Newsday broke a story yesterday about a former Islip, NY parks workers who was busted for insurance fraud.
But this isn’t your typical “out on TTD, moonlighting as a handyman” gig.
Nope, John Livingston, out of work due to a comp injury and according to his statements to his employer and adjuster, unable to find employment, was allegedly working as a bouncer at a bar.
A nude bar.
It seems that the $17 grand Livingston collected so far wasn’t enough to sustain his lifestyle and other obligations, so a man’s got to do, what a man’s got to do. In this case, what Mr Livingston had to do was ensure patrons didn’t get unruly or obstreperous. Let’s think about this. Livingston, who was employed as an automotive equipment operator, told the Town he couldn’t work in that job, yet he was able to find work tossing potentially beefy, probably inebriated guys out of a ‘gentleman’s’ club.
Livingston’s previous job must’ve been much more strenuous than your typical truck driving gig, or perhaps he couldn’t sit for long hours, yet could, without too much pain or chance for injury exacerbation, latch onto struggling guys and launch them thru the back door.
Or maybe this was part of his therapy and work conditioning program.
Livingston pled not guilty.
The Empire State has gotten rather forceful about comp fraud, so I’d expect Mr Livingston will come to regret his alleged decision to mess with the system.
Hats off (no pun intended) to the adjuster or employer who ordered the investigation (if in fact this was the result of surveillance) and busted Mr Livingston.

Broadspire, one of the largest TPAs in the country, has announced a new network strategy which goes by the acronym BOLD, that is notable as much for what’s missing than what’s present.
There’s no mention of Coventry in the list of Broadspire’s network partners.
I’ve discussed this at length with Danielle Lisenby, Broadspire’s top managed care exec, and the company’s president, Ken Martino. Danielle, Ken, Medical Director Jake Lazarovic, MD have led the company’s efforts to develop and implement a medical management strategy based on “a better answer than the same old broad based discount network ” approach.
Martino sees the BOLD network as a differentiator for Broadspire, a unique solution that is clearly different from those offered by the company’s competitors. Martino also noted that the extensive analysis conducted by Broadspire confirmed their belief that “greater savings could be obtained using multiple partners than relying primarily on one network.”
I’ve seen the analysis, and the numbers support the company’s assertion. When examining network penetration and net savings percentage, the new strategy provides better results in all but three states, and in those the difference is minimal.
On the flip side, the net increase (penetration x savings) in many states increases by mid-single digits, with a couple well over ten percent.
Sources outside Broadspire indicate Coventry is none too happy with Broadspire’s decision. According to Coventry reps (albeit second hand), Broadspire wasn’t willing to ‘partner’ with Coventry. I’ll leave it to readers to puzzle out how exactly Coventry defined ‘partner’.
What does this mean for you?

Coventry dominates the work comp PPO business. They are, far and away, the leader in market share, and use that position to their advantage. Since the exclusive marketing deal with Aetna was inked a couple years ago, Coventry has been raising network access prices and strongly encouraging customers to utilize their network in most, if not all, jurisdictions.
From a business strategy, this makes a lot of sense – from Coventry’s perspective. Using market clout to drive higher margins and hold off competitors is just good business – for the market leader. Over the near term, this has paid dividends for the work comp division’s parent, as the network operation has generated significant cash flow.
I’d highlight ‘over the near term’. Over the longer term, Coventry’s approach is bound to alienate payers looking for more flexibility, more control over their medical spend. As it is, payers utilizing the ‘one network’ approach are ceding a significant amount of control over the largest part of the claims dollar to an entity that makes money on medical bills – the more bills that are generated, the more money they make.
Even a non-actuary like myself can see the problem – for the payer – with that business model. Now Broadspire has become the first large payer to break away entirely from the Coventry model. Their numbers are compelling; it will be interesting indeed to watch how self-insured employers react.
Note – there are several other large payers also looking deeply into new medical management strategies. Perhaps Broadspire’s move will push these efforts along.

I was talking at length with a good friend who works for a large payer last week, discussing the process of getting the organization to make significant, and very much needed, improvements to their managed care program.
This got me thinking – by no means is this situation unique to that one payer. If anything, resistance to change is a consistent thread throughout the workers comp payer/buyer/service industry. Pondering this over the weekend I came up with a few warning signs of and reasons for the resistance.
Warning signs
Statements such as “we’ve always done it that way”, “that’s our policy”, or “that’s how we handle X here” can indicate pride and consistency, traits that are often excuses for not thinking more and deeper about specific issues. Policies are good, as long as they’re ruthlessly examined under a very bright light on a regular basis.
Long, exhaustive, exhausting studies and analyses and research into a new idea, especially those that involve a large committee of folks with lots of other, higher priorities. Committees are where good ideas go to die.
A culture of fear, where junior staff wait to hear what the boss says before chiming in; where criticism is pointed and personal, where people are afraid to speak up for fear of being criticized or chastised.
A resistance to comparison and measurement, where managers seek to report the data that demonstrates positive results (or at least results that help them achieve their bonus targets) and don’t look for ways to compare their performance to competitors or the industry as a whole.
Why?
There is a cultural issue in comp, and perhaps in the larger property and casualty industry that has significant negative influence on the ability of companies to evolve and improve.

People who say ‘no’ succeed; risk-takers do not. Risk takers seek to write the somewhat questionable policies, try different approaches, ask ‘why not’ instead of ‘why’, look for creative solutions to old intractable problems, seek answers outside the industry instead of always relying on the time-tested. Sure, these risk-taking efforts aren’t always, or even often, game-changing successes, but occasionally they do work brilliantly, and even when the improvement is incremental, it is improvement.
The ‘no’ people don’t write the risks that fail to meet every criterion, stick to the book when ‘managing’ claims, don’t direct injured workers in states that don’t provide explicit authority, complain that the laws don’t support tougher stances. They don’t look for the ‘how to’, they complain about the ‘why not’.
More specifically, there’s a financial gravy train that drives TPAs and insurers that makes it difficult to try new approaches in managed care.
That gravy train is fueled by managed care fees, fees that in many cases are larger than the earnings from claims administration, and can represent a big chunk of an insurer’s profit margin. Fees, whether from case management, utilization review, bill review, networks, or other services, contribute to the overall organization’s financial results, making it tough to consider programs that might actually reduce the amount ‘earned’ by managed care programs.
Never mind that these new programs will also reduce medical costs. In fact, I can, and often have, made the argument that the current large generalist PPO reimbursed on a percentage-of-savings basis is actually driving up workers comp medical expenses, and the data I’ve seen bears that out.
Yet the vast majority of payers are still wedded to this old model.
What does this mean for you?
More evidence that change in the comp industry, however much it is needed, will be difficult and frustrating. Precisely because of that difficulty, those organizations that adapt and evolve will find themselves better positioned than their moribund competitors.

According to Bill Kidd’s piece [sub req] in WorkCompCentral this morning, several states are attempting to address the rapidly growing problem of surgical implant device fees via regulation or legislation – by basing reimbursement on the manufacturer’s invoice. While it is great to see authorities paying attention to what has been a big problem for comp payers for several years, this solution may not be much of a…solution.
As I noted in a post a couple weeks ago;
“In several jurisdictions (including NY TX CA (working on a change) and FL) the basis for reimbursement is some version of the “documented paid amount” plus a handling fee of 10% or so up to a cap of a few hundred dollars (CA) or a percentage of the invoice amount (FL). Illinois is also contemplating a similar arrangement. [Bill notes that Minnesota is also looking into a fix]
The problem lies in the documentation of the paid amount. Most payers ask for a copy of the invoice, which, on the surface, makes sense – this is what was paid.
Not exactly. What the invoice doesn’t show can include:
– volume purchase discounts
– rebates
– “3 for the price of 2″ deals
– waste (some surgeons use the cage from one kit and screws from another, so the payer is paying for more hardward than is actually being used)
– internally developed invoices (documents prepared not by the supplier but by the provider)
This last point is the crux of the issue. Hospital systems often buy in bulk, with several implant kits shipped and billed; this obviously makes it impossible for the provider to produce the invoice for the device used in a specific surgery, as they never got one. Thus, many providers develop the invoice for a specific implant kit themselves.”
So, what to do?
I don’t see a legislatively-simple solution, or rather one that only requires a revision to existing fee schedule language. Requiring providers to disclose the ‘price’ is only practicable if they know what that ‘price’ is; as noted above, that often is difficult if not impossible to establish.
What states can do is require reimbursement at ‘cost’ plus something, allowing payers to work with specialty bill review vendors to determine what that ‘cost’ is. (HSA Client) FairPay Solutions provides this service; if there are others out there that can assist, let me know.
predictive modeling
And
artificial intelligence

Three items of interest from North Dakota – one quite positive, the others puzzling at best.
First, the good.
Sandy Blunt, former CEO of the NoDak work comp insurance fund, gave an excellent presentation on the current state of the work comp industry, with a strong focus on which claims are most important and most deserving of attention, and why they’re also the ones often missed. (I’ve been privileged to work with Sandy on several projects, and the presentation is a great example of how much value he brings.)
If you missed it (over 600 attended the webinar), the recording is here and the slides here. (use FINEOS as password, all caps)
Now, onto the weird. And yes, both also involve Mr Blunt.
Regular readers will recall Sandy appealed his conviction (on ridiculous charges) to the North Dakota Supreme Court fifteen months ago, with oral arguments heard seven and a half months ago. As of yesterday, the Supreme Court had not yet seen fit to issue a ruling in the case.
One has to ask why. Dozens of cases that were filed and argued after Blunt’s have been decided and those decisions released. The evidence is in, the arguments have been heard, there has been plenty of time for clerks to research precedents and judges to confer.
Yet no decision has been announced. Why not?
Even stranger, the prosecutor responsible for the conviction, Cynthia Feland, continues her electoral campaign for judge despite ratings from the North Dakota Bar Association that are lower than any other candidate. Perhaps the members of the Bar in NoDak are aware of some of Feland’s…issues.
Members of the ND State Bar Association were asked to rank, on a scale of one to five, the qualifications of attorneys running in contested state judicial elections’ professional competence, legal experience, judicial temperament, integrity and overall qualification.
Feland ranked lowest in every single category. Every one. And she was ranked lowest overall as well, with a 2.83 out of 5.00.
With the primary election scheduled for June 8 (a week from yesterday), Feland is hoping to be one of the top two vote-getters, a distinction that would put her into the general election in November.
Perhaps the Supreme Court is waiting on the results of the primary before announcing their decision. If that is the case, it is indeed unfortunate that politics would play any role in the judicial process.
If that isn’t the reason for this close-to-record delay, than what is?