There are no work comp ‘Preferred Provider Programs’ approved by the State of Illinois – at least not as of today.
No provisional approvals, final approvals, conditional approvals, or any other approvals – if there were, they’d be announced here.
In fact, word is there are fewer than five (5) applications presently pending in Illinois, and most are entries from the currently-in place discounted PPOs from the usual cast of characters.
There’s no doubt the folks tasked with approving PPPs are working carefully and quickly to get as many PPPs approved as soon as possible – but they’re a bit hamstrung by the rapidity of events. Legislation passed just this summer, regs are still evolving, and this is a very, very hot political issue – better to get it right than to do it fast.
Much as we’d all like to have a small, expert workers comp network in place based on outcomes, strong credentialing, and appropriate reimbursement, these things take a bit more than three months. Usually quite a bit more.
What does this mean for you?
Patience, Grasshopper…

The good folks at the University of California – Davis were kind enough to send me the entire study they are publishing re “…Predictors of Workers Compensation Costs”. This is the one that generated headlines claiming financial returns are the best single predictor of work comp premiums.
That’s not exactly what the study says. Sort of, but not exactly.
There’s a rather large disconnect between the report itself and the press release issued by UC Davis about the report. Moreover the press release itself is misleading, poorly written, and stuffed with quotes that reflect a lack of basic understanding about workers comp. Here’s one: “Increasing premiums had nothing to do with the number of injured workers, who often are incorrectly blamed for increasing premiums for employers.”
By whom? When and where? This kind of misguided PR flackery is sloppy at best, if not outright harmful. It can, and will, be used to add credibility to and strengthen the position of those with their own unique agendas.
Reading the press release and the report, you’d be hard pressed to know they were about the same underlying research report. The firm, declarative statements in the press release were NOT supported by the much more heavily qualified and less direct statements in the report.
For example, the report said this:

We had two major conclusions. First, the year 1992 marked a sharp contrast in trends and correlations between unemployment and incidence rates for occupational injuries and illnesses. Second, for the entire time period (1973-2007), insurance carriers’ premiums were strongly associated with returns on investments.

The press release read thusly:

Skyrocketing workers’ compensation claims payments are often blamed for rising premiums, but a UC Davis study has found that the number of claims has dropped during the past two decades… the study shows that higher premiums are instead associated with decreases in the Dow Jones Industrial Average and interest rates on U.S. Treasury bonds. “Insurance companies appear to have been setting premiums according to their returns on the stock and bond markets, not according to the number of claims they have” said J. Paul Leigh, UC Davis professor of public health sciences and senior author of the study.

Note the first sentence especially the phrases “workers’ compensation claims payments” and “number of claims”. There’s – at best – a marginal connection between the two. As NCCI, WCRI, CWCI, and pretty much every WC actuary has shown uncountable times, the COST of claims is separate and distinct from the NUMBER of claims.
Another problem with the press release – the report was about premiums, not costs. There’s a BIG difference between the two and conflating them was a serious error.
Leaving aside the big problems with the press release, there’s problems with the report too.
As a variable, the researchers selected regular ol’ medical inflation as reported by the Dept of Labor. As all of us in the work comp world, trend rates in work comp are NOT the same as trend rates in the rest of the medical payer world. Moreover, we look at medical inflation in two ways – on a calendar year and an accident year basis. The researchers said there wasn’t much of a correlation between premiums and medical inflation – well, given that there’s a tail in work comp long enough to circle the block, annual trend just isn’t viewed as – nor should it be – that significant. Which leads one to ask; so, why pick the medical inflation rate as a variable in a study specifically about work comp premium rates?
As I noted yesterday, the report uses OSHA reportable incidents instead of actual workers comp claims, then conflates the two – repeatedly. That’s just outrageously sloppy work. The authors do note that NCCI reports these data, but complains that they don’t cover the entire country. So, instead of using ACTUAL REAL workers comp claims, they use another dataset as a proxy and conflate the two – without any noticeable effort to correlate the two, identify differences, or account for them statistically. Why didn’t the researchers just focus the study on the NCCI states, where there were actual data? If they wanted national information, the researchers could have looked at OSHA data in those states, compared it to claim rates, and come up with some sort of statistical correlation.
That’s not all, but I have real work to do.
What does this mean to you?
Don’t read too much into press releases, especially if they are as inflammatory as this one was.
And be wary of research conducted by well-meaning folks who seem to think they’ve discovered something brand new that the rest of us knew existed for decades…

Yesterday’s news release from UC Davis claiming that workers comp premium increases are due to underlying shifts in financial markets will almost certainly generate a lot of conversation.
Here are quoted highlights with my comments in (parentheses).
– a UC Davis study has found that the number of claims has dropped during the past two decades…higher premiums are instead associated with decreases in the Dow Jones Industrial Average and interest rates on U.S. Treasury bonds. (I’m not sure UC Davis is the first to note that claims volumes have decreased over the last twenty years)
– premiums increased from 1992-2007, claims decreased 1 to 2 percent each year. Claims for serious illnesses and injuries varied, but decreased overall.
– for the entire 35-year timeframe of the study, rising premium rates were closely linked with the Dow Jones Industrial Average or Treasury bonds. As either the Dow or interest rates on Treasury bonds fell, premiums rose, and vice versa.
I’ve requested a complete copy of the study and will report back when I’ve a chance to read the entire document. For now, here are a couple observations.
1. The study used OSHA reported incidents as a proxy for WC claims. As all of us involved in workers comp are well aware, there is NOT a one:one correlation. I don’t know why the researchers didn’t find – and use – the number of actual workers comp claims. While it’s a pain in the posterior to get this information, it can be found. We’ve found it for a client – it’s out there, it just takes a lot of digging. By people who know where to dig. In any event, the study authors’ conflating of ‘claims’ with ‘incidents’ may well lead others to miss this key issue.
2. NCCI’s been reporting a decline in work comp frequency [opens pdf] of much more than 1-2% per year over the same period. From 1990 to 2009, frequency dropped by about 55%…
3. It’s hardly surprising that investment returns influence premiums. The old rule of thumb is a third of claim dollars are paid out more than 36 months after a claim is incurred, making the RoI of invested premiums critical. That said, I doubt work comp payers invest a significant portion of reserves – if any – in stocks listed on the Dow. That would be rather risky.
I’ve got a few other thoughts circling around, but in fairness they’ve been triggered by other media coverage of the report and not based on a reading of the report itself. At this point, rather than react to some of the quotes in UCDavis’ news release, quotes which may need context, I’ll defer further comment till I read the entire document.

I’ve spent much of the weekend reviewing responses to a client’s Request for Proposals for claims and managed care services. Here are a few takeaways.
1. Don’t tell how you’ve listened carefully and developed a customized approach designed specifically for the client and then talk about your California MPN if the client is only on the east coast. That’s just dumb.
2. Have someone who can actually proofread – proofread your final. Just because you ran it thru spellcheck doesn’t mean it is right. for example, ‘medial’ passes spellcheck, even when you are really trying to spell ‘medical’.
3. Either learn to write a decent document or hire someone who can.
4. Don’t talk about how you cap costs and guarantee a reduction in admin fees and then exclude case management, bill review, and other ‘managed care’ fees. The game’s up, people – payers know that’s where you make your money.
5. Don’t blather on endlessly about outcomes and quality and results if you don’t have data and compare that data to industry-wide metrics.
6. Can you really – with a straight face – say that 175 LT claims is a reasonable case load for an adjuster?
7. Address your cover letter to a person, not a title.
8. Don’t price bill review on a percent of reduction below billed charges. That’s a scam and everyone knows it.
9. Be clear about basis for pricing, include a definitions section, and be very precise about those definitions.
10. Don’t overwhelm with boilerplate marketing babble. Listen to the prospect, and show you’ve listened by writing a proposal that fits. Throwing everything up against the wall to see what sticks works only when cooking pasta.

First, David DePaolo’s post on the industry’s unfailing ability to believe it can keep doing the same things yet expect better results. David notes:
“A proposed rate filing in [Tennessee] would increase rates by 6.3% is causing regulators to take a look at the medical reimbursement schedule and proposing a reduction in the fee schedule. The same old arguments are at hand in both (or more?) sides of the debate – fees need to be cut because they are too expensive vs. access to care if physicians aren’t adequately compensated.
Stop the madness!! This is the same set of arguments that go nowhere each and every time the issue is raised. And each and every time the issue comes up, adjustments are made to a fee schedule, then everyone goes back to business as usual with cost shifting, procedure manipulation, bill review and utilization review shenanigans and in a few years we again have another crisis.” [emphasis added]
Isn’t that the truth.
Second, Jennifer Wolf-Horesjh (incoming Exec Dir of IAIABC) reminded me that IAIABC hosted an excellent webinar earlier this summer offering a comprehensive look into the opioids issue including recommendations for regulators seeking ways to address the problem. You can download or listen to a recording of the webinar; IAIABC’s making it available at no charge for members and non-members alike.
IAIABC is really focusing on this issue, and I applaud them for doing so.
Third, yesterday’s WorkCompCentral webinar on Prescription Drug Abuse in Workers Comp (your’s truly as presenter) is available for listening at your convenience. As the webinar was over-subscribed, those who werent’ able to ‘attend’ can watch and listen to the replay (no charge). details and a link coming…

There is one industry that’s more highly regulated than workers comp – nuclear power.
Other than that, and perhaps commercial airline travel, comp is it. Sure, there’s varying degrees of regulatory control, there’s no getting around the fact that most of what happens in and around work comp is driven by regulations. Often, the regulators are tasked with developing rules and regs based on legislation written by (speaking generously) non-expert elected officials. This isn’t to slam state legislators, but rather to recognize that they are part-time elected officials working with very limited resources and support who have to develop and vote on legislation that in many cases is far outside their area of expertise.
The legislation on which regulators base their rules may be pretty broad, thereby leaving the rule-writers with a lot of discretion – and potentially opening the door to legal challenge by stakeholders disagreeing with the regulators’ interpretation of the law.
It may also be written with a lot of detail, thereby challenging regulators to develop regulations that will actually work in the real world (which is a different world than the one in which some non-expert legislators operate).
Which puts a LOT of responsibilty on – and vests a lot of authority in – regulators. In my experience, most of the folks tasked with developing and implementing work comp regulations are pretty reasonable, open-minded, and highly knowledgeable. They aren’t looking to antagonize or frustrate stakeholders, but rather take the legislation and laws they are handed and figure out how they can develop regs that a) abide by the intent of the lawmakers and b) can actually work to enhance the quality of care and reduce costs.
That’s harder than it may seem.
For example, let’s say a state legislature passes a law designed to reduce workers comp expenses, and that law includes a requirement to reduce medical expenses. This type of legislation may well include a cut in the fee schedule, as that looks to be a pretty straightforward way to reduce medical costs – if you cut the price, then you cut the cost.
However, there are several studies that show there’s a tenuous connection at best between low fee schedules and low medical costs, and quite a few people think reducing reimbursement can actually lead to higher costs due to increased utilization and decreased quality of care (this is a complex issue that can’t be adequately addressed in this post). Regulators, who understand this issue, are faced with a no-win situation – they’re tasked with figuring out how to reduce costs but are forced to use a tool that may well have the opposite effect.
Sort of a damned if they do situation…
There’s an enlightening piece in Risk and Insurance about the interaction between regulators and stakeholders that provides good perspective on this issue.