Ramona Tanabe, CEO of WCRI – a most excellent workers’ comp research organization – was kind enough to carve out a few minutes on the eve of this year’s gathering of the brainiacs to answer a few of your reporter’s questions.

MCM – Great to see a discussion of provider consolidation on the agenda – what was the trigger for this?

Ten years ago we looked at where care is being delivered across states…Massachusetts was particularly notable for how much care was delivered by hospital-based care providers. More recently this has been increasing in some states as facilities acquired practices. Stakeholders brought this up so WCRI decided to watch this and see how providers changed when they joined a larger group. [WCRI looked at provider billing before and after they were acquired by/joined a health system or hospital or large provider group]

• MCM – What was one of the surprising findings from the research on consolidation?

We had a hypothesis that assumed we would find duration of disability would decrease due to coordination of care – and lo and behold numbers were the opposite – duration increased. We will get into the causes at the conference next week.

• MCM – Thinking about the various sessions, which one will have the most long-term impact on workers compensation and why?

Two – excessive heat – this impact is external to comp system and is not going away…it is a different world.

And the changing medical workforce is going to have a long term effect – access to care specifically doctors RNs LPNs is changing . Prof Cutler will talk about changes to the healthcare workforce and what’s been happening about that – who is providing the type of care – how many providers, who owns them and hospitals it is all changing – it is not like it was 30 years ago and the effects of that will continue to impact workers’ comp.

• MCM – There’s been what can only be described as a misunderstanding around medical costs in workers’ comp – in your mind what accounts for this? What WCRI research can help stakeholders grasp what’s really happening with medical costs?

Yes to the second question; there will be a session on medical costs and effect on inflation. At the last conference some said there is a delay in how inflation in the economy affects workers’ comp and that was why we had yet to see medical inflation…Have prices changed over time? that is how economists think about inflation…there’s also been a shift in services – where it is being delivered or changes in the types of services that also factor into pricing…location of service, intensity, utilization all affect costs

• MCM – Drug costs have been declining for some years now – any indications this trend has ended or changed?

[Drug costs] have declined over time – [this varies] by categories of drugs, there have been decreases in some and increases in others – society helped with that change with publicity around drug issues…issuing report on this later this  year.

What does this mean for you?

Pay attention to WCRI. Their research will help you plan for the future.

Here’s stuff to brighten your day…

Our cities and rural areas are getting safer.

Overall crime rates have dropped – a lot...

unless you own a Kia or Hyundai.

Murder rates are dropping as well

Net – safer cities and towns.

Inflation???

Business owners’ consensus view is inflation will remain near 2 percent...this from the Atlanta Fed.

Healthier people!

2 Medicaid items of note

North Carolina is expanding Medicaid – terrific news for poorer folks in the Tar Heel State. Great news for the 346,000 residents who now can actually get healthcare.

In some states, Medicaid is expanding coverage to include housing and nutrition, a major step towards improving the health of Medicaid recipients.  What I love about this is research indicates housing and food stability enable people to a) get healthier, b) focus on school and work (hard to study or work when you are hungry and living on the streets).

Kudos to the Trump Administration for jump-starting CMS’ investment in social determinants.

CMS’ move is just the latest that recognizes the critical importance of stable housing and reliable nutrition. From WaPo:

social determinants of health — essentially, the conditions in which people live — have an enormous bearing on well-being. Medical care, studies have shown, accounts for only 20 percent of the difference in patients’ health, while social risk factors are responsible for half to 80 percent.

And it’s not just Medicaid…

Last year, the National Committee for Quality Assurance, which evaluates health plans and medical practitioners, updated a data tool used by 90 percent of health plans, requiring them to report whether they have assessed patients for shortages of housing, transportation and food.

See you in Boston March 5 – 6 for WCRI…it’s sold out BUT there is a waiting list… click on the link to sign up.

AI is all over healthcare, from assisting in diagnosis to evaluating new medicines, from allocating resources to triage. Sure, there’s enormous potential – there’s also big risks. At last fall’s National Work Comp conference AI was all over the exhibit floor….in recent surveys HSA has conducted we have seen a dramatic rise in AI-related comments.

What’s apparent from our conversations with industry execs is this: AI is…in the eye of the beholder.

While industry folks talk about AI’s potential, they readily acknowledge their understanding is superficial at best.

I asked Jay Stith, the brains behind HSA’s analytical work – he’s also worked extensively with AI applications in his work with HSA and on the national scale for disaster prediction and preparation – to give you, dear readers, a very brief overview of what AI is, how it “works” and where it might be useful.

At its core AI represents the culmination of efforts to infuse machines with human-like cognitive functions. The engine driving AI’s transformative power is machine learning – a discipline enabling algorithms to learn from data patterns. This not only facilitates automation but also empowers AI systems to continuously enhance their performance, making them dynamic and adaptable to evolving challenges.

This potential doesn’t come without cost. Once you decide to pursue AI, launching a competent AI system requires a lot of work:

• Determining what problem you want AI to address,
• acquiring the resources (money and infrastructure) ,
• earning management and staff buy-in,
• acquiring the talent to develop AI,
• assessing/cleaning up/revising the data used to “train” AI
• developing metrics to evaluate the AI’s output
• building the AI model/tool/program/etc. structure,
• adequately training the AI, and
• then…the dreaded implementation phase.

All while navigating the tricky ethical considerations associated with AI (privacy, ownership, algorithmic bias, hallucinations, and employee displacement) and the looming threat of increases/changes in regulations.

That said…safely navigating the path will lead to much improved productivity, clinical outcomes, and lower costs for all.

More specifically, stakeholders believe AI in worker’s comp can be very beneficial throughout the workflow –from the basics like increasing speed and accuracy across the board all the way to enhancing predictive analytic capabilities and most, if not everything, in-between.

What does this mean for you?

The potential is huge but be mindful of the arduous process to get there.

A couple weeks back NCCI released information about its annual survey of work comp execs.  About 100 participated in the survey; some of the results were a bit surprising.

Execs were asked about their “concerns” re workers’ comp…frankly I found some of their concerns (financial health? rate adequacy? medical inflation?) puzzling at best.

Here’s a couple questions from my discussion with Damian England, Executive Director, Affiliate Services and Raji Chadarevian, Executive Director-Actuarial Research – and thanks tons to NCCI’s Cristine Pike for making this happen.

Where did the responses rank concerns?

Damian England, Executive Director, Affiliate Services – “While some carriers mentioned multiple concerns, roughly 40% of the responses were related to the financial health of the system and rate adequacy. About a quarter reflected the changing workforce, followed by medical inflation and the economy. Climate change and artificial intelligence were cited as emerging concerns.”

MCM – Rate adequacy concerns?

Damian England, Executive Director, Affiliate Services – Rate adequacy concerns are more of a global fear of the future and the unknown, amid a long-term trend of steady declines in loss costs/rates.  Although the industry in aggregate has seen nearly 10 consecutive years of underwriting profitability, not every carrier has same results or books of business; rather, individual carrier performance varies in many ways from the aggregate.  We also hear about changing underwriting cycles and whether we have the data necessary to recognize a turn in trends, as there is a recognition that recent trends will not last forever.

MCM – Why are they worried about medical costs – which are a non issue?

Raji Chadarevian, Executive Director-Actuarial Research (and all around good guy). – Medical cost drivers are not well understood; some are just looking at the overall medical price index, but medical cost drivers go beyond that. Changing medical practices, new medications, new ways to administer treatments and other transformations need to be considered. It is starting to resonate that some are understanding it is more complex…but there is a misconception in the industry that we look at health insurance rates and think that is representative of medical inflation – those rates [health insurance premiums] are going up but that is not medical inflation.

Also, WC is a long tail business, so a small change in the inflation rate one year can mean a lot in terms of overall cost of claims – that is where some of the concern emanates from – what does it mean for a 20-30 year claim?  Furthermore, for LT claims it isn’t general medical inflation largely driven by physician and facility prices, rather, for claims that are beyond the critical treatment period, medical costs have more to do with the price of Rx, home health care, medical equipment. Prices for HHC and DME have gone up significantly in recent years.

Ok, couple things here.  And please, this is not meant to argue with Raji or Damien, rather to point out that work comp execs need to study up on medical issues and worry about REAL issues, not NON-issues.

1. Rate adequacy is NOT AN ISSUE. Over the last decade rates have been too high – evidenced by continuing rates drops in almost all states over that period, accompanied by huge profits AND $14 billion in “excess” reserves.
2. Medical inflation is NOT AN ISSUE. Over the last few years there have been no reports of significant increases in medical trend. None. Zippo, Zilch.
3. Drug costs have been dropping for years – for lost time claims as well as med onlies.
4. Claims with ultimate costs >$1 million account for – at most – 15% of total WC costs  – and a huge chunk of that is not medical, but indemnity expense. So, while I get some execs may be concerned about future costs, this feels more like catastrophizing than rational business thinking.
5. Climate change – hard to believe that this was not one of the top concerns, but completely consistent with the industry’s ignorance of the issue. Talk to insurers, employers, and TPAs in Louisiana and California and they’ll regale you with the horrific and extremely expensive impacts of human-caused climate change.

What does this mean for you?

Execs are working about non-issues and willfully ignoring those that will have real and sustained impact on the industry.