I am attending the national workers compensation and disability conference in Chicago this week, and will be blogging from here.
Impressions so far – even more exhibitors in the pharmacy benefits management space than last year, which was a drastic increase from the year before. My sense is the higher margins in WC Rx are attracting entrants, many of whom have little understanding of the difficulties inherent in identifying and managing eligibility, dealing with paper bills and third party billers, and interfacing with payers’ claims and bill review systems.
More to come…

Peter Barth presented an interesting overview of China’s occupational insurance situation at WCRI’s annual meeting yesterday. According to Dr. Barth, China passed a comprehensive workers comp law that took effect January 2004. WC is voluntary in the world’s most populous country, although employers that do not subscribe to the insurance program are required to pay the same indemnity benefits available through the program.
The employment situation in China is somewhat unique; a large percentage of the employed population works for government or military-owned firms; about half of the 800 million potential workers are in agriculture, and a large percentage of the remainder is employed by either small firms or foreign and domestic joint ventures. To date, 75 million are coverd by the state fund, which has a goal of 140 million by 2010.
Here are a few other highlights.
– the standard for an injury or illness is consistent with the US’; arising out of or in the course of employment
– premiums are in three bands, ranging from 0.5% of premium to 1.5%, with 2.0% for the worst case
– experience rating is in place, but a maximum of one point can be assessed for the worst risks
While the occupational health situation in China has been the subject of much negative attention, the inception of this state fund may well be the start of significant improvement. Much needed improvement.

Medical utilization trends were the subject of a presentation this morning. Here are some of the highlights which are based on research on back and neck injuries…
– use of MRI increased 11-14 points for non-specific back pain cases from 1998 – 2003.
– 40 pct of these cases had MRIs in 2003.
– the surgery rate for disc problems was stable over that period, although there was a shift in location with more performed in outpatient settings
– the typical back case received 4-7 more physical medicine visits over the 5 year period, driven almost entirely by trends in CA and TX

Here are a few highlights from today’s WCRI conference
– medical cost growth from 01/02 to 03/04 was in the 8-12 pct. range, driven primarily by increased utilization
– there is a strong correlation between utilization and disability duration, with a 10 pct change in utilization associated with a 4 pct change in duration.
– early returns from CA indicate the recent reforms are having a significant impact on medical costs with a particularly large drop in physical medicine expenses (around 50 pct)
– a study by CWCI (www.cwci.org) indicates that relatively few physicians’ treatment of claimants are consistent with ACOEM treatment guidelines. This particularly interesting as the new regulations state ACOEM’S guidelines are viewed as presumptively correct: they take precedence over the treating physician when there is a disagreement. The full study is available on CWCI’s site.
– MA and FL, two states with historically low physician fee schedules have disproportionally more complex office visits than the median state. This is consistent with other studies which indicate low fee schedules are associated with billing practices featuring a higher proportion of higher value services.
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I’m posting this from the WCRI Annual conference in Boston. For those who have yet to attend, this is perhaps the best short conference on WC on the calendar.
Topics this year include workers’ satisfaction survey results and the correlation with costs and outcomes: pharmacy in WC (driven by the 3 new WCRI members who are PBMs): a session on medical guidelines with an excellent presentation by CWCI’s Alex Swedlow on early results of CA’s reform measures (and other topics) and more to come tomorrow.

Another scandal is hitting the workers’ compensation world, as the CEO of the Maryland state fund known as the Injured Workers’ Insurance Fund (IWIF) has been indicted on charges of accepting bribes and racketeering in connection with his previous career as a state senator.
Thomas Bromwell, the individual in question, has been running the fund since leaving elected office in 2002. To quote Insurance Journal,
“According to the indictment, Bromwell received nearly $193,000 from Poole and Kent, a prominent contracting firm, with the money disguised as payments for a no-show job for his wife, Mary Pat, who also was indicted. The company also provided free or discounted construction services on his home worth $85,000, the indictment said.”
In what can only be noted as bizarre, the Board of IWIF voted to keep Bromwell on in his present position despite the indictment. This despite the government’s move to freeze his bank accounts. No leave with pay pending the outcome, no reassigned temporarily, no extended leave of absence. Why? Evidently the Fund has experienced solid growth during Bromwell’s tenure, which has earned him the loyalty and confidence of the Board.
What does this mean for you?
Another scandal means you’ll need a cheat sheet to track them all.

My colleagues at Workers’ Comp Insider have posted a helful list of research, calculation, and analytical tools on their site. They include reinsurance and health insurance glossaries, safety information, and Bureau of Labor Statistics links.
There are several other insurance, managed care, and workers comp links and info sources on the sidebar of Managed Care Matters as well.
Worth a bookmark for those times when you need the answer and can’t find it anywhere else.

Workers compensation insurance results are in for 2004, and the numbers look strong. The overall operating ratio improved to 93.7, up from 98.4 in 2003 and 100.3 in 2003.
(The operating ratio is simply total expenses/(total premium plus investment income))
The positive results, reported by John Burton’s Workers Comp Resources, were driven by a significant improvement in overall claims expense, with the claims ratio at 68.4, a ten-plus point improvement over the prior year. The good news on the claims side was counterbalanced by a ten-point drop in investment income performance from 2000 (20.9% return on investments) to 2004 (11.2%).
The net – claims costs are decreasing, investment results are tanking

These are wild times for the workers comp managed care industry. With Aetna’s recent announcement that they are expanding their workers comp network into additional states, it appears the big health plan is becoming a serious competitor for network business. Sources indicate that the Hartford will be announcing expansion of their relationship with Aetna in the near future, with the business moving from First Health.
Liberty Mutual, the comp industry’s 800 pound gorilla, has yet to announce the results of their network selection process, an event that has many in the industry on the proverbial edge of their chair.
CorVel, which has been laying low, keeping under the radar after the adverse publicity from the Broward County School Board debacle is set to announce a major new business relationship; sources indicate it will pertain to provider networks. This announcement may come too late for one of their larger business relationships; the State of Florida is likely to go to bid for their managed care program in the near future.
Gallagher-Bassett has been revisiting their managed care vendor contracts, apparently (at least in part) to eliminate the referral, administrative, commission, and other fees that they have been receiving from the managed care vendors they work with.
First Health is still seeking a head for their workers comp unit; Aetna is as well. Meanwhile, Concentra’s takeover of Beech Street and Occupational Health and Rehab has made the company a more formidable competitor in the network and occ health clinic markets.
Changes to the Texas workers comp laws go into effect (realistically) on the first of the year, and national and regional players are scrambling to prepare. If California and Florida are any indicators, the first entities into the new programs will resemble pioneers – the settlers with the arrows in their backs. Kudos to them for their initiative, and credit to the “fast followers” for waiting a bit to watch how things shake out.
Meanwhile the private equity/venture capital world continues to buzz around managed care companies like bees around honey. There is a lot of attention being paid to these service providers; workers comp managed care is hot now among the investment community.
This is all playing out amidst the ongoing Spitzer/Blumenthal investigations into the insurance industry, sham bids, anti-competitive behavior, and outright fraud.
It all makes for a highly entertaining season.
What does this mean for you?
Significant change brings significant opportunity, along with big risks. Stay tuned; more changes are likely soon.