WorkCompCentral’s Mike Whiteley has the scoop [subscription required] of the month; he reported this morning Governor-Elect Rick Scott of Florida has renewed his promise to cut employers’ work comp costs by 35% .
(That was one of the lead lines I considered – the other was “Is it April Fools?”)
No, it’s true. According to the article, in a speech last week, the new governor said “We also need serious tort reform, and a 35% reduction in workman’s [sic] compensation costs.”
Wow.
That’s one ambitious guy! Another 35 percent on top of the 40 percent reduction most employers have seen since reform passed in 2003?
How’s he going to do that? Let’s see…
1.) Scott could immediately reduce the maximum maximum weekly wage basis to $0.00; or
2.) require all medical providers to treat work comp claimants for free, or maybe
3.) make workers comp optional for employers while prohibiting suits against employers for occupational illnesses or injuries (that’d be part of his ‘tort reform’ plank…)
Short of those rather draconian measures, all of which would require a compliant Legislature and Senate, I’m not seeing where he’s going to get another 35%.
I’m not the only one wondering, as Mike Whiteley reported on WCC; one local expert (Christopher Smith of Florida Workers’ Advocates) said “It’s our belief he’s relying on information that’s 10 years out of date. [emphasis added]…It appears to be based on some statistics that were advanced during the time running up to the 2003 changes.”
Well, perhaps the soon-to-be Gov is going to ask the Senate to overturn his predecessor’s veto of a bill reducing costs for physician dispensed drugs; perhaps but highly unlikely, as Scott reportedly convinced the new Florida Senate leader to not seek an override.
Here’s how the Palm Beach Post described the…episode.
“Concerning the workers comp prescriptions bill, Cannon first said the reason for his reversal was because Democrats had objected to the override and that he and Haridopolos had targeted measures that were non-controversial and had received unanimous or near-unanimous support during the regular session.
But he later conceded that a dispute among major Republican Party donors had foiled the override attempt planned for Tuesday.
“In the lobby corps there has emerged this debate and discussion and controversy. . . . If there’s that much debate and disagreement, that’s the type of thing that should be run through the entire committee process and should come back in regular session,” Cannon said.
Associated Industries of Florida supported the bill, saying it could have saved private companies $34 million in workers’ compensation costs, whereas the Florida Medical Association and the Florida Orthopedic Society supported the veto.
Also supporting the veto was Automated Healthcare Solutions, a Miramar-based company headed by a pair of doctors, Paul Zimmerman and Gerald Glass, who later gave more than $1 million to political spending committees headed by Haridopolos and Cannon.
The company provides software that helps doctors dispense and manage patient prescriptions, a profitable sidelight for many doctors.
After Scott’s primary election victory, Zimmerman and Glass also contributed $735,000 to the Republican Party of Florida and $175,000 to Scott’s political committee, according to The Miami Herald.”

So, Scott may cut 35% from employers’ workers comp costs, but he’s going to make them pay political contributors $34 million more than they would have.
Good luck with that…

An interesting confluence of events occurred this week in the Sunshine State, one that will keep employers’ costs up while enriching politicians and physician dispensers.
First, the Florida Legislature was going to meet and vote on a measure to override Gov. Crist’s veto of a law that closed a loophole in the state laws that allowed physicians dispensing drugs to workers comp patients to receive reimbursement much higher than the same drugs dispensed by a retail pharmacy.
Crist’s veto shot down a bill that had been passed unanimously by the Florida Senate and House – that’s right, not a single dissenting vote.
Then, seemingly overnight, the veto override was taken off the table; the new agenda for tomorrow’s meeting makes not mention of the WC Rx override.
According to an observer in Tallahassee;
Senate President-designate Mike Haridopolos and House Speaker-designate Dean Cannon dropped two suddenly contentious bills from their veto override list after objections from Gov.-elect Rick Scott and GOP donors.
The other measure [under consideration for a veto override vote] would have imposed new restrictions on doctors’ repackaging of prescriptions and would have lowered workers’ comp costs for the state and private companies.
But Automated Healthcare Solutions, a Miramar company headed by two South Florida doctors, supported the veto and spent $1 million on political committees headed by Haridopolos, R-Merritt Island, and Cannon, R-Orlando, this summer. [emphasis added]”
(Yes, this is the same AHCS that is suing the author of this blog for defamation and various other sins.)
From another article:
“Automated Healthcare Solutions, a Miramar company headed by a pair of doctors, Paul Zimmerman and Gerald Glass, steered $605,000 to the [Republican] party [emphasis added] after also helping finance some of the primary’s fiercest attacks on McCollum.
The doctors, who played a central role in fighting legislation supported by [Florida CFO and gubernatorial candidate Alex] Sink that would have reduced the cost of prescription drugs in workers’ compensation cases – a measure vetoed by Crist — donated $1 million through companies they lead to political spending committees controlled by incoming legislative leaders Sen. Mike Haridopolos, R-Merritt Island, and Rep. Dean Cannon, R-Winter Park.”
Which leads me to wonder, how powerful is the almighty dollar in politics? Is the removal of the comp drug bill coincidental, or is it possible that Haridopolos, an avowed friend of business, is somehow able to see the merits of a business model that has reportedly cost Florida’s employers $34 million?
If I didn’t have such deep faith in our politicians, I might even think Haridopolos set aside his pro-business theology for a few hundred thousand bucks.
What does this mean for you?
How much money is there in physician dispensing?
Millions. And more millions.
Enough to enable firms interested in and profiting from physician dispensing to contribute hundreds of thousands of dollars to politicians, dollars that may – or may not – affect legislative agendas.

Here in no particular order is what I can recall (and am allowed to post) from the last couple days at the comp conference.
First off, more activity, more smiles, more enthusiasm than I’ve seen in several years at the show. Things are looking up for payers and vendors, and that’s a welcome change from the past.

The Linked-In roundtable was big fun – some good controversy, a fair amount of not-heated-nonetheless-blunt discussion of TPA motivations, case management outcomes, the negative influences of the soft market, the travails of the claims adjuster, and how to assess outcomes/what to measure.
A few axes were ground and oxen gored, and if you missed the last hour or so when there was a very direct discussion of the unintended consequences and inherent conflict-of-interest in the current managed care fee structure and commission/marketing fee/kickback ‘system’ that’s too bad.
It was the first time I’ve seen a blunt and open discussion of the fundamental problem with managed care in workers comp – the more services delivered, and the higher the bills for those services, the more money the managed care vendors – and the payers splitting fees, sharing percentage-of-savings, earning commissions – make.
Why?
Exam Works was a big presence on the floor with a horde of young, shiny, physically attractive sales folks eager to discuss the benefits of working with what appears to be an amalgamation of mom-and-pop peer review and IME companies. I didn’t get it.
Mitchell and Ingenix staff were there, cohabiting in the same booth, and talking together with prospects and clients. A couple current clients I spoke with are going to transition to the new Mitchell bil review platform, a couple others are going to do a market check to see what else is out there. It is far too early to know how this is going to settle out; we’ll keep watching.
Several VC types were circulating, talking to and about prospects and deals and looking for the next big thing. More to come on this front, perhaps sooner than later.
Much discussion around the Coventry booth about the impact of Ken Loffredo’s departure. Ken is well known in the business, has more relationships than you can count, and leaves a big hole. How they’re going to fill that hole is the subject of much speculation.
Pat Sullivan’s new venture is WorkCompWire, a family-run business looking to provide news and other services on line to the community. He’s working it hard, and it is good to see another effort to get more information to the work comp community.
And finally, I’d be remiss if I didn’t tip the hat to CompPartners. Their hospitality suite had the finest collection of red wines I’ve ever had the pleasure of seeing at a conference; it was great to see old colleagues doing well – and having a lot of fun. John Swan can sing and play guitar, and Steve Huntington’s knowledge of Napa reds is, well, impressive.

And getting ready for the annual re-connect, see-who’s-where, find-out-what’s-new, separate-the-fluff-from-the-real confab.
Before diving into the meetings, presentations, and exhibit hall, here’s the first impression.
Mark Walls’ Work Comp Analysis Group is more than a presence here; Mark has done an impressive job putting together what has to be the largest collection of work comp people in the country. The various get-togethers, meet-ups, social events and roundtables arising out of the WCAG are a testament to the power of social networking.
I’m speaking on the impact of health reform (and related outside influences) on workers comp later today – the quick take is very little direct impact, but the indirect impact will be diverse and widespread, affecting everything from pharmacy costs to medical treatment expense to physician fee schedules to cost shifting behavior to information flows.
More later…

In what has to go down as the worst-kept secret in the investment community ‘EH-ver’ (say out loud like a 14 year old female), Genex announced today that they will buy Intracorp’s workers comp business from CIGNA.
I’m particularly pleased as I predicted this as an addendum to my annual ‘Hope I don’t Make a Fool of Myself with these Predictions’ post, and time was running short.
So what’s the deal.
Well, Intracorp has some pretty solid management folks who may be looking for jobs soon. Despite a notable lack of investment (and attention) from mother CIGNA, they’ve managed to keep body and soul together, won back a bit of business, and done some pretty innovative things in the network area. If you’re looking for talent…
Genex has to grow – or its private equity owners will be very unhappy – and buying a competitor is a time-honored – and pretty effective – way to do that in what is an overly-mature market dealing with declining claims volume and too many vendors chasing too many of those claims.
There’s a larger lesson to be learned here, one straight out of ‘The Innovator’s Dilemma’ (as long time readers know, my favorite business book).
This more-than-a-theory holds that companies that are very successful in their fields keep improving their products, believing that what their customers want is more and better versions of the same. What these companies don’t do is think up new ways of meeting their customers’ needs; ways that are cheaper/faster/easier. Instead, they work diligently on making their existing product a tiny bit better every year. And in the process, they don’t pay attention to what their customers actually need – the problem they are trying to solve.
Intracorp dominated the managed care world in the mid-eighties, believing its business was nurse case management. It owned the space for at least a decade afterwards. Upper management made a couple ill-fated attempts to get into the network business, neither of which had adequate commitment or resources behind it. As the comp managed care business became increasingly network-centric, IC was relegated to renting other vendors’ networks.
At first that was fine. But as time went on, the networks got more powerful, and the case management companies (which was really what IC was) woke up one day and found out they were no longer driving the bus.
Intracorp also failed to commit to a serious upgrade of their original, in-house, homegrown bill review system, patching it together and struggling along until the wheels finally came off and they had to switch to a third-party system. By then, it was too late. Several large customers had left, and when ACE/ESIS started to move away, the writing was on the wall.
Why?
I’d posit that Intracorp didn’t understand its real business was managing medical costs. It thought it was in the case management and bill processing business – a typical product/service centric mistake made every day – probably by most of the companies in this space.
What does this mean for you?
What business are you in? If you just said something about what you do, you’re wrong. You are in the business of solving a customer’s problem. And there may well be other products and services out there, or in development, that also attack that problem.

A source in the Lone Star State indicated that Commissioner Bordelon will shortly release a statement concerning the use of voluntary networks after 1/1/11.
Loyal readers will recall a post a few days ago that encouraged all to NOT implement any voluntary networks – or continue with their current ones – unless and until they carefully think thru the potential implications.
I’d suggest that is still good advice.

The next Governor of Florida will be Rick Scott. Democratic candidate, and current state CFO Alex Sink just conceded defeat, and her loss bodes ill for Florida’s workers comp insurers and employers.
Recall that Sink was a major supporter of a bill to prevent price-gouging by physicians dispensing drugs to workers comp claimants, a practice that has added millions to work comp loss costs. Departing Gov. Charlie Crist veto’ed the bill after a flurry of last minute lobbying by a variety of interested parties, including my nemesis, Automated Healthcare Solutions.
AHCS and its principals Paul Zimmerman and Gerald Glass donated hundreds of thousands to Crist and his supporters, donations that occurred around the time Crist was considering whether or not to sign the anti-physician dispensing bill. Let’s not miss the key issue here; AHCS makes enough profit from billing employers and insurers for physician dispensing to donate over $1.6 million to politicians.
Now news reports indicate that AHCS, Zimmerman, Glass, et al got behind Rick Scott in a major way:
“Automated Healthcare Solutions, a Miramar company headed by a pair of doctors, Paul Zimmerman and Gerald Glass, steered $605,000 to the party after also helping finance some of the primary’s fiercest attacks on McCollum.
The doctors, who played a central role in fighting legislation supported by Sink that would have reduced the cost of prescription drugs in workers’ compensation cases [emphasis added] – a measure vetoed by Crist — donated $1 million through companies they lead to political spending committees controlled by incoming legislative leaders Sen. Mike Haridopolos, R-Merritt Island, and Rep. Dean Cannon, R-Winter Park. The money was used to air TV ads during the primary against Scott.”
So, after their initial efforts to help Crist didn’t pan out, AHCS threw its financial muscle behind Rick Scott. Who will be the new Governor.
And will likely have the opportunity to sign, or veto, a bill to eliminate the loophole that enables physician dispensers to charge much more than retail pharmacies for the same drugs. Insurers and employers in the Sunshine State would likely favor such a bill; According to the Workers Compensation Research Institute, physician dispensed drugs are the main reason Florida’s prescription drug costs were 38% higher than a 16-state average.
But somehow I don’t see future Gov. Scott signing a bill bitterly opposed by donors who gave his campaign over six hundred thousand dollars.
Even if it would help reduce employers’ workers comp premiums, and improve the business climate in Florida.
What does this mean for you?
Higher workers comp costs in Florida.
(BTW, I finally got an official copy of AHCS’ suit against me, my attorneys have filed a response, and I’ll provide a more detailed update shortly.)

Yes, it’s true. And if he wasn’t a half-bubble off plumb when he started, he certainly was after spending a few years behind his desk at a workers comp insurer.
Franz Kafka worked for the Workers Accident Insurance Company, and is credited by no less a personage than Peter Drucker with invention of the hard hat. (with perhaps little support for that assertion)

For anyone who slept thru, or has been trying to forget those weird, more-than-slightly bizarre stories of man-waking-up-as-a-cockroach, or Trials held in low-ceilinged-rooms with death as the inevitable result, it may be time to dust off the college English anthology and revisit once again Kafka’s world.
Why?
Kafka can’t be any stranger (sorry, Camus fans) than today’s work comp world.
Kafka’s literary ‘angle’ has been discussed and debated for decades. Some think his work focuses on people’s tendency to invent their own struggles. Others interpret Kafka differently, believing much of his work describes the futility of existence, the hopelessness that comes from a complete lack of control over one’s own future.
Perhaps most believe Kafka was more interested in the absurdity of bureaucracy and law, the overwhelming focus on process and following rules, no matter how ridiculous or pointless, and the primary importance of the process over the outcome, the proveeding over the result. Several of his writings centered on, or included significant reference to, legal proceedings – the Trial the most obvious.
Today, we have workers comp – supposedly designed to remove lawyers from occupational injury and reimbursement for same – heavily influenced by lawyers for plaintiffs, defendants, and myriad other legal hangers-on.
– We have lawyers, for reasons known only to themselves, pushing drugs on their clients.
– We have employers neglecting to, or actively discouraging – the reporting of occupational injuries.
– We have medical fee schedules that discourage certain types of treatment while wildly overpaying for others.
– We have court hearings that drag on, and on, and on, marked by discussions seemingly unrelated if not completely foreign to the subject at hand.
– We have judges deciding that contracts signed by providers aren’t legal, even though the language was clear and the providers didn’t have any guns pointed at them at the time of signing.
– We have managed care contracts that reward managed care vendors, and managed care execs for sending injured workers to providers that bill a lot – and often.
– We have payers arbitrarily denying coverage for procedures one day, and approving the same procedure, for a claimant with similar injury the next.
And that’s just what I can think of in a few quick minutes; there are many more instances that amplify the absurdity inherent in this industry.
But, if nothing else, we can thank workers comp for helping Franz Kafka become one of the last century’s most creative fiction writers. Yet one has to wonder, who in the industry will become the next great author? Who has both the literary talent and has experienced enough career-provided absurdity to become the ‘next’ Franz Kafka?