Many readers are undoubtedly getting ready for next week’s annual Risk Insurance and Management Society annual meeting, held this year (conveniently enough) in Boston.
For most, ‘preparing’ means buying gel insoles, making sure the extra-think padding has been ordered for the booth, confirming appointments and hoping the notoriously changeable Boston weather doesn’t bring snow sleet freezing rain or all of the above.
Beyond the obvious, here’s a few things to look for at the annual confab.
1. The new thing. A few years ago it was pharmacy benefit management, back in 2002 it was emergency preparedness, a couple years back data mining was big. As to what’s going to be the buzz of the show, it’s anyone’s guess. It most likely won’t be a big transaction or venture; the Sedgwick deal is public, the Bunch sale is in limbo, and a couple others aren’t ready for public display just yet. Product launch? It will have to be a BIG deal. New customer? Again, it best be BIG to be ‘the’ thing.
2. Excitement, or at least a pulse, among the TPAs. This is admittedly hyperbole, but after the last few years, it’s a bit surprising there are any TPAs left. There are some indications the TPA business is picking up; reports are that more currently-insured, larger employers are looking intently at self-insurance. This is anecdotal, but encouraging nonetheless.
3. New network offerings. Healthcare Solutions (formerly Cypress Care and Procura) are reportedly making significant inroads in the payer market, offering access to the Aetna WC and MagnaCare networks and generating lots of interest among payers. Expect that their competitors will also be announcing expansions, multiple network offerings, and carve-out products to meet a growing demand for ‘non-me-too’ provider networks.
4. Investor interest is high. Expect to see even more venture capital folks/private equity investors/bankers on the floor, at the bar, and dining out this year than in the past. Interest appears to be pretty significant in work comp in specific and claims/P&C in general, as the smart people who work for investment firms continue to try to figure out why this business is so…backward? Inefficient?
5. Potential employees. I’ve always advised clients searching for sales talent to go to the shows, walk around later in the day/week, and find the booth staffers that are not sitting down, thumbs flying over their blackberries, yawning away, but on their feet, asking questions, listening hard, and doing their best to ignore their boredom and sore feet and backs and represent their company, and themselves, professionally.
See you there.

Noted work comp attorney Jon Gelman has an excellent post on one of the heretofore lesser known provisions of the Health Reform bill – the ‘Libby Care’ amendment. A quick read may lead some to think that the Feds are just about ready to take over handling of occupational diseases.
The provision Gelman is referring to is in Section 10323, Medicare Coverage for Individuals Exposed to Environmental Health Hazards, 2009 Cong US HR 3590, [this takes you to the entire bill and is a long download, the relevant Amendment is on page 111th Congress, 1st Session (December 31, 2009).
A more careful read produces a somewhat different conclusion; this looks to be a one-time fix to a specific ‘problem’. That’s not to say that the work comp industry has done a good, or even passable, job in addressing occupational disease, but the Libby Care Amendment isn’t an attempt to Federalize management and treatment of occupational disease. Color me a cynic if you will, but my sense is the Manager’s Amendment isn’t so much the ‘camel’s nose under the tent’ as a political move by Sen Baucus (D MT) to curry favor and win votes; the Amendment is specific to an environmental disaster in Libby, Montana.
Here’s why.
1. The Amendment requires a site be designated a “Public Health Emergency” by the Secretary of HHS. To date, Libby is the only site so designated.
2. The provision covers care for all affected residents and employees, not just workers. This is clearly far beyond ‘occupational’ and is much more of a public health issue than a work comp one.
3. Care is to be delivered through the Medicare system. This will require allocation of additional funding for each new site, something a cash-strapped CMS is unlikely to encourage.
I’d encourage readers to review Gelman’s piece in its entirety; Jon knows of what he writes and has done a credible job in identifying and analyzing this important issue.
What does this mean for you?
Likely increased attention for occupational disease, and over time, a push by CMS to ensure those responsible pay for the associated cost.

I’ve long held that broad-based attempts to control the price of medical service are, at best, a short term fix, and at worst, a blunt instrument that actually encourages over-treatment and extended disability.
Greg Krohm, Executive Director of IAIABC, has a similar take. Speaking for himself and not in his IAIABC role, Greg notes:
“payment rules like fee schedules are devoid of financial incentives for good medicine and good treatment outcomes, [emphasis added] including early return to work…I can think of no reason for a clinician – other than professional & moral values – to put in the extra time it takes to counsel and manage patients on tricky issues like return to work, pain management, therapeutic programs, and the prevention of re-injury. The payment is a flat rate per billing code without regard to quality or care given.”
Greg is, or course, dead on. His column is well worth a read and re-read, as he delves into several related issues. But for now, let me focus on just the price issue.
Fee schedules attempt to control cost by controlling just one aspect of the medical cost equation – which is:
Price x utilization (number of services used) x frequency (percentage of claims that use that type of service) = cost.
Some services – MRIs. for example, are indeed more a price than a utilization problem (not that there isn’t over-utilization of imaging, but price is a more important driver), so focusing on price per service makes sense. Hospital and facility fees are another service type that are primarily a price-per-service issue.
Physical therapy is much more of a utilization problem; the price per service is relatively low, but the number of services tends to be quite high, and many payers struggle to control utilization.
Even if price is the issue, attacking price alone without paying attention to utilization and frequency is akin to plugging one of three holes in a dam; the water will just seek out the other gaps, enlarge them, and before you know it the flood is even worse.
That’s but one aspect of the issue; we haven’t even touched on how low fee schedules disincent provider participation in workers comp thereby reducing access to care, or the inability of the regulatory process to keep pace with medical innovation, or bill review vendors charging some payers merely to reduce provider bills to an inordinately-low fee schedule.
WorkCompCentral’s Greg Griggs has written an excellent piece on this issue; [sub req]Griggs interviewed a couple folks who disagree with Greg Krohm’s views.
What does this mean for you?

Price controls. and artificially low prices, don’t reduce total costs.

Stratacare’s (relatively) new owners are delivering on their commitment to growing the company; they will be acquiring Marsh’s CS STARS MedBillPro operation.
Paul Glover et al (Stratacare leadership) has been aggressively on the hunt for new business; they were finalists in the now-defunct Bunch and Associates deal, and looked hard at OneCall Medical and at least one other deal. Expect to see more from Stratacare in the future; the RIMS Conference is coming up at the end of April, an event where new deals are often announced.
The announcement is here.
What does this mean for you?
Activity generates interest in the investment community…

I was interviewed by CompTalk Radio’s Bob Wilson a few days ago on the subject of the direct – and indirect – effects of health reform on workers comp.
The interview is here.

I’ve commented at length on the impact of health reform on workers comp, and will dive deeper into this topic in the coming months. There are several others who also are looking into reform, and their different opinions are well worth considering.
Greg Krohm, Executive Director has posted his views on the topic recently; as the head of the association of workers comp regulators, Greg has a unique perspective enhanced by deep knowledge of the intricacies of work comp regulation and operation in every jurisdiction.
Greg makes several interesting points:
– pharma costs may continue to rise due to increased demand for drugs
– the increased demand for physician services, particularly in rural areas, may lead to extended delays in getting initial treatment, especially in states with low fee schedules and high administrative loads. This is a trenchant observation, and one I’m going to have to think about as it relates to provider networks.
– with lower state budgets due to the significant expansion of Medicaid leading to possible continued reductions in staff at regulatory agencies, disputes will take longer to settle, rulings longer to be handed down, and clarifications on rules and laws delayed.
Greg’s observations are well worth considering.
What does this mean for you?
The impact of reform will play out over several years; knowing what may come will help you recognize the early signs and prepare for change.

In the five and a half years I’ve been publishing this blog, I’ve never had a guest post. Today’s post breaks that tradition. (This is NOT a change in policy; please don’t submit guest posts)
Good friend and colleague Peter Rousmaniere is one of the most thoughtful and interested observers of all things related to workers comp; his work appears in many other publications including Risk and Insurance. Peter and I were discussing the issue of the federal government’s role in work comp, he mentioned the history of federal involvement in occupational disease, and was kind enough to agree to write up his thoughts on the issue. I don’t necessarily agree with Peter’s perspective, but his views are well worth consideration.
Here’s Peter’s view.
There is talk about the threat of complete federalization of the workers compensation system without any evidence that the Administration and Congress is giving the idea any thought. However I envision a scenario for a serious effort in the next few years to take over coverage of work-related diseases. I have four points to make.
First, there is a very apt precedent of a federal takeover of about ten years ago. Thousands of nuclear weapon workers employed from the 1940s through the 1970s at private companies contracted by the federal government filed disease claims in state systems. Hardly any were accepted, an indication less of the merits of the claims than of the torturous, glacial pace of disease claims in virtually all state workers compensation systems.
After decades of inaction at the state level, Congress in 2001, in a bipartisan way, and with tacit concurrence by the states, said that the federal government was assuming the task of managing these claims. Thus emerged the Energy Employee Occupational Illness Compensation Program. The Department of Labor has spent several billions of federal tax dollars paying disease claims that were not paid through the workers compensation system.
Second, there is some interesting evidence that most occupational diseases do not enter into the state workers compensation systems. These ill workers go without the protections provided by these systems. The Massachusetts Department of Public Health studied asbestosis-related hospitalizations between 1996 and 2000 and found that among 3,344 hospitalizations, only 15 were paid for by workers compensation insurers.
Using epidemiological methods, and after analyzing state records of disease claims, other researchers estimated that the large majority of disease claims were missed. They went on to estimate that the annual national medical spend outside the workers compensation system for occupational diseases is between $8 and $23 billion.
Third, if the Democrats maintain their control of Congress in November, they are very likely to return to massaging the issue of OSHA undercounts. Congress could well extend its scope to investigate any kind of systemic barrier to protection of workers from the incidence and effects of occupational injury and disease. Congress will have not problem filling a conference room with claimant bar attorneys and medical reseachers.
Fourth, threats of federal takeover actually work. At the time the Nixon Administration created OSHA, it also launched a National Commission on State Workmen’s Compensation Laws. The commission’s report of 1972 is credited with embarrassing and prodding many states to modernize their workers’ compensation systems.