as follows:

Price per pill x number of pills per script x percentage of scripts processed in the PBM’s network.

Price per pill is determined by the definition of generic and brand, discount below AWP, brand:generic mix, and, most importantly, by the type of pills dispensed.  If a PBM does a crappy job managing the clinical aspects of the pharmacy program, you’re going to pay for far too many pills, and for the wrong kind of pills.

I’ve also read PBM contracts with quite creative definitions of “generic”…some so creative that what any normal person would say is a generic is – for price purposes – a “brand” drug.

Since brand prices are typically AWP-10-15%, a mis-categorized generic is going to be super-profitable.

Next, if the price is too good to be true, it isn’t.

A PBM cannot afford to pay for pharmacist support, bill review fees, call center costs, compliance/state reporting, IT connections and customer service if it is charging AWP-80% for what are REALLY generics.

So, it’s safe to say you’ll be paying for lots of opioids, fenoprofen, convenience kits, and other highly-questionable-if-not-downright-harmful-drugs.

But hey, at least you’re getting them for cheap!

Lets say you don’t care about the kind and volume of pills, you just want the deep discount.  Even then, you will likely find the cheap PBM delivers crappy results.  Here’s why.

PBMs that pitch really low per-pill pricing are likely using a group health-contracted pharmacy network, which leads to big-time problems with paper bills and administrative hassles for adjusters.  You may not see these costs as they are buried in bill review “savings”, and may not show up in your pharmacy report.

But they are most definitely there.

Oh, and Rule #1 in work comp services – do NOT piss off your adjusters.

Regardless, the network penetration for the cheapo PBMs tends to be pretty low compared to real WC PBMs.  There’s a bunch of reasons for that which I won’t get in to here.

What does this mean for you?

Do you want to explain to your boss why drug spend – and the combined ratio – are higher even though you got a great price from your PBM?

 


Apr
27

Drugs and worker’s comp, part 2

Yesterday we posted on top takeaways from our 18th Survey of Prescription Drug Management in Workers’ Comp.

Today, I’M responding to several readers’ questions about physician dispensing (PDD) and mail order pharmacies (twin sons of different mothers) and why they are rearing their unfathomably ugly heads once again.

Mostly because payers have pretty much neglected the issue for more than a decade. Meanwhile the profiteering dispensing industry has been contributing big dollars to politicians, coming up with new and ever-more creative ways to get around regulations, and learning how to get reimbursement from payers – one at a time.

The work comp payer industry is fat dumb and hugely profitable for insurers and some (non PBM) vendors/service entities. Why expend energy on PDD when you’re making bank, employers aren’t complaining, and claim counts are going to continue to decline?

Unfortunately, injured workers are the victims, as are employers and tax payers.

  • PDD are rarely subjected to utilization review (by the time the payer finds out a drug has been prescribed and dispensed by PDDs, it’s way too late to do anything about it.
  • PDDs may conflict with other medications, duplicate other medications, or be contra-indicated for the patient.
  • PDDs are hugely expensive – and often unnecessary or duplicative. Profit margins likely exceed 90%.

The net is payers are usually demanding PBMs “fix” the problem of PDD – instead of partnering with PBMs, employers, and other stakeholders to build and implement a long-term strategy to stop PDD.

What does this mean for you?

If you aren’t fighting the good fight, you are the problem.

 

 


Apr
26

Drugs and workers’ comp, part 1

Download the latest Survey of Prescription Drug Management in Workers’ Comp here

Key takeaways

  1. Total drug spend in workers’ comp was likely around $2.9 billion in 2021.
  2. The multi-year decline in drug spend seems to have flattened out; across all 31 respondents spend ticked up 0.82%.
  3. Opioid spend continued to drop, with 2021 figures showing a 12.5% drop over the previous year. Opioids represented 13.4% of all respondents’ pharmacy, the lowest figure in the two-decade history of this survey.
  4. Legacy opioid patients continue to be a challenge for many payers; most have adopted a “we’ll do whatever might help” approach to these patients.
  5. Physician dispensing is once again rearing its ugly head with respondents rating it the single biggest problem in workers’ compensation pharmacy after a multi-year hiatus from that august position.
  6. Payers continue to highly value PBM customer service; myMatrixx continues to lead the industry in that key category.

Media – if you’d like a much more detailed version of the report (which respondents receive) please leave a request in the comment section.


Apr
21

What business are you in?

Hint – if you are a specialty network, you are NOT in the specialty network business…

Over the  last few weeks I’ve been talking with Rita Wilson of Tower MSA: Rita’s been attempting to educate me about the MSA world, a Herculean task to be sure.

What struck me about our conversation is Rita kept referring back to Tower’s purpose, which is claim settlement. From Tower’s website…

Tower focuses on the settlement of claims as we deliver measurably better Medicare Secondary Payer (MSP) compliance. We identify cost drivers and other barriers to closing claims, recommend and implement clinical interventions, and benchmark our performance against CMS responses [emphasis added]

Tower is not in the MSA business…it is in the claim settlement business.

Work comp payers don’t care about MSAs, they care about settling claims – once and for all.

By clearly defining Tower’s focus, the company speaks directly to the problem its clients and prospects are facing, demonstrating Tower knows what payers want and need.

Back to a specialty network…

NO ONE CARES ABOUT YOUR NETWORK.

What buyers care about is their combined ratio (if an insurer) or controlling costs and return to work (if a self-insured employer).

If you can directly show how your PT/imaging/DME/whatever network reduces combined ratios, controls costs and improves RTW, then AND ONLY THEN should you talk about HOW you do that.

What does this mean for you?

Be like Rita.


Apr
10

 

WCRI is out with its latest inventory of state regulations re prescription drug management. This is a must-have for claims execs, managed care leaders, medical directors and risk managers…pricing, utilization review, opioid management, formularies and PBM regs are all covered.

Revenue Cycle Management – aka hoovering mounds of cash from workers’ comp payers – is the focus of a “white paper” targeting hospital and health system execs. If you want to know the hooverers’ playbook, sign up and be prepared to be amazed.

A closely-related item…

From the wonderful folks at Kaiser Family Foundation comes the shocking news that facility fees are driving ER costs to the moon. As most of you (hopefully) know, regulations allow any service delivered at a facility to uncharge a facility fee. It is not hyperbole to note hospitals are wildly abusing this, taking on facility fees to services provided at

      • remote clinics
      • physician offices
      • even telemedicine visits

oh, btw, many hospitals are STILL not complying with Federal requirements to post prices…

Finally, from HBR comes this excellent advisory on how not to anger/frustrate/alienate customers…something many worker’s comp entities seem surprisingly good at. (We are NOT looking at you, LWCC…your work on patient engagement is really good stuff)

All too common is the industry’s maniacal prioritization of efficiency over everything else. From HBR:

when focusing on efficiency, many companies overlook the emotional aspect of the customer experience — how customers feel when interacting with the business.

The piece focuses on consumers – which every injured worker is.

What does this mean for you?

Tired of being hospitals’ piggy bank?… then understand facility cost drivers and techniques.

Injured worker engagement is critical to helping them return to functionality.


Apr
7

What we found – the audit results

Our report on the audit of the Department of Labor’s federal employee (FECA) work comp pharmacy program is now public.

Key findings…during the audit period (FY 2015 – FY 2020):

    • 1330 oral fentanyl scripts were dispensed and paid for without evidence of required cancer diagnosis (remember Actiq and Fentora?)
      • that does NOT include any such scripts that were dispensed and paid for BEFORE the audit period
    • over 25,000 scripts that should not have been filled were.
    • Agencies, Departments, and taxpayers spent $300+ million more than they should have because they didn’t use competitive pricing metrics and methods
    • DOL failed to address opioids and compounds in a timely manner…in both cases DOL was years behind the private sector and state government comp programs
    • The FECA program – which is the biggest single work comp payer in the nation – didn’t have a full time medical director OR clinical pharmacist.

Before you ask…we did not assess or otherwise study the potential impact of these findings on injured workers as that was outside the scope of the project.

The audit covers Fiscal years 2015 – 2020; the analysts and pharmacists at HealthPlan Data Solutions did the analytical heavy lifting, crunching data on millions of scripts and reimbursements. HDS handled the clinical questions as well. CompPharma provided a lot of the qualitative assessment and program operational benchmarks. (Thanks to all who participate in our Annual Survey of Drug Management in WC.)

CPA firm HRK was the lead on this (they speak Federalease and have the right credentials to navigate the Federal contracting system).

Note – Haven’t been able to post for days due to server problems (I’m blaming Putin’s hackers)…and as many of you told me (thanks!) the blog site was down for a while as well. Thanks for your patience and keep those emails re service outages coming.

What does this mean for you?

Audits can be really useful.