My last post covered the first five of my annual prognostications; today we look a bit deeper into the crystal ball…

6. California’s crooked docs will be outed.

With SB 537 signed into law, it looks like we’ll know which docs are the bad actors later this year. Kudos to the behind-the-scenes folks who made this happen; thanks to them we’ll know the name of the PM&R doc in northern California who filed IMR requests resulting in 2,800 IMR letters and 4,441 Medical Decisions.

(while the law doesn’t require this outing to happen before 2024, I’d expect we’ll know the names of the worst offenders in 2020.)

Word of warning – network providers would be well advised to do their own research to identify and remove problematic providers before the list becomes public. Failing to do so will show you’re just a box of contracts.

7.  More effective approaches to chronic pain and opioid abuse disorder are here – and will gain a lot of traction in 2020.

Behaviorally-focused treatment, medication-assisted therapies, long-term clinical support and individual-specific treatment plans are all essential to solving the biggest problem in workers’ comp – chronic opioid use disorder [OUD]. Payers are recognizing that discounted-network approaches to pain and OUD are nothing more than revenue-generators for vendors. Carisk’s Pathways 2 Recovery is getting significant traction; Paradigm is shifting to more of a behavioral approach as well. (Carisk is an HSA consulting client).

8.  Don’t expect any meaningful state legislation/regulatory changes.

Significant change doesn’t happen unless there is a lot of pressure to make that change. And there isn’t – With workers’ comp anything but a problem for employers and insurers, constituents aren’t pressuring legislators to take action and regulatory activity will be mostly clean-up stuff.

Word of warning – beware of folks hyping relatively minor stuff like medical marijuana. Compared to the California crisis and Illinois’ past work comp disaster these issues are pretty insignificant.

9. Benefit adequacy will gain some traction.

I’ll admit this is much more of a hope than an actual prediction.

As reported by NASI, worker benefits have declined dramatically over the last two decades. Sure, some of this is due to the drop in frequency, but workers are getting less in benefits than they have in the past – and that’s bad by any measure.  It’s great that employers’ costs are declining, but that shouldn’t be at the expense of injured workers and their families.

With employers’ work comp costs at an all-time low, it’s long past time we focused on making injured workers whole.

This does NOT mean I support the self-described “worker advocates” who make their living off injured workers. If anything these leeches do more harm than good.

10. Conferences will continue to struggle

look familiar?

The work comp conference industry is suffering from over-supply; as a result many conferences are seeing drops in attendance, revenues, and exhibitors.

For some conference planners, the fix is pay-to-play.

While a possibly-useful short-term fix [pay-to-play generates much-needed revenue and profit] the long-term impact will be to further reduce the value of conferences.

Another “solution” is to require each session include an employer, ostensibly to provide real-world examples that other employers can use to improve their programs. The problem with this is obvious; while it will drive more attendance from brokers, TPAs and insurers, it doesn’t deliver much value for other employers. Here’s what I said back in August..

I can’t count the number of times I’ve heard “well, if I had a thousand workers in XYZ city I could negotiate with an occ clinic too”, or “how do I apply that to my interstate trucking company” or “yeah that’s not going to fly with my unionized workforce”.

That said, conferences put on by CWCI, NCCI, WCRI and those focused on self-insureds are content-rich and well worth your time.

That’s it for this year – may you do well by doing good.

Well, proving once again that I can’t/won’t learn from past mistakes, here are five of my predictions for 2020.

1.  The work comp insurance market will stay soft.
   
   
   As in mushy, pillowy, baby rabbit fur soft.
   Multiple factors make a strong argument for a continued soft market. (that’s a market where prices decline and it’s very easy to get insurance)
   First, insurance rates and prices continue to drop in pretty much every state. Second, outside of California self-insureds I haven’t seen any significant uptick in – or even leveling off of – claim frequency.
   Third, see prediction #2.
2. Work comp medical trend will remain flat.
   
   Trend has been flat for several years now; as a result, medical severity (that’s a financial term, not a clinical one) remains well under control as well.
   The biggest factor may well be the industry’s ongoing success in reducing inappropriate opioid usage.  Also, frequency declines will likely continue, helping drive down medical costs.
   But…
3. Facility costs will gain a lot more attention.
   
   This is the biggest cost problem payers are facing; hospitals and health systems have figured out work comp payers are a very soft target, and are hoovering dollars out of payers’ pockets.
   We’ll see more payers take specific actions to address facility costs; payment integrity will gain significant traction among payers and service providers. (PI firm Equian is an HSA consulting client)
4. Consolidation in the work comp services industry will continue, with more of the big players merging/acquiring each other.
   A few years ago there were ten or a dozen PBMs, now there are 4 with any measurable share. Paradigm and Genex have consolidated the case management sector. There are now a handful of bill review application vendors; that could decrease if Conduent’s Stratacare/ware goes up for sale early in 2020. Same thing has happened in the TPA space driven primarily by Sedgwick.
   The consolidation has been both horizontal, that is across different sectors (e.g. Paradigm buying CM and network companies) and vertical (TPAs buying other TPAs); as there are fewer assets for sale
   Sure there is a proliferation of start-ups and smaller players but it is going to take a while for these to break thru and gain major share in one of the verticals.
5. OneCall will be sold. 

   And possibly broken up by the buyer. After KKR and GSO’s takeover of the near-bankrupt company two months ago, not much has been heard from Jacksonville HQ.  After the balance sheet clean-up and Polaris review are completed, expect the new owners to put it up for sale. KKR and GSO will turn a handsome and quick profit, prior debtholders won’t have to write off their entire portfolio.
   No word on whether employees will get something back as well; that would require action by the current owners as “old” stock is essentially worthless.Next time – the next five.

Paradigm is evolving rapidly – and none too soon.  A data-driven firm known for taking risk on catastrophic claims, Paradigm has strengthened its behavioral health offerings, and added case management, specialty and network services, all intended to make the company one of the major players in workers’ comp medical management.

I’ve tracked Paradigm for more than two decades, watching the company evolve from one stubbornly stuck in a business model that precluded growth to a diversified provider with a broad array of service offerings. In conversations with Paradigm execs several years ago, I wondered why the company wasn’t solving client’s problems, instead focusing narrowly on a highly-selected group of catastrophic claims.

While this made sense from Paradigm’s perspective – it wanted to focus its expertise on a very select type of claim – there was a big problem with this approach.

Namely, Paradigm wasn’t thinking about this from its customers’ perspective. Customers gave Paradigm a big list of claims which Paradigm winnowed down; typically relatively few were actually “accepted” by Paradigm.  The customer had a bunch of problematic claims, but Paradigm wasn’t interested in solving the customer’s problem, it just wanted to cherry-pick claims.

That’s changed.

I caught up with Paradigm Catastrophic Care Management CEO Kevin Turner a couple weeks back to get updated on the company.  Here are my takeaways (Paradigm Outcomes is one of three divisions).

Paradigm is moving down the severity scale, applying the expertise and experience it has gained handling big cat claims to less-complex claims. In so doing, the company is embedding itself deeper and broader into its clients – and growing revenues.

Turner spoke at length about Paradigm’s core asset – the wealth of data the company has amassed over the last three decades – and how that informs the company’s approach to managing cat – and “near-cat” claims (my words, not his).

We also dove into bio-psycho-social issues, including the patient’s “whole family situation” (again, my words) and the critical importance of the family in the recovery process. Marital status and satisfaction, financial stability, relations with children are all key considerations that can impact the recovery process. That just makes sense; if a patient has a difficult home life and kids with issues, it is going to be that much harder to get better.

The company recently launched a home-grown IT application – EDDG – designed to help care managers use the company’s historical data and lessons learned along with bio-psycho-social indicators to manage claims.

Of note, Paradigm is no longer the only company in the cat claims risk taking business. Carisk Partners has gained traction with its Pathways 2 Recovery program, leveraging the company’s deep expertise in behavioral healthcare and workers’ comp experience. Carisk takes risk both on individual claims and for entire portfolios of claims. (disclosure; I work with Carisk)

Where you sit determines what you see; this adage applies to the work comp industry.

For payers, employers, and taxpayers, all is great.  Rates are low and dropping, insurers are enjoying record profits, frequency continues to trend down, medical costs are flat.

The very things that make payers happy have the opposite effect on service companies. For most entities involved in medical management, pharmacy management, investigations, technology, claims systems, Medicare Set-Asides, and litigation defense the drop in frequency and flat medical costs are unwelcome news.

The trickle-down effects of this dichotomy are many and varied.

• There is little-to-no pressure to revise state workers’ comp laws and regulations.
• Insurers are looking to increase their work comp business as it is a big profit maker.
• Claims execs are trying to balance hiring and training new claims adjusters while planning for long-term decreases in claim volume.
• Execs are also extremely careful about investments in new IT projects, as the long-term payoff is also challenged by structural declines in claims.
• The consolidation of service companies continues unabated; IMEs, bill review, specialty networks, PBMs, investigations, case management, cat case management services are all subject to this consolidation.
• Selling services to payers is getting increasingly difficult.  Payers aren’t seeking solutions to major problems; they are reluctant to switch vendors unless there are serious service problems.
• Work comp conferences are struggling due to the structural issues above; the lack of big problems driving intense interest in solutions and an arguably-over-saturated conference market is hurting attendance.

So, what to do?

If you are a service entity, you’ve got to differentiate. You must also deeply understand what individual buyers want, why they want that, what their decision process is, and who else is involved.

Unfortunately many service entities are cutting marketing budgets and pressuring sales staff to deliver deals. While sales targets are important indeed, they must also be realistic.

If you are a payer, I’d echo the last sentence above. Many payers are planning to write more workers’ comp, an obvious impossibility.